Transcripts For BLOOMBERG Bloomberg Surveillance 20240622

Consumers and businesses cut spending and asked its fell. That is a set of that is a setback for shinzo abe. Germanys chancellor Angela Merkel is saying she is willing to consider debt relief degrees. She made her first Public Comments since area finance ministers endorsed bailout for greece. She is confident the imf will join bailout. There may be some leeway on the Interest Rates the greeks are paying on their debt. Searchers in indonesia have found the wreckage of a commercial prop just that appeared to have crashed prop jet that appeared to have crashed into a mountain. There were 54 people on board. And lost contact with the air Traffic Control while flying in cloudy weather. He is elected president , donald trump says he would deport all undocumented immigrants from the u. S. The republican president ial candidate laid out his position on immigration in a fourpage document yesterday. He appeared on meet the press. Donald trump we have to a whole new set of standards. When people come in so you are going to split up families . Donald trump we will keep the familys together. What if the iowa state fair is a traditional showcase for candidates. And a major tournament record. He is 20 under. There it is. 20 under. What kind of course is that . The pga. Vonnie tough weather conditions. Tom lets go through this. 1. 1101. This becomes important with a 1. 1 move. That is how long we have we are on oil. Brent crude, 49. 13. The ruble is weaker. The mexican peso much weaker, 16. 46. Lets go over to the mac and the bloomberg terminal persian gulf war in the 1990s. This is inflationadjusted brent. We are back into, prechina. Brendan we are looking at two realizations. We realized fracking was cheaper, but here is the point where reached where it is impossible where it is possible that fracking may get even cheaper, that they can cut costs. The dynamic now is not the dynamic it was even six months ago. Tom is this lower for longer . This is four years here. One of our themes this week as we look at commodities and the effect upon your life. As vonnie quinn mentioned, japan is really front and center overnight. , the media focus is on lousy economic growth. Where the pros are worried, they are worried about manufactured inflation ready made by abenomics. We begin with a fiction known as japan economics, and we need to bring in willie pesek, in tokyo this morning. To me, it is about this new inflation in japan. Is it a good inflation . So far, no, because the yen is down 35 in almost three years. Any inflation japan is getting is imported, the bad kind. With oil prices low, japan is still importing inflation. Toyota is happy right now. When you talk too small to midsized companies, they are not because they have to in point they have to import a lot of goods. Trying to get consumers to spend more and companies to invest more. Tom what is the support for abenomics on the street . Cabinet is ate about 32 . The thing i hear left and right in japan is we hear a lot about it, ask that sounds great. We hear a lot about abenomics , and that sounds great. Prices are rising to some extent, so many ways, people are looking around and saying three years into this thing we are hearing about it but not feeling it. Rating we are waiting for raises to be passed along, and that is not happening. Brendan it is a frustration government. Do they have any stake in that argument . Willie people say abenomics has policy,rows monetary fiscal policy, and structural reform. Now we have to see there is only one arrow, the bank of japan. We are still waiting for the other two arrows, and it is not happening. Companies are having this staring contest with the abe government. They say we will raise rates raise raises when you make the economy more competitive and tweak tax rates. Corporate executives are waiting for that, so there is this highstakes staring contest against the government, toward japan, which is not blinking. Tom thank you. Our focus this morning, the continued collapse in oil. Give coat talk is with us. Shes Investment Officer david kotok is with us. He is an Investment Officer. Figure,ou make the book maybe they will buy it. Opus, 3,atest biblical 2, 1. Desk] its in the lower corner it says puerto rico. You thought you would sell 12 copies, and instead it is usually successful. David the book was on amazon live, the final version, july 31. Puerto rico defaults on august 1. Vonnie you called it, david. David bestseller ever since. There are pieces in the book in the versions of muni credit, and what is a moral obligation bond, a general obligation bond, and how you slice and dice through the market. It is the seven years of the financial history. Michael, my colleague, did the heavy lifting. Tom there are lots of charts in here. Sverybodys telling me muni are the place to be. David they are if they are the munis which are going to pay you, and they are not cheap. Other munis are dangerous. Shameless plug. Lets get to oil now. There is no side there is no sign of abating on oil. When will oil catch a bid . Avid this may go lower longer i am an old goat in this business, and i remember in this business when oil was three before thearrel middle east war when it went to 12 a barrel. That middle east war was in the 70s. We could go back to 15 or 20. This is a downward slope. Brendan my followup question to toms, i do not see the dynamics. I do not understand what is going to bring it back up. There is this hope we will get back to the old dynamics, we just have to figure out how to diminish supply. I do not understand how we are ever going to get back up there. David hope is not a strategy, it is a myth. We have been through this before but not recently. In our shop, we have been maxx underweight oil since 100, and we would not touch it here. I would add one quick thing on the muni thing. We are working on something , becauseacking munis there are a dozen states losing revenue. Inre is deterioration municipal finance, and you have to slice and dice and dig in the weeds in the oil patch in the muni market. When if ever will we see david the Oil Price Goes down, that means you get the first kick, but then you have to wait for the consumer to wake up and say i am going to have more money longer, im going to spend it. Vonnie will it be proportional to the drop in oil, or will it be lesser . David i think there is a huge boost in consumer spending, and when people begin to accept the fact that this is a permanent shift, not a temporary shift. Tom can you get over 3 gdp with that, and is the fed behind the curve because of the david iof oil he echo do not think the fed knows what to do with a stronger dollar and weaker oil and Capital Spending contracting. Tom come on. It is monday morning. September or december . David september. They have got to get away from zero. Vonnie do that . Why he echo brendan do that do they . Why . Brendan i am with vonnie quinn. Coming up, star wars is really all that matters. The companys new plans to tackle a galaxy far, far away in their theme parks. The bloomberg surveillance star wars report. Tom can i read . If they derive their revenue are young fees asleep yet . Tom good morning, everyone. Bloomberg surveillance. Lets get right to top headlines with vonnie quinn. Vonnie recordbreaking