Transcripts For BLOOMBERG Bloomberg Bottom Line 20150408 : v

Strain growth for a time. Participants also judged the underutilization of labor resources continuing to diminish. Part of the mandate was being met but the thing Everyone Wants to know is what is going to convince them that inflation is going to be rising toward their target . Participants expressed a range of views about how they would assess the outlook for inflation and when they might deem it appropriate to begin removing policy accommodation. There were no simple criteria for such a judgment. Further improvement to the labor market was one possibility. And a leveling out of the foreignexchange value of the dollar. You should note that several noted they expected economic developments would call for a gradual pace of normalization or a data dependent approach would not necessarily dictate increases in the target rate at every meeting. That is what bill dudley told us earlier this week. Thats kind of the operating assumption of the fed at this moment. One other thing they augmented some of the guidance they have given us on how they are going to raise rates, they say they will target a range in the 25 basis point range. They will go maybe 25 to 50. They will not pick a specific number. The repo rate they use to sell securities back into the market take some cash out of the market, will be the bottom of that rate and they will expand the repo program for some time in order to mop up excess liquidity. Mark the minutes also showing the officials are split on the rise. Michael most of them felt it would be too early. Some of them felt it would be appropriate at that time, but this was before the march payroll report that disappointed everyone. The consensus view is they are probably going to go much later. Mark michael, thank you so much. Again, we are awaiting word from federal court in boston, massachusetts. The verdict in the Boston Marathon bombing trial you are looking at a live shot outside the courthouse waiting for the News Conference to begin. Apparently attorneys from both sides will speak to the media as soon as the verdict is made official. As we mentioned before the defense conceding early on in the trial that Dzhokhar Tsarnaev took part in the bombing. That lt phase and the Defense Strategy is to try to spare his life. We will go back to boston when we get the verdict. Lets show you how the eckley markets are doing following the release of the bed minutes. How the equity markets are doing following the release of the fed minutes. Scarlet we saw stocks paring their advance. Come inside the bloomberg terminal and you can see this is the lead up to the fomc minutes and there is the leg lower following the headlines. We have come back a little bit but we have erased our games erased our gains. The s p 500 also giving up a lot of its gains end up by only. 1 . The vix, which measures the price of protection options against client on the s p 500 took a leg lower but it did come down a bit. The dollar is getting a boost. If you look at the dollar against a back against a basket of six currencies, we are at the best levels of our sessions right now. In treasuries, not much move on the 10 year yield, but the twoyear yield is at session highs. Mark scarlet fu joining us from the breaking news desk. Thank you. Lets get back to the release of the latest fed minutes. Im joined by dianes want from metro. Diane swonk. Did we get any indication on when the fed was going to change their rates . Guest the data has gone in the opposite direction and now we need to see it catch up before the fed actually raises rates. You are starting to hone in on the discussion of how theyre going to raise rates and the gradualism that will be accompanied by that. We also saw governor powell at the Federal Reserve board pointing out why we need to have a slower glide path on rates. This is important this is not a versailless process. They really dont know how you are getting a range because they cant actually target like they once could. Mark you mentioned a slower glide path. How slow are we talking about . Guest i think it is going to be extremely slow. They also pointed out some other issues the fed is traveling with that is the legacy of the Great Recession and the damage it has caused two potential growth along with productivity growth and investment and the marginalized workforce. The longer the expansion can be Monetary Policy is not a cureall but the longer it can be, the more we can allow it to catch up, that will allow marginal workers to be brought back into the labor force. The last long expansion we had was the 1990s when just about anybody with a pulse could get a job at the end of the decade. That is something the fed would like to see to reengage those who are marginalized and help by keeping rates really low. We are talking 2 or 3 . I think those are important things to keep in mind at this stage of the game. Mark as far as the timing of a rate hike is concern, the new york fed president said today i think there are strong arguments for being a little on the lakeside. Is there an argument to be made that a premature rate increase would force the fed to reverse course and lower rates back to near zero . Guest that is exactly the case to be made. Even if it triggered additional subpar growth, this could be transitory and we will catch up later on. We need to see the whites of the eyes of that selfsustaining recovery for the fed to move. What you are seeing is the fed head to the Downside Risk because if something is transitory like unusual Winter Weather or the stop at the ports, you have a large effect on the u. S. Economy. You have to wonder what the underlying resilience of that economy is and that is something the fed is very concerned about the stop very concerned about. Mark we are talking about the release of the fed minutes and a programming note we are standing by to go live to boston massachusetts. Theres the shot outside the federal court. The Boston Marathon bombing jury has reached a verdict and we will go live to boston when we get that information. You mentioned fed governor jerome powell. He spoke about the lasting effects of the crisis. You say he represents the way the board of governors thinks. How significant are his comments . Guest i think his comments are very significant in that hes reflective of what the board is thinking right now and he said im going to talk about something we havent talked about as much. Its not that he is blazing a path, but he is reflecting how the board is evolving on their thought. History has not been kind to economies with financial crises. The lasting effects have been enduring and that is something the fed is very concerned about. The fragility of the economy and even if we were not to slip into recession, theres not much they can do to bolster growth if it slipped into Slower Growth and further undermined wage gains. Its not even just recession their hedging against. Every