Abroad. He warned his opponents not to arrow not to bother challenging the vote. In asia, the u. S. Vice president mike pence had a warning for north korean. Weeks, thee past two world witnessed the strength of our new president in syria and afghanistan. North korea would do well not to test his resolve. Taylor mike pence urged china on north Koreas Nuclear wearables nuclear program. Of forging and leaking state secrets. The chairman was also indicted on giving 6 million in bribes. Acceleratedeconomy for the Second Quarter innovaro. Rose 6. 9 in the First Quarter from one year ago. New credit rose more than expected. Global news, 24 hours a day. Powered by our more than 2600 journalists and analysts, in more than 120 countries. I am taylor riggs. This is bloomberg. Lets look at the markets. Many markets are closed but we do have profound moves. Equities,to that of futures, bonds, currencies. The two cent spread is the story and we will get to that with our chart in a moment. Oil is off the big move. Vix moves after the fear in the market you saw thursday before good friday. Here is where we sit on the dow. Yield, theyear color is wrong on the chart. It should be read down the three basis points. Down to 1. 18. And there is the yen. 108. 32 we will have conversation on that across this morning. Lets go to the bloomberg. The trump fade and the fade is ier. Ing fade is that a word . The is a profound curve in trump phase. The yield curve is flattening out. Here is the coup plot. Delly go on the longterm fade and you have a real skew here downward. Right now. So there we go with the first chart of the week. And we do go to friday and next monday. Francine lacqua will be in paris for the first round of elections and i will join her for the second round. We do want to get back to where the markets are and how it links in to one of the great calls on Economic Growth. Nailed theumar has nongrowth of the american economy. Wonderful to have you with us. This is the linkage of a safe haven trade. Do you look at this because of korea and the other politics . Komal there were two influences earlier that caused it to go down. In the a lack of growth pickup in the post trump rally and you and i have talked about this in past programs. You are not going to have a 3 2017. In you may not have it in 2018 either. That is one influence. And i have long maintained that inflation is not yet ready to pick up. And we saw the latest core Consumer Price index was actually down. Deflation. So when you put them together, that says that the yield should come down and come down further. You have global uncertainties on top of that. Hird influence that as that is new. There. Lso bring up the chart. This is the one quarter one off today. Lets call this the Komal Sri Kumar chart. This is an ugly First Quarter. Ugly First Quarter. Ugly fourth quarter. Stay with me, it is a theme. Is this a one off. Nailed a sub gdp growth. Is there a oneoff to the First Quarter . Or is this sustained . Komal i think it may not be sustained in the quarter to quarter basis. If you look at the yearoveryear basis, we are decelerating and 2016 was one of the slowest recovery since the recession. In themay have a pickup subsequent quarters but they year as a whole is not doing well. So that suggests to me that somethings really wrong with the way Economic Policy is being conducted in the aftermath of 2008 crisis. Of gdp is part holding this back . Isack of Economic Growth it because of consumption . Or Something Else . Consumption being 70 of gdp not doing well. The reason for that is because of quantitative easement and all of that is contributing to it. And the average work week has been declining in a socalled deviant of good employment numbers and average Weekly Earnings have been decelerating in recent months, it also means the highest groups are doing well but they are not the big consumers. On the investment side, there is uncertainty as well. 70 representative gdp tom there is a weight to it. Komal exactly. Tom what is the policy prescription . To get a lift up . L increase the tom increase the minimum wage, i get that. Komal no, increase the hours that they work. Jobseople who has multiple is up year on year so what that says to me is that you are not making enough money and you are cutting jobs and you have to be searching for new jobs. And if that changes then it will change consumption. Tom i was away for a few days. I did cheat and look at the screen. How does a guy like you, who has cautious,ght and so as wehe world is ending know it . Komal i would be more optimistic. The 10 year yield is going below 2 . 2. 63 in the pump in the post trump rally. 220 area today. And if it goes down below 2 , i might start to become bearish which i have not been in quite a while. So that is where the changes come from. Tom i look at the yield. 102 basis points. We are almost back to everywhere with the idea of 100 im getting back used to it. I forgot, jason is waving at me. And lori is over here. To the trump back elections. What is the signal here will be see the boom in the market . Komal when the economy is slow, you will not have a steepening of the yield curve. When inflation is low, you will at have you have flattening. The third thing it says to me is that a lot of people in the markets assume that just because the fed is increasing rates, the yield curve will skip. This is nothing to do with the fed raising Interest Rates. And whether it is steep or flat, depends on what happens to the economy and i see further flattening. Tom under 100 basis points . We will come back and talk about that. Because no one is prepared for 98 basis points. Was that jargon enough for you in the morning . Weve spent that to you when we come back. Coming up, a discussion with Meghnad Desai. How about that for jargon . Stay with us. This is bloomberg. Taylor this is bloomberg surveillance. Futures fell in new york on worries that the increase in u. S. Production will count of those efforts by opec and russia to curb. Financial is trying to win a bidding war for money gram. They raised its bid for the u. S. 1. 