temperatures are pushing flames higher in western wildfires, and crews are trying to put them out. California now has 19 major fires, one of them sending smoke into the San Francisco bay area. Fires in oregon and Washington State are forcing people to leave their home. Died asly idaho woman she fell trying to evacuate her home as a brush fire approached. People are more deeply involved Government Service government surveillance programs than previously known. According to the New York Times, documents divided by it would snowden described relationships with the nsa and at t as highly collaborative. Remember asis being a giant of the civil rights movement. The longtime naacp chairman died saturday in florida. After his years as a radical student activist, he became a state lawmaker in georgia. His widow says bonds ashes will be scattered at sea. Julian bond was 75 years old. Tom he is an interesting place within our 20thcentury history. Vonnie absolutely. Tom before this, after this interesting place. Brendan the story of america right now, we have been spending time learning that those times are not behind us. Interesting picture on the front of the New York Times from 1963. Tom this is something that you wanted to talk about. Vonnie do or do not, there is no try. Yoda] try not. Do, or do not. There is no try. Yodas advice lands across the empire. We are creating a jawdropping new world that represents our largest single themed land expansion ever. [applause] vonnie we are joined by paul sweeney. Comcast is also making an expansion in terms of its theme parks at Universal Studios. Is this a viable longterm counter strategy to losing paytv subscribers gekko paul i think it is. Disney over the last 10 or 15 years, their theme parks have received a tremendous amount of capital investment, so they have expanded their business, including their cruise ship business. They laid down a lot of bets around the world, the most notable coming in shanghai in the next year, and opening the park in shanghai. They continue to invest because they continue to generate steady profits for disney. Brendan i need you to confirm something for me. Well i a will i be able to get into a millennium falcon . Paul i think you might. Disney is going to want to put you where you want to be. Vonnie you can also go around the toy story garden, and get into the ironman stark industries. A lot of great experiences, but disney and comcast both are betting that the consumer will continue to want to spend on oneoff experiences. Paul comcast bought nbc and they did not really think much about Universal Studios in florida, but it has a 30 ebitda margin. Brendan we are planning it out for the future, planning and trip to disney planning a trip to disney the way you would plan for a house. Paul it requires a tremendous amount of capital. Have been andou done the star wars experiences, how many times are you going to do those . Arent you going to have to keep coming up with new galaxies . Paul again and again, and nobody does it better than disney. Tom bring up the chart again. We need Brendan Greeley to help us out with the editorial. [as yoda] judge me by my size, do you . Voice] the live experience is important. Is this happening to tv . Paul this is a cyclical business. If you have capital to invest, you can generate decent returns. The cash cow which has been the Cable Network business it is still expected to be a cash cow. Investors are not sure with the Growth Prospects are with the Cable Network business. Companiesd 42 of the are theme parks. You are still looking at the espn story with disney, trying to get comfortable with that. You are looking at the film and production studio, and disney has done great with that with pixar and marvel and now with the upcoming star wars products. The theme park is core to what disney does. I think for comcast, they are sensing this is a good business. If you do have the capital, it can be a good longterm business for them as well. Tom thank you for joining us on monday morning. Paul sweeney with Bloomberg Intelligence. We will talk about amazon in the next hour. In the next hour we will give substantial time to adam parker of morgan stanley. He has been wrong on energy. Sometimes that is the best time to talk to someone, when they have to justify a call gone wrong. Adam parker on the equity markets. Us. With this is monday morning. Worldwide, this is bloomberg surveillance. Tom good morning, everyone. From new york city, this is bloomberg surveillance. A beautiful august weekend in new york. Some elevated temperatures. We migrate through this week. Let me do a morning mustread. Onhunt, a lot of experience campaigns. Mr. Hunt writing for Bloomberg Tom it is a smart essay. Brennan,ve about this, it is not hysterical. It was such a pleasure to see an essay that was not hysterical about these hysterical times. Brendan that is the Campaign Strategy of Hillary Clinton. That was a good time. Do you remember that time . Do you want that time back . The question for me back to al is, what drove that . Was it the ability to get a budget deal done . Tom the internet boom helping out. David kotok is with us. I was taken by doonesbury this weekend. You have written on the effect of this politics. I do not buy it or it is there any affect . Think there is in effect now because market agents are watching a sideshow. Looking at oil and china and currencies and Central Banks and the fed until this narrows, the markets are not impacted by these debates. And sandersrges emerges as credible front runners in their parties, or they go fringe and independent and they put the republican and democrat in the middle, then we will have a real freeforall. Markets will not like it. Price indo markets not Party Movements within the party . David i do not think markets are pricing any of this in now in the markets. Markets are looking at the fed and oil. That will change in another six months. Then we will have to hunker down and get narrowly focused. Tom david kotok with us. Coming up in the next hour, Bloomberg Politics editor Mark Halperin will join us. He reports that the butter cow did melt at the iowa state fair this week. That guy withon the helicopter as well. Stay with us, from new york city this monday morning. Bloomberg surveillance. