Transcripts For BLOOMBERG Bloomberg Surveillance 20151027 :

BLOOMBERG Bloomberg Surveillance October 27, 2015

Alongside me is tom keene in new york. Tom keene said it is too early to talk about the phillips curve. I have kit juckes next to me. Is disgusting. A lot of to talk about. As slow new cycle but very important trends. Jon, will talk about negative Interest Rate of german yells. And thats a wild statistic. Jonathan it is. I look at the curve, negative 26. We had a conversation about the bond market. The bloomberg first worded news. Body bank thank you for bonnie a deal of avoiding a government shutdown. Increasing the Borrowing Authority and racist spending for and raises spending for two years. John boehner probably will need democratic support to pass the bill. Hardliners are opposed. In spain the Prime Minister is in november. Ions he said he is still the best. He said his government has turned the economy around and unemployment. Death toll is rising from the earthquake, more than 300 people were killed and hundreds more were injured. The quake was 7. 5. In a remote mountainous region. South koreans plans to raise defense spending to deter the threat of north korea. Thats more than the average for the entire signs north korea has been expanding into play and improving the range of missiles. A 15yearold boy in Northern Ireland arrested in a hack attack. Talktalk telecom was hit by an attack and received a ransom demand from hackers. Talktalk said some banking information may be stolen. The first were news. Tom the currency and we do that often on bloomberg surveillance on radio and television. Equities are negative five and features down at 17 as well. The eurodollar insurance. Very quiet. 47 after the mario draghi bombshell. Ive next crude is front us de is front and center. A big deal down another 1 . We will get to that in a moment. Give me the negative german twoyear. Twoyearar and the negative 0. 3 . Further breakdown and something as well. A lookel right now and at oil. The first snapshot. Down we go. Up we go. Very orderly down to the recent lows of august and september. The stability and optimist pushing against the gloom. Vonnie really gets your attention. Absolutely, far from the august the low. Tom you wonder what it means for brent crude a it is west texas but the same chart, isnt it . Jonathan it is. Shapingil print and expectations of what happens and the oil market. A fundamental debate and what it means for the bond market. First over the airplane from sydney kit juckes kit juckes, sydney kitist juckes, global strategist. I do not know what you are doing in 1958 at the peace we look at and now we question. Do you question the phillips curve . Veryuckes i think it is close to dead and buried at this time. The people still believe it, it is nonlinear. , insecondly, inflation particular wages, the only thing left only react to lower unemployment. Those people need wage growth to its sole right in the next 69 months. Pretty quickly or turn into a paper airplane. Jonathan fundamental debate of the ecb meeting as tom keene reference, the low yields, what are they pricing . Are they pricing more qe . What is the move . Arejuckes i think markets questioning all sorts of things. More than anything else in bond markets, a question of why shouldnt they earn what to risk it is . If Interest Rates are lower for longer and going up almost never in europe and when they go up in the United States, much, much lower than previously thought. That is the world were in arkets you get one or 2 for german 10 year bond. People come in and buy it. That is what is driving market sentiment. Is avoiding me. I am in london and he is in new york was stopped he is in new york and i am in london. We crushed england in rugby. Good morning. When i look at the challenges out there, tell me why this october meeting does not a matter for this fed . I just do not buy it. Every fed meeting matters. Kit juckes i absolutely agree it matters. In a position where it will withstand the micro details. Raising rates are some of the recent data with be a huge surprise. Anything that provides any hint about whether december is on the table for a hike or we need to delay to the next year and a reaction from the markets. As if markerthey reads are saying what they are saying . Whether the swiss or german 10 literally orders Central Banks to stand still, doesnt it . Kit juckes well, i would like to leave central bankers to leave markets of them markets to leave central bankers. This is the error we are in where bankers feel they have to pay on due attention to what is happening in markets. That asked the question they will remain a dovish. Jonathan the market debate has not shifted much. On the f1 seat has changed. Is there divide emerging at the fed . Said yellen has cap to the in the same direct kept the fed in the same direction . Fed. Uckes two cams in the we should not change Interest Rates until there is change or raise a little bit and normalize when it is safe to do so. The good arguments about cannot talk to each other. Different points. Jonathan tom keene, to bring q and the conversation, u. S. Versus international, a strong domestic versus downs down downturn risk, has it changed . Tom you have the money question unlike the me. Macro is well under 2 for the Third Quarter. A better statistic for the Fourth Quarter which has barely started. Gdp,goes to low nominal gdp. Ou key u. K. I am more focused on nominal than a real. What will allow central bankers to act . Kit juckes nominal gdp and we will start with doesnt number gdp growth rate of 3 plus need 0 Interest Rate . In aaway from that, we are new normal wear you are not where you are not going to see a bit animal spirit of companies building factories like they used to. Oilite from the falling prices, cheaper gasoline prices and the u. S. Have not driven some a big spending splurge by folks who would rather put some away for a rainy day. We have learned our lessons. I do not think we will come back to that. Jonathan we could talk about this forever. My producer is telling