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tv   Bloomberg Surveillance  Bloomberg  July 12, 2017 4:00am-7:00am EDT

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mark: briefly rattling investors. pimco's cio said the controversy is dimming the u.s. economic outlook. why is the jobs market hot but inflation not? one of the key questions facing janet yellen as she prepares for her congressional testimony. time to tighten. could canada become the first g7 nation to join the u.s. in raising rates? and amongst the hawks, a dove. ben broadbent says he's not ready for a hike.
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we will get u.k. jobs data in 30 minutes. this is "bloomberg surveillance ." i'm mark barton. check out european equities. they are rising for a second day ahead of the yellen testimony. stoxx 600 is a 0.5%. investors pondering reports of donald trump junior's contact with a russian lawyer. sterling unchanged, was lower, declined for a fourth day. bank of england deputy governor ben broadbent said he isn't ready to support an increase in interest rates. the u.s. 10-year down a basis point. the yield falling for a third day. up, 2%not, 2% higher -- higher. u.s. industry data showing crude and gasoline stockpiles declining, easing a glut. busy day today, just getting data out of china, new yuan
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loans just crossing the bloomberg terminal. is therillion yuan figure. 1.3 was expected. rising 9.4% on the year. datachinese loan supply crossing the bloomberg. here's nejra cehic. nejra: donald trump junior says he never informed his father about a meeting with a person he was told would be a russian government lawyer with potentially damaging information on hillary clinton. he said the meeting was a waste of time and attacked the media's handling of the story. >> i think it a little ridiculous and overplayed and the media has done themselves a disservice by picking sides so flagrantly. they driven people to have to think about it. it is a tough game. nejra: senate republican leaders have dropped tax cuts for high
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income earners in a revised draft of their health care bill. the move aimed at winning over moderate holdouts comes after senate majority leader mitch mcconnell said he's delaying a planned summer recess by two weeks, giving republicans more time to pass the bill. gary cohn is said to be the leading candidate to replace janet yellen as fed chair next year. that is according to politico. the report quotes one republican close to the process as saying the job is probably cohn' if he if he wants cohn's it. ben broadbent said he's not ready to vote for higher interest rates. in an interview, he said there is reason to see the committee moving in that direction but there is still a lot of imponderables. it is tricky to make a decision. the boe is facing a diverging economy in which inflation is above target, but growth is
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week. saudi arabia is said to have pumped more than 10 million barrels of oil a day in june, exceeding its production limit for the first time since brokering the deal to curb the global glut. the nation usually increases demand. crude has declined around 15% this year and entered a bear market last month. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm nejra cehic. this is bloomberg. mark: thanks a lot. janet yellen facing a grilling when she appears before congress. lawmakers will no doubt probe her about a timetable for shrinking the fed's balance sheet and ask why inflation remains tepid despite such a strong jobs market. overnight, we heard from neel kashkari on this very subject. >> if you really were having to compete with other companies to find scarce talent, we would see
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wages climbing, and we are not seeing wages climbing quickly. when i step back and look at this from a nation perspective, and what does it mean for monetary policy, i'm looking for that wage growth as an indicator that maybe the economy is overheating, maybe we are going to start seeing inflation. mark: as western central-bank figures strike an increasingly hawkish tone, canada will likely become the first g7 country to join the u.s. in raising rates. the bank of canada widely expected to hike its interest rate by a quarter percentage point. 3:00 p.m. london time. hasrgan boss jamie dimon one the unwinding of bond buying programs is an unprecedented challenge that may be more disruptive than people think. he spoke in paris yesterday. >> we've never had something like this before. we've never had unwinding like
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this before. that should say something about the risk. mark: let's bring in james barty, head of global assets at merrill lynch, and james bevan. james b. and james b. going to be a tricky one. we will start with the near james first. let's start with questions about yellen. balance sheet first. when are they going to start shrinking it? >> sometime in the second half of the year. i think it is coming. it makes sense the fed starts to unwind the balance sheet here. we are well into the recovery. we saw payrolls numbers that look quite solid. it is about time the fed starts to take some of this out of the system. how disruptive is this going to be? when they eventually decide to reduce the balance sheet, we
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think they will hold off from rate rises a little bit. if that is fine, then follow through. mark: do you concur with that, james? the market seems to say september for balance sheet, end of year for rate hike. >> i think that is correct. the u.s. treasury has been spending cash and that has been supporting the u.s. market. as the balance sheet is reorganized, we get a double hit , which is going to be interesting to watch. mark: and james, the other issue given recent comments from yellen, from other fed officials , on asset prices, do asset prices now figure, do financial market prices, financial conditions, figure in the fed's assessment, and monetary policy, given what the fed chair set a week ago? >> they are not looking at
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markets and saying, we need to puncture a bottle. what they are saying is, notwithstanding the fact that they've raised rates, financial conditions seem to have gotten looser. you can proceed with the tightening because financial conditions are still pretty loose. hence why they can unwind the balance sheet. mark: james, what about inflation? it is going in the opposite direction. we heard from neel kashkari about the link between inflation and wages. well running the labor market hot drive-up wages or inflation? there's a fear you could unleash rampant price pressures and financial bubbles. where are you on this, running the economy a little hot when it comes to stoking inflation and wages? >> i would identify two separate pressures. there has been a shift from skillful people, who are in short supply, to less skillful
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people with low wages. that number has been depressed. the other issue is that it is clear that u.s. companies are seeing a revenue benefit, such that the payment is justified and capable of being sustained. as long as we have low inflation, there will be resistance from employers to pay more. what happens to the one third or one quarter of u.s. and u.k. cpi, which is in global trading goods and services, where we have north asian economies exporting deflation? well an inflation impetus remain in place? what it speaks to is the whole challenge of, what is china going to do in the second half? mark: has china cpi peaked? pbi has been rising after that multi-year downward trend. it is coming off the top now,
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isn't it? >> i think they still want volume gains. in the west, we tend to think that corporations pursue profit. north asian economies are more focused on volume, trying to achieve more market share. i think china wants cash flow and is worried about the stability of its banking system, its credit, its investment, and its property market. i think the pboc and china's authorities are immensely competent, but they have a significant task with which to revel in the second half. mark: james barty, james bevan. let's get the bloomberg business flash. nejra: burberry shares are up after comparable sales beat estimates in the first quarter. that has given the new ceo a boost as he seeks to benefit from a rebound in china while overhauling the u.s. business. tookormer head of celine
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over from christopher bailey this month. fidelity investments is said to have got hundreds of staff yesterday according to an unconfirmed report. last month, fidelity said that nearly 1500 workers opted to accept a buyout offer. the company that made its reputation by picking stocks has been trying to adjust to the wave of investors preferring low-cost funds over actively managed mutuals. the u.k. serious fraud office has opened an investigation into amex foster wheeler over principle -- possible bribery and corruption. the company said the investigation is not expected to impact its merger with john wood group. that is the bloomberg business flash. mark: -- says he never told his father about his meeting with the russian government lawyer who was said to have information on hillary clinton. he explained why he held a controversial meeting. >> in retrospect, i probably
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would have done things differently. this is before the russia mania. for me this was opposition research. they had maybe concrete evidence to the stories i had been hearing about that were probably unreported for years. i wanted to hear it out. really, it went nowhere. senator mark warner, the highest-ranking democrat on the senate intelligence committee, told us the contact was clearly inappropriate. >> those questions are going to be, why was he so excited, and why didn't he understand that having this kind of outreach from a russian national acting, it appeared, on behalf of the russian government, to tear down clinton and bring up his father -- i think anyone, even a rookie, would realize that was inappropriate. mark: let's get more with our congress reporter. still with us, james barty from
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merrill lynch and james bevan from ccl i investment management. kathleen, thanks for joining us. within the context of the ongoing investigation into whether the trump campaign colluded with the russians in the election campaign, what does this actually prove? >> i think this is potentially a big turning point. until now, the trump campaign and officials and administration have been saying, we didn't have any contact with the russian. the story keeps changing bit by bit. with the release of these emails, we can see that as early as june of 2016, donald trump junior at least was aware there was some russian effort to help his father get elected. that is one of the things that is said in these emails. that is fairly significant. if you then take a look back at all the stories and statements
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have of the trump campaign and white house since then, some of them are hard to square. president,et the donald trump junior told us yesterday, wasn't aware of this meeting. >> correct, that is the current story for claim out of the white house. it seems like every time, there's this trip of new information. bigink that is one of the questions now, or the big question. what did the president know and when did he know it, to use a phrase from another investigation. mark: they are all being sucked into the investigations. donald trump junior, one would assume, will be sucked into the special counsel investigation. >> also, there's the capitol hill investigations at the same time. the number two senate republican, john cornyn, said he expected donald trump junior
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would have to testify, perhaps behind closed doors. the top democrat on the senate judiciary committee called for a public hearing of her panel where donald trump junior testify publicly about this. i assume there's going to the pressure on republicans to allow trump junior to testify in public. mark: those that say that donald trump junior was merely collecting opposition research, a normal part of any campaign -- your face says it all. what would you reply to that? >> i think mark warner said it pretty well, even a rookie campaign operative, which the trump family did not have a lot of experience prior to this, but there should be something in nate in someone that is able to distinguish opposition research from any other thing,
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and intelligence, information from a foreign adversary. mark: it was quite threadbare, wasn't it? >> absolutely. we've seen this again and again. he ran as a political outsider. they function as people that, their whole shtick is they aren't typical politicians. they are new to washington. they are going to shake things up. one of the things we see is a lack of background, and i might say a lack of respect, for the traditions that come with being potentially a public servant, and how that is different from being a businessman. iversenmes bevan, dan says the trump junior news dimmed the u.s. economic outlook. his key initiatives less likely to win approval before the 2018 midterm elections. would you agree? >> i think there is a reduced
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probability the tax reforms will go through. u.s. revenues are likely to be dim. i'm drawing a subtle distinction between the outlook for corporate earnings and the outlook for revenues. i look at the indicators in the oecd but also from the pmi and i see robust revenue growth. i don't share if you that the u.s. economy is in trouble. mark: james barty, what is priced into equities when it comes to tax reform? >> i would say not a lot right now. year, wend of last start to get excited about it. you saw stocks starting to move. we've unwound that a lot. when i talked to investors, basically the expectation is that if there are tax cuts, they are going to be small, delayed, and the big issue for markets about ball trump and russia, how
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much does it impact capital? how much does it stop them getting legislation through? that is what markets care about. mark: coming back to our fed discussion, the fed can continue on its gradual path without having to worry about infrastructure measures or other measures. >> for me, the language is more about normalization rather than tightening. i don't think the fed's actions will be anything risking a shift back to recession. i don't worry about equity markets myself. mark: james barty, james bevan, kathleen hunter, thank you for joining us. still to come, saudi arabia said to have breached production limits for the first time. we focus on the oil story next. this is bloomberg. ♪
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mark: you are watching "bloomberg surveillance." saudi arabia is said to have pumped more than 10 million barrels of oil a day in june, exceeding its production limit for the first time since brokering that deal to curb the global supply glut. the kingdom usually raises production in the summer to raise demand for air conditioning and ramadan. crude has declined 15% this year, entered a bear market last month. still with us, james barty and james bevan. james, that is what i
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shall call you now. one of youre, competitors were saying, the market needs from opec. cut and oil won't fall below $40 a barrel. has opec got it within itself? >> i doubt they are going to do much more than they are doing. our view is that the cuts they've actually made are probably enough to stabilize the oil price around here. i don't think they need to go dramatically further. clearly, what they were hoping for is that these cuts would push the oil price back up to $55, $60 a barrel. demand seems to be weaker. u.s. driving has not been a strong. supply has come on stream much faster. we are locked between opec having done the reductions and the supply that comes above $50 a barrel.