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Get excited for the 1989 world tour with exclusive behind the scenes footage, all of taylor swifts music videos, interviews, and more. Xfinity is the destination for all things taylor swift. Tom our twitter question of the day is mr. Trump good for american democracy . That is a debatable the point, clearly a heated point. He is doing better in the polls, to say the least. His donald trump good for american democracy . Here is vonnie quinn with top headlines. Oil slumps price of today. Brent crude is trading for a little bit more than 48 a barrel. Signs that a Worldwide Oil glut is ending. China, the blast exposed weaknesses in how the two reels are transported and stored in china. Toyota prius factory will stay closed toyotas factory will stay closed for three days. Its securityng up team in an effort to protect itself against hackers. By the end of the year, uber staff to quadrupled more than 100 workers. The South African paralympic runner has spent time in prison for shooting his girlfriend. Oscar pistorius. He was sentenced in 2014 to a fiveyear term. From the box office, straight at of compton, smashed to record for an rrated movie. Mission impossible was behind in second place. Brendan do i get my do now that this movie is a Business Success that people care about . Tom it has to be a Business Success. Do they replicate it . Brendan we should go to paul sweeney about this when we talk to him next. Every time you see success, you see every other studio trying to recreate it. I think the answer is, you pay a little bit of money for a really good movies. Tom people went to movie 9eaters without 7, 8, yearold children. Angela merkel has begun selling the greek bailout package at home. Here is what she said on a German Network last night. Angela merkel with regard to the extension of maturities and the setting up of Interest Rates that we possibly have or rather not possibly, but definitely we have room to maneuver. We extended maturities in previous times, moved forward the repayment rates. It is always possible to do something else, but there is the clear statement that the eurozone cannot allow another haircut or debt cut. Brendan hans nichols is straight out of berlin here it lets listen to Angela Merkel. Is she observing the first rule of haircuts, that you do not call it a haircut . Hans you call it a haircut light. They arege calling it a haircut light. They are citing a senior eu official comment eu advisor, saying they want to tease out the maturities to an average. This is the average of 60year maturity. There is the inside of the paper. They are calling it a cleansed by a clandestine or a secret haircut. Brendan she is selling the steel to the German Parliament. Bloomberg has some quotes for some of her allies from some of her allies one of them is that this is what is currently achievable in europe. Is she selling this by holding it between her thumb and forefinger . Hans i think that is a good way to put it. With some distance, she is selling. Victory, the idea that you are not going to have an overall debt reduction, that that is a big victory that germany won in the negotiations. They are being a little fuzzy on just what the imfs role is going to be. Germany is insisting the imf has given them a Firm Commitment that they will stay involved after october, yet i have not heard anything from madame lagarde that is firmly saying that they will absolutely support this program. Vonnie exactly, and we do not know when if ever we will get that. The vote in German Parliament in the bundestag is wednesday. Is it going to pass . Hans it is going to pass. The question is how many defections Angela Merkel will have. At she could have up to 120 defections this time. She will get her majority, it is just a question of how bruised she will be when she comes out. Even some of her key deputies are saying that they will not vote with her. He says he has not made a decision yet. That is his way of saying that he probably has made a decision and is not want to announce it yet on bloomberg television. Ndan i am sort of shocked was friday the least dramatic finance ministers meeting we have had in two years . Hans probably, but there has been a dramatic reaction. One person said there was no bailout for creditors. There is a lot of comedy, but there is some market react on the debt side today. Nichols in berlin. How changes in chinas labor market may have been the final straw in the governments decision 2d value the you want. We will discuss todays single best chart. This is bloomberg surveillance. Good morning. Tom good morning, everyone. Hasmberg surveillance gotten through 38 minutes and 50 seconds without talking about the devaluation. Now we go to single best charts with Brendan Greeley. Brendan that is because we cannot pronounce you on. Pronounce the yuan. The subject of todays single best chart this is from a note from richard to from nomura. We are looking at the ratio of job offers to job seekers. Look at the dip in the last year. He writese in red that this came as a major shock to the chinese authorities. David kotok is here from cumberland advisors. The difficulty of looking at china is that you do not know what numbers to take seriously. Is this number worth taking seriously . David it is. He is on point. For years we had this notion of 15lion, 18 people million, 18 Million People going from urban to rural. Nobody is living all of these housing units, and we were speculating about how they were going to get through this and who is going to occupy . What is the bubble coming, that sort of thing. All this is now in play. Rural to urban has stopped. That is a major shift. Brendan if rural to urban has stopped, you still have these People Living in urban centers. What do you do . Shiftntervention can help them toward consumption . David the Chinese Government wants to keep them quiet. The Chinese Government does not want them in the streets. The Chinese Government does not want a repeat of tiananmen square. It needs to find things for them to do, and they have this mix of men and women because of former policy. Young mene a a lot of without women, a dangerous situation if you do not have them occupied. Brendan this is fascinating because we started at a with job offerslooking at to job seekers. Within 30 seconds, we were talking about tiananmen. Keep they are trying to the people young, dos file, with energy, and behaving. There is an argument that this is a healthy transformation, that that needs to happen for china. Would you agree . David it needs to happen, so transformation that is inevitable happens. Healthy is a question of how is it managed. They are attempting to manage it. They are attempting also to be part of the world reserve. Urrency and growth system they are the second largest economy in the world, the largest goods producing economy in the world. These are massive shifts. Are the imfyou right now, are you heartened or disheartened by the way they did it . David you are surprised but not so surprised, because you put pressure on them to do it. Cleany go to a nearly float of a currency . Does that happen in a world in which the secondlargest economic locks economic blocks europe just had a great report from haas nichols as to why there will be negative Interest Rates in the eurozone for the rest of the decade. These are great in balances in Interest Rates and currencies worldwide, and china is right in the thick of it. A big thing for the dollar. The dollar gets stronger and sronger. We have no idea how strong our currency tom does that in pinch Janet Yellens outcome . David it does not change september or december. They have to get away from zero because zero is distorting the operation of the money market system. They have mean to go up 50 basis point or 75 basis points. It will probably take them the whole year to do it and get stable. Our top photos. Number 3 we go to brazil on sunday, a bit of a reaction there, too. For protesters were asking ssefsf for rou impeachment. These protests happened in 16 states, and those in Rio De Janeiro gathered along copacabana beach. You put it really well this morning. There were just enough people on the streets to be a problem, not enough to be a huge problem for her. About half a million. Brendan distributed across several cities. We will be talking with