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tv   Bloomberg Markets Americas  Bloomberg  March 22, 2019 1:30pm-3:30pm EDT

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they have agreed to delay brexit ifm march 29 until may 22nd may succeeds. the e.u. would give her until april 12 to come up with a new approach. donald tusk is happy about the outcome of this week's brexit summons in brussels but said there is nothing more the e.u. can do to help prime minister may. he spoke to reporters. is in thee of brexit hands of our british friends. prepareds the e.u., for the worst, but hope for the best. mark: european commission president jean-claude juncker said britain should leave the e.u. by the start of elections on may 23 if the country isn't taking part. in the democratic union party is suggesting the northern ireland party is still
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opposed to prime minister may's withdrawal deal. dodd. said today -- nigel said nothing has changed. they will not accept a deal if it threatens the constitutional and economic integrity of the united kingdom. president trump's declaration that washington will recognize israel's sovereignty over the golan heights is drawing strong condemnation from some countries in that region. the government of syria called it irresponsible and a threat to peace and stability. foreign ministry said it plunges the region into a new crisis. turkey and egypt also criticize. it is a policy reversal that is certain to provoke -- provoke china. they learned -- we have learned trump encouraged taiwan to submit a formal request to buy
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fighter jets. the u.s. hasn't sold advanced fighter jets to taiwan since 1992. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ♪ reporter: from bloomberg headquarters in new york, i am vonnie quinn. am -- welcome to bloomberg markets. we are joined by our audience. >> here are top stories from around the world. financials leading benchmarks lower as the yield and 10 year treasuries extend its decline. we will have the latest. >> the u.s. treasury yield curve is going -- is a popular
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recession indicator. and u.s. economic outlook has been thrown into -- reports showed weakness across germany. the yield of germany's 10-year has posed negative. looking at the major averages. you can see off our lows but 500 -- a real s&p cyclical rotation. it started off pretty slow and then gathered steam as we headed towards mid point in the session here you have stocks down. there are several that are higher. the ones that are lower are definitely. i want to point to the dollar index, we are stronger today. sterling is stronger. i know sterling and the euro are the largest components of this dollar index thomas sterling taking back if losses -- index, sterling taking back its losses.
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the euro is weaker today, most likely on the weaker economic data. amber: the market is currently gripped by the fact we seem to be getting a recession warning signal. this is the difference between tenure and three-year which has inverted, meaning yields on than 10nth are higher months. this is concerning because the last time this happened was in 2007. months later the country plunged into one new -- one of its deepest recessions in decades. people ask what it means for the s&p 500, even though we got a 2007.tion in 27 -- in we saw a v shape recovery. we are kind of in one now. the market would lose 50% in value before bottoming in 2009.
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vonnie: one of the questions is why should this time be different if it is not an indicator of recession? we will have some guests that could maybe answer that. amber: yes. let's bring in from the david research, ed cliff hold, the chief u.s. strategist. when people hear part of the yield curve has inverted, this part specifically, is that a clear-cut sell signal? >> it has a good track record. there have been seven cases since the 1960's of the 10 and three-month yield curve inverting. the s&p has declined on average 30% after that. it has a good track record. you need to look for confirming information because the fed is manipulating the yield curve like it has not in the past 15 years. looking at other points like
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unemployment claims, consumer confidence, they are not pointing to recession. to look at other information before we say this is going for new bear market lows. vonnie: whatever about what it says regarding any potential recession, we did see a major move in the last two days. is that what you would have thought would have happened? ed: there is a lot of things going on with the fed and its balance sheet pushing down at different points in the yield curve, and certainly it took most market participants by surprise, not only pushing rate hikes out until next year at the earliest but how quickly the balance sheet will be unwind it. the fact the interest rate markets reacted as quickly as they did really reflects the fed had not guided to that up until this point.
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we need to be looking at the other confirming data points beyond interest rate environment for indications for the economy and stock market. amber: is this why the fed took a dovish stance, because they saw something in the data? german manufacturing sector, the lowest since 2012. is this something they are prepared for? or is there perhaps more easing they need to do to support the market? the data outside the u.s. is weaker. germany has a lot of collections -- connections to china. if they tell us that is outside the u.s., economies have been weaker, and if you look at signs of what we call -- we call the global recession in economic growth, it has been underway for several months. this is confirmation of that, but from the fed perspective, what is the risk?
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if they string out any future hikes, do we really think inflation is going to get out of control over the for civil future? probably not. if they go into recession, it is higher. for a risk reward perspective it makes sense for the head to be dovish. -- the fed to be dovish. vonnie: is this a one-day move? ed: we have to keep in mind how far we have come at a 20% rally in the s&p 500. even after you get strong moves like we have had, you usually get a pullback in a few months. the average decline is around 8% peak to trough that takes us over 2600. there is optimism in the market. these global growth slowdown fears could be the catalyst. they would have been the next thing that came along to drive
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the markets lower. in that is aded resumption of the dividend trade. a lot of these stocks have underperformed the last few years as the fed has tried to normalize. now the balance sheet will stay large. the idea of bond investors turning to the stock market for income is alive and well. the ratios for dividend payers and the 15 year low our relative -- vonnie: thank you. chief strategist at ned davis research joining us from florida. we will hear from the heritage foundation's visiting fellow and longtime supporter of president trump p or the president says he tol nominate stephen moore the board. the interview after 3:00 p.m. eastern. german ten-year bond yields dropped below zero for the first time since 2016.
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pushed lower by a weaker manufacturing. let's welcome the international correspondent michael mckee. if you had to rank them, conversations on the borderline between irrelevant and relevant, does it matter that german bunds went negative? michael: as you were saying, it is premature to say the yield curve is predicting a recession. the last time it went negative it took 18 months before the economy entered recession. that puts us in september 2020. what we are seeing reflected in bond markets is concern about global growth. the real issue has been germany because they had a slump in the fourth quarter and people thought they would come out of it. data did not support it, now data in february, people are concerned about a secular slowdown across europe.
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italy is in recession and the french numbers were not good today either. they still have the ongoing protests. there is concern the world is slowing down. with the u.s. slowing down, there is no reason to pull anyone higher. amber: there is a difference between a slowdown due to issues like trying to work through economic contraction, high debt levels, coming out of the financial crisis, and a slowdown that is sentiment inflicted. to what extent good germany quickly rebound if there is a shift or quick resolution on the u.s.-china trade fund? lotael: it would help a because the biggest economies are suffering a little bit from the uncertainty of the trade wars going on. one of the things is the
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president threat to use car tariffs down the road. we have the steel and aluminum tariffs affecting people. it is not just china, it is an overall concern. the feeling in germany is this was a one-off issue in the fourth quarter because they had a change to their automobile emissions standards that cause people to have to buy new cars or start saving up, and it dropped reduction of automobiles . the feeling is they will rebound from that. is it enough to pull the rest of europe up with italy struggling and france? vonnie: given the way the markets are selling off, how much more urgent is it these trade deals get done quickly? michael: it becomes urgent from a sentiment standpoint. the longer we go with retaliatory tariffs, the more it hurts. american farmers not doing well and the weather they have had
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has made things worse with the flooding. to have the tariffs remain in place is extremely difficult. the same is true with steel producers and the people who are suffering the canadian and mexican retaliatory tariffs because of steel and aluminum even though after the deal has been agreed. thank you for your perspective, michael mckee from bloomberg. tilt, tood's dovish little, too late? this is bloomberg. ♪ is bloomberg. ♪
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vonnie: this is bloomberg markets. i am vonnie quinn. amber: let's get right into one of the top stories gripping the market, analysis on the treasury yield curve that turned negative for the first time in more than a decade. we are joined by catherine who has been closely watching this story. i think a lot of people will have questions about the predictive power of this part of the curve turning in to a recession and then what is the time lag? it doesn't happen tomorrow.
