Transcripts For BLOOMBERG Bloomberg Surveillance 20160408

I want to hear more about the Fabulous Four from the fed. A busy day at Morgan Stanley in tokyo. Francine, are the many articles of mystery of why the yen is stronger. The most sophisticated prose. There is a mystery to it. John letter says they were talking about these trades and he himself cant figure it out. We will delve deeper into that. First, lets get to bloomberg first word news. Here is vonnie quinn. David cameron is acknowledging he had a stake in an offshore fund set up by his late father until six years ago. Cameron has been under intense pressure to provide details of the interest in the holding find it since it was mentioned in reports after the disclosure of the panama papers. Cameron previously said only that he, his wife, and his children hold no offshore accounts and one that in the future. State john kerry is in baghdad at this hour on an unannounced visit. He is meeting the iraq Prime Minister and others. The trip coincides with military advances against Islamic State militants. The pentagon says the u. S. Is considering more small military outposts to provide to iraqi forces. A major document is forthcoming from pope francis. It is about family issues. The speculation the pontiff could change church on whether or not catholics can you have received annulments can get communion. Samesex relations, cohabitation, and polygamy. Janet yellen says she still sees slight in the u. S. Liver market. There was a Panel Discussion last night in new york with three other predecessors. She says the economy is approaching full employment and is approaching tremendous progress since the financial crisis. Janet yellen whatever portion of the labor market you look at, and i go beyond unemployment measures to many other different kinds of measures of labor market functioning, really suggest a labor market that is vastly improved. , who in 2014, became the first woman to lead the central bank, and leading the fed with ben bernanke, alex Alan Greenspan. Global news 24 hours a day powered by 2400 journalists and more than 150 news bureaus around the world, im vonnie quinn. Tom we will dive into this historic moment last night. He went right at it with yellen on Monetary Policy. Vonnie absolutely. He wasntthink supposed to ask those questions. It was great. It was really something. Vonnie the lowdown for Michael Mckee. Tom Michael Mckee will give as wins wisdom and the next hour. Of up 94, oil gets a lift. It is all within the range off of yesterdays sport. The fix at 16. I would point out german to your yield continues to grind closer to three decimal points. That is a headline item. Flattened out yesterday afternoon. That is a big deal. Francine . Francine happy friday, tom. Dont do that very often concerns about brexit. Citigroup is saying the brexit risks are moving east and it is the postcommunist economy that would be hurt the most. European stocks gained. 6 . The yen is the story. Small idea,ot a francine, that the european banks that a bad day were the it was their ceo who came out and read justified unicredits business plan. We are going to see a lot of moves on these. They are very dependent on eu subsidies. The thinking is if happens happens, it grexit these countries will be in a a lot of pain. Tom arise in inflation in the 80s. Vonnie, here is the long greenspan period. Imagine, vonnie, nobody saw this coming. Didnt see this coming. Down we go to the zero bound with a triage of bernanke and yellen moving forward with actual progress at this little left. Vonnie ida bernanke didnt even believe it. We can map this with all the different phrases we use for the crisis, but there is. We will talk about that in the next hour. This is a great day. Muchpecially as we have so market talk. Im looking at yen in a million different charge. This is the one i picked out. This is the yen. It is in red. Yenwhite line is japanese noncommercial futures positions. If you look at this chart, what it tells us apart from today where we are seeing a weakness, they noncommercial positioning as a percentage of total interest has surged 27 . If you put it simply, it means that investor appetite will continue jumping. Lets get into price risking, what it means for young, what it means for Central Banks around the world. Citigroup it global head of equity trading strategies, great to have you on. Thank you for coming. We have seen quite a lot of swings in markets. The yen is the most interesting story of the week. What does it mean for japanese stocks in equities . Is it forcing central bank to do more and intervene directly . In theory, it is not good for the japanese market. It hurts exports and therefore earnings. The weakness of the underperformance in japan. There is a bigger question. Post g20, the volatility seems to have gone down. It seems like it was engineered. Reopens the rates to zero, what does it mean for the euro . That is on the context of a slightly weaker dollar. There are some weird movements happening and it raises questions. Do we have to look at Technical Levels . Antonin there are a lot of talks about the chinese refreshing their reserves and are they acting the yen as well . It is traditional speculating on the end or other place as well . We will keep a close eye and it will reserve a question on what the doj does. To they go for the negative which is something we discussed and decide to go for the negative, and what does it mean for the banks . If you look at them, they have gone down a lot. Occurrences, but i much more interested in how you take your Market Analysis into the real economy. What we have seen in the last few days, whether it is german yields or european banks or whatever, is that nothing more than a statement on it dampened real economy. Antonin they are continuing to flatten the yield curve. That is what youre seeing in bonds. When the economy picks up, it is a bigger question. It has been disappointing in europe area looking for yields, buybacks, it is quite independent of economics. At youryou look daytoday basis, how do you look at the Balance Sheets . A lot of these people are sitting on a lot of cash. Look at companies with this cash without leverage which can be releveraged into the market. We think we will continue working. You screen for free clash flow. You treat from pension deficits because some companies are running big gaps. You look for these companies who are going to feel the pressure to deploy this cash either because of Corporate Governance or shareholders. These companies are doing well. Francine thread surveillance this morning. We also live it is a beautiful setting. We will speak to our imf chief willmist and Jacob Frankel be joining us. We will talk Central Banks and markets. Francine tom keene is in new york. First, lets get right to Bloomberg Business flash with vonnie quinn. Vonnie thank you so much. They are starting to process the choosing Investment Banks to ist their indian wires us wireless business or they say the wireless carrier macer sell 10 of its India Business to fit share sales. It may be among the countrys initial biggest public offerings. Alibaba is increasing the amount it is run raising to 3. 