Transcripts For BLOOMBERG Whatd You Miss 20170329

Chrisnew jersey governor christie spoke emotionally about the problem during his president ial campaign and will lead the commission. U. S. Ambassador to the United Nations nikki haley is accusing the organization of partnering with what she called a corrupt government in congo. The ambassador also says she supports a massive cut in the Worlds Largest peacekeeping mission. She spoke today at the council on or in relations in new york. Global news 24 hours a day powered by more than 2600 in oversts and analysts 120 countries. Im mark crumpton. This is bloomberg. Scarlet live from bloomberg World Headquarters in new york, im scarlet fu. And im joe weisenthal. We are 30 minutes from the close of trading in the u. S. Brexit begins. Prime minister theresa may normally begins the process of exiting the European Union, and unprecedented cap that will reshape its relationship with its closest allies and unprecedented path. Or more from top fed officials over the next couple. F days we will hear more plus, what is populism . What is it matter to the Global Economy . We will attempt to answer that question with a fantastic panel. F guests dont miss this special hour of programming starting at 4 00 p. M. Joe lets look at with the major averages stand as we head toward the close. Abigail doolittle is standing by. Abigail we have mixed trading on our hands. The dow and s p 500 trading right around even. The dow down, the s p 500 trading up ever so slightly, but the nasdaq amazing nasdaq making some gains. The nasdaq actually on pace to put in a record high. The year, inry of fact. 100, ups the nasdaq almost 12 on the year. In blue, the s p 500 up 5. 5 of the year. Big outperformance on the year. Not surprisingly, it has a lot to do with biotech and tech. That is the story today, too. Some of the big winners for the nasdaq include amazon, alphabet, and facebook. Lots of strength for these technologyrelated stocks and for the internetrelated stocks, it could be a bullish initiation of coverage over barclays. Have initiated coverage on many of these names. The top pick according to ross sandler in the internet space is amazon. That is really his favorite. Not surprisingly, technology is a top gain around the year. 12re is technology up percent, but one of the worst drags today, the financials, which have started to drag more financially. Blue,e been down there in up just 1. 68 on the year. We see they had been up almost 8 , right behind technology earlier but started to take a leg low, and years having fallen, having much to do with. He fed meeting it will be interesting to see if the s p 500 can climb higher without leadership from the financials, or maybe the financials will recover, but certainly a sector composition issue to keep an eye on. Joe thanks. Republicans may be making another run at passing the Health Care Bill that they abruptly pulled from the floor last week in an embarrassing setback. Two public and lawmakers say leaders are discussing holding a vote even if it means staying into the weekend, but its unclear what changes will be made to the Gop Health Bill that did not get enough votes. Our with the latest is white house editor and our reporter who has been covering health care and taxes. Sahil, it looked like it was over and everyone was moving on, going to taxes. How realistic could it be that next week, they pick it up again and vote on a Health Care Bill . Is far from certain. We do not know what will happen, but there is a goal among House Republican leaders of giving this another stab, taking another shot and potentially voting as early as next week. The main thing that has changed is the political dynamic for some House Republicans. They are hearing from there can and activists and donors who are very upset, some of them live it on the fact that they have donated for seven years, and a hope among Republican Leaders is that some of the members were chastened for killing this bill and would be willing to vote yes, at least on the first go round. Does the white house have the will or intention to tackle health care again . The president has made clear that he wants on to tax reform. Hil he has. That is what he said after the bill was pulled. Press secretary spicer was noncommittal on when health care would come up again. He says as some republicans have been saying today and yesterday that they want to get to yes, that they are still going to work on it, but the white house in terms of a schedule and had no indication the president is going to push hard on this. He does seem to want to move on. Do we have any indication yet of what kind of policy changes if they were going to vote on a bill next week, how it might look different from the bill they ultimately did not put on the floor last week. Sahil we do not. Some of would be to get the republican holdouts on board without having to make major changes, but i spoke to some republican holdouts over the the last couple of hours who said that its likely some things will have to change. Conservatives want more regulations to be cut, and the do not want things Like Essential Health benefits out of the bill, so how they thread that needle remains to be seen. Alex, one person who is missing from the whole discussion on the Health Care Bill and the white houses lastminute efforts to get a vote and take place was gary cohn. Originally, there was reporting indicating he might be a point person, but in the end, he was kept pretty far from that issue. One thing he is working on, though, is tax reform. Do we have any update on what kind of meetings have transpired within the white house between the president and gary cohn on this . Alex Top White House advisers will brief the president tomorrow on a tax overhaul, including the republicans preferred plan to create what they call it a border adjusted tax. Its come to located, but