Today. One of the emerging markets linked to oil is in. Norway cuts their key rate. You saw the Swiss National bank earlier. This is not about the bank of japan and what yellen did or did not do. Help me francine, with daylight savings time. I am lost. Caroline just where moore concealer and get through it. I guess in your time, it is 7 00 a. M. I guess mark carney will be speaking at 8 00 a. M. Francine lets get straight to the bloomberg first world news. Caroline turkey will be present for concessions after the European Union needs for the refugee crisis. Turkey wants money and a cooker pass to joining the eu. They are going to meet today in brussels to try and work out a deal. French authorities have broken up a possible terror plot in paris. Four people were arrested and at least one posed an imminent threat. A Counter Terror rate in brussels left at least one person that. Choice to fills the Supreme Court vacancy goes to capitol hill today. Merrick garland will speak with democratic senators. Mitch mcconnell says he will not even get a hearing. Some republican senators say it is fine. Summer weather maybe enough to spread the zika virus. There is a 45 chance this summer that would allow the mosquitoes to sprea expand their range. Anti government protests have broken out in brazil. Demonstrators are angry that the larisa named the former president to her cabinet. It is viewed as an attempt to shield her from the corruption investigation. Lets do a data check here. It is not like draghi refugees days ago, but yellen has a big impact. What we really see are changes in the currency market. Oil gets a lift, 39. 52. Rent crude is 41. 41. Stephen roach is talking about at punch bowl, yesterday 14. 99. It is really getting down to complacency. Areu. S. Twoyear yields stunningly lower. Stephen major will be here to join us. Thatine, the dollar yen, is jawdropping yen strength. Isncine that jawdropping. The basic resources are still significant higher. This is after the fed signaled a slower path of rate increases. This means investors are a little bit less concerned. We have the boe later. This will send to the brexit debate. The swiss franc says they cannot do anything, but they believe it the ftse is overvalued. Norway cut rates, signaling more easing may come due to the price of oil sinking lower. We spoke to a danish central banker yesterday. They have had negative rates longer than anyone else. He said, it makes no difference to the consumer. Stephen roach disagreed with that strongly yesterday. Reporter absolutely and i am typing to our team in the control room to get the negative rate banner up. That is the key headline. Where your rate says where norway says they may cut rates. It was just outstanding. I dont know if you saw it, chair yellen came to a complete stop to talk about negative rates. Lets look at a positive rate quickly. Toove done you this chart many times. We call this the lollipop pop because it is childlike, like candyland or something. This is a twoyear trend and what is important is we are getting back to the reversion where the market vigilantes are driving yields up reluctantly as the fed desperately desires high rates. But the swirl, is really front and center. And again, there is that headline. Could they be the sixth nation to go to negative rates . E it seems the pressure is on, tom. I love your lucky charms chart. Mark carney has the difficult job to not talk much about the brexit. This is probably one of his main concerns. Is it wageine growth. This is the main concern we have in the u. S. That wage growth is not picking up enough. If the government little bit from early january, but not as much as the boe wants it to. I actually benchmarked it to the pound. And of course, this is a trade weighted index. The pound has been falling quite significantly. We have had some calls for the pound to drop 25 if the u. K. Were to leave the eu. Koch. Now joined by katie you are usually in new york, but you are here in london visiting clients. You believe the markets have been oversold. Do you still believe that from what you heard from chair yellen yesterday . Katie clearly the market like turn is very much. Absolutely. If you take a step back, looking at the lows, which have rally 10 despite that, when we world, wed the absolutely believe the fundamentals are a lot better than what many markets are suggesting, whether you look at negative rates, or whether you look at the fact that equities are negative on the year. First of all, we see fundamentals bottomup, much better than what equity markets are suggesting. Even though it will be relatively constrained, we think equity markets can grind up to single digits. The returns will be overall constrained and so, it will be very critical. Francine what fundamentals are you looking at . Ceo aret seems that reluctant to deploy their cash. I would say we are very far through that cycle from a developed market perspective. We think a lot of the costcutting has come. Actually do see signs of the strength across many major developed economies. The u. S. , for example, we certainly are aware of the news that came at yesterday from a central bank perspective, but when we look at the world bottomup, we continue to see the consumers being white strong in the u. S. We think the fed reaction is a reaction to what is happening outside the u. S. U. S. , consumers support 75 of the economy. I would say tom jeff corey was on asterday talking about oil, very wide dispersion, but nevertheless, a test and commodities. A test in commodities. Do you fall this into a single digit world for Equity Investors . Katie we are actually underweight commodities across our diversified portfolios from make europe, u. S. , and japanese standpoint. Those of attendees include consumer banks. The commodities sector is very underweight energy, as well