5 billion led by chinas wealth fund. An arm of the countrys secondlargest Bank According to people familiar with the matter. They say it could be valued at 60 billion. Communications could make a firstround bid for yahoo web business next week. This according to people familiar with the matter who says verizon is willing to a a company acquire the companys yahoo japan. Meanwhile, a separate persons as google, they are also considering a bid for yahoo s core business. That is the latest on Bloomberg Business flash. Francine thank you so much, vonnie. We were talking about the yen, the chart of the week. We are joined by the head of affects research. Julia was a top forecaster in the last 12 years months. He joins us. Thank you for joining us, david. What is going on in the market . Top talk longer term, because youre critically and to reach hundred five. David the whole rally was driven from fundamental reasons. The surprises that it happened right now. We had a bank of japan which is trying to avoid this which surprised us with negative Interest Rates. Despite this fact, the yen continues to rally. The base expiration is it is cheap and the second one is that the whole risk aversion which has led to the unwinding of short positions in the end has really helped the yen, pushed it to the extreme territory we are right now. Francine you are expecting yen against the 05 dollar. What happens after that im only reach 105 . David it is moving into overshooting territory. It is going to far at the current level. What we have to take into account, and this is also when we formulate our focus and have our expectations, that authorities dont like that. Day they dont like the sharp moves in particular. They have problems with these levels that are reaching below 110, 105. There will definitely be a slowdown in the appreciation of the yen. It will be stretched over time. ,hen you talk about gravity where the currency is actually heading to, where is the value which is in line, price stability which the yen has. Also, with the balance of payments surplus the japanese economies can pose. We are talking about levels below 100. Theyit sounds to me like cant control them. I like your idea of driving down to the center tendency, ¥94, something unimaginable. Explain to me the nature of it right now. You mentioned there was a massive bets. You get in excel aversion to a stronger yen. What is the belief of that convexity, how will that play out today into next week . Very shortterm, i would say we have to be prepared for consolidation. We have sharp moves. Now, everything is not driven by fundamentals. The fundamentals are the longterm gravity pushing the yen to its lower levels. So far, were any technical territory. More consolidation is likely. Tom bring that chart up again. Francine, this is critical. I think a large part of the public and even Market Participants dont understand the history of the end which david absolutely nails. It is normal for the yen to strengthen. It has been doing that for four years. A huge strength through the 70s and 80s. They continued strength over the last 20 years. Francine you are right, tom. Look at what the ceo jay has been doing. We caught up with governor corona kuroda. Territory tive territory. When we had abenomics the markets believe they will, trump. They dont believe they will do more. Will they actually intervene in the markets directly to support or weaken yen . David in terms of intervention, but that puts the rather weak measure and will not do much for yen weakness. The only thing which can really and makee trend in yen it weaker again would be a new measure, a new unconventional measure. Something the market is not expect. We move much closer to this helicopter money, this unconventional measure which really does direct government financing or something in that which is not experimented by now by the ecb, by the fed. The boj would need to, again, somebody prepared to go an extra mile. Unfair question, but im going to ask it, anyway. Is there an appropriate abenomics level for the yen . Is there a level at 120 where we are happy, or 110 . Or is it 150 . Abenomics has been weakening yen. With that, the economy should have profited, companies should have profited. This should have created room for true reforms. We thought when we ask for reforms in japan, they will should lead to stronger currencies. Profitability is rising and so on. This would help the currency. When the yen had been sufficiently week, when inflation have an higher, profit seven higher, it has to deliver on the real economy side and not on the yen. The Financial Market is questioning if this is possible, tom david cole with a good briefing from frankfurt. Seeing, mystery we are the yen move, a massive yen strength, and a brutal move. David kohl. Coming up in the next hour, it is extraordinary how the weekend as been. I dont know if we can talk about. We will find out if robert can talk about yahoo . Yahoo is in play. It is bloombergs valiant. Surveillance. Francine im Francine Lacqua in london. Tom keene is in new york. We are on both sides of the condit. Of the world. David cameron has been responding to reports that he profited from his fathers offshore account. Take a listen. David cameron we had a joint account. We owned 5000 units in blair more Investment Trust which we sold in january, 2010. That was worth a like 30,000 pounds. I paid income tax on the dividends, but there was a profit on it that was less than the Capital Gains tax allowed, so i didnt pay Capital Gains tax. But it was subject to all of the u. K. Taxes in the normal ways. Francine this is related to the panama papers. It has taken four days per David Cameron to come out with a. 30,000 pounds you pay for a year at his school. Know. Dont i havent done a lot of research on this, francine, other than to peoplere are a gazillion doing this. They have the right to find lower taxes. I believe the Prime Minister explained that in a responsible way. Know if it isnt a right or not a right, but will be can link into, and i dont have the answer to this, is whether that news for cameron is good news for brexit. Tom compare and contrast the upper over the Prime Minister of the United Kingdom with the upper upper over the leadership of iceland. This is a mom and pop transaction. Francine it is a completely different story, a completely different outcome, approach and how he dealt with it. The amount is much smaller and it wasnt his. It came from his late father. Ant to explore the idea cameron seen in a negative light, it gives more water to the brexit camp. Wax a should increase momentum. Whether it is cameron, the events of brussels a few weeks ago, ongoing migrant flows, all of this is contributing to one camp gaining momentum versus the other one. Francine thank you so much for now. Coming up, we will speak with former imf chief economist and rossetti workshop. Tom, when you look at the guests that have been under fire from papers, i wonder if we will find some solution going forward. 20, someone said we will crackdown on tax havens. It has come to liquidity and money that is not claim. In other incidents, such as panama, it is coming into the uproar. That explained bernie sanders, the popularity of donald trump. For we go to break, i want to show you the european this has to do with brexit. Happy friday to tom keene. That is why are one of those currency pairings. Look at european stocks. They gain from 0. 