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we are probably stuck in a $45, $50 range. mark: james bevan, the commerzbank narrative says opec strategy was doomed from the very beginning. it is all about shale, that is what he said. >> if it were all about shale, there's a ray of light for the saudi's. the rate of growth is beginning to flatten and fall away. that would be good news if that was the only issue. i worry about the motivation of people within the oil industry. the hard reality that sustainable energy and e- vehicles are beginning to lead to a long-term decline in demand for oil -- if you are an oil producing nation, you want to produce a lot right now because it still has value. in 30 years time, nevermind the amount in the ground. people may not want it anymore. look at the number of oil companies that say, we're going
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to be number one in e-cars by 2025. we've had volvo, volkswagen, tesla, all saying they have huge plans. it is the automobile that is the principal driver of global demand for oil. mark: how do we as investors take advantage of that, the push into electric cars? we had volvo announcing that it is going to manufacture only electric or hybrid models from 2019 onwards. >> i would say there are two separate strategies to container -- consider. in terms of the e-vehicle revolution, i would be looking at the tire manufacturers. that is a critical part of maintaining efficiency. michelin is an obvious name to call. the other is trying to deal with the makers of the moving parts. e-cars have so fewer moving parts.
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traditional engineers are in real trouble. the big players like johnson are well-placed to do well on the back of this revolution. if we are correct in saying the oil price is going to remain turbulent, how else might you want to play this? tohink there is a real case saying, let's be buying emerging markets. they will benefit from a rise in the oil price. bp was asked of when peak oil will happen. 2, 2042. date, june up next, with slowing growth and rising inflation, we bring you the latest u.k. jobs data. this is bloomberg. ♪
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qqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqq mark: you are watching "bloomberg surveillance." let's get the bloomberg first word news. nejra: donald trump junior says he never informed his father about a meeting last year with a
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person he was told would be a russian government lawyer with potentially damaging information on hillary clinton. he said the meeting was a waste of time and attacked the media's handling of the story. >> i think it is a little ridiculous and overplayed. i think the media has done themselves a disservice by picking sides so flagrantly. they've driven people to actually have to think about it. national economic council director gary cohn is said to be the leading candidate to replace janet yellen as fed chair next year according to politico. the report quotes one republican close to the process as saying the job is probably cohn's if he wants it. saudi arabia is said to have pumped more than 10 million barrels of oil a day in june, exceeding its production limit for the first time since brokering the deal to curb the global glut. the kingdom usually raises production in the summer to meet
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the demand of air-conditioning. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm nejra cehic. this is bloomberg. mark: just getting some breaking jobs data out of the u.k. consumers continuing to see spending power eroded by feeble wage increases and rising cost of living, despite unemployment falling. regular earnings rising 2% in the three months through may through -- from a year earlier. slightly up from april. well behind the rate of inflation last month. inflation up 2.9% year on year. real pay fell by 0.5%. that figure could turn negative as cpi pushes past 3%, which is driven by the decline in sterling since the brexit vote over a year ago. pay remains subdued even though demand is healthy.
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unemployment fell by 64,000, taking the jobless rate to 4.5%. employment climbed 175,000, the most since the end of 2015, to a record 32 million. the number of unemployed people for vacancy fell to a record low 1.9. these figures underscore the dilemma that split the bank of england over whether to raise interest rates. let's get more on the u.k. ben broadbent said he's not ready to vote for higher rates even though he sees the pressures to do so building up. he says there's reason to see the committee moving in the direction, but there's still a lot of imponderables. he describes making a decision a little bit tricky at the moment. james barty from merrill lynch, james bevan from ccla investment management.
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they really do, james, underscore the dilemma facing boe policymakers. >> if you look at the employment numbers, perhaps the bank of england should be raising rates. you look at the wage inflation numbers and say, if you've only got 2%, the bank of england is not exceeding its inflation target over the medium term. jobless claims have not been up for a few months in a row. the rate of growth is slow. can the strength of those employment gains be sustained going forward? to my mind, ben broadbent is right. the bank of england should be forward-looking. the rise in inflation is squeezing real wages, slowing the economy down, and as long as wage inflation doesn't pick up, the bank of england will be hitting their target. ork: are you a broadbentite are you going to go for the hawks? >> i think you can make a very good case why we need a rate
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hike relatively early. ,here is a broad expectation somehow the consumer benefits. the consumer is still paying 6% or 7% to borrow money. a very significant difference from the 25 bit official rate. the very low official rate is leading to asset price inflation that makes life very difficult in the housing market. it is also not leading to fresh investment. i suspect the government and the bank of england would rather see more investment in the real economy to solve the productivity problem. that isn't going to be solved by low interest rates. i think the bank of england, recognizing domestic inflation remains high, and the global inflation story is not within its control, should be thinking about raising rates. it is fiscal policy. it is the direction of travel
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that needs to be the real focus. mark: all those things picked up by theresa may and our government, which is wobbling, propped up by the dup, that speech to push through anything that isn't brexit, all other things up in the air -- can she push through these much-needed measures on fiscal nature and productivity? >> i think it is difficult for them to do anything other than brexit. the one area where i'm sympathetic is that i suspect the fiscal range will be loosened somewhat. there's already this debate about public-sector pay. clearly that is not going to happen this year. if you look forward to 2018, i think it is almost impossible to maintain its current stance on public-sector pay. philip hammond is going to have to find more room in a slightly higher fiscal deficit to fund that. that may put additional pressure
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on the bank of england. >> to me it is all about growth. if we simply say we are going to pay public servants more, all we have is a bigger bill today. we can have higher taxes, which is redistribution. we can take the money from somewhere else. that is redistribution. or we can grow the economy. we need government policies that encourage investment. encourage rebalancing the economy away from overreliance on financial services. mark: brexit, how is it going from your perspective, james? >> i've previously described brexit as a slow-motion car crash. mark: has that changed? >> i think we have every evidence it is. >> i think the car crash is accelerating. mark: a slow-motion accelerating car crash. >> a lot of people thought immediately after the vote, there was going to be a lot of turmoil. actually, the pain was always
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going to come later. we're seeing sterling's decline. we're seeing foreign direct investment slow down. are we going to get the investment the economy needs? as long as we've got the uncertainty and companies can't be convinced the u.k. is going to stay in the customs union, they are not going to make that foreign direct investment. that is going to drag on growth. the way negotiations have started, it looks like we are not going to get an early conclusion on the trade side. mark: not only have they have to worry about the brexit negotiations, which have started in a tricky manner because of the you nationals living here, what about the government itself? are business is going to invest given the backdrop is so weak and wobbly? >> we worry about stable politics because we got used to stable politics. you go around europe and you think, when did the dutch last
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have a government? yet the dutch economy is fine. germany's industrial production of five percentage points year on year. they've got an election coming up. mark: minority government is not a bad thing? >> as long as there is entrepreneurial flair and real investment. mark: james barty and james bevan, stay with us. janet yellen's semiannual testimony just around the corner. we're going to talk about market positioning for the second half of 2017. that is next. this is bloomberg. ♪
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mark: you are watching "bloomberg surveillance." let's look at the market action.
