Transcripts For BLOOMBERG Bloomberg Surveillance 20150505 :

BLOOMBERG Bloomberg Surveillance May 5, 2015

Broke out after the death of a black man in police custody. There were some tense moments after a false report that police shot a man yesterday afternoon. Last night on the late show with david letterman, president obama said event in baltimore and elsewhere have caused the country to address the issue of racism. President obama a lot of the things we have seen in ferguson or new york or baltimore have been going on for a long time. We are aware of it because when you see something on video it is a lot harder to deny and communications have improved. That is a good thing. Olivia the president said it is just a handful of police who have caused problems for their communities and other police officers. The imf is warning the eurozone you will have to take a haircut on greek debt. The Financial Times says the imf is telling greek creditors it may cut off support to greece unless they agree to write off significant amounts of sovereign debt. Greece is facing a cash crunch. Investors are refusing to give greeks any more bailout money until the country agrees to a ballot reform. Brendan ceo of ubs Sergio Armani has agreed to wealth management. Ubs talks to the Justice Department about settling an investigation into currency markets that are at an advanced stage. President obamas appearance on letterman last night was his eighth and final one. Letterman will host his final show. President obama i know you like michelle a little bit more than me. David letterman she was here a little bit more than me. President obama i am sure you are not alone. But i am not going to let her have all the fun. Brendan the president told letterman that when they leave their jobs they can go to the local starbucks and swap stories. Get to our morning brief and 8 00 a. M. Eastern. Disney reports earnings at 8 30 a. M. Eastern. Former arkansas governor tom another republican in the ring brendan Mike Huckabee announces a bookstore sorry, a president ial campaign. Tom it is good to have you back. Me and olivia cannot come close. Brendan greeley, back. How about a data check flat flat, flat. Boring today. When i walked in the door this morning, crude oil nudging. On to the next screen. You have equity markets. The german 10year, 0. 44 . That is a higher yield. There is brent pushing up to 67 a barrel. Lets go to the bloomberg terminal and look at a longterm chart act in 1955. There is a trend. There is a regression which shows the slope. There is the 1980s double recession, nothing like what we have seen. This is the employed jobs growth. We are miles from an extrapolation of what we knew 50 years ago where we ought to be. Brendan i think one of the things the recession taught us is to look farther back. This number predates the recession. Amateurs talk Unemployment Rate. Pros talk workforce participation. That really tailed off. Tom going back again to eisenhower in 55, this is two americas. This is a better skilled america , and this distance that is the theme of this week, and, frankly, of the american economy. Olivia there is certainly a debate in the fed going about going on about what full employment is. Now they are saying it is below 5 suddenly. I wonder what it was back in the 1980s there. Jobless claims nevers have been fantastic. The last 15 years, jobless claims numbers have been fantastic. Tom the jobs report is friday. We will discuss it later this hour. First, the state of your American Economic growth. Capital labor, innovation, technological progress, even technological disruption. Ian shepherdson will not translate that strange beast productivity. What are we lacking that causes us not to have jobs growth like we had in the 1950s, the 1960s, the 1970s. Ian what we have learned not just from the u. S. But from other countries that have had financial crashes it takes many years to get back onto the path you were on before the crash. Tom do you blame it on corporations with a lack of investment in ireland . Ian no it is fundamentally about the unwinding of excess leverage. It takes years is not even a couple of decades to fix a problem like what we had in 2008. We are maybe halfway through that. Tom did you notice that someone with a british accent can say it takes decades, and it sounds less bad . Brendan do we have politics that are up to the task of dealing with a decadeslong problem . Ian sweden had a crash like this back in 1920, 1921, but they got back. You can do it, but the idea that you can do it within the space of two or three years and everything will be back how it was, that just doesnt work. Olivia how much of the great russian from the mean is actually demographic . In the 1970s, now what we are retiring. Ian you will never see that regression line being met over the next 20 years. Growth is trending at 275, maybe 300 a month. The jobless claims numbers down to a 15year low last week, but the trend is at an alltime low. I am pretty confident we are going to keep going on the growth side. We will not close the gap. Tom do you agree with professor blanche flow of dartmouth, that the Unemployment Rate is flatout higher than the good news of. 6 . Ian is no doubt it is higher. But last week the employment cost index, Wage Inflation began to creep higher. Tom we are going to show that chart later in the hour. Princess charlottes birthweight or Ian Shepherdsons eci. Ian everything we got said Nothing Happened that in march except a week payroll number. Except a weak payroll number. Brendan when you bring up sweden, as was sweden was sweden just lucky to get it back this time around . Ian they are still pretty scared. The swedish example is interesting because the buildup in leverage before the crash in the early 1990s is similar to the buildup we saw in the u. S. And the shape of the crash in the Banking System is also similar. If we use sweden as a Guiding Light and