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what has history shown when a transition could crop up? >> it feels like investors aren't ready to say this is the signal we are getting a recession in the next 12 to 18 months. talking to investors today, it sounds like it is a reflection that markets are pricing in the fact the fed might have to cut in the next year to two years. that is what yet -- what you are , closelyis curve watched curve turning into negative territory today. vonnie: anchored by european rates. germany went negative as well today for the first time in a couple of years. that would have had something to do with it. do we turn positive monday? a good question, one i have been asking people. it is important to keep in mind it is a shallow inversion at this right. given the fact central-bank
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purchases have distorted yields around the world for the past decade, plenty of people are telling me you need to see a much deeper inversion before you say this is the classic signal the yield curve typically is. amber: in addition to watching this story and the role of the fed, donald trump saying he will appoint stephen moore, somebody who has been a trump supporter but also very critical of the fed in the past and their move to cut rates and buy bonds, what are you hearing from the investors you talked to about that move? is that something they are focused on what that could mean in terms of the direction of the federal reserve? we know chairman powell has often increased the higher -- the ire of president trump. >> in the question hasn't -- that question hasn't come up yet.
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definitely to your point we are getting a nude very's -- a new voice in the federal reserve and it will be interesting to see how it plays out, this voice critical of the fed in the past. vonnie: the further out on the curve, there are different forces at play. right now it looks like traders are worried and might -- they are not so worried about that 10 years or 30 years -- does that change? >> one of the things i have been tracking is you saw these three-month curves today but if you look at the five-year, 30 years, it is steepening for the past several months. just following up with people, but is more a reflection that if you think the federal reserve will have to cut in the next five years, you would be buying five-year bonds now. that is what is leading me to say that this might be more
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reflection that the market thinks it will have to cut in the future then a recessionary signal. vonnie: that will be your next story, i am assuming. catherine from bloomberg news. markets falling as yield curves are exacerbated by data out of europe continues to settle market fears. this is bloomberg. ♪ ♪
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vonnie: this -- amber: this is bloomberg markets. vonnie: i am vonnie quinn. time for the business flash headlines. citigroup is cracking down after an investigation into stocks trading.
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equities traders in hong kong have been ousted and three were suspended. the probe found personal conduct didn't meet its standards. they looked at their own interests when facilitating. deutsche bank received major shares. bloomberg learned that lender is trying to retain top performers after cuts to the investment bank. deutsche bank set aside $2.2 million down from $2.5 billion a year ago. people received bonuses for the first time in four years. alva johnson has a new spokesman, shaquille o'neal. he is joining the board and will invest in nine restaurants in atlanta. he will get $8 million over three years to endorse papa john's. by -- precipitated that is the business flash.
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let's get more on the market selloff. we are joined by a market strategist. thank you for joining us. take us through the market reaction. basically polar opposite to what we saw yesterday where the fed is our friend and in them we trust, and today, what did they know that made them turn so dovish? what is your take? a markets on wednesday had take on this like you said. the fed, what do they know that we don't? the fed is our friend, keeping rates lower. that should be a buying opportunity for equity markets. the real deal is the fed went beyond what markets were expecting and as markets digested that one day later they realized reading behind the do thethere was panic as direction the fed took. instead of bringing is down to one hike on the dot plot in 2019
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as many expected, they took us down to none which really led many to believe in retrospect, looking into this that the fed is setting us up for a rate cut as the next move, not a rate hike, which suggests the global economy is -- vonnie: at what point will that become evident? it is friday, we are not sure what of the markets are thinking. >> we will need to see second-quarter data. first quarter had the government shutdown, a lot of it late and muddy, people not really confident in that data. the secondugh to quarter data we will see it more clearly. as will the fed as to the next decision and where we will be going. macro strategist with bloomberg, thank you. the nasdaq composite index down, gaining steam. bloomberg users can
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interact with charts thing of seen giving -- using gtv , browse charts on gtv to catch up on key analysis and save charts for future reference. thank you for joining us. this is bloomberg. ♪
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"activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. >> i'm mark crumpton with bloomberg's first word news. secretary of state mike pompeo today blasted lebanon's hezbollah which he promised the u.s. would continue to pressure during a visit to beirut, secretary pompeo called on the
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lebanese people to stand up to the iran-backed militant group he said was, quote, committed to spreading destruction. his harsh comments were in sharp contrast to those of lebanese foreign minister who minutes earlier, while standing next to pompeo, insisted that hezbollah is, quote, a lebanese group that is not a terrorist organization. and was elected by the people. >> hezbollah stands in the way of the lebanese people's dreams. for 34 years, hezbollah has put the lebanese people at risk with unilateral, unaccountable decision on war and peace, and life and death. whether through political promises or outright intimidation of voters, hezbollah sits inside the national assembly or other state institutions and pretends to support the state. >> secretary pompeo added that the united states would continue using, quote, all peaceful means to curb hezbollah and iran's
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influence. the trump administration is hitting iran with new sanctions. the treasury department says the sanctions target 31 iranian scientists, technicians and companies involved in the country's nuclear and missile research and development programs. the announcement comes as secretary of state pompeo is in beirut, where he warned lebanese officials to curb the influence of the iran-backed hezbollah movement. european council president is happy about the outcome of the brexit summit but says there's nothing more the e.u. can do to help prime minister theresa may. at the end of the two-day summit in brussels, tusk said today, quote, the fate of brexit is in the hands of our british friends. he also said e.u. leaders are hoping for the best, but preparing for the worst. the leaders have agreed to delay brexit from march 29 until may 22 if may succeeds in getting her agreement passed. if not, the e.u. has given her until april 12 to come up with
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some new approach. global news 24 hours a dejan air and on twitter powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. flts 2:00 p.m. in new york, 6:00 p.m. in london. >> this is bloomberg markets the close. >> it's a slowdown showdown. global stocks dropped the most in over two months. slowing economic data hits riskier assets. the gap between the three-month and 10-year u.s. yield disappearing for the first time since 2007 and that german turns negative. and a seat at the table. president trump says he's nominating steven moore to the fed board. we'll speak with him in just an hour. all that and plenty more to
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come. >> and we have some breaking news on the budget. monthly budget, the u.s. posting the largest monthly budget deficit on record in the month of february. the budget gap widening to $234 billion for the month. that's compared with a fiscal gap of $215 billion a year earlier. this comes as you have falling corporate and individual tax revenue. but increased spending at the same time. same story, different month. but it continues. >> year to date, more than half a trillion. >> big numbers. there's also some big numbers when you look at the declines. relative to what we had been seeing, you're looking at a 1.6% drop in the s&p and dow. we're no longer at our session los but clearly global slowdown concerns are rearing their head again. >> we haven't had this sort of selloff since the beginning of january, when you're looking at the old country. to me it was really europe that catalyzed the risk fear that went on today. this risk tone as germ pace in