time we stumble a bit, we pay the consequences and we have yet to see wages increase. Thats going to be a lagging issue but they have been subpar. Mark in a note last week, you pointed out that the Labor Force Participation rate particularly for young americans, is disturbingly low given how far along the economic expansion is. Why and what can be done to turn things around . Guest it gets to the long jeopardy of the recovery. Some of them are taking on student debt which has mixed issues. Its still worth it to get a College Education but there are still issues related to student that student debt. Have stayed attached to their schools longer because they are afraid to start the clock ticking. Mark we do want to let you know about the breaking news where recovering this hour. Dzhokhar tsarnaev has been config did of the 2013 attack on the Boston Marathon. He along with his brother who is killed by police his attorneys had laid out the prosecute had laid out the defenses contention that he was involved in this deadly attack but the strategy according to our Boston Bureau chief was to try to spare his life during the penalty phase of that trial. A federal jury in boston convicting Dzhokhar Tsarnaev of the 2013 attack on the Boston Marathon. That attack happening on president s day in 2013. A very famous day in the city of boston the red sox play a day game and the marathon is taking place earlier on before the game and there you see the famous video the first blast and people scrambling, not really knowing what was going on and then moments later, a second blast from homemade bombs laden with ball bearings, laden with nails, obviously to try to injure and perhaps maim and kill as many people as possible. Three deaths, 260 people injured. One of those who was killed was an m. I. T. Police officer. Tom is standing by in boston. This is not a verdict that was unexpected. Tom what the jury has handed over to the judge 32 pages a 30 count indictment against the younger brother and it goes through charge by charge first, conspiracy to use a weapon of mass destruction. The second charge actually using the weapon itself, the third charge, carrying the weapon. As they charged this young man, they were very thorough, making sure they covered every angle stop not surprising. We will have to stand by now and learn how many counts they have found them guilty. 17 of these cover the Death Penalty, so that will be the determinant in the next phase, which is whether or not this young man gets life in prison or is put to death. Mark with the volume of information the federal court jury had to go over, was the defense or prosecution, either side were they convinced this would be an open and shut case . Was there any sense Dzhokhar Tsarnaev was not involved in this attack . Tom there really wasnt. There were a lot of people asking me why are they going through this . Why the exercise . We know what happened and theres plenty of evidence. That is our justice that is our justice system. And the prosecution wanted to set up the parameters for the penalty phase of this trial. This is the same jury that is going to take this into consideration, whether this defendant should be put to death are not. As we said in our earlier discussion, the defense attorney said he was there and he did it. But not lets go home. He did it but his brother led him around. She said in her closing we are not asking you to go easy on this kid. We are not asking for any special treatment. We think yet to be punished for what he did. You saw the evidence, these were horrific acts will stop what she was trying to do is say he is guilty but does not deserve death because his brother was leading this whole mess. That is what the jury considered. As we went through these 16 days, and some of it was just heartwrenching. I speak about these kids i can barely contain the emotion. The family was a pillar of the community, they rose to the challenge after they lost a son. They had evidence in court where they were showing the singed bottom of his jersey. He was an avid sports fan and is there at the finish line wideeyed, its marathon day in boston and this horrific act descends on the city and on this little boy. That little boy became the symbol of this and when that day occurred in court, when this evidence was brought out, here is what is left of martin richard, not a dry eye in the house. Mark tom, thank you so much. Im joined on the phone now by the former Police Commissioner of the city of new york. Welcome and thank you for your time today. Your reaction to this verdict . 5 i guest i think it is an appropriate verdict. His is one of the most turned this crimes in the history of this country and i think the trial was appropriate and i also think the Death Penalty would be appropriate. Mark what does an act of terror at an event like this due to the psyche of the city . Guest it puts fear it does exactly what terrorism is designed to do. It puts random fear into people attending public events. Fortunately, the city of boston has responded really appropriately and has been incredibly strong in their response. A terrorist act is designed to be a random act of terror. It is designed to make people think if you go to a mall or movie theater, if you go to a sporting event, you could end up dead. That is why it is so horrific. Mark when an event like this happens at the Boston Marathon are some other function where you have a lot of people is the sense that since terrorism could happen anywhere at anytime that Law Enforcement for all of their best intentions and manpower is powerless to stop Something Like this . Guest they are not powerless. The more intelligence you have the better off you are at stopping things and we have stopped numerous acts of terrorism through intelligence. But you have to remember, the terrorists only have to be right once. We have to be right 100 of the time and thats the problem with dealing with homegrown terrorism because these are not the people who are on your radar screen. Mark as someone who was the Police Commissioner here in new york and the bostonnew york rivalry, whether it is sports or some other form, how would you describe how the city of boston has rebounded from this two years on into the incident . Guest they have been magnificent. The Police Department in boston did an incredible job resolving this case. The community has come together to support the victims. Clearly, this brought out the best there is in boston. Mark how do Police Departments around the country learn from this tragedy . What do they take away from this . Guest one of the things that clearly has to be done and this is easier said than done but you restrict packages, you restrict backpacks, you make sure people who are entering go through the chutes like we do on new years eve you dont allow certain objects and packages and parts of luggage into a sporting event. For the first time this year Major League Baseball is using magnetometers