the idea is to cut the Corporate Tax rate down to about 1 and implement a new tax on imports and domestic sales. It has kind of split the corporate world. Retailers, Automobile Companies and industries that import a lot of materials are opposed to this while exporters like boeing, for example, favorite. Joe at the end of last week, the impression seemed to be that trump just wanted a deal, period. That he was not particularly concerned about the details of Health Care Reform. He just wanted a deal he could sign and tout. When it comes to tax reform, is there any reason to believe he is more interested in the details of this, or will it once again be about him just wanting something done . Alex i think Health Policy is really kind of a black hole for donald trump, as it is for lots of people who are not in that world. It is a very complicated area of policy. Policy is something he knows more about. He is certainly familiar with the alternative minimum tax, having paid a large cap will love years ago. He is familiar with phonics. I think he is more comfortable in the realm of tax policy than in health care. Taxes, itit comes to sounds like the white house is easy to jump up eager to jump on that and work on that. Are there people in congress eager to put health care behind them, or do most republicans still really prioritize Obamacare Repeal and replace as the number one thing they want to do . Hil it is a bit of a mix. Wings of ways and means chairman brady signal to reporters he is ready to move on to taxes. He has seemed passionate about taxes from the start. As for House Republicans, it is complicated. A lot of them i think would be happy to not take a vote on health care because it would be it is also them, but not really a tenable political position to move past this debate after seven years of promises without so much as a vote. When republican told me a couple of hours ago that they would like to pursue these things on parallel tracks. If that is realistic i doubt it. Congress is not really known for being able to do two a things at once, so we will see how it goes. One thing about the order in which the white house tackle their priorities is that the Health Care Reform was supposed to help pay for tax reform. Is that why they are considering bringing it back into the mix, because they need a way to show that tax reform will not cost . Ything extra alex i think that is part of why they are considering bringing this planet or a vote driving itbut also is pressure from the political right. They promised for seven years to repeal this law, and to not even take a vote on it could be devastating for the Republican Party in the 2018 elections. One thing they face is they are running out of room on the calendar. A lot of stuff is coming up that the government will have to deal with. There is also a Supreme Court nomination pending in the senate. Now is the time to do health care. They could not get it done last week after three weeks of negotiations. If they cannot get it done next week, i think it is probably dead. Thank you so much. Coming up, we will hear from the president of the boston fed. In an exclusive interview, he said we could see more rate hikes this year. This is bloomberg. Scarlet whatd you miss . The boston fed president says the fed should be prepared to raise Interest Rates four times this year to guard against inflation in the u. S. Economy. Four is much more gradual than what we did. For in when here would be much less than we did the last period we were coming out of a recession. Then we were raising twice as fast. Relative to that, this is much more gradual even if we did it every other meeting. I view for over the course of this year, and we have already done one as being gradual. Once a year in december is a very gradual pace, but as we get to full employment, we do not need to make up much more ground, so that would indicate that we have to raise rates a little bit more quickly to make sure we do not overshoot where we want to be. In my own view, the economy is likely to be Strong Enough and growing fast enough that that would be consistent with raising rates roughly every other meeting. That would get us to the point where we still would have an Unemployment Rate more than likely a little bit below what i 4. 7 is all employment of and likely at 2 inflation, though there are many forecasters now that are forecasting a little bit above 2 inflation. Scarlet is the feds and to slow down inflation is the feds aim to slow down inflation . Goal is to hit an Unemployment Rate that is sustainable over the longterm. If it is possible for the economy to grow rapidly without dramatically tightening labor markets, that would be wonderful news and would indicate the economy is being much more productive. We have not had a particularly productive economy over the last couple of years, so thats one reason that despite getting gdp 2 or little bit above we have had a low Unemployment Rate. That reflects the fact that probably potential is not as high as we thought. What is the message from the treasury market . In. 10year yield has all the yield curve has actually flattened it. The treasury market is nothing to be worried about inflation. If you take it over a longer period of time, the 10year rate is still quite a bit above what it was, for example, prior to the election, so we have had a move up in the rate. You are right that over the last week or two, it has come down. There are plenty of other things affecting it, including what has happened with the Exchange Rate and fiscal policy. Those are things we do not control but obviously have an effect on the rate. Inflation is a big question. Many people argue that given that, there is plenty of room for the inflation rate to overshoot, and in fact, it should overshoot. Theres recent research from brookings which suggests that is necessary or over time, that fed to