francine: europe in the green; stocks gain after a 40 weekend. y falters aheadie of a speech by janet yellen. the u.s. government drops its case against apple after breaking into an iphone. personal security and national privacy are still being debated. hijacked airplane forced to land by a passenger claiming to have an explosive belt. this is bloomberg "surveillance." tom keene is in new york. it's a pretty quiet day; we are

waiting for janet yellen. it's a quiet day on the markets, but watch out for commodities and watch out for dollar. tom: exactly. i was watching commodities today; citigroup was really talking up saudi arabia, having trouble moving oil. really, the backstory, while you were off on your three-week vacation, is the idea that the atlanta said lowered their gdp for this quarter under 1%. that is the backdrop, yelling those before the economic public. francine: rate. -- right. it seems confusing to understand what the fed's next move is. let's get to the first word news. vonnie: good morning. a jetliner has been hijacked and forced to fly in cyprus. it was on a flight from alexandria to cairo. the egyptian government set a hijacker claimed to be wearing an explosives belt. 56 passengers have been allowed

off the plane. several for for flight crew are still on board. last week's bombing severely damaged the airports departure holes in. brussel -- in brussels. it will only be able to handle 20% of the normal number of flights. the legal battle between apple and the u.s. government has ended. the government says it gained access to data on an iphone used by a terrorist and no longer needs apple's assistant. it was trying to compel apple to help; apple had resisted, setting off a battle that could redraw the boundaries between privacy and national security. police say a man was shot after pulling out a gun just outside the u.s. capital and is now in critical condition. authorities ruled out terrorism, saying they believe he acted alone. -- suspect has been arrested the suspect had been arrested last fall. the president may be

on the verge of a big setback in her fight to avoid impeachment. leaders of the centrist brazilian democratic party have agreed to break with her, after a person familiar with the matter. the votesecline her she needs to avoid being impeached. global news, 24 hours a day, powered by 2400 journalists in 150 news bureaus around the world. tom: we'll stick with equities, bonds, currencies, and commodities. the market is really waiting on yellen in new york today. 10-year, a little bit of movement. i'm for.next screen; vix, 15.24. thewatching german yields, two-year and 10-year. 0.50 would be a big deal. right, the ecbe starts buying on friday.

you know it is a slow news day would we have the same data. i'm looking at europe stoxx 600. u.s.dollar, a gauge of the its theyt's pairing just one-day decline as the markets are awaiting yellen speech. tom: let's go to the bloomberg. backdrop. last time she spoke to the economic club of new york about slack. every other word was slack. 30 years of american gdp; we have shown this chart many times. here is the financial crisis. i've blown it up to highlight morning in america. this is back when things were good in the 80's, then here is the late 90's boom. regression;10-year we go from here to here, and this is the new atlanta fed statistic; 0.6%.

this could change. vonnie: jpmorgan is saying the numbers not just reflect the cool and oil industries but the profit margin squeeze, weak productivity, and that is not necessarily a good thing. tom: there is a weight to this. francine: i'm looking forward to the new interview. i went further east for my terminal today. i am looking at copper in china. this signal a chinese copper demand says a slump is coming. this is the blue line, paydown copper imports by buyers in china, the world's biggest consumer. it slumped quite significantly; if you benchmark it towards demand, answers this is a complicated chart to tell us that a slump may be coming. but the market is awaiting the federal reserve chair's speech. we help it provides further

clarity about her assessment of the economy. let's get straight to the cc l.a. investment management chief investment officer, james bevan. great to have you. are you confused by what janet yellen has been telling us? we aren't sure whether their rates normalized. >> well, there has been a considerable change in the temperature and direction of travel since last december. there was all that talk about r hikes. i don't say probability of recession, but we may see one cut or this year, given the poor background. and realistically, the fed might be prepared to let inflation run in order to get wage inflation. to wait: are they going for that wage inflation before they start normalizing? >> that would be my expectation. in terms of the rhetoric that comes out of the various regional banks. tom: we show the video here of

cherry yellen and her press 16 -- the on march idea of growth slipping away. how do you define a growth recession? >> as we know, t recession iswo -- recession is two negative quarters of growth. i don't think we will get a technical recession but there is something anticipated by the fed when it talked up the prospects of four hikes. that has now evaporated from the rhetoric. i would say we may see one or no hikes, rather than the two hikes. tom: within the parlor game of gaining monetary theory, tell me about how you look at economic growth. is it fair the united states, or the united kingdom, to parse off that exports and the lead with a domestic analysis? . >> i wish that were true.

we have a current deficit of enormous proportions, and that is hugely worrying. with the brexit debate -- realistically, the u.k. is very dependent on importing foreign , which could be a smart place to hold assets and do business. if that changes i think it would drop in the bond market will sell off. the dollar is still a reserve currency in the u.s. dollar bond market is so much more strong and will position. tom: francine, board of the day from mr. bevan -- neverendum. i like that. francine: [laughter] >> we will have them again and again, won't we? francine: even if it is a very 51-48, the, a

political machinations -- if you are david cameron, you must be tearing your hair out. >> if we were to parallel the votes on scotch independence, the scots having been told quite clearly that they were to stay, no revising the conversation on the basis that the world is changing and you have to adapt -- i would say a lot of the people who may elect to vote to stay in the eu will do so because they genuinely don't understand what the options look like. if it becomes apparent that there is limited traction in being able to secure -- a lot of people. francine: we also got some economic data out of japan. retail sales and spending data. we are also expecting an impromptu news conference by the japanese prime minister. what can we expect from him? >> i am absolutely terrified.