see how long it takes to get over it what we failed to do was be patient and to recognize it takes many years after a gigantic crash. You get a very long period of unwinding the excesses and fixing the Banking System. It stretches over the whole Banking System the whole economic cycle. Olivia obviously you are bullish on the u. S. Economy. One thought has been the drop off we saw in energy. Will that bounceback . Ian not in a hurry. We were probably lose three quarters of a percent from this year. Which is huge. It will come back eventually but we are not seeing the false of falling gas prices to consumers. Olivia why not . Ian it takes a long time for them to realize how much better off they are and then to spend the money. Spring, late spring, early summer, the consumption rebound should start. Brendan Ian Shepherdson advises patients. Ian patience is a virtue. Markets do not have it. Olivia coming up, we are going to look at Disney Disney reporting results in less than two hours. Will a blockbuster Opening Weekend at the box office be followed by a big Earnings Report gekko everybody wants to see the avengers age of all ultron. Tom good morning, everyone. Bloomberg surveillance. Coming up later this morning, he is out the door John Chambers i guess outgoing . I refuse to believe he will have nothing to do with cisco. On Market Makers at 10 00 this morning. Really looking forward to that discussion. John chambers, with a long history of struggle, and really doing better than good at cisco in recent years. Brendan a historic trip for john kerry on an unannounced visit to somalia. He landed moments ago in the capital of mogadishu. He is the first secretary of state ever to visit the country. He wants to show support for the government fighting al qaeda. Hillary clintons attorney told lawmakers she will testify at the same time about the benghazi attack and her email. The house asked for separate sessions on each subject. 25yearold brian moore dies two days after being shot in the head by a suspect. Fellow officers stood in honor as his body was taken away from the hospital. The suspect is facing a murder charge. More with the suns, nephews, and cousins of police officers. Tom we will look at the u. K. Elections this thursday. Francine lacqua is joining us. Pimco is out with an Important Note there optimism on mexico. We will look forward to the job economy in fridays report. Ian shepherdson is with us this morning. Olivia . Olivia disney is on deck for reports later this morning. Between the avengers the age of ultron and star wars, would appear that mr. Eiger has jumped light speed. He is a selfconfessed marvel freak. What are investors looking for in the results . Brendan let me take you let me take you to the numbers. 600 million more than this time last year. In terms of net income, 1. 87 billion dollars for this quarter, and in terms of earnings per share 1. 10 versus 1. 11. Just off a penny. Brendan Dougan Olivia guggenheim has raised their price target citibank has raised their price target. Is it all about the movies . Ramy it is all about the movies. Brendan you used the word thrusters. Amazing and awesome. Ramy disney is apt over ads movies and parks. You talked about movies they brought in 15 billion in revenue just in the past year. Of course, marvel lucasfilm, we are looking forward to that. As well as parks. They took it last year about 7 billion and also in ads, they took in about 8 billion last year. Brendan disney had amazing success with their own programming with frozen, but the story of success with movies is the story of acquisitions. Marvel, lucasfilm. What is next to acquire, or do they have to make up the growth in the coming years with their own programming . Ramy so far there is no other talk of acquisitions, but in terms of the marvel universe they have several other films they are looking toward. Over the next five to several years, they have been working toward this whole marvel universe over the past decade and pushing ahead to new characters, new movies, toward something i think in 2019. Tom mr. Eiger has delivered 16. 4 shareholder return over the past 10 years, massive dividend growth. What is thought about acquiring shares this morning . Ramy no one is talking about sell side, it is all about by side this morning. Looking at the stock price over the past five years and longer i think it has been up by about 160 . Everyone is saying buy, buy. 23 out of 38 people said buy. The rest said hold. Tom where does the persistency come from . It is not staggering from movie to movie, they have gone beyond movie to movie. Ramy that is setting of what is to come. Movies is the first thing. Then there is merchandise, the parks. There are roller coasters themed off of this. It is providing something that people can ride and buy. Tom let it go olivia are you going to see the avengers, tom ge . Tom i am going to wait for the next frozen. Brendan i believe we made a mistake and i would like it corrected. Tom coming up in the next hour we will get charles calaveras thoughts on greece. Stay with us. Bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance. We go to the morning mustread it here is Olivia Sterns. Olivia morning must live comes from David Einhorn, who slammed to the industry yesterday at an Investment Conference or said investors are bullish on oil prices and should avoid singling out shale pioneer spends 14 on field operating expenses and another six dollars on corporate expenses. Subtract the historical of 28 and pioneer loses 12 for every boe it develops. That is like using 50 bills to counterfeit 20s. Olivia vince, thank you for joining us this morning. Everyone seems to have been different map about how much it costs to drill a arrow of fracking oil. Why is it so difficult to figure out the marginal cost . Vince i think when you consider the capital intensity of these businesses, you are not buying them to share in your cash