go ever lower. I am comfortable with occasionally being a little bit above and occasionally being a little bit below. Hasfederal reserve forecast is hitting 2 over the course of the next sheet of years. If you look at private forecasters, a number of private forecasters are above 2 at the end of this year, beginning of next year. There are forecasters saying theyre concerned we will be a little bit higher. I do not think that is likely to happen, but i do think we have pretty much hit our inflation target and our full employment mandate, so it makes sense to have an Interest Rate more consistent with where we are now. If there is one variable, when indicator you would point to that would make you say maybe we do have to go more slowly, what will you be watching . If we started seeing the Unemployment Rate drift of rather than down, that would be an indication that we do not have to worry as much about labor markets being tight. We are not getting enough growth in the economy to be able to sustain full employment. But that is the main thing you would be watching . I would also certainly be looking at inflation, so we have a dual mandate. If we are significantly missing on inflation in terms of being much lower than we were expecting, that would be a source of concern as well. My expectation is we will get growth. Scarlet that was our exclusive interview with federal bank of boston president , eric rosengren. Time now for the Bloomberg Business flash, a look at some of the business stories in the news right now. Bill ackman has taken full responsibility for the choices that triggered the investment disaster from pershing square. He made the rare me a call in an annualculpa letter to investors and apologized for damaging purging pershings success record. For an Insurance Group is a potential deal to redevelop a manhattan how are manhattan tower with links to the trump group falls apart. An abrupt pullout of a deal and a struggle with Regulatory Approval to buy fidelity and guaranteed life. Former goldman trader turned London Stock Exchange ceo xavier relay is postponing retirement after watching the biggest deal of his career fall apart. Regulators consider his 14 to step too far. The European Commission officially killed the deal, saying it would have created a de facto monopoly. And that is your Bloomberg Business flash. We head into the next hour, the u. K. Is setting out the nations path to unravel ties to the European Union. In the bloomberg, you can see a breakdown of how the country voted on the referendum. Read are the leaves, so youre talking about most of england. You have scotland, northern ireland, parts of wales, and Central London in the middle. In the next hour, we will be examining some of the consequences of exit from multiple viewpoints including immigration and trade the consequences of brexit from multiple viewpoints. From new york, this is bloomberg. Oil Price Movement is being driven and dictated by supply checks. Crude stockpiles are at a record, so this backdrop making wti crude cheaper than brent, which is the global benchmark. It is, in fact, the cheapest in 15 months. The difference is more than three dollars a barrel or about 6 . Why do we care . It paves the way for a surge in u. S. Exports, which is a Huge Positive for a white house looking for fed news when it comes to trade and the economy, and to some extent, it is an indication of the rapid pace to u. S. Energy independence. Lets not forget also that this represents a trade opportunity for investors. Im looking at a theme we have been talking a lot about on the show lately, and that is the valuation gap between s p 500. We were talking to cameron price earlier in the week. Goldman is out with a verdict the seeing pop up a lot, and that is the relative valuation emergingp 500 versus markets stock. This goes back to late 2011. You can see that the ratio is very high. At least on a pure p d basis on a pure pe basis on a pure p e basis. More and more people are saying there is real momentum with emerging markets. Talket you hear a lot of about this, but i wonder how many people are actually switching over. The market closes next lets take a look at the major indexes. Not much change going on. The s p 500 gaining two points. The nasdaq up by. 3 . This is bloomberg. U. K. Prime minister theresa may serves her divorce papers to the eu, marking another step in the Brexit Process that began nine months ago. This hour, we take a special look at the rise of populism and its affect on the Global Economy. Markets in the u. S. Just ending the day. We saw equities swing between gains and losses. The nasdaq poised near a record high. [bell rings] if you arejoe tuning in live on twitter, we want to welcome you to our coverage every day from 4 00 to 5 00 p. M. Eastern. Scarlet we have special guests with us to explain the origin of. Opulism George Magnus will break down the Brexit Process and later, we will hear from former ecb president jeanclaude trish a jeanclaude trichet on how to be a successful leader. Joe we will get a scorecard on the most notable populist leader today thats President Trump by speaking to Global Political analyst tina fordham. We will get some fascinating political analysis. Stay with us. Scarlet first, lets get to our mark wheat market minute. Mixed kind of all session long. Joe coleman today definitely the quietest day this week. Scarlet the second or breakdown the sector breakdown pretty mixed as well. And retailers as well as automakers doing fairly well, up to 5 as well. Financials the laggards. Utilities also down by about. 