Transcripts For BLOOMBERG Bloomberg Surveillance 20150319 :

BLOOMBERG Bloomberg Surveillance March 19, 2015

Developments that will unfold are uncertain. What Market Participants should be doing is looking at incoming data, just as we are. Olivia fed policymakers indicate that before they raise rates prices are being pushed up. Speaking of prices, the price of oil is falling again today. West texas intermediate is back below 44 per barrel. In tunisia authorities are looking for several gunmen after a deadly attack in a museum. At least 42 people were killed, mostly foreign tourists. 22 people were killed, mostly foreign tourists. Brendan some of the biggest banks are getting hammered over loans they made to Energy Companies last year. They could lose tens of millions of dollars. Thanks to the collapse in oil prices, they cannot get rid of loans even after cutting prices. Target is making news. They are setting up a 10 million fund to settle classaction lawsuits over the hack. In sports, i hope you have turned your bracket in. Rock chalk jayhawks. Last night at the last to play in games, dayton beat boise state and Robert Morris b north florida beat north florida. Yes, i have kansas going all the way. Tom eric knows less than i do. In our morning meeting. Robert morris beat north carolina. Olivia i choose my team based on the initials. Tom we will have fun with it. We have a special announcement on Bloomberg Television. Let me do a data check. Post fed. All the debris on the euro. We are giving back the movement we saw yesterday. Oil is front and center in this hour of bloomberg surveillance. On to the second screen. The two year yield. We go right down to 0. 58. Enough said about janet yellen. The curve flattens. Some maneuvering after janet yellen discussion. What matters here . Lets bring us to the bloomberg terminal. Here is 0 on american gdp. This is the storm of a year ago. That gave us the terrible First Quarter. Over here you have the bluechips near 3 . The atlanta fed is much lower here. This is brendan greeley. Brendan the atlanta fed has the gdp now forecasting model. They are looking at the forecasting model a lot sooner. The atlanta fed model has trouble getting the net exports right. There is still some uncertainty there. Tom lets get right to the strong dollar. We are less patient this morning. They recalibrate this morning. Oil will adjust lower. First, the dollar and Ellen Zentners call for delay. Do you keep your longterm view of a strong yellen dollar followthrough . Hans absolutely. In 2012, we called for a move between 45 and 50 . We think in the longterm better growth is going to matter that will be dollar supportive. For now we are looking for a pause. Tom dovetail in Ellen Zentners call for a delay until 2016. How do you fit the moving parts together . Hansguenter we are in absolute agreement. You should not confuse the old Morgan Stanley with the new Morgan Stanley. One house, one view. We said that the u. S. Dollar has to be strong but not because of developments in the United States. We never identified the United States is the country of milk and honey. In asia, the credit multipliers were breaking away. The world outside america was weakening. Because america was holding its drawers better. It was in this environment that the two views came together. It has made the fed very successful. The u. S. Dollar is going to pause. You will have a eurodollar rebound because of the fed. Olivia yesterday, we saw a huge move in the euro versus the dollar. When does the euro hit dollar parity . Hansguenter i think that we have to wait a little bit. I believe that the euro will be much weaker in the future. One Interesting Data point to pick up here when you look at the recent decline in Commodity Prices that does not affect the fiveyear as much as it did in the United States. That gives us a very good look at the differential. Maybe it is a buying opportunity. That does not mean anything that the euro decline is finished. Tom thank you so much. Joining us is omar accu larp of Charles Schwab. How linked is dollar dynamics with the oil movement . It was linked strongly yesterday. We have already seen the dissipation in that link. Tom i am absolutely stunned at this focus on the dollar right now. How do we adapt to dollar and oil dynamics . Edward they are in a lucky position in that their earnings are in u. S. Dollars. They have a benefit on the depreciation of the currencies that they are buying goods and services and. Meanwhile, they are sweating it out on the oil prices. Olivia production in the u. S. Is at a new record high. What is the capacity situation . How much more Spare Capacity cushion is there . Edward the last time cushing hit this level was two years ago. There was no relief at cushing from pipelines. We now have over one Million Barrels a day of capacity to close that. The roach motel is no longer there at cushing. Tom are you taking a shot at steve roach . Edward not at all. [laughter] olivia our producers going to have to start producing less . Edward our last option is to ramp up exports a bit more. The ability to move crude out of the u. S. Was over. The ability to push u. S. Crew down we have a little bit of room on the export side. Unless refiners really ramp up quickly, we are weeks away from the point at which shutdowns may be necessary. Brendan i want to get back to the fed. Your macro call says it is a stable u. S. Economy, but low to nonexistent inflation. Do we not need a little bit of inflation for a stable u. S. Economy . Omar absolutely. It will drive it at a different pace. The pace that the fed will raise rates will be slow. That will be related to inflation. Inflation comes in different flavors. We are not seeing any inflation related to wage growth. Target and walmart started that announcement yesterday. Tom you can link the target announcement into