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nejra cehic is here. nejra: european stocks rebounding from an april low today. we saw them grand lower after controversy over trump junior. u.s. stocks recovered. european stocks didn't. 0.6%.oxx 600 up some energy stocks leading the gains. almost every industry group gaining. historically, july has tended to be the best month. we will see if that follows through. today, european equities bid. look at sterling. we were seeing weakness earlier from the comments from ben broadbent. seeing a little bit of an edge higher after that wage and unemployment data, meaning we are overall flat on sterling at the moment. it was on its fourth day of declines. longest streak of declines march for cable.
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we are keeping a close eye on this. it was the only currency out of the g10 to be declining against the dollar. we were seeing some dollar weakness following through from the politics yesterday and on the dovishness from the fed. the dollar pretty much flat at the moment. treasury yields have been moving lower. we are looking at the two the fed, to janet yellen. also to the bank of canada with that anticipated rate hike. i thought i would show you what has been happening with canadian two-year yields versus the u.s. that yield in canada has been ramping higher in comparison on those expectations and the boc;s boc's hawkish tone. finally, talking about oil, wti above$45 a barrel, brent $48. these bouncing back after some of the bearish positioning in
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about a year. mark: thank you. as markets await testimony from janet yellen, with corporate earnings season getting into full swing, let's talk about how investors should be positioned. with us still, james barty from merrill lynch, james bevan of ccla investment management. james, i know you love talking about earnings. james bevan, how is the earnings season? >> i'm really optimistic. to me, the earnings season is why one can be bullish. i expect decent earnings this year and next year. that allows me to conclude that the s&p 500 is still cheap. mark: you've got to disagree, james. >> sadly, no. i think the earnings season is going to be pretty good. if you look at the things we look at, to give us an idea where the momentum is, the pmi's, there's still a global
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synchronized recovery. that tells us not just that earnings are going to be good this year, but that should run into next year, and equity markets are pretty well supported. we've been cautious over the summer. we felt it was a good start to the year. central banks were becoming more hawkish. that was always going to cause equity markets indigestion. but our argument has been that, as that comes to an end, as bond yields start to stabilize, you want to buy equities again. mark: the queen of charts, hillary clark, compiles all these wonderful charts. g #btv 2012. this essentially shows stoxx 600 estimates by year. usually the trend is up and down. this year they've been remarkably stable. is it warranted, justified?
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>> to me, it will, because we've had very positive numbers. both in manufacturing and in non-manufacturing. i look at the scale of uplift in forward expectations and current conditions. this is consistent with earnings numbers being very robust in europe. mark: what about currency? james barty, trade weighted euro, ggp flat lines. given the euro's path in the first half of the year, monetary policy, how is currency going to play into earnings? >> it is going to be a slight drag. we estimate for every 10% rise in the euro, it knocks 4% off earnings. it is about a 4% move so far. hit to about a 1.6% earnings. when we are talking 15% plus
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earnings growth, the operational leverage comes through from that stronger economic growth. certainly nothing to change the face of the equity markets. mark: james bevan, we've had in in yields. we know why. coordinated hawkish rhetoric from central banks. how much further has that got to run, and at what pace? there -- long-term bear of bond markets but i'm not expecting a collapse. the anchoring of central banks will keep a sensible point for yields. i don't believe there will be a strong selloff. i would like to see a gilt yield that was much higher. that would unshackle the pensions from many of the current perceived obligations and send a real message that the u.k. economy was good for business. we are long way from being able to see a strong gilt market.
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mark: are we, james? >> in terms of a big rise in yields, yes. i think a month or so ago, bond markets were too relaxed about the world. we were starting to price out the vast majority of fed rate hikes. bund yields were down. we started to reset those expectations back to more sensible levels. there's still only about 2.5 rate hikes priced in over the next 2.5 years. my guess is this backup in bond yields has got a little further to go. mark: things a lot, gentlemen. negative yielding bonds equate to 6 trillion now versus 12 trillion just after brexit. james barty, head of global process at at merrill lynch. as a bevan, cio at ccla management. we're going to talk to the private aviation company cutting through any brexit turbulence.
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mr. jet's chairman and founder joins us next. this is bloomberg. ♪
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mark: you are watching
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"bloomberg surveillance." one company that seems to be weathering the global turbulence is the aviation firm which has a fleet of 71 private jets flying clients worldwide. membership sales jumped a record 7% in the first half of the year. the company says it has unparalleled customer experience. i'm joined by vista jet's chairman and founder, thomas. how is business? thomas: business is tremendous. we see chairmen and ceo's turning away from aircraft ownerships and subscribe with us. we make it easy for them to fly and conduct business. mark: that model, is it taking off elsewhere? it is your model, your idea. you came up with that model. who is trying to replicate it? thomas: we don't see anybody replicating it.
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there's the fractional market, as we all know. we have to build out a global infrastructure. we concluded our investment cycle with a $2.5 billion balance sheet and we offer that infrastructure in the most efficient way. mark: 70 planes. how big is it going to be in five years? thomas: in the next three years, we fill up that infrastructure first. that can double the number of hours flown. this year we are going to do about 55,000 hours. from there, we will add airplanes. mark: what about the delays for the global 7000? how concerned are you? thomas: we are in very close contact. we are the largest client around the world. we took more than 100 airplane deliveries. we are not concerned about the delays. there is a clear track record of certifying this aircraft. mark: are you concerned -- do you see bombardier moving
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forward with the global 8000? thomas: that is still in the cards. what the entire industry is expecting is that extra 13 foot in length is now giving you long-haul flights, 15, 16 hours nonstop, and i think that is enough range to the from the middle east to america, and that is the range the industry needed. mark: you are not worried about its financial troubles? thomas: no. we have business as normal with bombardier. great company to work with. they have the canadian government supporting them. mark: we talked about brexit. what about the brexit impact on your business? thomas: we see a very strong business of ceo's, chairmen, flying into london come out of london. london is our number one city in the world. that is a strong indicator for us. mark: where is the growth when
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it comes to traffic to cities? thomas: the biggest growth we have seen in the united states, now the united states is the number one country for takeoff and landing's at vista jet. that is a huge endorsement of our business model in the united states. we see growth from the u.s. to asia, from the u.s. to europe, so that the continental flying. mark: donald trump talking about privatizing the u.s. air traffic control system, what are your thoughts on that? thomas: that is up to the u.s. politics. we perform in the current environment. we will perform in the future environment. the business in the u.s. is very strong. large corporations, ceo's, are saying, why do i need to put this aircraft on my balance sheet if there's a subscription service which does provide me with a better service?
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mark: let's talk about supersonic like. -- supersonic flight. nasa testing technology. getting serious about producing a supersonic business jet. how much would customers be willing to pay for such an experience? thomas: i was a big user of the concorde in the 90's. i know all the business benefits. it is a highly complex technology. i personally believe this is at least 10 years away from putting it into service. i think clients would pay a significant premium. you're selling time. these business jets are time machines. i think supersonic will have a future, but we don't see it anywhere before 10 years. mark: what about the use of technology to better coordinate the unused capacity? do you see any of these efforts being successful? thomas: the apps are another
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sales platform. what we have launched just recently is our own app, which allows clients to see where our airplanes are, and take the airplane wherever they want to take it. chairmen, they want to know where an aircraft is, use it efficiently, and fly to their destination. mark: thomas flohr, chairman and founder of vista jet. "bloomberg surveillance" continues in the next hour. guy johnson and tom keene will be speaking to bruce kasman. this is bloomberg. ♪
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tom: this morning in washington, they are transfixed by trump
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junior emails. they are all on the relationship between the president's campaign and the government of russia. the white house attempts to define pollution and conspiracy. i love it, so does michael mckee. this morning we hear chair answers toimony and piercing questions from representatives of the house. and the many mysteries of dis inflation and relfation, and what does this mean for policymakers? this is "bloomberg surveillance ." i'm tom keene in new york and guy johnson is in for francine lacqua. i was stunned by real wages in the united kingdom, back to 1975. guy: actually, the dates were a bit better than anticipated when it came to the story out of the you cables of the pound was down earlier. two way action in sterling this
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morning. tom: it is interesting to see, folks. this will be a theme all through "surveillance" today. bruce kasman from jpmorgan will join us. from our first word news, here is taylor riggs. reporter: donald junior says he never told his father about the meeting last year with the russian government lawyer with potentially damaging information on hillary clinton. speaking on fox news, he attacked the media's handling of the story. >> i think it is a little bit ridiculous and overplayed. i think people are getting that the media has done themselves a disservice by picking sides so flagrantly. he also said he "probably would have done things a little differently." wall street awaits congressional testimony from janet yellen. she delivers the semiannual
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monetary policy report and answers questions on the state of the economy before the house today. you can see that live right here on bloomberg television at 10:00 a.m. wall street time. the bank of canada announces the interest rate decision today and willmists say canada become the first group of seven countries to join the u.s. in raising rates. this is be the first increase since 2010. investors are looking at the decision as a possible harbinger of things to come globally. british consumers are continuing to see spending power eroded with the wage increases, even with unemployment falling to a 42 year low. so, as a result, fell by 0.5%. that figure is forecasted to push increasingly negative. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i'm taylor riggs.