5 . We should mention retailers doing well because the border adjustment tax included in the initial republican tax proposal may not make it to the final bill according to deutsche bank, so that his reason for some retailers. O pick up we want to bring up protect pharmaceuticals, as well, yearsg the most in the after an experimental drug for patients with Cystic Fibrosis hit two of its test goals. Looking at the bond market, we cut we keep talking about this range. Today, moving a little closer to the downside. Also want to point out, twoyear yields still deeply in the negative territory. Scarlet im glad you bring that up. On this brexit day, we have to consider what is moving in europe, but Euro Weakness is really the theme. Theres a report that ecb officials are hesitant to change their dovish message, so that is part of it. We saw the euro fall against all its major peers except the swedish krona. I included pounddollar. The pound modestly weaker against the u. S. Dollar. The mexican peso rallying after that thee bank note border adjustment tax may not make it to a final form. Clearly, political turmoil in south africa punishing the currency. Finally, on the commodities front, zinc having a decent day today, up 1. 2 . Crude oil getting closer, back to that 50 a barrel, so really stabilizing after that big tight a few weeks ago, and gold selling off modestly really stabilizing after that big dive a few weeks ago and gold selling off modestly. We are to talking about populism and its impact on the Global Economy. Well talk about the economic applications of rising nationalism, growing barriers to trade. Not havewe could chosen a better day to break down this topic because today, brexit has formally been triggered. There will be two years at least of negotiations that will ultimately lead to the u. K. Breaking ties with the European Union. Prime minister may the United Kingdoms permanent representative to the eu handed a letter to the president of the European Council on my behalf confirming the governments decision to invoke article 50 of the treaty on European Union. United in theain future, also during the difficult negotiations ahead. We will never accept, for behind all that, the u. K. Is forming trade negotiations with other countries before the withdrawal. My firm expectation of the european side is they will want to negotiate the sequence of the divorce settlement and then talk about the future status. Until the withdrawal, the u. K. Is a full member of the European Union with all the rights but also with all the obligations. Going reality is there is to be some uncertainty in the market for another 3, 4, five years at the very least. When this country leaves the European Union, we will have control of our budgets, and we will decide how that money is spent. It will be a catastrophe for the whole but especially the United Kingdom. As far as im concerned, no deal is a bad deal. Has beenrd brexit chosen by the british side. I think it is a mistake for the United Kingdom, and certainly, say, thei would european and Global Economy. Simply unacceptable. Now is not the time to be talking about [indiscernible] theres no reason to pretend that this is a happy day, neither in brussels nor in london. On today of all days, we should be coming together as a United Kingdom. Joe for more analysis on todays news out of the u. K. , lets bring in an independent economist and commentator, an associate at the china center of Oxford University and and advisor to Asset Management companies. He joins us now. Great to have you back. Not much of a Market Reaction today. Everything was basically priced in. No real surprises, but from what you heard today from theresa may and eu leaders, what do you think is the most interesting thing . Perhaps the most surprising thing i dont really mean shocking, but slightly surprising thing is actually the text of the letter, which the Prime Minister sent to the president of the European Council. It was actually not as aggressive or as it was quite friendly in terms of most of its content. Talked about partnership, talked about european values, which the United Kingdom shares, and a willingness, basically, to enter negotiations in good spirit for the most part. That was a veiled threat if there was not an agreement, then other things like Security Cooperation might not you know, might not make the grade, as it were. There might be a compromise there, but there is a question as to how credible that threat might be. We will have to see how much of that goodwill survives into the real mccoy of the negotiations with europe once things pick up probably in about four or five weeks time. Scarlet in terms of impact on the economy, we have a barometer that measures what it means for the economy in terms of inflation, unemployment, trade metrics. For the most part, the u. K. Doing that too badly in 2017. This brief read period. Green is good, red is bad. This indicates the u. K. Has kind of put that behind it. What do the u. K. And the market misunderstand most when it comes to the risks of a hard brexit . Increasingly, thats what many people say we are headed for. Dont know about markets. Markets are generic. Hundreds of thousands of people worldwide all kind of making decisions. What i think a lot of people in the political debate do not really understand as they economics of brexit have not even begun yet. The only thing that has happened since the referendum in june of last year is that sterling has , which is as it should be because it represents a much bigger risk premium that has to be embedded in the price of the currency and u. K. Assets. Of that isct starting to be coming through in terms of inflation, and it will continue to push inflation up, most economists think, through 2017 and into 2018, which itself will kind of weaken consumer demand, but if i may say quickly the major thing that i think is misunderstood in this debate ofthat the effect of brexit, leaving the eu was never really going to be on the demand side of the economy. Shortterm cyclical forecasting, which is why the levels that came out in last summers forecast i think are wrong. The impact is much more glacial corrosive over time as the