Tom totally agree. Over the last two or three years, jobs has been pushed aside by the Global Economy, by the dynamics, even with brexit coming up, theres a whole host of issues coming up. Weve got the right guests coming up from u. B. S. Francine well have break news the last halfhour on china. The ministry of finance fighting back the rating downgrade that we broke on surveillance yesterday. Now lets get to the news. Francine, thank you so much. In washington, the focus is on Islamic State. President obama will try to rally interpret support for an effort to keep terrorist groups from getting a Nuclear Material and other weapons of mass destruction. Theres growing concern Islamic State may target nuclear tensions. Tensions over the south china sea. Indonesia will employ f16 fighters after chinese coast guard vessels clashed with indonesian boats in the area. Other forces will be stationed there, too. China contained 80 of the south china seas. The reopening of the Brussels Airport is being hampered by Police Demands for more security. Authorities are still hoping that passenger flights can resume on a limited basis this evening, more than a week after the terrorist attack. Brussels police union is demanding texts of passengers at the entry of a temporary checkin area. Meanwhile, the u. K. Will put more police on the streets to fight terrorism. Britains Prime Minister, david cameron, says about 1,000 more police with guns will be deployed, thats about a 15 increase, but theyll be given 40 new armed response vehicles. Economists predict the u. S. Economy added jobs last month. The monthly report out at 30 eastern. A survey of economists forecast the british economy will lose workers and gain efficiency with the start of higher minimum wage today. It was boosted the equivalent of 10. 35 u. S. Dollars an hour. Companies will invest in technology instead. News 24 hours a day in more than 150 bureaus around the world. Tom becoming a big deal. Everybody wants, 15 seems to be the center. Francine thats california. Tom i dont have a strong evening he will on this, but its good to have the contentious debate. Well, its something fiscal thats being done somewhere, right . Tom thats exactly right, it is a fiscal idea. Lets give you a fiscal data check. The euro 11395, thanks to steve sawell of b. N. P. Paribas for a call on stronger euro out. Oil, well, im going to call it rangebound. Again, out of the next chart, a panel if you would, down to 17,6 5, not in the record watch, but were getting there quickly, and the dollar index, of course, front and center. Francine, what do you have . Francine lets get my board up. This is the picture for the sox 600. You can see its down 1. 3 . Its all about concern what the u. S. Jobs means. We figure out what yellen does next. I want to show you the nikkei, because it was much worse than expected. I wanted to show you crude at 38. 19, tom. Tom very good. The bloomberg getting set up for jeffrey and gary. Dollar index up we go, and this defines a range i rarely do this. I rarely use settlement and resistance lines, but it really works here. Just round rangebound with this new dollar weakness. Were not there yet. There it is. One of the themes on an International Jobs day. Francine, what do you have . Francine i like that. Thats exactly right. Its an International Jobs day, especially after janet yellen will lay out her biggest concerns, talking about Dollar Strength and talking about the emerging markets, including china. I want to show you something a little bit different. I wanted to show you the index, this is the indian stock market, and i put it next to the you can see this is pretty much a story of all emerging market currency. When yellen says she wont hike, this is what happens. And theres a correct correlation, and that is basically from september of last year. Now, with more on this Global Economy about janet yellen, the world markets, theyre all watching, so lets get straight to u. B. S. And investment strategist. Jeffrey, great to have you on the program, as always. When you look at the world economy, it looks safer because janet yellen isnt normalizing as quickly as we thought, but actually is it not just selling more threats . Jeffrey for now. The central bank approach is do no harm, and its not just from Janet Yellens point of view f. We look globally, draghis initial suspension in march, people thought seems to be ruling out further rate cuts, and then we have this come out and say, no, of course they can cut more. It was quite interesting. He didnt rule out money. Francine that seems crazy. Helicopter money seems more dangerous, or am i wrong . Geoffrey just a quote. He said its extreme, of course, but francine ill say. Geoffrey six or seven years ago, they would have absolutely equated helicopter money. I think the two were the same. And now theres a clear difference in what they point out. Proper money literally handing it to people in the street. Thats money which is coming out. So theres a divergence. Tom geoffrey, what an interesting week. What a nuance of things this week, and it all centers back to china. But if everyone like you is looking at china, what are you actually looking at in china . Geoffrey right now, again, its do no harm, please, no more bad news, and were going to get march reserve data in a week or so, and probably markets are going to look for not only the outflows starting to ebb a bit, but is there any prospect of china actually surprising to the upside in growth, and then people, you know, want to put money not just to work in china, but in emerging markets in general, see whats going on, here, for example. So can now e. M. Use this opportunity with a dovish fed, with a stable china, and then turn risk commodities, everything around into a proper response case . That hasnt happened yet. Tom and that sets up china. Well do this in our next section with greater detail. With that said, dr. Yu, bring that back to what it means for the developed nations so the u. K. For germany with its link to china and what does it mean for the u. S. Dollar and america . Geoffrey it is a compelling upside surprise story for growth. Then i think for all these developed market economies, they dont have to worry about deflation tendencies from weaker prices, weaker p. P. I. Coming out. They dont have to worry about their own currency strengthening and not generating export demand and then the jobs, so its going to be