i look at the failure of abenomics, mr. kuroda no longer able to buy back enough bombs -- nds.gh bombs i see almost no progress whatsoever in terms of the structural reforms and entrepreneurial spirit. then we have him talking about another round of tax hikes. i think japan will have a decade of you whatsoever. tom: are we becoming like japan? is the general statement of salt 2% growth with lousy inflation -- that looks like japan, visit? >> will, it does, but i think there is a major difference tween the anglo economies in japan. i can be put down to two things, one in demographics. positive. i

they make the demographic pictures very different; japan have an aging population. the other big challenge is culturally, they see much more -- they seem much more prepared to put up with bad news. to get the japanese people to spend more seems difficult compared with the consumerist culture of the usn u.k. tom: james bevan. be at the lunch. this will be very important; i will be having the chicken robert. a lot of people showing up. janet yellen, 12:00 noon today. we will have complete coverage on bloomberg television. good morning. ♪

francine: i'm francine lacqua in london; tom keene is in new york. this is "surveillance." let's get to the bloomberg business flash. vonnie: thank you. the ecb prepares to ramp up debt purchases friday; before then, mario draghi will get another chance of the gloomy outlook on inflation. consumer prices in the eurozone fell in march for the second month in a row. unemployment likely stated double digits. investors they have until april 11 to submit its for its core internet business, according to "the wall street journal." it includes a stake in alibaba. about 40 companies have signed nondisclosure agreements, indicating they are interested in making an offer. and a wall street executive has

been arrested on charges that he scammed investors out of millions of dollars. he was part of the parkhill group. authorities say he duped a hedge fund manager into wiring him $20 million. that is your bloomberg business flash. francine: thank you. we have news that there was a hijacked egyptair flight. this is the latest. , the hijacker who claimed he was wearing an explosive back, force the airplane to land in cyprus and release the majority of those on board. let's get to james bevan and john, our lee geopolitics coverage. what do we know? this man claims to have an explosive belt, but that hasn't been proven. john: that's just it; we don't know that much. of interesting thing is that it happens at a time of extreme

sensitivity, and there is a temptation and you see an image like this to see that things are getting worse, but it is important to see that this happens relatively regularly. this is the 16th hijacking since 9/11 , and in pretty much all those affair ended peacefully. this isn't that rare. francine: this is terribly damaging to egypt, who is still trying to direct foreign investment, to be seen as a safer place. is a damaging to aviation? john: i think -- most people, i'm sure, will have full confidence in airport securities. this is theright, second time since december we have had incidents like this. in december, we had the bomb getting through the net, which is very rare.

certainly, this comes at the worst possible time for the egyptian tourism industry, which, in all fairness, hadn't recovered anyway. tom: the instabilities come down to tourism. people have to get on planes and go places to enjoy themselves -- i believe that's the word. tourism is aime, general statement; it really has got to be depressed in some geographies. john: certainly, yes. if you look at egypt, at should seen, this isve extremely damaging, but it is also important to bear in mind that it will expand. people may well cancel their vacations to egypt, but that doesn't mean they will stay at home. that money will be spent elsewhere. these instances are bad for local industries, but for the isustry in general, my guess

that it won't have that much of an impact. tom: i just cyclic statistic -- 12% of egypt's workforce is in tourism. . don't hold me to that. john, what will you listen for from chair yellen this afternoon in new york? china is thely, th key focus, from a global perspective. i have spent the last two weeks at an asian and it is interesting what people had to say. there is a reasonable amount of confidence that the economy will muddle through. from the geopolitical perspective, there is still a lot of concern about what some as chinae seeing expands its influence and reach into the south china sea, which is still causing a lot of nervousness. tom: john, thank you so much. john fraher.

in our next hour, we will look worldwide. the secretary-general of the oecd will join us; really looking forward to that. on thelobal growth, strength of our cities. ♪

francine: i'm francine lacqua in london; tom keene is a new york. this is our morning must-read. we picked out something to do with apple. in "the new york times," --

with us is still james bevan. i take it out because it plays to what we heard last night, that the u.s. government has dropped this case against apple, but there is this debate still raging about personal privacy and national security, and there is no end in sight to that debate. >> absolutely. and there is a big conspiracy theory about how did the u.s. managed to get within the apple operating system when they said they would need to build a new platform in order to do this. there are different constructs that are being much discussed in the city at the moment; one is that apple should decide to help rather than going through the press. secondly, the hacker has genuinely got in, which will clearly be surprising to federal authorities and apple.

third, federal authorities have found a mechanism to into her in a way that has not previously been anticipated. this is an old operating system, not the current generation, so apple could reasonably turn around and say we have improved security in the new version. tom: james, is's event -- for financial people, do we care? >> well, we certainly care of consumers stop buying. there is no evidence of the most immediate data coming through that anybody is interested in security. that said, cyber security, as a global issue, is on the world economic forum's top list of major risks for 2016 and 2017. tom: my biggest problem is their software -- they take $7 and $10 out of your account. it's amazing what those children's games will do. let's go to the apple charts. apple's done pretty good over

the last 10 years; here is the s&p down, barely getting it done. apple has done pretty good. vonnie: that is a rise of more than 1000%. it's hard to believe. if you look back here, the ipod was at 40% of sales. the ipod is 4% of sales. tom: the a9 chip is getting rave reviews, and some of the optimism we hear from different guests. >> absolutely. we have been a buyer of apple on the basis that the stock come back far exceeds the actual reduction in the company's fundamentals. we had been keen on apple. i look at some of the other great companies of the states, and i see the recent pullback and a great buying opportunity. francine: where does it leave apple competitors like samsung? >> i think most of the asian samsungs, the ho

nahis, are having a very difficult time keeping up with the local competition out of china. francine: james, thank you so much. we will be talking more about the yen. withg up, we focus on fx jane foley. we have data out of japan this morning, and we are expecting shinzo abe to start talking anytime. james bevan, saying that the great experiment is just not working; they probably have to find another way out. that is a discussion will be having next. dollar bulls remaining skittish; we are expecting janet yellen to speak later today. ♪

thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. it's reliable. just like kung pao fish. thank you, ping. reliably fast internet starts at $59.95 a month. comcast business. built for business. tom: good morning, everyone. francine lacqua in london; tom keene in new york. international relations are front and center. here is vonnie quinn. vonnie: thank you.

