Transcripts For BLOOMBERG In The Loop With Betty Liu 2014031

BLOOMBERG In The Loop With Betty Liu March 14, 2014

Kremlin has been amassing military along parts of ukraines eastern border. Ahead of the meeting, john kerry stopped to speak with reporters. About. Ave a lot to talk i look forward to an opportunity issues and the possibilities that we may be able to find about how to move Forward Together to resolve some of the differences between us. We look forward, i know, to a good conversation. We will take you live to the Russian Embassy later in the hour for an update. The public face of russias seizure of the peninsula is holding a News Conference ahead of the vote. You can watch it at bloomberg. Com tv. We want to focus on the oil ties between the countries. The u. S. Is selling 5 billion barrels of oil today. It is the first time the u. S. Will be testing its release system. Barrelsel, 5 million sounds like a lot, but put it into context. It is kind of like a drop in the bucket. It is basically less than 1 of all of the oil we stockpiled. The whole enchilada is 690 Million Barrels. Huge, and there is a lot left over. In terms of demand, it is relatively small. We use 19 Million Barrels every single day. 26 llion barrels is about of that daily demand. Cause a lot of the defense. If it does not cause big effects, what is it meant to do . Two things. The direct purpose is to test infrastructure, a teacher pipelines are working up to snuff. It will also test the appetite for this oil. It is sour oil, so, in theory, oil thate blended with the u. S. Produces. It is being called a warning shot. It is not a coincidence the test comes days before the referendum on crimea. The u. S. Is releasing this hour crude. The sour crude. The release might displace other imports and those imports have to find their way to market, most likely diverted back to europe, and that could compete with russian crude. Russia exports 7 Million Barrels 2012. In the entire u. S. Stockpile could replace russia for 100 days. That is the muscle that they are boxing. Flexing. Overall effect on the oil supply . Industry experts a pretty small. Of release might have more an impact on the heavy crude, the sour crude that is still being imported. If the u. S. Diverse the oil to europe, it could impact prices. Keep in mind, russia needs 110 per barrel to balance. Russia needs High Oil Prices to sustain itself. However, experts tell me if you want to saber rattle it will be the u. S. Exporting oil, which we are not legally allowed to do because then they could really eat into demand and provide another option for european buyers. Thank you, alix steel, our bloomberg reporter. Shaking this hour, facebook ceo Mark Zuckerberg. Americans, he is unhappy about the nsa and spying. Nt unlike a lot of americans, Mark Zuckerberg was able to get president obama on the phone wednesday night to complain. There are reports the nsa describe disguised itself as facebook. Nsa calls the reports inaccurate. Mark zuckerberg has not revealed what he said to the president but in a Facebook Post he wrote the u. S. Government should be a champion of the internet, and not a threat. Speaking of movers and shakers, i want to bring in our mover and shaker, jim reynolds. Why do you blush . Thank you for the kind description. He is the ceo of loop capital. You are a friend of the president. You have talked about his policy and his relationship with business. There is no secret that the frustrations are there, but they are also continuing to rise, are they not . They are continuing to rise, but the good news is as you look through the continuum, when this first started the economy was sluggish, we were not growing, jobs were not being created and the like. There is less of a discussion of the impact on the economy. We seem to be on an upward trajectory. We are creating jobs. We want to create them faster. We have a solid business climate. We are seeing a lot of deals get done that one again done not getting done last year. Dealmakers might say that is regardless of washington. Not happeningere last year because of the indecisiveness. If you recall discussions, it was confusion around washington, d. C. Every other conversation was what is going on in washington, d. C. . Now, and most of the business conversations i have, washington, d. C. Does not come up. What has been decided . Economy continues to grow through it. We are on a positive trajectory. The fed policy has become clear. When you look at what is happening in productivity, jobs, corporate activity in terms of mna, spending, and the like, it is really a seachange. There are a couple of issues that have come out of the white house that have rankled some people in Corporate America. One of them is the minimum wage hike. The white house pushed for that. Also, the push for reclassifying certain kinds of workers in the u. S. So that they get overtime pay. Republicans argue that is another job killer. I wanted to listen to what House Speaker john boehner said about this. If you do not have a job, you do not qualify for overtime, so what do you get out of it . Nothing. The president policies are making it difficult for employers to expand employment and until the policies get out of the way, employers will continue to sit on their hands. There are a couple of responses that i have. First and foremost, there might be a bit of fact in there somewhere, but i do not know if you expect john boehner to come out, of all people, strongly in favor of any of the policies the president has. He is the opposing party. We have midterm elections. A lot is at stake. The president , in his state of the union address, stated several things, and we talked about them afterwards. I said it sounds more like a governor talking because they were smaller goals. They were goals that have more to do with the domestic economy. They were less ambitious. Much less ambitious. Income inequality was an