a plus for them as well. Francine what happens if we wait . You could argue that janet yellen by verbal intervention. What happens when you do start normalizing . The job is going to be that much more difficult, which is also a lot of critic issues with helicopter money. Its going to come back from that. Geoffrey thats only the feds problem right now in some normalization. But if you look at all the other Central Banks, the next step is going to probably be more on the exception. They were easing anything. But i think yellen again would want to avoid what happened in december. The perception is theyre overdoing things. They want to see velocity in prices and jobs, allow conditions to actually go beyond what expected a bit. Francine so this is not coordinated. This is not janet yellen saying, look, guys, you know, youre important to us, dont mess up this, ill give you a healthy hand. Geoffrey i think someone put it to a finance official a few weeks ago, and i think the response was youre thinking of it too much. Tom geoffrey, when i look at the work in the United States, bring it over to your poll in london, the bottom line here is if we got a migration towards a global slowdown. Part of that has to be a u. S. Slowdown as well. Do you look at maury harris review of the atlanta g. D. P. Now statistic as indicative of a slower American Economy . Geoffrey slow american and he in the price, but actually, we just advocated going overweight u. S. Equities. Tom why . Geoffrey slow, yes, but how slow . There is a strong positioning case right now so that your Earnings Growth we look at 3 . It can actually surprise to the upside. The key is the consumer. Consumer Savings Rates going up. The key is now making that money work, putting that money to work, so if confidence stabilizes, but everything will surprise to the upside. Tom its outside your watch, but are you suggesting large cap dividend paying stocks with multiples over 20 to 1 is a place you can put his 401k money . Geoffrey thats where we see. We have adjusted back to neutral. Its more relative as well, so weve adjusted back to neutral position in u. S. High yield, but right now, if you look at where position ago justment should happen, you should number u. S. Equities. Tom i love watching to geoffrey yu about the equity markets no. Wunls does that. Were going to come back with geoffrey yu and lots to talk about. Coming up today, our jobs coverage. And then a conversation on television, on radio with William Gross of Janus Capital. Stay with us. Francine im Francine Lacqua in london. Tom keene is in new york. We have a lot of data out of japan. We had data out of china. Of course its jobs day as well. Francine, thank you so much. Another sign of weak inflationary pressures in europe. Prices for factory goods in the euro area fell last month by the most since 2009. That underscores the problems facing the European Central bank. They expands its Bond Buying Program despite the threat of deflation. A threeweek bidding war over Starwood Hotels appears to have come to an end. In a surprise move, a group led by china clears the way for marriott to buy starwood. They decided not to go through with the deal because what is called various market considerations. And elon musks tesla motors is making a bid for the mass market. They unveiled its molds three. Its a 35,000 car that musk hopes will expand its Customer Base and lead to sustained profits. More than 115,000 fans placed nords stores for the model 3, and deliveries will begin next year. Thats our Bloomberg Business flash, and somebody did tweet a picture of those lines at me, and they were long. Tom they were long . Theyre moving units and all that. Francine, china, please. Francine yeah, talking about moving units, lets talk china. Chinas official factory gauge has unexpectedly jumped as timulus kicked in. We have a little bit of, i guess, a bright spot, the factory gauge, unexpectedly jumping. Why was that not expected . E knew about the stimulus. It is good news on chinas economy, and this is what economists have en hanging out now for a number of months. Its perhaps an indication or a sign that all the stem husband you just mentioned is starting to gain traction, and perhaps it is an indication that the economy itself might be stabilizing per se. Now you wouldnt to want get ahead of yourselves in terms of calling a turn, but it just shows that the mood among the manufacturing side of things must be picking up because of all the stimulus from the Central Government and the fixed Interest Rate from the central bank. So a positive sign, but not a clear indication things have turned the corner just yet. Francine and at the same time, we also heard yesterday, and you were on our on air breaking news about downgrading china. Today we have the ministry of finance. We also the c. E. O. Saying, look, guys, its a little bit unfair. I mean, this was more or less to be expected. This is them fighting back. Enda oh, yeah, typical. We should say its not just china. Remember the u. S. Fought back when they had an actual ratings downgrade in 2011. But i think that said theres still a phone call among the authorities. They do need to get a handle on it, and thats why, for example, theyre shying away from the allout stimulus that we witnessed back in 2008 and 2009. Authorities are pushing stimulus, and more stimulus will come despite what we see today. You know, theyre trying to implement some form of discipline, because they cant let it get too out of hand. I would say that even when we see a price in economy like we did with the p. M. E. Today, its still worth remembering the Manufacturing Sector is still deflation, prices at the factory are still falling. That will hurt investment and hurt prospects in china. So its a bit of a news, but the overall picture is still subdued. Tom do i need to be on the watch sunday evening in new york . Are we going to see monday morning festivities by chinese authorities . Enda were heading into a holiday, but by all accounts, do keep an eye on the data over the coming weeks to see whether trends to see the bright spot we saw today becoming a trend. Have a look at exports up there, have a look at industry, see how house prices are traveling, because theres an emerging view now among economists that maybe we might start to see some cyclical stabilization in chinas economy. Now they might have a better Second Quarter than the first quarter, and i guess