tv Bloomberg Go Bloomberg March 17, 2016 7:00am-10:01am EDT
earnings are jumping, but the airline warns its problems are far from over. good global markets morning. you are watching "bloomberg ." i'm stephanie ruhle, here with jonathan ferro. it would weston is in d.c. for a special interview. we will be sitting down with alan greenspan. he was the chairman of the fed for 25 years. we will talk about what the fed did yesterday, what is said. whether central banks have it in their power to affect fundamental growth. jon: looking forward to that. i will go this morning for the
european open, the rally in europe, deutsche bank down another 4.5%. the dax deep in the red. there are so much to discover this morning. cehic.et over to nejra a: turkey will be pressing for concessions as the european union meets over the refugee crisis. the eu wants turkey to stop the flow of refugees from the middle east in return, turkey wants money, a quicker path to joining the eu and the ability to travel to europe without visas. a kurdish militant group has claimed this possibility for last week's explosion in turkey's capital. the same group that claimed responsibility for a similar attack on turkish army officers. to fillt obama's choice
the supreme court vacancy goes to capitol hill that it. -- today. mitch mcconnell says garland won't even get a hearing. some republican senators and say they will talk with him. global news 24 hours they powered by our 2400 journalists in more than 150 news browse around the world. as we watch the fed affect work its way around the globe overnight, it saw changes and evolutions during that time. in on thegth in asia back of the fed commentary being more dovish than had been estimated, with the exception of japan. if you look at what happened in , wepe earlier in the day did see gains in european stocks, but then they seemed to melt away. seeing declines across the board in europe now. you can pin it on that last line here. , the ceobank yesterday
coming out saying they are not likely to be profitable this year. shares lower for a second day and other banks are following suit. the dax the worst performer of the benchmark suite been tracking in europe. , weakness in futures as well as investors contemplate day to a following the fed -- day two a following the fed. the strength we are seeing is in commodities producers. , crude oiler stronger, the fed seeming to indicate that it doesn't want further dollar strength. if you look at currencies around the globe, we have been seeing the dollar weakness versus its major trading partners. the dollar falling versus the end, the pound and the euro strengthening against the u.s. dollar.
let's look at treasuries to see how they are doing now. yields worked lower as the fed lot down to two increases. interest-rate rate futures to extrapolate the probability of rates going higher this year, in particular the june meeting. yesterday, before the fed commentary, this probability was 55%. today, under 38%. we see the markets ratchet back their expectations. we have to one individual stocks, that is caterpillar. the company with a forecast that is below estimates, reflecting further weakness despite the bounce we've seen in commodities. stephanie: janet yellen referred to the next gathering in april as "live meeting."
fed fund futures continue to price one rate hike around december 2016. jim carrey enjoins us. -- joins us. dean, let's start with you. policymakers have scaled down there projected rate have to despite recent jobs come inflation data. what does this tell you? dean: how sensitive the fed is to financial market developments and develop its overseas. it is much less sensitive to u.s. economic data, which happened firming. it is a different fed reaction function than what we've seen in prior years. has emerged in the last 24 hours over whether the federal reserve has changed policy just a little bit. they shifted away from this notion that you can hike gradually as the data comes in. is this a central bank that is
about to run monetary policy hot and look for overshoot on the inflation side? dean: they are looking for some overshoot. for a large looking overshoot, but they are willing to risk that. they are concerned about the fragility of the u.s. economy to the developments elsewhere and to financial markets. in my view, the u.s. economy is not as gradual as they seem to think. it is there thinking that will drive policy. jim: we have to think that if you go back to the g20 meeting, what we are starting to see is courtney did central-bank policy action. meetinged with the g20 results saying the banks don't want to see competitive devaluation and that is an important factor. the pdo see has been behaving nicely. started to walk back negative interest rates and even the boj at the margin started to do the same thing and now as the
fed is trying to follow through we are moving away from central banks individually trying to address the easing of financials. trying to make financial conditions easier. we are seeing this in a much more coordinated fashion. and is remarkable right now one of the big changes we are witnessing. jon: what are we seeing since g20? the ecb putting a lot more attention towards the credit channel. moreederal reserve, a much dovish federal reserve than people expected. that theseo believe global leaders got together in shanghai and agreed to do something coordinated, what does that mean for the fed? dean: whether it was coordinated or not, the signal the fed is giving is a favorable one for risky asset investors. the fed is saying if markets run into volatility, the fed will scale back rate hikes relatively abruptly.
that is a positive signal for those investing in equities. here,nie: bottom line when you look at janet yellen's actions and what banks did think the do we volatility could quiet down following these two days? dean: the problem here is that there's always something to worry about. in the older days, what the fed would do is skim through these events and proceed as they wished. the fed is much more sensitive to those events. the policy will be much harder to predict because it will be quite abruptly changed from day-to-day. jon: what does this mean for the bank stocks? deutsche bank down another 4%. on the back end of last year, we said timing will be good. it is the yield curve, it is coming. did not happen.
turn of the year, too much volatility, that is bad for banks. the banks are stuck between a rock and a hard place. is that your take? dean: a number of factors are waiting on banks around the globe right now. in europe, there's worries about negative rates and how those will proceed. in the u.s. can mother's questions about how much tightening the fed will actually do. u.s., there's questions about how much tightening the fed will actually do. i don't think the u.s. actual defaults are a big issue for banks at this point. stephanie: in terms of banks defaulting or not a big issue in terms of all the companies those banks lend to? we will definitely see defaults this year. maybe not banks defaulting. dean: we will see defaults, no questioning. i'm talking about non-bank defaults here. those are likely to be less than have been feared at times in the past. will see some difficulties in
the energy sector, but when we look across corporate america, it is hard to see a massive wave of defaults looming right now. jon: we come into the federal reserve meeting and look at the spread between the federal reserve looking at for hikes and the markets and saying maybe one. -- federal reserve looking at four hikes. jim: my view is it is one-to. -- 1 to 2. , they data gets a strong could go by june, but i don't think they will go -- to me, it's either june or december. it's a question of how -- if financial conditions tighten too much, janet will not move. she's happy to do one hike this year. jon: you look at the data, , it's hardnflation to say the fed is data dependent
anymore. stephanie: when can choose the data they want to look at. you can paint whatever picture you want. dean: it is the case. , they need to hike not only the u.s. economic data to be looking strong, the employment data, the gdp data rebounding, but they need financial markets to because -- to be calm and growth in the rest of the world to be promising. that is quite a list of things to check off. i think the fed will be raising rates later this year, probably more than the markets think. it is a difficult barrier to get over for the fed. jim: when we say data dependent, which data? how much does u.s. data influence the fed? 10 year yields went down. global economic data, what's happening in oil and commodity prices.
yes, there is the dependence. this is a bit of a change now for the fed. they are turning more global. -- dean, thanken you for joining this program. jim will be sticking with us. the situation in brazil escalated. details on that, next. european equities, this market command to these in europe were up, then turned over. now futures down by 35 points. by 55 futures down points. ♪
business/. -- bloomberg business flash. caterpillar estimated fourth-quarter earnings to be less than estimates. a been hurt by a commodities slumped. talks in the u.s. about setting up two funds to pay for pollution linked to those emissions tests. american automakers are taking a big step aimed at avoiding crashes. they will announce today that vehicles will be built with braking systems to prevent crashes without driver action. that is your bloomberg business flash. stephanie: on to global go. protests in brazil broke out last night as president dilma vow to turn around
the government backfired. her plan to appoint the former president as her chief of staff was an attempt to shield him from a legal - probe. wow.is a -- at this point, can she salvage her relationship with the brazilian people? >> that's what we are waiting to see. last night was an unexpected development. the release of the wiretap dilma. lula and ,eople took to the streets spontaneous protests broke out. 10:00ill be sworn in at a.m. we are waiting to see what happens. wiretapping the president. is this something we've ever seen before? >> we've never seen this before.