the sao bureauau tree chief in the next half hour. What we are looking at right now theoncern over deteriorating economic situation. Vonnie exactly. Lets move on to top photo number two. Thas vineyard needed president obama and former president bill clinton hit the greens together at a country club on the island. Jurek and clinton advisor Vernon Jordan joined them as well. They were going to celebrate Vernon Jordans 80th birthday saturday night at his home on the vineyard. Amazed by am always the expresident s club. There is a heartbreaking anecdote where in the final month of his presidency, george w. Bush used to call bill clinton, and they would talk about it because nobody understands what it is like to be a president except another president. Exactly. I cannot believe they used the card. A cart. From donald trump to jeb bush to Hillary Clinton tried the tasty fair that was offered. The 51st iowa state fair. Mac,iggest winner was big weighing in at 1166 pounds. Brendan that is the trumpiest trump face. You cannot win as a candidate. You have to go and make yourself look silly. Youd have to grin and bear it. Vonnie i do not understand why it is a source of pride. Brendan we asked, is donald trump not only good for iowa, but good for american democracy . Let us know bsurveillance. Tom good morning, everyone. And little better take on oil than we saw in the last two hours. Here is top headlines with vonnie quinn. Vonnie and air Traffic Control center in washington made air over theiserable weekend. The faa is investigating. In south korea, shares of samsung fell to a 10month low. Last week the company unveiled challengeartphones to the iphone. It will not be enough to reverse fivequarter slump. Theearold david denson is first openly gay player affiliated with the major leagues. He is at a low level team with a Milwaukee Brewers system. Believe these still make headlines . Tom that is right where i was going. Brendan i was amazed that in all of baseball i was shocked. By that. Ned and also that there is not a in theopenly gay player major leagues. That is amazing. Vonnie it is a big deal in so many sports in the last year. Tom lets rip up the script right now. We can do that with david kotok. Particularly on Oil Currencies, they implode, as we saw this morning. The brazilian real is not open yet. The mexican peso is weaker, russian ruble weaker. Now we are going to rip up the script. Twice you set on your fanny in sarasota, florida, for a long time with this outage this weekend. David the flight patterns changed. It took them 3. 5 hours to get from sarasota to laguardia. Had to go far west. Colorado . Ad to go to david just about. 500 flights canceled. It was a mess. Tom lets go to Oil Currencies. My experience is that everything is rationalized until it is not. My other experiences that you never see it coming. Do you know where the Inflection Points are . David you never see an Inflection Point until it hits you. But you do see the setup for greater volatility. When you think currencies, suppress the Interest Rates on all those currencies to zero, you remove the function of Interest Rates to arbitrage difference of opinions in the financial markets. We now not only have zero, we have a negative block. Tom sam fisher would stay sam fisher would say that there on thet of distinction Balance Sheet from 1988, but they defend those down to the currencies. Is there a point of more rationalization on the Balance Sheet . David there is a port on every Balance Sheet, but you cannot say that you cannot see it coming before it hits you. There is no way to forecast abrupt currency changes. The whole idea is to forecast increasing volatility, take hedge positions, dampen your risk profile, and wait for the bomb to drop. Brendan when we look at what happened after the bomb dropped last week, and all of these curencies, was that a reaction to the devaluation of the currency, or what that evaluation said about what the Chinese Authority thought about the chinese economy . Of it is a reaction that reflects what they think, but the third piece is the trade flow. The biggest trading relationship is japan china. What is japan now going to do . My view, they will have more qe, they will do it again. They are down to zero for more years. Tom bring up the mess in chart, if you bring up the mexican chart, if you would. It is a gorgeous chart, and now it is extended. Ourdoes that knock on southern border and the adjacency of puerto rico . Is in a wholerico different place than mexico. It is part of the united states, uses the u. S. Dollar. Tom donald trump mentioned in this weekend, that everybody has to move to mexico. David the fact of the matter is, we are having a massive global adjustment process. The dollar is the emerging winner, so when you look at mexico or you look at the yen or you look at the euro, or you look at other currencies around the world, one thing is consistent. U. S. Dollar stronger, stronger, stronger. And the u. K. Right behind it. That is the pattern of the world. Tom adam parker is with us in stanley hour, morgan troubled. Brendan the fragile five to the troubled 10. Looking around the world, what country are you most worried about right now . Is it malaysia . About asianworried growth. Germany and they are better markets, better governments. Our bias is a strong dollar pattern for strategic periods of time. Brendan it seems like one theme in talking to you is the inability of any country anywhere to do anything about monetary policy. Do anything but monetary policy. David because fiscal is broken. It is broken in greece, france, europe, and here. There is no fiscal policy. Zero. Tom but your etf strategy can get you adjusted because it we are seeing emerging markets off of oil. On a stronge still dollar. Think about the u. S. Market. Suppose the u. S. Market delivers in earnings in the s p 500 index, and those dollars have buying power that is 10 better than a year ago worldwide. That is a positive thing. Tom can you buy Apple Computer this morning . Not i bank i buy etfs. Computeryou buy apple etfs . David sure. Tom how about our forex report this morning as we talk up doubt as we talk about the malaysian ringgit. Stay with us, another hour of bloomberg surveillance. Announcer this is bloomberg surveillance. Oil continues its decline as battled Oil Currencies move weaker. To will Vladimir Putin react the collapse of oil . Abenomics is not working. We will go to tokyo to address their interesting inflation. Adam parker joins us from morgan stanley. Will someone show a little low for this bull market . This is bloomberg surveillance, live from our World Headquarters in new york. It is monday, august 17. I am tom keene, with vonnie quinn and Brendan Greeley. I guess we could talk about oil as it continues to drive south. Brendan we continue to learn new things about what drives the price of oil. This dynamic will not stop. Right down to our top headlines with vonnie quinn. Vonnie japans economy suddenly shifts into rivers, raising questions about what the government can do to rev it up again. Fell at a rate of 1. 