issue he wanted to deal with. It has become a big thing for him. This is one way he begins to deal with it. The one thing that is not talked weekend,e lower end but the top end, the lower end, we get, but the top end, the gap is wider than ever. For yourself if we want to talk about income inequality, we have had several ceos on the program that have talked about it and defend it very they say defend it. They say i work hard, and i see myself as an example to the american people. You work hardif enough in this country you can get to where i am. Is there anything wrong with that . Absolutely not. Every young person should have those ambitions, but the reality is we still have workers, low skill workers and marginally skilled workers that have to get up every day, go to work and try to pay their bills, so how do we make sure they are adequately compensated . Do you believe raising the minimum wage, any other policy about overtime pay, do you agree it could be a job killer or that it could cost jobs in the u. S. . Doubt some no businesses will have to lay off workers to maintain margins and do this. There is also the flipside of this that many businesses cannot absorb the costs and continue to function and have inadequate margin. They be the ceos take home a little maybe the ceos take home a little less, which is something we do not talk about, and they do not take it out of offhide of workers and lay workers and you are able to accomplish that. It is difficult where you work for a living and you still do not make it out. You continue to struggle. We will talk more about this in a moment. I want to focus on what is going on in new york city with jim reynolds, the ceo of loop Capital Market and we will talk banks and pension funds. Well be back with new York City Comptroller scott stringer. Also, bankuniteds john kanas will weigh in. Hitsthe magazine that government. It is called garden and gun garden and gun. First. Bloomberg. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. Back with my guest post, jim reynolds, ceo of loop capital, a significant acrossiter of muni debt the u. S. We are also joined by scott stringer, the new York City Comptroller, who is also pushing for a higher minimum wage for workers in a city that is one of the most expensive to live in and the world. We have documented the rise in rent and the rising cost of living here in the city. Wage debate on the and how much that will close the income gap. We have to recognize new york city is the Financial Capital of the world. Citywe do well in new york it has a Multiplier Effect for our state and our dark you for our state and i would argue beyond. We want permission to raise new. Ork citys minimum wage we have an 80 higher cost of living than the city of buffalo, the city of rochester. It makes sense that the minimum wage, one size does not fit all. Doif albany allows you to this, they would have to allow all cities to do this, right . They should be explored. Just for numbers say, if we could raise the minimum wage to 11 in new york city, that would be an additional 2 billion that would be sent in neighborhoods where we need to create more economic activity. Heardo not know if you the discussion at the top of the show where she a costed us where she a costed me on the minimum wage issue. I am a fan of it, but the downside that betty referred to is are you concerned about the job losses that might result . Sure. There are National Numbers that have come out that shows that is a concern. So many studies there are numbers to back that up. There are so many other studies that suggest we will not lose jobs, that we will actually create jobs. In new york city, were actually adding jobs, 95 thousand jobs, but what we find in the trends is that these are lowwage jobs. The challenge is yes, job creation is good, but we need jobs that will pay the rent, put food on the table, and give people an entree into the middle class. That has been the american tradition. Withott, we were speaking john kessler tedious, who cites as aising cost of living reason why people are fleeing the city. The Florida Real Estate people were celebrating them more and more new yorkers are moving down. I think it is 400 families or people a day. Really . Because of taxes . Because of the fear of taxes. They have not gone up yet, but they fear it is going to rise, so they figure lets get out of town faster. What do you think of that . People,ing for working being progressive, and fiscally responsible is not mutually exclusive. I, believe it or not, in a rare moment would agree that we have to be careful that people do not flee, but here is why people stay. People stay because they love our culture, our arts. City. S an interactive we have diversity like nobody else. We have the tools to keep people here, but you do have to balance with delivering service. One way is to give people that are struggling an opportunity to do more so we do not have to spend more on social service and the like. You cannot have it all ways. Jim, in chicago, you are dealing with the same issues, maybe to a bigger scale with pension obligations. We are, and that is something i wanted to chat with you about, scott. It is interesting, in this National Debate about unfunded ever l liabilities, i rarely hear new york city in the conversation. Can you give me dialogue as to why that is . I would like to be able to tell you since i have been comptroller, we are all set and everything is fixed. And the future is bright. Ofi wish i could claim all the credit. Just do not mess it up. Do no harm. To your point, the pension actuarial targets have to be met, and that is about allocation, and bringing in the professional team that understands we are longterm investors and we recognize volatility in the market. I want a Risk Assessment of pension funds. I want to make sure we are edging in the appropriate ways so that when the economy moves in a certain direction we