francine: the yen rises again, the longest winning streak in years as speculators defied the authorities. cameron releases his tax details and faces parliament today. will the fallout put the outcome of the brexit referendum at risk? rada turbulence. where is asian luxury demand going? this is "surveillance." i'm francine lacqua in london. tom keene is in new york.

we had some importing use. market movement, a lot of volatility. tom: a lot of volatility. we will cover that with paul donovan. -- excusepresident me, the president and the chair will meet today at 3:00 p.m. what chair yellen will discuss with the president, but they are meeting. francine: i don't know if this happens very often. they may talk longer term. tom: maybe they will look at washington capitals prospects. i don't know. the stanley cup is upon us. francine: there you go. let's get to the bloomberg first word news. here's caroline hyde. caroline: the international furor over the penama bakers -- the panama papers anders its second week. over the weekend, cameron addressed concerned party activists that acknowledged

shortcomings in his handling of the matter. president argentine is promising to put his assets in a blind trust after he was linked to two companies listed in panama. foreign ministers from the group of seven industrialized nations are meeting in japan, calling for a renewed push for nuclear disarmament. johnsecretary of state kerry says the determination to defeat islamic state is unwavering. nations remain-7 steadfast and united in their commitment. it a resolute commitment, strong commitment, to degrade and destroy daesh through our global coalition. we are committed to using all the tools available to us. kerryne: meanwhile, visited the memorial of

hiroshima's atomic bombing. y the's visit marked kerr most senior american official to travel to hiroshima. , officials say a lieutenant from north korea fled to south korea last year. liberal lawmakers link the events to what they say is the conservative government of president park trying to muster anti-pyongyang votes ahead of this weekends parliamentary elections. the government denies the claims. presidential election is headed to a runoff. the right-leaning daughter of a jailed former president topped sunday's elections but garnered less than the 50% required for victory. according to the country's electoral office, she has about

39% of the vote. global news 24 hours a day program by 2400 journalists in more than 150 news bureaus around the world. tom: thank you so much. let's get to our data check. equiti, currencies, commodities, a nuanced, strange data check. dow futures up 49. oil with a pretty good game. $40 on nymex. you see it in the yield market. ix, 15.36. the yen was at 107 when i walked in the door. i am watching euro-swissie grind. the german yield, the positive yield, 0.086. that is a grind lower on the german 10-year. how you: i love quantify your board. nuanced and strange is also what

we're seeing in europe. the euro stocks 600 led by italian banks. i wanted to show you asian stocks also gaining. yen at 108 .13. however, it was gaining. because of volatility, it is now losing. twitters, with the lawrence frank interview, featured as well on the cover, it was a theme over the weekend of negative rates. we will talk to paul donovan about this. this is u.s. 10-year, which is positive when you take away the cleveland cbi, which is a higher cpi. we grind lower ever briefly in the 2008 crisis. -10-year yield. then down we go to this chronic since right here, in a new leg down. it would be something to see

this grind lower. yield when you take out a relatively high cleveland inflation. francine: what is going on, tom? we are totally on the same page. something on negative rates in japan. what i wanted to show you is the topix, the blue line, against topix banks.e, the japanese banks tumbling today. the cheapest on record on it speculation the boj will do more negative territory. this is the lowest since 1993. negative rates are announced here and then they go down. tom: great chart. it really shows the bank overlay as we go into the second and third week of april. francine: our guest host for the hour is paul donovan, global economist for ubs investment bank. great to have you on the program. japanl talk briefly about

to see how you price risk. we will save japan for a later block. are we miss pricing risk? negative rates are skewing the banks. what does it mean if you are a player on the market? paul: we've got to be very careful. inflation has been taking up as we've seen. the answer is, maybe never. you've now got a rigged market. sitting here in the u k, the gilt market has been rigged for my entire career. you end up with this repression coming through. certain investors are forced to buy bonds. in that environment, you permanently end up with a distortion of the so-called risk-pre-rate of return. is lower.ield why are governments doing this? it is the fantastic way of reducing debt over time.