supply potential, trade, and investment become disrupted. That is really the issue, but we will not see that in any kind of shocking way. It will happen gradually over the next two or three years. Joe you mentioned the tone of theresa may in her letter and thanps it being friendlier expected. Is there a way for the negotiation, the final outcome to somehow reflect that, that the u. K. And eu could have a friendly, productive relationship even with a hard brexit . Mr. Magnus as they say, the proof of the pudding will be in eu negotiations. There is some back channel noise going on. A lot of it comes from brussels. Ather than westminster the may government may be more willing to compromise than the have so farteers suggested might be possible. The issue really is what possible compromises could there be . Theresa may has already said firmly that we want control over immigration of this country and will not be party to the european jurisdiction code of justice. If you put that to one side and think on the other side, if there is to be a soft, raised brexit where is as few people get hurt as possible, if you see what i mean, there has to be an agreement in principle sometime between now and the end of 2018 for a transition arrangement where we basically phase ourselves out of the eu over a period of seven to 10 years, rather than drop out of it, one year to the next, the coyote moment, which would be very damaging. At this juncture, people are going to have to struggle to see in what areas the government might compromise and what the impact would be on its own in parliament, who obviously want to see some of them actually want to see a hard brexit, to be honest. Talking about populism, and one of the themes we hear a lot lately is all the experts are wrong and that the elites do not get it. Something stuck with me in your last answer before when you talked about how people predicted a recession, but you explained the real impact of brexit were always more likely to be on the supply side. Why did so many people get that wrong . It would be churlish not to concede that there were vested interests at work on both sides. Leif campaign wanted to paint this golden age of britainand golden buccaneer and around the world and signing trade deals. Added that up of to something unrealistic, and it has to be said that actually, on the remain side, the official campaign basically suggested there would be a fallout. It gained to suggest that they knew they would be a consumer crutch after the referendum, which i think was just some in the air kind of thing. There was no basis for thinking that would happen. It was and ever. Stick with magnus, us. We will talk about how populist leaders want to change the nation of global trade. Scarlet a quick look at lululemon. Down by double digits at the Fourth Quarter results came in pretty much in line with what analysts had expected. One dollar and adjusted eps. Stimate was 1. 01 the outlook for the year is a boost in low Single Digits to fullyear comparable sales. For the first quarter, the current quarter, the Company Sees Sales being down in the low Single Digits. We will keep an eye on the stock , currently off by 16 . This is bloomberg. Joe you are watching a special hour of whatd you miss . Populism in the Global Economy. At a chart going back to 1980. There is an extraordinary period of globalization, free migration, all that stuff, and if it willn is change. So lets explore the question of how populism might change the barriers on all this stuff, talking with George Magnus of the oxford center, an independent economist. Of trade,s golden era arguably, going back the last several decades, and there are now people in power who perhaps want to roll some of this back. Lets start with some of the ramifications. Some of the winners of world trade like china and germany what will happen to them . Mr. Magnus i think if we ended up with trade conflict, trade wars, which they are colloquially called, and you found, for example, that the u. S. Administration levied on chinese automobiles or sectors in china, there was retaliation, and so on, and if, or example, there were stats for example, there were spats that cropped up, generally speaking, you would expect some countries to fair less well than the deficit countries because the surplus countries depend more on trade for generating growth than the deficit countries at least that was the case in the 1930s. I think that china and germany germany has a current account surplus as a share of gdp, which is three times that of china. Its not the biggest in the world. Germany does stand to lose a lot if the world goes into a kind of trade conflict. The fear is trade protectionism is contagious. Once a country starts raging raising trade barriers, another country will have to do the same. Does it leave no room for a winwin outcome . Mr. Magnus once it moves to the point where this kind of aggressive policy action is taken against other countries, there is no winner. I think it is a kind of a loselose game. The problem with all are wrestling with the moment clearly, nothing has happened yet it has just been rhetoric, but the problem we are wrestling with is the United States, which has championed liberal institutions and trade and investment system in the world since the end of world war ii, if the United States walked away from that role because it believes that trade is a zerosum game, that you can only have one winner, and bilateral is a ms. In and pluralism and multilateral agreements are out, the danger is that you get unilateral actions designed specifically to improve the u. S. Trade allens with china or with some other country, and then you get retaliation, and then other countries are brought into that because we do have Global Supply chains. The navarro view is that Global Supply chains do not matter, but the reality is they do. Joe there is a famous chart