Transcripts For BLOOMBERG Bloomberg Bottom Line 20150508 : v

To 5. 4 , the lowest in seven years. All of that after a march jobs report that was even worse than previously estimated. The government now says only 85,000 jobs were added in march the fewest since 2012. Dow jones industrial average the s p up 1. 25 at 21. 1313. The nasdaq composite index is up just 1 at 4998. Now that he has won reelection, David Cameron has a new challenge. How to unite a United Kingdom that has never been less united. The conservative party unexpected lee won a majority in parliament. The Scottish National party swept every seat in scotland. That put and depends back on the agenda of months after it was rejected by voters independence back on the agenda. David cameron we will govern as a party of one nation. That means entering this recovery reaches all parts of our country from north to south, two east and west to east and west. Rebalancing the economy. Mark in discussions with banks to raise about 25 billion in financing the money would be used to back its unsolicited bid for mylan. Teva has yet to decide the size of any potential increase. Myla says it wants to stay independent. The Worlds Largest maker of chemicals has rejected a 45 billion takeover offer from monsanto. The offer undervalues the company and does not reflect its growth prospects. The combination would create the biggest supplier of seeds and crop chemicals. Monsanto dominates the market for gmos. Thats a look at the top stories we are following on this friday. More now on the rebound in u. S. Hiring. He was chief economist at rbs joins me from stamford connecticut. Welcome back to bottom line. Michelle what were the main takeaways from the april employment report . Shell the biggest takeaways that everything is ok. Michelle the march report was so disappointing. While the april number was not gangbusters, it wasnt the same job growth we saw at the end of 2014, the number we see is very solid, even looking at the threemonth trend of just under 200,000. These are solid numbers that are sufficient to bring the Unemployment Rate down. The big take away was the economy is not as weak as the First Quarter gdp data suggested or as that march report would have suggested. Mark how important is this report given the numbers we saw in march . Is the weakness and enough to alter the fed possible thinking on an Interest Rate increase . Michelle going as early as june is not likely. These numbers probably still leave open the degree of which you will see a rebound in the second quarter. They would like to see more evidence on the wage and inflation front. This only firms of our expectation that september is the most likely time for that first rate hike. I dont think it should change anybodys pew about the fed it dramatically in either direction. View about the fed that dramatically in either direction. At some point we will get wage growth. The question is when will that happen. We are hearing a lot of companies are raising wages its not showing up in the Hourly Earnings numbers. Other data, the quarterly gauge of compensation released last week is showing some firmness. I dont think we should assume its never going to happen. It will just take the Unemployment Rate falling further than we had all thought, including the fed to see the strength in the labor market show itself in terms of better wages probably. Mark im speaking with Michelle Gerard. According to figures job cut announcements surged 53 in april from the same month last year. Does the biggest jump in firings since 2013 concern you . Michelle no. The claims figures come another way to look at the pace of which companies are shedding workers has fallen to cycle lows. They are signaling a strengthening of the Market Conditions and better drop growth as we move forward in the coming months. That is a strong counter to the layoff numbers we see the claims figures are far superior in terms of predicting payrolls and the trends in payrolls. Mark one nugget i took away from this report, got up limit rate for African Americans fell to Single Digits for the first time in nearly seven years. How significant is that . Michelle when you dig into the numbers, by race, by gender the other thing im looking at is shortterm versus longterm unemployed. These headline numbers are improving, but the underlying details of the report are showing improvement as well. Some of these areas where employment lower educated those who have achieved lower education have also picked up in recent months. This is a testament to the underlying strength of the health of the labor market that many people still doubt. Im really we are really on solid ground. Mark how much damage have cheaper oil in the strong dollar done to American Energy companies and manufacturers . Michelle the adverse impact of Lower Oil Prices is hurting the economy. This is what models would predict. It undermines gdp growth. It was a big factor in First Quarter gdp. Ultimately, we will see broader demand domestically and globally that will be a net positive for the u. S. Economy. The model suggests that is more of a second half of 2015 phenomenon. I would suggest that would probably be the case. I do think it is a positive. Right now, we are just seeing the negative aspect of it in terms of the hit that sector of the economy is taking. Mark Michelle Gerard joining us from stamford, connecticut. Thank you so much. Have a good weekend. Lets get back