yellen policy . Brendan it sounds like he is calling the target announcement anecdotal. Omar it is very anecdotal. The fed has a 2 inflation target they have been very explicit about. When you see the components of gdp that are targeted toward consumer spending, there is a very good linkage into what you would need to have an wage growth relative to what the consumer growth is to the gdp. Tom we will continue on that. Olivia our twitter question of the day. Are you more worried about the fed moving too soon or too late to raise rates now that fed chair janet yellen has opened the door with the potential to rate hikes . Tweet us. This is bloomberg surveillance. Omar tom good morning, everyone. Bloomberg surveillance. Olivia just mentioned the german 10 year. Lets get to our top headlines. Brendan we begin with the Federal Reserve. It has opened the door to the first Interest Rate increase in almost a decade. The fed does not seem to be in a hurry. When they start raising rates, they will do it slowly. The price of oil is falling again after a brief rally. West texas intermediate is trading at under 44 per barrel. Also crossing the bloomberg terminal, investigators are trying to figure out why a navy seal plunged to his death. His parachute failed. Penn states president s warning students involved in the nude photo scandal could be expelled. They posted photos of women naked and unconscious on facebook. Police are also investigating. Coming soon, your favorite tv shows on your videogame console. Playstation has its view service. It offers live and ondemand programming. The sale of cds in other physical formats fell 20 . Those are your top headlines. Olivia who is still buying citys . Dont go away. Plenty still to come on bloomberg surveillance. Electric car sales are gaining traction. In 30 minutes, the winners and losers of march madness. Tom very good. On oil, this is not your mothers grandmothers collapse. It is a key theme for edward morse oil must touch in the area of 20 per barrel to clear massive oversupply. We are down to 43. How rapidly are we going to get to 20, 25 . Edward if we have it for another five days, we will have oil in the 30s. Oil in the 30s means we have a government that does not allow exports and the only give is to either lockout imports, which is really hard, or to chain production. Tom when you speak at the council of Foreign Relations you can hear a pin drop in the room because you talk about the minutia of pipelines. What is different about the american Pipeline System now versus midland, texas of a million years ago or 1986 . Edward we used to have pipelines. We used to have them coming from the u. S. Gulf coast moving inland. That is because the u. S. Was not producing enough to consume inland. We now have an abundance of crude inland. Almost all of those pipelines have been reversed. Tom should we export oil edward . It is the rational way to balance the market edward it is the rational way to balance the market. There are all export obstacles to exporting. The u. S. Can export oil to canada. We were exporting none. We are going to go back to 400,000 barrels per day. We can export as much alaskan crude as the market wants. Sometimes that is open to sell the crude in asia. We predict it will be open sometime this year. That is another chunk of thousands of barrels per day. The government has ignored negotiating with mexico to allow exports on the same conditions that we can export to a contained u. S. Country. We import crew that can be reexported. We are able to move a lot of crude. We can move about as much as ecuador produces. Even without keystone, we can use move it to the Canadian Border to the from the gulf coast. Olivia there have been energy ceos in washington this week lobbying the president and the government to open up exports further. In the headlines iran, nuclear talks, the israeli elections. What would an Iranian Nuclear deal due to the price of oil . Edward there are bullish factors. The biggest bearish factor is a deal with iran. It would open up more exports from iran, maybe adding a half a Million Barrels per day in three months. That would be a 50 increase in the amount of oil sloshing around in the world. There were a bullish factors. Venezuela, algeria are in terrible shape. Tom lets talk about that in our next section about opec with edward morse from citigroup. Coming up the interview of the day, alan zentner alan zentner Ellen Zentner staking her career. Omar tom good morning, everyone. Bloomberg surveillance. This is bloomberg surveillance. Lets get to a morning mustread. Decades in the egyptian perspective on the middle east. Ed, im staggered by what mr. Gheit said. Opec will implode. Do you agree . Edward some opec countries will definitely implode. Tom omar, you took your degrees in mexico. What does it mean for mexico . Edward mexico is in a different position. The government depends 30 on the revenues of oil, but they are in a very different position. They are no longer a petrol state. Brendan is that a way to draw a distinction between oilproducing companies . The ones who are not petro states will survive . Edward some will survive. Russia is a petro state, but it has Human Capital and technology. Tom recalibrate 20 per barrel. Are you at 20 now or 22 . Give us a better number. Edward the average that we had for the Second Quarter is 35. We are moving quickly toward the number. The 20 number is likely to what is what will happen. Tom do you realize that he talks and the price of oil just goes down . [laughter] olivia we have yet to get to the demand side of the conversation. Brendan you guys keep talking, im going to go day trade. [laughter] olivia are you worried about the fed moving too soon or too late . Tom good morning, everyone. Bloomberg surveillance. Lets get right to our top headlines. Olivia the fed is clearing the way to raise