6 . That ends two quarters of growth. Exports slumped and spending levels of consumers and businesses fell. Zo abe is pledging to revive the worlds thirdbiggest economy. Angela made her first Public Comments is euro finance ministers backed a bailout for greece. Vote wednesdays on the 96 billion bailout. An Unusual Development in the aftermath of an airline tragedy. The wreckage of the turboprop plane was spotted today on indonesian mountainside. He was carrying 54 people. As well as nearly half 1 million in cash. It is unknown if anyone survived. The money was for poor families in an eastern province. After weeks of oneliners, donald trump gets specific about how he would handle immigration as president. He said he would order the deportation of all undocumented immigrants and would deny their citizenship. He expanded his views on nbc. Donald trump we have to a whole new set of standards. Doug you are going you are going to deport children . Donald trump we have to keep the families together. They have to go. He stole the show over the weekend at the iowa state fair. A sensational performance at the pga championship. Clayton day set a record, finishing 20 under par. He moves up to become the worlds top rated offer. Rory mcilroy is gone from the top spot now. Tom interesting to see that as well. Most of this hour, about alibaba. I have never seen this. The principles of the firm are going to join in the buyback of the share. Jack ma and joseph tsai are going to spend their money to buy back shares. You do not really do that in america. I do not know what to say about that, other than it is a regulatory filing. In yuan. Ted i do not want adam parker to talk about this. I do not want him to get in trouble with morgan stanley. It is a chinese thing. Brendan i am trying to figure out what that has to do with their less than stellar Earnings Report last week. Tom lets do a data check as we ponder this. Euro, 1. 1085. We need to go to tokyo, where we have very interesting economic dynamics. We have good nominal gdp, some inflation which brings down to negative real inflation. Willie pesek joins us from tokyo. Is abenomics working . Willie from where i sit, no, it is not. The yen is down 35 in 2. 5 years. Abenomics had planned and promised that deflation would be ending, wages would be rising, the economy would be growing at a reasonably good clip. None of that is happening. Meeting the inflation we are getting is the bad kind of inflation, the imported inflation. Wages are not rising. Toyota made 18 billion last wagesnd wage raised 33 a month. Am the money question is second bout of significant inflation in the yen is tokyo steeled for a 1. 30 or ¥1. 40 . Willie i certainly hope not. It puts the pressure on the bank of japan to do more. Corrodedto me is nomics. In some way we have never seen this before, where the government has abdicated its responsibilities on the central bank. When you see the chinese evaluation from last week, the yen will be rising on the currency, and the boj should be doing more. Brendan what is preventing any kind of structural adjustment with abenomics . Willie from the fiscal side, the worlds biggest debt is one problem. And japan raised sales taxes last year, so you could argue fiscal policy is moving in reverse. The other problem is that abe has been distracted. I think the economy right now, we are suffering the fallout from that. A lot distraction and focus on Different Things then he was elected for. We are still waiting for him to get to the economy. The numbers today mean that the clock is ticking. Tom willie pesek, thank you so much, from our news bureau in tokyo. In new york, the lead story without question is a continued to climb in oil with new weakness in the mexican peso within the last 10 minutes. U. S. Parker is the chief equity strategist and is a class act. I love what you do here. You do something really rare. The first sentence of your research report, our energy over rate is initiated at the beginning of the year and frankly it was a bad call. I admire that you do that. Are you still advocating on energy stacks on Energy Stocks . Adam we are. Tom you so Samson Energy do what we have been waiting for, which is clear the market. Will that be a rapid process which means Energy Stocks recalibrate higher . Adam i think we have a potential hire move later this year. There are cyclical stocks that are down a lot. Was of last year, brent 100. People were bullish on energy. Now it is 47 or 48 or whatever it is, and people are bearish. It is usually a good set up to get long. Tom energy experts, are these are they seeing these countries act rationally . The ashey did not cut dramatically as one holds. There was more nonus supply than i thought, not just the iran news, but saudi being and record production. There has been a little bit weaker demand from china, big auto decline there. And lastly, you had a little more u. S. Supply with all these guys getting access to more capital. That probably delayed it, but to me the sentiment is horribly negative, and cyclical stocks were down a lot. I think it is a good portfolio, underweight on industrials and materials, overweight on consumers. When you run a balanced or folio, a balanced portfolio brendan what about the price of oil says this is cyclical and nonstructural. Everything that we learn about oil is that these are fundamental structural changes. Adam typically cyclical businesses have a lot of Capital Spending and a lot of big change to the profit profile of the business. It is one of the only sectors in the market were high Capital Spending gets rewarded as opposed to punished. You have to argue it is not going to be a i think the question is how long a down cycle is. The mandate has not been that bad this year. Last fall andion other elements have exacerbated it. Will we see the s p is interesting, is around 7. 5 energy, so it is not one of the more important sectors. Tech and financial are more important. Look thee analysts got too negative, and there has been an up in refiners services. Our experts think it will be sometime in september or october, but then you want to own the nps. Tom oil is cheaper than it was at 80 a barrel when people came by here and said we can begin to buy we can begin to nibble. When you hear that word, run. Point. Ne quick what people sometimes say, stocks discounted oil now, it might mean that they are discounting at 60 or 70 a year now. Tom our twitter question of the day is mr. Trump good for american democracy . We have had some interesting responses. Tom good morning, everyone. Bloomberg surveillance. Here is Brendan Greeley. Remember 14you principles, you are given an award. Times looked at the Work Environment at amazon. Im going out on an editorial limb, and i find it terrifying. Paul sweeney is with us. You run a tight ship on Bloomberg Intelligence. Do would learn anything new about the way amazon is run and the way Silicon Valley works . I know it is not a valley company. Article,is an amazing and it paints a picture of an extraordinarily demanding workplace. There is an institutional level of high turnover, and you hear in the technology world, that one of the biggest problems they qualifiednding workers and engineers. Once you get them, you want to retain them. Is this related to farther down in Silicon Valley . Is this an extraordinary tech company, or is this the environment out west . Paul they are aiming exceptional company. Their Capital Stock is at an alltime high. From investors standpoint, whatever they are doing is working. But clearly it