francine: asked to liquidity as the bank of england make sure there are enough finances for banks. he did not talk much about brexit. is the eu really stronger than we think? 25%.'s exports tumbled there is a challenge for policymakers as they target 6.5% growth. tom keene is in new york.

we have a busy day ahead of us. we have some great guests. the mood in the markets is often haven assets. tom: we see some weakness across all. i love the guests we have. to dive into productivity. we are doing around the world in 120 minutes. >> thanks very much. the european union is getting closer to a deal with turkey to stop the flow of migrants. jacked up thehey price at the last moment. the turkish government wants to double the financial aid to more than $6 billion. turkey made the most serious offer yet to stop the tide of refugees into europe. malaysia is marking the second

anniversary of the death -- disappearance of that boeing jet. they are committed to solving the mystery. ships are searching the southern indian ocean this year. china's president thrown to punish polluters with an iron hand. there is evidence that iron hand is loosening its grip. there has been a number of days where air quality was listed as hazardous. balancelem is the between the environment and commerce and michael bloomberg said he will not enter and run for president. michael bloomberg is the majority owner of bloomberg. the front car of a commuter train punched into a creek after

derailing. nine people injured and authorities say it was a miracle no one was killed. the train was traveling to stockton. our 2400ered by journalists. over to you. tom: thank you so much. it was a quiet day yesterday. we pulled back today, futures are -15. by a good sixen basis points. that shows the pullback. let's go over to the next screen. fixes 17.35. there's the dow, nicely placed after a good three-week run. part of that flight to quality is stronger japanese yen today. francine: that was also on my

board. you can see stocks are up 600. the yen you can see at 112. copper is falling. this is on the back of weakened japanese data. chinese exports are shrinking more than expected. u.s. treasuries are falling. we just heard. he did not talk too much about brexit. he said that he won't publish the full analysis of the brexit issue. he does not want to be involved in the political debate. he has been trying to avoid talking about it. he did say one thing that was significant. he said they have the tools to deal with any financial ability -- stability. that's different to what we've heard. tom: that is very different. francine and i don't talk about what's on our data check ever.

we never talked at all except if it has to do with the butterfinger candy she brought back for caroline hyde. it's important that we see the same thing. let's go to the bloomberg. this is the theme to the program. this is the four year moving average of american productivity. i moved out the quarterly data. this is the expansion in the last decade. greenspan was way out front and identifying this good productivity. this is the mystery. right now.re one of our big themes today. england: the bank of president is still giving his testimony. is john.s

thank you so much for joining us. he made it clear he's not going to get into the brexit of eight. he did not share the views with the cameron. he is independent. what do we actually learn? he has a handle on the situation. john: he may not want to talk about brexit much. he is going to be forced to do it. they want to propagate the idea that they are politically neutral, but everything takes place in the context. the bank is in a little bit of a bind here. it's going to be jumped on by --h sides of the debate debate. it could be used to suit whatever arguments the side of the campus to make. francine: we can remind ourselves that the last governor was in front of the same committee. he said he did not have the

tools to ensure financial stability. mark carney says they do no matter what happens. john: they can be told that whatever happens on either side of the date, you can do it. tom: i know you are the one guy that can talk straight on brexit. mere you explain to mortals what london has to fear? i don't see a replacement for london. i don't see luke johnson moving to europe. explain to me why i should be worried that london will be diminished if the u.k. exits. i think it will be improved. i think there are regulations

and restrictions around us as part of the eu. i think pain in greater control of our destiny and a more democratic nation, less beholden to on elected bureaucrats in russell's will be healthy for london. i think we will thrive. kingdomng up the united of gdp chart. this is real gdp. luke has this tattooed on his left arm. the u.k. is one of the great successes of the global economy. there is that little bit of a recent rollover. do you link this into your analysis of greg's it? -- exit? global think it's a factor like the commodities decline in the slowdown in china and brazil and other countries. i don't believe the exit is inhibiting growth. francine: you need to find a

chart that talks about sovereignty. it's very clear that luke is on the brexit side. this will harm the recovery. the risk of brexit is hurting investment. luke: i don't know that that's proven. the investment and political move should be dictated the long-term consequences, not short-term volatility what's comes and goes. -- which comes and goes. do we have sufficient toxibility in our system thrive in the 21st century? locking ourselves into a rigid system with 28 countries that can't agree. we are not part of the eurozone, which is a failing union. we don't want to be part of an ever closer union. i don't see why we should remain

part of a project it isn't succeeding. tom: you read 14 papers a day. how organized are the pro-europe crew in the united kingdom? how organized are they right now? john: it seems like there is a reasonable amount of organization. determination not to repeat the mistakes that were made in the run-up to the contract. the business elite left it too late to weigh in on the side of staying in. energyseeing a lot more on both sides and more organization on both sides than we saw in the run-up. there are a lot of nuances here. a lot of people say it's better staying in and renegotiating. some say we are better off with

sovereignty issues. what do you make of the concern? people panic and you see a shock. this is when we did when we met lehman go. we will have a minimum of two years to renegotiate our trade agreements. we are the fifth largest economy in the world. i don't see why we will falter. currencies fluctuate anyhow. we export less to europe than they export to us. interestbe in the eu's to see us not succeed. tom: thank you so much. luke will continue with us in the hour. we have huge news on china this morning and their lack of exports. in the next hour, we are bringing you deutsche bank.

we will talk about wall street as a utility bank. this is bloomberg "surveillance."