the judges said he was wiretapping lula and happened to -- they released tons and tons of phone recordings and couple of them happened to be with dilma. stephanie: from the brazilian perspective, it she is impeached, who would step in? who do they support right now? where are they looking for leadership? >> that is another problem because we don't really have the -- they havembers been implicated. we don't know what is going to happen next. if she is impeached through congress, the person who takes over is the vice president, the largestt of one of the parties in the state. they've given her 30 days to decide what to do. we are following developments as they go along. stephanie: and following the
markets. --are seeing the incumbent the opposition party being looked after, what does it mean for the economy? >> brazil politically has been congresslock since focused on the impeachment process. the reforms are not getting done. at this point, we need to solve the political issue and then we can get to the economic situation. what a lot of people say also is that we are in a confidence crisis. you don't know where the government is. stephanie: what do outflows look like in terms of brazilian investment? >> the situation has been so fluid, we just don't know. investments have been going down, stocks have gone up
recently over impeachment prospects as dilma rousseff loses power come investors get more positive on the country. now with lula being nominated, that has reversed. investors got a bit more excited again in late trading yesterday. stephanie: that is more of an emerging market story. could we see more investors push into emerging markets because of brazil's unrest? >> yesterday, when strategist there is no positive outcome out of this. period.e: no brazil, thank you for joining us this morning. , we are taking a look at what the fed's latest rate outlook means for credit. we are seeing rates rise in the early hours.
jon: yesterday's fed decision providing less support for the u.s. dollar. karen is still with us. you provided a chart of the trade weighted problem. massive appreciation over the last 18 months and then this rollover of the last couple of months. what does this rollover worth? we want to summarize what the fed is addressing, what it is is a stronger dollar. the dollar has been strengthening since mid-2014. 24% based on the trade when it index -- fed's trade weighted index. it is appreciated a total of 12%. these are aggressive
appreciations of the dollar. that hurts global financial conditions to the extent that -- think about all the emerging dollars --ernal stronger dollar pushes oil prices. if the fed is trying to address global financial conditions, one of the ways they can do that is talk about lower rates, try to weaken the dollar to some extent and that should help. jon: this is stephanie's world, the world of credit. it's not like the debt is being paid off. you get these portfolio effects, look at what the chinese are doing. paying off foreign debt. what does it mean for your credit strategy? jim: we have to think about the linkages. what is the number one thing correlating? oil. note can say the dollar is
going to strengthen as much, that means oil prices effectively should not fall as much as we thought they would come which would reduce some of the default risk. that is a strong positive for energy, especially the high-yield energy sectors. that is the linkage that the fed is trying to address. a dollar strengthening too much too fast is not a good thing, not just for the u.s., but not for the world or not for the financials. jon: what about the risk that the strengthening dollar is pushing noncredit investors into the credit market, causing those markets to get more crowded and tighten more than they should? credit markets are not as liquid as government bonds. when the market turns like we saw in early january, we got a worse affect in the credit market and we should have. jim: if you get too many people into the credit markets, that will be a problem. -- credit people are
spreads have been widening. look at any flow of funds and to credit, we need easier financial conditions. one of the channels to get financial conditions easier is to lower the cost of credit. do you think about high-yield, high-yield spreads back in basisry were over 850 points with yields of 10%. today, that has narrowed by 200 basis points just in the past month. but not enough. we need to see better credit conditions. this is happening in europe as well. one of the reasons the ecb has turned their qe policy towards try to support credit and help creditks in terms of creation. we don't want to force people into a market that is not as liquid as it used to be and then when there is a problem, there is a mass exodus. , at this point, the central banks are trying to support this asset class as a means of using financial conditions.
-- using financial conditions. jon: the conversation about the federal reserve willing to accept an overshoot in inflation, the market is not believe it and yields are lower this morning. can you get a rally in the sovereign debt market and credit? jim: i think the reaction in u.s. treasury and sovereign markets right now is really just , look, the fed took to rate hikes off the table. that will push yields lower. , treasury it right yields and inflation expectations should rise. stephanie: coming up, has the u.s. gone too far in advising against written -- britain leaving the european union? ♪
bank of england, 30 minutes away. fed reaction coming up on this program. tune in, top of the hour, david westin sitting down with alan greenspan. do not miss that. caron. jim here is mr. tom keene. the morning to nejra cehic. inra: for the third time four weeks coming european leaders are meeting to discuss the migration crisis. they will be in brussels trying of the flowthe stem of migrants. there may be hundreds of thousands of migrants in north africa waiting to come into europe. antigovernment protests have broken out in brazil. demonstrators were angry that president dilma rousseff named lula to her cabinet.
the move is seen as an attempt to shield lula from an investigation. may be warmer enough to spread the zika virus in new york and los angeles. the summer will be warmer than usual. the spread of the range in south america. jon: thank you very much. politics and focus. i see the brazilian side of things absolutely phenomenon. tom: clive crook gets out the knife. it's inconceivable that the president or any u.s. president would even consider such an arrangement for america. is it exaggerating when he says the u.s. defense its own sovereignty -- "hysterical
vigilance." a point., he has why is the president lecturing the greater england -- jon: he's being encouraged by the government in the u.k. the government has taken a position and the present here is backing them. -- president here is backing them. this is a democratic decision for the people of the u.k. to finally get a say. tom: fair, it is a democratic decision. he can do nothing until this --sent over until the brexit until this freezes over? jim: it is one of the biggest risks for this year.
that goes thevote wrong way in terms of brexit, that could be a negative event, particularly for rising risk across europe. it could expand into the rest of the world. it is hard to manage and we don't think there is a high probability, maybe about 30%. something to worry about. tom: robert felton was on this morning reading about -- raving about alan's call way out front on rising yields. what we are witnessing in currencies this morning, dollarng the sing stronger. these things are really moving. --: the norwegian rate cut they don't quite make sense sometimes. had some great calls and some bold calls on the fed and this is one of them.
she has a call for one rate hike this year. with that tells you is essentially when we look at rates today, what she is basically saying is that rates are very limited in terms of their upside. yields and they year at 1.75%. even lower than where they are today. is that a positive for other market classes -- other asset classes? we have inflation expectations at modestly rise. we have interest rates that are relatively low. that is a good tailwind for credit and high-yield inequities and other assets. this is a very stimulative call. when you look in the future forecast since 2017, it is more robust for the u.s. julie:-looking at the options market here between the footsie and the euro stock. -- i've been looking at the
options market. what we are looking at is the skew between these and the onging traders are doing further declines in european stocks versus the footsie. trying to price in the risk of a brexit and what effect that would have on the market. the ones line is the options on the euro stock. down here, we look at the spread between the two. we saw a negative spread between the two, but it is now at a narrow level. are asrs and traders concerned if not more concerned about the risk to u.k. stocks as a result of the brexit versus european stocks. tom: in the last 24 hours, word has gone from concerned to confused. i find the jaw-dropping how a nonevent like the janet yellen moment has become such an event
given the markets -- where's the two-year yield right now? jon: around 20 basis points. upside surprise on inflation come a push towards 1%, janet yellen comes out and says i don't think so, maybe two hikes this year. how do you make a call on the front end of the curve in the markets? rate hikes have 1-2 this year, front and yields have to be contained. it will be hard for 10 year treasuries -- two-year treasury yields to get above 80 basis points. we have better economic growth. we could have a second rate hike , to your pushing towards 95 -- two-year yields pushing towards 95. stephanie: as much as i love your morning must-read --
producers are going, "don't let tom leave." we have another special must-read, this one coming from bloomberg businessweek. a cover story profiling the ge thes efforts to transform 124-year-old company. joins us now. jackld never say the new -- is not your father's ge or your older brothers ge anymore. they are shutting their banking assets. they're focusing more on industrial and getting into software development. the stocks outperformed the s&p in the last year. that is a welcome thing if you are an investor in ge. globalizationd of
wrapped around a new industrialization. what did you learn about how ge does globalization differently? howhe story is about they're getting into software development entering to link together this equipment they are making, whether it's jet engines or power generators or health care equipment. this created an operating system which is like the apple ios system or google android system, but for the industrial equipment. that is what the transformation is about. tom: is the software there to make money or cut expenses? devin: both. they are sing last are they made $500 billion on it -- it saying last year that they made $500 billion on it. they are on their way. stephanie: what was your biggest take away from the interview? devin: he's been there for 14
years. he does -- he is pretty resilient, pretty optimistic. it's only in the last year that things have taken off for him. even last year, people were still protecting he would be stepping down early. they are not saying that now. he seems pretty upbeat. jon: how significant is the relocation of the headquarters? is an important thing in terms of rebranding the company and attracting young employees. it is a challenge for them. stephanie: we sat down with the former cmo, current vice chair. they've had a similar problem to ibm come old standing companies are not that cool for young people. are they making that shift? they've been making a huge -- is a hugeey amount of money in terms of recruiting.