a hijacker who forced in egypt air jetliner to land in cyprus is described as a local. this is a coding to the associate -- this is according to the associated press. almost everyone on board has been released; there are said to still be seven people on the plane. there is a report that the hijacker give negotiators the name of a woman in cyprus. apple inctory for illegal battle that could have rewritten the law on national security and privacy. the u.s. dropped its case against apple after gaining access to the data on an iphone used by the justice department. the company had resistances last government set a third party offer to hack into the phone. millions of americans are vulnerable to man-made earthquakes. the states at highest risk include oklahoma, kansas, and texas. that is the first time the

government has acknowledged so-called "induced quakes" from fracking. president obama called out the news media for the coverage of the presidential campaign. the president spoke at a journalism awards dinner in washington. >> one of my great regret is that the tone of our politics has gotten worse, and i will take over responsibility for it -- and i won't take all the responsibly for, but i will take some of it. vonnie: the president didn't mention donald trump by name, but he made it clear he was talking about selective coverage of the republican front-runners. are sharks after the islamic's estate hits the antiquities in the asian city of palmyra. officials tell "the new york times" that 80% of the ruins are intact. syrian troops recaptured it from the islamic state over the weekend. global news, 24 hours a day, powered by our 2400 journalists and 250 news bureaus around the world. francine: thank you so much.

we're getting shinzo abe, the prime minister of japan, talking at a news conference, after we have data from japan on spending. earlier this morning, he did say they will raise the sales tax; quite controversial. unless there is a huge amount like lehman brothers or some kind of earthquake, he says he aims to achieve the same wage for the same work. he's talking about next year's budget, saying it will help ensure a strong economy. let's get back to james bevan from cc l.a.. you were skeptical about shinzo abe's next move. >> absolutely. francine: he called a news conference; this was unexpected. he is kind of painting a picture -- do you think he capitulated, that he is saying there will be low growth that we have to accept it? >> i think it will go back to what the bank of japan has been doing. it again quantitative easing years ago, a price keeping

operation to the bond market. but we are now running out of bonds, and that is why i think authorities are recognizing they have a decade of low inflation and growth, very little they can do about it other than to keep the population going to ensure the demographic time bomb does not deliver very difficult consequences. francine: for james, governor kuroda -- but james, governor kuroda says he could go into negative territory. >> i think that would be a major mistake. the big challenge that lies ahead for japan is whether china will go for material devaluation in the latter half of the year. the principal devaluation would be against japan's yen, and that would make the export story of japan even more difficult. tom: james bevan with us in london, and jane foley, who has been a huge help in giving us a perspective. it's very quiet. i heard he took a nap this

morning on your trading desk. --uiet, quiet, quiet today but what is the bust for abenomics right now? which way does the yen shift out of this quiet? jane: when i think is interesting is what it didn't do over the last few weeks. if it goes back to a month ago, when we saw risk appetite returning, normally that would coincide with the yen weakening, and yet it didn't. it is only more recently we have seen it coming through. you could argue that the yen has done a little bit of ketchup, or you could -- it'll bit of catch up, or you could say they are unsure about the rally. maybe that is why the yen was so reluctant to go up after earlier gains. i think the hopes that we will see some stimulus from the government is risk appetite. tom: a nice explanation of the

ambiguity on the yen and other ambiguities. bring up the other chart of dollar-you. -- of dollar-yen. ago, andtwo meetings then the range bound trading. jane, when i look at the foreign exchange market as a litmus of the system, it is covered by a global slowdown. we were talking with james bevan about it. the basic theme here is global recession. is the backdrop for your fx market a global slowdown? is, but i, i think it think what is interesting right now is the dollar. it is making things look different. what we have seen in the dollar over the last couple months is perhaps a change over the last year, that the market has been getting rid of excessive dollar longs.

that is what the market has been thinking about. but the market has taken a year to get rid of those excessive dollar loans, and i worry if they can't reduce them anymore, that dollar could be poised to go up. if the dollar goes up, that means the euro can potentially suffer. we could come to a different chapter in foreign exchange if the fed to hike interest rates again. francine: jane, what he would expecting from janet yellen today? it seems the market is confused about the messaging surrounding the fed. janet yellen's dovish, but we have mixed data. jane: we have also seen some comments suggesting that april is when it could be, or june. we saw the inflation data yesterday -- disappointing. then again, we have payrolls on

friday. in terms of yellen, i think she will leave the door open, but i don't think she will be particularly cautious. she is historically very concerned about the plight of americans. maybe we do have to wait for friday for something new. francine: jane, if we aren't getting that much direction from chair yellen, we are also expecting the san francisco president to talk later. is it just wage growth inflation we are looking out for? jane: it was mentioned a few sessions ago about global risk -- that was mentioned in the recent policy statement, too. those appear to have eased over the last few weeks, but i think they are very much still there. we could see later in the year more concerns about global and itcoming back, starts the case that the fed will want to remain relatively cautious. tom: yeah, but i go back to a

dearth of economic growth. there is discussion, even within chair yellen's press conference, he polite dismay the last few days with economic data. what changes in may, or in august, to get us out of that 2% trend? jane: well, i have to agree with you. this is a discussion we could be having -- or could have had -- over the last five years. each and every year, big forecasters have had to revise. and we are still in this rut. we don't know why it is. we have said is demographics, low productivity growth, a whole variety of reasons. and i think all central bankers are very aware of this, and they are all very reluctant to hike too soon or aggressively. that said, the u.s. economy is seeing some growth. if we see inflation pickup, that

will be the trigger, but that is still an if. tom: thank you so much for joining us. go back and have an afternoon nap. it is amazing how quiet it is. james foley is one of the hardest worker -- jane foley is one of the hardest workers in the industry's. -- in the industry. vonnie, too. francine: coming up, the oecd secretary-general. he always gives us stirring conversation. the interview, coming up at six clock a.m. in new york. ♪

tom: good morning, everyone. francine lacqua in london; tom

keene in new york. right now, i want to get to the meat and potatoes. let's talk to james bevan about asset management. here is a quote from his recent note -- i love this. gap between the dividend yield and the real inflation-adjusted or this inflation-adjusted bond yield remains extreme. dividends are very important, providing a whopping, china or or long-term% returns." mous is a word that is used for dividend return, but it is ever greater, isn't it, in this new world? >> absolutely. one of the very interesting issues about quantitative easing is they have been highly successful at reducing the cost of debt and not the cost of equity. that is why equities looks cheap, and they have had high cash flow yield, decent balance sheets, strong dividends.