tom:tom: francine's fired up in london over brexit. what a great conversation. tuesday, herehis is remy understands io. overseas shipments in china fell 25%. that is the biggest decline in seven years. slowdown in global trade is

making it hard for chinese leaders to keep growth in the target range of 7%. nike has suspended its contract with maria sharapova after she failed a drug test. forhad been taking a drug health reasons for a decade and did not notice when it was put on the banned list. she signed an eight-year deal worth $70in 2010 million. shares of burberry are searching. is luxury goods maker looking at a takeover offer. they are prepared for a bit after a mystery investor took a 5% stake. that is the business flash. francine: i spoke to burberry sources last night. tom: i'll bet you did. francine: she said they are monitoring the situation. when you go above 5%, you don't

have to disclose who you are. this person went above 5.4% but then came down. they are trying to find out who that mysterious person or group of people is. it could be an activist investor. they are looking good the moment. tom: do you buy burberry in london or do you buy it on 57th street in new york -- and mark --? francine: a lot of people are shopping around. they are not speaking to the worldwide traveler. if we talk about brexit and the pound goes down, i might start buying it back here in london. we have a very well-known entrepreneur who is pro-exit. we talked about your reasons. my argument would be why take a risk?

we don't know what the u.k. would look like. this could hurt innovation and entrepreneur is him. -- entrepreneurism. luke: innovation requires risk-taking. i think the for countries to thrive, they need to evolve. they can't remain static. one of the great problems of the eu is it's not very good at creating jobs for innovation. tom: but the u.k. is. luke: i think some of the regulations and restrictions that we suffer under the eu would be lifted. would have a resurgence of belief in democracy. i think the eu has in a way damaged the people's faith in politics and political leadership. i think that is, across europe.

francine: unlike the u.s.. luke: i think if there were votes, it would be closer than you think. the dutch and the danish and the germans are looking at us, saying how come they get to vote? there are many other challenges of making the eu work. tom: you are a fossil in this business. where do the young kids want to be? i know they want to be in berlin. we have cool people like hans nichols, they want to be in berlin. everybody wants to be in london? london is thriving thanks to bright younger people and older people as well. they are starting businesses. they are generating investment.

growth and job creation are at the top of the tree in terms of the eu. we have pretty good demographics compared to other members of the eu. we have a better pension provision. i would say there are many being independent. can paris or amsterdam ever compete with london? luke: they are wonderful cities. i think in financial terms and entrepreneurship terms, they will not outpace us. tom: luke johnson will continue with us this morning. tomorrow, we are thrilled to lse. the this was my book of the year last year. brexit.talk about

this is bloomberg "surveillance." ♪

francine: we were saying than mark carney tried to avoid the brexit debate at all costs. he didn't want to get sucked into this. he is being grilled about how it could affect the pound exchange rate. he just gave us a glimpse of what could happen if the u.k. were to leave.

brexitso tied with the debate. it's time for my morning must-read. this is by mark gilbert. the regulators don't want you doing anything exciting. the public despises you. johnson, one of the best entrepreneurs we have had in the u.k. is still with us. carney you make of mark saying it may affect the exchange rate? people said when we joined the euro that if we didn't they would be doomed. they were all wrong. i think we will prosper. there may be short-term volatility, but we will overcome that. tom: you are a non-banker, i get

that. how do you perceive u.k. banking not restructuring to complete the european tanks? -- banks? barclays, hows, do they pull that off? luke: i think it's really tough. being leads they are by the regulators. they are finding it hard work. attracting example talent to banking is more of a challenge than it was. ,here are many plate people they are now becoming entrepreneurs. that is good news. if they start successful businesses, that will be good for the economy. we don't want to lose our banks. mba courses, the

most popular career would have been investment banking. now, i'm certain the largest would look to start their own business. i think that's good news. you very muchk for this spirited conversation. coming up, she is the jpmorgan vice president of asia-pacific. we will be asking her about emerging markets and deflation and devaluing. that's coming up next right here on bloomberg "surveillance." ♪

tom: good morning, everyone. bloomberg "surveillance." right now, here's remy.

and: it's primary again republicans have four states. is michigan. hillary clinton leads in michigan by double digits. bernie sanders is doing better with younger voters. justin trudeau says donald trump may turn -- 10 down his rhetoric. he meets with president obama this week. he suggested the things trump needs to win the nomination are tongs you won't say resident. a magistrate ruled last week that apple did not need to cooperate. they have helped the government on leak -- unlock iphones in the past. tomakers are considering

give police more power to fight terrorism. there was a bomb in gun attack in the capital blamed on islamic state. the government want police to be able to detain a suspects for up to six months. syria, the u.n. has begun providing food to a rebel held area outside damascus. the cease-fire has made it in to help some of the millions of people displaced. we are powered by our 2400 journalists. thank you so much. concerns over japan's re-inflation program are boosted by numbers. in china, exports tumbled 25%. in february.epened it's been challenging for policymakers to keep the economy moving along.