we just look for the setup. Tom time will tell. Thank you so much for terrific coverage out of china. Geoffrey yu is with us from u. B. S. Asset management. By definition, the currency must appreciate. Does a government make the currency depreciate, or does it just happen out of thin air . Geoffrey right now i think there are two things, and it is going to be a cyclical recovery , and then youre going to see inflows into china, because thats where positioning is relatively light. People want to own e. M. In general, so thats not the type of flow that they would want to counter. Yes, on the other hand, you have a p. P. I. Issue, but if stimulus generates efficient domestic demand, then they will be betting that inflation, that p. P. I. And c. P. I. And be able to take care of themselves. Francine whats your take on equities . Yesterday the shares listed in hong kong enters a bull market. Do we need to take notice, or is it too volatile . Geoffrey frink the shanghai point, quite new position in general. Asia, i think people still to want shy away from the markets, quite scarred from the experience last week. This week, they were reported as well, they want a comprehensive regulatory frame work coming in within the next six months. I think people, they want to see what the securities regulation is going to be a comprehensive frame work coming through, and they apparently want to model it based on what type of things has been doing. So if that is a game changer in terms of how people see the market, it will be conduct, then i think more people will be willing to invest. Until then people will generally be a bit defensive. Tom as we look at the international economy, well continue the synthesis of International Events this week into the American Labor economy. The chief economist from citi group will join us. Well talk about the demrobal recession probability, also bill on the call on oil. This is surveillance. Francine tom keene is in new york. This is our morning must read. I pked out something where theres great opinion pieces. They write in this morning about it actually pulled out of that m a deal at the last minute. Chinese businesses, they say, wanting to make these splashy deals need to work with their customers. If the likes of anbang dont understand the bona fides they need to convince those parties to deal, they have a know your customer problem of their own. Who they were talking about was not only the financing, but also some of the customers. This goes back to the point that youve been out front on, that youve been making the last couple of days, you werent really sure who anbang was. If we didnt have full disclosure, then they had to pull out. Tom i dont think its a question of full disclosure. I love this due to various market considerations. Consider this, theres no disclosure. I mean, i have no clue whats on their balance sheet, whos auditing them. Not that we predicted this, francine, but the end result is where you and i were talking about. This thing was a joke from day one. Francine and the great piece yesterday saying this is exactly like the 1980s when all of the billions worth of National Savings went down black holes, because thats basically part of whats going on here. He also talks about what he calls strategic premiums, they were offering a ridiculous price in this deal anyway. Francine this goes back to capital outflows out of china. Geoffrey and i think this would be a lesson for chinese corporate. Transparency works both ways. I think in the longer term there should be corporate governance. Youve got transparency issues and domestic until china theyre trying to impve regulation. But on the out flow side, weve seen the m a deals overseas. Its smaller than anticipated. Thats a trend that will only continue. Tom i say this with immense respect for the heritage funk of switzerland and china, jonathan andersons work years ago, does china have gap accounting or anything that even approaches it . Geoffrey lets just say they are trying to conform to international standards, but you should not expect a comprehensive approach, right, because you have to appreciate and respect the underlying system at the end of the day, especially with the stateowned enterprises. At least many are list and had they have to conform to international standard, but for some other types of companies, theyre even less so. Im told theres just willingness, and this is about politics as much as economics, so actually open up, to invite, to allow outside scrutiny, but internal scrutiny amongst its own people. Until that is willing to be allowed, then i dont think we should get our hopes up. I remember about two or three years ago, you worry about the issues. Tom geoffrey yu, thank you so much for comments there. Coming up later today, bloomberg markets, this is a timely interview. Jeremy, somehow helicopter money will come up, later today. Job, everyone. It Gary Shilling, looking for to that. Francine the clock in london. I am in new york. To our bloomberg first word news. Vonnie more than 50 Global Leaders gathered in washington. President obama will try to get people to sign onto an effort to contain weapons of mass destruction. In richmond, virginia, a state Police Officer has died after a shooting it they do not know why the gunman opened fired. Two other people were wounded. California and new york are poised to become the first states to institute a 50 15 minimum wage. Global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. Tom breaking news right now. This is oil in the middle east. A conversation by our john nichols. The deputy crown prince is front and center in the transition within the wealthy in the nation. He extends on the oil freeze and any participation. There is a lot of talk about a wellfunded well. Francine right. This was a fivehour conversation. Talked us through the main points. There are three main stories often the bloomberg terminal. Pin itf all, they try to down on when it will be listed. The prince said as early as 2017. The end ofis out at last year that they were thing , that sentsible ipo Ripple Effect across the market. They are also talking this wealth fund. If you think about the amount of prince saying,n this could be the worlds biggest wellfunded controlling 2 trillion. Tom this is not american oil, folks. Weaknesslearly dollar oil price up here and a little rollover with those headlines coming across bloomberg. Jeffrey is in ubs he can link commodities into what we see with dollar dynamics. What is the ubs call on oil . Where are they at with oil finding a bottom . Where is your secular equity for oil . 