they deserve ginormous valuation than they have not got them yet. tom: is the dividend yield appropriate in europe? to want to go to that higher yield of the united states, or should europe be more like the united states, do share buybacks and the other malarkey? >> i worry about share buybacks if it in deals little -- if it involves the delivery of more debt. there is bifurcation between sensible balance sheet management and the magnification of earnings-per-share. companies that manage their balance sheet well and can pay decent dividends, they are the ones who deserve our attention and focus. francine: where do you find them in the industry? i am looking at miners, the oil producers. they are under so much pressure -- >> i think they should see quality growth. francine: where? >> consumer durables, great quality companies like heineken, palmolive.

many of the global telecoms, fantastic companies. in an environment where, as we have been describing, german bond yields are in negative territory. francine: but then they are exposed to the emerging markets. as soon as janet yellen normalizes -- >> we talked about emerging markets as a problem. drain,-- economy in the stock market of 35% year to date. that's extraordinary. markets are betting that tomorrow will be better than yesterday. about --when things how do we get global growth numbers that remain the consensus for the global economy -- it is because developed economies will grow 2 or less and emerging markets will grow 3 or more. tom: yesterday we saw that regime change, valeant. we will talk about starwood in a

moment. it is all wrapped around a cfo saying we have got to do something, we have got to do something. when he want leaders to do in quality companies? >> when we talk about mergers and acquisitions, i would say that, as a matter of fact in recent years, there are two very distinct flavors. there has been financial engineering, the opportunity to gear up a target in order to magnify returns on underlying cash flow, and that is a dangerous way to behave. in contrast, there are mergers and acquisitions all about aqua delivery.on will there is still plenty out there were companies are saying, you don't understand value, these prices are too low, we will take you private or we will buy it off you. tom: james bevan. we will do this in the next set, look at the open checkbook, perhaps, that the open

acquisition policy. in our next hour, we will be joined from pimco. a perfect time to speak to them about global growth and tepid u.s. growth as yellen speaks today to the economic club. ♪

francine: i'm francine lacqua in london; tom keene in new york. we are looking at markets, at janet yellen.let's get straight to the bloomberg business flash with vonnie quinn. vonnie: thank you. barclays is warning that commodities may drop. the bank says that oil and copper are at risk for steep declines. commodities are headed for a quarterly after moving 11% in the first quarter and 14% in the third quarter. in london, there is growing concern that the housing market is oversupplied. lenders have started charging higher rates for development loans. home prices in london are at the most in almost seven years. and it is the beginning of a new era in virtual-reality; the first oculus rifts has begun

shipping. it cost $600 it cost $600 and requires a powerful computer to run games. that is our latest bloomberg business flash. francine: thank you. this is what we are watching for the rest of the week. the u.s.12:00 p.m., federal reserve chair janet yellen speaks at an event hosted by the economic club of new york. tom keene will be attending. thursday, president barack obama will host the 2016 nuclear security summit in washington. attendees include the presidents of turkey and china. looking ahead, the monthly jobs ar report. it is expected to hold at 4.9%. of bidding war for starwood is sweetening hisg offer to $14 billion higher. for more, let's bring in aaron kerchfeld.

thank you for coming in. this is big, because this points to china on a big spree. aaron: that's right. a 12-year-old company that many of us had never heard of, swooping in to outbid marriott. this really shows that chinese companies have huge appetites abroad -- we have already see more deals year to date than all of last year, and the trend is continuing. francine: can marriott come back with a higher offer? i guess it depends on how much they are willing to pay. aaron: that's right. it depends on what their investors think. investors reacted somewhat negatively, hurting the valuation. the question is how important is this deal to marriott, so the shareholders will back it? there is possible talk about selling real estate, right now anbang is in a strong position

because it is an all-cash bid. tom: i strongly take issue to everybody's coverage of this deal. who are these guys? haveanalysis here -- i absolutely no clue what their balance sheet is; i have no clue how they will finance this puppy, and more than anything, what is there link to the chinese government? aaron: i think a lot of people are asking the same question. people don't know much about anbang, but they do on the waldorf-astoria. tom: who's they? aaron: they are an insurance company in china, state owned, backed by the local banks. do we know a lot about them? we don't. we are learning more and more by the day, and colleagues are doing research, but at the end of the day, it is not as transparent as companies we all know. tom: what will be the

regulation? i look at your work, and it is all about regulation in china. i get that. what will be the regulatory greeting in washington? well, they are trying to address that. you may have seen in their filing that they are discussing nonprice terms. that is a sly way of they are discussing regulatory concerns. starwood will ask itself -- if we sell to anbang versus marriott, will we face any risk? i think they are aware of that, but i think it is fair to argue that hotels aren't in the strategic national interest, unlike maybe the technology sector, deals that have had pushed back. francine: james, at the end of the day, this is a group led by anbang. we don't know much about them, but they have the cash. it is difficult to say -- >> to put this in context, china

is exporting $1.2 trillion on an annualized run rate at the moment, and they will likely continue until either we get a material devaluation or capital controls.until then , we will see more and more deals, where this capital is reapplied, with a lot of cash sitting in china, and wants to find a home abroad. francine: i am looking at the biggest u.s. targets for chinese buyers. legendary entertainment, cinema, appliances, starwood. it seems that they are trying to diversify. asthing could be a target, long as valuations are cheap? >> it is also part of the portfolio perspective. if you were to anticipate a huge amount of domestic cash in china , if you were to say what does that mean in global terms, china will be saying -- we need to diversify, we will buy abroad, the commanding heights of industry, leisure, entertainment