2 billion. Youre a net has a competing offer for money gram on the table. And carnivores can rejoice. Stakes and burgers will be cheaper this summer. Americans are expected to eat 8 more red meat then poultry this year. This is because of falling prices in grocery stores. That is your Bloomberg Business flash. Tom a story that is changed in back then, it was turkey. President has a victory and there was talk of a complete referendum towards dictatorship. Good morning is this a dictatorship . Well, we have yet to find out. The reality is that the president did get the majority here. It is a slim majority but he did get the majority, nonetheless. It wont happen overnight. This is the biggest change since 93 years ago. In terms ofke time legislative effect. What i watch out for is the and the voices from the european. Have a listen to what the deputy Prime Minister had to say. Lets not make decisions at this stage. In the sense that it hasnt been brought to the agenda. And whether or not parliament would approve it is a second issue. Even if Parliament Approves it, whether it is approved is a separate issue. You know, it would allow turkey to wayne and lets not overdo it. Yousef a strong reaction there from the deputy Prime Minister of turkey. I have been in the streets over the last 48 hours. I have heard firsthand a lot of support that is out there for the president. They see him as a strong man, a man it was willing to support their values. But the other side of that is that people have concerns that you are risking the checks and balances. Tom what is really unbalanced is to the south and that is the syrian border. Update us on president duda one the turkish president s reaction . On syria . Yousef he has been on the campaign trail and he hasnt really been putting this as a priority. Ultimately, the theme of the geopolitical uncertainties around syria have been a big part of the agenda because he wants the additional powers to be able to defend the country more, to be able to negotiate better and give him the leverage that is going to make a difference to the average turkish person. Whether that materializes remains to be seen. Theespecially with uncertainty coming from russia, and other powers, that is a complex nests that we have yet to figure out. , thankusef gamal eldin you so much. It is temple for the historic election. With us now is Komal Sri Kumar. Can you keep this stuff removed from markets . In the u. S. Economy . Or do you have to fully in the global uncertainty . Komal i think it will increasingly pay a role in Economic Policy. As if it gets to decide what the Interest Rates are going to be and is based on u. S. Economic growth and they will be but affected by global developments. You talked earlier about the pickup in chinese Economic Growth. As taylor said a few minutes ago, growth is also accelerated. And that is the way the chinese have kept up growth. And if that comes to a halt for any reason, because of debt defaults are other issues, it will have an impact on the United States and on fed policy. Into t is he seems what are the themes into the three or four day weekend . Better emerging markets. I believe that includes turkey. Do you believe the theme that while the u. S. May struggle, we do get a better emerging market economy . Komal they are developing and two things are contributing. One, the fed is going to be slower in hiking rates than the market expects, which is always good for the emerging markets. And secondly, President Trump has been talking down the dollar and that is something the emerging markets welcome as well. The real unknown is what will happen to oil prices. Lower oil prices are not good for emerging markets. Side, the issue that i have is that the turkish president has an issue in interfering and policymaking with the central bank setting up Interest Rates. And if you are to do that again, to have more power, it would be negative. Tom the knock on effects to the to set we were talking we were you talking to Komal Sri Kumar and yousef gamal eldin. This is bloomberg. Tom bloomberg surveillance. Run muchre closed to of the world but they are open in the United States. We welcome all of you worldwide and Komal Sri Kumar. We do have a cautious call on gdp. Lets talk about the chart of april and march. This comes from tony dwyer. Bring it up. This could be chart of the quarter. He nailed this chart. It is the same flattening of the andd curve but he says look bring it into where jamie dimons and others. Here is the election, the day after. In the three months, fiveyear spread. We are literally back to where we were the day of the election. Back. Essentially i think the spread is telling you a story, the message is the same. They do not have a story for the steepening of the yield curve. The steepening occurred in the immediate aftermath of the election, one that stocks said growth was going to pick up. To ask you this question since nobody is watching because the world is closed today. Why do we have a threeday workweek and Francine Lacqua has four days off . I dont get what that is about. Jamie dimon makes money. Bring up the chart, get with it. Jamie dimon makes money up at the top. Could he make money here . Komal if it were to flatten, the banks would not make money. I think that is where the change will take place in the banking sector. So they do need a steepening yield curve and it was expected. And it was supposed to come. If health care is going to take theyre all being set back and i think that is being deflected in equity prices. Overall in the banking sector. Help me with what bill says. Retirees neighbors will not get ahead given inflation . Komal that is because they dont have much interest income. The question is, will this continue to support them in the medium term . That is where the risk lies. In a lothere has been of exuberance in the equity market. Is with ussri kumar ad andrew lo will join us in moment. We can check out the markets. Markets are on the move. The vix is 16. 