can continue to grow. Are those returns, those goals too high, unrealistic . I will not know the specific data, and we will have to come back after june 30, we are doing well. I do not want to overpromise, we still have another quarter, but i am confident in new York City Pension Fund will reach the seven percent target and perhaps beyond and that is because of hard work and strategic thinking. In this economy, nobody is an expert. Maybe you are. Let me ask you another 1 the toughest thing for democrats has been the relationship with unions and negotiating points. You seem to enjoy a good relationship. What is your secret . The Labor Movement represents working people around this country. They are very important to the life of families around the country. There is a rich history. We should not demonize labor unions. Just like it is a mistake to demonize this offense. It is time for the country to come together. Us,hank you for joining scott stringer. Also, jim reynolds will be staying. We will be back in two minutes. First. Bloomberg. [laughter] you are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. It is 26 minutes past the hour. Bloomberg is on the markets. We have erased all of our games for the year on the s p after hitting records. The s p is now down. 2 . We are waiting for Producer Price numbers. We are on the markets again in 30 minutes. The mystery over what happened to the missing malaysian deepens. Flight malaysia is looking at the possibility of pilot or crew involvement in the disappearance. There is also evidence that the claimed flu the airplane flew four hours after losing contact. Four years after the explosion, the right for exploration contracts in the gulf of mexico. They were banned after the epa determined they had not fully corrected problems that led to the spill into the gulf. Theen buffett is once again worlds second richest person. According to the bloomberg billionaires index, he has a net worth that is about 5 million more than carlos men carlos slim. He has been helped by a rise in berkshire hathaway. He is right behind his friend bill gates aaron bill gates. Bankunited has reached a milestone. Includingity holders equity holders including wilbur ross and carlyle have made shares available to mutual funds. It is that a 52week high and it has expanded operations into new york city. Joining me is the bank and ceo of bankunited, john kanas. Jim reynolds of loop capital is also with us. The did you think about endorsement for florida from John Catsimatidis . We are sending john a check. I was trying to do the math, how many people can be absorbed . Do not worry. They keep building. Both of you have been in the Banking Industry for years. Tell me how you think banking will turn out in the first. Uarter i think it will be tough in second, androbably maybe all of 20. A lot of banks have been anticipating a rise in Interest Rates, and prognostications are based on levels of rates where we are not there yet. With janet yellen in the thrown, promising more of the same kind of monetary policy, i think it will be a while. Rates are languishing at this low level for longer than people think and that continues to squeeze bank margins. Would you agree that mergers and the positions activity is acquisitions activity is rising . Tothere is a great argument be made that consolidation of Smaller Banks over time is that what you did . 18 or 19 times, yes. The consolidation at the midcap level and large level continues to be thwarted by a number of things, not the least of which egulatory policy, and valuation . Valuation for sure, and uncertainty. One of the things that we chatted about was what is happening in your sweet spot, the middle market, mergers and acquisitions activity, and it feels like we have ourselves set up to do better last year and the year before, but this year it looks like things are falling into place. We are starting to see higher valuations, money is virtually free, baby boomers want to get out and things are happening. How are you playing the a sector . M we are continuing dialogue. The key to success in the anmarket space is to grow institution and look for opportunities to buddy the institution up with a complementary company that could improve value on both sides. We are also in contact with s and boards of Company Companies that we think could be a good partner in the future. Ofre has been no more talk consolidation than this year. We keep the channels open. People know well what makes sense for us. That he said, valuations are making those conversations difficult. Very difficult, and candidates smaller and smaller. Scarlet fu has breaking news on the Producer Price numbers. We are talking about wholesale inflation and we had an unexpected decline in Producer Prices for the month of. 10 . Ry, a drop of if you back out energy and food prices, alsol down. Im a yearoveryear basis, Producer Prices rose less than anticipated. 9 is the headline number. Producer prices were actually overhauled in january to include more prices for more services. This is a more comprehensive pricing businesses power and one reason he remains muted is because of a lack of topline pressure and these numbers bear that out with lower than expected readings in wholesale inflation. Thank you. We were listening in, and it is interesting, jim, because those kinds of numbers, while just one month, add a little bit of uncertainty to fed policy, but it is also not terribly good news for corporations that have less and less Pricing Power of a given what they see with inflation. We have seen the difficulty that is the story with business growing Topline Revenue and the Pricing Power that has not been there every it is probably there. It is probably good news for the fed that has been watching the job rate and inflation. It shows we do not have to be as concerned about the inflationary impact we

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