to screen everybody. Mark is that the wave of the future . Guest we live in a dangerous world and when you live in a dangerous world, you have to take precautions to protect the public will stop sometimes thats a bit of an inconvenience. Better than an inconvenience than to be dead. Mark what is your message to the public . Do you ever get any pushback from people who say maybe terrorists have done exactly what they set out to do, to cripple a city economically and instill fear to the point where people cant get on with their lives. Guest they have not done that and they will not win. Just like when you stand in line at the airport, to protect yourself and people around you people have to sometimes have a little inconvenience. It certainly beats the alternative. One thing i know about terrorists they will attack a soft target before they will attack a hard target. The harder we make our targets within reason, the less successful they will be. Mark the former new york city Police Commissioner joining the on the phone. Thank you for your time. Lets go back to bostons bureau chief. Tom has been standing by as we cover this story. The verdict, if you are just joining us, the federal court jury convicting Dzhokhar Tsarnaev in the 2013 bombing of the Boston Marathon. As the commissioner was pointing out, i guess the defense is trying to link this, saying Dzhokhar Tsarnaev was basically being led by his brother and thats the strategy they will use in the Death Penalty phase. Im trying not to trivialize this but is this in the sense my brother made me do it . Tom that is their whole defense, if you want to call it a defense. We are getting more information now. It is guilty, but there are 30 counts here. The courthouse is less than one mile from where i am in the courthouse in boston. Counts one through 10 out of the 30 is a clean sweep. It is guilty of stop some of the questions we had earlier about whether they would argue or differ or say not guilty on some of these more shaded, nuanced counts 80 carry the Pressure Cooker, did he conspire to carry the Pressure Cooker . One through 10, guilty. We are a third of the way through the reading and so far it looks like a clean sweep. That does not surprise me because, after all, the jury was given this case yesterday. It has been about a day. They may not have even taken that long. I said to someone earlier today any jury wants the world to know they did their job and due diligence. Even if they walked into the jury room after being discharged by the judge, they want to spend some time showing the world they did contemplate what they were about to do. Mark what men what message did they send the world if they got the case yesterday and the verdict today . Tom closed. We did it. We figured it out before we sat down. We have to go back to why this took place in the first place. We talked about the legalities and why the prosecution had to set out the evidence. They needed it and knew beforehand the defense is going to come back. He doesnt deserve the Death Penalty. The prosecution would say we are going to take you through this again so we will have our ammunition at the penalty phase. Mark in the month i guess it has been almost two years to the day since that attack at the Boston Marathon what did this due to the economy of the city of boston . Did it have any impact whatsoever on people coming to the city . Tom its certainly did early on. We here at bloomberg tried to get at that story. We talk to the people who run the summer tour is him business. It is a bustling one in boston and we found out that sure enough, people were holding back on hotel reservations. There was an initial caution people were not coming to boston because there was fear of the unknown and what was this going to do to my Everyone Wants<\/a> to know is what is going to convince them that inflation is going to be rising toward their target . Participants expressed a range of views about how they would assess the outlook for inflation and when they might deem it appropriate to begin removing policy accommodation. There were no simple criteria for such a judgment. Further improvement to the labor market was one possibility. And a leveling out of the foreignexchange value of the dollar. You should note that several noted they expected economic developments would call for a gradual pace of normalization or a data dependent approach would not necessarily dictate increases in the target rate at every meeting. That is what bill dudley told us earlier this week. Thats kind of the operating assumption of the fed at this moment. One other thing they augmented some of the guidance they have given us on how they are going to raise rates, they say they will target a range in the 25 basis point range. They will go maybe 25 to 50. They will not pick a specific number. The repo rate they use to sell securities back into the market take some cash out of the market, will be the bottom of that rate and they will expand the repo program for some time in order to mop up excess liquidity. Mark the minutes also showing the officials are split on the rise. Michael most of them felt it would be too early. Some of them felt it would be appropriate at that time, but this was before the march payroll report that disappointed everyone. The consensus view is they are probably going to go much later. Mark michael, thank you so much. Again, we are awaiting word from federal court in boston, massachusetts. The verdict in the Boston Marathon<\/a> bombing trial you are looking at a live shot outside the courthouse waiting for the News Conference<\/a> to begin. Apparently attorneys from both sides will speak to the media as soon as the verdict is made official. As we mentioned before the defense conceding early on in the trial that Dzhokhar Tsarnaev<\/a> took part in the bombing. That lt phase and the Defense Strategy<\/a> is to try to spare his life. We will go back to boston when we get the verdict. Lets show you how the eckley markets are doing following the release of the bed minutes. How the equity markets are doing following the release of the fed minutes. Scarlet we saw stocks paring their advance. Come inside the bloomberg terminal and you can see this is the lead up to the fomc minutes and there is the leg lower following the headlines. We have come back a little bit but we have erased our games erased our gains. The s p 500 also giving up a lot of its gains end up by only. 1 . The vix, which measures the price of protection options against client on the s p 500 took a leg lower but it did come down a bit. The dollar is getting a boost. If you look at the dollar against a back against a basket of six currencies, we are at the best levels of our sessions right now. In treasuries, not much move on the 10 year yield, but the twoyear yield is at session highs. Mark scarlet fu joining us from the breaking news desk. Thank you. Lets get back to the release of the latest fed minutes. Im joined by