it is basically like a tax on savers they don't realize they are paying. by forcing institutional investors into government bonds at lower yields, you are reducing your debt over time, but it creates havoc. francine: this could go on for the next five years, 10 years, or is this the new reality? paul: in the u.k., we are 50 years and counting. there's negative consequences. a more parochial world. a collapse of global capital flow -- global capital flow has collapsed as a share of gdp. we are far more concentrated on investing in local markets. tom: paul, good morning. i want to set up where we are in this monday. if i look at the german 10-year, it is grinding lower. to overplay a single statistic. i see a set of data, including a

german 10-year hitting down to 0.087 that suggests continued slowed gdp. do you buy the idea in america that a lousy first quarter can lead to a better second, third, and fourth quarter? i think this is part of the problem. in a world of financial repression and low inflation overall, and inflation is picking up, but not 5% or anything like that. in that environment, the information content of the bond market is very low. it tells us about regulation and the general low-inflation environment. inflation,ot 5%, 6% the information content of a bond is better. tom: i love that insight. where is the information content if not in the bond market? in economists of course.

where else would it be? tom: that is why we booked you. paul: if we are looking for information content, we've got to look at a very broad range of indicators. focusing on the bond market, even single data releases, is no longer helpful. we are getting more uncertainty. that is a huge problem. for the markets, there's a certain amount of information content we can get from equities. again, we have to bear in mind that the equity market in the states, s&p companies are maybe generating 15% of u.s. gdp. there's a limited amount of information from that. tom: paul donovan, we will speak on the yellen-obama meeting that we will see later this afternoon. coming up in our next hour, we will drive forward the conversation on equities. joseph quinlan will join us with

u.s. trust, a great synthesis of what equity markets are doing with the economy. ♪

francine: plan francine lacqua in london. tom keene is in new york. first of all, this is the bloomberg business flash. here's caroline hyde. caroline: standard chartered's is looking to sell $4.4 billion of assets in asia according to people familiar with the matter. the bank is talking to potential buyers. is paring itsered balance sheet after record impairment. developing economies in east asia is holding up despite tough global conditions

and slowdown in china according to the world bank, which is lowering its growth forecast for this year to 6.3%. in a report out today, the washington lenders as growth is said to ease from an estimated 6.5% in 2015. the parent company of the daily mail says it is in talks with bidders for yahoo!. there is no certain the will take place. people familiar with the plan say verizon and google are also among the bidders. that is the bloomberg business flash. tom: caroline, thank you so much. francine, are you kidding me? explain to me why the daily mail wants to put up with yahoo! a million miles away. i don't get it. francine: there's a couple reasons. 85% of sales from you are in the u.s. businesse a u.k. media

and the u.s. is still the holy grail, you think yahoo! is attractive, cheap, then i may go get it. but we spoke to someone very close in negotiations and he said it is up for sale. tom: i'll go with that. the holy grail this morning is cate wearing alexander mcqueen in india, by the way. let's get back to something more serious. i'll donovan of ubs puts it front and center. japanese yen is one of the litmus papers of a troubled level system. i need a basic explanation of the bafflement last week. explain to the mortals why the yen is stronger given the challenges of the japanese macroeconomics. don't forget, it is not just a one sided equation. you've got to think about what is going on in the states as well.

particularly with capital flows in the united states. not buying soare many dollars as they used to be vying. middle eastern dollars are actively selling and bringing the money back. because central banks reserves are weighted, that is creating a generally weaker dollar environment. japan has a current account surplus block. that means the price of the yen is basically the price at which japanese investors are willing to sell their currency. the price of the dollar is the price at which foreigners are prepared to buy dollars. the japanese are a bit reluctant to sell yen at the moment. we don't have central banks buying the dollar. tom: bring the chart of again. this is very important. the distinction that mr. donovan makes of selling and buying depending on where you live. where at ubs have a tip

yen strength begins to create financial instability? where is it? paul: it is yen strength so bad for japan really? for the japanese economy i mean. eats into theo is profit margins of japanese exporters. we know that. exporters carry on selling stuff overseas. they don't reduce market share. they reduce profit margins. over the last few years, japanese companies have been using their profit to invest, but not in japan. it is not necessarily bad for the japanese economy. for one group, it could be good. the one set of prices that respond to currency moves is commodity prices.