they're spending close to $1 billion a year on the software division alone. they have 1300 people at their software center. they have a long ways to go. moving from fairfield connecticut -- fairfield, connecticut and moving to boston , a hipper, cooler place -- stephanie: boston, hip and cool. tom: when i look at the , to be clear, ge capital is behind them. they are now an industrial company. are they adjusting cap x and all an oldferent ratios for industrial company or is there something new in allocating capital? devin: they are selling off appliances.
they have a target to sell $200 billion worth of their financial assets. clearly, they are getting a lot of -- making a lot of acquisitions. by the end of 2017 come and 90% of their earnings will be coming from industrials. that is their message over and over again. stephanie: people are starting to listen to it. , a great piece. you can see that in this week's "bloomberg businessweek." a big morning we are having following yesterday's fed announcement. greenspan -- talk about a big morning on "bloomberg ." stick with us. so much more to cover. ♪
stephanie: it is time now for a very special contest we are having here at bloomberg tv, brackets for a cause. titans from the world of business, sports and finance taking their best shot at filling out the perfect march madness bracket. each of the participants are donating $10,000 with the total pot going to the victor's charity of choice. this is the second year we are doing this. last year, we raised $350,000. gary cohen won. he is playing this year appeared i playing again for girls inc. it is not just the 42 of us playing. one out of every eight americans playing in the ncaa pool. last year, 40 million people filled out brackets. barack obama had 66 million people vote for him. this is massive here in the u.s.
here is who is playing with us. a toughman may have had week, but he's hoping to have a huge bracket challenge. 's don fitzpatrick. mark cuban, owner of the dallas mavericks. -- dawn fitzpatrick. mark cuban, owner of the dallas mavericks. julie: you get bragging rights, the money goes to the charity you want. stephanie: we've got everybody's brackets. michigan state is the favorite -- a favored winner. people going for them. north carolina, seven. you at home can watch as play. you can follow this on tv and bloomberg.com. bloomberg.com/charitybracket.
if you are lucky enough to have a terminal, you can follow it at -- guess who else is playing? ballmer, owner of the los angeles clippers. he is playing. david einhorn is also playing. just because they are smart and wall street doesn't mean they are smart at picking best double-teams. -- basketball teams. stephanie: you know we are going to have upsets. the fact that duke is not even part of this, there are so many massive duke fans out there. we see university of virginia. last, youa was that know p tj would be playing for virginia. julie: i'm a maryland fan. stephanie: kevin plank is
playing. huge maryland fan. he has maryland as his number one. if you have not participated, you should join. they got. -- there you go. julie: you don't have to donate to be part of this. the average bracket pool across the country, people are putting in $29. it doesn't have to be $10,000. how great is that? $420,000, winner take all. that's a lot of money. win.etter hope you going to be kicking that off today at 12:00 p.m. you will be able to see that on your terminal, on the website. root for me and the ladies of girls inc. we send you to london where nejra cehic has the business flash. nejra: the ceo of
glaxosmithkline plans to step down. he believed the company next march. 2008. been the ceo since he has been criticized for the lagging stock performance, sluggish u.s. sales and the pipeline that lacks promising investment. saudi aramco and u.s. shale breaking up. shell of to sell $30 billion in assets. saudi aramco considering an initial offering. famed plaza the hotel will go on the auction block. they have set a foreclosure auction for next month. an indian company defaulted on the loan. that is your bloomberg business flash. julie: we were just talking tough week,ckman's tough year.
we learned at the close yesterday that he had decreased his estate in mont elise -- mondelez. mondelez.n it is down 37% year to date. i created a chart of his top holdings year to date and how they have done. g #btb access this on 614. -- btv 614. you see his other top holdings here and how they performed. the next worst performer down 15% year-to-date. canadian pacific down fractionally. air products is one of the better performers here. here, up by 5% year-to-date.
gives you a snapshot of the holdings. stephanie: we cannot forget his massive short in herbalife which we solve -- which we saw rise this week. when you see things start to push, bill is feeling the squeeze this week. herbalife, ithort was like a line of bazookas and his front yard showed up with the likes of george soros, carl icahn saying can you bet against us? remember how much animosity there was against him. it is a tough week for bill. i still don't bet against him. julie: the market can bet against him. the question is, what will his investors to? i don't know what the covenants much theyis fund, how
can pull out money, but that will be the true test. when you get to quarter and/or year and and investors are able to pull out money, will they be doing so given this kind of year to date performance? jon: the moves in the fx markets -- dollar yen breaks lower. 1.45%. we dollar is the story this morning. you see that reflected in this grind lower in the front end of the treasury curve. through -- upes by .8%. we are 7.5 minutes away from the bank of england decision paid -- bank of england decision. this is "bloomberg ." ♪
stephanie: you are watching "bloomberg ." we are watching the markets, one .5 hours and of the open. hours beforehalf the open. out withe company came numbers that missed estimates and a forecast for the full year that missed estimates. shares are down 6%. that has led to a debate among analysts about what this will mean for apple and what it will mean for other apple suppliers. will it have implications? if you look at apple shares this morning, they are down, but not down by very much. .7%.
saying thee supply-chain issues or demand issues with apple are well known at this point and that is why you will not necessarily have an issue. stephanie: the first time we've seen apple in the black for the year. we've finally found our groove. step aside. julie: that's what some investors are saying. if there is trouble, it is already well known. we are watching apple and a lot more. coming up next, something even more special. an interview with former fed chair alan greenspan. david westin is in d.c. preparing for that now. we are back with more "bloomberg " in just a few. ♪
a weaker dollar. the dollar-yen breaks down to new lows. -- turn lowerarn as caterpillar is down 3% on the premarket after reporting a big mess. miss. ♪ jonathan: good morning. just getting that bank of england rate decision. the bank of england in interest rate of 0.5%. the data is weaker. there is a referendum on june 23. this for at least the next six months. stephanie: waiting to see all of this pan out. david westin, a big interview coming up with you. i am sitting now with
alan greenspan's former chairman of the federal reserve. we will speak in a few minutes at the role of central banks. stephanie: joining us later, steve rattner. we do have what we already covered. i want to give julie a check at the markets. we have the pound pretty much hanging near its highs of the session. little delay, we see the pound high -- to the higher recession. a leg up even though it is not a seeing theheless increase. the fed talking yesterday implying it wants to keep the dollar at this level -- let's see what is going on on , dovishollowing the fed
by the market. you can see all three of the major average futures. you look at what happened overnight heading into the morning, we saw a mixed market in asia, strength and some of the other major market including shanghai. earlier, we saw strength the european markets as well. more of a risk off scenario happening today, look at assets that are perceived as more safe. well.s strengthening as the youths push lower to 1.8%. oil has been seeing a strong as finally we are getting a date set for a meeting of opec nations.
stephanie: it certainly does not mean anything will happen. oil just creeps higher. even if something happens, you are at huge oversupply. >> i will send you down to d.c. welcome. it is great to have you here. we have bank of england just hold their rates. the bank of japan, all about central banks right now. everyone with central banks is focus on growth.