-- whatever we can take that will deliver a better portfolio. the aaron, what does anbang from washington? aaron: wellaaron:, they just need the green light. at the end of the day it will come down to starwood, but i think any chinese buyer in the u.s. is going to reach out to washington, reach out to new york, and try to get a feeling that this will go through. tom: does jc flowers have the feeling yet? aaron: that's a question only jc flowers can answer. that obviously he is confident enough to get involved in put money on the line, so he thinks this deal will go through or he wouldn't be bidding. francine: quickly, is there anything safe as they are trying to expand their portfolios? i think clearly technology, energy -- we have already seen resistance. we have seen some energy deals,

even when the dutch company phillips tried to sell a lighting business, that was rejected because they do some supplies for the american military. the big questions in the u.s. are -- are there any key suppliers, and the location sensitive areas, sensitive technologies. i think going for something like entertainment, legendary or hotels, that is safer. tom: thanks very much. james bevan, thank you so much. greatly appreciated. in our next hour, janet yellen speaks. the oecd and yet compelled. ♪

tom: janet yellen speaks to the economic club of new york.

the backdrop, 1% u.s. growth and a global recession. fels.s hour, joachim authorities say seven people are still on board a flight that diverts to cyprus. and cities are critical for solving global inequality. in this hour, angel gurria. we are live from our world headquarters in new york, tuesday, march 29, in new york. i am tom keene. in london, francine lacqua. as you mentioned earlier, there is this tepidness across commodities and economic growth. francine: we still cannot figure out the next move from the fed. i would point everyone to bloomberg.com and read a great piece saying that money cannot get this world economy out of recession.

we also have breaking news out of the boe and brexit concerns. tom: that is a little bit why you people are acting like americans. long campaign here. -- hed notice mr. abe does not really want to talk about the presidential candidates. i think angel gurria will not want to talk about the presidential candidates. in a busy newsday, let's get to our first word news with vonnie quinn. those: it is one of countercyclical buffers from zero. authorities say 17 people are still on board and egyptian jetliner that was hijacked to cyprus. more than 50 people on board were released. the hijacker claims to be wearing an explosive belt. he says the hijacking is not related to terrorism. the hijacker wanted to see his ex-wife who lives there. she isng to authorities,

being taken to the airport. the ceo of the brussels airport says operations will not be back to normal for a wild. was damagede hall by -- the departure hall was damaged by the explosions. the legal battle between apple and the u.s. government has ended. the justice department says it has gained access to data on an iphone used a terrorist and no longer needs apple's assistance. apple had resisted, setting off the battle but could every drawn the boundaries between privacy and national security. a man who was shot after pulling out a gun outside the u.s. capital -- outside the u.s. capitol is in critical condition. the suspect had been arrested at the capitol last fall after entering the house chamber and yelling. president dilma rousseff may be on the verge of a big setback in her fight to

avoid impeachment. she may be deprived of the votes she needs to send off being impeached in a corruption scandal. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am vonnie quinn. tom: let's get to data very quickly. turning markets here. -- maybey will lose they will move off the news this morning. a little bit of weight to oil. 38.70 bears watching. ed morse of citigroup is cautious. we come back down off the mario draghi press conference from weeks ago. yield, 0.145. francine, what do you have? francine: i want to show european stocks.

overall they are gaining a touch. we started the day with a gain of 1%. now they are pretty much flat. you can see crude has been stockpiled. we had that news conference from japanese prime minister shinzo abe not saying much. you can see the yen versus the dollar. tom: very good. let's go to bloomberg right now. i want to set this up for later fels.oachim here is the financial crisis, regression of the last 10 years is nowhere near where we want to be. the slope is getting there, but chair yellen will be asked today about the zero statistic. this is a bombshell from atlanta. vonnie: year-over-year at 1%, tom three where is that going to

go? spending folded right into that. francine, what are you showing this morning at go vonnie: -- francine, what are you showing this morning? francine: this is a signal of chinese copper demand, basically telling us a slump may be coming. the white line is a premium paid on copper imports by buyers in china. china is the world biggest consumer, and i benchmark it to that important. the blue line is not at the -- the blue line is not a pretty picture. tom: so there we are with some of the dynamics of economics, finance, investment. for a briefing on central banks, mr. abe is speaking. chair yellen will speak today. secretary-general, angel gurria.

he was intimately involved in peaceful regime change within mexico, which at the time was an historic moment. someally was something, 20 years ago, to see mexico go through a modern, developed world minute -- developed world process. angel: we were going through a monetary crisis, and then money would flow out. transition, first the first change of government in a generation that was smooth, no turbulence, and on top of that, it also compounded the complexity because we changed regimes. even that was smooth because of the very good transition. tom: it really established modern mexico. let's establish the territory where on. willem buiter leads the

discussion of global recession. -- joachim fels will join us later. we are forecasting 3% global growth. the only problem is there are some indicators like the rate of 2%.th of trade, which is and only five times in the last 50 years has the rate of growth of trade been below the rate of growth of the world economy. every time that happened, a severe slowdown or a recession happened. tom: the trade dynamic has adjusted in the last 90 days. francine: this is crazy. it, you think about have not really changed your growth forecast. all the economists around the world have not really changed their growth forecast. only in last five weeks have we

had the boj, the ecb cedi there is more out there. why is this not helping the real economy? angel: i think the question is that central banks, the heroes of the last few years -- they are the heroes of the last few years, but they have done the most of what they could do. that means you have been there and done that with monetary policy and with most of the german fiscal policy. now you have to move toward structural change. you have to move toward education, innovation, more competition, the tax structures, the rmb, and those take a few years. this is the problem today. you do not have very fast fixes. years oft consolidation, eight years of fixing the banking system, in some countries there may be room -- like canada just announced -- to go for some infrastructure

investment, and then kind of give a push for the short-term growth. that eventually would bring down the debt to equity ratio, simply because the economy would be growing. you would get better tax revenue . in a way, this is only possible now after eight years, simply because the situation is a lot more stable than it was. francine: so you are saying there is no magic solution? not even helicopter money that central banks can do? angel: they already did it. this is the point. we have run out of those easy fixes. the question is, now we have to think medium and long-term, go for the monumental's desk over the fundamentals again. -- go for the fundamentals again. where is our dysfunction