is a different culture than what you see in technology companies, where they tried to be supportive and create an environment where they can attract but also retain the best talent. Tom what did you see in the article . You look at 40 amazons. What was distinctive within the article . Paul it is really part of the culture to not only attract people, which is very common. The highest performers are very common for Silicon Valley. But also to be able to manage those people out, to expect that a lot of them will leave so that you will be left with a very small percentage tom is it a military equivalent . Up or out . Paul it seems that way. There are a lot of and a goat for a lot of anecdotes from recruiters. Vonnie is he getting away with it because they are in seattle and not Silicon Valley . Paul again, it is a very unique culture. I do not think you find that in very many other companies, certainly of that size. If you stickback if you step back from the stock, you can see that whatever these folks are doing is working. Brendan we go to sao paulo after the break. Good morning. This is bloomberg surveillance. Down goes oil, then it came surveillance, and it goes down again. 41. 77. That is a wild statistic. Now top headlines with vonnie quinn. Vonnie recordbreaking temperatures are fanning the flames in western wildfires, and draining crews trying to put them out. California has 19 major fires. One of them is sending smoke into San Francisco area. Fires in oregon and Washington State are forcing people to flee their homes. An elderly idaho woman died when she fell trying to evacuate as a brush fire approached. A new report says at ts involvement in government surveillance was deeper than first believed. The New York Times says documents leaked i Edward Snowden described at t as highly collaborative with the National Security agency. And julian bond is being remembered as a giant of the civil rights movement. A longtime naacp chairman died saturday in florida af. After years as a radical student activist, he was 75 years old. Tom a little different approach may be that donald trump. I want to bring up our twitter question again. We usually do not do this, but we are doing it this morning. I have done a scientific analysis. We have a record twitter response. I wonder why. Is donald trump good for american democracy . Thank you to all of you listening and watching worldwide bsurveillance. Is mr. Trump good for american democracy . We thank you for your response. It was the great distortion of centralbank policy that drove rates to impossible lows there it it is still the great distortion. Now with a higher yield challenge, with the fed raising rates, adam parker has to worry more about what Corporate Officers will do. They are a fine company, as everybody mentions. Lets talk toothpaste. Colgates to the moon like disney, but less so with a with an 8 or 9 Dividend Growth. Adam our work shows that the sweet spot for dividends is at the 10year or growing. People think and believe that it will be perpetual. Tom do i need to pay for doubledigit growth, or can i make money longterm rationally with high singledigit dividend rose . Adam high singledigit Dividend Growth would be a great outcome in the longterm. Companies tend to be as per year in companies that have pay ratios that are too hi, there is the fear that they have to cut them. Tom colgate has gone from . 22 to . 38 dividend. That is called growth. Yield, that10year is 10. 7 . Adam people are paying for a low growth dividend level. Onare actually underweight Consumer Staples because they are generally expensive and a lot of them are missing estimates. A lot of them have high exposure with the strong dollar. Tom verizon, four points of percent yield, killer, with a 3 growth. Brendan i think i am not allowed to talk about verizon. I may Say Something irresponsible. I want to ask about capital investment. What indicators should we be watching . Adam two things. One would be backlogs in the tech and industrial companies. Backlog is a proxy for mediumterm demand. Machinery, semi conductors, broadbased economically sensitive businesses. Books to bills are not above one in semi semi manufacturing. Why would a company speculate and build the fact that unless they are getting signals from their clients in the mediumterm and shorterterm. Carl riccadonna at Bloomberg Intelligence has been banging the drum about basic capacity. If we are not at or close to capacity, there is no reason to spend capital. Adam thats right. To me that is further dividing this issue, where the Economic Data does not look good but profitability for these companies can remain elevated. I am confident that you will not see a big Capital Spending pick up until you see book to bills growth. Vonnie Howard Silverblatt send a note in last night talking about if you take out energy they are up 9 year over year. Adam the Government Data seems to include r d and other spending issues. I look at the top 1500 u. S. Equities, and Capital Spending is down in the dollar year over year. You will see about 2 sales growth, 2 Capital Spending dollar growth. Tom link your call with ellen zentners call, which is for a slower fed. What does that do to the profitability of the banks as they figure out what to do with their cash . Adam i think it is kind of mixed. We are overweight financials because we think the risk some of the big banks are growing fast. If you get the long income growing, our macro call you have slow growth, slow reflation from forming, and you have slow retrenchment from the fed. That is not bad for equities. Tom adam parker, we will talk about the bull market in a bit. , 30s that the tens yield, there were some interesting things last week. We turn to Mark Halperin in iowa. Mark halperin looking at mr. Trump, looking at governor bush, looking at secretary clinton. How about a twitter question . This is a big response. Thank you. Is donald trump good for american democracy . Mark halperin from iowa, next. Tom what you need to know on an august monday morning. , much much peso weaker. Lets listen to our top headlines. Vonnie oil prices on a very slippery slope and crude trading for just over 48 per barrel. West texas intermediate below 42. No end in site for the Worldwide Oil glut. Now 114 after is those asked lotions of a chemical warehouse in china. 17 people are missing. The disaster is raising questions about how the country handles hazardous materials. Uber is reportedly beefing up security to block hackers and prevent attacks on its office and workers. The Financial Times is a uber will quadruple it security staff to handle Data Security and vetting drivers. Citigroup. E of the Justice Department is looking at the banks dealings. They suspect money launderings at citigroups maxim group mexico unit. Straight outta compton Smashes Box Office records. It had the biggest opening for an rrated movie in august. It made nearly 54 million in north america. Is a group whowa really transformed a moment in u. S. History. Brendan it really was. This formally a lot formula seems so simple and so hard to pull off for hollywood. And movie is well written really good. But it seems to be really, really hard to do. Team. s National Soccer are live in sao paulo. Our brazilians angry about corruption or are they scared that the real is that 3. 