dianes want from metro. Diane swonk. Did we get any indication on when the fed was going to change their rates . Guest the data has gone in the opposite direction and now we need to see it catch up before the fed actually raises rates. You are starting to hone in on the discussion of how theyre going to raise rates and the gradualism that will be accompanied by that. We also saw governor powell at the Federal Reserve<\/a> board pointing out why we need to have a slower glide path on rates. This is important this is not a versailless process. They really dont know how you are getting a range because they cant actually target like they once could. Mark you mentioned a slower glide path. How slow are we talking about . Guest i think it is going to be extremely slow. They also pointed out some other issues the fed is traveling with that is the legacy of the Great Recession<\/a> and the damage it has caused two potential growth along with productivity growth and investment and the marginalized workforce. The longer the expansion can be Monetary Policy<\/a> is not a cureall but the longer it can be, the more we can allow it to catch up, that will allow marginal workers to be brought back into the labor force. The last long expansion we had was the 1990s when just about anybody with a pulse could get a job at the end of the decade. That is something the fed would like to see to reengage those who are marginalized and help by keeping rates really low. We are talking 2 or 3 . I think those are important things to keep in mind at this stage of the game. Mark as far as the timing of a rate hike is concern, the new york fed president said today i think there are strong arguments for being a little on the lakeside. Is there an argument to be made that a premature rate increase would force the fed to reverse course and lower rates back to near zero . Guest that is exactly the case to be made. Even if it triggered additional subpar growth, this could be transitory and we will catch up later on. We need to see the whites of the eyes of that selfsustaining recovery for the fed to move. What you are seeing is the fed head to the Downside Risk<\/a> because if something is transitory like unusual Winter Weather<\/a> or the stop at the ports, you have a large effect on the u. S. Economy. You have to wonder what the underlying resilience of that economy is and that is something the fed is very concerned about the stop very concerned about. Mark we are talking about the release of the fed minutes and a programming note we are standing by to go live to boston massachusetts. Theres the shot outside the federal court. The Boston Marathon<\/a> bombing jury has reached a verdict and we will go live to boston when we get that information. You mentioned fed governor jerome powell. He spoke about the lasting effects of the crisis. You say he represents the way the board of governors thinks. How significant are his comments . Guest i think his comments are very significant in that hes reflective of what the board is thinking right now and he said im going to talk about something we havent talked about as much. Its not that he is blazing a path, but he is reflecting how the board is evolving on their thought. History has not been kind to economies with financial crises. The lasting effects have been enduring and that is something the fed is very concerned about. The fragility of the economy and even if we were not to slip into recession, theres not much they can do to bolster growth if it slipped into Slower Growth<\/a> and further undermined wage gains. Its not even just recession their hedging against. Every time we stumble a bit, we pay the consequences and we have yet to see wages increase. Thats going to be a lagging issue but they have been subpar. Mark in a note last week, you pointed out that the Labor Force Participation<\/a> rate particularly for young americans, is disturbingly low given how far along the economic expansion is. Why and what can be done to turn things around . Guest it gets to the long jeopardy of the recovery. Some of them are taking on student debt which has mixed issues. Its still worth it to get a College Education<\/a> but there are still issues related to student that student debt. Have stayed attached to their schools longer because they are afraid to start the clock ticking. Mark we do want to let you know about the breaking news where recovering this hour. Dzhokhar tsarnaev has been config did of the 2013 attack on the Boston Marathon<\/a>. He along with his brother who is killed by police his attorneys had laid out the prosecute had laid out the defenses contention that he was involved in this deadly attack but the strategy according to our Boston Bureau<\/a> chief was to try to spare his life during the penalty phase of that trial. A federal jury in boston convicting Dzhokhar Tsarnaev<\/a> of the 2013 attack on the Boston Marathon<\/a>. That attack happening on president s day in 2013. A very famous day in the city of boston the red sox play a day game and the marathon is taking place earlier on before the game and there you see the famous video the first blast and people scrambling, not really knowing what was going on and then moments later, a second blast from homemade bombs laden with ball bearings, laden with nails, obviously to try to injure and perhaps maim and kill as many people as possible. Three deaths, 260 people injured. One of those who was killed was an m. I. T. Police officer. Tom is standing by in boston. This is not a verdict that was unexpected. Tom what the jury has handed over to the judge 32 pages a 30 count indictment against the younger brother and it goes through charge by charge first, conspiracy to use a weapon of mass destruction. The second charge actually using the weapon itself, the third charge, carrying the weapon. As they charged this young man, they were very thorough, making sure they covered every angle stop not surprising. We will have to stand by now and learn how many counts they have found them guilty. 