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p.m.i. woeful coming in. france as well. clearly the global slowdown feeding in from china to europe is head -- is hitting the u.s. we have to wonder why the fed took such great length in terms of dovishness. >> one thing everyone's keeping an eye on is the inverted yield curve. that's an issue here. it has gone negative, the three-month bill and the 10-year note. that is weighing on financials. financials, the worst performers not just today but for the week. >> 4% 5% for the week. >> pretty ugly. >> the eye of the storm. the party's over when it comes to banks. >> that was from bear this week. we're keeping an eye on the pound. it is in recovery mode, clawing back from yesterday's drop. you leaders preventing -- e.u. leaders preventing an exit next week. >> they just pushed it to april 12. meanwhile, let's dive deeper into the actions in the markets. what are you watching? >> thanks. a lot of people are feigning shock at this inversion of the yield curve. at least one portion of it. but really if you look at the
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lot of price action that we've been seeing in the bond market, it shouldn't be all that surprising. take a look. people have really been piling in to that long end of the curve for quite some time. you're seeing japan's 10-year yield falling deeper into negative territory today. german bonds of course dropped back below zero after we got that awful p.m.i. report. then you have australian yields posting their third straight weekly decline and new zealand's bench mark, that benchmark below 2% for the first time ever. look at the yield on the barkley global aggregate treasury index. that slipped down to 1.23%. that's more than 10 basis points below wrer where we were at start of this month and 40 below where we were back at those highs in october. there are a lot of ways you can interpret this data but one thing it's telling you right now is that right now money is getting cheap, dirt cheap, and while that may be good for some people, there's a certain bit of skepticism in this market. particularly on the which the side, where they want to know why things need to be as cheap as they are -- on the equity side, where they want to know
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why things need to be as cheap as they are. >> it means risk on yields lower there as well. look at high yield bonds. you can look, the yields have come to the lowest point since october. if you flip up the boards, you can see investment grade bond yields have fallen to the lowest in more than a year. the big thing here is, as the pool of negative yielding debt swells to nearly $10 trillion, the highest level since 2017, foreign investors are being pushed into the u.s. for some yields, for some reprieve from this financial repression. >> i am looking at the financials index. the all part of the same story as we see in these global bonds rally but financials up more than 2.5% today, really the big lag ard on the sector basis and extending declines for a fourth straight day. as we have seen those yields come down. adding fuel to the fire today is trump saying he's going it appoint steven moore to the fed board. that adding a little bit more to the sentiment of that dovish fed. within the financials, it's the
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regionals that are das particularly underperforming -- drastically underperforming. those regional banks more sensitive to rates as they're heavily dependent on loans. look at. so individual movers. -- look at some of those individual movers. not a good day for those banks. >> we thank you. great analysis there. let's dig a little bit deeper into all these market moves because we've just been seeing that that yield erosion between three months and the 10-year, we are actually just starting to break back into positive territory. this doesn't show it that well because you can't mark where the zero line is but you pointed out that currently, what had turned negative in terms of that spread between the three months and the 10-year, is just moved into positive territory. >> just barely. it fell -- it was as negative, is that the way you put it, negative 3.66 basis points but we're right back up a little bit here.
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we'll continue to keep an eye but certainly you cannot say that this is much of a positive yield. >> exactly. it has eroded. let's get the take of andrew, former blackrock head of institutional client business. great to have your perspective today. what is this? is this a global slowdown concern? is this a p.l.i. coming from germany, the fact that bond yields are negative in japan already? or is this with the fed? >> our perspective more generally is we have very high levels of volatility. it's no single factor. one of the reasons we see this elevated volatility is because of this very broad spread of factors, whether it's macroeconomic, geopolitical. and we think that elevated volatility is going to be a feature of the future rather than a benign period we've been through. >> when you try to look for what narrative the markets are telling, are bonds, bond investors and equity ved investors looking at the same thin and fixating on the same
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issues? >> i think we're seeing such a breadth of narratives, i don't know that one can narrow it down to any particular individual story. i think what we're going to see is a much more bumpy ride in both equity and bond markets than we used to. we've had an extraordinarily benign period for the last 10 years. that i think is coming to an end. and the fact is that drove it are coming to an end. we better get used to that bumpy ride and navigate through that ride. >> i'm interested what you take as volatility right now. where is your measure? we have we have stocks up by 2% and negative yields, but the vix is only at 17. it's not an elevated level. what do you use to measure that volatility? >> i'm thinking from a long-term perspective. most of our clients are naturally long-term institutions, long-term investors. so i'm thinking in terms of the long-term drivers of return. and i think if you look at potential powers, there's a much
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broader range of long-term outcoming than we've been used to. markets where equities and bonds have mostly gone in one direction. and last year far from being an oneration as some -- aberration as some people were talking about, this is more representative of the bumpy ride kyo see overall. >> but last year sparked volatility, then it calmed down and people thought that was the anomaly. if this is going to be the new norm, what began in late 2018, and continues right now, we're kind of picking up on it, how invested were your clients, are your clients? were they -- were they comfortable with where they were or are they looking to come pull out or go back in right now? >> of course our clients in many cases are looking for us to drive that decision for them. about half of our business, more than $50 billion, is multiasset money. where we make those decisions overall. within the guidance of our clients. so we provide that element of
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diversification and, yes, of course we try and manage through that, but we are emphasizing in our multiasset mandates the importance of diversification. volatility doesn't necessarily mean bad, it just means bumpy. if you are going to navarro date a -- navigate a bumpy road, you are going to need a broader spread of investments than you had over the last 10 years. >> where do you go, when you have europe selling off 2% today and it's been a rally at the beginning of the year, as we saw in the u.s. we've almost seen really the moving in tandem. how do you ensure that you're getting that diversification when it comes to assets and regions? >> you have to go beyond just the equity in the bond markets, i think. you have to look at alternatives more broadly. the point we make with our clients, i made it in my client letter just recently, was you need to look beyond what's worked in the last few years. because that was an exceptional period in the long-term history of markets. you need to look at alternative assets that have genuine
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diversified portfolios. i would highlight something like managed futures or c.t.a.'s. that's an asset class that in the long run has shown very good properties of good returns. it's one of the few asset classes that have been able to produce good returns when equity and bond markets are falling. the returns in the last few years have been much more muted. but actually every reason i think try anticipate like that would have very good properties in this bumpy road going forward. >> all right. brace yourself for that bumpy road ahead. today's just a small example of that. >> exactly. >> andrew dyson, thank you. so next -- thank you so much. >> next a look at markets because a bumpy ride is what we're having today. coming off the los. the nasdaq has been the key performer throughout the day. tech, momentum, this is where you tend to see the biggest risers and indeed the biggest falls. but this is where we saw that negative yield for the first time since 2016. we're now paying the german government for the privilege of