do you agree that is the fundamental problem and what should be done about it. >> we have gone far from that and required central banks to do much of what the fiscal system tends to do. stagnation is a fiscal problem, not a monetary problem. productivity growth on average in the last five years. --tually all the amazed emerging nations are less than 1%. problem anductivity
it is essentially, ultimately, a fiscal problem. the best way of doing this is to look in terms of what is being produced. the longer assets have been very significantly curtailed. wall types have been suppressed ,nything with real estate because of the risk 10, 15, 20 years from now. we look at what we of the fed had to call structure of interest rates, a very good proxy and depending on when they
.re -- were expected the gap between the 30 year u.s. treasury yields on the five year treasury note goes to the highest spread in american history. two or three years ago. and it has not come down all that much. is basically saying anything with a long life to it has a present value and corporate management does not want to invest in that. david: what can be done? isn: the fundamental problem ultimately the fact that entitlements, which are legally required will grow wholly
abilityently foot the -- of what the ability to fund it is, which is largely related to the gdp. i would say, and it is hard to they probably require a 3-4% growth rate. just to pay for entitlements? alan: the context of the types of revenues that arise for government, specifically one form or another to fund entitlements, implicit in where the entitlements are on the is economic growth probably close to 4%. we are at two and struggling at two. what is happening is there has inn a significant decline
a percent of gdp largelyg over the years because entitlements have dug into them. one way to see that it the sum of entitlement spending plus gross domestic spendings, which is household and business savings. items has beenwo relatively constant since 1965. what that says is for every dollar increase in entitlements, we have lost the dollar in gross , but grossvings domestic savings causes gross to mystic investment, and gross
domestic investment is the key element in productivity growth. the sequence of starting with unfindable entitlements has led to stagnation and productivity growth. investing ind of things like plants and equipment, we are spending it on entitlements. those dollars are going to entitlements. alan: that is exactly the issue. during republican administrations, entitlements grew more than on average during administration spare that is my party. want you to observe how much the issue is being discussed in the campaign. the problem is entitlement is the third rail of american politics. you touch it and you lose. to come back to the
central banks roll, i listened carefully to your answer and i ratesnowhere, let's cut and by corporate jet. i did not hear any of that as part of the solution. what do you think of the ecb buying corporate debt? alan: i like to. -- i don't like to. david: you had all the federal reserve systems sign up to it with stringent rules about what the federal reserve's should be investing and and you should be concerned about the market. alan: the federal reserve is
there to act as a central bank to apply liquidity. you can do everything you want to buy merely staying with u.s. treasuries. investing long time in u.s. treasuries was considered inappropriate. is once you start to and since itthing canars the central bank produce free money anytime you what you get is the political system looks on and says hey, this is going on. you get an extraordinary demand for entitlements and all sorts of programs which are not funded
. why do they need to be funded? let's go back to investment it i understand you think we should be dealing with entitlements but as you say, that is politically difficult. borrow at 2% we interest rates and invest in infrastructure? it was certainly helped to fund the system and away that would be very cheap. our level of debt is now on the rise and will accelerate on the upside. in 30 year issues, the better off we are. if the money were used for broadband internet access for all, traditional infrastructure, basic education
for the new market economy, wouldn't that increase productivity? alan: no, only if there were savings behind the investment. can't print money and by the infrastructure, for example. ultimately, it begins to take hold. i find the fact that yesterday, wasconsumer price index out, and the last two months of an annual rate at more than 2%, i grant that the cpi is not -- chloride -- corsica i even that is not the ideal statistic used. but i think -- >> shouldn't we be more concerned about inflation then we appear to be?
alan: pce core. that is not going up. there is at deny strong inflationary process going on. pass and the issue is how long can we maintain in tworm interest rates, years pushing money in the system, have rates which i would say human psychology -- i think there is a limit. the federal reserve indicated there will not be as many rate hikes as we thought this year. they have been wrong consistently overestimated rate hikes. if you go out to 2017 in 2018, there is still a fair spread
between what the market thinks can be absorbed and what the fed is singling. who is right and wise the fed consistently wrong on the issue? alan: no comment. david: is there a practical limitation about the ability for any central bank to raise rates because of foreign exchange at this point? foreign exchange is a two-sided coin. those who basically think everybody's exchange rate is going up. it is a zero sum game. we don't even think in terms of what your exchange rate is doing. always think in terms of what the system as a whole is doing. it is very obvious we have been through time where the dollar is
greater congressional oversight of the fed. is that an inevitable result of a more active fit in the system? i do not know but i will tell you is the wrong direction to take. founders of the federal reserve may the term of each government 14 years. very explicitly to move it from the political system. is awe're getting now congress trying to run monetary policy since they have so well with fiscal policy, i'm sure somebody will have second thoughts. if you are actually in the system and going around the table as to what's to do -- what to do, you have to think about what and a political implications of what i am
saying, he would be sitting there reading a script edited over six people to make sure it is politically correct. the fed has got a tough enough , and let's put it this way. guarantee having seen it becamein my years, as it more and more public, with the theral reserve was doing, federal open market and members script,ngly came with a you want a debate in which joe will say i think it is going up
for reasons of nz, and john says i don't, and just as i think you're right. it never happens in a public discussion. involvedns or anybody in the political system can never admit without consequence that had -- that they have been wrong in that changed their minds. it is a rare phenomenon. court is veryreme removed from politics, but over time, you can see it reacts as it should in a democracy. isn't that true of the federal reserve as well? court shouldreme the views of people who do not understand what the in the supreme court to interpret the constitution is tough enough as without having someone
look over your shoulder. same with the fed. if you want monitoring policy to be run by referendum, you do not need the federal reserve. every month you have a referendum of the population of where you want the rate to raise. i will tell you. zero. discussion of entitlements, there has been a lot of discussion about globalization. not popular with either democrats or republicans. what happened in the country that a lot of old do not feel the benefits that the leaves say, straight. alan: the growth rate is very slow. in the first quarter, it looks
as though we will get a 2% annual rate in more than likely, less than that. it means real incomes are staggering, people getting poorly compensated and they are very dissatisfied, for good reason. and you get consequences. difficult to deal with. david: there are two front runners. what difference would it make if -- doesn't have any effect on the federal reserve? alan: i do not know. all i can say is bill clinton never once argued in public second-guessing the actions of the fed.
it has not always been the case i might add. what hillary clinton would do, i do not know. david: what would be the effect on the economy of donald trump or hillary clinton would be in charge? do you have a sense? my lifehave a sense in is in the business and i do not want to compete. a lifelongare republican. it has been pretty active. overall reaction to what has been going on in the level of discourse? alan: silence. david: let's talk about oil. is it good for our economy or bad? on who you ares here the reason for cheap oil, it is a direct consequence of
what is happening in global economy. the demand for crude oil and hasous other products significantly declined and we have had been crude well over and per barrel collapse last i looked, it was $40 per barrel and it has gone much lower. it is a demand issue. we have got a major problem because at the moment, the production level globally has run two to 3 million barrels per access and we building up the equivalent of excess oil running basically into inventories and it is loading up
mainly in the developing country. david: thank you. alan greenspan. thank you very much for being here today. a great interview. 60 minutes away from the open. here onfor that right bloomberg . here are the futures markets for you. our futures -57. equity markets in europe, down by 1.8%. deutsche bank up by almost 5% this morning. so much to discuss next. ♪
jon ferro is with me and david westin is in dcn he just finished a very interesting interview with down greenspan. rattner.ined by steve we will get to julie hyman in a moment. but we have got a lot to talk about. moves, it the market love really making john feel bad that the u.s. bank noticed what happened yesterday and it was not until the european banks went to bed, woke up and figured out those europeans are a little slower. breaking news for us. julie: an increase in jobless claims last week. ofalso coincided with a time businesses and households to calculate payrolls and job rates for march. there is a week when they do that each month.