17 of these cover the Death Penalty<\/a>, so that will be the determinant in the next phase, which is whether or not this young man gets life in prison or is put to death. Mark with the volume of information the federal court jury had to go over, was the defense or prosecution, either side were they convinced this would be an open and shut case . Was there any sense Dzhokhar Tsarnaev<\/a> was not involved in this attack . Tom there really wasnt. There were a lot of people asking me why are they going through this . Why the exercise . We know what happened and theres plenty of evidence. That is our justice that is our justice system. And the prosecution wanted to set up the parameters for the penalty phase of this trial. This is the same jury that is going to take this into consideration, whether this defendant should be put to death are not. As we said in our earlier discussion, the defense attorney said he was there and he did it. But not lets go home. He did it but his brother led him around. She said in her closing we are not asking you to go easy on this kid. We are not asking for any special treatment. We think yet to be punished for what he did. You saw the evidence, these were horrific acts will stop what she was trying to do is say he is guilty but does not deserve death because his brother was leading this whole mess. That is what the jury considered. As we went through these 16 days, and some of it was just heartwrenching. I speak about these kids i can barely contain the emotion. The family was a pillar of the community, they rose to the challenge after they lost a son. They had evidence in court where they were showing the singed bottom of his jersey. He was an avid sports fan and is there at the finish line wideeyed, its marathon day in boston and this horrific act descends on the city and on this little boy. That little boy became the symbol of this and when that day occurred in court, when this evidence was brought out, here is what is left of martin richard, not a dry eye in the house. Mark tom, thank you so much. Im joined on the phone now by the former Police Commissioner<\/a> of the city of new york. Welcome and thank you for your time today. Your reaction to this verdict . 5 i guest i think it is an appropriate verdict. His is one of the most turned this crimes in the history of this country and i think the trial was appropriate and i also think the Death Penalty<\/a> would be appropriate. Mark what does an act of terror at an event like this due to the psyche of the city . Guest it puts fear it does exactly what terrorism is designed to do. It puts random fear into people attending public events. Fortunately, the city of boston has responded really appropriately and has been incredibly strong in their response. A terrorist act is designed to be a random act of terror. It is designed to make people think if you go to a mall or movie theater, if you go to a sporting event, you could end up dead. That is why it is so horrific. Mark when an event like this happens at the Boston Marathon<\/a> are some other function where you have a lot of people is the sense that since terrorism could happen anywhere at anytime that Law Enforcement<\/a> for all of their best intentions and manpower is powerless to stop Something Like<\/a> this . Guest they are not powerless. The more intelligence you have the better off you are at stopping things and we have stopped numerous acts of terrorism through intelligence. But you have to remember, the terrorists only have to be right once. We have to be right 100 of the time and thats the problem with dealing with homegrown terrorism because these are not the people who are on your radar screen. Mark as someone who was the Police Commissioner<\/a> here in new york and the bostonnew york rivalry, whether it is sports or some other form, how would you describe how the city of boston has rebounded from this two years on into the incident . Guest they have been magnificent. The Police Department<\/a> in boston did an incredible job resolving this case. The community has come together to support the victims. Clearly, this brought out the best there is in boston. Mark how do Police Department<\/a>s around the country learn from this tragedy . What do they take away from this . Guest one of the things that clearly has to be done and this is easier said than done but you restrict packages, you restrict backpacks, you make sure people who are entering go through the chutes like we do on new years eve you dont allow certain objects and packages and parts of luggage into a sporting event. For the first time this year Major League Baseball<\/a> is using magnetometers to screen everybody. Mark is that the wave of the future . Guest we live in a dangerous world and when you live in a dangerous world, you have to take precautions to protect the public will stop sometimes thats a bit of an inconvenience. Better than an inconvenience than to be dead. Mark what is your message to the public . Do you ever get any pushback from people who say maybe terrorists have done exactly what they set out to do, to cripple a city economically and instill fear to the point where people cant get on with their lives. Guest they have not done that and they will not win. Just like when you stand in line at the airport, to protect yourself and people around you people have to sometimes have a little inconvenience. It certainly beats the alternative. One thing i know about terrorists they will attack a soft target before they will attack a hard target. The harder we make our targets within reason, the less successful they will be. Mark the former new york city Police Commissioner<\/a> joining the on the phone. Thank you for your time. Lets go back to bostons bureau chief. Tom has been standing by as we cover this story. The verdict, if you are just joining us, the federal court jury convicting Dzhokhar Tsarnaev<\/a> in the 2013 bombing of the Boston Marathon<\/a>. As the commissioner was pointing out, i guess the defense is trying to link this, saying Dzhokhar Tsarnaev<\/a> was basically being led by his brother and thats the strategy they will use in the Death Penalty<\/a> phase. Im trying not to trivialize this but is this in the sense my brother made me do it . Tom that is their whole defense, if you want to call it a defense. We are getting more information now. It is guilty, but there are 30 counts here. The courthouse is less than one mile from where i am in the courthouse in boston. Counts one through 10 out of the 30 is a clean sweep. It is guilty of stop some of the questions we had earlier about whether they would argue or differ or say not guilty on some of these more shaded, nuanced counts 80 carry the Pressure Cooker<\/a>, did he conspire to carry the Pressure Cooker<\/a> . One through 10, guilty. We are a third of the way through the reading and so far it looks like a clean sweep. That does not surprise me because, after all, the jury was given this case yesterday. It has been about a day. They may not have even taken that long. I said to someone earlier today any jury wants the world to know they did their job and due diligence. Even if they walked into the jury room after being discharged by the judge, they want to spend some time showing the world they did contemplate what they were about to do. Mark what men what message did they send the world if they got the case yesterday and the verdict today . Tom closed. We did it. We figured it out before we sat down. We have to go back to why this took place in the first place. We talked about the legalities and why the prosecution had to set out the evidence. They needed it and knew beforehand the defense is going to come back. He doesnt deserve the Death Penalty<\/a>. The prosecution would say we are going to take you through this again so we will have our ammunition at the penalty phase. Mark in the month i guess it has been almost two years