let's look at what is happening. what are we seeing as the yen strengthens? ultimately, lower energy costs, lower food costs, and lower importing pharmaceutical prices. spends most of their money on food, energy, and pharmaceuticals? the elderly. the elderly get a better standard of living from this. francine: but the problem, and i spoke to mr. yen, he predicted 110. he says it will go to 100. the problem is that you lose control afterwards. once there is that economic swing, are we going to have intervention? if there is intervention from the boj, will it be coordinated with the fed? paul: intervention is possible. coordinating with the fed is unlikely. it is the treasury, not the federal reserve. are we going to be using

treasury reserve? why does that matter? we are in an election year. with democrats and republicans, do you want to be intervening in the currency markets in this environment? tom: paul donovan, we heard that same tone, importance of election year in the u.s., and in japan, we heard that from robert feldman of morgan stanley as well. we've got a big week of economics. imf meetings later this week. faber,next hour, meb really smart stuff on what to actually do given our great distortion. ♪

i'm francine lacqua in london. tom keene is in new york. we picked up something from a central banker, the ecb executive board member, speaking at the workshop in cernobio. he's talking about extra stimulus. when we consider that the usage of these instruments is expanded to very high proportions, they may start by diminishing returns at some point. paul donovan is still with us. he's talking about diminishing returns from central-bank action. yet they are the only safety blanket we had at the moment.

paul: this has been one of the debates. how much should fiscal policy be coming through? good luck with that. it has never happened, not since the bond summit in 1978. if we look at what is going on, there is stimulus coming through in europe. not so much in the anglo-saxon world. we are backing this up in some ways. i think there is a limit to what central banks can do and we run the danger of the unintended consequences. those unintended consequences are chair yellen meeting with the president and vice president today. i know you are not going to tell is what they are going to talk about, but the idea last week of a coordinated response, has there been any evidence of that within modern macroeconomics, where nations get together to provide a group stimulus? i don't buy it. paul: there was an attempt,

1978, the bond summit, which was derailed by the israeli situation in 1979. if you go back to the plaza in theory there was going to be coordinated action around that. but president obama can't promise this. he's got to get it through congress, which won't do anything he wants to do. the germans aren't interested in doing more fiscal stimulus. southern europe is interested in fiscal stimulus. japan is interested in fiscal stimulus. trying to convince others, you are never going to get merkel to agree to that or cameron. donovan, we will continue this discussion. right now, bring me up the second data screen if you want. i want to go through this as we go to break. it is important to set the tone on a monday, sort of a non-news

weekend, except all of a sudden, chair yellen is meeting the president. expedited meeting by the board of governors of the fed today as well. futures better. the yen was 107. grinding stronger earlier this morning. euro-swissie, a lot of people watching swiss franc. bloomberg gadfly with a terrific article. coming up on bloomberg this morning, steven ratner on what ith the equity markets. francine lacqua in london. i'm tom keene in new york. this is bloomberg "surveillance ." ♪ you shouldn't have to go far

to get the help you're looking for. that's why at xfinity we're opening up more stores closer to you. where you can use all of our latest products and technology. and find out how to get the most out of your service. so when you get home, all you have to do is enjoy it.

we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. shoshow me more like this.e. show me "previously watched." what's recommended for me. x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity. tom: good monday morning from london and new york. francine lacqua and tom keene. imf meetings later this week.