Interest Rates. Policy makers are dropping the assurance that they will be patient when it comes to raising Interest Rates. That does not mean the fed will be impatient. Janet yellen we anticipate that it will be appropriate to raise the target range for the federal funds rate when the committee has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 objective over the mediumterm. Olivia janet yellen said that that does not mean raise the race will come in june necessarily. Oil futures falling 3 . West texas intermediate is selling for a little more than 43 per barrel. Oil is down 19 from its peak last month. The u. S. Drone strike has killed the suspected mastermind of a deadly terrorist attack in kenya. The drone hit a vehicle in somalia caring carrying a Top Commander of alshabaab. Brendan california is taking more steps to fight a drought that is in its fourth year. There will be emergency legislation unveiled today. Earlier this week, regulators briefed new cutbacks residents can only water their yards two days per week. A big victory for tesla. They will be able to sell electric cars directly to consumers in new jersey. State automakers a block the deal. Governor Chris Christie signed a deal that overhauled dealership laws. Time is running out for you to get your march madness bracket done. I have the jayhawks. Tom has the wildcats going all the way. 16 games. President obama has his bracket in. He is playing it safe with his picks. The president has picked only one National Champion correctly since taking office. Those are your top headlines. Olivia you can call it the dollar dent. Oracle abercrombie are pinning their disappointing earnings on the dollar. Omar aguilar is the chief Investment Officer at Charles Schwab. It falls on him to tell you how to allocate your cash. 16 is a lot better than the s p. Are we better than in cash than the equity market . Omar that is a good question. You probably know what i picked for march madness. Clearly the colors are beautiful. Going back to that. The dollar today. Everybody talks about the strength of the dollar. We think about, what is the reason for this . A lot of it has to do with the quantitative easing in europe. The flow of assets went to emerging markets. For those five years, the gdp growth was driven by emerging markets. When you think about what is happening with qe in europe, a lot of the assets are flowing to the dollar. When you think about people having cash, it is an indirect exposure of qe in europe. When we think about Asset Allocation we go back to basketball. It is having a good threepoint shooter. Having something else. Olivia how exposed our u. S. Multinational companies to the stronger dollar . Barclays group had a report out that there was virtually no impact in stocks continue to rise. Omar multinationals, 40 of the earnings in the s p 500 have sales overseas. Earnings will be impacted area impacted. Tom do you change your allocation because of that . Do you have to make a strategic shift because of the dollar . Omar you have to reallocate your risk. U. S. Equities versus international equities. Tom where is Charles Schwab on that right now . Omar in terms of allocation . One interesting statistic, you look at performance in dollar terms in local currency versus dollar it is about 15 or 16 . What is holding out the International Exposure is the dollar. It is a big difference in terms of risk allocation. Brendan omar you are a blue devil. You say that emerging markets are facing headwinds. You put brazil, china, and russia in the same basket. Would you really design describe all of them is facing the same headwinds . Omar they all have different flavors of trouble. Russia has a lot of geopolitical risk. Commodities are affecting russia differently. The situation in china is more of a government trying to get inflation under control. Tom ed morse cant talk about hydrocarbons, you can. How are you waiting on oil stocks in the u. S. . Omar producers are going to have a hard time. Capital spending is a huge part of the Energy Sector in the u. S. Tom how do you know when to go into oil stocks . Omar it is very hard to predict. The whole oversupply is something that will be affected. Olivia thank you so much. Still to come more americans are buying electric cars. It is a booming industry. This is bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance. Futures are 3. Dow futures are 17. Olivia tom, are you driving a tesla get . Tom i looked and no, no, no. Olivia is the roof not tall enough . Brendan they have a folding up backseat. Olivia we are waiting with bated breath on the tesla suv. Monthly sales of electric cars are rising. Up nearly 66 since 2010. The key is that we need to get a point where we hit a Critical Mass of infrastructure. As soon as we do that, that graph is going to turn into a parabola experts say. Everybody likes the idea on principle, but people are worried that they are going to drive to the hamptons and lose power and be stuck. You need infrastructure. That is why tesla and elon musk are working on these power stations. They want the infrastructure before people can feel confident. That is the appeal of the hybrid. I dont know what you gentlemen, were doing this weekend. I was in miami. I was covering the formula e motor circuit race. It is very cool. I caught up with Richard Branson, the founder of the virgin group. He is one of the sponsors of the races. He has a very keen interest in getting into this industry. Richard branson we have virgin racing on the side of the car. We are developing work on electric cars. You never know. We may find virgin competing tesla in the car business, as we do in the space business. We will see what happens. Olivia Richard Branson saying he might be giving elon musk a run for his money. Tom other than sir richard and pretty girls what is are they re

© 2025 Vimarsana