to the day since that attack at the Boston Marathon<\/a> what did this due to the economy of the city of boston . Did it have any impact whatsoever on people coming to the city . Tom its certainly did early on. We here at bloomberg tried to get at that story. We talk to the people who run the summer tour is him business. It is a bustling one in boston and we found out that sure enough, people were holding back on hotel reservations. There was an initial caution people were not coming to boston because there was fear of the unknown and what was this going to do to my Summer Vacation<\/a> and my life . Early on, we saw that and then we saw people were coming back, being encouraged to do so. The businesses at the finish line on boylston and newberry, some of the more famous shopping streets of boston, they suffered an initial setback but they got back to business as usual but he quickly. Some of them we talked to said it took months and may have taken a year or two to fully recover. But we are back in business and boston is booming. I dont mean to sound like a booster here, the skyline is changing, biotech is going gangbusters in the seaport district. There is a lot the new mayor talks about as far as the city moving into the future. Mark tom thank you. Im joined on the phone now by the former assistant secretary for the department of Homeland Security<\/a>, the executive Vice President<\/a> of implant sciences. Thank you for your time. I would like to eat your thoughts on the verdict. I would like to get your thoughts on the verdict. 5 guest the evidence here is overwhelming. Not only do we have the ability to even attempting these attacks in the United States<\/a>. Just as importantly, we have the technology and the will to prevent these things from going in the future. Mark talk to me about the technology and what sets him apart from what they use in other parts of the world. 5 guest the United States<\/a> has the technology and Law Enforcement<\/a> capability to do Point Technologies<\/a> like explosive trace to touch and bomb dogs, all sorts of devices that can be put into place. We have demonstrated that in the past. We have a very Strong Security<\/a> apparatus in the United States<\/a> that can be applied to events like this in the future. Mark do the folks who were attending the marathon or some other public event, do they give up some of their liberties for the sake of being safe . Guest we all do and i think its a price we are willing to give up for a safer society. I think people recognize the world is changing and we have to be part of that and take a proactive approach. Its not just a Law Enforcement<\/a> or Security Apparatus<\/a> responsibility. Every individual has a responsibility to report things that are anomalous or things that need to be reported to authorities. Now we are talking about terrorism, but we have had the same responsibility in high crime areas or any place we want to raise our children and did joy the freedoms we have. We are not giving anything up its just more participating in the process. Mark what type of reset does this mean for the department of Homeland Security<\/a>. When you have an incident like this, there are ripple effects across the United States<\/a>. Guest it does show we are vulnerable and thats part of being in a free society. We cant lock everything down and we are not going to watch every single person. People are going to get in under the radar and thats whats going to happen with lone wolf type attacks like this. Thats why they are threatening to us. It is not a reset as much as this is a demonstration of what these types of attacks can be for the future. But we have the capabilities and technologies to prevent them. We are never going to prevent every single one of them. We can reduce the impact and lessen the severity and we can do things that are going to prevent future incidents. Mark aside from the technology, what does the department have at its disposal to keep americans safe at an event of this magnitude . Guest this is a layered approach. Its not just one standalone Silver Bullet<\/a> approach. It is information sharing, making sure the public gets information back to the authorities. It is people being part of the equation to identify things that are out of place as we saw in the times square bombing. That prevented a significant tragedy several years ago. Working with local Law Enforcement<\/a>, the department of Homeland Security<\/a> has a program, not just on bomb detection, but identifying homegrown extremists. There is a societal aspect to try to identify people who have not acted yet but are showing behaviors that are more violent tendencies and extremist tendencies. Mark you mentioned information sharing. I imagine across the spectrum, at the federal, state and municipal level, how key is that . Guest it is critical. Theres no such thing as a National Infrastructure<\/a> for information sharing and stop these events occur on the street in a locality someplace, whether its boston, new york or a suburban location in the midwest. The local Law Enforcement<\/a> apparatus to have the information at the National Level<\/a> and its critical that gets pushed down to the people who are on the street that can do something about it. Information that might be identified as a fractional piece of information can ultimately fillin a bigger piece of the puzzle and thats whats going to be on the street. It cannot be singular information sharing from the National Level<\/a> down. Then it has to be put into a Bigger Picture<\/a> to understand what that means. The good news is we have those capabilities. Mark the former assistant secretary for the department of Homeland Security<\/a> joining us on the phone. Thank you so much for your time. We are now in the second half hour of bottom line on bloomberg television. Im mark crumpton. Lets get you to some of the top stories we are following on this wednesday. Lets begin with a check of price the price of crude. Its down about 6. 