it's great to have you on the program. it's great to have your thoughts on this ominous day. they have a 6.5% growth target. these exports are worrying. jing: the numbers are not surprising. the month of february is a short month. there is chinese new year. we can't just look at one months number in isolation. pictureook at the trade , china has suffered from a decline in exports for the past 12 months. this month, we need to take in conjunction with january figures. going forward, when the holiday season is over, we can look at the pattern. the most important thing is we know china can no longer rely on exports to drive growth. that makes it more important to stimulate the economy. francine: the problem we have

heard is they want to focus on growth. toy will do what it takes get growth where they wanted to be. what does that mean for reforms? jing: this is a fine balance between reform and restructuring. china has unveiled a host of reform programs, including a supply-side reform. sectorve a financial reform. china needs to stimulate the economy because growth cannot fall too far. you will have unemployment. in 2016, we can see the supply-side reform unveiled. creating means is industries like steel and aluminum where there is a lot of overcapacity. the government will reduce the supply. they will get down on housing inventory. tom: you and i are on the same

page saying a one-year average. the yellow line is the one year moving average. this is remarkable. and the down in exports depth of this back 20 years. we have never seen this before. chronic we seen this export slowdown and is the solution a currency depreciation? jing: tom, there are several reasons. there is a global economic malaise. experts --ely on exports to drive growth. the current environment is different. was weaker currency last year against the u.s. dollar. it was stronger against other currencies, including the yen

and the euro. tom: this is critical. what is the prescription from you and jpmorgan to jumpstart this? against aart managing basket of currencies? the forwards solution. tothe past, people were used the relationship the dollar. the chinese r&b should be looked at other countries in the basket. year,december 11 of last when the index was unveiled, we have seen a stable exchange rate against the basket of currencies. u.s.u are expecting the dollar to be stronger compared to the pound and the yen and the euro, the chinese would be weaker against the dollar. francine: what have we learned

from authorities? he started speaking. given what we have heard from the air, they are pushing didn't monetary policy. how can we understand what they mean? communication has improved in china. silence from the central bank governor. now they have broken the silence. that is very good. many senior officials of come out to speak. this has eased some of the concern toward china. in terms of monetary policy, the phrasing is an easing highest. that is a code word. francine: can we see more intervention as well -- and mark -- well? jing: they are going to

undertake open-market operations on a daily basis. tom: where is hong kong in five years? we have really moved on from the excitement of the shift over to china. there is hong kong in five years? jing: hong kong has been a big beneficiary of the connections with china. the hong kong economy has boomed. years, hong kong has experienced many challenges because of strong dollars. hong kong is very expensive to do business. land costs are very high. forward, hong kong has to continue to reinvent itself. the major advantage is its close to china. is theng exchange listing avenue for many companies. i think in the future, you will see more conductivity between

the exchange and the mainland exchanges. ais year, we will have connect introduced that will bring more international capital to china and bring more chinese capital into hong kong. he will continue our discussion with jpmorgan on china. some very difficult export data. they are moving to a 12 month study or a three-month study versus one-month data. morning, an this important conversation with the chair of the securities and exchange commission. look for that in the 8:00 hour. this is bloomberg "surveillance." ♪

francine: tom keene is in new york. we talk a little bit about women in the boardroom. we talk about what is. jpmorgan vice chair of asia-pacific is here on international women's day. how different is it in china compared to the rest of the world. we talked to a lot of female ceos. you don't need quotas because of the back story of the chinese communist party. jing: women in china have enjoyed equal status with men because of what chairman mao ago, women hold up half the sky. there are very few female ceos. boardroom, the chinese boards are very different from western boards. the way they operate is completely different.

i would say in asia in general we are seeing the rise of women in the corporate world and in political leadership positions. in situations like japan where they face a demographic challenge, they could include more women in the workforce. francine: we talk about women and economics, this is one of the big research centers they are trying to promote. i picked out a morning must-read from the world economic forum. if you look at the place women revolution,ustrial the job losses will be for women. a computer and laptop, people don't need to know that you are female. jing: there shouldn't be any

gender discrimination. there should not be any racial discrimination. if you are capable and productive, you should be contributing to society at large. when you look at the western world, women make up a very small minority. hopefully things will change in the coming year. i think in china as well as the west. tom: this is the drop jack -- backdrop to your wonderful career. this is always among the elites. the public can effortlessly afford childcare. there is a broad body of middle-class women and working class who have no support. the you suggest any policy change in the western world to support the broader working-class woman it? i think society and employers and governments in general should provide more

support for working women. aftery have children giving birth, they should be allowed to take more time off. if you look at the situation in china, you have some demographic challenges. we have an imbalance between men and women. women than men because of the one child policy that has lasted for 35 years. going forward, you have a lot of women working in blue-collar jobs. there are service industries as well. they are assembling electronics. a lot of their efforts need to be much better recognized by the outside world. tom: contacts policy work? i look at my income tax form. i am amazed that we can't have tax policy drive forward the most basic of home care value. it's a modern idea.

affected january 1 year. jing: it's always complicated when it comes to tax matters. you have many governments who want to have a say in how much you can be taxed. i think it's a very complicated situation. a concerted effort on the part of governments and employers and society as a whole to support more women in the workplace. help them move up the echelon in the corporate world. francine: what do you think about japan? it doesn't seem to be quite working. is it cultural? idea, ifs a very nice we include more women in the workforce in japan, reverses

demographic challenges. there are deep-seated challenges. women have not been the workforce. they are usually in secretarial positions. i think this will take a generation for young women to come up and be more educated and really come into the world and become leaders rather than just junior support staff. her we will continue with in london. we have a wonderful week lined up for you. we have a former director of research for the international monetary fund. we are really looking forward to it. that's what we try to do here. this is bloomberg "surveillance." ♪

tom: good morning, everyone. francine is in london. now to our business flash. remy: there was a big jump in german industrial production. that rose in january by the most in six years.