right now? it is not just u.s. and china, it is a bigger story than that, isn't it? --el: yes, and it shows you i mentioned that trade was very sluggish. trade should be growing at double the growth of the world economy. tom: why isn't it? are a number of uncertainties. there are blockages. every time we get together at the g-20, the leaders make commitments for open trade, and they go there and take a bunch of protections. this is not helping. the other thing is investment, the seed of tomorrow's growth. investment is about half of the speed it should be growing because of uncertainties and regulatory issues, and ultimately because of the financial side. credit is not flowing. there are restrictions on the sector, on institutions. last but not least, the reason we are growing so sluggishly in the last 10 years, the engines

of growth, emerging economies. china is slowing. brazil is in the recession for the second year. those are no longer the cylinders of the engine of growth. tom: we are coming back with angel gurria. important research on our cities and global inequality. today, live coverage of federal reserve chair janet yellen's speech at the economic club of new york. she wants to get through it without moving markets. that will be challenging. will give questions to chair yellen. this is "bloomberg surveillance." ♪

tom: the chair speaks. the president of the specifics

speaks. who is this, from singapore? vonnie: john williams is delivering a speech right now in singapore. he says the fed might actually make his target sooner than two the last couple of months of cpi looking good. he is also saying that the data -- they are waiting to see if the data are a mirage. tom: it is a good time to have onset, angel gurria, with the oecd. right now, on disinflation and inflation, james sweeney at credit suisse is adamant that our fears of inflation are overdone. do you agree? should we be worried about deflation? angel: no, we should be worried about deflation and worry about the amount.

the badkind of the -- kind of deflation -- when the oil drops you will get a reduction in the prices. youa lack of demand means have to do something on the other side. we have been focusing on the supply side for many years. we have to look at the demand side. that should get us over the deflationary parol. tom: you are one of the most plain speakers we have talked to. i will ask you a difficult question. what would you do with brazil? angel: we have to let the legal and constitutional procedures roll out. the only thing i would ask of those procedures is that they are done fast, because uncertainty is the greatest the economicnd all agents, investors, bankers, officials, all the politicians, they say let the -- they said let's get this over with so that if the president is still going to be running the country, we

will all rally behind her and start anew. because right now there is a paralysis. francine: there may be a faction loses support for dilma rousseff, that she is trying to gain votes. does she need to be impeached within the next two months, to start anew, to start afresh? angel: i cannot give you an opinion of the internal proceedings, less so with something changing so fast with all the new information. brazil is a g-20 country. it is one of the largest economies in the world. therefore, the questions of the situation are not just brazilian, they are systemic. we should accelerate the process . francine: i have never been called a pessimist before, but if you look at the world,

talking about the limits of action, when you talk about systemic risks, i think of brexit. the bank of england just saying to the banks, please raise your buffer rates because we need to make sure that the transmission mechanisms are still there in the case of brexit. do you worry about brexit? angel: i am going to be actively trying to transmit to the british public, investors, and businessmen, that we should have the u.k. stay firmly within europe, that that is best for the u.k., for the people of the u.k., best for europe, best for the world. tom: but the polarity here is that europe needs the u.k. more than the u.k. needs europe. angel: i do not think that is a functional, useful comparison. tom: i am just trying to get you

going this morning. angel: it works both ways. the u.k. is much stronger as a part of europe. it has the u.k. in its financial sector -- in its financial center with its economy. everybody has gained. there is no reason why we should think that a part -- that apart they would do better. out of concern for the first people for the european economy, with the economy of the world, to say that we are going to be working and talking and in a constant dialogue so that we can hopefully convince people that it is their best interest to go through brexit. that was very smoothly done. comments from last week shows the ancient concern of europe not to repeat the challenges of the middle of the last century. we do not want another war. we do not want all the angst that came with it. with that said, which

us to aion will call europe that is a better place? angel: they will not be a single institution that will coalesce europe in a single unit, with everybody abiding exactly by the same rules and regulations. the question is how to make some of the regulations, some of the rules homogeneous enough so that the country's can have a predictable behavior. if you know what the rules are, you can abide by the rules and investors -- tom: some individual liberty to do that? should we sacrifice them? angel: no, we should not sacrifice individual liberties. it is on the banking side. it is on banking capitalization, on trade and investment rules. it is not about individual liberties. individual liberties are not going to be sacrificed, and even less so in its to two setting like europe, where they invented

human rights and have been promoting it ever since. they will continue to do so. it is not about human rights, about sacrificing even economic rights. it is about working better. this is where we should document the reasons why it is going to work better. it is not just an intuitive question. it is not just saying you look better together. it is about the institutions and about economics and trade and investments. on the other side, it is about the uncertainties that are created with the brexit in an already very uncertain world. francine: we have warned of a credit crunch that could be triggered by the strength of uncertainty. seed of a shock just like lehman was. angel: i think the question of credit does not necessarily follow. there is a fundamental assumption, which is wrong by

those who think that nothing happened. all of the institutional arrangements today would continue to work in a -- in the same way. that is not the case. we cannot assure that. that is a great source of uncertainty. tom: the secretary-general of the oecd is with us. in the next half hour, joachim fels will join us from pimco. some of us i think will talk about the dot polot. we will find that out from janet yellen at lunch today. ♪

tom: a most busy morning. the secretary-general of the ocd -- the secretary-general of the oecd is with us. has oil found stability? angel: i do not think it has found stability. we are still going to see volatility, we are still going to see turbulence. i am a mexican, so i am interested. tom: you are living this. angel: i was finance minister of mexico, and i had oil at $8.50 a barrel. goingfraid there is still to be volatility because there are a lot of investment decisions being deferred. they will depend on whether it $40, $50, $60.

investment -- this is also part of the global slowdown , that a lot of investments are being deferred because of the low price of oil. tom: we are going to come back with important research on the oecd on what our cities have to do. on "bloomberg ," we continue the discussion on economics. shiller onave robert to talk about his good society. look for that today. futures negative four, dow futures -36, and the 10-year yield, 1.68%. this is "bloomberg surveillance." ♪

tom: what a busy morning. we go to williams of san francisco. these are nuanced headlines right now.