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this is bloomberg. tom: thank you, taylor. equities, bonds, currencies, commodities. we will have all of this with michael mckee in washington at the 10:00 hour. the curve, a little bit flatter. next screen, please. oil with a left this morning. the yen, stronger in from that weak week over the last four to six days. the renminbi gets my attention. and is a stronger renminbi as it got a lot of play, it surprised me how quiet people are on the yuan. guy: absolutely. they could just be a dollar story this morning. the pound has come back, talking about the cable rate. earlier this morning and weekend, indicating he is not ready to raise rates. the data is better than expected
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over the last 30 minutes out of the u.k. when it comes to the earnings picture. but not as squeezed, much as anticipated. if unemployment gives going down, we will get some sort of an effect on the wage data. who knosws when. that is more good news for the hawks at the bank of england. european stocks are up 1.5%. there is weird stuff happening in tehe bund market. oil is climbing another day today, which is worth paying attention to. tom: thank you so much for that. let me go to the bloomberg. this is a chart for char air yellen. political on the article with gary cohn from the white house is a future fed chairman. this is the lollipop chart, two year yield. we have this up, up, up move in
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yields. is this escape velocity? here,reach this curve up here is the next meeting, and here is where we might have a new fed chairman. that gives you a graphic of the two year yield and chair yellen. guy: one of the more interesting decisions today comes from canada. tom: yes. guy: we will be paying attention to this throughout the day. we have seen the cab gaining serious traction. but the market is still nervous about this. thise short going into decision. there is interesting marketing positioning going on here. this blue line shows you the risk reversals and this is the one week in the white. the skew favors coal. not everybody is completely convinced that the bank of canada is going to deliver later on and if it doesn't, you will
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be a massive market reaction. guy: i want to bring my bloomberg global audience into what we are observing in the u.s. with theyork times" latest lead on the story with her conversation with "the post," etc. ofs is an email on the cover "the new york times." when was the last time you saw an female on the cover of a newspaper? that is the uproar we have seen over the last 72 hours. mr. trump junior appeared last night most comfortably with sean hannity of fox. here he is. >> in retrospect i would have done things different levels of this is before the russia-mania. for me, this was opposition research. they had something, maybe concrete evidence to all the stories i was hearing about, but maybe they were underreported. i wanted to hear it out. but really, it went nowhere and
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it was apparent that was not what the meeting was about. tom: joining us now, kathleen hunter at the desk with guy johnson. and bhanu baweja will join us as well. kathleen, let me go to you here. can i make the statement that policy discussions are dead because of the uproar over mr. trump junior? >> i think that a lot of the policy discussions, or discussion surrounding the trump agenda, where all my support prior to yesterday -- were on life support, prior to yesterday's revelations. there was a republican lunch that was going to be about trying to find a path forward on an obamacare repeal. the donald trump junior news broke as that was breaking up. that became kind of -- it hijacked that conversation and all of the discussion on capitol hill was about trump and russia
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again, and not necessarily about an obamacare appeal. definitely on life support, maybe dead for good, a lot of the trump agenda. tom: help educate us on what i am trying to get up to speed on, which is this collusion and conspiracy. what have you learned in the last 24 hours? >> the idea of collusion is, legally speaking, these are all terms where there is a legal definition versus an ethical or what should be done best practices definition. i think with conspiracy it is usually, you have groups of people working to act together and when it comes to collusion, i think that what we are seeing from donald trump junior, in terms of his contact with who he believed to be a russian government official, who he believed would be providing him information that would help his father win the campaign, which he also was told russia was trying to do, i think a lot of
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that goes pretty far towards showing at least, you know, on an ethical level that there was some level of collusion. the legal question, lawyers are divided on whether or not that can be proved. guy: funny, financial markets can generally only think of one thing that one time. >> this is an important story because the question is whether we will be a big rebound in capex in the u.s. that is the big question for q2 and q3. this does muddy the waters. if you just look at financial markets, there is not a lot been priced in for the trump agenda, as you said. nonetheless, at the margin, this does add to political uncertainty, which does mean rebound, that might get postponed even further. i would not say this is completely immaterial. this might not matter for the s&p right away, but it matters
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for the economy and therefore, matters for what the fed is thinking medium-term. guy: if it gets worse, is there a point at which it you go, i need to sears the start pricing this in? it is an incremental story, thus far. you can't really figure out -- we're back to where we started on the reflation trade. the market is not expecting much in terms of the policy agenda. do you expect a point in time when this it celebrates? >> the way the market has priced in geopolitical and local risk is very binary. the way they priced in the italian referendum, brexit, trump -- the payoff for that has been exactly the opposite of how people have priced it out. i don't think this will be priced in incrementally. i think this will be priced digitally. my worry is that this leads to uncertainty in.
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-- uncertainty in capex. his agenda is about manufacturing in the u.s. while you have seen some improvement in jobs growth, you have nothing any improvement in capitalization. tom: kathleen, the president i believe attend paris for bastille day. how will he be greeted? >> he was just in europe. the cease-fire, the syrian cease-fire deal he struck with putin was overshadowed by the problems that come. when he lands in france, this will continue to be a question that dogs him. tom: kathleen, thank you very m uch. we will continue with bhanu baweja, a lot to talk about on dollar dynamics. and of course will look for chair yellen at 10:00 a.m. today. michael mckee is in washington
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to lend perspective through the morning. chair yellen with the testimony, but really, those answers to piercing questions. from london, from new york, this is bloomberg. ♪ reporter: this is "bloomberg
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surveillance." i'm taylor riggs. every top estimates, comparable sales were up 4%. burberry said results are boosted by strengthen mainland china. the u.k. led gains in europe him a while the americas remained weak. twitter has a new chief financial officer. it is the second time the social media company has turned to an investment bank for executive to
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revive the fortunes. he will take over the role next month. that is your bloomberg business flash. guy: thank you very much indeed. janet yellen begins her semiannual testimony in washington later today on the hill. investors looking for guidance on when the fed could start reducing its balance sheet. yesterday we got a little bit of guidance from lael brainard, one of the more dovish members from the fomc. she is comfortable with pushing have with plans to starts ranking the balance sheet -- to start shrinking the balance sheet soon. she was less clear on when rates should be raised. president trump is increasingly unlikely to nominate yellen for another term, according to politico. politico thinks that gary cohen could be the lead candidate to replace her. let's get more with bhanu baweja , ubs head. it comesher or, when
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to september, we start rolling the balance sheet off, and december, we start increasing rates? do i think of those two as a package, or do i think of them as separate events? >> they are a package, but there is a sequence.. more likelyey will go for a rate hike. lael brainard said yesterday they do want to get rates up to a certain level. so, there is a threshold. in case they need it to, if the economy were to unexpectedly tank, they would cut rates again. they want the policy before they start moving on the balance sheet. she is also quite clear on the difference between these policies. the shortened rates, the policy rate, has an impact on the dollar, which is why she does not want that to be pushed too far. she maintains her stance that the real, terminal rate for the fed is close to zero.
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can go.nce sheet the reason why her testimony was regarded as dovish is because she said the terminal interest rate is still zero, and that we are almost there. we don't have a lot more work to do out here. that is what makes yellen's testimony interesting. they shouldhe idea be getting up to a positive or at least neutral rate in the fed funds. this is the bloomberg dollar index, which is very good math. here is the election over here, a strong dollar, and the role is going to end, as bhanu knows it. this is a weak trend since january of this year. how does chair yellen adapt to a dollar that has confounded everyone? >> i would think they would be happy with the outcome of the dollar. this is why lael brainard has said we need to go slightly slower, but one thing brainard
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-- in december of 2015, brainard was the first one to say we need to be careful about the international consequences, i.e. china, of a tightened fed policy. the one thing the fed is quite comfortable with. this morning we saw china's credit numbers being released. you spoke about the renminbi, very stable, the lowest it has been in two years. aboutwere much less financial conditions tightening. i think at the margin, if the dollar strengthens a little bit and lael brainard has been arguing against getting too aggressive on rates, but if the dollar strengthens a little bit against emerging markets, i has the ability to become reduced. because emerging markets are at least much more stable. guy: what do we know about gary cohn's view of monetary policy? >> it is very likely similar to
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his earlier colic deadly. h-- is earlier colleague dudley. he will be focused on financial conditions. there seems to be a preset course from the fed. i don't think it is likely he will knock that off. in this context, and given the fact that unemployment -- you will be quite focused on unemployment. his political affiliations are democrat and he is not worked for trump for a long time. i think that will mean he is focused on the labor market, but there is not enough here, other than his obvious understanding of the financial conditions. tom: that will keep us busy through the summer and frankly, into the fall and next year as well. you really wonder where this will go with randal qaurles as the vice chairman. thoselly wonder, between two. withll continue
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bhanu baweja. we will do a touch on brazil as well. in the next hour, bruce kasman with an interesting research note from jpmorgan on reflation. reflation. stay with us. this is bloomberg. ♪ guy: 23 minutes after the hour.
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guy johnson in for francine lacqua. the senate has approved a bill loosening decades of labor laws, a big victory for president
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michel temer. he is awaiting a report recommending whether he should be prosecuted or not on fraud charges. still with us is bhanu baweja. this is a big win. there is still a lot coming down the pipe for michel temer, but the labor market stuff is the easy bit and the pension market stuff is the hard bed. is the rate of change the problem? he is not making progress fast enough to get brazil out of the hole it is in? >> this becomes a big political question. when are we likely to see the next regime come in and take the mantle? i think the market has now accepted the current administration will not be able to present a plan to stabilize brazil. remember, the current rate, we are losing time. it is not just the fact that we will get pension reform eventually we should be happy about. it matters whether we get it in
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2017, 2018 come or 2019 and the markets are not prized for 2019. the credit risk increases because there is a risk that brazil goes to 90% before 2021, which is what the imf expects if we don't get the primary deficit in order. while this was a step in the right direction, we need to see pension reform being expedited and for that, we need to see the next regime come in. guy: if i see michel temer being prosecuted, do i see that as a positive? how do i price that? >> yes, the sooner you get a new regime, the better it is for the market. the market is helpful we see this sooner rather than later. inflation has really come off in brazil. there is a possibility that we g policy loser, so the
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market is taking the view that monetary policy will get cut more than what is being priced in. i think that makes sense. tom: we will continue with bhanu baweja. much to talk about here on the challenges of commodity-based e.m., as well as not commodity. on the other ward day. howard ward was brilliant. his colleague will join us during the 6:00 hour tomorrow and i promise i will get him to give you some stock tips. this is bloomberg. ♪
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tom: good morning. new york city, a shot of washington but they are so shaken up we will not give you washington's shots.