right now, our first word news on geopolitics. here's caroline hyde. caroline: thank you. ukrainian prime minister arseniy yatsenyuk is resigning. the move opens the way for a new government. the country's parliament is set to vote to elect the current speaker as the new prime minister. say theum, authorities extremists who struck brussels last month had plans to launch another assault on france. they were reportedly surprised by the speed of the investigation and instead rushed an attack on brussels. men inties arrested four raids over the weekend, all allegedly connected to the brussels attacks. in southern india, medical teams are tending to hundreds injured after a massive fire that killed at least 110 people as authorities search for those

responsible for the illegal fireworks display which caused the blaze at a hindu temple. the display was staged the forward on sunday as the temple was packed with thousands attending a religious festival. president obama will meet with u.s. federal reserve chair janet yellen today. the white house says the oval office meeting will focus on the state of the american and global economy as well as wall street reform. vice president joe biden will also attend. global news 24 hours a day. i'm caroline hyde. francine: thank you so much, caroline. as we talk about the panama papers fallout, i want to draw your attention to something that gadfly wrote. it is lionel laurent. it says, nevermind the russians. penama will be all about the banks. lionel joins us on set. paul donovan also with us.

you basically argue that once we move away from resignations or david cameron being in hot water, it is the banks that are left to deal with all this murkiness about taxation and tax havens. lionel: it is all about scrutiny, transparency. thanks have a point when they say they have improved a lot. the direction of travel has been reducing their exposure to these areas. one has to wonder just how long it will be before politicians who are under pressure to respond will say, we need more questions and more answers on what is going on in these jurisdictions and what banks could be telling us more. francine: what are the banks that are under more pressure? weird from societe generale, from the swiss banks, credit suisse and others. lionel: they were surprised in terms of the names. i think it is more the timing and the sheer number of

companies that were supposedly set up by these banks according to the documents that have clashed with their own narratives of saying, we turned the page. so give us some credit. i think that is clashing because the politicians and regulators say, just how much have you done over the past five years? tom: i can't get a straight answer on this, lionel. is there a distinction between panama and the other lovely names? my blind trust in jersey, i can't believe how poorly it performed last year. jersey, guernsey, eight islands in the caribbean i can't pronounce. are they all the same as panama or are they different? lionel: i think you will get a straight answer from the oecd. they said panama was a holdout with their own initiative, automatic exchange of information.

i think panama is already being singled out by quite a few authorities as relatively more difficult to deal with than others. all you have to do is open and annual report of a multinational company and you will see a long list of subsidiaries in a lot of these jurisdictions that have been called tax havens. tom: in three weeks, business continues as usual. let's move onto the other business of the moment. what geography are you focused on to learn about how bad it is for banks? do i look at europe, america? where are you looking? lionel: you could look at emerging markets. emerging markets are at a very interesting critical juncture. they are seen as beginning some kind of rebound. on the other hand, banks are still having to reduce their exposure. standard chartered is apparently

putting loans on the market. of banksshrinking exposed in emerging markets and perhaps the tom: worst time. francine, i think there's a lot of value in not looking at the major stories, but unicredit. then unicredit announcement was something. francine: and we know that unicredit is meeting with intel some, pressured by the government, which is why they are actually the biggest gainers today. i have a disclaimer. tom, you have a lot of sense of humor. you do not have an offshore account. i do not want to get internal revenue on our behind. tom: get over it. continue. francine: paul, when you look at the banks, we forget sometimes that there's a transmission mechanism that has to go through the banks. then you think anyone that goes

through qe, you need the banks there to support it. is that almost broken? paul: i think we can't talk about monetary policy as being end-all anymore. you have to talk about regulatory policy. as we see more regulations on the banks, good or bad, it does have an impact on the transmission mechanism. it does change the way things are operating. we have this complex interaction. this is part of the problem with things like the federal reserve. we have a multifaceted policy. you have three options in front of you which creates a multifaceted federal reserve and ecb. central-bank policy is becoming increasingly complicated. this regulatory side is the thing which is often ignored, but it is a very powerful force credit comes to