5 , lesser than before. Basic resources also gaining. Tom good morning, everyone. What a friday it is after an amazing thursday. Olivia long chart coming up in a moment. Is transporting refugees to turkey. Protests before the boat the part appeared activists jumped into the sea to try to obstruct the operations. Meanwhile, a decline by two thirds in march 2 21,000. That is according to the interior measure minister who says measures could extend the influx. The number of asylumseekers seekers in the First Quarter still more than doubled from the same period in 2016. Shows disdain for donald trump runs deep. He tries to overcome recent campaign setbacks. The Associated Press whole says seven in 10 people including half of Republican Voters have an unfavorable of view of the billionaire developer. Mens an opinion shared by and women, whites and hispanics. I am vonnie quinn. Tom thank you so much. Mysteries in this first week of april. Economists have gathered at the acclaimed amyris eddie workshop in italy to think about it. They have a lot to think about, they have even more to think about after what we have observed in the markets yesterday. Blanchard does not worry about the market move. He is a former researcher for imf and at m. I. T. He takes a bigger picture. We will break that rule and talk to him. Wonderful to speak to you, what is the gross prescription at your workshop . To do we get ag 10 economy get going to to their Economic Growth . Oliver the conference is just starting, so im sure we dont have the answers. Im not sure we will have it by the end, either. The recovery is slow. Some people worry very much that it may stop. My own view is no, i think it is slow because the future is not exciting, anyway. We are going to a state where growth will be slow for a long time. Spenders are not eager to , not eager to invest, and that slows down recovery. The man is weak because the future is not exciting. That is my diagnosis that was shared by the people here. Some people are more worried than that. Tom you will not write the acclaimed green book at the imf spring meetings as you have before on financial stability. Let me ask you the basic question. Have negative Interest Rates worked . Olivier they probably work, but it is a bit early to say. I dont like it. I think it is basically interfering with business and banks in ways which are very complex. Even if they do something on the macro side, i much prefer what we now call regular qe which used to be called conventional metro policy. It is easier for banks to deal with. More qe would be my preference as opposed to larger negative rates. You were talking about stimulus and the fact that drug he also has to do more. For thes the yen mean doj and what does it tell us about his policies . Olivier i didnt get all of the question, this is about japan and the fact that policy doesnt seem to be doing merkels . Miracles . Als . They havent got inflation up here they need to do something. I have argued they should basically work on inflation itself. They should try to get increasing wages and increasing prices rather than try to get it indirectly from qe. That is what they should be focusing on at this point. Francine if you are policymaker or chief economist to the bank of england or the treasury in the u k, how would you assess global risks for brexit . Oliver it seems to me it is Legal Process the whole tocess, they are mistaken leave eu. It will create a enormous uncertainty. It is already starting, but it will go on a long time after the vote. The result of this will probably be a drop in investment by firms who dont know which way to go. It will lead to a depreciation of the insurance rate and they wanted to deal with both. Depending on the intensity of one, it may decrease the Interest Rate, depending on the intensity of the other, we will have to see. In your textbook, you ote an entire page to veto he worked for years at the imf to fiscal analysis and fiscal policy. Morgan stanley is talking about a coordinated fiscal response to jumpstart global growth. Is there any history of coordination in fiscal stimulus . Olivier i think there is one example which is 2009. The circumstances were different. Everybody had to do the same thing, which is to have a fiscal expansion. That is the only time in history. Today some countries need a fiscal expansion, some do. The notion there would be a coordinated fiscal expansion is a tradehen i look at world and the flatness and world exports, we have shown that short a lot this week. Exports have gone flat. His currency the only response twoweek trade . To weak trade . Olivier you are mixing two issues. Increased decreasing global trade is not a worrying phenomenon. It is a time where global such a russian supply chains are expanding quickly and global trade was expanding relative to output your that time is gone. Because it is weak investment, we have less global trade and growth output. I see nothing in the global trade number which worries me. It would be worrisome if it indicated global output was weaker, but there is no evidence that is the case. Tom thank you so much. Greatly appreciate that. Francine, just so you saw there, just put meanchard in the timeout chair. He was basically saying i conflated two ideas. He was very diplomatic. Francine he was pure it i wasnt going to bring it up. He did the french way. It was very classy. C i just gotlity was classy from the acclaimed blanchard. We will continue this conversation. Maybe i will get a b. On economics, bloomberg surveillance. Francine im Francine Lacqua in london, tom keene is in new york. The u. S. Is bracing for the worst earnings season since the financial crisis. We talked a little bit about brexit and the concerns and how we price risk. If you look at a company, what are you looking for any Balance Sheet . Antonin you are looking for Earnings Growth. Expectations are bad. Any company that can show Earnings Growth should be better. Properly accounted growth. Not to overengineered financially and so on. With,e thing we stick especially in the context of europe, countries will be able to fund themselves. Companies that can releveraged themselves to pay dividends, they should do better than the rest of the market. That is the one thing we have been holding it on. Francine if you look at commodities and the industry, dividends have to go down. Is that a given because theyre are going through such tough times of cutting costs and working through the World Economy . Antonin yes, but it is already partially priced in. The forwardlooking dividend curves that come in a huge about. On top of mining companies, i would add oil companies. Oil on from 25 to 40 and we are starting to settle back down. The longterm expectation of oil remains extremely high. It back comes in, it raises questions on dividends. Tom we spend a lot of time looking at sterling. Should i buy british stocks . With all of this uproar that francine is riled up about, should i go along the footsie ftse . Antonin we kind of know what it should do assuming it should it goes through. It is a lot harder to making negative case on the ftse. It is a lot of dollar earnings and dividends. One of the structures we look at two hedge a potential brexit risk is to go outside on the ftse. You like to go 40 or 50, but that is a lot harder. Tom are european banks a value trap . I dont want to get you commenting on the banks, i know that is inappropriate, but what are financials trading at . 