demand is still strong in germany even though experts have -- exports have cooled off. there is an opportunity for parish investors. the london metal exchange is up since mid-january. top and aluminum will drop as much as 20%. that demand grows and will not be sustained in china. pimco says investors should move out of government securities. return fund next the u.s. will avoid recession this year. companies high-yield will offer better returns. that is the bloomberg business crash -- flash. today is the main news markets and finance. we heard mark carney talking about a potential brexit. here in the u k

that they will form close ties with china. we saw three trips with david cameron and boris johnson. is that right? the chinese have great ties with germany. will they be number one? jing: the german economy is much larger than the u.k.. china has good relations with the u.k. and germany in terms of economic ties. look at what china has been doing. we have had a lot of interesting outbound investments from china into the european union in general. china has purchased a lot of capital group companies. invested elsewhere. they have been booming as well. everything from luxury goods to

autos. all of those have enhanced the relationship between china and germany. we will get back to you. let's get to the biggest power producer. the company announced this morning that it would cut 2400 jobs in the u.k.. 300-2000fter losing customers. thank you for coming on. you have the credibility with your customers. how do you regain it russian mark -- it? >> we have set up a restructuring program in order to get our interest back under control. we had problems with their invoicing and billing services in the u.k. retail business.

we are on a good track to get these problems solved. we will be back to normal profits by 2018. timeit sounds like a good to bring in mckenzie. you were at mckenzie. you need to consult to a venerable firm that is in crisis. the stock is moving from 98 to 11 euros. what is your to do list? what is your number one message to your 59,000 employees and shareholders? the number one message is keep doing your business as you've done operationally over the last year. support the restructuring of the group. tom: i look at your business and

i see the word hedges and my radar goes up. risks if thee hedges in the utility business don't work out. it's not gold-mining. explain to us the financial risk if you are hedging and it doesn't work out. we are like many other utilities selling our power generation volumes. this is against forward prices in order to reduce the price volatility. means thation, this after a couple of years the prices will have fully materialized. and provides a time buffer nothing else.

francine: customers left your company because of knowing failures. how many more will leave? we can't give you a precise forecast on that number. we are confident the numbers will not continue as they have done in the last year. we have moved up from the last place. we are ranked number three in terms of customer complaint. are confident that our improvement programs are starting to materialize with the customer. tom: thank you so much. he is the cfo of rwe in germany. the challenges in the united states and we see the same thing occurring in europe. he was talking there

about customer service. because we are much more connected with social media, once you lose that trust it's difficult to come back. we are talking about system failures. this is serious. tom: it's a great challenge. we need to say thank you to jing for her perspective. we will talkour, about the future of wall street area deutsche bank will join us and we will talk about an essay on the nations productivity. it's great in our next hour. this is bloomberg "surveillance." ♪

is the new wall street a utility? .n this hour, sallie krawcheck

we consider the arch issue in 2016 america. productivity is flat-out unacceptable. today is a blue-collar vote. the michigan primary tests than many candidates. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. i am tom keene. with me, francine lacqua. we are focused on michigan. comments are being made on brexit. francine: the problem is that he cannot win. he is trying to make comments on britain, but he has to make comments on financial stability. but he is being accused of being biased. he cannot win in this at all. yellen will6, chair comment on brexit. right now our tuesday first word news with ramy inocencio. ramy: the european union is

getting closer to a deal with turkey to stop the flow of migrants. brussels,ummit in turkey jacked the price at the last moment. the turkish government wants the e.u. to double its financial aid to more than $6 billion. in return, turkey made its most serious offer yet to stop the tide of migrants. malaysia is marking the second anniversary of the disappearance of the boeing 777. the government is committed to solving what it called the agonizing mystery. ares looking for the plane due to search the indian ocean this year. threatenedi jinping to punish voters with an iron hand. there is evidence that that hand is loosening its grip. there have been a number of days when air quality was listed as hazardous. betweenlem is environmental protection and economic growth, which slowed

last year. michael bloomberg says he will not run for president. bloomberg said his entry could benefit republican front runner donald trump and lead to an unresolved election that with then be decided by republicans in the house of representatives. bloomberg is majority owner of bloomberg news parent bloomberg lp. the front car of a commuter train plunged into a creek after derailing. and people were injured, authorities say it was a miracle no one was killed. it was traveling from san jose to stockton when it struck a downed tree. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i'm ramy inocencio. tom: let's get to the data check before we get to our guest. equities, bonds, currencies, commodities, a day off after egg magnificent three days. -- after a magnificent three days. down futures, -1.28. ,ou see the equity market

17,100 on the dow. 1.13 -- to quality, yen 113. ,rancine: treasuries rallying and reports are showing that chinese exports are shrinking. we have the breaking news from the ocd saying they are seeing signs of growth. the 10 year is what i chose because mark carney, the governor of the bank of england is under fire because of his stance on brexit. thisyou wonder where conversation is going to be in april and on into may. let's go to the bloomberg terminal. what a response we have had to konstam appearing. we will talk about this later in the hour as well. writes notesam

everyone has to read on wall street. he has done it for years. now i deutsche bank, he is the global head of research. bank -- now at a deutsche bank, he is the global head of research. dominic konstam with us. i want to talk about negative interest rates. it is not in your note this week per se, yet it terminates that yet it permeates every conversation. back in 1511 when they start of the college, they were not talking about negative rates, were they. dominic: the famous one was in 1932, and a lot of people have been writing about them for a long time. stanley fischer had a whole list of references in january on the history of negative rates. tom: how should we treat them? them about her at citigroup says that unless we see financial