as materials. Tom katie koch with us today from Goldman Sachs. We will come back. Lots to talk about. If you are just joining us, norway with a rate cut and is some really stern headlines out about negative rates. We are thrilled to bring you Robert Feldman of morgan stanley. He will join us from tokyo. From london and new york, this is bloomberg surveillance. Francine yesterday was fed day and today it is boe. Lets get straight to the Bloomberg Business flash with Caroline Hyde. Caroline in switzerland, the central bank is giving Interest Rates at a record low. It repeated a pledge to intervene in currency markets if necessary. They describe the fed as significantly overvalued. Vw is in talks with the u. S. About setting up two funds to pay for those emissions tests. One fund would be administered by the epa to provide clean transportation in the u. S. The other would be run by california. Rose 55 . R profit the German Airline is forecasting a slight increase in earnings this year. The reason is competition with its current carriers. Soars. Sas profit tom caroline, thank you so much. All you need to know is that the yen is at 1. 11. That is definitely a surprise. Michael mckee has been in that press conference before. Regarding negative rates, yellen was very tentative. Michael the fed has been watching negative rates and they dont seem to think it is the answer for the United States. The the pressed conference with a question on credibility. It wasnt that it was rude, but about whatpt, everybody wants to know. Measure the credibility for us. Came out andfed did what the markets wanted and said, we have been too optimistic about the path of growth. The markets reacted by lowering their estimates. You the dot chart have it up on your terminal this is december and the fed is up here. The market is down there. And lookoves lower what happens, the market rates lower still. Trade with a higher yield. That is the norway reality. Dont dofrancine, this. Francine i could, it is like scheduling, right . Tom oh my word. It is just too much. Francine it is like magic why are we still looking at dot plots . One of forget the dot plots and just look at what the markets expect . Michael if that were a quest to janet yellen yesterday, we might have gotten a good answer because the markets told us they are not watching the dot plots anymore. They like the idea that the fed is focused on keyword rate cuts. The fed is not saying, we are going to do two rate cuts. If thee saying economy develops as they expect, you would see the number of rate cuts in the year. Obviously, the economy continues to change. Even their decisions yesterday will change things because now when you look at the relative value of currencies, the fed has been wearing what is going on overseas what do we do . We weaken the dollar. That will not help mario draghi and that will not help kuroda. Francine it is really our problem. Has janet yellen finally become the central banker to the world . Michael the fed yesterday said, we are worried about the rest of the world. We are not worried about the United States. Which raises the question for the markets, what is the reaction function . In the u. S. , they are there. Tom this is critical. Mike nailed it with the reaction function. I was not able to ask richard for the others yesterday about this. They are losing their degrees of freedom. Everybody comes down, whether it is norway with oil, or chair yellen warning about the United States. Mark carney said later today, they are losing their options, their degrees of freedom. Youael at this point, dont know what their plan is and why they would raise rates at all. To dismissn seemed the inflation the u. S. Saw yesterday. If they are not moving on inflation, what will they move on . They are looking at what is happening overseas and they could raise the value of the currency in other countries. This could help the emerging markets with a lot of debt. The weaker dollar is in less trouble, but it does not help the major economy, with which the United States does a lot of trade. Francine yes, if you are a part of the European Central bank or the boj, this is a headache for you. We sign a nice rally this morning with the emerging market currencies. Opportunity ong currencies in emerging markets . For willy rally be shortlived or will the rally be shortlived . This is actually quite good for yen risk assets. It is also very true of equities. From an equity perspective, you the to be very geared into future Growth Opportunities that can do well in this backdrop. That should lead you to heavily avoid the index. The best evidence i can give you is 50 of our portfolio is invested outside the index. We would be zero weighed into the commodities sector. Francine katie, thank you very much. Also thank you to michael mckee. Coming up later today, the former minneapolis but fed president. He wrote a brilliant Bloomberg News piece on inflation. Francine i am Francine Lacqua in london. Tom is in new york. One of our exclusive interviews is with Justin Trudeau, the canadian Prime Minister. We picked up the morning mustread to reflect the importance of the new Prime Minister. Michael bloomberg wrote, strong Economic Leadership and trudeau seems to understand it does not begin with protectionist or socialist policies that vilified scapegoats. It begins with uniting people around a hopeful and realistic vision that can be fulfilled if Government Works in concert with markets. Tom, when we were covering the World Economic forum, it was very clear that Justin Trudeau has a little bit of a halo. For the moment, he is sustaining it. Tom he is on a victory lap of sorts. And of course, there is the heritage of his father, which few of us with gray hair remember. It is interesting how he distances himself from the trudeau legacy. What is most fascinating to me