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holding their debt. >> once again, it comes on the heels of some disappointing p.m.i. data out of germany, certainly raises a lot of concerns about the overall prospect for europe. >> 44.7. that is the reading of manufacturing in germany. 44. well into the negative when you're sub-50. >> you're also keeping an eye on the turkish lira plunging right now. >> a bad day for emerging markets anyway. why the tush i, -- turkish central bank failed to send their route in the wake of an unexplained drop in official reservesful we'll keep an eye on. that this is bloomberg. ♪ this is bloomberg. ♪
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>> now on top of brexit, populism in europe and elsewhere around the world is a rising threat to growth. more than 40% of the world's most important economies are under the control of populist
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governments. or nondemocratic governments. that's according to analysis by bloomberg economics. joining us now from washington is bloomberg economics chief economist to tell us what this means and, put this in perspective for us. how does a change in political thinking that we've been seeing around the world effect economic policies? >> the big shift that we've seen in the last several years is the rise of populist leaders. and here we're they think -- we're thinking about people like president trump in the united states, brazil, and others around the world. put that together with the growing share of g.d.p., which is controlled by nondemocratic governments, the chinese communist party being the obvious example, and what you've got is a really significant shift in the way the world economy is being run. a big shift in the people, the parties who are running the
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world economy. the obvious manifestation of that is the trade wars. in 2018, all of those tariffs being imposed, now in 2019, we're seeing the consequences as trade stumbles and global growth weakens. >> global growth weakening to 2.1% in the first quarter. put it into perspective what exactly could erode the growth yet further, what kind of policies? we've seen certainly sentiment eroded when i look at the italian bond markets, for example, the selloff there because of concerns about the fiscal side of the equation. what's going to hurt most? is it trade, fiscal spending, what might it be? >> i think it's a combination of factors. we've already seen protectionism and uncertainty around trade denting exports, global trade seems to have contracted at the end of 2018. in italy, as you mentioned, there was that populist budget, which promised to be all things
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to all people, raising spending at the same time as cutting taxes. the consequences, italian bond yields spiked and italy spiraled into recession. >> it's really fascinating analysis. the charts speak volumes at 70% of the g 20rks i think it is. and now -- g-20, i think it is. and now in these populist viewpoints what about the new capitalism? they need to invent a new capitalism, what would that look like? >> i think there's a meaningful economic debate happening right now in the academy. you've got people like the french thinkers who you mentioned. you've got people like larry surms, and -- summers talking about the need for more fiscal policy to support growth. you've got people talking about the need for more incluesive capitalism. and these are policies which over time would be supportive for the world economy, and potentially create a more
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incluesive form of capitalism. the issue is, and the challenge is, well, who's going to put these exciting new policies into place? where is the global consensus on a new approach to capitalism going to come from? if you look at the people who are in charge in the u.s., in some countries in latin america, in some countries in asia, some countries in europe, doesn't seem like people who are going to be very open to these ideas. >> thank you so much. tom orlik joining us from washington. tom was speaking of the people in charge. let's look at man in charge of the u.s., president trump. he is meeting with caribbean leaders at his mar-a-lago resort in palm beach, florida. you can see him there with the first lady as well. taking some pictures. we'll see if he makes any comments about the many different headlines circulating today, including perhaps changes at the federal reserve. >> yeah. steven moore. heritage foundation. could he become -- put on the federal reserve board? we're going to be speaking to him a little bit later. >> looking forward that. lyft. up, uber taking on
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uber said to be planning for an i.p.o. on the my see. this is bloomberg. ♪ . ♪
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>> it's time for a look at some of the key movers. first up, morgan stanley double downgrading margin to underweight. analysts seeing no potential upside driver for this stock. the company announced the failure of its -- [inaudible] -- by 3%. yesterday was a big fall. next, analysts still optimistic about nike. trading is positive rating and a $100 price target on nike. analysts seeing a buying opportunity in today's weakness. finally, lew lew lemon downgraded. the analysts seeing less margin upside ahead.
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that's some of the top ones. >> joining the ranks of elicit company, uber and lyft. uber is choosing the new york stock exchange for its i.p.o. while lyft will begin trading on the nasdaq. joining us for more is our bloomberg opinion columnist. we've been waiting so long for this to come through, it feels unreal nows that happening. is there a rush to come to market, to lyft right now? seeing as this appears to be closing? >> it sure feels like there's this rush to market. that we saw both uber and lyft and pinterest may be will file its i.p.o. filing publicly as soon as this afternoon. and i think, look, you can see the direction of equity markets, apart from a day like today. but the markets are at a record high. there is intense investor appetite for growth companies. and these young, relatively young tech companies, they have growth and nothing else
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basically. >> growth. no profit. and this is something that people are starting to voice concerns about. some of the facts given by lyft in particular, they're not clear enough. we're not able to build models. is something you're hearing? what more does the market want? >> i was surprised when our colleague wrote a story yesterday from some of the lyft investor meetings where they were asking company executives about profits and the expense growth and when are we going to see profits and that was a little bit surprising to me. but i think until we see one of these high growth, high loss companies do poorly in its i.p.o., i think the market is rewarding revenue growth at the expense of all other metrics. >> but how do you compare lyft? what is it comparable to? there's no other ride sharing company that's listed right now. what do they use as a comparison? >> i think that's a really astute question. we've never seen these kinds of companies before with this kind of business model. and there isn't a really great
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public company comparison. you saw in lyft's road show that they're comparing themselves to companies like grub hub. which, like lyft, matches up demand of people want to eat food and grug hub's case or people want to take rides in lyft's case, with supply. restaurants or drivers. so those kind of middleman businesses, also some of the ecommerce companies that also don't sell merchandise themselves, but match up buyers and sellers though, are the companies to which lift is comparing itself. >> so pleased to have your opinion on this friday afternoon. we thank you. going to be busy amid these whole host of i.p.o. that's are coming. of course sticking with the i.p.o.'s, we were just mentioning one of them, pinterest, we haven't talked about them yet. moved its plans to initial public offering to next month, we understand. pinterest had previously been thinking about all the way in june. suddenly they're racing for it. they could be worth as much as $12 billion. >> of course the interesting
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thing about this is pinterest is a fairly old company. it was started in 2010. so it's among the longest-lived of the silicon valley unicorns. people were wondering when it was going to come to mark. there's plenty of money in private markets that it didn't have to go anything about it. >> they're thinking to raise $1.5 billion. clearly they want to be growing, want to see in what ways they want to take on the growth perspective. they managed to dodge a lot of negative concerns surrounding silicon valley and indeed social media to a certain extent. but we'll also have to see how much oxygen uber and the likes suck up. >> that's a good point. especially next week with lyft. this is bloomberg. ♪ ♪
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>> i'm mark crumpton with bloomberg's first word news. the united states posted its biggest monthly budget deficit on record last month, due in part to falling corporate and individual tax revenue and increasing federal spending.