me we cannot. We have to move it all. We will have an interview with the joe papa and speak with Elliott Gotkine from the tel aviv stock is change worse meeting with shareholders about a. M. Ile takeover at 9 45 do not miss it. This is bloomberg surveillance. Tom welcome back. Everybody with the daylight savings, Jonathan Ferro savings time, whatever, i cannot keep track of my watch. I believe we fall back this weekend here across america. Right now need to fall back on business. Vonnie that is right. On halloween. Tom i am going as a panda. Vonnie sell shares in an ipo. Hopes to recover 24 billion investment. Posting the most profitable quarter in five years. The Worlds Largest chemical maker has cut target for the year. By fallingen hurt oil prices and falling demand from china and brazil. Has extended a driveby three years and may also sale assets. Third quarter profits plunged and bp, down 30 . The British Energy company did better than expected. Bp helped more earned more by process in crude. The ceo will maintain the dividends. Our business of flash. Jonathan i do, vonnie. Go much closer to zero as the euro tumbled in march and bounced and a lot of people inc. We were settling back and looks like a range with a long time. That kind of made sense. As we tumbled at those levels, what we know investors are doing our earnings a carry. And we could grind ever so slowly and lower as oil finds. At one point, everybody assumes that we could mess around and low levels. Are not anybodys radar. You need a crystal ball. I want to talk about centralbank. Mario draghi and i wonder if a inflation, it is shaped by oil prices . What did you think . Shaped by oil price and expectations as well. The expectation part was new . all struggling with the expectations against the inflation swaps that you can see that show what the market is pricing for future inflation. Say, why are the muppets and Financial Market with expectations Spot Oil Prices or conclude the swap market does not reflect expectations. You have to phrase it, a relationship of some kind. It does not make sense. Maybe fiveyear outlook is not a function of todays oil price. Jenna the bank fx rate, jonathan efforts rate, the fx rate . Kit juckes up to a certain point. He is saying he does not what is rotations to go down forever. Jonathan kit juckes will stay with us. Do not miss that interview. This is bloomberg surveillance. Good morning. Tom welcome back. Bloomberg from surveillance. Take one day off and i cannot remember how to talk to stop vonnie bloomberg city. Tom surveillance. This is new york. It is gorgeous. sunrise. Mets will kennedy made me smarter. Real inn adjustment, the last time we were here was 19911992. Going to end. Will kennedy just absolutely nailed this below two dollars. The Jonathan Ferro, a great chart making my day. Jonathan the same story making going to end. Will kennedy just absolutely nailedus better. Breaching a record. U. S. Is the biggest supplier headed into the winter. A fundamental supply story that keeps on disrupting the market. Now tom breaking news. Below two Oil Price Dollars and almost back to 1991. Jonathan the must read. The New York Times making a comparison between valeant and in run. I remember another company that had eyepopping growth and also secrets which eventually destroyed it. You probably remember that company, is name was enron. Tom keene, i want your thoughts on this. Short seller. Nd a much bigger story we need to be talking about . Lastyou noted in your hour, a company that buys revenue and does not make revenue. These are now oil people, pharmaceutical people or steel people, financial engineers. I do not want to give an opinion either way. Everybody has got it and bloomberg has got it. T willree with jonas, some way and ugly. Jonathan i wonder about the m a picture. Business. The m a is that model fundamental . Tom with all due respect to venture capital, private equity people, you get into more trouble with Financial Transactions than people really involved and the different industries. Ive may bill fossil on that. My radar is up right now. Anybody wants to make a comparison between valeant and enron. Basically, the company with secrets and that is what happened to enron and the sickest destroyed. Tool the debate will continue. We will follow. The debate will continue. On bloomberg excuse me. We look at housing. Numbers are out. Robert shiller will join us. Not only told to Robert Shiller about housing but looking at the little. Lori lorited at. 11 . The report 5 . From new york and london, bloomberg surveillance. Is good morning, this bloomberg surveillance from london. Lets get the first word with vonnie quinn. Vonnie Mariano Rajoy has called an election on the 20th. He has been sinking in the polls but he still insists he is the best person for the job. Unemployment is at the lowest in almost four years. Rescue teams in afghanistan and pakistan are trying to reach wrote areas struck by the killer earthquake. The death toll is likely to rise. A magnitude of 7. 5 in a mountainous region. That is the bloomberg first word news. Jonathan it is the Third Quarter and the advanced reading. 0. 5 survey. For you those of you thinking that is low, annually it is 2. 3 . Intelligence economist jamie joins me now. It is slightly disappointing, was it in line with what you were expecting . Itwe were expecting. 6 , 0. 5 is close. We are treading water at the moment. The labor market still continues to tighten. Weak. S looks slightly. 