you have probably seen a million times already, the elephant chart showing that while incomes stagnated, many of the worlds poor surged. Also the extremely wealthy have past decades. The could you have a situation where you say we are not worried about global welfare. Could you have a situation in which brought about higher wages via erecting trade barriers . We could have a big argument i dont mean we, but one could have a big argument about that from the point of view of trade theory and practice. The idea that protectionism could lead to welfare gains for american workers, for example, or french workers, if Marine Le Pen were to become president of france. I think that is just fantasy. Wars and protectionism produces welfare losses for everybody. The solution to the problem of the elephant chart is actually very much within the hands of governments and domestic policy to manage those inequities and dysfunctional relationships that cropped up. We did not do that, so we have the elephant chart, but i think that protectionism, in my view, is a completely negative and counterproductive way of going about it. Thank you so much. As we wrap up our conversation on trade, i want to talk about a function of eu trade flows in 2015. Germany was the block cost single biggest trading partner. Whats notable is the only noneu countries in the top 10 are the United States and china. From new york, this is bloomberg. Scarlet whatd you miss . Dive into theeep bloomberg. Im taking a look at where asylumseekers are heading in europe. Part of the populist rhetoric is that an open door policy to refugees means an open door s, and theterrorist elites have been treating refugees better than the population. Thats part of the complaint. Germany is the yellow line. It accounts for 80 thats pretty massive of all asylumseekers in the eu. Green line, and greece is the white line. Of all the leaders in europe, merkel seems like one of the most stable. She has come under a ton of but she is doing well. The number one challenger and we will be talking to tina fordham later in the show, who points out the number one challenger to her right now is kind of centerleft. Scarlet its important to consider the backdrop here as the populists gain a bigger voice. Joe coming up, the man who led the ecb during the recession, jeanclaude trichet, told bloomberg today that the brexit will not necessarily lead to an eu breakup. Is morehet what damaging is the uncertainty on what will be the final deal between, i would say, both entities. I hope very much that this thing will go as rapidly as possible, certainly within the two years. Insightwill have more on who he things the winners and losers of the recent era. This is bloomberg. Joe welcome to our special edition of whatd you miss . Were examining how the rise of populism in the developed world will manifest in the Global Economy. Ago, return tors nationalism in europe was declared a matter of war and peace. If we lack the impetus to continue the project of integration, there will not only be stagnation but also regression. I thought that was fascinating. As you contrast that with what we see today, all this talk, you have to remember the eu experiment was born out of political origins more than anything else. Joe right. We talk about free trade and regulations, but there is the fundamental point he was making that its really about peace between nations. Scarlet right, making sure we do not go to war again. Downearlier today, i sat with former ecb president jeanclaude trichet, and he explained what populism means and how it is causing a type of political fear. There is anxiety and all our countries. It has been crystallizing in the u. K. With brexit combo in the u. S. With President Trump, and exactly as you said, in the. Xtreme positions that we see either extreme right or extreme left in europe. Of course, we have to take into as a realat anxiety political issue. I think that the elite has to political and all societies and i mean that and societies is a real political problem and we have to engage in education to cope with this anxiety, which is justified by this global phenomenon. Joe what you described is similar to the debates in the United States. People debate how much of it is economic, how much is cultural, if its related to immigration, refugees, issues like that. Little bit more about the specific things you mentioned job retraining, but talk more about the specific things that the italy, as you put it, need to do to ameliorate some of the anxiety, and what has prevented is so far the specific things that the italy the specific things that the , as you put it, need to do to him ameliorate some of the anxiety. Mr. Trichet economic competition is one of the reasons for this phenomenon, but also other phenomenon, like the loss of national identity, like the cultural stress associated with mass immigration, with also evolution ofd say our societies in general. The families that have dissolved in our societies, so it is a multidimensional phenomenon, and you have to take all into account. If you so all magnificently the economic problem, that does not mean that the loss of identity will not be a big problem, too, or what i call the dissolution of the traditional family. Poses a particular stress on our society and the most vulnerable part of our society. It is a multidimensional problem we have to understand much better. A level ofas political decision by our democracies. It is a wakeup call for taking very seriously these phenomena again. Few seconds have a left. As we undergo this period of change and stress and the things you describe, who do you see as the winners and losers from these changes . Mr. Trichet we clearly had a wehe potential losers probably are under assessing the rigor of the real economy when i look at the consumer surplus, which is implicit in many of our new technologies, for instance, are