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they are ugly, turmoil. we have the yelling testimony at 10:00 and michael mckee. and we have all of the uproar over mr. trump jr.. kevin cirilli will join us. really looking forward to speaking to libby cantrill of pimco and we will do that about the linkage of policy or disappearance of a policy debate and health-care front and center. it is like me,, they will eliminate some vacation days. it is a miracle in washington. they will shorten at their recess. is that where francine is? she is on recess? mark: on vacation, i think. tom: news with taylor riggs. taylor: we will start here. jr. is saying his meeting with the kremlin
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connected lawyer is the extent of his former connections with the soviets. speaking on fox news, he said he probably has met with other people from russia but insisted he did not try to impact or damage hillary clinton. more than half a dozen republican senators have discussed alternatives to the health care bill even after majority leader mitch mcconnell said he plans a vote next week. fund so on an insurance they do not have to raise prices. attorney general jeff sessions is poised to announce a law enactment targeting health care fraud. people familiar said it will focus on opioid treatment that exploits obamacare. and you can prosecutor opened an investigation -- and a u.k.
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prosecutor has opened an investigation into bribery and -- it is not expected to affect 2.8 billion takeover by john wood group. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries, i am taylor riggs. this is bloomberg. tom? showed crude and gasoline stockpiles declined ahead of an eia report. ,oining us now is miswin mahesh good morning to you. of big housesmber over the past few days lowering their expectations for the oil price. is it the inventory data doing that or the inability of opec to do anything besides talk in nigeria? why is everybody turning pale? miswin mahesh: it has been a
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combination. inventory, it is still kind of getting to the constructive level but not as much as the market would have liked it at this point in the summer season. second in terms of libya and nigeria coming back, smart balance is canned not within the opec -- smarter balances not within the opec deal more than this point last year. all of that is adding and weakening sentiment. point --s what do a opec exports look like? willow bay c -- will they come in lower or stay where they are? i think that is the key, how will markets balance? guy: one of the things we expect is the dollar goes up and oil goes down and vice versa.
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the dollar has been going down in oil has gone down, explain. miswin mahesh: the correlation between oil and the dollar has been on and off. at this point, whenever we see the correlation very strong, it is a point when demand is in the driver's seat. the supply side is driving the market and that is what we are seeing the correlation breakdown. having itseeing oil own fundamentals, demand is doing quite well at this stage. that said, it would not be surprised if later on we start seeing the correlation coming back. for now, it is a supply side. a chart with a two day moving average. to $30 arrel and down barrel. the home on the range, a little
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bit of a curve. a little bit of a weakening. what price does saudi arabia want? miswin mahesh: ideally, they want you dollars a barrel level -- $60 a barrel level. theyarket balancing initiated with the opec deal was aimed at achieving that. clearly, we're not at those levels. tom: why is that? rain newton-smith: the market -- miswin mahesh: the market is not as weak at what the financial markets are looking at. -- it is as it should be at a price level where we are at the moment, for instance. in terms of ample balance orilable, it is not as much as large as it was a few months
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ago. ce.: defined your patien we don't know their level of patients at $45 a barrel. when does the patience run out? miswin mahesh: the july meeting will be crucial because of that is when they are monitoring the members and some of the compliance. we might all to -- also see nigeria in libya. might also see headlines from nigeria and libya. in terms of what they could do to balance the market, there is still a big opportunity. might also see headlines from nigeria and libya. we cannot throw it out completely in terms of what they can do in balancing and building up the process. at the moment, as they are waiting and watching and have
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done something already in terms of how it plays out. it does take time for it to feed into the market. and sending sentiment in reverse inventoriesterms of in actual exploit numbers. guy: thank you. miswin mahesh, oil analyst joining us down the line. thoughts? >> i see one of the crucial aspects which we have not discussed is what is the break even of the show producers? put on a note suggesting above 48 and a lot more supply. and the state of oklahoma, texas, you see much higher than initially estimated. between libya and nigeria and the u.s., you made up about 70%-80% of the cuts of assuming they will hold in the exports will decline. if we see it to does not roll
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over from march 2018, you will see the market being oversupplied and into 2019. i think there is a certain feeling -- ceiling of how high the oil price can go. i think much greater production from the u.s. and nigeria. i think the usp's has -- u.s. peace, it is the change variable and i think above 48 -- guy: what is that 40 a number? bhanu baweja: closer to 42 and that is technology. that is what we are not taking into account. i think that number will be much lower and its limits how high oil can go. china consumption, these are huge demand and doing quite well right now. electric vehicles is a 10 year story on oil. over the next few years, the
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most important area will be marginal cost of production of and it has been coming down a you will see much higher supply and as low as 20. in a year's time, it will be lower. tom: next up, bruce kasman. bloomberg businessweek with a relaunch by megan murphy. i cannot tell you about our new issue. it is under secret route. there is the old issue. -- it is under secret route. -- it is under secret wrap. it has a celebrity. ♪
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guy: 5:41. i am guy johnson. tom keene in new york, bright and early. it is -- sorry to say, tom. combatbetween to help terrorism funding, quite insufficient according to a statement that are imposing a blockade as u.s. secretary of state visited saudi. our reporter joins us from dubai. you said we have a pair of secretary of state, bouncing back, they call the shovel diplomacy. this is a diplomatic and producing it outcome -- if it diplomatic and producing it outcome? >> they will get some ideas and they signed a deal in this memorandum around terrorism financing would possibly unlock
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some doors when they sit down with the saudi block them and intothursday -- bloc thursday. on the qatari side, let me run you through what the saudi led bloc said after the deal was signed "the 4 countries reentered -- reiterated cooperation of the just, that will ensure terrorism is a dressed and stability and security are established in the region." underscoring more needs to be done and groaned the prospect of an immediate resolution, at least for the moment into cold water. guy: markets are trading higher because we are expecting progress or because the oil price and energy is trading higher? >> oil trading higher always helps. we are at an oil price that is not positive for the week.
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there have been ups and downs and movements in crude oil. that plays a role in positive sentiment but the broad range rally we are seeing, qatar is up over 2% and the same applies to other parts of the region. these are whispers that there is confidence that maybe rex tillerson, the man that all of the hopes have been pinned down to can yield tangible results in puts of currency wars and up the chart. tom: when i look at the this, all i can think about is a fear of terror. identify for our global audience what the royal family of saudi arabia is afraid of. what is their fear when they look at the affairs of qatar? as much as they say it is about terrorism and make an argument
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to be made, the reality is there is another element, an element of fears of influence of a global voice and a saudi's have never been very happy that qatar has pushed far above their weight in terms of global capital markets and global politics, financing. they want the qataris to be under the same umbrella as the saudi's and the rest of the region to be a unified force. they do not like there is a wealthy neighbor doing their own thing. that is what is most about than terrorism. guy: great stuff. yousef gamal el-din. what is this about and how does it gets resolved? bhanu baweja: i don't think it gets resolved in a hurry. it is about qatar's foreign policy, especially that -- >> is it about anything else?
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want to interrupt your guy, i think this is important. bhanu, continue on foreign policy. it is about terrorism and the politics of the region, isn't it? bhanu baweja: it is. how qatar have supported some political islamic movements across the entire region and how qatar has gotten closer to iran. if you look at the list of 13 domestic the eu, or the gcc alliance has made him a it is very difficult for qatar to give in without saying my for policy is what saudi wants to do. i think that is why it will be extended. qatar is not the biggest oil producer. qatar's on economy is what it matters for and qatar's banks. i do not think we are likely to see any other decency currencies. -- gcc currencies.
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ass becomes more interesting the involvement of iran becomes more prominent within what is happening within saudi and the rest of the bloc. and eu on one side and qatar is getting closer to iran and maybe forcing qatar closer to iran through putting this pressure. guy: in oil prices continue to decline, can we expect the region to be more tents? if you are saudi arabia and you have an oil price of $20 a barrel, you have a real problem. bhanu baweja: you certainly do. regimes have ramped up expenditures to bring back revenues are collapsing. this will be a major fiscal problem for all of these oil producers, including qatar and saudi. i do not believe it will be a currency problem. i would not be buying that
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dollar call just yet stop even qatar -- yet. -- even qatar has billions of assets abroad, this will be played locally instead of the middle east. valuable is extremely what you are talking about. where does the united kingdom and where does the united states really fit in? i do not buy that shuttle diplomacy will get this done. where does britain and the united states sit in? bhanu baweja: i think rex tillerson will find that his troops to the middle east -- that his trip to the middle east will be less fruitful than when he was an oil man. the region is becoming more internally in a mashed. -- in a mashed -- internally enmeshed. tillerson is not the mediator. the mediator is still kuwait.