265,000 is the number and slightly lower than estimated by 3000. numberontinue to see the near a four-month low as we saw a little bit of a tick up week over week. are also seeing, as evidence in the report, we are not seeing hiring but a higher rate of retention. that is another implication of the report. taking a look at the markets here, we are going through them as to get the jobless names numbers and we are seeing the dollar come back from the lows of the session and still lower a basket ofersus currencies. s&p futures, as you can see, bouncing around a little here. jobless claims usually, unless it is not a hugely outline amber, does not tend to have huge effect on the market. assee the yield going lower we continue to have buying in the treasury market. stephanie: does this surprise
you in any way as you look at the overall view of the economy. think you canon't make too much of it. it is impossible to excite you, by the way. steve cohen that is all right. jonathan: looking at the trends, jobless claims, that is a high-frequency trend point. when i would say about the labor market data at the moment, and i asked to push back, is there any more this point given what we heard at the fed? think it totally matters because the labor market data is one of two or three things they are most closely watching as they decide what to do. there are those of us who believe notwithstanding the improvement in the jobs situation, that the effect on wages has been very muted. we had a good month in january and not a very good month in february. they are still not
going up very much. until they do, it should be restrained. that is what they said in part yesterday. stephanie: the jobs number gives us a distorted picture of jobs. so many of the jobs created are low-wage jobs people between ages of 18-35, not in mid manufacturing sector, which at the lowest in terms of job increases and numbers. helped --turing has also had the worst performing in terms of wages. they are down in the last six years. finance andand health care and education, all of these are up over the last six years. is weole point of this have got to get people's wages up. that is at the crux of the economic and political situation. the fed should allow wages to go up before they start tightening. jonathan: i asked the question
because the federal reserve , it was heard yet today global, global, global. i asked that question because as you look at the global data versus domestic data, has the importance of the labor market diminished given the federal reserve has looked at this and said yes, ok, i am word about what happened elsewhere? steve: yes, i would say it a little differently but it would be the same thing. the fed os has to be worried about the laureate -- world economy. if it collapses, we will collapse with it. i would argue the primary focus is the u.s., all the international, whether it is emerging markets in europe or whatever, has to be a use of what they think about as they form monetary policy. stephanie: sending you to london with our partner.
one more time. >> thank you so much. president obama''s choice to fill the supreme court they can he goes to capitol hill today during the federal appeals court judge will speak with senators, mitch majority leader mcconnell says they will not even get a hearing. for the third time in four weeks, european leaders are meeting to discuss a migration crisis. they will be in brussels trying to persuade the flow of migrants. is expected to warn other leaders not to ignore another potential crisis. in northof thousands africa before they try to cross to europe. .nd there may be more secrets in egypt, a scan of the burial chamber has revealed two hidden rooms. remains speculation the
death remains might be inside. jonathan: call it a dovish hold. the federal reserve kept monetary policy unchanged for the prospect of four interest hikes here. maybe we will only get two. take a listen to what janet yellen said yesterday. committee expects ,hrough gradual adjustments economic activity will continue to expand at a moderate pace and the labor market indicators will continue to strengthen. european equities down by 1.7%. the stoxx 600 up by one percentage point. a rally in the u.s.. u.s. futures this morning negative. or futures -44, s&p 500,
negative five points. the market reaction, i go back to the two year yield yesterday up on inflation. yield goes toward 1%. it happened yesterday and we go back down. is it enough to say the federal reserve is coming down further toward the market and maybe by the end of the year, we will only get one from them? >> the fed has been consistently more optimistic and aggressive, whatever you want to call it, and more wrong than the market. futures, yout the know the futures are not expecting two rate increases this year. the fed is still signaling there will be two so we will see how that plays out for many of us, we do not see evidence for any rate increases this year but we will see what happens. stephanie: you brought us a chart illustrating the big gap.
here it is. walk us through that. steve cohen the top three lines are what the fed expects rates to be doing. they released these plots member isat each projecting. you start at the top, and then you keep going down, you see the fed has consistently been lowering its forecast for 2016, 17, 18. blue line would be where they are most recently. then you look at the bottom, the red line, the futures market in who makesat people his that's with money think every day, you can see there is a significant gap, particularly out years between what the fed thinks will happen and what the market thinks will happen. i will say if you go back and rewind history, you find the market has been consistently right for the last years and the fed has been wrong.
stephanie: is that because the fed traditionally tries to do -- draw a line around the united states and say this is the data we should pay attention to and we will do this? when the market has been forced to have a global macro view all along? that is possible. i would say differently, because the fed has to be been wrong. that they had to optimistic a view of how the recovery would unfold. government,in the even if it is the independent federal reserve, there is a positive bias. cheering for the economy, as we all are, so if you go back over history, there is an interesting factoid. between 2000 and 2014, there were 220 instances in which a member had a negative gdp. the imf failed to protect every single one of those.
the economist did this study and larry is excited about it and i thought it was interesting. forecastrs do not recessions. when on the government side, you tend to be even more optimistic. jonathan: if you do that, you failed at your job. the terminal shows where the central policy is for the fed, each plot.
the policy initiatives, the productivity demand growth, we just do not see it. one of two things will happen. i do not think they will put it on autopilot and go of 3% in 2018. either it will start growing really fast and they will turn out to be right and known will be happier than i am that i was wrong, and the rates will be 3%, or they will not be 3% and we will not be going at 3% and just to tie that back to the political thing, we will have an unhappy electorate. secondie: standby one year i will need you to participate. pay attention. key investors are looking at today. emerging market portfolio
manager. about emerging markets . where do you see the best opportunity today? the fed has told us they are , in whiche slow commodities as a result, they will rally. it is hard not to like in mexico and indonesia an asian companies. stephanie: we are feeling stable today but it is aggressive to say it's tough -- a few weeks ago, it felt like a
disaster scenario. and that is why i want to distinguish. as an investor, you need to be invested in the yield and evaluations. there are significant structural headwinds. extremely high. growth, the -- it remains highly problematic. problem, this will be with us for a long time. this is how we're talking back-and-forth. we spent a lot of time talking about the fed. we're sitting hit talk about jacob zuma and what is half -- what is happening to messick leak. how much time dealing with a focus on the fed and domestic politics and domestic conditions
in this particular companies? focus domestically in those companies. i get the idea of what the fed , driving developments in the emerging markets. investors,amental looking at what those companies do and things like that. stephanie: is it not tough to factor in the emerging markets specifically because so many of those companies are oil dependent? >> going to just to commodities , it has beenasset as high as i have ever seen. it is important to focus on what is happening in commodity markets are it stability out ofted with a freeze opec, as well as a capacity of reduction in china, as well as signs of demand that remain
quite strong and on top of it, a week dollar with higher commodities. you put all these things together and for now, it looks like commodities are stable and that is an important reason why over the short term, we remain positive on emerging markets. >> it is exactly what you guys have been talking about. the emerging markets index of stocks in purple, you see them all moving in tandem. rent has been a big boost for currencies and stocks in this environment, at least if you're looking your today. has it changed how you think about the world? .> a little bit things have changed and therefore it has implications for the rest of the world.
optimistic thee fed has come to what i would view as a more realistic position in what will happen. take the announcement as bad news, that they suddenly decided the economy is not in great shape, but we knew that. is good news from an investor point of view and economist point of view. what has changed for me is jefferies cutting chipotle to underperform. those free burritos just ain't working. he will stay with us. jonathan: thank you very much for joining us this morning. coming up next, we will hear ceo and cofounder
you want to operate your company like a public company. we do not have any money for capital. we definitely do not have plans over the next two years to be public. you have brian smiling always given how they that is. i'm pretty sure you did not come here on anyone's catch, but what is your take? >> i think airbnb is one of the most disrupting -- disruptive companies. what they will tell us is airbnb is having an impact on the business because they can add so many rounds. they can add so many rounds at such a low cost. it is reasonable to start comparing them to a marriott. stephanie: rather than ipo, a
takeout candidate. can you afford to? >> to cory's point, what i hear from my friends is one of the bigger problems with airbnb is that they cut out the pricing the hotels are able to charge. is in sanuper bowl francisco or whatever, by supplying the rooms to the market, the ability of the existing hotel operators, we got search pricing. that is pure profit for those hotel operators. they are not happy about it. jonathan: i can confirm cory .ohnson is not saying on a sofa coming up, stephanie ruhle takes on julie hyman in battle of the charts. help me judge next. ♪
up, annetteming turner and she sits down with the canadian prime minister in a bloomberg exclusive. that is coming up very shortly. now, it is time for something maybe equally as important and maybe not. stephanie ruhle is julie hyman. take it away. can say that is more important, but this might be more fun to we will seek to what we are at is what stimulus has done. what central-bank policy has risk assets recently. a new wave of stimulus is here. the bank of japan adopting its .egative rate in january he sees the stimulus. the fed certainly more dovish. we have seen a master rebound and risk assets.