to the u. K. Elections where David Camerons conservative party has a sweeping win over labor. One other major winner was the Scottish National party. It 156 and 59 seats in scotland. W. Won 56 of 59 seats in scotland. Willem they will have a great deal more control over any future discussions of scottish independence. The Scottish National party will now have control of the Scottish Parliament in edinburgh. While they are not talking at about an independence referendum, they have been making noise of the offers over greater taxation control at the same time, you are signatories seeing the tories saying they should start thinking about a federal system. Mark is the outcome surprising . Willem the u. K. Polls were not particularly accurate to some extent. Danny alexander is the Campaign Strategist for the labour party. He was ousted by a 20yearold university student. Labor had 60 of the s p does this time, taking 51 . You are seeing these a significant scottish politicians being pushed out of the seat he has held since he was 23. They will have a lot more clout down in london and that will have a real impact on the way that london talks to scotland about future independence referendums. Mark they will have another shot at this. Willem a lot of people in the u. K. Expect that to happen. These numbers were so dramatic you ended up with just three seats for the other major parties. David is based in new york when he lost he moved here. Ed miliband will have to decide what his future is. Mark does mr. Cameron believes he has a mandate now . Willem he will feel more empowered under this coalition than in the last five years. Mark up next, we look at the passion Industries Fashion industrys push for fair fashion. Mark welcome back. Lets get you the top stories we are following on this friday. The u. S. Justice department has opened a civil rights investigation into the Baltimore Police department. Loretto lynch has agreed to grant the request Loretto A Lynch whether the Baltimore Police department has engaged in practice that violates the constitution or federal law. Conduct all lawful searches, seizures and arrests and engage in discriminatory policing mark freddie grays death brought triggered rise in baltimore. Six Police Officers have been charged in connection with his death. Nike wants congress to approve the asian trade deal. They will increase manufacturing in the United States bringing as many as 10,000 jobs. We spoke with nikes ceo and head of president obamas visit to 90 headquarters near portland oregon. Nike was the company born and succeeded based on the ability to trade globally. This is an important topic. We feel it is critical for the United States to have a 21st century trade agreement in place. We feel that, for nike, it gives us the opportunity to create jobs. Create jobs because of savings we think we anticipate will be part of that tdp. Tpp. Mark it allows for an up or down vote on trade deals that have been negotiated the president as a way to expand u. S. Exports and jobs. Coming up and 2 20 talking trade at nike headquarters. A look at their fair fashion practices. At 2 30, geopolitical roundup. At 2 56, julie hymans off the charts. Stay with us. Bottom line continues in just a moment. Mark this is bottom line on Bloomberg Television. The apparel industry is a 2. 5 trillion dollar worldwide behemoth. Many of them are in developing countries. Several leaders in the industry are trying to change that with in a fair fashion movement. Tara smith joins me now with more on the fashion industry initiative. You launched the fair Fashion Research center at the campus here in new york. Why did you see the need to open such a center and why is there a need for fair fashion practices . Cara its a 2. 5 trillion industry. It could be an instrument for sustainable development. If you look at the industry, what we want to do is be able to prove to business the Business Case of sustainability. It is looked at as an opportunity to be more profitable, to increase brand value, to increase shareholder value. We are looking at the university to prove that Business Case. Mark maybe fair fashion and sustainability worere mutually exclusive . Cara we did not look at it as a business opportunity. Now you can see efficiencies. If you have an environmental impact, you have waste and inefficiencies in your system and not the most audible way of doing business. Dust profitable way of doing business. Many are looking at sustainability as what do we have to do to right thing and be more efficient. The information needs to be what are the more scalable practices and we need to put measurements and metrics. Mark in economics 101, to talk about factors of production. What is the industrys reaction to this . Have they been receptive, have they been status quo . Cara the industry very much recognizes the collective power of working together. Its critical to create the change we all want to see. Looking at Industry Conditions the idea that they can be more efficient on one side and making more sustainable longterm investments on the other. We are very much aligned with industry. Mark fair and ethical fashion. How does that play into a businesses need or drive profits . Cara packaging and all the waste that comes from packaging if you look at transportation, and abuse, what happens later and abuse, end of use how do we pay more, how do we understand the efficiencies that come from better Labor Conditions