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the treasury department says the budget gap widens its $234 billion in february, compared with a fiscal gap of $215.2 billion a year earlier. according to data compiled by bloomberg, the gap surpassed the previous monthly record set seven years ago. a federal judge in san francisco is scrutinizing the trump administration's policy of returning asylum seekers to mexico. civil rights groups have asked that the asylum policy be put on hold while their lawsuit moves forward. the policy began in january at a border crossing in san diego. marking an unprecedented change to the u.s. asylum system. families seeking asylum are typically released in the u.s. with notices to appear in immigration court. syria today condemned president trump's abrupt declaration yesterday that washington will recognize israel's sovereignty, but with the israeli occupied golan heights. speaking at the united nations,
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syrian ambassador called the president's statement irresponsible and said it, quote, reaffirms the united states' blind bias toward the israeli occupation and unlimited support for its aggressive behavior. >> it's clearly -- it clearly reflects the contempt of the united states for the international armistice and its flagrant violation of its resolutions, particularly security council resolution 497 of 1981. unanimously adopted by the members of the security council, including the united states itself. but that was a different united states. >> egypt also issued a statement saying the golan is occupied arab territory and calling for respect for international resolutions. and a kremlin spokesman told reporters president trump's comments, quote, can destabilize the already fragile situation in the middle east. judge prosecutors say the suspect in the deadly shooting
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has confessed and said that he acted alone. police say the 37-year-old tushish man killed three people on a tram and seriously wounded three others. the motive is still under investigation. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts and over 120 countries -- in over 120 countries. this is bloomberg. ♪ >> from bloomberg's world headquarters in new york, this is bloomberg markets. they're closed. >> of course we've been talking about this all day. but the spread between the u.s. three-month and 10-year treasuries have turned negative for the first time since the financial crisis more than a decade ago. here to explain why that matters is lisa.
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>> let's look at what's been driving this yield curve flattening. it really comes from the 10-year, not the three-month. if you pull up chart you can see the 10-year yields have plummeted over the past few sessions to the lowest levels in more than a yearle. while those three-month yields keep rising. so this really is being driven by something else. if you look at the board you can see that spread. this matters because people typically look to this curve, including the new york federal reserve, as the indicator of recession risk. in other words, if this inverts, it usually does signal that there is an economic down turn in the next 12 to 18 months. the question is why. is this because of the fed, is this because of something else? the answer is, it's something else. it's not the federal reserve. they've come out, been extra dovish. this is coming from lower inflation expectations over the longer term. this is a gauge of inflation over the next five to 10 years, based on break-even contracts. it's like biggest one-day drop
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today going back to august, 2016. so really what we're seeing today is a reprising of inflation expectations going forward, especially given the weak p.m.i. data out of germany. and of course the federal reserve taking a very dovish stance, making people wonder, what do they know that we don't? >> great perspective. let's get even more insight for you. is there more at play globally speaking? >> yeah. i think a combination of inflation and growth fears are definitely sort of stoking this sort of concern. i think the fed started out kind of on wednesday saying, we're lowering our inflation expectations, we're lowering our g.d.p. forecast. and we're obviously decreasing the rate hikes we see. so investors said, all right, we have to reprise for. that all of a sudden you combine that with really weak numbers out of europe today. >> ugly. >> sort of confirms that maybe the fed really is sort of thinking that there is a global slowdown and we have to sort of react to that in the bond markets. that's why you see the bond
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yield turning negative and the treasury yield curves follow shortly thereafter. >> lisa mentioned that in the past has proven to be a pretty reliable gauge indicator of recessions. give us the rundown on what has happened in the past and how long it takes before recession actually follows. >> that's what i was sort of looking at, sort of -- because the headline, of course, is that it's the lowest since 2007. first time it's inverted since 2007 of but in 2007 it was on the way up. it was inverted and then coming up. the first time it dipped from positive into negative was january, 2006. so it was about two years before the recession actually started to take hold. kind of bracing for a recession right now. but stocks, risky assets, still probably will do well. not like you should necessarily sell everything that recessions -- that the reagencies segs' right -- the recession's right around the corner. >> you're seeing negative p.m.i. out of germany which is supposed to be engine of growth and europe. >> exactly. you see the e.c.b. in easing
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mode too. they're adding more stimulus already. so they're ahead of the fed in that respect too. which is not a great sign. i think j. powell has indicated -- jay powell has indicated, last year he's like, there's nothing we don't care about, we're america's bank, we don't care about the rest of the world. the u.s. is great. but now he's saying there are these headwinds that we can't ignore any longer. >> we talk about the german bond yield and how it's negative right now. does the u.s. yield curve inversion mean the same thing? when yields across the developed world are so low or neglect snive does it still signal the same thing or is it something that we should look at it using a different framework? >> i'm really interested to see who is buying treasuries right now. because there is an open question of, because of the cross currency basis, the way it works with hedging costs, the currencies, the treasuries don't have a great pickup, if you hedge them away in germany or in japan or elsewhere. so it's interesting -- it will be interesting to see if japanese viventers are maybe
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buying treasuries unhedged and just taking the risks that the dollar's going to be strong because the u.s. is the best out there. because we've seen weak growth everywhere else. it will be really interesting to see who's causing all of this. >> we don't know this for a couple weeks, if not months. >> yeah. we'll have to look at auctions and maybe get anecdotal evidence. it will be very interesting to see if this is maybe shorts that are can pet lating, better on -- that are capitulating, betting on higher yields, or what. this is a big, significant move, and we might see a bit of a sort of retracement next week and in the weeks to come. but this is something that's not going away. >> all right. brian, thank you so much. check out brian's columns for bloomberg opinion. coming up, shares of blue apron sliding more than 50% over the past year. we speak to the company's co-founder about his new venture and the road ahead for that. this is bloomberg. ♪ his is bloomberg. ♪
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>> it is a down day for the equity market and it's time for our stock of the hour because got to be talking about regionents financial. dropping nearly 6%. but that's the entire financial sector feels the heat of these falling yields. across the board the banks have been hit up this week. >> i could have picked any single one of them to talk about, especially within the regional banks. but for region financial i want to look, hop into the terminal here. showing you the r.s.i. as well as this rapid price drop we've seen over the past four days. this is the worst four days for them since 2011. you can see we were -- oversold territory now after being overbought. just weeks ago. this has been a very, very rapid decline as we have seen those yields come down. and of course this all started with the dovish fed earlier this
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week and sentiments not being held by trump saying he's going to tap steven moore for the fed. will he press powell to tighten even more than powell was thinking? not a good day, of course, for regionals, for banks across the board. they've all been under prosecute err this week. not a good day. of course the financials index a big underperformer. it's just a blood bath out there to be honest. >> absolutely. looking at the bank index here, all 24 members are in the red. but it's noticeable that these regional names are declining more than, say, the bigger banks, the j.p. morgans, for instance. what's driving that? >> these regional banks are even more sensitive than maybe just financials overall because they don't trade like some of those bigger banks like the jpmorgans. and so they're really heavily dependent on thrones capture that net interest margin. as we see these yields come down, flattening of curves, inversion of curves, it really could weigh on the probability of these guys. so that's why you're seeing regionals and everybody else down today.