.hen it comes to helping stephanie: my chart is all about the luck of the irish. since the financial crisis, the -- more, 7.8% alone in 2018. is the biggest rise we have seen in modern history in ireland. there exports. they are doing phenomenally well. the irish economy is so concerned of what it will do to them to them. what we have seen in the crisis,
look what ireland has done, really taking itself out of what they were in. what a day to celebrate the economy on this fine st. patrick's day. >> i love the idea that you cannot ignore the fact of what julia is talking about, the big issue in front of us every day. cory: i would have loved vonnie quinn to do that. stephanie absolutely wins that one, clearly. >> it is st. patrick's day, it is a time, thank you very much. coming up, a bloomberg exclusive with the canadian prime minister. ♪
stephanie: we are about 30 minutes from the opening bell here in new york at it. i'm stephanie ruhle and or is jonathan arrow. in just a few moments, bloomberg editor in chief will be speaking to the canadian prime minister in an exclusive interview and i am super excited about it. jonathan: the world is a scary place and we will not cut the budget but allow for deficits. for now, julie hyman has the market check for you. the fed expressed more dovish sentiment yesterday. a little bit of a decline. thanks that's leading the way downward. we will see if that is case in the u.s. as well. assets viewedthe
as more safe doing better this morning. yields are coming down in terms of treasuries. we are seeing the buying of treasuries, gold, and yen. can we show that? let's take a look. there we go. the dollar is falling and 10 year yield going to 1.89%. oil this morning has been going higher. not really participating in the risk sentiment elsewhere. also in terms of some stock movers we're watching, we have got fedex going higher this morning after the company cannot -- came out with earnings that beat estimates. scherzer going lower. the companies predicting first-quarter earnings are going lower than estimated. inmodities have rebounded the first quarter and yet caterpillar is suffering from we
demand. selling 20 million shares because of losses that bill ackerman asked incurred in the first part of the year. i want to take a look at my technicalere for some we have been watching. we have been watching the 200 moving day average on the s&p hundred. -- s&p 500. is it resistant, for the s&p 500 right now? here, we have the members trading above the 50 day moving averages. we see that go toward 90%. saying thats are could be in the short-term we are coming back down to the longer term according to the investment group, that could be a healthy place for the market.
both fedex and caterpillar, we see moves there and they are often do letter -- bellwether, both are very heavily weighted in terms of -- these are big companies that where we seence large money managers have large slots of cash. when companies come out with numbers, it pushes the market more than others. a company like caterpillar, which is sensitive to commodity prices, a few weeks ago, we were talking about it or when you sick company like this move down in commodities, just to be a buying opportunity because they are a leader in the industry. is sort of a debate. some say caterpillar's shoot do better in the latter part of the year. others say why didn't caterpillar cut its full-year forecast if it is coming out so the quarterly for forecast. it will be interesting to see
what happens. caterpillar tends to have a more ripple effect among the other makers then does fedex, whose competitor is ups and does not have the same fear of influence. jonathan: we are awaiting the with the interview prime minister. that interview will take place any minute from now. to go back to the story, caterpillar mast what is happening here in now. $5,000. plus 9%. glencore, 8.8% move. , theylk about volatility trade like penny stocks up down, up down, a huge ways. >> crude oil at the highest price we have seen after the two-day rally, we are seeing the move and and there are names like peabody warning that we could be facing bankruptcy.
it depends on where you are and how sensitive you are in the day today. julie: it has a lot to do with the u.s. dollar, which of course the fed commented on yesterday and it is interesting it is a technical affect without any real fundamental basis. the fed is making his commentary because it is concerned about the global economy. it should in theory be bearish for commodities. instead, it is very for the dollar and it is a boost in commodities this morning. stephanie: gold futures are up this morning. pushold is making a big back. difficult time to trade the markets. you wonder why money managers have gotten chewed up this year. there is not one direction. >> i was trying to call of the gold chart. stephanie call must get a little
first alert news. showruggle, cannot have a without david here. david: meeting with senate minority leader harry reid and patrick leahy. democrats are trying to put election-year pressure on republicans refusing to consider any nominee put forth by president obama. senator chuck grassley of iowa. 20 fingers at the congressional very hearing today on flint water. snyder's blaming a failure of government at all levels, including the epa. theynation occurred after switched flint water source to the flint river. the u.s. is opposing more economic sanctions over its weapons program. the yvonne man ministration has blacklisted more than a dozen agencies and companies in response to what the u.s. calls test --
powered by more than 150 news bureaus around the world, stephanie, back to you. stephanie: i am missing a beat here because i am still hurting over battle of the chart. i did not wear green today, i'm getting beat on. the tie for me is losing. i am hurting. not to add insult to injury, but this is a great one hillary made this morning. 582. as we speak about gold, some people consider gold to be the best inflation had. ist is interesting is here straight up gold and here. a big surge recently in gold going above $2400 an ounce. if you inflation-adjusted, it does not look quite as good.
jonathan: an exclusive interview. take a listen. >> it is no question oil prices -- we're very good on water as well, and not just oil. oil prices are certainly impacting on another -- a number of regions that contributed significantly to canada's overall growth in meaningful ways over the past 10 years. areas are going to .ifficulty we need to be diversifying and investing. that highlight the kinds of changes and a challenge. it is an opportunity. we're looking at a frame in
low,, with interest rates with our debt to gdp ratio being down around 31, and the need for investment in our economy, there is an opportunity to get those out of work construction jobs in the oil industry, to work the municipal infrastructure. >> everyone in western economies is thinking about a decline. in the middle classes doing well and the economy is therefore doing well, how do we create an economy in which -- understanding income inequality can be a drag not just on the
middle-class. that question on how to solve it is one that is being challenged around the world. a lot of people are on the austerity side thinking we have to control government spending. canada is positioning itself. this idea that confident optimistic companies will invest in futures, really very much what we're focused on. investing in innovation around cleantech, startups, and , themy, roads and bridges tenant infrastructure that would lead to quality of life and better productivity in the coming years, we think this is a great opportunity for the coming decades. >> a lot of people look at canada's economy, a budget next week, they see an economy growing by 1.5% a year and a
think it needs stimulus. your government seems unable -- >> we had a massive stimulus. following the recession. 2008 and 2009 recession. it is in debt and we kicked off with it. is much more modest and much more responsible. what we're looking at is not so much trying to jolt the economy life as to try to lay down the groundwork and the foundation for better growth and better over the long-term and not an instant influx. the challenge when you are trying to shovel money out the door, it is not always get spent on the right things. what we have decided on
infrastructure spending is the amount of investment in infrastructure over 10 years. the first two years, we are going to do the unsexy things, recapitalization of infrastructure, maintenance, upgrades, the things you do not get to cut a ribbon and announced a shiny new building on subways and things that are necessary to keep the pace up in terms of in transit of people but do not get the flash that are desperately needed. that is what we are really focused on in the coming couple of years, and then we get into the bigger and longer term things once we have been able to plan them through. >> how will you pay for all of that? the idea that you will need to raise taxes at some point. yes we are justin: aware the growth profile in the
country's not giving the kind of tax revenues we would like. been the case over the past 10 years. aroundtform was designed recognizing our growth is not great and we need to increase growth. the question is, how do you improve growth rates? do you cut the economy or invest in the economy? put money in the pocket of the middle-class and create opportunities to grow. investment. that means we are in an approach that i'm confident will give us the better growth, that will create more government revenue and get us through this phase. >> you get economists on the other side, you are the person who champions. maybe 3%, maybe further. : one thing important to
me is fiscal responsibility. toerstand you do not have make a choice between fiscal responsibility and investment. but they have to fit into an overall scheme. when we have put forward is what the economy cams or -- can absorb. i do not know that throwing infrastructure will result in the kind of productivity gains or economy. more progressive governments like mine has a bit of a compared to those on the right wing who do not believe the government is good for anything. they do not mind if they are inefficient. they are demonstrating the
government is inefficient and wasteful. someone who believes the government has an important role to play, in certain areas and creating conditions for growth, has a strong and vested interest in being response will and demonstrating government can spend and invest and be responsible stewards of taxpayer money. a deficit around 1.5%, you do not want to take it all the way to three or further. justin: the frame we will be putting forward in the budget suited tois the one our economy and the example he could give to the world that we should be using fiscal levers a little more and i expect monetary policy to fix it. we are approaching the limits of the impact of monetary policy. >> do you see yourself as an outlier in that huge debate? >> no.