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it has to be dealt with internally. i do not think they will be with to make a dent. the lines are being drawn. the mainline between saudi and iran and that is what this is about. the u.s.believe administration has a clear view on how they wanted to proceed and as a result, the same process will last some time. tom: bhanu baweja will stay joining us from ubs. a function on your tv that you can watch and all of our shows, tv and access the radio with you. a fantastic sidebar that provides you with the data and charts. break them out and asked a guess a question. open up an ib channel. bloomberg oh. this is bloomberg. ♪ -- bloomberg oh. -- this is bloomberg. ♪
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guy: welcome back. you are watching "surveillance." back to bhanu baweja of ubs. bank of canada later today. will it deliver in the market
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has priced so much in delivering. we have flipped on a dime on a pound. now we're expecting rate hikes. are we getting ahead of ourselves with some of the banks? bhanu baweja: especially with these two. boeou look at the curve, prices almost one rate hike which is where we are with he said. his relative pricing does not make sense. -- where we are with the fed. inflation unlike canada is stable. while been coming down the labor market is quite hot. it does not make sense for canada to be priced for nearly twice as much as the u.s. and the market is overpriced and should be reflected in the currency. as the dollar comes down, the canadian dollar has rallied quite aggressively. we would it the other side of
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that right now. speaking of the u.k., the markets have priced in for one rate hike. i think if we do that a rate hike, it is difficult to see that as the beginning of the cycle and it would be one rate hike and then nothing which is what the markets price for. i find it interesting that despite a does repricing on the front end and the u.k., sterling has now strengthened -- despite a repricing on the front end in the u.k., sterling has now strengthened. they have priced in the rate hike. they agree with the boe that hikes are going up. i think it's because the market's position is not quite as short in the market sees there is midterm challenges. real wages are declining by less than you think. also because credit impulses has
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been so positive and held up because of credit going up. take that away and economy will clearly, down. to go back to commanding heights and lack of wage growth and pre-world war ii era, is that where we are now? is a good, bad or lousy wage growth? which way for the politicians? bhanu baweja: it would be more about fiscal policy and at this moment, we do not expect fiscal policy much. it is the monetary policy lever we are concerned about. given nominal wages have not grown and consumer demand has been held up by an increase in consumer credit and inflation is boee high, as debt did, the would have to look through this as well and probably not hike more than once. that says the sterling will come
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under pressure again and quite surprising we have not seen any shots covering. , thank you, aeja very rewarding our. -- a very rewarding hour. the yellen testimony and bruce kasman comes out the great a note at jpmorgan. bruce kasman on fire. on fire this weekend over reflation. bruce kasman says stop worrying about disinflation and we will do that in the next hour. this is bloomberg. ♪
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tom: this morning, washington is transfixed by trump jr.'s emails
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about the government in russia. legal experts defining collusion and conspiracy. i love it. michael mckee in washington. chair yellen testimony and answers to piercing questions from representatives of the house. mysteries of inflation and disinflation, bruce kasman will join us. really interesting on reflation. this is "bloomberg surveillance" live from new york. i am tom keene. guy johnson beleaguered by real wage decline. this is a big deal. and the united kingdom, wages are going down. guy: what it is doing is borrowing. how long can that credit impulses last and what does the picture really look like? tom: we need an update on washington before we go does
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some really. here is taylor riggs for taylor: donald trump jr. said he never told his father about a meeting with what would be a government lawyer with damaging information on hillary clinton. he attacked the media handling of the story. >> i think it is a little bit of ridiculous and people are getting it. the media has done themselves a disservice i picking size and and pushed people -- sides have pushed people to think about it. said "hee probably probably would have done things a little bit differently." congress is awaiting testimony from chair yellen. she will answer questions on the state of the economy before the house today. you can see it right here on bloomberg tv at 10:00 wall street time. bank of canada announces decisions today and economist say they will likely become the
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first group of seven country to join u.s. and breaking rates and where a be the first by the bank 2010 -- it would be the first by the bank of canada since 2010. british consumers are continuing to see spending power eroded by real wage increases. regular earnings rose 2% in the three months through may. that is well behind the rate of inflation and rail paid fell by 0.5% and that is forecasted to turn increasingly negative as it pushes past 3%. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloomberg. guy? tom? tom: right to the data before mr. cirelli in washington, bonds currencies. curve flattening this morning. on to the next screen.
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andwith a lift, brent crude the guy has that statistic. 6.788 on a stronger chinese yuan. guy: let's talk about the british pound. the wage data while weak relative to inflation was better than the market was expecting which is why the pound has picked up. one person sending and a lower and he said he does not think it is time for a rate hike. we had all german auction and has gone reasonably well on the 10 year. tantrumys back, a mini by a french auction. guy: a higher german yield this morning, high your 10 year yield. 24has been extraordinary hours in the united states of
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america. there is no measurement all the focus in washington. here is mr. trump jr. with a hannity of fox news last night. >> in retrospect, i probably would have done things differently. this is before rock -- russia maybe a in a the press. ,aybe concrete evidence probably underreported for years not just during the campaign. i wanted to hear it out. it went nowhere and that is apparent that is not what the meeting was about tom: kevin cirilli is our chief washington correspondent. let me ask you the question i was asked yesterday, how does mr. mueller responded to the events of the last three days? will have toe investigate. i spoke to several democrats and republicans, the republicans feel like this is going to be territory for special counsel robert mueller.
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and i should note i spoke with mark meadows who said he thinks eller will use this as part of the investigation. there's a nomination hearing today and he is the president's nominate to be director of the fbi and i am told he will face questions on the development over the last 24 hours that we just saw. tom: i am trying to keep up with you and i am not doing a good job. 17 at first who do not all agree on collusion and conspiracy. caseid at the case for the of collusion is no conclusive. five believe the circumstantial evidence is damning but we do not know enough to drop conclusion. we havehe experts says never seen anything like this in
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the history of the united states of america and conclusion itself is not a crime. another academic said it depends on which side of the line a meeting falls, not a success. i would suggest the white house is not want to split hairs. how does the white house respond to 17 experts with 17 different opinions on it? kevin: i spoke with one source who works frequently with the white house and he told me, there is the reality setting in that this is very bad, so to speak. my buddy jonathan with the story today, last night, essentially saying the white house is trying to flip this back on democrats stop i would look for the next 24-48 hours for there to be an emerging strategist out of the white house in terms of hitting back hard against the democrats
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on this issue. particularly on former president's relationship with the russians. guy: where is the vice president? what is he saying? how is he positioned himself? cabinet bank this has been -- kevin: this has been fascinating. the vice president heads to kentucky and will be having a small business speech as a meeting with small business leaders. there have been a lot of reports inside of the beltway press, as well as national press, "the boston globe" guys suggesting he is laying the groundwork for a 2020 work and has not given an interview. in his public statement yesterday, he noted he was not part of the campaign when it is july 9 meeting with metaphor and junior took place. tom: is mr. previous done? done? preiebus
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kevin: there have been so many rumors i cannot keep up. tom: thank you. in washington with the wall -- with the daily washington gossip. an important discussion in europe. guy: we do. the eu's brexit negotiator is briefing the press. if you want to see it, you can see it on the screen. if you must continue, life go on your screen -- live go on your screen. leading the charge out of the parliament. euking at the making sure citizens will not be second-class citizens. this is where the fight is right and now. barnier making that clear. he is speaking french, here is the translation for -- translation. >> the financial framework, the
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current one and then we will be able to start our work and agree on negotiations on such a methodology. now, for questions which relate to island, we want to start the discussions quickly on maintaining the common travel area between island and at the united kingdom. we want to define precisely, precisely all of the different relevant assets and also protecting the commitment of the good friday agreement. tom: you can see that on live ago which is a good resource for the types of things going on in the united kingdom. on the global note and whether global optimism is bruce kasman of jpmorgan. when mr. dimon has a free
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market, he called up bruce kasman. you are having a couple coffee with a mr. dimon and you are a rare optimist. will of the u.s. deliver to eight point -- 2.8% gdp or better? --nu baweja: we are off bruce kasman: we're optimistic economy.obal we think the u.s. is storing ok and we do not expect a bit policy changes. the 2% economy was driving the global economy is the strength of western europe, the improvement in emerging markets, supportives are very and this so a world in which the u.s. is part, not the central driving force. discussed, do you assume we know fiscal efforts he cuts of all of mr. trump jr. stuff? do you say it is not going to
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happen -- efforts because of all of the mr. trump jr. stuff? bruce kasman: we thought it might come at the end of the year. our bid call is not about donald trump -- big call is not about donald trump but republicans commented to consensus on the key issues around tax reform, infrastructure spending and other issues. guy: a lot to talk about. bruce kasman with a smart of you on disinflation. with the house of representatives, it might come up and we will see it with chair yellen. michael mckee with important perspective on tv and radio in washington. janet yellen to the house this morning, 10:00 a.m. this is bloomberg. stay with us. ♪
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>> there a questions. talking in ther u.k. no softening from the other side of the table. we want eu citizens to have the same rights. it does not guarantee reciprocity. we want to be the ultimate guarantor of rights. the u.k. recognizes its dues. the story surrounding brexit, barnier, a fascinating press conference. if you want to watch it, live go. tom: it would be something to know michael mckee walks into the rayburn office building 2.4 million square feet and today it will be filled with hot air as
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questions are thrown at janet yellen. what are we going to hear in the questions from the representatives? what will be different this time? michael: it is-- raising rates but members of congress will want to know the same thing, when will you raise rates again and how far will you go? republicans are going to suggest perhaps we need more stimulus and the economy and we could use more employment. on the other end, there are critics of the fed and 30's policy and they will be questioning about when the fed what the size of the balance sheet will be when they finish. it is probably a question she does not have an answer. cohn written up in politico about potential chairman, is she going to get
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rude questions about her future and a different kind of fed in the coming years? she will get rude questions, what about her future, we do not know. you walk and here with headline saying you are likely to be replaced knowing that today and tomorrow, probably your last 2 hearings the for congress. it is -- before congress and it will be interesting to see how she handles it. if donald trump were paying attention to what she is saying and like what she says, maybe it would help make her case. the latest is she does not have much of a case with them anymore. guy: a person indicating she have concerns about raising short-term rates too far because of the impact on the dollar. will we hear the story being laid out about the chair as well today?
