Transcripts For BLOOMBERG Bloomberg Surveillance 20160422 :

Do you get a welcome like that when you floif london . Tom no. I sort of sneak through heathrow in search of my luggage. Its aal little bit more of a drive for me than the president. Francine first lets get straight to the bloomberg first reviews. Heres aaron page. The landmark agreement is aimed at reducing pollution and slower rising temptures. And s have agreed to fuel their cars. President obama is weighing in the debate over whether the u. K. Should with Prime Minister David Cameron in an article mr. Obama wrote the European Union doesnt moderate the they said the United States would never contemplate anything like that. Ministers ea finance feet in decide whether or not some of the creditors want greece to increase austerity measures if it doesnt comply. And donald trump told top insiders its all just an act. They have set to easy tensions with republican elders. They tried to convince them that his bombastic demeanor is merely a ploy to get votes. And authorities in minnesota is investigating the death of legendary musician, prince. He died yesterday. He was 67 and aclaimed as a musical prodigy and sex symbol whose hits included little red corvette and he won an oscar for the sound track to the movie purple rain. Tom . Tom rene, nicely done. He is the only one who never left the midwest. There have been very good treatments in the last halfhour and as with madonna and Michael Jackson he was truly one of our midwest stars but he never left. He stayed in minneapolis and was always associated with the different fabric and culture than anybody else in the business. He was extraordinary. Francine he was. I didnt know ant the fact that he stayed there but from the the london point of view he was one of the most inflame binet original and with the death of david bowie, it seems we are quickly running out of these cude most to nd the National Football league who put tout video of his 2007 super bowl performance, which is nothing short of extraordinary. It is just absolutely stunning compared to the silliness today. Lets move on to data here right now. Its a purple rain for the markets. Futures at negative three and yield at 1. 875 so a real churn to the market. Theres really a churn to the market. And its just basic dollar strong tore get up to a 95 on dxy would be something but francine, lets leave it there on a friday. Francine yes. Oil gaining. Tom, i wanted to show you yen. This is on the back of that nice bloomberg scoop about b. O. J. Officials with positive rates on loan programs and i showed you euro dollar just for good measure. Tom yes. Lets go to plom. Com i loved our Michael Fuchs interview. This is the Deutsche Bank piece. Heres normal. Heres good. Heres the fade. Down we go. And weve come back up with a eg up but nowhere near normal. Big on t mike fuchs was the point today. Francine eyes, he said at the end of the day i have to take care of my favors and help negative rates there. I like fact that you put Deutsche Bank because theres a story with Credit Suisse and what i take is dollar demand in china. Now, this is in the white line foreign net exchange and you can see it swapping back in march and then deaf renial getting bigger. It tells us swan confidence is still weak. So we have scommine, japan with the bank of japan officials set to be weighing more negative on loans but lets get to gap holding grouch chief economist Larry Hathaway. We have so many angles to talk to you about. So this is a bloomberg scoop. We understand they may look at offloading and look at putting negative rates on loan. Does t it tell you they are nervous . Larry it tells you belatedly that they are to some extent for stability of the system, and it certainly is perhaps also a sign that negative rates alone may not spur the lending activity they would like to see through happen run this those channels. Francine how much more creative will Central Banks get and its not only that they are thinking timeout box. They dont have a box anymore. Larry we have heard from ben bernanke on this particular issue. T we have seen that globally i had an nation had been held down and falling prices to the stheavent they can hold these levels well probably see those numbers hold far bit. But not likely to be repeated. Tom larry, its a friday. Not much is going on in the markets. Its time for a hathaway recalibration. How are we doing in our renation . We are reinflating. What scorecard do you give us for our renation . Renation for the things like Consumer Price sincere only evident in a few places and most evidently in the United States where the fed has largely chosen to ignore the uptick in Consumer Prices. Its harder to achieve levels of activity. Obviously, you dont really support much by way of inflation pressures, but markets and for that matter policy makeers have been a little bit too extreme in their take on whats driveling worldwide Economic Activity. I think those fears have quite rightly been put to rest. Nor are they likely all that just ut those medses we talked about. Tom if you look at a dow jones chart, not all that exciting. Positive growth a surprise, larry, youre talking about positive growth surprises. Where are they . Larry so those good surprises are fairly broad based. As we see them across the sectors of Economic Activity across areas of geography, perhaps the more encouraging have been that services had been holding up both developed and emerging economies through most of the concerned periods of growth that we have revisitted in the last six months, it does appear as though we are beginning to turn the corner. It some of the adjustments may be more fully realized, and for that perspective, its also shown a little bit better