5070going to be the range . For the bottom, we reach that already. Tom lets frame this right now because this is critical. Jeffrey, i am going to suggest there is a massive delta between a 60 terminal value, and you to 80. Ted 70 that is a huge difference for saudi . Even with the dollar peg in place, they will be able to know where the necessary transition of the economy to start to leverage the transition. Once they bring down, that will break even. Even with lower secular oil prices, tom i talked to a young kid from kuwait linked in with the family. Tell me about the adjacent nations. How is a link to saudi arabia . Things is side of very important. Linkages economic a social political side, that is where some degree of divergence between places like boring and the uae. It is nots necessarily so, but in oil, they are still a wind producer at the end of the day. Francine should we not be more worried on value . I am sure they have a lot of money. That is on the fiscal side. Even ifut productivity, you bring down your budget. That is not guarantee growth. This restraint is one part of the story. Can you do more with less . Francine right. A saudi used to those kind of reforms . If you are so rich and you want to make sure people dont protest in the streets, you want to change her mind said. They know the pressure is on the attack. They know the pressure is on them to act. Tom all we know about dollar dynamics, what we have not talked about is global demand. From 2. 5 tograted 2. 0. Global growth is not a scenario we are looking at. You are making a huge bet on demographics and productivity. If you are assuming global come at you are looking at terminal aging and very limited demand. Tom whats your call . The 2. 5 to between 3. 0 range. That is what the future is. That is where ubs is shifting on the Wealth Management side. Not just the type of products, but the quality. They will be willing to pay not just in products, but investment products, too. Tom coming up, we will talk with john nichols off the News Headlines a few moments ago. Nearing nearly 40. It is jobs day. It bill gross will join us. Thrill to have mr. Gross with us. He has had a end up quarter. He has had a banged up quarter. Tom good job stay, everyone. Jobs day from everyone. Jeffrey with ubs wealth. 5. 1 in the u k on the jobs chart. 4. 9 in the u. S. We forget how good and where the statistics are. O go below 4 jeff, if this is a labor formation, can you entertain say whether it is the u. K. , or france, or the u. S. Grading good jobs i . Jobs withoutting pay growth. That is where the shift has been. We talked about the fed it being bullish. Itsle in the development of are happy. Ina substantial list Earnings Growth before people are willing to spend additional money. This is what i think the bar for the jets report is much higher now. Francine, the distinction for me as everyone knows we are seeing wage growth among the elite. Forre seeing wage growth the public and politics, whether it is a u. K. , u. S. , where ever. It is a huge body of people. I suggest the are seeing declining wages. Francine this goes back to our discussion on politics. It goes back to qe and if that is impacting the inequality. Jeffrey, if you look at the wage growth rate, how must we care about the jobs data . The market says there is no hike. Of a rate dylan does not care and much about domestic as long as it does not fall off a cliff. We have to revisit her views as we expressed earlier. You talk about the segmentation in wage growth. The other issue is there is any quality. At theo have to look populations of the country who are not trained for those jobs. Skilled labor, 2. 5 . Investment and education is needed. Tom jeff, i have been looking for a charge that describes global trade. In dollars. Exports it is a lot chart. All you got to know is that Global Exports exports in u. S. Dollars have gone flat. Roy, have we seen it. I know it is about export dynamics. Experts exports are flat on their back. Huge sign of a emerging markets. Youre going to see this chart a lot. It is another candidate for chart of the year. We will touch on that with jeff. Coming up, oil what the most interesting eight months it has been. Are editor and chief on the discussion with his deputy crown prince of saudi arabia. Stay with us. I am Francine Lacqua in london. Tom keene is in new york. Tom, we have to focus on the middle east and we had great headlines crossing the uber terminal from saudi. John nichols had a fivehour conversation with a debbie crown prince deputy crown prince. Ramco. S about telling our bloomberg as early as happen 2018. They are also speaking of doing 2s big oil fund exceeding trillion after the assets from my go adding to it after the assets added to it. You had a fivehour conversation. He sketched out the whole plan moving the saudi economy away from oil and basing it around something new. Is an2 trillion fund amazing thing. It is enough to buy google, microsoft, the alphabet, behold lots of it. Change to spare. They will add land, property and roughly us twice as big as any wealth fund. Obsession, given that we have concerns that audi has not done the Structural Reforms needed. Subsidiescut all the and moving on to other things. It is a rather dramatic plan in terms of the economic transportation transformation of the company. The first window into the royalty, we all understand this is a generational change. Did you get that tone in your interview. If it is a generational change, where they heading . Of a it is something generational change. His father is the king. There is an element of a group, mostly young performers around him, who want to push on the accelerator in terms of change. From will be some people the religious side will be suspicious and worried about this. I think there is an element that saudi arabia has to change. They really needed it. I am sure you were briefed on the oil dynamics of the middle east. What is the level of desperation and saudi arabia about the funding of those domestic responsibilities, and having enough in the bank as a have had for generations . What is a level of sweat . John most of the revenues have come from oil. Idea of this as an Investment Fund will change because aramco will go into it. As an investor living on several trillion dollars and not moving, it is going to change even the way they think about it, i think. They are also going to try to build up over the next few years, a whole variety of different investments. Even if you look at saudi aramco , the goal is to go from being a producer of the oil, by far the biggest producer of oil in the world, to becoming the World Biggest refiner. 