flow. You are buying them, given that they are a depleting asset, for the reserve growth. For their ability to replenish that reserve growth, to take that resource and develop that reserve and eventually produce out that reserve base. Olivia what David Einhorn is saying is that cost in production and cost of revenue is less than the cost of production. Is that true . Vince on an actual cash basis, you have an f and 8 im sorry, and ella we and loe that is your cash cost. You have something cost in acreage, in developing the acreage. What you are concerned about here is the cash cost relative to the current price of the commodity itself. Brendan and that is dropping right . That is something that Bloomberg Intelligence has been in front on that it is not static. They are Getting Better at it as the price drops. Vince the completion cost is roughly 60 2 3 of the overall cost. That is coming down as the emps are generating these cost concessions from the service companies. You are roughly 20 or 30 down on the production side. Tom here is mr. Einhorns comments. Down he goes. We made it back halfway. My question for you, the market knows a lot of what mr. Einhorn was criticizing. Is he talking his book . Is he adding new information, or did you know already everything he said . Vince i am not sure we chartered New Territory here. We were down 50 on the overall commodity. The names in general are elevated relative to historical valuations, but but that seems to be tom are his investor comments appropriate . Vince valuations are what they are. You are not buying these names for cash flow, youre buying them for replenishing the assets for reserve growth. Olivia what tom is getting at is that our toward a question of the day we asked you, what you think is activism good for business . David einhorn has come out swinging, saying it is doomsday for american fractures for american frackers. Tweet us bsurveillance. Tom good morning, everyone. Bloomberg surveillance. Lets get to top headlines with olivia. Olivia the imf is talking about a debt cram down in greece. The imf had told creditors that it may cut off support to greece unless greece writes off significant sovereign debt. The European Commission is saying that the impasse over greeces fiscal crisis is strangling the economy. The ecb says the Greek Economy will grow just one half of 1 this year. It seems all of the protections for greece are subject to a high degree of uncertainty and discussions about policy measures are continuing now between the institutions in the greek authority. Olivia euro zone finance ministers are refusing to give greece more bailout money until the country agrees to economic reforms. Congress may be close to giving president obama the room he needs to finish negotiating the Nuclear Agreement with iran. It would give congress the right to review or reject any iran deal. A Senate Committee approved the bill, but senators marco and tom cotton have proposed changes that democrats opposed. Republicans may agree today to end the debate and set up a vote. My cut can be will become the lit Mike Huckabee will become the latest to enter the provincial race for republicans. He is an ordained baptist minister who won eight states in the 2008 primary, including iowa. A new wall street journal nbc news poll has jeb bush leading by 23 . Hillary clinton has risen from 36 to 42 . She has been hurt by controversy. Brendan a chain of bakery cafes is getting rid of 150 preservatives flavors and colors to serve only clean food at panera. Boxer Manny Pacquiao will undergo shoulder surgery this week. He says he injured the shoulder while training for last weeks lost a floyd mayweather. He may face disciplinary action in nevada for not disclosing the injury before the fight. Tom you would think brendan he has never been a guy to manage bad news as an excuse. Olivia the stakes are also high in britain. It is two days before britains least protectable election in 30 years. Our european editor at large Francine Lacqua, joins us from london. In british newspapers, they are full of stories about ed milibands strategy for getting into downing street. What a minority government led by ed miliband, if in fact labor gets less votes than the tories, be viewed as legitimate . Francine we need the leaders to actually try and get a little bit of momentum going. This is what we heard from the voters that we have been speaking to about david cameron. We just do not know at this point because 40 of people are still undecided who they will vote for. So depending on Coalition Partners or at least their allies, they could have some kind of legitimacy. At the moment, everything is up in the air because so many people are undecided. Neither party none of the parties have been able to win over the electorate. They have either been considered k. G. On their policies and giving mixed messages which is why voters have been putting off deciding. Brendan what people really want to see is a royal baby. What i am really curious about is what used to be the kingmakers. Where are they . Are they are even are they even going to play a role . Francine a lot of insiders say they may surprise us. When you look at the polls there is a 3 to 4 margin of error. So when you say 3 , 20 , or even 30 what voters are angry about, the coalition has largely been worse because we are in a much this is an economy that is Getting Better. A lot of things that they wanted to push through, they have not. And actually it was seen as what is seen as, as you would say, president ial, we have not seen on the character front. That is what voters are seeing again and again. They had more hopes for him. Olivia brennan, you say the liberal democrats used to be the kingmakers. They were the kingmakers in 2010 when everyone got excited about nick clegg, and now the country has moved on. Francine, what are the big issues for Glo

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