5 today. And the oil glut keeps getting bigger. Crude Oil Stockpiles<\/a> grew by almost 11 Million Barrels<\/a> last week, more than three times the average estimate. A generic drugmaker has offered to buy a pair ago perigo. That represents a 25 premium over tuesdays Closing Price<\/a>. That would add to a record time of consolidation in the pharmasset goal industry. Last year, they acquired Abbott Laboratories<\/a> in their nonu. S. Locations as part of a plan to move its tax address to the netherlands. It is the biggest deal in the oil and gas industry in at least a decade Royal Dutch Shell<\/a> will buy bg group for 70 billion in cash and stocks. That represents a premium of 50 on their Closing Price<\/a> yesterday. The shell ceo told bloomberg that the deal is a bargain. The way we would look at it is if you look at the combination of the two companies, what we can do with the fantastic assets bg has with our capabilities applied to them, we saw a lot more value in that combination than the market. Mark the combined company would surpass chevron as the secondlargest oil and gas producer after exxon mobil and would be able to get rid of overlapping costs to offset the impact of lower oil prices. A white Police Officer<\/a> in South Carolina<\/a> is facing a murder charge and has been fired from his job accused of shooting a black man after a routine traffic stop in north charleston. Video captured by a bystander shows the officer shooting a 50yearold, walter scott, in the back as he was running away. The patrolman can be seen firing eight shots. The mayor confirmed the video is the basis for the case against the officer. The person who shot the video is not being identified. The video was given to the dead mans family and their lawyers. History has been made in ferguson, missouri, the town where riots broke out last summer after Police Officer<\/a>s shot and killed a black teenager. Voters have elected to africanamericans to the city council, meaning three of the six members of the council will be black. The Ferguson City<\/a> council is in charge of hiring people to run the towns operations and enforce its laws. That is a look at the top stories were following on this wednesday. The top story today is the release of the fed minutes policymakers were split over whether they would raise rates in june. The executive Vice President<\/a> Market Strategist<\/a> at pimco joins me now from Newport Beach<\/a> california. Welcome back. Did we get any sense on when these rates may be raised . Tony the fed is making it clear again that it will be up to future data. It did tell us a little bit about how high the bar is and what it wants to see. One of these things is some stability in oil and dollar, two things that have concerned the fed of late. There is some of that and the fed will need more time. There is some language that suggests and will deadly today said there could be a hike in june. Several have suggested that a favored a hike in june. Numerically, four or five of the 17 or so participants in the meeting, so its not quite enough to get over the bar set by the leadership. It is very data dependent in terms of when the dead will move. The fed will move will stop mark our markets and investors too worried about when the fed will raise rates . Tony pimco would like to suggest you not get too concerned about the analysis and get caught up in timing the markets. Thats always a dangerous thing. That said, we do think the market is underpriced. In the final analysis, we suggest focusing on the speed and magnitude of future rate hikes. Janet yellen said this in a speech available at the feds website. It wants investors to focus on the entirety of the feds path on rates and markets have been doing that, pricing in a 2. 5 policy rate by 2020. It seems the market leaves the feds notion that the neutral rate, the number in terms of keeping employment in place, is lower than it used to be. Mark how can the fed had a perceptions that it is moving too slowly on raising rates and that it is behind the curve on inflation . Tony the inflation data are quite low. It has been six years of running below the fed us 2 target. What if the next six years were 2. 5 percent . Were not suggesting they want to do that but the fed, by moving on rates before it reaches its objection its up to act on inflation, it would show the fed is on the job, so to speak. Its kind of like walking a dog with a long leash. You have to get ahead of it before it moves away from you. Mark we have an Unemployment Rate<\/a> in the 5. 5 range. Is this why the fed lowered its range on the nonaccelerating inflation rate of unemployment . Tony its not really clear. For four years, the fed cap the range at 5. 2 or something higher. It never lowered the lower end until recently. It seems that because of low inflation pressures and a lack of wage increases, it seems where it is companies decide they have to get more to pay workers is a lower Unemployment Rate<\/a> that has been the case historically. Importantly, the feds staff said they expect growth this year and next year to be above potential, which is another way of saying the rate will fall at the beginning of next year and it will be a great thing. But the reason to get off the emergency policy rate it will remain accommodative for years and below what is normal for a given level of the Unemployment Rate<\/a>, but it is no longer needed, the fed believes will stop the fed believes. Mark up next, live from mexico city, the latin america report. Mark welcome back. You are looking at a live shot outside the federal court in boston, massachusetts. Dzhokhar tsarnaev found guilty on all 30 counts in connection with the april 2013 bombing at the Boston Marathon<\/a>. That attack left three people dead and over 200 others injured. During the manhunt for him and his brother, a Police Officer<\/a> with the Massachusetts Institute<\/a> of technology was also killed. We are waiting to hear from the Defense Attorneys<\/a> and the prosecution and as soon as they step up to the microphone, we will go back to boston, life. Welcome back to bottom line. Is time for the latin america report. Lets go to our bloomberg partner in mexico city who joins us live. Lets start with at t who have to pay to 5 million to u. S. Regulators after an investigation found callcenter workers in mexico, colombia and the philippines improperly disclosed personal data on almost 280 thousand customers. 280,000 customers stop they passed names and Social Security<\/a> numbers to third parties who requests that mobile phones be unlocked so their devices would work on networks other than at t. The customer information was given to people who appear to have been trafficking in stolen or secondary market phones. These are the stories making headlines here in latin america. Mark thank you. That is your latin america report for this wednesday. Coming up, we will check the other top stories of the day. After four years of drought, california almond farmers are getting a bad rap for how much water they use stop but is playing the blame game fair . Mark welcome back. California plus drought has entered its fourth year, but new figures show residents reduced water usage in february by the lowest amounts since tracking began. The governor issued an executive order seeking a mandatory 25 cut in water usage, it is farmers, not homeowners who are being blamed for excess water use stop is this unfair when sony farmers are struggling to stay afloat . It goes all the way back to the freeway. You can see the tops of the truck. In recent years, the success has stemmed from a nutritious type of nut. One third of my farm is in almonds, but the income equals half my income. Demand for almonds have soared and so have revenues for farmers. It now constitutes one of california plus most valuable crops, bringing it around 6. 