instability there is no cause for concern. do you agree? : if the prices are falling, if nominal -- if nominal growth is constrained, the economy will be negative. maybe from a policy perspective you need to have them linked. francine: the financial system was different then. now they permeate into everything we do. they have a direct impact on liquidity. are you concerned that we are punishing the banks too much? if you are, then mario draghi should not go into further negative territory tuesday. is, do youe first want to have a very healthy banking system in the private sector? think everyone would say absolutely yes, in which case you definitely go to the second

issue, which is you need to make sure that banks earn less bread. if the equilibrium interest rate is negative, they should be largerd to charge a negative number. and giving back that money, if you like, in terms of negative rates, paying mortgagees. you can have a proper banking system with negative rates, it just the way that things are done at the moment, your constraining -- you are constraining. you constrain them on the asset side through qe. some people say that is a good thing because you should get them out of securities at a low yield, if not negative. there are moving parts, but you should not throw out the idea that negative rates are a silly idea and you should ignore them. francine: what should mario draghi do on thursday? he can also go back to forward guidance. has that worked? dominic: i think that the first

thing obviously is his deposit rates. that opens the way to more qe, and there is the argument that bank lending is beginning to improve. i think the second order right now, to adjust the concerns around bank profitability, they can certainly tier the positive rates. they can certainly talk about other things on the qe program. they did not have to do it yet. there are lots of things he can do. i'm sure he is going to do enough, and then lay out other measures if necessary. tom: math time with dominic konstam. we love to do that. on aannot do longs negative rate. you cannot take a picture of a negative interest rate showing that slope matters, rates of change. i have grossed up a negative positive by adding 100

basis points. here is the negative rate line. here is where we were. we come down, and i'm sorry, , thisc, this convexity acceleration of negative rates taken positively here is cause for concern for mr. draghi. denmark, japan -- does anyone have control of their destiny if they go to ever further negative rates? dominic: yes. they clearly have control. it comes back to the same issue. if prices really are falling and nominal growth is stagnant -- tom: they have got to go there. dominic: negative rates as a fiscal policy, where you tax in order to bailout debtors, the issue becomes very political. the germans do not want to be

taxed in order to pay a bunch of debt to some italian bank, so that is where it becomes an issue. in the u.s., ironically, you could argue a lot of people would like to see the savers get taxed to help the guy who has a very large debt. you could also do it through wealth tax. tom: but this is absolutely critical. it is negative rates another round of the plutocracy speaking? is it the elite saying that we make the rules, we are going to negative rates, and the hell with the public? how can a saver make money on a negative rate? dominic: negative rates arman of the most -- negative rates are one of the most socialistic experiments. negative rates help the person because what it does is, it takes money from someone who is saving it and giving it to someone who desperately needs it. now if you are retired, you will say i hate that.

that is the problem, you have an aging population. francine: you said, "if done properly." what does that mean? is the three-tier system in japan wrong? dominic: it means that the banks should be allowed to make sort of a minimum amount of money so they stay in business. we are not an executioner. we are far away from any concerns about that right now. global banking is not a major issue in terms of liquidity. but if you are going to end up with nominal growth being stagnant if not negative over the next 5, 10 years, you will have to do with negative and just. if done properly, it means you have to allow banks to charge. tom: you have a point where banks change rates, -.75. do you have a number for that? dominic: you have to make sure cache does not leave the banking

system. you need to tax cash. you can do that technology wise. the cash in your pocket will be worth less every month. but if you go to mortgage you will receive a check every month. tom: we are going to come back with dominic konstam. i want to dive into his important paragraph on america's productivity. on bloomberg radio this morning, looking at active and passive management. jack vogel joins us with an update from vanguard. we will speak with him about a single digit investment world. "bloomberg surveillance." ♪

lacquae: i am francine in london, with tom keene in new york. the conversation is on finance, economics, and also markets.

let's get to the bloomberg business flash with ramy inocencio. ramy: voters of small businesses in less conference -- voters small businesses are less confident in the american economy. six of the 10 indices that make up the report declined. contractsuspended its with maria sharapova after she failed a drug test. she had been taking a drug for health reasons for a decade and did not notice when it was put january 1.ed list cherub homicide an eight-year deal with nike in 2010 worth $70 million. in london, shares of burberry are surging today. they are setting up defenses against a possible takeover offer. its advisors to prepare a bid after a mystery investor took a 5% stake. that is the "bloomberg business flash." burberry we think that

may now be a takeover target. so we do have a mystery person or group of people going up to 5%, but why burberry would be attractive is that first of all we have seen a little bit of pressure on the share price because of its exposure to china. it is one of the only freestanding and free-floating luxury companies left out there because we have seen so much consolidation in the industry. tom: you wonder if one of the french conglomerates in the fashion industry is making a dash here. let's go back to dominic konstam with deutsche bank. my "morning must-read" is off his research note. this is must-read for global wall street. this wasought

absolutely brilliant. the rollover we have seen in productivity. let's start with how the fed should look at low productivity. how should they study it? how should they folded into the march 16 meeting? dominic: they need to try to understand what is causing it, and specifically whether it is a supply-side issue or a demand side issue. i'm pretty sure it is a demand-side issue. issue,s a demand-side they are both warring, but a supply-side issue is something we could do more about by having puzzled see -- by having policy be more positive. tom: the headline item, speaking with chairman greenspan a few days ago in celebration of his 90th birthday -- this is not 1995. this is different. the ratio of the dynamics of capital investment is radically different than the labor dynamics comparing capital to labor. tell us about the labor dynamics

in america, what we get wrong. middle 1990'se there was an investment boom that was so dramatic that the capital labor ratio was growing extremely strongly, around 8% in the late 1990's. now it is about half that. it is very low. what has happened is although there have been investments and ,nvestment rate is quite high, there's almost a sense of over employment. we have added jobs without productivity. tom: this is so important to move from capital deepening, which is a phrase from where we were younger, to where we are now, to almost too much labor coming into the market, given actually pretty good investment. francine: this goes to the heart of what the u.k. is seeing. my question, which is very easy but difficult to answer, are we ever going to see productivity back to the way it was because of regulation?