5 millione about barrels a day and want to move back to 8 million 8 Million Barrels a day. It goes across the whole parameters. Inis a fairly genetic change the industrial makeup of the country and the oil market. Francine there is this underlying political tension. Ith i ron iran it has another element of combatedness. John they sure the middle east with iran. They definitely see iran is a foe. Iraniansess, if the are going to pump more oil, savvy saudi feels he can do the same thing. Tom francine, we are singing moving oil. Jump in here with the next idea with geoffrey yu and john nichols this is the dollar dynamics off of yellen. A weak dollar. Abruptly reversed this 20 minutes ago on the interview with the deputy crown prince. Francine tom, when the headlines broke on the bloomberg terminal, geoffrey, you also getting analysis. You have analysis for john to . Geoffrey it is still up. A lot of people argue there is a misalignment. John it is not a priority for the moment. There is an element whereby in that region, the reformers within saudi arabia are looking much at the idea of creating a freetrade zone across the gcc. You get this idea that the region has got to change. In the end, probably politically. Francine 2 trillion in this wealth fund and he makes a clear point by saying they want to be the biggest. John they will be the biggest. The aim is to use this to push but also to bring in other mining land, property, and run this as far as they can in a professionally managed way. The prodding and managers from different places to manage it. It is a gamble, but one in which someonebeing taken by who has been arguing this. Francine tell us what the requirement is by saudi arabia from the United States . Tom it has been an original 10 days and politics. Not to be so bold as to say that crown prince good he burnett mr. Trump or mr. Sanders and mark the idea of what is the requirement for the next president of the net it states. Or their requirements for the next Prime Minister of the united kingdom. John their main requirements of the president of United States is some degree of support. That is what they are looking for. Their argument that you can they hadh, iran been a loyal ally of america. Are crossed in different ways in which the way enron is coming into the fold. The way in iran is coming into the fold. The interesting thing about the middle east is its become a place where everything is up for grabs. The prince did not say this. If you talk to people in the saudi court, they push across may not behat obama a strong as they would like. Tom one final question if i could lets bring it back to the price of oil. Representative of citigroup of a about the demand strong economy. John they want a strong world economy. What comes through quite strongly about saudi arabia, there are tensions. You can imagine their main priority would be a high oil price. I dont think it is as clear as that. I think they have different priorities. 50,have oil prices at they feel relatively comfortable in that because they think that is enough for people to keep on buying oil. But from the point of view of the reformers within saudi arabia, it is a prompt to get more people inside the kingdom to move away from oil. It is a very complicated economic problem. John, thank you so much. Tom, he was probably relieved that janet yellen will take her time to normalize. We will be speaking to Gary Shilling. It is jobss day. It is jobs day with a 4. 9 unemployment rates. It is a generational change in saudi arabia. The modern middle east will invest globally, oil defend this hour. This hour, bill butler and Gary Shilling. Welcome, everybody. This is bloomberg surveillance. I am tom keene. Francine in london. Crude above 40 a barrel. Francine this is a paradigm. A lot of emerging markets or gcc countries are trying to figure. Ut what is next for them is deputy crown prince serious with shifting the economy. To dr. Butlerpeak about that. On this jobs day, our first word news, this is vonnie quinn. Lets get more on the transformational change. It will freeze its oil output. Will others do the same . Mohammad bin Salman Al Saud spoke to bloomberg. Iran said it would boost production. The Nuclear Security summit in washington, the focus will be on Islamic States. President obama will try to rally National Support to keep terrorist groups for getting Nuclear Materials and other weapons of mass destruction. There is growing concern that Islamic States will target nuclear facilities. Wisconsin Governor Scott walker is not backing off his promise to support the republican president ial nominee, no matter who it is. When i was on the stage in cleveland, i did raise my hand. And everybody else said i was not going to run as a thirdparty or support anyone else. I support the nominee. I hope the nominee, after tuesdays win, is ted cruz. It makes it a whole lot easier for me to do that, but i am a man of my word and have not changed in that regard. Vonnie walker has endorsed ted cruz. You can watch all of that interview with the wisconsin governor today on with all due respect. Tensions are wrapping up between indonesia and china. Indonesia will deploy f10 fighters. Other forces will be stationed there. China claimed 80 of the south china sea. Economists are predicting the. S. Economy british will lose workers. The wage was boosted to the and hour. Of 2. 35 global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. Im vonnie quinn. Tom bonnie, thank you so much. 1. 1 . Les down over to the next green if you would quickly. Look at the fix, 13. 95. Brent crude under 40 of those headlines. Francine . Francine this is my board for european stocks. They are not starting a month on a high. Worses sentiments, much than expected, although it was probably expected because we had began rising. Nymex. To show you brent crude, 39. 