really different there. vonnie: a fascinating headline from john williams. he is always interesting, but never more than today. the dot-plot point, he favors keeping forecasts because they show how policy moves with the economy. he is talking about the cpi data being something that they are keeping an eye on. i can see glenn hubbard at lunch -- so, bullard or williams? who do you agree with? with serious news on egypt, here is vonnie quinn. vonnie: drama is playing out at the airport in cyprus. a man is it -- amen is claiming to be wearing an explosive belt -- a man is claiming to be wearing an explosive belt and hijacked the plane.

authorities say it is not terrorism related. he has a next wife living there and asked that a letter be delivered to her. .t is a victory for apple the u.s. has dropped its case against apple after gaining access to the data on an iphone used by a terrorist. the justice department adopted a court order to force apple to help hack into the phone. 7 million americans are now vulnerable to man-made earthquakes. it is blamed on fracking, according to the u.s. geological survey. the highest risk is in oklahoma, kansas. president obama has called out the news media for coverage of the campaign and has asked reporters not to dumb down the news. he spoke at a journalism awards center in washington. president obama: one of my great

regrets is that the tone of our politics has gotten worse. thell not take all of responsibility for it, but we all own some of it. i will take my share. archaeologists are -- at the the dunnage damage that islamic state did in the city of palmyra. but apparently it could have been worse. 80% of the 2000-year-old ruins are intact. syrian troops recaptured palmyra from islamic state over the weekend. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am vonnie quinn. francine? straight let's get back to the oecd secretary-general, angel gurria. am reading out of a report from the oecd saying that the growing gap between the rich and poor have become -- has become

-- has becomey go an increasing global challenge. is it due to central-bank policy , and how do you address it with cities? angel: it is due to the fact that there is this growing gap between the top -- and you have been documenting the question of the financial sector just rocketing up -- but it is also lowere up to 40%, the skled working class really has not gained in real terms. it has not gained in terms of the gdp's of the world. there is a serious need for upscaling, re-scaling the working class. they are in danger of losing their jobs to the digitalized economy. and in order to make them participants in the digitalized economy, we have to increase and have their skills.

the other thing is that poverty and disadvantages reproduce themselves. a poor person will have less money to invest in himself, in his own health. healthier people tend to live longer and better lives, and that reproduces itself. what we have got to do is bring everybody up so that they are at the same level so that there is a level playing field. in things like health and education. francine: we all agree that this is something that needs to be done. countlessn to inclusive encapsulating conferences. but people do not feel like they are part of the middle class, which is why they are voting for extreme politicians. weel: the question here is, know what the policies have to be. the reason we are getting the mayors together is that this is the willie sutton equivalent.

why do we do cities? because that is where the people are. 75% of the people in the oecd are in cities. more than half of the population in the world today, the total population of the world, is in cities. they are mostly in cities. in the oecd countries, you basically are having and urbanization process that will continue and continue. so you focus on the cities in order to get less inequality. the answer is inclusive growth. tom: our third rail in the united states is that we read a is 110 years old, upton sinclair's "the jungle." nobody wants upton sinclair's "the jungle." it is crushing that every kid in america has to read it.

what are you going to do for the bottom 40%? is it infrastructure solution? is thethe paydown infrastructure. angel: all of the above and we set health, education, skills, and the infrastructure that you mentioned, including affordable housing. for example, in new york, mr. de blasio passed a law about affordable housing. fordeffort by the foundation, the oecd, is precisely to focus on, because that is where people live, to get the mayors to work together with the national authorities. many of the policies that affect inequality are national, so the mayors do not necessarily have full control. there should be better coordination. we call it the eminem's -- we m's. it the m&

tom: i like it. let's give a round of applause to someone who is getting it right. do with the cities and mayors. angel: let me tell you, nobody does it better on every front. there is always somebody who is doing something better on a particular front. thisdea is to generate idea that everybody can consult, can say, even ask, how do i get this done, do it better? there will be an answer because somebody has already been there and done that. tom: this is g7, not g-20. inequality amid less growth. in the 1990's we all fondly remember that, and then there is

where we are now. do i understand that your cities project sets in a constructive feedback loop to get growth going? does it do it at the expense of rural communities? no, because part and parcel of getting the cities better is making sure that china, for example, 20 million people are migrating from the rural areas to the cities. that is without taking into consideration the citizens that are already in the cities. tom: how big is mexico? i do not even know. angel: 22 million, thereabouts. that is in the metropolitan area. 14 million in the municipalities. water, problems about -- forgetransport about developing countries.

with the 21 counties in the three states in chicagoland -- tom: do you have a separate addendum to help mayor rahm emanuel fix the chicago cubs? that is what we need. angel: i think he is doing a good job and addressing the issue. but the point here is, there is nobody who does it better. cubsyou do not mention the with president, you mentioned the chicago white sox. to score points with the president. important commentary on cities. and the ford foundation, i should mention as well. on tepid, joachim fels economic growth. "bloomberg surveillance." ♪

francine: i am francine lacqua in london. tom keene is a new yorker let's get straight to the bloomberg business flash with vonnie quinn. vonnie: barclays is warning that commodities may slump as investors rush to the exit. copper and oil are at risk for sleep -- topper and oil are at risk for steep declines. -- copper and oil are at risk for steep declines. the european central bank is preparing to ramp up that purchases friday. before then, president mario draghi will get a sense of the gloomy outlook on inflation. consumer prices in the euro area fell in march for the second month in a row, and employment stated the double digits. all of this from the bloomberg survey of economists before the

survey comes out. yahoo! has told potential investors that they have until april 11 to bid for its core business. include a stake in china's alibaba. have signedntries nondisclosure agreements to make offers. tom: with us is joachim fels from pimco. gurria of well, angel the oecd, the secretary general. it is wonderful to have you with us. let me bring up the chart that shows a challenge that janet yellen has today. our single best chart -- we think tiered -- we feature this through the morning. toro-analyzing our gdp down 0.6%. it simply cannot get up to the sustained growth we saw in the 1990's. what will you listen for from chair yellen this morning for