numbers. Francine larry, are we turning better numbers . I read the key take away from the thursday was the de facto ceasefire agreed in the shanghai meeting of g20 economies seems to be in force. Is that right . Larry i dont really know if there was a de facto currency war cessation and some of the concerns about dollar strengths, how that might play out in the emerging markets was probably part of that general discussion but surely none of the Central Banks are going to tie their hands to currency and have strong objections and objectives they are trying to achieve. And the dollar has weakened since that time and we have seen that in commodity prices. Tom Larry Hathaway will get us through the hour as we consider the finance evaluation. Our next hour on this 46th earth day we are thrilled to bring you jeffrey sacks of Columbia University and nuclear fizzist and secretary of Energy Ernest moniz in our next hour. Francine im Francine Lacqua near london. Tom keene is in new york lets get to the bloomberg slash with neraj. Looking into possible irregularities. Daimler says it was asked to investigate certification process of their cars and a lawsuit claiming mercedes engines violated standards is baseless. They will discuss the state of its own emissions investigation. And the largest british Mortgage Lender is already planning to eliminate 9,000 jobs by the end of next year. That number could rise as part f a costcutting effort. Lower Interest Rates has hurt lloyds. And a floost missedest mats Company Warns Profit Margins and google has to pay more to partners to reach people on their phones. And also down in the premarket. The company says results are so microsoft is trying to focus more on cloud products. And that is the bloomberg usiness slafrpblt fran france . Francine the writing in the teleal graph newspaper president obama stayed European Union doesnt moderate the british influence. It magnifies it. Now we are joined by White House Correspondent who is traveling with the president and Larry Hatheway still with us. First of all, talk to us about why the president felt the need to come here a lot of people think this is meddling and does he actually think he can influence voting there . He does. He believes he has a high popularity among young voters and undecided voters. He wants those who havent made up their mind to listen to a message from the american president not someone who is meddling or someone interjecting into a family dispute but someone who can have an impact. Francine they said if we and he is intimating it will be a more strained relationship i guess . Toluse yes. He is intimating the trade relationship thats based on its in my opinion in the e. U. And the president is trying to get a in my opinion and trade a major part of that so he is saying there could be economic and security impacts involved and something that could strain the relationship with the United States and them. Tom what i find strange is that the president is asking the british people to accept a situation that he would not recommend to the american population. Can this whole thing backfire on the president . And on Prime Minister cameron . Toluse thats the argument we are hearing from the critics of this argument because they are saying the president is being a hypocrite saying they should remain in the e. U. When the president is making the argument that the u. S. Is part of the u. N. And how the u. S. Partnered with other nations but that is a concern that he could be seen as meddling. Tom theres a thing i spent one day in fourth grade called the monroe doctrine. This is a little different than the monroe dock threaten basically said, get out of our backyard. Francine right. And there is that sentiment among some in the u. K. At the end of the day, the biggest argument, larry, is that we can renegotiate with new or other countries, we can be stronger outside the e. U. , and this is almost president obama putting them back in their place. Larry i supposed thats right. The fact that a standing u. S. President will come and take sides it is of course of interest to the United States. We heard from the i. M. F. About the risk that could befall them but nevertheless does feel a little bit like a hypocrite the type of message. Tom Everybody Knows texas has their own foreign policy. That say . Larry i suppose those who would like to be independent even with a libertarian streak are perhaps troubled by this, but there are genuine concerns here that are shared by the United States. And from that perspective one n see this is part of u. S. Diplomacy, i supposed before this would have been behind closed doors other than in francine some people say, even i think if i get lectured at, i will listen. Tom i am fascinated where we will be the end of june. President , with the wonderful to see you today with bloomberg news. Coming up in our next hour, James Glassman. We will look at his optimism on the u. S. Economy. Talk about the state of entrepreneurial business. This is bloomberg surveillance. Francine were talking yen, japan, thanks. Im Francine Lacqua in london. Tom keene easy new york. A story that fascinated me this morning, Credit Suisse approaching Bond Investors with a possible instrument that would cover potential losses from events such as rogue trading and cybercrime. Laurent. Ined by lionel i woke up, i read the story, and i thought it tells me two things. Maybe the ceo who comes from an insurance background wants to do a cap bond. Arenderstand that they looking to reduce the risk from rogue trading and cybercrime. This means that hes not very confident about he can combat it at the bank. I think it shows there are risks outside the banks control. Kind of funny to see it as a hurricane or earthquake. It makes sense in theory. Banks want to be safer. They dont want to add more burden on the shareholders to make that happen. Tois going to become located put a price on that. How comfortable would investors that givenmoney into the past of the Banking Industry and the future risks . This isfrancine bloomberg reporting that the bond would kick in for losses to 4. 