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>> thank you so much for study -- setting that up for us. we heard from analysts saying the party eefers for these big banks. brace yourselves. let's move on here because we want to look at how shipping-based food businesses are becoming more and more popular. matthew is looking to make them even bigger. he co-founded blue apron and he joins us with the launch of his new company which is called cooks venture. give us the 30-second elevator pitch. what is it? is it a food company, a food delivery company? what's the ultimate mission sneer >> really everything. we're trying to a-- here? >> really everything. we're trying to attack all the vertical spaces with getting food to consumers, whether that's direct to consumer or through wholesale. the idea behind cooks venture is we're a company founded in the principles of regenerative agriculture. that is, drawing down carbon from the atmosphere and capturing it in the soil through good agricultural practices. through plants and animals. >> so the chickens that you have then, you're able to feed the crops they eat with some of the
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creation of the chickens themselves when it comes to their own -- what i'm interested in, that sounds ecofriendly. you're then transporting said chickens to retail, to the consumer. how does that ensure you're reducing emissions at the same time? >> the real biggest problem with carbon sequestration in our country and globally is not the transportation of foods and goods, it's use of petro chemical fertilizers on farms that creates more carbon in the atmosphere through the use of natural gas. it creates petro chemical fertilizer subsidies. that farmers are using in the form of ammonium nitrate on farms on a daily basis. so that's really the issue. not the transportation. so if we can actually measure our soil, grow crops in a more friendly way, with organic systems, and then feed those crops to chickens and other animals, then we're able to reduce emissions of carbon. >> for consumers who are watching their carbon footprint and trying to minimize it, how much more are they saving really
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or how much more efficient are they being by getting their chicken delivered from you guys as opposed to going to the local farmers market? >> that's a great question. we're going to be delivering to retailers all across the country, in addition to selling online to folks who live in food deserts, who don't have access to chicken. but we'll be in grocery stores and in local markets all over the country as well. >> i'm going to pick up on the delivery thing, though. because you helped found blue apron. one the key crit sisms of blue apron -- criticism of blue apron is there's too much packaging. how are you solving that element of things? >> it is shoofpblet if you look at studies on that, the biggest problem in the shipping industry when it comes to food is the corrugated boxes. if you use curbside recyclable boxes, which we are, the actually less carbon on a comparable note to you what get in your car drive to the grocery store, buy your goods and come home. there have been numerous studies on that. >> how did you get into this
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after blue apron? what was the thought process or opportunity that presented itself in >> i'm a chef by trade. i've been cooking for a little over 20 years. i've been just interested generally in food and building a better food system in scafmente when you can't find the kinds of foods that you would want to feed your friends and family, when when they're coming over for dinner, we have a problem with our american supply chain. to solve that, we need to think about solutions that generate better quality food in a macroscale in our country. so the farmers market is a great example. i support local farmers markets, but we need sustainability and the way we purchase food, on a macroscale. so, when you're selling millions of people food on a weekly basis, you realize that that kind of food isn't available and we need to make it more available. consumers need to vote with their dollars to support regenerative agriculture to do that. >> that's all well and good but how much can a small startup do as opposed to big companies like wal-mart? once they engage in regenerative agriculture, then it becomes --
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it moves the needle. >> companies like that are investing in regenerative agriculture. companies like general mills, unilever and us. in scale, our plant will be able to process 700,000 chickens a week which could effect millions of acres of land across the country and the crops we feed our animals. as we diversify into other species like pork and caddying katrinale, diversified crops -- cattle, diversified crops, the scales associated with that and publish that on an annual basis to prove we're sequestering carbon, partnering with large sfoogses -- institutions and organizations like that, the union of concerned scientists are proving that this carbon is going back into the soil and a lot of global scientists agree that if we're able to do that on a national and global scale, just 1% more carb in the soil through sequestration could stop and reverse global warming. >> you talk about general mills. you talk about big companies that are currently listed.
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your previous company, blue apron did list, it was a who are show since then. what do you want cooks ventures to do? >> i think we need to look at the food system, you know in a different way. my passion is really in the food system and supply chain and providing better access to food to people. >> how big do you need to become? do you need to drive -- do you have ambitions to become another public company? >> i'm not going to say we're going to be a public company or a private company and i want go there just yet. we're just launching this week. obviously we want to make a big impact and there are great private companies out there that are multi, you know, -- >> they're all going public. >> big scale. not all of them. not all of them. but i'd say we want to make a large impact and we can make a scaleable impact, even with where we are today. and we want to grow and make that more prolific. i think the way to do that is through better information to consumers. >> a mission-based company for now. we thank you for telling us about that mission. much passion. blue apron co-founder and now founder of cook ventures.
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warren buffett has made a course correction that raises the idea he may buy an airline. berkshire hathaway is among the biggest share holders in u.s. airlines. he said he wouldn't rule out owning one. he hasn't always been a fan, though. he had problematic investment in u.s. air and joked that capitalists should have shot down the wright brothers' first plane. deutsche bank employees in the u.s. received a major share of the bank's bonuses this year. bloomberg has learned that the german lender is trying to retain top performers after cuts to the investment bank. they set aside $2.2 billion for bonuses. that's down from 2ds.5 billion a year ago -- $2.5 billion a year ago. >> that's your business updates. >> coming up, executive director of the nfl players association talks about the new england patriots' owner robert kraft and whether there are changes afoot for the upcoming season as a result. that's next. this is bloomberg. ♪ ♪
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>> let's turn now to the business of sports. new england patriots' owner robert kraft, as you know, was charged in february for soliciting prostitution. what kind of impact does this have on the nfl as well as the upcoming season? i put that question to the executive director of the nfl players association. >> i can't imagine a world where we start the season without the players, because the players didn't do anything wrong. >> so the patriots would still play the season opener? >> oh, yes. yes. now, you know, what happens with respect to individual owner conduct and the league, once again, i'm rarely -- i can almost say never -- invited into thoast those meetings. >> you mentioned the collective bargaining agreement. two years before the current one he can pires -- expires. what did you learn from the 2011 lockout and how to rallies the players to stick together and make demands and face off against the league? >> that was a lockout imposed by the league because they wanted
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the players to play 18 games. they wanted to us give 20% of our salary back. and to give up our pension. other than those three things, the deal distribute offer they made was great. so we went through a very tough fight with the owners to keep our pensions, to not give back 20%, to not play 18 games. my hope is that both sides can come together and figure out a fair deal for each side. we had a great meeting, we had the largest meeting ever in the history of the nfl players association last week. we had over 250 players. so they are serious about the issues that are important to them. i think that it would be good for our business to not have a massive amount of disruption in our business. but we prepare for the worst and hope for the best. >> what are the areas in which there will be less friction, that there's broad agreement? >> let me see.