and so on. This is where we see the most important change in the industry and where education and research can put itself mark where do the fair fashion practices need to begin . Which areas should be the starting point not only for the discussion, but for the implementation . Cara there are so many problems in the fashion industry that we have decided to attack four areas first. If you look at the hole and tried to act on all of them, its too many. Packaging, how we reduce waste. Inefficiencies whats happening with the buildings. Was happening in transportation with omni channel and digital and everything being shipped around the world . If you take just those four areas and say how do we be more profitable, it allows for different opportunity. Mark is there a demand for management courses focused on absolutely. As the business has evolved there is a different skill set that is necessary in order to manage the business is. Businesses. Understanding the bar mental and social practices and opportunities the environmental and social practices and opportunities. Its very important to understand the impact of online buying. Mark have consumers been driving this discussion . Have they been demanding accountability . Cara more and more consumers to appear we have seen it in the Food Industry and architecture. Mark has social media would like absolute. Its a big factor because consumers are now able to see cara that forces the conversation because preserving shareholder margins means you also have to protect what happens on social media. We are all called to do the right thing by social media as well. Mark are you positive that a groundswell has begun . Cara absolutely. You look at so Many Companies like gap so many people are already doing fantastic things and we need to aggregate those as a measure and share them to create the most change towards profitable sustainability. Cara mark mark thank you so much. Up next i will speak with stratfords Vice President for Global Analysis about the Economic Situation in europe. Bottom line continues in just a moment. Mark welcome back to the second halfhour of bottom line. Thank you so much for staying with us. Greece is racing against the clock as the country has less the new week to prove to the European Central bank that it is serious about reaching an agreement with international lenders. Ministers have signaled some progress in the talks, but there is potential roadblocks ahead. Joining me to discuss the implications for greece and the european economy, from washington, reva bhalla stratfors Vice President for Global Analysis. We are getting goodlooking scenarios about the situation in europe. How does stratfor view the perception of and a comic reva there is a huge gap between the perception and reality. Monetary easing in the eurozone and the low price of oil has given a boost to the numbers. You have to look deeper at the situation. Look at the unemployment number you can see that that number may be going down a bit but the majority of those jobs are parttime jobs. You still have a large number of people underemployed who are not actually in jobs they trained for. That leads to a lot of resentment, a lot of frustration and that will have political implications when we see the strong current of euro skepticism. Mark this week, greece made it 222 million repayment to the National Monetary fund. Next week, greece has an even larger payment to make to the imf and some pension and salary commitments. What is needed for greece to achieve potential stability and to end this cycle of 11th hour scrambling reva as we go day by day, week by week emily will see greeces scrounge up the funds. As we go into the end of june, thats where we will hit a break point. Thats when the bailout ends and negotiations for a third bailout will have to begin. Greece cannot avoid that scenario. If you are the rulingpart you came into power on a mandate that you were going to and austerity you cannot fulfill that mandate anymore. What we are going to see is greece ship the political burden to the public. Thats where we will see a referendum, call for early elections, potentially. Even then, the crisis is far from over. Mark the Russia Ukraine conflict is over a ar old. As these at least 6000 people have been kill. Vladimir putin is still defined in the face of International Condemnation but his numbers at home are sky high. Does the west have room to maneuver and what cards does russia have left to play . Reva the u. S. Does have room to maneuver. Thats exactly why you see the United States working so hard to seal a deal with iran, which will come to fruition. As the United States precept is freeze up its frees where is the u. S. Focusing on the baltic . The Baltic States that need defense assistance and political support. We will be leaving our military equipment behind after these exercises, which makes the russians very nervous. There isnt much that putin can do. When it comes to military scenarios o ukraine, there arent any big military pushes we see, especially as putin is having to manage a very big power struggle within the kremlin. Mark if, the u. S. Senate backed legislation that would let Congress Review and possibly reject any final deal with iran on its nuclear program. Which of the Energy Markets expect from a deal and are there potential disruptions that could impact the overall oil markets . Reva iran has roughly about 3035,000,000 barrels in storage. They