dominic: that is a tough question. .t is very true on the secular stagnation today, we have had disappointing productivity for 30 years, but the late 1990's was an exception. i am sure there will be a boom that is demand led. we will have a few years where it will look good, but there is a concern that these things go in long cycles, and through this generation we may not see something for a while. francine: and so what data would you be looking at to help us understand that? there is a school of thought that thinks we need to rip up the script, as tom keene would say, that the way we look at finance and economics has completely changed the last six years. supply createsk its own demand, so technology is

there. i think we need to see a demand sort of boom that props up that supply. i think there is a demand issue. see a verye could prosperous trend. but those rates are too low anyway, and they are tending to rise. if the government is not doing any fiscal policy, then that is not going to happen. those are the things you want to look for. is there going to be fiscal stimulus? tom: bring up the chart of productivity, capital labor and the dynamics of productivity. all you need to know is the yellow line shows the boom, and we have rolled over to almost a non-productivity. if i look at the mystery of growth, if i look at xavier columbia, where does the growth come from? it does not come from government

policy. it comes from demographic dynamics, cultural dynamics, and the new new, right? dominic: where the government can come in is basically allow people to go now and again on a spending binge, and that hopefully feeds itself. demand-side economics is important. it is not just all demographics. we have the technology. buyle cannot necessarily because they are in a deleveraging mode. tom: we will continue this discussion through the month. certainly through march 16, the fed meeting. we will continue the discussion, but we will really focus on the debate in his united kingdom. tomorrow on "bloomberg we will speak with lord desai of the global realities of exit. this is "bloomberg

surveillance." ♪

tom: we welcome all of you on economics, finance, investment, and international relations. francine lacqua focused on brexit. mark carney is speaking today. go to the bloomberg terminal to see his careful analysis. .us ave dominic konstam with i want to talk to you about your investment accounts. there is a new terminal value.

it is a lower value. are we ready for a single digit world? it is a different world than we have known the last 20 years. no, a lot of things are not ready. all of these deferred liabilities are not ready. have been having to deal with it for a few years, and japan has had to deal with it. unfortunately, there is a lot of implied force going on. the imf was saying yesterday we have major problems ahead of us in terms of health care. francine: when you look at the brexit debate, and when you fold that into single-digit returns, is this a real risk that the markets are underestimating? the brexitll, ,ebate, the rest -- the risk the markets understand how dangerous potentially the turmoil is that could come from brexit, in terms of not just

disrupting the u.k. but theupting europe, and president that may set. -- and the precedent that may set. andrisk to both the u.k. go back to you concerns of other countries perhaps wanting to leave. that may obviously require much more stimulus to try to hold it all together. francine: dominic konstam, thank you so much for later this week we will speak to the former chief economist of the imf. that is on thursday. this comes on the back of the oecd warning that a lot of major countries are slowing down in growth. ♪

tom: good morning, everyone. "bloomberg surveillance." finally a day off from the surge we have seen.

dow futures at -102. francine, looking at oil, finally giving back. francine: and we have goldman sachs saying the rally in commodities and oil will not last, so it is a tough choice for investors. it has beenchange let's get to our bloomberg first word news with ramy inocencio. primary day again. republicans have four states, and democrats have two. the biggest price is michigan. a double-digits lead there, but there are signs john kasich has been gaining ground. for the democrats, hillary clinton leads michigan by a double-digit margin, polls showing bernie sanders is doing better with younger voters. the u.s. government has appealed apple's win in a court battle over unlocking a drug dealer pot iphone. -- oh unlocking a drug dealer's iphone. thatovernment has argued

apple has helped it unlock at least 70 iphones in the past. erin andrews has been awarded $55 million over a secretly recorded video. it was you've millions of times online. the jury decided that two hotel shared in the blink or lawmakers in indonesia are considering whether to give police more power to fight terrorism. less than two months ago there was a bomb and a gun attack in jakarta. the government wants police to be a will to detain suspects for up to six months. convicted terrorists could be stripped of their citizenship. the u.n. security council sanctions were not enough for south korea. it is imposing its own penalties on north korea. south korea will prevent entry of any ship visiting north korea in the past six months. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus i'm ramye world,

inocencio. francine, on over to you. francine: today is international women's day, and we have a wonderful report by the world economic forum. we spent a lot of time in davos talking about it. the simple title is "women and work." they believe it will be 117 years before women have the same career prospects as men. it is a great honor to have sallie krawcheck with us. great to have you on the program. if there was one prescription to get more women to work, or actually closer together in the pay gap, one prescription over the next 12 months, what would it be? sallie: i wish there was one soundbite answer, but there are many. mandated parental leave -- if you let women after they have a