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i'm going to pull out a post-it note. you know, i think that there is -- let's just say this. i think there is more agreement today in 2011 than we had in 2011 over health and safety. i think that the players were adamant about being zero-sum, about player health and safety. we take the view that it's nonnegotiate -- non-negotiable. i think that was a bit of a change in 2011 and the owners weren't used to players being as aggressive about their own health and safety. i think that we have learned a lot more in the last eight years . but to say that, you know, we're all on the same page as that, you know, i don't know. but i do think that the league is far more understanding of the players' resolve when it comes to health and safety issues. >> nba commissioner adam silver made headlines recently when he
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said a lot of nba players are generally unhappy. there's less camaraderie. more pervasive loneliness exacerbated by the isolating effects of technology. physical health obviously a big issue for your players. you mentioned health and safety. it's a big issue for the league as well. how big an issue is mental health? >> it's a big issue for the union. we have a robust support system for our players' mental health. we don't really spend a whole lot of time talking about it. we understand what our job is hen it comes to not only insuring to our players' mental health, but in those times when we need to provide them with help and support, we do it. and we do it without cost it the player and, frankly, most of the time without anybody ever knowing about it. i think that allows us to have far more of a web or system of
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support. but it's an important issue. >> one final question before i let you go. how important is it for the nfl to update its cannabis policy? >> i think that it's more important to look at every option to to ensure the health and safety and treatment of players. opioids remain a big issue. but also exposure to pain. is a big issue. so i would much rather focus on the totality of the issues rather than just focusing on cannabis or marijuana. >> and that was my conversation with demarias i smith of the nfl players association. we're going to stick with sports because papa john's has a new pitchman up. might recognize him. hall of fame basketball player shaquille o'neal. he is joining the board of the struggling pizza chain and of course papa john's trying to undo some of the damage caused by the founder us a use of a racist slur. this might be one way towards mending fences. >> the first black person to join the board, also up 5% on the day. even though they're paying him a cool $8 million. he's going to be investing some
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of his own cash in some atlanta restaurants. >> yes. he's investing in nine restaurants in the atlanta area. papa john's -- john's will own about 77% of that venture. shaq will invest anywhere from $840,000 to $2.8 million anticipated acquisition costs to the restaurant. >> he's a tourg presence for now but he's a pretty towering presence in reality. you met him. what was it, you just about touched his waist. >> >> he came to the set four years ago and, yeah. i was trying to put my arm around him and i got maybe two to his waist. maybe. >> how tall are you? >> i'm a good -- on a good day i'm 5'4". >> he basically had the light shining on him. >> this is so brilliant. >> this is bloomberg. ♪ this is bloomberg. ♪ you.
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all of you. how you live, what you love. that's what inspired us to create america's most advanced internet. internet that puts you in charge. that protects what's important. it handles everything, and reaches everywhere.
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this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. >> president trump is reversing his administration's decision to wash sanctions on north korea. white house press secretary said
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today the president likes chairman can and doesn't think these sanctions will be necessary. to white house sanctioned chinese shipping companies suspected of helping north korea invaded sanctions -- innovate sanctions. some eu leaders were against giving britain a delay to brexit but agreed out of solidarity with others in the block. eu leaders agreed late thursday to give british lawmakers a few more weeks to try to approve the divorce deal the prime minister theresa may has struck. >> there are some countries particularly those that are near to the u.k. who are sick of this. they can noing longer explained to the public why so much time is being spent on brexit when there are more important issues to deal with.
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>> he added that the extension gives breathing space for britain to decide among three options. no deal, withdraw agreement, or a closer relationship with the eu. condemned president trump's abrupt declaration that washington will recognize israel's sovereignty over the israeli occupied go on heights. the syrian ambassador called the president's statement irresponsible. >> this clearly reflects the contempt of the united states for the international teams and its flagrant violation of resolutions. adoptedand unanimously by the members of the security council included the united states itself but that was a
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different united states. >> egypt also issued a statement occupied araba is territory and calling for respect for international resolutions. a kremlin spokesman said president trump's comments can destabilize the already fragile situation in the middle east. the u.s. posted its biggest monthly deficit on record last month due in part to falling corporate and individual tax revenue and increasing techs -- federal spending. according to data compiled by bloomberg, the gap surpassed the previous monthly record set seven years ago. global news four hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over 100 20 countries. i'm mark crumpton. this is bloomberg.
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♪ 3:00 in new york and 7:00 in london. >> i'm scarlet fu. >> global stocks dropped the most over two months. the gap between the three-month and 10 year u.s. yields disappears for the first time since 2007. the german ten-year -- a seat at the table. president trump since he is nominating stephen moore to the federal board. all of that and more coming up. let's get a check of the markets. we have come off of our lows. the nasdaq is now off by only
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one and three quarters percent. >> we have seen tech in the firing line but banks as well because yields are crumbling. the 10 year yield off by nine basis points. a significant move when you also see in a move between the three-month and 10 year as a sign of recession. >> u.k. stocks having its best drop year to date. have prevented a no deal brexit from happening next week. let's take a closer look at the action. oil rallyr the earlier in the week? that is gone. when you look at oil prices today, wti crude was down as much as 3% at one. it did pay are some of those
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losses as we head into the settlement but we still ended up with a the worst daily loss that we have seen in three weeks. that is off of the disappointing data out of france and germany. aboves. benchmark traded the $60 mark three times this week but failed to hold the level. i think what you are seeing now is that for a lot of the past few weeks, we have seen support on the supply side with opec pledging to maintain cuts. no you are seeing a shift in sentiment toward the demand side plate. seeingany traders were -- saying that we need to see small cap confirmed the rally. today, thelloff small caps are performing again. the russell 2000 has underperformed the s&p for four straight weeks. if you take a one month view,
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the russell is having its worst month against the s&p since 2009. we have to note that this is largely in part because of the banks. they make up 25% of the russell. --en out of the nine read industries are also lower. >> i want to look at that rebound in the u.s. housing market. --got data today that shows take a look at contract closings. you can see that real estate investment trusts has been outperforming the broader s&p 500. that comes as rate declined giving a boost to people who want to borrow. it is cheaper, they are borrowing more and buying. >> president announcing plans earlier today to nominate stephen moore to the federal reserve board of governors.
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mr. moore is senior fellow at the heritage foundation. i am pleased to say he joins us now live from washington. is ourth us correspondent michael mckee. we also want to welcome our bloomberg radio listeners. thank you for speaking with us. has the president spoken to you and formally asked you to accept a nomination? >> he did. that was the honor of my life when he called and asked me to do it. you can't say no to the president. privileged to have this opportunity. i will still have to be confirmed through the senate. he said i have full confidence in you. he and i think a lot alike when it comes to economics. >> you are a longtime supporter
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of the president. as you say, you have to be put into the role and accepted. do you worry that you might not be deemed independent? >> persuade the chairman and work with the chairman to try to make sure that america grows as fast as it can and that wages rise and we have a long. soundsperity through monetary policy. it trump has in a great job on tax reduction and deregulation. it looks like we are going to get this trade deal done with china. if we have a sound monetary
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we can havelieve three or 4% growth for the next five or six years. >> you suggested months ago that jay powell be fired and that the rest of the federal reserve for monetary go policy incompetence. you called the fed the swap in washington. will you be able to work with these people? >> that was probably written in a time of anger. everyone would now acknowledge that what they did in december with the rate increase was a substantial mistake. reversed that and changed directions with respect to the rate increases. i have never met chairman powell. i look forward to working with him. he wants a high growth and he can be a hero if we get our monetary policy right. have progrowthe measures on the fiscal side of the equation.