will likely want to release that upon the signing of a deal. That will have the shortterm impact on markets. Got that, raising production you see estimates all over the place and we can raise it to 700,000 barrels. It will be much lower than that we are looking more at 400,000 Barrels Per Day a lot of these fields in iran, that takes time to bring back online come investment money. It will be more of a measured response overall. We will see a deal either way. Mark the slowdown in china is coming as the country is attempting an economic rebalancing act which areas of the country will be hit the hardest and will the president s corruption probe have any impact on Economic Growth overall . Reva this is where you will see growth rates really diverge within china. The Northern Industrial belt all of those Industries Related to the construction sector, they are taking a very big hit. These are the areas to see much slower growth, a very difficult balancing act. He is letting full force ahead with the corruption probe there are political undertones to that probe with big implications for energy, in particular. Mark reva bhalla Vice President for Global Analysis at stratfor thank you for joining us. After the break, we check in with jose at the World Economic forum. We will get the friday edition of the latin america report. Mark welcome back. Its time for todays latin america report. Pour the first time, a delegation from the cuban government attended the event going on at the World Economic forum at the riviera maja in mexico. Jose joins us live. Afternoon. Jose good afternoon, mark. Cuban officers attended a World Economic Forum Meeting for the first time last night and it was very interesting. On one hand, the island minister of finance showcased a portfolio with more than 300 specific Investment Opportunities in the socialist nation come asking for latin american and american investors to support them. The ministers said we need the u. S. Investment we need the west money. They are eager to receive full investment and they were not afraid to show it. They also spent some time explaining the Economic Transformation that is underway in the island. Towards a more open market, more socially economy but more open to free market. Thats what they said last night. Mark hades president is theyre looking for investment dollars as that countries economy moves forward haitis president. What did she have to say . Jose the president told bloomberg that things are moving in haiti. He has been able to get major investment from Carnival Cruise lines. Here is some of what he told us yesterday about attracting more International Investment in haiti. Its a place of opportunity land of opportunity. Many times, they have sold haiti as a place where there are problems. Our weaknesses when we have a problem in energy, we need to solve it. How do we solve it . Having investors come and put a new system. Clean energy. Theres room for many investors in that sector. Jose he met this morning with carlos to discuss investment in education and some other Investment Opportunities. He is meeting a lot of leaders here. We have Closing Remarks from carlos and other leaders cochairing this World Economic forum. Mark that is your latin america report for this friday. Up next encore your guide to the biggest newsmakers of this past week on bottom line. Mark welcome back. Breaking news. Visa set to buy visa europe. Visa and its european counterpart split in 2007 ahead of the u. S. Firms initial public offering. Analysts had been speculating for years that they could merge. Talks may fall apart over price. Visa shares are up on the news about 4. 7 . Thats get you the other top stories we are following on this friday. A Tropical Storm warning has been issued for parts of north and South Carolina as anna approaches the u. S. Coast. It formed nearly a month before the Hurricane Season officially kicks in. Annas maximum sustained winds are 45 miles per hour. Say what you will about tom brady, but dont tell the new england quarterback his super bowl win was tainted by the controversial depleted footballs. Brady probably knew that balls used by the team in the afc championship game against indianapolis had been illegally deflated. Speaking to a friendly crowd in salem, massachusetts he was asked what he thought about the investigation. Tom brady our owner commented on it yesterday. Its only been 30 hours. I havent had time to fully digested. When i do, i will let you know what i think about it. Mark brady could end up getting suspended and the patriots may face a huge fine. It is friday so we bring you encore come a look back at the most notable newsmakers from this past week on bottom line. Its not something that could happen within the next few months and would require a lot of cooperation between many Automotive Companies his idea to consolidate these Multinational Companies together for the purposes of r d. Mary barra and other auto execs have their own fivetenure plans. Many are not commenting, so they are staying the focus of what they have planned in the past. If you are a server and you work eight hours, you should get paid for those eight hours and you should be able to depend on that money. You should not depend on whether there is a blizzard outside and you get sent home and you dont make your money for the week. Its really difficult at the end of the day, whats going to have to happen is there is going to be a default in