clearly, the winners those who are very well educated on thefing, if i may, wave of technology, innovation, creativity. The losers are clearly those who are less well educated and whose are progressively obsolete because of, again, the competition and the technology advances. We have to care particularly for those that are the losers, but again, the problem is larger, and i think we have to reflect much more, and we are not in the domain of the economy but much more of sociologists, this question of the national to aity, the belonging solid identity, which perhaps in the United States, which is a land of immigration, is particularly at stake because you need a very strong sentiment of what it is to be a u. S. Citizen. I would say we have the same issue in france. We are also a land of immigration. The proportion of the french population which has parents or grandparents at our foreigners is as large as in the u. S. The idea that the french citizen has to be defined, as an american citizen, which has nothing to do with ethnic origin or sensitivities or religion, but which has to do with a sentiment that you belong to citizenship, which is based upon the attachment to values and ,ttachment to liberty, if i may is something which is very, very important. Joe that was my conversation with former ecb president jeanclaude trichet. Coming up, we will be speaking to another european leader. Former italian Prime Minister mario monti will talk about italy as a microcosm for the eu and what it can teach all the leaders grappling with todays problem. Lululemon falling sharply after forecasting earnings and revenue for this quarter that mrs. Analysts ses analyst that mis estimates. The ceo mentioning the company has had a slow start. The other big leaders Conoco Phillips after the Energy Leader agreed to sell some of its canadian assets. From new york, this is bloomberg. Joe this is a special whatd you miss . Our dedicated to examining the Global Impact of populism. If you are new the bloomberg terminal, check out tv. Check out our markets. Great way to consume tv. Scarlet we saw five out of 11 sectors gaining. Not as active as monday and tuesday were. Scarlet when nation that has faced political and economic instability is instability. The country is contending with a banking crisis, almost 12 unemployment, and voters were skeptical of the eu. They are flirting with the same kind of populism seeing gains elsewhere. Former Prime Minister Matteo Renzis Democratic Party as the runnerup coming in at less than 27 percent. We want to welcome now mario ofti, former Prime Minister italy. Good to see you. Thank you for joining us today. Lets stay with the fivestar movement because they are poised to perform well in the next election, whenever it will be held. Why do you think mainstream parties in italy have lost public support to an upstart like fivestar . Mr. Monti mainstream parties have been losing support in many countries. It remains to be seen how substantial the loss of their public support will be on the date of elections. Sometimes people tend to think votedeeply when the actual is cast than the polls. One must say that after the brexit, there has been a string defeats. Or large elections, general in germany, where they will vote in september, however it goes, it seems to me the case that it will either be chancellor merkel. R Martin Scholz with shall see, of course, and france. Isis as if the discontent understandably conveyed, and then there is perhaps a rethinking. We saw matteo, renzi step down after he failed to get his referendum passed on constitutional reform. What did you learn from the approximately year and a half you were Prime Minister of italy about the difficulty of reforming politics and the economy . It is difficult but not impossible. It helps if those in government convey clearly the situation without any allusions to the people. In the days i was asked to govern italy, the financial ,ituation was indeed dramatic and under the auspices of the president of the republic, i called upon the three main of the parliament. Centerright, mr. Berlusconi, centerleft, mr. Visconti, and the center, to get consensus on what italy had to do urgently in destinationid greece, as it were, in financial terms, rather than stress their individual differences, and it worked for one year. Italy has been the only country of Southern Europe to go out of the financial crisis without the need of any external support. Then, of course, there were elections, and each party reasserts their own identities. Italy is often described as a microcosm of europe with an income of productivity gap similar to what we see in northern and Southern Europe. Or untriedy proven policy that might be able to do so. Mr. Monti this is an historic difficulty. I wish italy were able to overcome divisions as germany was able to do that. The problem is that divisions between north and south in italy are much more deeply rooted in fairly shortlived divisions between western and eastern germany. It is largely a problem of culture. It is also a problem of law and order. I must they that in recent years, the italian state has achieved considerable success against organized crime and the south, but obviously, that is not enough yet. What are the frustrations the renzi government perceived . They feel they are at the mercy of germany, that they had these fiscal handcuffs that prevent them from engaging in the countercyclical stimulus that might make reform easier in the short term to swallow. What are the lessons other european leaders need to learn, and what do they need to offer countries like italy, greece, portugal other countries that are having recurring growth to give them the ability to make these fixes to their economy . Mr. Monti i believe the European Union should, with the consent of Northern European countries, be more forthcoming in allowing investments. Not