27, elevated after he difficult thursday. Look at the yen, that is a wow statistic. The safe haven. This is bloomberg. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Tom good morning. Bloomberg surveillance. Markets are closed around much of the world but we are open and we do see a safe haven move today off u. S. Markets. Here is taylor riggs. Taylor in turkey, voters have given the president sweeping new power. He narrowly won the referendum that changes turkey from a parliament lead system to an executive presidency. He warned the opponents not to challenge the judas missy challenge the legitimacy of his vote. Pence urged them to take action against the north korea program. Mike pence repeated trumps warning that the u. S. Will act without china if necessary. In europe, france has stepped up security for president ial candidates less than two weeks before the election. Intelligence services picked up on an imminent threat. France has been under a steady state of emergency since the terror attacks in november 2015. Global news, 24 hours a day. Powered by our more than 2600 journalists and analysts, in more than 120 countries. I am taylor riggs. This is bloomberg. Tom thank you. It is really extraordinary what we will see next sunday in the first round of the french elections. I want to go to the morning mustread before we bring in our seemed guest. This is the only one to read in america on france. That he need to know is owns the discussion of france for all americans. Time, france is been a country that does not like itself, provincial alienation is widespread. Of gdp is spent on health. Unemployment and other benefits compared to a lower number in germany. Tends to bession taboo. It is wonderful to have an honest discussion this morning with Meghnad Desai and Komal Sri Kumar. Group writing about the french elections . Meghnad we are watching the french elections carefully. But ive always believed that you can never rule out the improbable. Because what we have experienced election isd trump that the unexpected does happen. We no longer live in a world with a curve and the probability is unlikely taking off. It is coming up. Marine le pen asin a president. Francine help us with the historical reach. Socialeat praise is astronomy. See in with what we turkey with the president to not so much will we see in france but the comfort of authority and aristocracy and dictatorship . Is that the euro we are going into with populism . Meghnad it is a failure of politics. The people. What happened in 2008, the crisis, normal policy failed to contain but worsened the situation by letting the bankers off and gave them lost more money for quantitative easing. Saying, if this is normal, liberal politics, we dont want it. We want Something Else. We want someone in charge. And i think this is where the turkish president and to some extent donald trump was elected on that process. Kumar is here with us. What permeates france is the lack of Economic Growth. Prescription for whoever wins the election to jumpstart it . What does france need to do . Do what they need to the impact of the 2008 economy, the reason why Marine Le Pen is doing so well in the polls, take a look at the youth Unemployment Rate at over 20 in the case of france and never learned, where the mainstream candidate won in march, the low 10 and that is the big difference. If you look at the polls, only the 64yearolds and higher, the recipients of social benefits, do not support Marine Le Pen. That if yous to me want to get out of what theyre going through, you need to. Reate jobs it is a multideflationary involvement and it has reintroduced the gold statement. One we have here is with spain and italy and northern countries that are willing to deal with deflation and stay where they are. Tom can you attach the two . Meghnad there has always been a belief in the u. K. That real untilations cannot start after the french elections and after the german elections. Are going to start negotiating. It will be different in october compared to what it is right now in april. We have to wait six months before it is allowed. It is very important for us. Whiteelp me here with Prime Minister may needs to do. What does she need to do she wants to move forward with the negotiations with europe . Meghnad she has to be clear in the speed which she closes up the brexit problem. Europeans are not going to negotiate with anything else. The future arrangement will not be negotiated. So the divorce has to be done first and then we can start negotiating on what the future it isement will be important that we dont get confused as to starting to discuss what will go down after brexit. Withlets come back Meghnad Desai. Do you see a strong dollar . Komal i think the dollar picks up and it has nothing to do with the United States. It is global uncertainty. A strong dollar notwithstanding. Tom this is fabulous. We have Komal Sri Kumar here. Ith Meghnad Desai in the next hour, this is really going to the fun. On the third wave of sanctuary cities. This is bloomberg. Tom g