48 this morning . I think they are angry about many things. Theres the perception that corruption is just everywhere. Brendan i had heard there was hope that highlevel people are being indicted. Is that unprecedented . Is that a big deal in brazil . That is a really big deal. Theave started seeing former brazil president s name, one of the most popular politicians. People are angry at him, as well. Brendan in the pictures we are seeing right now of the protest, there was one sign that read open road impeachment. Is that an actual possibility . Could he be in danger . That possibility has come and gone. This time, the protest did mention it much more strongly. Word as,is using the no, i will not be impeached. Brendan we are sitting here watching Economic Data, but there has been great reporting from sao paulo about what has been going on in the real brazilian economy. Are we seeing an implosion . What would you describe about what is actually going on . We had peak unemployment rise. You are seeing the biggest impact in confidence. Businesses are not investing, people are not buying as much. People do not know what is going to happen next. Tom what is the linkage of the protest into foreign markets . Do they have an awareness that they are imploding as mexico implodes, as malaysia implodes . Think the markets have been really sensitive to any political news out of the of more any sign instability. In the past two days, we have seen some improvement. Wins in theome senate, but you still have the currency down 25 this year as the worst performing currency in the world. Brendan the Business Leaders and economists, are they worried more about china than brazil . China is a big worry. Brazil was hit really hard lest devaluation. Yuan china is the biggest trade partner with brazil. Tom very good. A Research Note on a likely shut down in washington. A little more credence this morning. Let me look at a gated check. Equities, futures doing not much. Oil, 41. 87 a barrel. Brendan this is bloomberg surveillance. Im Brendan Greeley with vonnie quinn and tom keene. Iowa. Ate fair at from where we sit, there were only two stories on the trail. Donald trump and Bernie Sanders. Is that true in iowa . They are certainly big players. Both of them were here on saturday and made big splashes. Jeb bush is a story. Scott walker will be at the fair today and he is a big story. Hillary clinton was also here on saturday and is a big story. Trump and sanders getting a lot of tension, deservedly so, but there are other people in the race who will be players. Brendan who is doing the best job at this iowa game . You have been watching this for a long time through a lot of cycles. Who does it the best . Hillary clinton has got a very big lead over Bernie Sanders and martin omalley. Is thissurprising to me is an organization game. The number of people who vote on both sides will be fewer than 200,000. You reach out to regular caucusgoers on a regular basis and if you are donald trump or dr. Ben carson, trying to bring in new people, Bernie Sanders, as well. Finding people, identifying them as potential supporters, wemunicating with them, dont know who is doing particularly well, although trump is in that game and that is surprising some people because they thought he was just a splashy candidate. Vonnie and you got a taste of that. You were in his helicopter and he was giving our rights to people at the iowa fair. And carson approval is that 12 . Could you see why in the helicopter . Im sorry, did i what . Vonnie did you see why his popularity is rising as you took that helicopter ride . The thing i picked up in the helicopter ride, it was a few kids and one of the mothers getting a ride overlooking the state fair. He is in a good mood. People are trying to appeal to the public, people who win over the voters, when they are in a good mood, that is to his benefit area i dont remember ever seeing him and that good a mood as when he was in the helicopter hovering over the state fair. He sees no reason to even consider backing down or slowing down. He said he might spend one billion dollars on the race if thats what it takes to win. Brendan everybody likes toys. Know about the actual policy that he dropped over the weekend. How finely tuned is his new immigration plan . History akoni and immigration plan, how finely tuned is that immigration plan, how finely tuned is that to the Republican Base . By the standards of a campaign document, it is relatively specific. There were some elements of the policy than need more fleshing out. Some will not like it. It is somewhat specific and it is consistent with the way he has talked about immigration issues over the course of his campaign. Tom i saw your Twitter Photo of fox newss pull. What is the helper in perinription hel prescription for governor bush . He is the least affected by trumps rise. He will be closer to 300 million at the end of the year. Ash wants to be known someone who fights for veterans and is strong on National Security. He wants to be known for his record in florida. He has to figure it how to voters and beo less about the son and brother of former bush president s. Tom you have been too many iowa fares. Will donald trump be a thirdparty candidate . It is too soon to say. I dont think so. I think he wants to be the republican nominee. Why would right now, you think about anything else . Brendan we will continue the iowa coverage live from des moines. Thank you, mark, dont eat fried something. Television. Mberg bloomberg surveillance. Good morning. Tom good morning, everyone. Bloomberg surveillance. Dont forget the bloomberg commodity index. It is the smartest index. I am proud of the bloomberg commodity index. I am also proud of the next hour of Market Makers. Cory johnson. We brought him in from drought california. Give me the desperation 60 miles from where you live. Ory these are the dog days of august. A rough time in california, but we have four years of drought. It is the worst drought ever known in california. This is the worst drought ever. To thisia has adapted really well. Governor jerry brown has led a lot of interesting things, whether it is putting firefighters to work a lot earlier than they have in, which has helped reduce the acreage of fires. We have seen a couple of fires get norton that north of napa recently, though. Tom i go into bakersfield once in a while to see family. Cory that is rough. Tom people growing carrots. Cory in the world of farming, a tremendousn change. 