is most of the dutch disease of canada, where the provinces are so partitioned into what they are doing, whether it is the oil, western economy, and of course the industrial economy of ontario as well. Francine one things for certain. Because he is young and liberal, there has been a lot more appetite to find out exactly what kind of policies he will be offering. We are of course, a lot less dependent on canada than the u. S. Katie koch is still here. In london, there are pro brexit campaigns. . Ould we find outside the eu look of the u. S. And canada. They have a great relationship. Can we merirror that . Katie we dont think they will be a brexit. And as to what is economically beneficial, we think the u. K. Remaining in of the eu would be beneficial to the economy. We think the trading relationship can be more meaningful. However, there will be a lot of uncertainty between now and in june. We are relatively neutral in our portfolios in the u k and we are trying to give ourselves too much exposure. Francine volatile currency that e junebe on its knees com 24. ,atie if there was a vote it would put incredible downward pressure on the currency. We still feel very comfortable owning assets in the u. K. We still can find some interesting Growth Opportunities. I would say that one of the noise kicks up and causes stress on markets, that is an interesting time for us to initiate positions that can grow. Tom let me ask you what i asked bill gross yesterday and i dont mean to be rude what does an Asset Management company valeant . Hey own a how do you handle that Goldman SachsAsset Management . To valeantnt speak specifically, but i am happy to expand on how we are positioned in other equity markets. I had mentioned to francine that there is an opportunity to pick up assets, despite the bad news. I want to talk about a Company Called just eat. They do something maybe a little boring to people, but they deliver food. This is a company that has a secular Growth Opportunity because you have millennials that want to consume and consume henabled way. We have used this opportunity to add to the positions we think can grow in this environment. Tom katie, thank you so much. Coming up later, a conversation with the Prime Minister of canada, Justin Trudeau. 1. 11 at 8 00 a. M. Tom good morning, everyone. Bloomberg surveillance after the day. We are in new york. Lets look at some data right now. Yen moving currency markets front and center. Yields are on with person deepening a two year yield. 1. 1283 gets my attention, but what really gets my attention is yen, 1. 11. Interesting to see if we can get through the strength we saw at 4 00 a. M. New york time. Right now is Caroline Hyde. Caroline for the third time in four weeks, european leaders are meeting trying to stem the flow of migrants. David cameron is expected to warn other leaders not to ignore the crisis. Hundreds of thousands of migrants in north africa are waiting to cross europe. More. S. Has incurred economic sanctions on north korea. The Obama Administration has blacklisted more than a dozen north korean agencies, officials, and companies in a response to Illicit Nuclear and ballistics tests. The governor of michigan will be at a congressional hearing. According to his prepared remarks, snyder blames a failure of government at all levels including the epa. President of south africa is facing into the attack on his leadership. He has come under fire for links to a millionaire family that does business with his son. Now they are saying the party should consider whether to oust him. Venezuela is shutting down because of the electricity crisis. The twoday Easter Holiday is being extended and giving everybody three days off. They have rationed electricity and water for months. A drought splash output the hydroelectric dam. I am Caroline Hyde. Tom thank you so much. What we try to do is get you the guests with experience and depth and linkage to the coaches of society. Has beenan feldman with morgan stanley, it is your 20th anniversary in two years. That is just exceptional tenure for them. He joins us this morning from tokyo. What will be the reaction dr. Todman by the japanese elite Janet Yellens action yesterday . Lookt i think they will at the action of the Federal Reserve is something determined fundamentals. Ic they are certainly bring attention to what happened to the outlook for inflation in the u. S. That is the driver of that reserve policy as an important determinant for where the yen dollar goes from here. I am sure they will be watching very carefully, but the key thing for policymakers here is what happens to yen dollar in light of what the fed is doing. Tom what we have seen with other banks with adjustments to nominal gdp, everybody bringing inflation down and gdp down, how do you respond to statements by people that such and such country is becoming like japan . Well, japan has a lot to teach the rest of the world about the good things and bad things to do t when you face an inflationary period. They got their act together very well in japan. It now has one of the best financial regulators in the world. The same can be said for abenomics. It is a response to inflation. It uses three policies in a coordinated way to address the inflation problem. This is an issue of leadership. I think the g20 has a lot to learn from what has happened in japan. Japan has a lot to learn from what happened in japan. The key thing is abenomics is a template or what people need to do. Tom you have a template for abenomics which everyone in japan reads religiously, and one of them is about immigration. I was taken back by one of them. You had a wonderful idea where an automatic permanent resident status to foreign students who graduate from japanese universities. This change would increase the attractiveness of studying in japan and make event a m