baby actually have a break, they are more likely to come back to work. there is a study that shows he could save companies money in the first year. closing the gender pay gap is a pretty good one, too. continuing to advance women in businesses. and the one im am focused on, the gender investment gap, can earn women hundreds of thousands if not millions of dollars more over the course of their careers. i wish there was one answer. there are several. francine: do we need quotas? tom and i spoke with madame lagarde many times, and she said she would go to countries and say we need more women in the workforce, and ceos would say they are very difficult to find. sallie: got it. we needother answer is, a pipeline. but the pipeline is as strong as it was, 10, 20, even 30 years ago. street, it is as strong as it was when i got in the

business. what happens with these inherent gender biases, where we like to work with people like ourselves, i like to work with people like myself. so we hear all this research teams that are diverse are better performing on every metric, but it gets very hard when joe is available, i would like to promote joe, he is a lot like me versus suzy. the question of quotas -- i am not there yet, but if we do not start to make progress before i die, i could not get there. tom: dominic, this is great. i have a guy with prodigious shops out of cambridge and from sanford woman bernstein that they had to duck to get out of the way of the ckoss check -- of the krawche theory. you did this by action, ability,

and sheer chops, just like this guy. everybody knows wall street is getting better. there is a better, smarter pool, in many cases, of women leading the way. are we waiting for time to get us to the way that we have women with stem caliber capabilities, or can we not wait for that time to happen? , it is not getting better. there is less diversity on wall street and pre-crisis. it is costing wall street a lot of money. why? because women are not investing to the same degree that men are. you think about my old businesses, where lynch, smith barney. most of them were male advisors and i love every one of them. but they lose their mail clients at a rate of 2%, 3%, 4%, 5% every year. in the year after the client dies, the spouse leads that same

financial advisor at a rate of 70%. -- the spouse leaves that same financial advisor at a rate of 70%. together witht ruth moore come out on the west coast, and you drag her back to the east coast, and say how are we going to make more sallie krawchecks, what is the prescription to get to sallie krawcheck? sallie: i think the schools teaching kids more stem and bringing ladies into that is an important prescription and is a key way for women to get ahead. but if we wait for business to change, here is what i think will be different. what i think is going to be different is the cost of starting businesses today is at historic lows. millions on our digital platform. um spent street for

billions. at the same time, crowdfunding is coming up, so all of a sudden for women and anybody, there are more options. if i do not like it here, i do not have to stay here or go home . i can freelance. there is more support about freelancing. tom: francine, jump in here. dominic, you have to feel good. ifeuropean blanking -- european banking blows up, you can crowd source. francine: i wanted to bring you back to dominic's world, and i picked out a quote from the world economic forum. she says -- francine: dominic, bring it back to your world of corporate activity and having -- bring it

back to your world of productivi ty and growing jobs. it may be easier to work from home and to be anonymous. dominic: it helps women, it helps anyone who does not come from a privileged background. that is the whole point. i was reading something from 19th century economics, and they got it all wrong. you do not need a revolution. you can just destroy excess profit in the system, kind of the way technology allows you to do that. people were less privileged, and that was a good thing. would you go to wall street now? sallie: i love my career on wall street. there was never a supply-sider i amread my piece and said not going to read this because you did it on a thursday night. tom: this is brilliant.

why can't we bring that attitude to the rest of financial industry? sallie: i say that the research business is a very fact-based business, and where women tend to do well is, what artifacts? the stocks that you recommend go up, the ones you did not recommend go down. when you work by metrics, you find that, again, those gender biases that we all have, including ourselves, tend to fall away. tom: do you have any women on your staff at deutsche bank act of you have to. dominic: yes. what we find -- what i base my long career on wall street is, they eventually leave for whatever reason, and it is hard to retain women so that they work through, and that is the problem without question. tom: it is still that way. sallie: here is an idea. maybe promote them. that would help. i promise, that would help.

tom: coming up on "bloomberg ," they will not have dominic konstam or sallie krawcheck. an important conversation with mary jo white. coming back, sallie krawcheck on the future of wall street, dominic konstam on the nation's capital -- on the nation's industrial production. "bloomberg surveillance." ♪

francine: i am francine lacqua in london. tom keene is in new york. we talked about markets, finance, economics, and international business -- and international women's day. here is ramy inocencio. ramy: there was a big jump in german industrial production. it rose in january for the first time in six years. even though exports have been

cooling off. goldman sachs says the rally in metals may be an opportunity for bearish investors. goldman forecasts copper and aluminum will drop as much as 20%. analysts say demand growth for the metals in china is unlikely to be sustained. pimco says investors should move out of government securities and into corporate debt. the manager of the $90 billion total return fund protects the u.s. will avoid recession this year as well. pimco says high-yield company debt and jump onto will offer better returns. that is the "bloomberg business flash." tom: sallie krawcheck is with us. we will talk about the future of wall street in a moment. this morning, dominic konstam is with us. he is with deutsche bank, writing exceptionally important research. weill not send it to you and protect the copyright of our analysts. i want to go to the ecb.