greece when they will end up leaving the eurozone or the official creditors, the imf and ecb and European Union will have to take some sort of haircut themselves to get the debt to gdp ratio down to sustainable levels. Its an industry that is transforming very rapidly. It will be a broadband industry going forward. I dont think the whole concept of bundles and economics the retransmission fees will disappear as more and more content goes over the top. There is a huge amount of uncertainty. We should be facing some of these Critical Issues that are impacting the industry. Mark crude Oil Continues to climb. Oil has rebounded 40 from the sixyear low reached in march. Alix steel joins me with more on this story. Alix first is the jobs number, overall. This being one of them you also did have stronger import data into china, they imported a record of quantity of crude in april, 7. 4 Million Barrels a day. That is not enduser demand, thats just refineries buying that oil and starring it storing it. Mark will we see 100 oil . Alix opec wants to. They do want 100. Those opec hawks need it. You have venezuela, angola, algeria, ecuador. These players are extremely big losers when it comes to Lower Oil Prices and the chart you are looking at there are the greek right evens for the country. Break evens for the country. Libya needs 200 oil in order to break even. Iran is right around that line of 65 oil but they need to hundred billion dollars in investment. 200 billion in investment. The rig count number today, it increased in the balkans for the first time in five months. We saw one rig return in the crimean basin Higher Oil Prices are drawing back in shale priors players. Citi sees 100 of these rigs coming back by the end of this year. Mark street smart at the top of the hour. Alix we will talk jobs and some tech. The second halfhour, we have brad hargraves. A huge Venture Capitalist invests in things like potbelly. We will get his take on the Venture Capital landscape. Mark thank you so much. After five years, this is the final edition of bottom line. To the crew, you are the best. Your hard work and professionalism are appreciated more than you can imagine. To our viewers, thank you for your loyalty and your constructive criticism. You will notice some changes here at Bloomberg Television beginning on monday. Im very excited to be part of that change. Get the latest headlines at the top of the hour on Bloomberg Radio and streaming on your tablet and on bloomberg. Com. That doesnt for this final edition of bottom line. Im Mark Crumpton reporting from bloomberg headquarters in new york. Thank you very much for joining us. Have a great weekend and a happy mothers day. Stay with us. Julie hyman will have another edition of off the charts. k at action on wall street today. A lot of it has to do with the jobs report. The number is deemed not to hot not too cold. It seems like that is the case today. Investors judge the jobs report. Not so hot that it will make the fed be aggressive. That might be surprising to some that we are seeing such a big rally. Not surprising to one man who said it no matter what, it doesnt matter what the jobs number will be, stocks will go up. That was timely tom lee. Mike regan noticed this bold call. You dont tend to get a lot of strategists coming out and being this specific on this day. Mike thats what stuck out to me. If youre a strategist, you are always on the hook to make a forecast for the end of the year or for 12 months. That is hard enough to do. To make a oneday call saying the market will rally, its very unusual. The most remarkable thing is how very right he was. Julie lets look at the first chart, recent history. He looked at the two weeks leading up to the jobs report and look at the performance in stocks and that twoweek period. You have a distribution of performance. It you look at four weeks after the report the more negative things were ahead of time, the more positive they were afterwards. Mike the weaker the market is coming into the jobs report, the better it does after it. It was down almost 2 from the last record through the open yesterday. That was one thing he looked at. The other chart is something that a lot of people might have guessed is true but he actually looked at all the numbers and figured out we talked about how bad it is. He looked at jobs reports that beat economist estimates and he broke them up julie the different lines are whether the report before missed and how much it beat or miss. The top line is mike after the biggest misses. He when all the way back to 1996. Back to the greenspan era. The fact that that trend has been in place that long is remarkable. A lot of people intuitively know this. Weve come to expect you want a decent number. You want to see some growth, but you dont want to see it too hot. Its sort of exactly what we saw today. A number that was a little weak not really too troublesome still over 200,000 jobs, about average. It shows the previous month was an anomaly. Not Strong Enough to push the fed into a corner. Remarkable call, for sure. Julie thanks a lot, mike. You can read about that call in his column on bloomberg. Com. Thanks a lot. Alix welcome to the most important hour of the session, less than 60 minutes left until the closing bell, i am alix steel. The economy is strong, but not too strong. Street smart starts now. Alix here are the top stories we are watching ahead of the bell. Visa is in talks to