1 10 of book or something . The gloom out there is fantastic. They keep coming back in. One of the issues is the headwind seems to be changing. Whether it is regulation, Interest Rates. Therefore the one conclusion we can drive for europe is if european banks dont go up, europe will struggle to outperform the u. S. There is a super high correlation of european banks versus u. S. A potential catalyst for coming out of the value trap would be announcement of the captive increase. Francine no one wants to do it. No one wants to admit that they have to. Antonin they are getting closer, but you could argue that would be you clean the pipe and you can start fresh again. As long as you fear what may come, it is difficult to make a decision. The other argument for bank weaknesses, last year, we talked of thehe banks a lot Dividend Growth was coming from the banks and i got completely emulated. That contribution to the unwind. Francine are you concerned the banks are fulfilling the primary job which is the transmission recommend mechanism, lending to the companies who need it . Antonin if clients dont want to take loans, you cant force them. If anything, the latest ecb announcement, especially in japan, makes it so it is easier in europe to lend and not get her by the negative rates. You cant make it up. Nextine coming in the hour, he is the cofounder and chairman, he will come to us live from the river banks. That is at 6 30 a. M. In new york. Coming up next, we talk Interest Rate with Jacob Frankel of jpmorgan. Tom good friday, everyone. After a tumultuous thursday, Francine Lacqua in london, i am in new york. We are doing a lot of international economics. Robbie feldman will shot just join us from the top of the hour. Robert feldman with Morgan Stanley, looking for that forward to that. We will try to figure out who will buy yahoo maybe we can figure that out by 7 00 a. M. With a Bloomberg Business flash, here is one vonnie quinn. Vonnie home prices are surging in londons outer district. Networks are luring londoners further out of the expensive city center. A new train station will open in 2019. It accounted for up to 30 of sales in the commuter belt. Iceland is sticking to a plan of the centralt bank manager tells bloomberg the option will likely take place before a summer recess. Recent political turmoil wont have an effect. We are never concerned about politics in the process for choosing parliament. We work with whatever government is in power in any given time. We give our advice. We have our independence in terms of setting Monetary Policy. The parent the plan is to free up 2. 4 billion for investors including hedge funds. That is the latest Bloomberg Business flash. Francine lets get back to the river banks of the lake. We are joined by Jacob Frankel. He is the chairman of jpmorgan. Thank you so much, mr. Frankel. When you look at the qb that has been put out on the market in the last month, it hasnt done anything for growth expectations. What is going on . Jacob lets put it into perspective. There is no question there is a complete consensus that the qe at the beginning has been not infected, but also effective, but also essential. The problem arose from what was supposed to be unconventional temporary measures have become the conventional. With the passage of time, the efficacy of such measures have declined. Is of the main issues today that the nature of the problems in the World Economy today cannot resolve by Monetary Policy. Pushfore, as much as you on this string, it is not the fed, the ecb, the bank of japan, those are governments that need to do structural measures. Those are the measures that improve productivity. We have at this Conference Time and again. The issue is productivity is low. Growth is declining. This is not something that Monetary Policy will do. In spite of all of that, Monetary Policy is still viewed as the only game in town. That is something that the limits of the town should not be expanded anymore. Francine you dont think we will see helicopter money . Or we may see it from some major Central Banks around the world, but that would be a mistake . Jacob i think it would be a mistake to focus only on Monetary Policy. Helicopter money is not a policy. It is a way to describe the notion that you need to get money, disposable income into the hands of consumers and investors so that they can spend and consume. Generically speaking, what they need is not money. What they need is confidence and productive opportunity in front of them, and knowledge about how the future will look. The story about the tax system and the like, about open markets. As we listen today to the record that rhetoric of the Election Campaign in the u. S. And globally, the notion that protectionism may be something that should be embraced is terrible development. No businessman would like to be in an island of his own, etc. Growth depends on open markets. Churchill once said that markets work best only when they are open. Fromit is a long way robert mundell. Your original work in chicago. The big difference is we are in a floating rate world. As you observe the strength in the japanese yen, francine and i observed 14 articles where it is a mystery why the yen is stronger. Why is the yen stronger and what can the japanese government do about it . Governmentjapanese needs to remember that when it started the strategy, they spoke about three arrows. Monetary policy was only one. Physical policy was the second. Scal policy was a second. Structural policies to remove distortions and enhance growth is the third arrow. By now, the third arrow has been paralyzed. Nothing happened there. When you look at the picture that is so crooked, dont be surprised you have great volatility, uncertainty. Explaining the developments in an Exchange Rate during the past two hours, look at the Exchange Rate system within the strategy. Strategy is based tom the point here without question is the desire of Market Participants and public authorities to manipulate currencies. Can that happen in an almost complete floatingrate world . Jacob when you have a very vast ocean, little drops here and there do not change. They can create noise. May beorts to manipulate costly. I dont believe, however, that through Exchange Rate manipulations, you can generate growth and improve your mediumterm perspective. Favors attention from the Center Diverse attention from the center, the political system needs to recognize the challenge is on their banks, not the Central Banks. Switch could speak to janet yellen and the unique challenges of the federal reserve. Is she central bank or of the world, and by that, i mean, is she central banker to israel, to poland, and to malaysia . Jacob she is the central banker of the most important central bank of the most important country for the World Economy. As a result, she has decisions impacting each and every country in the world. Dollar isy the u. S. The main currency of the world and the u. S. Is the main currency center. It is a privilege, but it is also a responsibility. That is why it is so essential that Economic Policy design which is thes. Financial center of the world is done in a transparent way, in an explicit way, and it is communicated in the proper way. Other Central Banks and policy makers and Market Participants can take this into account. Francine tom we greatly appreciate it. Jpmorgan international and one of our acclaimed experts on Foreign Exchange. Thank you so much. Appreciate you being with us today from citigroup. Joinsl continue, nouriel us in the next hour. We will turn to mergers and acquisition in america. Overnight, further news on the most challenging times of yahoo . Robert will give perspective. Teachers up 11. Stay with us, bloomberg surveillance. Tom after an hellacious thursday, european banks the yen