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i don't want to be a destructor. i want to help chairman powell and the others on board to construct the best stable price progrowth system for this country. >> president himself has been critical of chairman powell. if he is putting you on the board, i wonder if it is to be a check on jay powell. thing he told me is to pursue policies that are good for the american economy and the american worker. he has said in every conversation that i care about wages and i want to make sure that middle-class workers are doing better. he did not mention anything about differing with chairman powell loan where the other. >> what is your view on the fed mandate? the fed chair had spoken about the overarching goal of federal expansion. and do your view on that
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you think is at odds with what the fed is pursuing? growth.for i think the potential for the u.s. economy is three and a half to 4%. i am kind of new to this game. i am going to be on a steep learning curve myself. is a real exciting opportunity for me. it is hard to say what my role will be there. assuming i get confirmed by the senate. >> let's presume that if you are looking from what the fed could do right now to put three and a half to 4% growth the you think is attainable, what does it need to do? is it dovish for longer? have no rate hikes for 2019? do we see a rate cut coming before a hike?
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>> i wrote a piece last week that spelled out the monetary policy that i think donald trump liked. it might be a reason why he asked me to serve. i am for a stable dollar. when you asked me about the dual mandate of the fed, i think the most important thing the fed can do is maintaining currency that remains stable and strong over time. is that we have seen slight deflation in the economy over the last four or five months. you have seen that with the commodity prices falling. it is not just oil prices. the commodities, they have fallen 8% to 10%. that is not inflation it is deflation. that is not a dovish policy. it is a policy that says make deflation can be as harmful as inflation. i am worried more on the
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deflation side than the inflation side. >> there is no deflation in the economy by any price measure. the fed will probably not adopt a commodity price target. how do you get a stable dollar? of thee once an advocate gold standard. are you still? >> i have never been a gold standard guy. i am open to it. steve forbes just wrote a book on it. i will challenge you on this. if you don't think we have deflation then why have 30 commodity prices fallen by 8%? explained by ae dollar that is too scarce. trump has created a progrowth environment. you have huge global demand for dollars. if the fed is raising rates and
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pulling dollars out, that will create a deflation. if you say there are no signs of deflation, how do you account for the commodity prices? >> you look at deflation by a broad general move in prices. the fed has been struggling to get inflation off of the 15219 range. >> they have been pretty consistently under their target of 2%. can argue about whether they are too tight or not. >> du you think that they should be cutting interest rates at this point? >> i don't know about that. i have to take a closer look. one of the things i want to do is talk to the people at the fed. dozens andeveral
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scores of great economists over there. i want to hear -- one of the things that will be interesting for me is to hear the case and look at their data. then to help make the decision about whether we are too tight or too loose. >> i want to talk to you about the debt level. you said you are a growth hot. obviously a lot of fiscal hawks in washington. you are critical when it the national debt reached $18 trillion when president obama was in office. it is now at $22 trillion. are we still hopelessly overleveraged and if so what is the prescription? careerve spent my whole since 1983 being one of the biggest budget hawks in washington. looking at my record, i have recommended trillions of dollars and cutting waste and inefficiency. we do have way too much spending. i think everyone a colleges that. ofhad virtual record levels
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revenues even with the tax cuts. it is not a revenue problem it is an overspending problem. i think we need to reform our entitlement programs and find ways -- i love donald trump's thought of cutting every agency by 5%. we need to bring the expenditures down. running deficits is not sustainable. >> your perspective on how global and outlook the fed should have? recently jay powell was talking about a headwind a space from brexit from china. how much do you think the fed is eight central-bank to the world? how global should the fed be? >> one of the reasons i think we have seen a follow-up and growth especially this quarter has been that the u.s. economy is being weighed down by the global slowdown in growth.
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absolutely, the fed should be paying close attention to what is happening globally. we want to see global growth increase because we cannot carry the whole economy on our shoulders. in terms of exit, i hope for a good resolution of that where the brits can remove themselves from the eu but still have free trade with the europeans. that would be the best for both sides of the equation. it sure looks ugly a now but i hope there is a good resolution. >> in terms of the china trade deal, do you know if we are any closer to that and whether china might continue to be a headwind to the u.s. economy? >> i am hopeful. i spoke to be president a few weeks ago about this and he was optimistic. it is tough. the chinese are very difficult to negotiate with. i have always said i think trump is fighting the right fight. tradee been in an abusive
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relationship with china for a number of views now. if you think about the implication the trump can pull this off and get the deal done, where the chinese reduce their tariffs on american goods. we could do something about the intellectual property theft that is endemic in china right now. i think we will be hugely of thee for not just u.s. economy but china and the rest of the world. there is a lot hinging on this deal and i am feeling more confident than ever that it will get done. ofyou were an opponent quantitative easing. are you an opponent of keeping a balance sheet that is going to be three and a half trillion dollars? >> i will have to study up on this one. to hear what the economist at the fed have to say about this. thisknow much more about
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than i do. i will reserve judgment because i don't have the full knowledge that i need to. time, we want to reduce the balance sheet and not have these massive amounts of debt on the fed balance sheet. 10 years ago, republicans were very upset about deficits saying it was unsustainable. end oft tax cut at the 2017 increased the deficits as well. what is your stand? cutshelped write the tax so i think it has been a tremendous success. when you look at how will the economy has done. the amazing recovery we have had, the best labor market in 15 years. before the rate increases, we had growth with full employment and no inflation. nice increases in business investment. it is not an accident that this economy has done so well.
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it is in no small part because the business tax reductions that have put more into the hands of the businesses so they can hire more workers and invest more. i think it is fantastic. i like to see revenues coming in havefaster pace area we near record revenues we just need to get the spending under control. neither party seems to be too interested in that right now. >> thank you for joining us. >> we are looking at a down day
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across the board in equities. one big reason why is the inverted yield curve. especially between the three month and the 10 year. >> this is bloomberg. ♪
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you look of the volatility, we were down one and three quarter percent on the low, the vix really high. 20%. that is a significant of move for that type of denver movement. market is really concerned about another event. we got right to this 2810 level. it is certainly a spot where market or dispense are concerned to the downside. curve ort the yield
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will something else happened this weekend that will recall the market? >> that's checkup on that. we did have a only the vix move but also the volatility of volatility. it was up 20 points. this is the first time since you think what do some catalyst could be that would see selling accelerate in the days to come? >> i always question if somebody knows something. if there is a market selloff event, i think that would be a buying opportunity. that shows me -- there is significant concern out there in the very short term about market events happening really this month. it wasn't around yesterday it's
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big today there is a concern about a short-term market negative event. -- it is long big 10. asay, the market is about ready as tom last night. >> thank you so much. as we had to break, with 30 minutes to go before the market closes, there is the yield curve inversion. >> this is bloomberg. ♪
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>> i'm mark crumpton with first word news. at the trump administration has approved 3.6 billion dollars in new loan guarantees to finish the nuclear reactors. the expansion in georgia is years behind schedule and its estimated cost of more than $27 million has doubled since the construction was approved in 2012. money isay taxpayer being used to prop up a failing project. trump's declaration th


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