3 billion. What does this tell us about the outlook for the bank . The problem is that psychology is a very big component of everything that underpins share price. You can look at it in terms of past and future. We have an big losses from rogue traders in the past. They are not completely fantastical events. In the future, there may be more risk of data fraud. That tells you that these risks exist and they are not going away. Whether you can convince investors to lend you money on that basis is a whole other question. Topic, something about going into the summer where with doddfrank in the United States, we try to figure out how to incentivize people, bonuses, etc. Goodw dropped reading what people want to do to incentivize bonuses. I dont think they have any understanding at all of how profits are created in the street. Do you see any future that will create bonuses down the income statement off operating income profit or will it still be revenue based at the top . I dont know, tom. I think the problem here is that banks do want to show shareholders they can be a safe proposition, but they want to do it by saying, lets transfer the risk. Lets ask bondholders to help out. Lets stop crushing the shareholders to try and pay for losses that may be out of their control. It is that question of risk transfer. Is that giving away too much . Is it going to crush the revenue side and the profit side at the same time . Francine thank you so much. Larry stays with us. Coming up next, we talk with that,n kanji on apple google, and microsoft earnings. Alphabet was down some 6 in afterhours trading. We spoke to an analyst who said wall street was expecting too much. That is next. You shouldnt have to go far to get the help youre looking for. Thats why at xfinity were opening up more stores closer to you. Where you can use all of our latest products and technology. And find out how to get the most out of your service. So when you get home, all you have to do is enjoy it. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Shoshow me more like this. E. Show me previously watched. Whats recommended for me. X1 makes it easy to find what you love. Call or go online and switch to x1. Only with xfinity. Tom good morning, everyone. Tom keene in new york, Francine Lacqua in london. Lets get right to our bloomberg first word news. Heres nejra cehic. iran will randow its complaints that it is not getting the sanctions relief its deserves. Meets with irans foreign minister today. Certain now allows transactions with iran involving banks and businesses. In mexico, the death toll has risen to 24 from an explosion at a petrochemical plant. The blast occurred on mexicos southern gulf coast. Japan has become the fourth country to test fly its own stealth plane. The government hasnt decided whether to put the plane into production. It is made by mitsubishi. Speaking of world war ii, next month, president obama will become the first sitting president to visit hiroshima. Earlier this month, secretary of state john kerry went to hiroshima. The bombing of that city and nagasaki are viewed in the u. S. As having hastened the end of world war ii. Global news 24 hours a day. Im nejra cehic. Francine thank you so much. Posted firstquarter sales and profit that missed estimates. That at shares falling in premarket. Microsoft also down in premarket. For more, we are joined by hussein kanji and Larry Hathaway. Thank you for joining us. When you look at google, we are concerned about margins, not the growth model, but how much money they can make going forward. Is it that wall street inflated our expectations or we have questions about the model . I think google right now is a costcutting business. Everyone knows that Search Engine revenue is plateauing. It is hitting saturation. This has been inevitable. As the world switches over to mobile, consumption goes up, but the value goes down. Google has been spending its big cash horde on investing in new projects that could generate revenue. Francine this is winner take all, or is it . If it is, google is number one. Google is number one in search, but who is the winner take all in next years market . Looks like the dark horse has been amazon with its Cloud Computing platform. Microsoft is a very distant third. Google has built up into a number two sorry, google is number three, microsoft is number two, but it is nowhere close to where amazon is. Lets look at where this has come since 2009. Apple a major performer. Heres google and microsoft, the yellow line is google and the orange line is microsoft. Hussein, are these bluechip stocks masquerading as Tech Companies . I think these are still very much Tech Companies. There is a lot of innovation that has to happen for them to become big. Apple called the mobile revolution correct the. It built the iphone and capitalized. Microsoft very much missed it. Didle played defensive and the android business and has been trying to catch up. It is a winner take all market in this world and apple got first mover advantage. Tom but what is microsofts new plan besides xbox . Where do you see microsoft in three years or five years . Microsoft, theyve replaced their ceo. What hes trying hard to do is shift the market over to cloud oriented business. That has been the business. That is the future of the business. The mobile business has been a disaster. The nokia action wasnt good. Lumia sales