weakens slightly. Global markets find modest stability. In this hour, we speak with Nouriel Roubini. Is the mergers and acquisitions boom over . We speak with Robert Profusek. Maybe he will talk about yahoo ,t is a bidding war for yahoo and the board will toy with verizon, google. We will again talk about that this morning. The morning, everyone. Bloomberg surveillance. Thrilled that you are with us. I am tom keene in new york. Francine lacqua is in london. The rally of yen is faltering a little bit, but a disclaimer, we are not sure why it is strengthening so much. Else is trying to have an explanation for it, so we are just trying to find out. Jacob frenkel and Nouriel Roubini in this hour, and that is called perspective. The real mystery is, what does the japanese government do . First word news here is vonnie quinn. Vonnie David Cameron is acknowledging he had a stake in a fund set up by his late father six years ago. He has been under intense details in buy interest in the fund. Cameron previously said that only he, his wife, and their children hold no offshore accounts now. John kerry is in baghdad at this hour on an unannounced visit, meeting with iraqs Prime Minister and other top officials. The pentagon says the u. S. Is considering more small military outposts. Federal reserve chair janet yellen says she sees tracking in the u. S. Labor markets. Economy ise approaching full employment and is making tremendous progress since the financial crisis. Janet yellen i think overall, with whatever measure of the labor market you look at, and with many other measures of labor market functioning, it really suggests a labor market that has vastly improved. Vonnie yellen, who in 2014 became the first woman to lead discussedl bank, Monetary Policy with ben bernanke, Alan Greenspan, and paul volcker. It is looking to draw capital interest. Tom some of the merger actions through the end of the weekend. Lets get through our data check before we get to dr. Feldman. Weakereuro, slightly yen. European stocks are up, led by a lot of commodities. I want to show you some of the eastern bloc. I chose the polish currency. This is on brexit concerns. With overt feldman, 30 years of experience in out oftional economics, the Massachusetts Institute of technology, and on china watch for salamon and Morgan Stanley. , thank you so much for joining us. What is the disarray of the japanese government . What is the urgency into the weekend for mr. Abe . s focus is abe firmly on the upcoming elections, what to do about fiscal policy, not so much on Monetary Policy. With the yen trading at 108, this is an issue that is in front of them. But the politics of a somewhat exactly the are not same as the market implications. Even the market implications are not all bad. Politics are important because we have an election coming up in the summer for the upper house, maybe for the lower house, too, in which the electrical system is much more skewed toward the regions. That will mean for a stronger yen, not all bad for the administration. They have been very calm in their reaction so far. Tom dr. Feldman, you have an inflammatory quote International Coordination of policies in order to stabilize a Global Economy to be a theme at the g7 iseshima summit that japan is chairing. We also see a growing likelihood of physical action for political reasons ahead of the japanese election in july. Do you actually believe we can get a coordinated, fiscal response at a g7 meeting . Robert i believe that is true. But how much each country decides to move will be heavily influenced by local conditions. Francine go ahead. Robert the key thing is that we saw Prime Minister and going to washington Prime Minister abe going to washington, and working toward a more coordinated global policy. There is a consensus among Global Leaders that the idea of currency wars is a bad idea and the central bank should step back from it. But if we do not have the Central Banks doing something, Something Else has to be done, and that puts the onus on fiscal policy, in all forms, for some countries to do something. Francine i applaud that you say it is a stronger yen but not a strong yen, but the negative rates six weeks ago, what does that mean for the boj and for kurodas policy . Are they backfiring or just slow . Robert they have been ineffective in doing what they wanted to accomplish through the Exchange Rate channel. You cannot isolate one thing and say therefore it is a failure. I think people are quite disappointed that the yen has strengthened in the face of that rather aggressive policy. There is a lot of controversy about the policy. It was introduced very suddenly without a lot of consultation with other parts of the government, much less the private sector. The credit channel might go the wrong way, as it has in other countries. The expectations channel seems to have gone the wrong way. There is some reconsideration of how effective that policy is. Tom when we look at yen, we look at the massively strong yen of decades ago and even a modestly strong yen that we have seen over the last years. There has got to be a value. My center tendency is a 94. ¥94 meand a sub100, for the government and the people of japan . Sub94 is not something i usually get questions about. But if we work to get back below 100 at some point, it would raise questions about whether the Monetary Policy in its current form is working. It would also raise questions about japans global strategy for exporting some of its employment to other countries, the yens happened with going up and down. The local employment in japan suffered a great deal when the yen stronger. That said, there is not a lot of Employment Opportunity in japan because there are not a lot of opportunities to employ in japan. He does there are not a lot of people to employ. Cause aelow 100 would little bit more reconsideration. Tom Robert Feldman, we particularly on friday evening, coming to us. This is a wonderful way to turn. We have been trying to get Robert Profusek on, the head of mergers and acquisitions for jones day outs he got shellacked last week with , and it speakss to what dr. Feldman is talking about, which is every company is dealing with lower growth, lower Revenue Growth prospects. There is the merge there is the urge to merge. If the credit markets go and change dramatically you have low growth, cheap money. What are you going to do . Apply, synergize. There has been a difference from the First Quarter, though. Robert it was down a little bit, and i think that was because the credit markets were in bad shape in january and february, and the equity markets were volatile. Tom through three administrations, clinton, bush the younger, and president obama and their antitrust and antibob profusek tone. Are we going back to an anger of the 1930s or even the early 1940s . Robert well, the pfizer ruling, the new regulations, people are arguing that is targeted right at pfizer, and of course the president went on the air to talk about it. Word, didsed the p he . That was a pretty extraordinary transaction. You have both parties complaining about inversions. Happens at the absolute top of the administration really does not affect the staff of the department of justice or the ftc. These are lifetime good people trying to do the good thing. Tom are they your enemy now . Robert i dont think so. The number of deals that gets blocked is very small, no matter who the president is. The factou mentioned that we are seeing distressed m a. Given the amount of qe, we are probably not seeing enough distressed m a. Is this a new world order . Are we going to see more m a of Distressed Companies happening in the next six months . Robert i think so. One of the areas that has been surprising is that we have not had a lot of m a in the oil patch. Obviously, there is a need for capital, to consolidate and try to survive. There has not been much. When you think about it, if you are a midmajor or an major and you have cut your budget, or dividend, done all this stuff, youre going to run out after that and buy something . It is hard to explain to your shareholders. We think after we get through this period there is going to be a lot of activity, especially in the downstream area and midstream, and logistics and terminals and all that stuff. Francine thank you so much. Bob is right. The last major oil m a transaction i can remember was. E was big with Nouriel Roubini that is at 6 30 a. M. In new york, 11 30 in london. We will talk macroeconomics. Francine i am Francine Lacqua in london. Tom keene is in new york. We are on yen watch. 