transmission and the efficacy of central-bank policy. francine: lionel, you wrote a piece saying bank really writers are pulling a few -- bank regulators are pulling a few punches. are they over regulating without understanding what they need to crack down on? lionel: i don't know if i should say over regulating, but there is a mixed message. if you look at italy, on the one hand the ecb is trying to improve this transmission mechanism. on the other hand, the ecb regulator is looking at issues like corporate governance and nonperforming loans and really bashing the banks to get their house in order. maybe not ever regulating, but certainly mixed messages between the political side and the regulatory side. tom: thank you so much. i can't say enough about bloomberg at fly. it is a briefing with charts,

charts, charts. bloomberg gadfly on european banks has also got a killer article this morning on the swiss franc. tomorrow, we drive forward the story of oil and call it the hottest recovery. we need to recalibrate with jeffrey currie of goldman sachs on commodities and brent. ♪

i'm francine lacqua in london. tom keene is in new york. this is our morning over. the fashionada, house based in italy, listed in hong kong. it closed down 8%, down 9% over

two days. figures showed the lowest profit in five years. the last 12 quarters, they disappointed investors for 11. fromis because demand luxury in general is going down in asia. tom, i initially thought it was your fault. you switched to dolce gabbana instead of buying prada, but you are not behind the cause of this. tom: i think there's a lot going on here. it follows on the rest of the economy. here's how you do it, francine. here's the "new york post" today. cate is here. i looked at this and said, this is going to sound like hotcakes. ands doing cricket in india she's wearing alexander mcqueen. every single woman in america is going to dial-up 1-800-i want to

be like kate. e to whereto get cat prada. francine: alexander mcqueen is quite a big coup. has been championing a lot of u.k. brands. on a more serious point, if you are tied to a celebrity that is doing well, there's a dampening effect on the jury demand in china and emerging markets. that is also tied to dollar. it is also tied to the terrorist attacks in europe. paul: we've got a lot of things coming together. there has been perhaps a move against conspicuous consumption for some groups and some markets. for political reasons, social reasons, there's been something of a shift. what we've also been seeing is that in emerging asia, the explosion of debt over the last

few years is coming to an end. just at the point when more established markets are starting to pick up in europe, asia is now slowing down. if we look at where luxury demand growth has been, there has been this over the last 15 years. asia is a less equal society, so you get more luxury demand from the high-end. europe is a more middle income society. economic growth there is not necessarily about buying clothes from prada, but getting a decent bottle of wine. tom: i'm drinking boone's farm. you don't know what that is. francine, you and caroline didn't ask about my bowtie. i'm wearing william knight. francine: prada. tom: it is william nye. francine: the science guy. tom: it is very cool.

francine: i wonder how that sells in china. paul, the luxury market, prada sold a lot of small gifts. it different if you sell clothes? what kind of niche market do you need to be in to succeed as a luxury company? paul: part of the problem with things like clothing and small gifts is that it is quite a conspicuous form of consumption. if you are going for something which is a luxury brand but was brand,trusive, a quality and i'm not saying these aren't quality brands, but where there is more emphasis on quality, that perhaps is a better area to go, maybe. the only luxury brand i own is my globetrotter suitcase because i spent 10 months of the year on

a plane so a good quality suitcase is important for me. that is more about the quality and durability. tom: to me, it is also oversupply of luxury with the inequality and the skewed income growth to the upper 1% or upper 7%. like any other cycle, it has played out. york, thereue, new are a lot of vacancies due to skyhigh rent. francine: in more simple terms, just oversaturation. hionhave a lot of fas and luxury companies where fashion is fickle. you look at the duchess of cambridge and what she is wearing. the companies that have not expended aren't doing well. reset for this is what you see within the obama-yellen meeting or the spring meetings of the imf, this continued inequality. we see one little tea leaf of

that as the luxury brand response. francine: we've been trying to get to the bottom of inequality and how you deal with it. we have to take a break, but it would be great to get back to paul to see if qe has really created this inequality and whether it is making it worse. tom: we will do that next year, linking central banks to the imf meetings. the imf and world bank spring meetings in washington. we will speak with kenneth of harvard university, an imposing of the peterson institute, and david lipton of the international monetary fund. q&a,berg markets magazine, john with the managing director. good morning. ♪