5 billion last year. But it is also among the first guest, requiring 10 of the states irrigation. In year four of the drought, water is priced at a premium. When i planted these orchards, water was 70 dollars or 80 a foot. Now they are 900 and up. Hes lifting a third of his land normally letting a part of his land devoted to asparagus lie fallow. We see hundreds of thousands of acres going on planted. There simply isnt the water in the system and there is in the ability to move water from areas where it does exist to areas that needed. Up until now, investing in almond has helped his business thrive. But in times like this, just ensuring the farm survives may be this greatest source of value. Mark why have farmers in the Central Valley<\/a> expanded so rapidly into almonds despite the fact they are so water intensive . Besides the profit motive, these are a very valuable crop. It goes back to water insecurity and if you look at the numbers we got from the department of agriculture, you can go to the 1990s when farmers were encouraged by people to move into crops like allmans, which got you a lot more bang for your buck. They were a lot more valuable per unit of water then barley or cotton. It has been a big change for farmers. Mark if we ignore the high price of purchasing water, what are the physical complications and eating the Irrigation Water<\/a> to farmers in the Central Valley<\/a> . That part of the world was not designed for people to live there in large numbers and grow large amounts of crops. Getting the water from the sears of the north traveling 200 or 300 miles south into the Central Valley<\/a> has been a huge manmade effort over the last hundred years and it is struggling as more and more people move into california. These farmers are now being squeezed by the needs of other people in the state. Mark thank you. Lets talk more about shells acquisition of natural gas company, bg group. Alix steel joins me more that jointly with more on the story. Are we going to see more of these deals . Alix many analysts expected it to happen in the back half of the year because oil prices were not low enough. Whats curious is the 50 premium paid for bg. You would think this would be a buyers market. But that wasnt the case. The other question this rings up is is shell calling a bottom in oil prices . If you flash back to the late 90s when we saw Oil Prices Hit<\/a> about 9. 55, that is when a son took over mobile. You see these huge acquisitions and oil prices have rallied from there. If you think oil is going to 100 a barrel, this is not overvalued. Mark do the analysts think shell overpaid . Alix that is the big question. They are modeling their forecast on 90 oil in 2018 and 2020. So no, if you think oil is going to be 90 a barrel, but if it stays lower, you run into more serious risk. Mark what are investors telling us . Alix they are saying you overpaid. What shell really needed is a reserve base. Its going to boost their reserves by 20 and the deal for these Big Oil Companies<\/a> is they need to replace their reserves. They are putting out millions and millions of barrels a day and the need to replace that to keep production flat and the is not replacing its reserves will stop its reserves. Mark is that the number one thing they get . Alix they also got brazil. 10 of their operations will come from brazil and be a key driver for shells portfolio and increase production by 600,000 barrels a day by 2020. Mark street smart is at the top of the hour. Im sure the verdict will be going on into your show. Alix we will also be talking to the fomc minutes. We have a professor of economics from dartmouth college, getting his take on what the fed will be doing next. Mark alix steel and street smart is at the top of the hour. Scarlet fu will have another addition of off the charts on the other side of this break. Stay with us. Bottom line continues in just a moment. Mark get the latest headlines at the top of your hour on your tablet and on bloomberg. Com. Im mark crumpton, reporting from new york. Scarlet fu has off the charts next. See you tomorrow. Scarlet with the bull market in the u. S. Equity market entering a seventh year, valuations are under scrutiny like never before. With me to talk about a couple of charts making their rounds in the market, my guest oversees about 170 million dollars. You insisted to me a few weeks ago that we feature this chart will stop this chart. This is the u. S. Market cap to gdp and it goes back 44 years, although he back to 1970. All the way back to 1970. The market cap is more than 100 of gdp. What does that tell you . Guest that we are somewhat elevated and when you convert profits into that chart, you notice we are elevated, but nonetheless, we are not in bubble territory. The one thing you have to realize is the valuation and expected returns on the s p 500, once you start normalizing Profit Margins<\/a>, you come to the conclusion that overall total returns over the next five years will be more muted. Scarlet lets put up that chart once again because i want to show you how we are above the longterm average. The longterm averages below one. Since the 90s, weve reverted to the mean just two times. For the last two decades, have we just been too frothy or structurally, has something changed . Guest margins have been somewhat higher the previous 30 years and that and if its the overall market. We do believe we are somewhat overextended within the equity markets. Valuations, growth trajectories, when you look at u. S. Gdp growth, 2. 5 . That is when you exclude oil and gas. It doesnt mean we are ultra bearish, we just believe you want to be underweight equities relative to your bond allocation as well as loosing up the quality spectrum. Scarlet we are on the cusp of the First Quarter<\/a> earnings season and i have a chart this is u. S. Market cap to profits overall. What does this measure tell you . Guest it is painting the picture that profitability within u. S. Corporations is quite nebulous and Profit Margins<\/a> are elevated as well. When you look at the market cap you say to yourself were not that frothy. But one has to take pause and normalize earnings somewhat and margins somewhat and you come to the conclusion again that you want to be somewhat more cautious. Total return for the s p roughly 5 . Forwardlooking, sevenyear average 5 or 6 on the total return basis. Scarlet do you see value when you strip out energy . Guest you want to look at it that way because the earnings in a broader sense are moving forward, but its at a muted pace. 3 kind of growth is not that exciting. Scarlet with the dislocation in the Energy Sector<\/a> as well. Street smart is up next. Alex 60 seconds left until the closing bell. Dzhokhar tsarnaev convicted of a terrorist attack. Jurors will decide if he should be put to death. On wall street, investors pouring over minutes of their meeting. Central Bank Officials<\/a> are divided over whether to raise Interest Rates<\/a> in june. 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