108. 70 five. Lets get to the Bloomberg Business flash with vonnie quinn. Starting theone is process of choosing Investment Banks for its indian wireless service. They say the wireless carrier may sell about 10 of its Indian Business through the share sale. Biggeste the countrys commercial offering. Verizon is making a firstround bid for yahoos business next week. Says google ison also considering a bid for yahoos core business. Tom i want to get to the single best chart for we get to Michael Mckee on last nights soiree. On the left, paul volcker with the high Interest Rates. The great moderation of that Alan Greenspan era, and then on to bernanke and the shock and awe. That is the precursor for the drama last night. She loves you, yeah, yeah, yeah. Hurried zakaria had to pick up syriza kari a i said yesterday they were be no news of substance, aut sack area but zakari went right to it. Economy ise relatively good. The inflation is rising and we will be steady on inflation rates. The last time they were together was a couple of years ago for the 100th Birthday Celebration of the fed. This is the first am i remember anybody asking them about policy. Beatles, they sang very much in harmony, talking about the difficulty of the jobs, communicating to wall street with the fed is doing, and the idea that the u. S. Economy is in relatively good shape but we need more help on the fiscal side from congress. That was a pretty unified message from all of them. Francine i wonder if they talk to each other to check to chat shop. Studentsone of the asked janet yellen about neil cash cow or a about neil ka shkari, about breaking up the big banks. She said he has the right to look at this. We think doddfrank is working pretty well and we do not need to do that. She is not worried as much about the u. S. Banking System Health right now. Vividne i remember colors when she sat with Christine Lagarde yearandahalf ago talking about levels in the economy. Feel when sherent was asked about bubbles this time around . Michael donald trump said recently that this is a bubble economy. She said that is not the case that we are in good if that is not the case, that we are in good shape. We do need more fiscal help in this economy at this point, much better than anywhere else in the world. Tom april 27 will be miles away. It is a long and winding road. See how i am doing that . Keeping the beatles thing going . A lot can happen before we get to the meeting, right . That is part of what greenspan said. The fed is making policy based on forecasts of what can happen. News comes in, the forecast changes, so they cannot stick to a prepared script. Wall street wants to know goingately what you are to do and when you are going to do it. In april there is no press conference, but you have to figure if we get the same kind of jobs numbers, even given what the more dovish yellen is saying recently, that you might get a move in june. The last song on the meet the beatles album was not a second time. Tom i do not remember that song. We beat the beatles to death here. We will continue this discussion on bloomberg surveillance radio this morning. Later this morning, michael and i will speak with pablo goldberg. This is a great time to speak with the blackrock senior strategist. Coming up on yahoo . Bloomberg surveillance. Francine from london and new york, i am Francine Lacqua, with tom keene. You have the morning mustread. Tom mr. In melt of general immelt of ge really goes after the senator from vermont. Never bothereds to stop by our aviation plant in rutland, vermont. E have been investing heavily the plant employs more than 1000 people who are very good at what they do. It is a picture of firstrate jobs with high wages, advanced ufacturing in but a vital in a vital industry, and vermonts jr. Senator is always welcome to come by for a tour. This was really something. So you do not talk about the candidates, which i know you do not want to do. Would you like to see a more assertive major ceo in america, like we saw from mr. Immelt . Robert it depends on the circumstances. Stakeholders,s of and i am not entirely certain i understand this particular issue. I am sure there was a reason, but in general, ceos, despite all of what we saw this week, do not try to get the headlines. Tom they still try to stay out of it. Robert above the fray. Tom i like that, above the fray. There is a belief on wall street that only if they engage the public, there is a job offering free ge aviation, for a mechanic ,n scenic rutland, vermont 05701, whatever the zip code is. They have to say they create jobs. They dont. To the responding particular ends and flows of politics is usually not among them. Tom i just wish they would be more assertive. Francine but i guess when you look at jeffrey m l jeffrey immelts quote from today, when you create jobs and are in the business of creating jobs, then you can really make a difference. So this is a ceo saying, fine with the rhetoric, but go and see the real world. Tom one thing that bob profusek is expert at is creating a factory or creating a moment or industry or subsector, but the reality is that everything is at the margin. You have to go out with a marginal investment dollar and create the next job or the next 12 jobs. The people you are dealing with know that. They know that marginality. Robert that is the point i think he was trying to make. The political swirl this year with the president ial campaign is as if nobody is doing anything in the united states. He made an important point. They make jobs. Is her highpaying jobs, and they do create growth in the economy these are highpaying jobs, and they do create growth in the economy. His point is correct. Good,s. Companies create highpaying jobs. Valspar,winwilliams, valspar is in indianapolis. They do not create good paying jobs. Robert i am not aware of the specifics of the circumstances, but i understand that, hey, wait a minute, were good for the economy. Tom coming up again on the end, Nouriel Roubini of roubini global economics. Stay with us. After quite the thursday. Francine look why in london, recovering from her yen losses yesterday. She was all week yen she was yen, strong yen. Here is vonnie quinn. Vonnie earlier today, some 45 people were sent from were sent to a nearby port on the turkish coast. Jumped into the scene to try to obstruct the operation. A monthly number of Asylum Seekers arriving in germany declined by 21,000. That is according to the countrys interior minister. The number of asylumseekers in the First Quarter still more than doubled from the same period last year. It is now at 181,000 from about 185,000. A prediction from president obama, obstruction of his Supreme Court nominee by Senate Republicans will inevitably lead democrats to return the favor and undermine public faith in the legal system. Yesterday he pressed his case judge merrickr garland. He accused gop leaders of negative partisanship. President obama those in the senate have decided that is moreg the base important than upholding their constitutional and institutional roles in democracy that is dangerous. But Charles Grassley is not budging on letting the nomination move forward. Pope francis says individual it ist should be the outlined in a 256 page document that rejects the emphasis on black and white rule. The joy of love was released earlier today. Francis says the church must all reject must no longer those who fail to live up to the gospels ideas of marriage and family life. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am vonnie quinn. Thank you so much. Lets go back to the river banks and being to Nouriel Roubini. He is an economics professor at nyu school of business. Great to have you on the program. And is going on with yen, was it a mistake to go into negative rates . Or would they have been strengthened more if governor corona had not done if governor kuroda had not done so . Of the i would say part yen strength is the same thing with the euro, having to do with what is going on in the united states. The fed has gone very dovish. They are going to hike on the invest twice this year. Even some fed governors were talking down the dollar, and that is creating, both in the euro and in japan, some frustration. In shanghai there were there is awith sense in japan in the eurozone right now that the u. S. Is cheating, pushing down the volume of the dollar in a situation where growth is improving in the u. S. , inflation is going higher in the u. S. While in europe and japan, inflation has gone lower. Faltering. Is so there is a bit of the gaining of currency tensions if not a currency war, between japan and the eurozone on one side of the united states. This is something that has to be discussed. Francine if you think that is something that janet yellen is doing deliberately, that mario draghi will add more stimulus, what are the options left for japan . Is there a further move into negative territory and with helicopter money . Impart part that answer depends also on whether abe is going to propose a potential has to a potential tax hike next year. Economy is faltering and you cannot have another fiscal drag so with inflation going lower and growth going lower, the yen is becoming too strong, the boj will have to do more. 83 if it is not going to go on quantity, the only other option is that because more negative with the policy rate and doing more quality with more purchases on private assets. When the action of the boj will occur, it will go even more negative, and that will weaken the yen rather than strengthening. Generally the and weekends only when they increase the risk of concern on the effects of negative policy rates on global banks. Then the yen strengthened. Mode,ey are in riskon and the Monetary Policy is that the boj would weaken the end rather than weaken the yen rather than strengthen it. Good morning. I went to give you the highest marks on being out front in the diminishing value of monetary actions. The fiscal toolbox has been barely touched. Do you see any indication of the single nation or a coordinated fiscal response to jumpstart real economy benefit . Well, i think that intrinsically, even central bankers in europe, they were concerned about fiscal policy and the need for austerity. They are saying we are running out of bullets. We are reaching the limits of what Monetary Policy can do. So there is a broad consensus, but even the g20, we have not gone beyond what has been said in the past about fiscal policy, so there is a division. To usingis more open fiscal stimulus, but germany is against it. Even the chinese are very cautious in terms of how much they want to use the fiscal tool because they are worried about creating a social welfare system that they cannot afford with aging. Because there is no traction there, the margin is going to go in the direction of easing. But a small canada does not make a big difference in the world. Until we see Monetary Policy reach the limits of what it can do, Monetary Policy is still the only game in town with Central Banks. Fiscal room in many parts of the world, including europe and the eurozone. I agree with you we are not there. Is the catalyst for germany can we presume a stronger euro like we see a stronger yen . A 1. 15, a ¥1. 24 are they out of the question . Nouriel in germany there is still a fiscal ideology. , to want to show an example make an example for the rest of the eurozone, fiscally conservative. The fiscal stimulus in germany or less fiscal austerity in the eurozone is not changing. Or and announcing that it is likely to change anytime soon. You need a severe crisis in the eurozone to change that, but that is going to take a while. The potentialre for japan to benefit from a weaker dollar . Well, the peak of the concerns about riskoff in the middle of february, there was the view that on top of all the other problems, the risk of china and the u. S. And the fed driving prices lower, it was leading to a Global Equity , with an exacerbation of the risks. There was some consensus that maybe the dollar should not strengthen. Leading to a strengthening of the euro and the end, this is actually damaging the economic prospects of inflation targets of the boj and the ecb, and therefore the nervousness is that the u. S. Is now free riding, and now they are pushing it to the limits. There is a serious concern that a weak dollar is damaging the prospect of other advanced economies. Tension right now between europe and japan and the united states. Everybody wants a weaker currency. That is not possible. It is a problem. And here i was thinking you would have an optimistic view about the eurozone. Talk to me about brexit. This will probably have ramifications for the whole world. It does, the cause if they decide to go for brexit, many other things are going to happen. It is going to create a huge amount of uncertainty about the future of the european union. Then the scots are going to say they want to leave the United Kingdom. Catalans are, the going to say me, too, me, too. And then some members of the european union, like the swiss, are going to say without this without the u. K. In the european union, i am not wanting to be a member of the eurozone and they will decide to leave. So it could be the beginning of the end of the european union, and you could also, given the , grexitbetween greece has been avoided. So if you have brexit on one other, itrexit on the is the beginning of the end of the eurozone. Tom Nouriel Roubini, thank you so much, from italy, for completing our coverage. Let me do a quick data board here. We are going to talk yahoo futures up 12. With us, Robert Profusek of jones day on the m a derby known as yahoo bloomberg surveillance. Vonnie this is bloomberg surveillance. The only story we are really following right now, arising to medications ready to make verizon is