you are looking at the distribution, the choice set of outcomes mario draghi has. how small of a corner has he backed himself into? dominic: he has backed himself into having to deliver something on the positive rate cuts, on the qe, expanding the program. i think where the big uncertainty is, if he is going down the road of the ragged -- of the negative refinancing rate , we discussed early about bank profitability, and we know there is a concern among investors. the issue is for the ecb, how much should they care about it going forward? banks beingng about able to function as a proper lending entity to help the european growth. a private really want banking system that is failing on profits and losing capital. , we were dominic talking before about negative

rates more in general. we heard from the bank of international settlement yesterday that they were worried about negative rates if they for -- if they were for a prolonged tell? what is a prolonged period? two years, less? would be a worry specifically on the liability side. the idea that banks are being constrained in terms of, for example, charging depositors. for the moment you are not so concerned because on the asset side, the idea is that you are trying to jumpstart banks to make perhaps a higher risk -- to .ake higher risk loans i think that is how you have balance it. the longer it is, the more you will have to be focused on not being squeezed on the liability side, the deposit side. only on: is it currency, or does it infiltrate through the real economy?

the ecb actionk -- i think we are moving beyond the beggar thy neighbor phase. a lot of people have focused on what the ecb has done up until now about getting their currency down, getting it weaker, and taking someone else's growth. the u.s. is not growing strongly. it is ok but not brilliant. new in jeff garten's 's workingo draghi with negative rates, which in europe is a fiction. they do not have a combined fiscal policy. how can he affect strategies if he does not have the coalescence that chair yellen has? dominic: that is an issue. tom: it is an issue. that is why i brought it up. i do not want to get you in trouble with deutsche bank, but i'm serious, i do not understand

economicfects original thought across the artificial structure he has been handed. see how i brought the conversation to a halt tha? help me here. i am frazzled. fran, save me. francine: this is what we do. we save jobs. on friday, catherine mann will be joining us. that will be a great conversation, especially after we had a report saying they are a little bit more worried about germany than other countries are. ♪

tom: decline in the forex market this morning. -- 124.38 shows it stronger. francine: coming up on youomberg ," stephanie, have loads of great women on the program today. stephanie: we are loading up our entire program with

extraordinary women leading the industry we are kicking off the show with samantha power weighing in on china, the refugee crisis, and the election. we also have bryce masters, currently running digital asset. she is the woman who built the commodities empire at jpmorgan. it is going to be a really big show. francine: i am really looking forward to it. stephanie: you are going to be .art of it, francine all women, all day. tom: sallie krawcheck is with us, the gain a -- beginning a research career at sanford. -- beginning research career at sanford bernstein, then on wall street. when i speak with a young woman or a young man, they are aware that wall street will never be the same to we are getting to

the point where it is seven, eight years on, so are we at henry kaufman's utility banking? it is interesting because you talk to folks on wall street or investors in the big banks, and they say if only rates were higher, then they would be net interest income flowing down, and things would be good. i do not know. i am not a research analyst anymore, but i do not mind the rates being higher. i never liked the word bank and bear market in the same sentence. tom: we turn to you then on the question of wall street needing a higher interest rate structure. i do not want to pry in all those matters, but the basic idea of yield to the rescue -- is that something global wall street can count on? dominic: no, i don't think so. is not say it necessarily the level of yield that it always comes back to, spread, whatever it is a there

is so much spread compression as the rates have come down. so definitely we are not going to go back to anything like we saw. there are different systems. you do not have to have -- one of the reasons why the u.s. does quite well is that we have a function unlike europe. europe orer it is america, everybody has a different past, don't they? francine: right. a lot of people would say in the e.u. we are a little bit behind. it took a lot of -- it took a couple of years for the u.k. banks to sort out themselves here and we spoke to, tom, because you mention a lot of banks like to be like utilities. it is a little bit tongue in cheek. >> we all know that we would love to get the margin for the --lities, so i think that we

as i mentioned before, the capital requirements and the uncertainties really cause you to stay focused on what you are good at. francine: here in the u, banks are shrinking it are they shrinking too much? oflie: some of it is because the leveraging, but the other thing is banks are not good at innovating. if we look to the long-term, when is the last time you saw great innovation coming out of the banks? it is not part of their processes or their culture, and you are seeing hedge funds taking away trading businesses. you have this crowdfunding, crown lending, p-to-p are taking away -- p are-two p are taking away lending businesses. tom: where is the march on the income statement? the idea of making it on the income statement, morgan stanley

maybe is out. inc. play now. james gorman really improved shop. still, the share price, you go back to the 1990's. the house of gorman -- is that a utility operation? first of all, i always love the wealth management business because clients are paying you. if you provide value, they pay you. that is good old-fashioned business. net interest income falls right to the bottom line. you never have to hire another teller because the yield curve steep and up. tom: there is a romance to banking as well, to what this guy does. these guys walk around like knights- with -- like with their research capability. sallie: some of us do not think it is so boring. but for years we used to talk about that these institutional businesses were great for the employees but were not great for the shareholders. if you look over long periods of

time during a course of a cycle, it was rarely be on their cost of capital and it was a great trend for shareholders. tom: sallie krawcheck, thank you so much for coming in. dominic konstam, you survive to that one. coming up on bloomberg television as well, with many esteemed guests -- on bloomberg radio, we will continue with sallie krawcheck and dominic konstam. will discusse active and passive management, as we always do. look for that on bloomberg radio, sirius xm, nationwide. dow futures exactly -100. this is "bloomberg surveillance." ♪ stephanie:

european leaders are close to a deal on refugees. mark carney voices his concerns

over a brexit. it could have a big impact on big business. it is international women's day. melinda gates joining us on why she thinks there need to be a fundamental change in policies toward women. ♪ stephanie: welcome to what will be a very special day on "bloomberg ,go.." ."omberg to "bloomberg ." let's get started with first word news. >>