her growth prescription? joachim: i think what we can expect is that she will repeat march,e fed announced in the summary economic projections. the fed is now looking for a little more than 2% growth this year, 2.2% over the next four quarters. i think that is optimistic. what janet yellen will portray is a two-speed economy. there are global headwinds from a sharp slowdown in global growth over the past year, driven by emerging markets mainly, and by appreciation of the dollar. she will point out that the domestic economy, particularly the consumer and construction sector, and the labor market, which are doing quite well. this is a two-speed economy. on balance we are looking at subdued growth for the u.s. --st-quarter gdp chartres

the first quarter gdp chart showed growth down to zero, so very little momentum. her message will be a relatively upbeat one. tom: in a press conference she talked about glimmers of growth. your global gdp migrates from 2.8% down to 2.5% down to 2.0%. bring up the global gdp chart. there it is. slope matters. we did this for angel gurria. there was a window in the 1990's when jumble -- there was a window in the 1990's when global gdp fell flat. will we see that again? joachim: we are not seeing flat gdp, but we are seeing slow growth in real and nominal terms. what this reflects is a sharp slowdown that we have had in emerging markets, which are in a structural adjustments.

this is not just the cyclical slowdown. at the same time, we have a lot of headwinds for growth in the developed market, headwinds coming from the global savings clubs, which is leading to weakness in aggregate demand. this is pushing inflation below central banks targets, and this explains why we are in this world of what i call bbb growth. growth is bumpy, below par, and very brittle. francine: given this outlook, what would you be buying? joachim: what we would be buying and what we are buying in this environment is high-quality credit, particularly in the u.s. we have portions on equities. we think this is not a world where interest rates, where bond yields will rise sharply, even though the levels are very low. but we have a lot of conviction that high-quality credit investment grade -- high-quality

credit, investment grade credit will be doing well. we are not seeing a recession around the corner, and we think central banks will remain very supportive over the next couple of years. it mean tohat does inflation-linked bonds and also gold? are those diversify errors? i think if you look at inflation expectations as they are reflected in the bond market, we think they are too low. they have moved up over the past few weeks, so the last couple of months. we think the markets are pricing in too low of a price for inflation. we do not think inflation will move significantly above central-bank targets. but over the next 12 months, particularly in the u.s., we will get back to 2%. aboutet's tie together eight threads here before the yellen speech. the backdrop is moderately -- the backdrop is modestly rising inflation in the united states.

here is a quote from the yellen press conference, which was only what, eight days ago, nine days ago? the employment condition so far this year has occurred as economic growth appears to have picked up from the modest base seen in the fourth quarter of last year. she goes on to say, "as the factors restraining economic growth are protected to fade further over time, the median ofe rises to 3% by the end 2018." can we look out to 2018, whether it is inflation or growth? toohim: i think this is long a time horizon to make reliable forecasts. what we can try to do is forecast the next six to 12 months, but 2018 is a very long time horizon. best guess,fed's

but i would say it is no more than that. as janet yellen keeps emphasizing, they are data dependent, so that outlook for 2017-2018, that can well change over the next year or so. tom: what, greatly appreciate it. joachim fels with pimco. coming up, we will speak with douglas cass. we will talk about the consensus view on buy quality and buy dividend growth. stay with us. ♪

tom: the backdrop for the foreign exchange report is a churn in foreign exchange. , 1.4269.ing stronger francine? francine: coming up shortly, it is "bloomberg " with david west, stephanie ruhle, and jonathan ferro. what do you have on the program today? jon: it is all about janet we continue the countdown to the much-anticipated speech, right

here in new york, from the fed chair. communication is very much in the spotlight, and throughout the last couple of weeks since the fed meeting, a little bit of nuance on what the fed may or may not do for the rest of the year. we are trying to put a little bit of nuance on the table. the market is not at ease, but on guard at somewhat -- but on guard somewhat. ors the market lead the fed does the fed lead the market? that is what we are discussing on "bloomberg ." francine: sometimes it feels like the fed is following the market. i am very much looking forward to "bloomberg ." let's get to angel gurria. i look at a merging -- i look at emerging-market currencies through it stocks are not doing badly, and everything has been going through what janet yellen has been doing, which is that she has been dovish. that, my expectation is

because conditions remain reasonably the same as the last time they took a position, that they will hold the position. the question of perhaps having allayed the possibility of rates is in the fed's something which is acknowledged generally, and mostly because of the world's economic conditions, rather than the u.s. but at the same time, the mandate of the fed is narrower than that, but they do take into consideration what is going on all over the world. b communications is now much improved -- the communications is now much improved the savvy is a few years ago. they feed into each other, and that is the better way for this to happen. the market has something to say to the fed, but the fed makes

its own divisions -- the fed makes his own decisions based on mandates. francine: people keep telling me from the imf and that we need to watch out for a credit default in emerging markets. normalizing,elays we will have a bigger problem at the end of the day. angel: this will not change because the fed increases 0.25%. this is a very general statement. i do not see this happening broadly. i see some problems with some countries that did not do their reform process while they were having a wonderful bonanza for the price of oil and the price of commodities. now they are suffering the consequences. i do not see a generalized problem in the developing world with that. that aree countries being developed where the private sector and households may have incurred very high

amounts of debt. but in general, i would say that there are issues mostly about the lack of reforms. this is what did not happen in many of the developing countries, including in latin america, perhaps with the exception of mexico, chile, which are doing better. virtue is its own reward. see you, iime we want to talk about the courage to invest. sometimes it is just about courage. also beings eliminated, courage, and more investors will mean better growth. tom: angel gurria, secretary general of the oecd. coming up, "bloomberg ." we will continue on radio. janet yellen at noon today. ♪ david: investors look for clues

for potential rate hikes. the chair speaks today. brexit risks. the outlook for the u.k. stability worsens.

government's ability to break into a terrorist's iphone ultimately hurts apple's reputation. david: a warm welcome. i am jonathan ferro. stephanie and david westin are away today. big events this week. it was on friday and then today, the much anticipated fed chair speaks today in new york. before we get to all of that, we and. 30hours minutes away from the open we are done by five points on the s&p 500. the miners are leading the