canada as a useful example but i also know we are in a situation that is the envy of a lot of other countries. our debt to gdp ratio, our extraordinarily diverse and capable workforce. we have a lot of stability other countries do not have. at the g 20 finance ministers meeting, there were strong discussions which canada was very clearly on the investment side, about where the limits of monetary policy are and whether we need to use more fiscal -- still countries like the u.k. and germany firmly on the other side. thee frankly, with conditions we have in, i'm happy to showcase that we think drawing an investment and creating opportunities for sustained growth in the short-term and long-term are where we wanted to be. ofwhat are the issues fairness? you have got the benefit system, you already looked at the tax credit for children.
what about the question of old age security? >> the idea of fairness, there fact big deal made of the that we campaign on the promise of lower tax and raise it for the wealthiest 1%, which is about making sure people who --nd money and circulated more generous for the families and the loan middle-class needed. and not spending it for wealthy families like mine. security, there is a nice parallel here in my predecessor went and announced in a bloomberg interview, very wisely, the reviews are mixed in canada on how wise this was, of announcing he would raise the age at which you reach old age
security. we think that was a mistake and i campaign against it but i happen to confirm here in a bloomberg interview that next that we willture confirm that we are keeping the old retirement age at 65. how we care for our most warner boyd society is really important. >> you go around the world and most people are gradually the age at which your running against most economists pushing forward. the sense is tweaking the age like that is very simplistic solutions that will not work to a very complex problem. how do we encourage people for
longer, how do we make sure we are creating -- how are we encouraging a lincoln mentor between our older citizens and the younger citizens who need to have all the good pass to create then success needed to support our demographic. all the things together means there are a lot of things we will work on, increasing the plan. the place we are returning to because it was a mistake to mess it up to 67. europe, keeping we pension age really low, are all likely to live much longer. surely the whole pressure is to push out the benefits longer.
>> obvious that someone who worked as an investment banker or a lawyer their whole life, 65 is not necessarily an a's where they need to retire. -- he is nowhere near. anyone who works with their and has beenborer in a much more physical job, ,nce you start reaching 65 there are real challenges in how much longer someone can keep working the job. a stan responsible discussion around that is what we're waiting for. >> you target the very rich. what other things which you look at in this budget? capital gains, stock market, these are things you talked about on the campaign trail.
justin: we will see next tuesday afternoon the afternoon on the budget. is weame we have taken certainly have nothing against success and we want more people to be successful in canada. that if weworries put more money in the pockets of average consumers in the country, if we make the middle-class more confident thet their kids future, general economic climate would be such that our visit -- big businesses would have plenty of opportunity. >> you are seeing tech companies coming out against the spirit i go back to france. ideas, ithe different would be like cuba without the sunshine. do you worry you might be driving away entrepreneurs? >> i will and to those questions more clearly once we put forward
the budget in a few days, but i will underline the fact that i got to be in the position i am by listening to people, to experts, by understanding what he economists and business owners and ordinary canadians about what was going to help them and what was not going to help them. we made our decisions on evidence-based research. >> you do not worry about a talent train. >> the decisions we are taking our ones designed to encourage entrepreneurship and reward andnesses that are growing encourage canadians to feel optimistic and confident not just about their own future but about their children's future. >> you talked about businesses that are growing. its stock used to treat $27 and
now it is rarely a dollar. it wants $1 billion from you. why should the government be helping businesses like that? justin: it was allowed as extraordinary. it really is more efficient, more fabulous in always. aerospace has a bright future. of course, but we also know from the bigo airbus to all aerospace companies around the world, they have always needed significant government support. we look at is how do we ensure there is a strong aerospace and history in canada, not just right now but in five years, 10 years, and 30 years. how do we make sure the height
audio jobs and innovative solutions put forth are there for the long haul? we are looking at this as what is the right investment and is it a smart investment for canadian jobs and the canadian economy in the global market? that is the lands we're taking on that decision. be happy to say to people, i'm have you put this behind -- or something like that request government is about choices. ton you make right choices create opportunities and row the economy and make sure there are good jobs are made of that have to be an either or in many cases. growing theare economy in meaningful ways, which allow you to continue to invest in a meaningful manner. ofan answer to the question when you answer the question?
>> this will be answered when we have the right answer to give. we're taking our time in a deliberate and thoughtful way to ensure we're doing the right thing in the interests of the canadian industry and high-quality jobs but also our responsibilities toward taxpayers to get the opportunity cost right. is your biggest worry with the economy? justin: a lot of what i worry ordinary folks will withdraw their support for the economy. governments of different stripes got elected on platforms that were pro-growth. center left, center task competitiveness, fiscal discipline, foreign trade, we've explicitly said to people, we will grow the
economy and it will be good for you, but middle-class lives of the fact that it hasn't had a real rate -- raise in 30 years when you look at income since 1980. when you look at the fact that people are worried their kids will not have the kinds of opportunity and quality of life that they had, there is a danger you will get frustrated and for the growtht agenda. everyone worsee off. we need to make sure we are demonstrating growth can be good for everyone and not just for the top percentile. >> canada is a leader on things like climate change. un-greenthe famously oil sands. his canada really incredible -- credible leader on this? we are even more of a credible leader because aople recognize there is
country with extremes in temperature that require conditioning and gray heaters. between oure spaces communities and natural reserves including energy resources. if any country is going, in a self interested way, to negate climate change, it would be us. on the contrary, we're saying yes, this will impose real challenges on canada. we also see climate change as an opportunity to invest in renewable energies. it is where the world is going. canada can either be dragged along by it, kicking and screaming, or we can choose to and our and canadians innovative thinkers and industries want to be part of leaving it. that is why think we are credible. >> video anything over this issue, eight years were he's trying to put forward but not sick that's fully in some ways.
what did you learned from that? justin:+++ premiers a few weeks ago to talk about the green agenda and obtaining, we had a range of different political ideologies are on the table. the consensus really was that this is an opportunity to have a challenge and we move forward on it. the genius of canada and the way it is as a confederation is that we can draw on different solutions for different parts of the country. i do not particularly worry about what type of mechanism they will bring in as long as they are reaching the reductions they are committed to pair there are different models that will work. in oil heavy province, they might want to look at a different thing. the end, it pushes
everyone toward the issue of a carbon tax. that is the only way with which carbon can be fairly priced. thein: that is certainly opinion of a number of people are making sure we're putting a cost on carbon pollution, it can be done in a number of different ways. where we push ourselves incrementally can depend on the jurisdiction of the region. what i said is we will be ruthless making sure the reductions actually do happen. that is the frame we were able to all agree on at the conference. the idea of working in a respectful but collaborative way has again shown to be the right way to go. worse, he willr not be here in a time. you have donald trump, a man who wants to build a wall on the and stop syrian refugees getting in, you seem to want to welcome a lot of them. how do you deal with the donald
if he is elected? is the i think the fact incredibly unique relationship and close friendship between canada and the united dates goes beyond americans who moved to , just partis really of what we deal with. there are always issues you can find common ground on and -- host: what would be the obvious issues of common ground between you and donald trump? justin: the desire to see americans do well and citizens in our country have greater opportunities. on ayou can come down
frame that says, that's great success, you get to discuss what the best ways to create success is. i have tremendous confidence in americans' capacity to get the right results in the electoral system. host: even if the results is mr. trump? this was a win for democracy is the line we put forward. see whate are going to americans are made up in this upcoming election. there is a lot of anger. there is a lot of anger against the establishment for different reasons. i think the next president, whoever it is, is going to have to deal with some big questions around our governance, your governance, and how we build an economy that works for everyone. those are the questions i am
asking about how we are creating an economy that works for everyone. host: do you mind you are typified as a slightly more contrast, with increasing spending and some of the issues in europe. justin: i don't see it that way at all. i see it in keeping of the canadian tradition in responsible government. americans have peace envoy the pursuit of happiness. we have peace, order, and good government. it is the most boring aspirations for our country, but it works for us. we put forward reasonable solutions and how to bring people together. we believe creating equality in opportunity is really a path forward for success.