willing to acquire yahoo stakes hasn sweetened the offer. It is also considering a bid for yahoos core business. That is our Bloomberg Business flash. Lets get back to jones day s bob profusek. Who would benefit more . Verizon or google . They have very different approaches. Robert it really depends on what they are getting. The issue for yahoo , and why there has been so much activism swirling around, is that there are different pieces. There is japan, alibaba, the days business. It depends on what you are bidding for. It is kind of a menu, but it is interesting, not surprising, that alphabet is looking at it. Verizon are not just a phone company anymore. Represent verizon, google, anyone . Robert no. Mcinerney, freeman what does the board actually do in these kind of ballets . Do they sit by the phone and wait . Is it like two Board Members who drive the bus . What actually happens to the yahoo board as the meeting begins . Robert i do not know this for certain, but it sounds like it. There is a pretty structured bycess, organized and run lawyers in Investment Bankers lawyers and Investment Bankers. Tom and they get big books in. Robert and then you set round one. There is typical in diverse there is typically a multiround process. There is a just in that there is a preliminary round of interest. Francine will this work out . With your wealth of expertise, i have always been told that if you buy a steak or if you buy either m a, which can either be a megamerger or a smaller merger, culturally it has a stake. When the two companies are healthy, that is when it works out. This smells of desperation. Robert i do not know if i would say it is desperation. Yahoo is a complicated company. It has this in pieces it has different pieces to it. It depends on what they are willing to pay compared to the outside value of yahoo as a whole right now. Tom i look at this and the oddity of yahoo , the 20year or 30year train wreck that is yahoo Marissa Mayer is a discredited ceo. Is she even involved in this transaction, or does the board just say to her let us work over the weekend . I understand it is speculation. Robert i would not say she is discredited. She has had a lot of issues to deal with. It puts pressure on her. Activism not talking about yahoo in particular does sometimes create tension between management and the board. But it is a boarddriven process. On the other hand, the board cannot run the business. Going to continue with bob profusek here on m a. We will get you ready for your friday reading into the weekend. Into the weekend. , snow in newie york . Is that possible . Tom good morning, everyone. Bloomberg surveillance. Lets do a Foreign Exchange report. Yen is front and center, 108. 64. I thought exceptionally valuable was the Robert Feldman interview. Look for that across social media it in the next two hours if not the next 90 minutes. Europulling a back is pulling back from 1. 14 as well. Francine . Francine coming up shortly, it is bloomberg. Stephanie, i know you have hank paulson. Stephanie i am excited about a weekend in paris with tom keene. But i am focused in the next three hours on bloomberg. Hank paulson will join us in the next two hours. We have seen such a strategy shift, and especially a place like ubs, with such a push into private wealth management. It has to find out what the head of the Investment Bank has today. Less light was tom keenes stream, all three treasury secretaries. Last night was tom keenes dream, all three treasury secretaries. Tom real expertise on the housing economy as well. I want to rip up the script here. Francine, come in with what you observed with professor roubini. Francine it was surprising that Nouriel Roubini is speaking to fed chairlly accusing janet of not playing the game, trying to artificially weaken the dollar. Is that right, chris . Is she trying to play a game that will hurt the rest of the world . That has been the word since the g20 meeting in shanghai. We know that she met with Christine Lagarde ridley know that she heard about weakness in china, heard about weakness in the emerging markets, and if nothing else, it seems as though she has decided to slow down this gradual tightening too, as she said, a more gradual gradual base, in order to prevent the dollar from appreciating, and in that sense, yes, she is making an effort to weaken it. Tom chris, your expertise, good your expertise, besides great Housing Market economics it is a little soggy out there. Is the housing economy not going to be the support for the sub2 american gdp . To be housing is going all right, it is just not going to be strong. One of the reasons it is soggy is we have a lot of supply on the market this year. Think about after the financial crisis, after the great recession, there were a couple of years when Housing Investment was close to zero. We just were not building anything. Multifamily especially takes a few layers from planning to ampletion, and we are getting ton of that supply in the market. Tom and within the commercial real estate area, i have always found m a and odd thing because it is so entrepreneurial. What is the dynamic now . Capex is still good, and financing is available. There have been some big deals. We did a big deal in december, 2 billion, read deal. Private read. It was owned by a private Investment Firm and was sold to another one. Like stone. Blackstone. There has been a lot going on in the multifamily sector. There is a lot going on in other things. Francine is liquidity vonnie is liquidity going to be a problem, chris . Terrificat is a question. We touched on part of the answer to that, and that is this idea that you can do private deals. It is harder to do publicly traded deals because some of the players are prohibited from being in that market. Ofe and more, these friends mine who were propped traders are on the beach at the moment looking for things to do, so, yeah, the liquidity is reduced, and what that means, especially at times of market volatility, there is just not as much done. Vonnie from a global perspective, francine from a global perspective, people are saying that janet yellen has not globalized yet. But has she eased Monetary Policy . Chris has she eased . No, she just has not tightened as much. If you think back to the First Quarter, the big Central Banks and what they did, we were expecting the ecb to ease in december. They did not. They waited until march, and then draghi gave his weird press conference suggesting that maybe we have done enough, so the euro actually strengthens. In japan, disappointment. They did not ease enough, and the yen strengthened. In the u. S. , we do not tightened as much as expected. So which central bank was easier than expectations . It was the fed, and that is why the dollar is weaker. Tom we will continue with chris low and Robert Profusek on bloomberg radio. Francine, have a great weekend. Stephanie it was an historic conversation. Janet yellen joined her three predecessors last night. Dealmaking a week of and unmaking. Head of Investment Banking joins us in an exclusive. And suitors from verizon to google are lining up to bid on yahoo we have the details. Stephanie welcome to bloomberg. We are here at World Headquarters in new york city. I am stephanie ruhle, here with Jonathan Ferro and david. Jonathan, a quiz to yesterday was risk off. Jon it is great timing here. A little embarrassed. He should be feeling good about him a little bearish. He should feel good about himself as well. In