65. This is going to be one of our things on the back half of this hour. Dollar rolling over, but by no means through support. Probably the dollar in the Global Markets waiting. Francine, what is your chart this morning . Francine this is the white line. I was looking at the emerging markets. India, these are stocks and white. In blue, the blue line you can really cells of the story from most emerging markets. It is tied to dollar and what yellen had been doing. Week. Hat an interesting we need to synthesize it with someone who is been way out front. Not Gary Shilling, he will join us in a bit. , congratulations on your call. As you look at the probability, what stands out that you got right . The main thing is that no country has really outperformed on the call mes last july was made. Latestdespe the slightly lift in the data. Your area, noaits better. Cap and japan, worst than expected. Tom Everyone Wants to know on this jobs day, how we have 4. 9 unemployment rates. Anxiety. Nger or bring up the charge of the remarkable success of american unemployment. Atlanta gdp statistics, 0. 6 positive for firstquarter growth. Stunning. Miserable withso a chart that good . It is not just jobs being created. Paste the last couple of years. Squeeze middle. Middleclass america, or. Orkingclass america when the aggregate looks all right, the individual level is less than it used to be in a world in which thirdgeneration expects their kids to be better off than they are. Francine, jump in here, please. I would argue that the squeeze middle class in the u. S. Is also in the u. K. Is this a direct linkage to qa . Qe . That is a a winner very minor part of it. If Financial Assets are stronger , otherwise, it would it situate inequality and wealth. Globalization has eroded the earning potential of the working and middle class. Nothing has been done to upset that through distributed mechanisms, better training, since it economic policies. Until that changes, this discontent that feeds the populist will continue. Francine talking about those economic policies, you see in weeks, athree to four lot of Central Banks doing a lot more to help their economies along. , i cannothas done find one economist that believe a stronger pickup that would put growth on a more solid footing. Does qe need to stop . Is it even working . Minorprobably have some beneficial effects on the real economy, the most of the effects it has goes through active market and does not get transmitted to the real economy. Banks need fiscal backups. Those voices should become louder because without that, central bankers are going to be margin players. Tom i would suggest that everyone moving toward bill in lower this idea of mixing in employment dynamics with the real economy and the idea of frictional unemployment. Do we have a new frictional unemployment where we just have to get used to a lousy or job economy and cannot aspire to better job formation . Both inmation itself in the u. K. And u. S. Is not been a problem in terms of the head count. It is the quality of the jobs being created. The wages and conditions of work that go with it is the problem. Boost tore is a major capital expenditure, and both in the public and private sector tom can Public Policy do what you just said . In principle, Public Policy can make a big difference by taking care of the so the wordre chatty is a compliment. Habby is a compliment. Especially at the Secular School level which does not prepare americans and brits for the 21st job market. Sea of mediocrity. That can be remedied. We will get to economic issues. China in dire straits. We will continue this discussion. Gary shilling and james glassman. It wouldnt growth of Janus Capital will be with us just after the jobs report. This is bloomberg surveillance. Francine im frank and the plot in london. Tom keene is in new york. Vonnie china factory gauge showed improving conditions. Sayshinese government seasonal volatility is one way for the rebound. Starwood hotels has come to an end. The bid for Starwood Hotels has come to an end. Anbang decided not to go through with the deal because of various market conditions. Tech line motors is making a bid for the mass market. It has unveiled its model three. It is a 45,000 car. Fans placed0,000 orders. Francine . Francine elon musk trying to give a massmarket car that focuses on electrics. You see a country that is taken by these shifts, but also with the market price of oil. Willem buiter is still there. Talking about the last eight months of the trial interrelations of this economy the need to restructure. Is this the right way to diversify. The mega fund itself is not the way to diversify in terms of domestic production, right . You increase the size of the National Savings that you would in which you would accumulate. Oft happens in terms diversification and new job creation, we will have to see. The only thing i have seen since the interview is enough and that aramco is going to go more into refining and petrochemicals. But it does not create jobs. Ways when this massive fund gets invested and diversify it. You get cap creation at home you get job creation at home. It will be a huge challenge and a major social, political, Economic Transformation for saudi arabia. Francine when you look at the price of oil, should they freeze all production to get the deputy crown prince they will only freeze all production if iran joins in the same plan. This is geopolitics. Wilem i dont think the lowcost producer should be the one to freeze production. As part of a deal, it would not make sense for them. , the the same producer same as a low cost producer, makes no sense. Tom you get to wake up and get the global oil market. The world is changed. What does edward say about the royalty and how they will work with oversupply, that is so different with what we saw with robert laceys kingdom . Lem it will be about 50 at the end of the year and never will reclaim the commanding heights. This is a sector that will not produce the rent that allowed the country to live the way that that it has had in the past. There are many factors in play that are not just demanded. Hopeful noises in terms of political stability coming out of libya. There are few thousands of barrels of oil there. This is the end the oil age, and a sense in a sense. Tom it is fascinating to see. As we heard earlier from geoffrey yu, 70. We will continue with William Buiter. Later on this morning, on the equity markets, Jeremy Siegel of wharton, he has been an optimist or thick and thin. Professor siegel will reaffirm the spirit of the use of cash. I am Francine Lacqua in london and tom keene is in new york. It is jobs day we are talking about china and we have a great morning mustread. Bauder wont shut up so bonnie cant get to it. Jillian and to get for vonnie quinn. [laughter] in the Financial Times talking about janet yellen. Continue. The expectation in the surveys are suggesting 2. 