manage to be very happy. that came through the election campaign where we had two parties building a little more fear and anxiety. there is a lot to be optimistic about and let's build on that happiness. canadians responded. about government in the way your father did. you have some of the same style. your campaign took off when you talk about ending austerity. your father was remembered for increasing deficits. is that a lesson you have learned? justin: trying to compare the economic circumstances on a global scale in the 1970's what we are going through now is very different. from a different
perspective from my father. certainly, the solution that i am putting forward are not aced innostalgia -- are not based nostalgia. i would not be in this chair if i try to emulate my father in everything he does. he gave me strong values and principles and the challenge of the next generation is always to take for the previous generation offers you and make it suit the times we are in right now. onn though people still hang to comparisons, i don't worry about that. i worry about what i am doing for the right reasons for canadians and in terms of engagement with the world. so, i let everyone else make comparisons. i'm focused on being me. host: thank you very much. we are going to throw it open to the floor. that was don nickles speaking
with prime minister of canada, justin trudeau. q&a section one our live event channel on bloomberg.com/live. what stood out is that justin trudeau says this is not his father's age. here is a prime minister singh the economy is slowing. monetary policy is reaching its limits. we are going to invest in infrastructure. at the same time, almost not admitting at don nickles pushed him on, can we really afford for people to retire at 64 years old anymore? infrastructure spending, people like to hear it. argument the of
heard larry summers make. we are five minutes into the market trading day. julie hyman, give us a picture. julie: it is fascinating how the changes are looking like yesterday. yesterday at this time, everyone was waiting for the fed. are we got the fed and we still not seen change in the market. it has a much more bullish stance. increases fromte four. what this means for the year to date is that we are seeing small declines for the s&p and dow, -- boththem less of them down less than 1%. we are seeing strength in risk-off assets. the dollar not down
quite as much. gold continues to strengthen up 3%. that could be helping stop to some extent. individually, we have been talking about caterpillar. the company forecasting sales and earning sales of the low what analysts were expecting. the shares are trading higher. the seen commodity strengthen today. that could be helping caterpillar. fx bringing up the lower end -- fedex bringing up their numbers. -- amazon is said to i office depot's corporate business unit. nasdaq is trying for a second day of gains. doolittle's down there
at the nasdaq. what are you seeing? abigail: we have an affect opening lower for the 30 in a row. actuate between small gains and losses. it will be interesting to see whether data access. one stock down is apple. they have gone negative. andi is saying apple supplier is showing weak misguidance. iphone demand is weak. saying iphone demand is strong. apple iphone sales are likely to return to 50% year-over-year growth. lots of different views on apple. apparent,that is very apple was down more than 10% earlier this year, is now flat on the year. >> abigail, thank you very much. stephanie ruhle has stepped out on assignment.
i want to continue the conversation on the federal reserve. the differences need to be resolved. the fed has decided to come down to two. how much did that have to do with the international environment is the mop how much did that have to do with wages? ed, the consensus view after the news conference yesterday, talking about a domestic u.s. economy. what was your take? ed: we are always in some sense. the one thing i will say that the united states is not as closely linked to the rest of the world as perhaps we should be. while the fed may be worried about that, i inked the fed's problem has been the erratic nature of this recovery. if you look at whether the fed
should have raised which yesterday, or whether they should have raised with a month ago, or whether he should have rate rates two years ago, they face the same problem. at the data, they start to look for a wild, looks like a time where we can start getting back to normal rates, normal types of patterns, then something happens. a lot of critics of the fed go back a couple of years ago and , already five years past the recession, should have been raising rates, and look at what they did? if you look back to that. of time and say, what was going on in the labor market, you and starts.its at the end of 2013, we had a pretty strong couple of quarters. didn't he was growing and all of a sudden, you hit the first falls at angdp annual rate of 1%.
market,k at the labor unemployment is falling, but they see labor force participation in down. they know the employment rate is not where it should be, so they keep getting nervous about numbers that don't seem to support the position they should be raising interest rates at a rate that would be commensurate with he did it in the past. >> the other problem is that they are forecasting cpi 2%lation to get back to before 2018. policy is exactly where it should be. >> that is exactly right. there was some indication that inflation is picking up and it was silly not a concern in her mind. -- it was certainly not a concern in her mind. mentioned the main thing the fed would be concerned about is
controlling an nation. central bankers would subscribe to that view, at least in part, the reality is they are constantly looking at employment, they are looking at wages, and of course, wages have not been strong. the primary reason for that is productivity growth has not been strong. without productivity growth, we know that wages are not going to take off. the fed is not particularly concerned about inflation right now. this has been something on the back burner despite the fact is there binary mandate. -- primary mandate. they are focused on the aggregate economy. >> in terms of the date of dependence, we have been told that when data dependent, we had to do -- two sides of the mandate. we know there is an act of
mandate they were not given that they are following. it is financial stability and what happens in financial conditions. what is it mean for the communication of the fed at this point? >> i am not sure of the communication, but the point you made is relative. they are absolutely concerned about volatility and capital markets and this is not been a stable period. what everyone has been worried about in this recovery is that capital expenditure has not been where it should and we are seeing that reflected in low credit productivity growth. to the extent that capital expenditures and investment activity, not only in the united states, but around the world, is going to be infected by capital market volatility, that is the reason why they are focused on this. it is not so much they are trying to prop up capital markets. is they are concerned about
if they don't measure there is sufficient liquidity, what they are going to do is stymie the capital markets that will going to capital expenditures and later into productivity. fundamentally, is still comes back to wages and employment. i know janet well. we have been friends for a very long time. always say she was actually my teacher at one point. i know that has to be weighing heavily on her mind. she is thinking about employment and aching about wages and what is happening to the typical american worker. if you back to that. through data-driven numbers. this affect the typical american worker? >> ed, great to have you with us. on "bloomberg ."
♪ first quarter of the year is usually a strong one for banks. analysts are enda kenny 32% drop in goldman sachs income. deutsche bank has an unprofitable year. bloomberg banking reporter laura kelly joins me now with more. goldman sachs has been very quiet, typical of them, but it makes other people nervous. banks say this is what you should expect. this is something of interest to you guys. bank of america have not said anything. it is not conspiracy theory.
>> existed between a rock and a hard place. the volatility part, everyone said, too much. where are we? where is the sweet spot? >> i was talking this week to a couple of different traders. the banks are bracing for problems, but they are not changing or innovating. the are in the same model. the used to make money off of balanced sheets. that is something they cannot do as well. for ast i'm waiting market change. >> at this point, you look to europe and the difficulties there. with the ceo of deutsche bank coming out in the month of march saying the rest of the year, forget about it. we will probably not make a profit. that the u.s. look at the difficulty of the european banks? i have been hearing conversations like that
starting. even so, the trading revenue seems to be something that is not there for anyone. it is not a question market share. >> the revenue environment is not there for anyone it seems. laura, thank you for being here. i want to get some of the stock movers. julie: let's take a look at intel. it's said to be in talks to license graphics from micro graphics. it has turned to licensing some of its designs as a new source of revenue. the possibility that this is happening, though shares going up. intel of a little bit this morning. woww anden watching j apple. el we had been watching jabl
and apple. we have already heard of murmurings. analysts seemed to be split if this is delayed news. off by 7/10 of 1%. chipotle's shares are down. the new york times reporting it will be expanding its free burrito program to combat some safety andlems with inspection of its products. the company talking about it potleto be that every chi was taxed. now they are seeing a drop in traffic. matt miller is away today, so
i may not make it. coming up on bloomberg tv, the britts invasion. caroline, what is happening? trouble across the pond. i will be co-anchoring with mark barton. we have switzerland, norway, and still they said ramifications. talking about the equity effects. we will be getting when will the drew.ke next with matt guests ono two great a daily have been seeing stocks drop. we are going back to the future. tying talking about self sneakers. your colleague stephanie ruhle will be lining that up for us.
fairly betting. the fed is still signaling there will be to go. we will see how that plays out. for many of us, we don't see the evidence for any rate increases fisher, but we will see what happens. >> below oil prices are certainly impacting on a number of regions in our country that have seen tremendous growth and contributed significantly to canada's overall economic growth in meaningful ways over the past 10 years. justin: now the prices falling, those theories are going through difficulty. >> what a morning on "bloomberg ." better luck for the rest of your day.