5 is not great, but the unemployment and the labor market look fine. What does the dashboard look like . Kit juckes they are beginning to lose momentum, but lets not call it a slowdown. The peak growth rate is probably behind us and what is interesting about that is that they should have raised rates long ago and our window for rate hikes is in danger of getting shorter ahead of us before we get them up. That is going to be a challenge. Gdp differently in england. Viewers, thatan is annualized. A lack of inflation rolling over, this is real gdp plus inflation. How does more corner and react to this . Kit juckes this keeps him on hold for now. He is in much the same place. He will be with antiwage Growth Numbers and any signs of inflation. An economy that is growing sluggishly but steadily. Tom jonathan, what do you see there . I see in adjusting economy with some real challenges, like the u. S. One part is doing well but the other part is not part of the discussion. We just about a strong domestic economy that has picked up increasing risks abroad. Perhaps jamie murray can talk to me about this, but i see a difference in the labor market. Why do we have the difference in the u. K. And why are we experiencing Something Different than the u. S. . Is thedifference participation. Upe, participation has held pretty significantly before the crisis. In the u. S. , it has fallen off. That explains the gap of wage growth between the two countries. The market is not expecting it, does this bills . Kit juckes i think it does build. I think it will come down to wages. There is an important distinguish and which is that we are in the highest wage earning sector which is googling different than the United States. Construction is booming, finance is doing whatever finance is doing that is where the far this growth has been. Jonathan going into the end of the year, all of the economists on wall street are looking into their model. What does that mean for the United Kingdom . How quickly does this become a problem in the United Kingdom . It is not a problem because inflation will remain below target, but we expected to pick up the quickly in the next two months. Wekenexa to the public why might be doing that when inflation is picking up. It changes the tone as we going to the new year. The unitedned to me kingdomlondon. What is the rest of the united the sides the streets i navigate when i am over there . There has always been a divide between the pay act prices of assets in london versus the rest of england area as far as i can tell, the diversion isnt getting wider over the past year, but it does still persist. Tom this is a huge social problem. Is the u. K. Tilting with this weaker growth more towards europe like or american like . Kit juckes it remains extremely american like. If you look at the gdp numbers, our annual average since the crisis is 2. 1, and yours is 2. 2 . Growth rates look incredibly similar between the u. K. And the u. S. Incredibly different with the challenges that they face. Jonathan i hear so much about the u. K. Economy. Gdp you think of the do you see an economy that is rebounding . Think thisll be another 20072008 shaped economy . Consumption has been performing very well and strongly. If you look at household allens sheets, they are not in the position that they were in 2007. Wealth, it at net looks better than it did before. Jonathan do you agree with that . Kit juckes we dont have as much leverage in the economy now. What we have had is a further piece of asset pricing inflation, so without being too scary in terms of what rates go up, what happens if the budget deficit is paid . We have longerterm challenges along with the shorter term being ok. This starthen does to matter in a fundamental way . Thejuckes it matters if u. K. Leaves the European Union and has week growth. It will need to attract foreign investment. It goes back to what you said earlier. This could be as good as it gets. It gets . S good as or a beginning the slope rollover . I dont think it was ever going to be the same as 20132014. We are going to be seeing it growth in the u. K. Jonathan gentlemen, thank you very much. Tom keene is with me in new york. Not miss the interview coming up, this is bloomberg surveillance. Good morning. Jonathan good morning, this is bloomberg surveillance. Im alongside tom keene in new york. It is the biggest battle and it shifts to israel today. Para go ceo joe papa is in israel. Elliott gotkine joins us live now with more. I am pleased to say that joe papa is here with me now to talk about attempts to fend off my land mylan. How confident are you . What feedback are you getting that they are likely to support your proposal to reject the bid . I am delighted to be here. This marks our 10 Year Anniversary of eating on the over the last six months we have had a chance to talk with the shareholders. One thing that has come up is that the para go shareholders, it is a bad deal. The shareholders will not tend to mylan. We have a high level of confidence in the fact that our longterm shareholders recognize that this is a bad deal for shareholders. It is delusion for the earningspershare. And if reduce the shares standalone pe, it will be depressed if we merge with them. For those reasons, we have believes that this just will not work. I heard you say it was inadequate and insulting. What price would be less insulting . Joe papa we are not against doing deals, we just believe that this deal is a bad deal. I will say that we are particularly thinking that this is a bad deal put forward by my lan. The current deal that is in front of us on the table right now, we believe this deal significantly undervalues the longterm prospects for the pair perrigo company. Elliot the deadline is november 13. There are three scenarios. Off, deal extended, deal. They go between 50 80 . What happens on that morning . Joe papa we believe the most is thatutcome for this the deal will be rejected by the shareholders and it will not get to 50 . 50 80 , iget to think it will be chaotic. At ylan will still need to run the company but we will have separate directors and ceos. It will be chaotic. We think it will be difficult for them to achieve synergy. Therefore, we think the right answer is to reject this. Meanwhile, this has been going on and have you been holding other talks with other parties about the possibility of being bought . Set publicly in april that i did receive some inbound calls regarding potential activity, but when i would say is the following. We believe this is a bad deal. Just because they have put a bad deal on the table, that does not mean that we have to counter

© 2025 Vimarsana