5 in five years time. Back in 2011, it was 4. 5 . I want to read this part of the that officials need to get into consumers lives. I dont think you are a big a good example. Anthropologyfitted hiring people out of oxford. We were talking about Inflation Expectations and how janet yellen wasnt trying to reset things this week. Correctlypointed out that the anticipation by the markets of the feds future response were worst than expected. Their view of projection of isure rates have gone down not a problem, but as part of the solution. The market knows the reaction function of the fed. I would not use anthropologists, but psychiatrists. [laughter] geoffrey i think that is the quote of the day. Francine do you think the human speech was coordinated to give them more room . That i doubt very much that kind of explicit formal coordination took place. Central bankers are part of a homogeneousther world, and they often think ofke, even without a need coordination. I very much doubt that there were those phone calls. Tom this is a wonderful treat. William buiter with us. With all due respect they will speak with Governor Scott walker. Stay with us. Show me movies with explosions. Show me more like this. Show me previously watched. Whats recommended for me. X1 makes it easy to find what blows you away. Call or go onliand switch to x1. Only with xfinity. 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. Tom good morning, everyone. Tom keene in new york. Francine the clock in london. Its get to your bloomberg first word is a vonnie quinn. It is april 1, ok. I just saw that come are you kidding me . Vonnie delayed reaction. [laughter] saudi arabia plans to sell its stake by 2018. In an interview with bloomberg, debbie crown prince mohammad bin Salman Al Saud reveals details of an ipl. Details of an ipl. O. Reopening of the Brussels Airport is being hampered by the demand for more security. They are hoping that passenger flights could resume ive limited basis. They are hoping that passenger flights can resume on a limited basis. California is becoming the first date of a 15 minimum wage to take place by 2022. Uomo has following isthis in trade. Front and center. Lets bring up a chart right now. Buiter, trade evaporates. Why does it become so difficult . Simply an end, largely for economic reasons, not protection driven to the evergrowing ratio of trade to gdp that we have seen since 1950. The relocalization of the world, but not every country can be hong kong. No trade or gdp growth will fall in line. Supply lines are shortening again and this is not something to worry about, unless it is protection driven. Tom that is where i want to go with you, Gary Shilling. You write a lot about china. Professor buiter said china is in dire straits. Are they in dire straits . Globalization is probably the greatest economic factor of the last 30 years. What that meant was you are transferring manufacturing from europe and north america to china and other developing countries. That give a tremendous person trade, but that globalization is over. You reduce manufacturing in this irreduciblen minimum. That was really pushing china and they turned around and the exported back to europe and north america. He did not really change the overall, it was just being done and you had a lot more ships to haul stuff back and forth. In theocess is over, but meanwhile, the other thing driving china was infrastructure spending. Slipping. E has been their exports you got to have customers. Were other customers . North america and europe. Withovered it up infrastructure spending. Francine it was a great chart. I want to come back to the news of the day. China gate jumping china gauge jumping. When does the Chinese Consumer take the place of the u. S. Consumer . Years, or not even a reality at this point . Chinese consumers, they account for 37 of gdp. The u. S. Is about 70 . They are off the charts. Nobody has a lower ratio of Consumer Spending and Consumer SpendingConsumer Spending and gdp than china. Wilem it is a questionable speed as well. It is a question of speed as well. Although there has been some , it is all style stuff mainly directed at infrastructure investment, some china ishe banks, so simply kicking the can down the road at the moment. Cost of greater indebtedness and unnecessary xrom capf the shift private or public growth. Could this be a credit crunch in the making . Wilem it is up to the chinese authorities. They have to address the excessive indebtedness of the corporate sector and of the local government sector. Is the banking system. If they do it fast enough, to get banking to lend to new profitable sectors, rather than upthe old sectors, that is to the policymakers. Buiter is professor way out there on global slowdown. Give us an update on good and bad deflation. If there is a good deflation, is it out there right now . Gary good deflation is driven by supply increasing faster than demand. Bad deflation is the opposite. You get a good deflation of technological improvement. There is a lot of Technology Today that has not come to fruition that will be driving the economy. We will resume growth later, but in the meanwhile, we are in the age of deleveraging working off all the excess debt. During this time, it is more of the bad deflation that reigns. It does not matter what country you are in. Deflation is good for the chinese because they were replacing manufacturing employees. Capitulatenet yellen to the schilling view . Gary they have such a forecasters, i think they should get out of it. Gary shilling and William Buiter, this is really special. Coming up, we will look at inflation with William Buiter and Gary Shilling. Later on, our jobs report after our jobs report with William Gross. What a wonderful day for economics and april fools day jokes. Andcine it is jobs day april 1. I am in london. Tom keene is in new york. Vonnie the Obama Administration may lefty the band may lefty the band. That is no final decision made. Number of lawmakers are unhappy. As part of last Years Nuclear agreement, the administration is maintaining a strict ban on the dollar. In europe, prices of factory fell most. That underscored the problem. The stars have come out in favor of copyright laws. Stewartperry and rob are wanting a change in the copyright act. It is not new. It has been going on for a while. Before. Have shown this we are doing this with William Buiter and Gary Shilling. Takes outliers out each month and is more stable and set higher. 