only private investments, but public investments to be exempted from the straitjacket tactics. On the other hand, i believe countries in Southern Europe should not have the wish for tovey the wish of going back earlier days before the single currency was there when the belief in those countries was tot it would be sufficient increase the publicsector deficit in order to grow. That has clearly ruined countries like greece, to some , so we need to find and i believe it is not impossible to find a balance with the north of avoiding the impression that it wants to condemn the south to insufficient growth and the south avoiding the impression that it wants to circumvent the rules. Scarlet final question to you who or what wins from the rise of antielite and antiestablishment sentiment . Is there a victor . Victor . is there a yes, the enemies of europe, but i think Public Opinion will have of thorough consideration that if we destroy the European Union, we are going back to a europe of wars. Joe mario monti, former prime italy. R of thank you very much. This is bloomberg. Scarlet this is a special edition of whatd you miss . Weve spent a lot of time looking at the consequences of europe, but maybe the greatest populist victory was the election of donald trump. Chiefto a jeep Global Political analyst for citigroup. We began by asking if donald trump is now governing as a populist after his populist campaign. I think the term is being thrown around quite a bit. If we say he ran as an antielitist, then, yes, he is continuing with that. I think what is different about him than other republican is really note trying so hard to appeal across the base of the whole party but to his core supporters. That is what we see so far. Not much has surprised me about the policy, but we have talked about the factors that would lead to early action from the president. We saw the executive order on climate change, but some of the surprises like the failure in the house last week to underscore, i think, that he is not a traditional republican. Traditionalot a republican, but he also has not been to get anything done legislatively. The people he has surrounding him do not necessarily have any ideological coherence. People like gary cohn on one end and also peter navarro. What does that say about his ability to be able to move significant legislation and change the nature of this policy . The u. S. Presidency, the office of the presidency is relatively weak. I think President Trump, with his executive style, has been a bit taken aback of how unlike a ceo, who can line of his deputies and say make it happen it does not work that way. Members of congress are always keen to show independence, even from the same party. This is where markets misread. Prospects for major reforms are probably better now than i have midtermssome time, but mean that it is just not that simple. We have what is going on in the United States and Upcoming Elections in france and germany as well. Beyond that, what would you say are the next hot spots for populism around the globe . Going tom if we are answer that question, we have to define what we think populism means. I dont think it is a particularly rightwing phenomenon, although it is typically described that way. We are at a time when the terms left and right themselves do not mean very much. Authoritarian populism is something that has been studied by the university of ethics, and those features include lack of support for human rights, for gender rights, demand for strong leadership, and more economic intervention, so protectionism. What we mean and markets when we think about populism, we mean political outcomes that might lead to more economic disruption at the primary level. Our road, aped down look at other factors. I am particularly interested in what i call the soft drivers of this phenomenon, including really a lot to do with unease about globalization. The pace of change, particularly technological change, cultural identity, which manifests itself. There is a lot more going on in my view than just the economics. To answer specifically, for europe and this has become an advanced economy phenomenon, but really it is u. S. And europe. It is important to look at where we do not see populism in the ,dvanced economy like canada japan, australia, new zealand really not showing this populist juggernaut. Worry about italy, the fivestar movement at the top of the polls, but i wanted to make an observation if i could about how i also think that this theme in politics is evolving so both the fivestar movement in italy and Marine Le National front have both taken off their Party Platforms the rhetoric about referendum on the euro, and that is what worries investors about all of this, the risk of europe disintegration. Scarlet that was tina fordham, citigroups chief Global Analyst in new york. From new york, this is bloomberg. Continuing our theme, dont miss the french elections in april and the german elections in september. Im alisa parenti, and you are watching bloomberg technology. Lets start with a check of your first word news. British Prime Minister theresa may has triggered article 50, marking the official end of britains membership in the eu. A senior european diplomat says the eu will not seek to punish britain for leaving the bloc, but it will be presented with a divorce bill as high as 63 billion. Hasation secretary devos accused her predecessor of thes her signature signature project by duncan did not produce any significant improvement. President trumps daughter ivanka is joining her husband as an unpaid adviser to her father. She already has a west wing office. Her official title will be special assistant to the president. Ar husband, jared kushner, is senior advisor. President trump is creating a commission to address the opioid crisis. New jersey governor governor Chris Christie will lead that commission. Pre