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michael: it probably will be a question in some form. here and no economist they do not really understand the economy and it may not get into that level. the dollar will probably come up. yellen would probably say the rest of the world is normalizing, the ecb expected to talk about tapering its own balance sheet purchases. michael mckee, thank you. you will be with us during the morning from the rayburn building. bruce kasman with us and libby cantrill from our studios in washington will be with us in a bit. does president trump really want chair, a fed chair that loves low rates because low rates are good for business and the animal spirit that mr. trump know so well? bruce kasman: quite frankly, i
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do not know the answer. we do not have trump talking in a clear and detailed way from the next said chair. that is one of the uncertainties we face. if he wants somebody strong growth, janet yellen is as good a candidate as he would get stuck he is in -- would get. -- he is not want to choose janet yellen a. i do not know if he will choose somebody progrowth or changing the agenda at the fed or somebody who has a more compliant of you about the fed. tom: randy quarrels, a business cohn,, maybe gary democrat financier kind of guy, where are the academic phd's? are we going to a fed in the melzer history books? bruce kasman: we have not been in a long time with fed chair who has not been a trained
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economist and also had monetary policy experience. that does not necessarily mean we will have a bad of monetary policy but creates more uncertainty about what the regime will be. it is a close line that links alan greenspan, ben bernanke and janet yellen and hs they break the link and go into what i believe uncharted territory -- and i believe break the link a goal into what i believe uncharted territory. >> what we know about gary cohn and monetary policy? bruce kasman: he does not have much experience. he is experienced in financial markets and as a manager but does not have experience in this space. we do not know how he will perform, recognizing the fed is not a one-man show. committee and a lot of other people who are well trained and experienced in study monetary policy.
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tom: bruce kasman with us. libbyl come back with cantrill. tomorrow mario at 6:00 a.m. this is bloomberg. stay with us. ♪
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tom: too much excitement. guy johnson in with francine lacqua -- in for francine lacqua. mr. barnier speaking to the eu and we will talk about that
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later. bruce kasman. pimcocantrill at straddles the line between the chaos and cacophony of her washington and policy. let's talk about that. after what we have seen which ,as unimaginable, four days ago what we have seen in the last 24 hours, the mystery in the next 24 hours, who cares about health care. libby cantrill: this makes the republicans pretty ambitious legislative agenda that much more difficult and ambitious. they are trying to push forward on health care and unpopular bill. they need every help that can get including the strength of the bully pulpit of the president and they do not have it right now. i think health care will be difficult to get over the threshold. tom: bruce kasman just to describe a battered global economy without the locomotive of the u.s.
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gdp, whata sub 3% does it do to the policymakers who need to get reelected? bruce kasman -- libby cantrill: you would like to think it would put more urgency to help accelerate the sense of urgency. however, they are trying to do really difficult things. however care is complex, tax reform is even more complex. more winners and losers and you see the lobbyists and special interests coming out of the woodwork. while you would like to them it would put on pressure on policymakers to advance progrowth legislation, i think what other are doing is really difficult. regardless of what is happening in the economy, it does not change the fact. it will beg about hard to get any of it done by the midterm, would you agree?
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do we get anything done and the second half? libby cantrill: what dan was saying, these aims are inherently difficult are made that much more difficult by the -- destruction of the russia investigation and the president's pretty low approval rating. whether things get done before the midterm is too early to say. however, our review at pimco even if we do see action on tax reform, it will be a lot smaller, a lot less bold and probably longer needed that some segments had expected. tom: let's come back with libby cantrill and bruce kasman. this is bloomberg. ♪ these days families want to be connected 24/7.
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that's why at comcast we're continuing to make our services more reliable than ever. like technology that can update itself. an advanced fiber-network infrustructure. new, more reliable equipment for your home. and a new culture built around customer service.
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it all adds up to our most reliable network ever. one that keeps you connected to what matters most. tom: bloomberg surveillance in new york and london, focused on washington. we welcome all of you with an update on the uproar in
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washington with our first word news. here is taylor riggs. >> starting with donald trump, jr.. he says his meeting with the kremlin connected lawyer is the extent of his formal contact with russian officials and associates. speaking last night, on fox news, he said "he has probably met with other people from russia but insisted he did not attempt to coordinate or impact the election or try to damage hillary clinton." trumps ago president tweeted "he was open, transparent, and innocent. this is the greatest witchhunt in political history. sad." half a dozen republican and democratic senators have discussed alternatives to the embattled alternative gop health care bill. mitch mcconnell plans the vote next week. the main idea involves authorizing cost-sharing payments for insurers so they don't have to raise prices for covering bigger pools of customers. attorney general jeff sessions is poised to announce a major law enforcement action this week
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targeting health care fraud. people familiar with the metal say it will -- with the matter say it will focus on opioid treatment under obamacare plans. hundreds of arrests are planned across the country. u.k. prosecutors have opened an investigation into british engineering firm wheeler over possible bribery and corruption and use of third parties. the probe is not expected to affect its $2.8 billion takeover. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. guy: think you very much indeed. the eu's chief brexit negotiator michael barnier addressing the press and answering some questions. some great lines coming out. said "i'm not hearing any whistling" which is a reference to boris johnson's line on the financial commitment the u.k. may or may not have to
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deal wit. he was emphasizing the pressure of article 50. the best relationship we can have, remain a member, is the line that michael barnier is coming out with, pouring more pressure on the u.k., generating shifts in the political establishment. a bloomberg gadfly columnist joins us now. there has been a suffering of -- a softening of the line in the u.k. you can't clearly defined strategy and yet he is no lesser than the pressure he is applying. what is his tactic? >> in particular, yesterday, the guardian was really over the line aggressive and again, barnier has pushed the ecj line which they are putting hard on. after boris johnson's comments
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that the u.k. have been backed into a corner on the large bill, that is something which may end up getting stronger. >> we don't even know what the number is yet. >> it is 100 billion euros. that has been made a few times. guy: but they haven't negotiated it yet. >> but the point is that there is nothing put back to the opinion at all. that is very clear. also, a very contentious point, they rejected the offer made by theresa may as far as ex-pats and eu citizens. guy: even the line of the ecj has been diluted. extended,s been certainly, but i think for the ecj to be a part of any deal is not going to happen on the u.k. side. guy: he is also talking about membership being an option. >> that is not going desperate the well, let's face it. tom: marcus, i'm sorry, i was
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working on the chart, let's bring up a chart i made. this is guy johnson's chart on real wages in the united kingdom. the red circle is brexit. marcus, i believe real wages have plummeted since june 23 of last year. climbu link real wage to to the advent of the brexit initiative? >> i think certainly, you can link the decline to the poor performance of the conservative party. something we pick up on is the the 5.5t people are, of million public-sector employees being capped at 1%, i think this lack of real wages kicking up with inflation, which is clearly going in the head is a sore political point. tom: bruce kazin, you know this as well, mr. diamond speaking in paris. here is wages, bruce kasman.
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are we going to see negative real wages in the u.s. and france and other places besides the u.k.? bruce kasman: i think the u.k. is a special place. it is clearly connected because it is largely driven by the fact of the currency weakness that came through and the spike we see in inflation. household or beings squeezed and u.k. growth is going to be week. the story elsewhere is different. you have limited upward pressure on wages, modest pickup inflation but good growth. if you look at the payroll number out of the u.s. last friday, you did not have much wage inflation but you had strong hours and strong jobs and strong labor income being generated so in the u.s. and western europe and even in japan, the story is very different and more positive for households. guy: the market is pricing in one rate hike from the u.k. this year. the bank is going to deliver a rate hike. do you see that happening
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considering the backdrop? >> i don't see how they can hike rates. it is ridiculous to even have a conversation. i think they are going to do these things on credit control. that is what they do with the financial policy. guy: does it puts the pound up? wouldn't that be one day of dealing with the inflationary story? >> it will go away in a few months time. it is the base effect. tom: thank you so much. great briefing there. this is going to be a theme through the year. looking forward to this, libby cantrill on the deficit. we will do that with libby cantrill of pimco and bruce kasman on reflation. let me remind you of bloomberg businessweek, the relaunch and redo. i can't tell you about the new issue. it is hermetically sealed in a floor below our world headquarters here on lexington avenue. we have a financial celebrity front and center. bloomberg businessweek. don't miss it.