2 up toation pounding 3 . Gary shilling, let me start with you. Are we getting a new about off a boy and Service Sector . Gary people in the Service Sector by goods. Ieldou look at oil workers, you do have a spillover from goods. You look at the consumer consumption index and goods are declined 3 . Services still rising. You are dragging the services down with a weakness and goods. Professor buiter, we have a real gdp highend inflation statistical study we use. Do we need to go back to a more nominal analysis of where our economies are . We we have to keep out have to keep our fingers on the pulse of real activity and inflation and deflation. Tom our central bank doing that . , but theyy are trying are not successful. We dont know where the potential for growth this. That is no reason to say, lets make it easier on ourselves and look at nominal growth instead. Francine, this is so important. Janet yellen said, just what professor buiter just said, we dont know. Francine i would argue with growth is the one thing we seem understand from mondays what yellen was saying on monday. I dont know. It would be a great question for gary. Gary, when you look at what we heard from janet yellen, should . E look at wage growth going to move on Interest Rates. Not until china stabilizes. Say, i dontjust know why people Pay Attention to Central Banks anymore. Hey are basically impotent everybody gets excited about what they say and what they do. Forecast. Know how to i am just amazed how much everybody worries about the fed. I dont feel like the fed the fed certainly did push stocks through quantitative easing. It is proving more affected to push the economy in china and japan. I just it is better than watching the soap operas. Francine ok, so you are bringing up an important point of how you price risk because of qe. Wilem, you believe that qe has not done any harm . I think it has misled a lot of people believing the fed is omnipotent. Look at the forecasting record they always started 4 and crank it down to reality at 2 . It at 1 . Ly started if i made those kinds of forecast, i would be so embarrassed. Tom lets go to William Buiter. Said lets get rid of the dots. It does provide benefit to vonnie quinn or Gary Shilling . Wilem the dots are not labeled. Tom thank you. Wilem there are three. That matter. Dot and the deadly udley dot. Tom do you know were sam fisher is right now . Wilem i dont know. A noisy forecast. Michael mckee, if you are watching he has been on a 12 week vacation. Dots. Gnificant weight of that is not april full, folks. That is wonderful. This is that it was. Later today on bloomberg radio, James Glassdoor will join us. Bill gross will be with us on television and radio. John silvia of wells fargo. This is bloomberg surveillance. Tom a report on jobs day. Francine the pond francine the plot in london. Tom keene in new york. Brazil with her immense political challenges. Francine . Francine coming up on a bloomberg with stephanie ruhle. We are following up on a very important saudi arabia story about the changes in aramco. And you as you have been saying, the focus on the program will be on jobs. That the break the news 8 30, we will join you tom with bill gross from jennas capital for your interview with him. After that, we will come back with blackrock. That is all on bloomberg. Tom thank you. Crushing it with new terms. Look at this terminal shot of the dots. I am guessing yellen and dudley are here. Push the green line down. Which of these two lines is right tt . Wilem the market is less wrong than the median fots. Tom lets bring it back to jobs. Gary, let professor buiter get in. Down go the yields. Did inflation get it so wrong coming out of these prices . Recognizey failed to fail to recognize the real rates. Pushing on enormous amounts of liquidity and cutting nominal rates does little to stimulate the economy. People are looking for inflation a a model that is not near lower bond. It is nonsense now. Gary, you think Central Banks are pretty much nonsense. Do we need to stop having Central Banks have an impact on inflation . It is not working. Tom gary . Im sorry. I did not hear. The process of Monetary Policy is just not working. What are the alternatives . Alternatives is deleveraging. Theres massive fiscal policy, then bailout of wall street, quantitative easing , these guys are combating portions much greater than policymakers. The problem is, these guys think the are omnipotent and cannot accept the fact that the markets overwhelm whatever they can do. Buiter, dok, william we need to change the Central Banks mandate . I dont think central bankers think they are omnipotent. I think the markets think that central bankers are under the tent. Our omnipotent you dont change a target because you have trouble achieving it. If the target is what you like to achieve, you look for ways in conjunction with other policymakers, special fiscal policy and debt restructuring, to get to the target. To change theed inflation target. You have to become more effective about pursuing it. To garys point, the habit out seven years. Though gross talks about inflation 10 years. How long is this song and dance going to go on . I see this period of low, real, and nominal Interest Rates lasting until we have had global deleveraging that is overdue, but not coming. You have to do this organically. It will take years, and years, and years. Gary, we have to leave it for radio right now. It has been special to have the two of you Gary Shilling and William Buiter. They will continue on radio right now. Francine, like you so much on this jobs day. Look all across bloomberg for our coverage. We go beneath the headline numbers for jobs. Bill gross joining us at 8 30 this morning. How much does unemployment really matter to the fed at this point. Mideast game changer, saudi arabia will share share and set large sovereign wealth. Welcome to bloomberg go im david westin here with Jonathan Ferro and bonnie quinn. Fed chairto decide if look atle yellen will payrolls. The answer potentially coming up of minutes. 19 minutes away from payrolls