30 of farmers in california are now using drip irrigation which uses less water. Vonnie a lot of people are wondering, how do they work, what do they do, these balls . Cory they are putting a classic plastic, biodegradable ball in the reservoirs and let the reservoirs keep the watery little bit longer. It is these kinds of things that are helping california deal with it. Californians are consuming a lot less water. Intentional choice people are making about tearing up their lawns and replacing them with rocks and cactuses. Brendan outside of the imperial valley, are we going to see this effect home prices in San Francisco, in l. A. . This looks like a shotput. It is a lot heavier, but im very strong. It is not heavier. Tom house prices. There were changes in a lot of rules about building houses. Now in california, there are a lot of concerns about another el nino, a very wet winter. We might have some snow for a change. That it mightcern be a warm, but what winter and might not solve problems in the long run. Tom cory johnson, Market Makers in a bit. We have had a record response on a twitter question. It is not, could use shopko the one of these balls . Is donald trump good for american democracy . Good money morning, everyone. Bloomberg surveillance. Vonnie the faa wants to make traffic system never goes south again. It started with an outage at a Washington Area control center. Normal airport operations resumed last night. Shares of samsung beltway tenmonth low and south korea. Concerned the new phones will not be enough to reverse samsungs five quarter earnings slump. Apple is building a fiveyour project, could be a self driving car. The guardian says the company is building that car and is looking for self testing sites. Google is already testing out self driving cars on Mountain View streets. Tom very good. Oil is weaker, west texas is moving down. The mexican peso is looking for new weakness. Tick by tick. For much of wall street, labor day signals a new year. Cherubs go back to school. With fond memories of his fourday summer vacation, mel needs to recalibrate and refocus. At morgan strategist stanley. I look at the s p 500 ended signals this change of the weekend, go to cash, go to cash it has been wrong for years. Why is this the time i should go to cash . Mel i dont think it is. To me, the bottomup numbers are too low. The economy is going to be a little bit better in the second half of the year. Sentiment is awful. , imu want to romanticize a contrarian bowl, today is the day to do it. When you are missing is the rationalization. Tom all of it is broken, isnt it . Mel i think it is tough. What five or 10 year duration government bonds do you want to buy. Vonnie how long does that continue without gdp getting a bigger boost out of it . We have seen the cost cutting and the buybacks. Mel i think increasingly, it will be about how long the ranch and can last the expansion can last. If it is for two more years, people will get concerned. Five more years could be good. If i have a low amplitude. Tom low amplitude is a key thing. We are just going to keep going. Going just going to keep and that is what we did with a lower amplitude. Mel i think this is the longest expansion ever. Areas from see big the Management Team or to carry a ration deterioration in the credit metrics. Allens anaren i have written about allens ventnor elen zentner and i have written a lot about this. We have models that forecast stock level return. Some of those models include technicals. The market level, it really is not a great predictor of overall market level performance. It turns around it is not that easy to forecast the whole market. Think at the market level it is very important. We account for that in our forecast. Vonnie did the summer give you pause for thought . Any dangers to your bull market thesis . Adam i dont want you to think i am impregnable to data. There are lots of things that make me concerned all the time. I still think i have this slow growth and slow reflation from the fed. Risk remainsggest a slowdown in the u. S. Economy. That is a real risk if it happens. Tom where is institutional cash now . One of the rules is follow the money. What is the money doing . Adam i think people prefer other equity reasons to the u. S. They are picking around some of the emerging markets to see if it is a falling knife for an opportunity. Or an opportunity. I dont think sentiment on u. S. Equity is high at all. Tom one of our frequent guests is taking a substantial position in glencore in mining trying to get out in front. The assumption that if you are looking to commodities, you are looking at growth in emerging markets. Last week come a we said, we are looking at the wrong growth engine. We should be focusing on the u. S. Adam the u. S. Consumer is the game in town and the world. Jobs are improving, housing is improving. Delinquencies are not growing, they are coming down in terms of mortgages and credit cards. Obligations are low because of low Interest Rates. I dont think the consumer is in bad shape. When the savings rate goes up, that is an expander and lengthener of the cycle. Tom where are you on gold . Do you have a cold call within mining gold cal within mining . Adam i dont. 1 of the s p is metals and mining. Most of the companies have not been standouts. Tom it is monday. [laughter] want some in my personal life, but i think its going to be my crazy grandfather left it in my shoebox rather than a good investment. Tom adam parker. Brendan adam parker is on team america. Yeah lets take a look at the brazilian real. I am there is a lot going on and the question we have not been able to answer quite yet is how significant are these protests . They are significant enough to be worry about. Tom there could be another weekend. Is that assumed . Brendan i dont know. You watch the real and that gives you an indication of what is going on. Tom i think it is surreal that there was a protest and 47 eet away there were people hanging out on the beach. Vonnie that is brazil. My focus is going to be the Home Building confidence index. We are looking for it to rise again. It bounces around a little bit, but we have seen some strength in housing. Dont forget the empire manufacturing. Tom Economic Data today as we migrate toward september 17. The slide continues for oil. There is no other way to put it. Oil went down this morning on a lack of news. That is always the worst outcome. It seems to be watched very closely. The hydrocarbon currencies, it hasdollarcanada been pretty good. If we were to see candid i give way, that would be an ugly sign. Some of the things to follow. I believe we had a twitter weston. It was not on oil or the boston red rocks. Vonnie it is about one of the candidates. Tom i cant remember his name. Vonnie it is donald trump. [laughter] vonnie is he good for american democracy . Some of the answers were too vitriolic to post. With this agree answer. I hate to say he is good for democracy. I am fascinated about how honesty is about campaign finance. He called marco rubio the personal senator of mark zuckerberg. I feel i feel like just being straightforward about how campaigns are finance is good for america. Vonnie second dancer. We chose this answer. Trump candidate, good. President , probably very bad. Tom that is nicely put. Giving my opinion, but there are a lot of people who agree. Think about how boring it would be if he had not done this. Vonnie i dont know. Last answer. I admire him, but no he wants to stop immigrants and a lot of innovation comes from immigrants. Brendan that goes to the heart of what he says. A lot of the innovation we are getting in Silicon Valley area tom thank you to adam parker. We continue on radio. Market makers is next. Good morning. Announcer live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. It is monday, august 17. It is a monday in august. You had better be at work. I am olivia sterns, in for stephanie ruhle. Cory johnson. Corey here for Erik Schatzker. We are 90 minutes from the open. Olivia throwing shade at the drought problem. To discuss this new innovation and growing business. That is a shade ball. Jack my will take