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>> this is bloomberg surveillance. i am taylor riggs. let's get to the bloomberg business flash. >> national economic council director gary cohn is the leading candidate to replace janet yellen as fed chair next year according to politico. one republican says the job is probably his if he wants it and he could easily win senate confirmation. a decision today. canada will likely become the first group of seven country to join the u.s. in raising rates. it will be the first by the bank of canada since 2010. investigators are looking at this decision as the possible harbinger of things to come globally. that is your bloomberg business flash. more on bank of canada. to talk about this
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discussion point because the rest of the world is repricing. in europe, you see it clearly. you see it in canada. is the market getting ahead of itself? this chart suggests maybe it is. this is the risk reversal skew on the one-week-one months. the cat has gained massively of late, signaling it is not quite so convinced. is front-end of the curve being priced significantly differently elsewhere in the world. my question is are we getting ahead of ourselves? tom: that is where we go in our first list with the united states in canada. with his right now is bruce kasman of jpmorgan and libby cantrill from pimco. i was floored by your reflation same. this brought tears to my eyes. i did this to impress him. this is global inflation back in
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1969. back to nixon where there was a massive reflation and then down we go with the great moderation. the financial crisis, we've got a period of global inflation. bruce kasman: i think it is done. we are not going to have inflation but we are seeing some very powerful disinflationary drags around 14 and 15 and 16. we have a lot of noise in the energy space. core inflation has been stable. it came off a little bit in the last three months. locally, it hasn't moved. when you're going to see if we are right is strong growth. tolation consolidates back 2013 and that is going to be good for corporate income, rebalancing growth between dm and em and it is a positive environment. tom: that's that to this level for those keepin score at home.
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we parse service sector in this producing inflation. can better reflation help the beleaguered commodity nations? bruce kasman: definitely. what you have been seeing in the last year is the significant rebound imposing growth, and in terms of trade. haveally those companies macro imbalances. canada is a beneficiary of it. other reduces of commodities have been beneficiaries and we are seeing in growth numbers, and we will see it in the market. tom: do we have a trade policy of any type forward that will help us enjoy this global new. libby cantrill: the trade policy of this administration has not necessarily been entirely coherent in terms of reconciling some of the more protectionist things that president trump has said on the campaign trail with actual action. paper,e navarro ross
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they said, i love it. are we still doing zero-sum deal mercantilists? libby cantrill: well, it remains to be seen. there is a big divide among the advisors. there is the ross camp and also the steve mnuchin camp which is more dramatic -- pragmatic on trade in terms of our policy. however, onee, area the president has in terms of policymaking and unilateral ability is over trade. if he is isolated on the legislative front and he can't get points on the board in terms of legislation, he might pivot to trade in terms of just winning political points. >> bruce kasman: bruce bruce kasman:, is the dollar going to play a role going forward? >> we've heard the criticisms in europe and the united states apparently has a problem with germany, benefits of a cheap euro, etc. what role of the dollar
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perform? bruce kasman: the dollar plays a role in the sense that it impacts on our trade performance. it is also a signal. when you are seeing in the dollar is a sign that the u.s. is at the center where growth is in the world and i think we are seeing the dollar go down as a result of that. it is important to keep that in mind. with what the fed is going to tell us today and where it is going forward. i agree this administration wants a weaker dollar with mercantilists. the administration has a limited tool short of putting it in the fed chair that can deliver that monetary policy outcome. guy: do you think gary cohn would do that? bruce kasman: i have no idea what gary cohn would do as a central banker. i think right now the issue on the fed is that you have someone who is experienced, someone who someone whont, and is consistent with the fed's goals and i think answering the
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questions about gary cohn are hard to do. is that financial market experience but he has no experience in monetary policy. guy: is the u.s. comfortable politically with a cheap dollar? libby cantrill: again, i don't know if we have had a coherent policy on the dollar. the previous administration has at least said that they support a strong dollar. this administration has a predicated a little bit more so it is one of the areas where there hasn't been a lot of coherence. secretary mnuchin has implied he supports a stronger dollar but it hasn't necessarily been a unified one. tom: i want to go to libby cantrill. in bruce kasman's world. do republicans want a nonmonetary phd? do they agree with the trump religion? war's, randy quarrels, mr.
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cohen, and others. are they on board with that? libby cantrill: all of those candidates would have no problem getting senate confirmation. tom: but where is the phd kennedy? -- where's the phd going to be? libby cantrill: monetary policy matters a lot but the fed chair also oversees the regulatory regime of the banking system. what a lot of republicans on the hill want to see is a rollback. when league 04 standard deviations, who is going to be there? libby cantrill: i think people have a lot of confidence in gary cohn on the hill. he has proven himself. tom: when we go for standard deviation, libya's rights, i think you are right, but when we go three for standard deviation, what if it blows up on something we can't predict? they don't have the isl in curve. bruce kasman: i would emphasize, it is not just about having trending, which is important,
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and certainly i am a little bit disappointed that phd's and experience in economics is not being really given any confidence. tom: libby doesn't care. >> [laughter] bruce kasman: it is also that experience. if you go back to paul walter, line we have in fed chairs is people who have experience in monetary policy. it is the combination of training and experience and acceptance of the fed in terms of institutional goals that matter. tom: i just got any mail that said "don't interrupt libby cantrill." let's look at tv . tv , you can watch it as you are following. there she is, beautiful as always, and you can go over here and pull up a chart that will bring tears to your eyes and then you can steal the chart over to your bloomberg terminal. even libby can do that. in washington, this is bloomberg. ♪
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guy: 11:50 in london, 12:30 weekend today, not going to be
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with the prime minister, theresa may but effective deputy prime minister david green, a man of incredible power now within number 10 so he will be standing opposite the labour party benches. and answering the questions thrown at him. it will be interesting to listen. are with theere we markets. the sterling rate has been an interesting story. on the bank of england earlier on, pouring cold water on the rates.er the race of -- the rays of rates. there is weight pressure but things are little bit better at the margin. after that the cable rates came back up. tom: let's get back to it with libby cantrill of pimco and bruce kasman. i love this. the world is coming to an end and our debt ceiling goes forward every year. here is the average deficit gdp for a decade, 80's to 90's.
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4% on the nose. here is the clinton surplus. we come over here and we've got this rollover here. how close are we to that point where you and i start talking about this more often? libby cantrill: i think at least in terms of policy makers on the republicans, they are always talking about this and this will help them in form what they do on tax reform. there has been some speculation that maybe they need to push through a tax cut. this makes that more unlikely. there is going to be more and the sis on revenue neutrality. tom: in the next eight months, do we migrate over to the talk ned? trump deficit be dam libby cantrill: i think the deficit hawks, speaker ryan, they will hold more sway. bruce kasman: for sure. in that chart, one thing that is missing is that we've got a deficit that is not high by historical standards but very high by periods in which we are
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operating at close to full employment. it is a high structural deficit. tom: we will throw that out to you on twitter as well. bruce, i think we are about to lose tom, but the surveillance conversation will continue. but no loss in terms of our global audience, except for tom keene with three more hours still to go. we've got two minutes left so very quickly, janet yellen goes to the hill today. that could be coming down the pike towards her. is she looking at the exit of the balance sheet as something she wants to get firmly on the rails before she departs? do you think that is part and parcel of her thinking? or does she want the legacy to be, you know, i started to get us out of this. bruce kasman: i think both. i think the economics combine with the desire to get it going
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before her term is up. i don't think the fed has decided whether they do it july, september, but i think they've decided they will do it this year and we will hear that message which we have heard clearly in the minutes as well, being expressed at the testimony today. guy: does it ripple back into the politics? the financial crisis may seem a long time ago but nevertheless, we are only just beginning to roll the balance sheets off. how does that feedback into the view of where the u.s. is? we are done with that now. is that the sense it portrays question mark libby cantrill: we think a lot of policymakers on the republican side have wanted the fed to decrease their balance sheets so they will welcome this. from our perspective at pimco, what does that mean from a rate policy perspective? how does it inform their movements on rates? whether they actually move into december or whether it causes
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them to pause. i think that is it for us. >> and it is which is the moving parts and how do they figure that one out? situation are in a where we try to do this and the rest of the world is watching, do you think it is different for every central bank? we are going to a conversation at some point of how it gets out of its position that it will find itself. further down the road, it will be the boj. do you think the fed model will be the model for the rest of the world? bruce kasman: generally speaking, the idea that you first stabilize the balance sheet and then you begin to raise rates, and then you let a more active balance sheet unwind and take place. that is going to be the policy. i think the ecb and the fat are similar in that they have concerns about inflation. but they are both going to move on the balance sheet to balance the tapering as long as growth is solid. we think that is going to be the case.
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guy: we will leave it there. bruce kasman of j.p. morgan and libby cantrill joining us from pimco. thank you both very much. a fantastic conversation throughout the last hour. they are both going to join tom over on radio so the conversation will definitely continue. we are live later on today for the annual media summit, including tim armstrong, the ceo of the company. we will leave you with the data. this is where the markets are as we approach the session in united states. it seems as if it is not as bad as we anticipated in the u.k. this is bloomberg. ♪
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♪ said shakeup. gary cohn is said to replace
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yellen next year as the fed chair gets ready to face congress. receipt with caution. u.k. unemployment hitting a low but wage growth is weak. he is not ready to raise rates. donald trump, jr. and russia stay in the spotlight as pimco warns the controversy could dim u.s. economic outlook. david: welcome to bloomberg daybreak on this wednesday, july 12. i am david westin with alix steel. jonathan ferro is off today. alix: here are the markets. s&p futures relatively flat, although the high for the assion, sterling getting boost. it was lower earlier and then we got those job numbers out of the u.k. with the 10 year treasury pocket , that is supply later today as markets handle that as they move lower. crude is getting a big relief rally by over 1.5%. they lowered the estim

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