morning, everyone. markets interesting and very nuanced. francine lacqua in london. i'm tom keene in new york. that's get to our bloomberg business flash. here's caroline. caroline: chinese consumer prices remained buoyant as food

prices surged. the consumer price index was at 2.3% in march, matching february level. the producer price index posted its first month on month increase since 2013. italian officials and executives in the country's major banks are planning a fund to buy bankshares. the fund would help lenders tackle an estimated $410 billion in bad loans. people familiar with the plan say a final agreement could be reached this week. the record number of luxury homes planned in london is raising the prospect they may be forced to turn some into offices. plans are in the pipeline for 35,000 high-end properties worth almost $108 billion, but the surgeon supply comes as demand is weakening thanks to higher property taxes and slumping commodities. francine: thank you so much, caroline.

the u.k. minister of continues to face scrutiny after the panama papers called his business dealings into question. joining us now is bloomberg's svenja o'donnell. still with us, paul donovan. thank you to both. david cameron,t what do people take issue with? is it the money that he recovered, either from his late father or his mother, or is it how he's dealt with the saga? svenja: i don't think it has come as a massive shock that david cameron is quite well off. i think what has been problematic is the way number 10 and david cameron himself handled these allegations and the way things have been disclosed. the issue is trust. problem is, if you are prime minister, and obviously he's been run minister for one term already, he spent the last five years preaching moral high

ground, then you open yourself up to this particular issue. francine: the issue here is not that he's going to be pushed to resign. the issue is that people get confused and vote -- svenja: the issue is people think he's not told the whole truth, that he's not been straightforward. he's not going to resign over this. the problem as we discussed earlier, with brexit or any referendum, is that people never answer the question on the ballot. we still have a few weeks for things to roll back a little bit from what has been a pretty nasty month for cameron, but there is a risk that some of the doubters think, cameron is campaigning for him, we don't like him anymore, so we will vote no. and is this it across all of u.k. politics?

obviously it is a tory issue, a conservative issue, but you've got to be kidding me. there's got to be many labour party members, whether in panama or guernsey or wherever, this must permeate all of the u.k. as it does all of the united states. svenja: there's a suggestion that all mps will be forced to publish their tax returns. of course the issue is we are not talking about anything illegal, but you are right. indeed be very surprised if david cameron was the only person to have just done some tax planning especially when it comes to things like inheritance. i think tony been was someone who was famously quite savvy about how to pass on his house to his children. i think the problem is that we are talking about the prime minister, a prime minister who we know is going to step down

the for the next elections. he's already got a sell by date. tom: i like that, a sell by date. maybe some of our candidates in america have a sell by date. let's switch gears with paul donovan. back to the terminal. this is the 10-year yield in the united states adjusted for inflation. i've used cleveland cpi, which is a little higher. paul donovan, we have negative rates on the 10-year. that goes to the idea of inflation being measured differently, particularly for the rich like prime minister cameron versus the poor. paul: absolutely. inflation and the quality has been one of the real features of the last 10, 15 years. as income inequality has grown, the basket of goods that somebody very high income is buying is more likely to be

different than the basket of goods somebody of low income is buying. the basket of goods that you will have as an elderly person is very different from average cpi and it is going up in price, generally speaking, faster than average cpi. , ifcally, if you are rich you are young, you've got a very different composition of goods and services. if you are lower income or elderly, you tend to face a higher inflation rate. you need to be young and rich if at all possible. francine: news you can use. unfortunately, everything ties in. how do you prepare your clients for any eventuality? , the two key question key questions, our first, what is the nature of the exit? we believe in a soft exit, u.k. to bebut it is not going that different from where we are

now. the second issue, what does this mean for europe? this isn't just an implication for the u.k. if the u.k. leaves, europe becomes more southern european in its political structures, and that is not appreciated. tom: paul donovan, thank you so much. thank you for coming on after some tough travel days in asia. svenja o'donnell, thank you so much as always, with bloomberg news. osborne is next according to the signs of london. next for us is joseph quinlan. linking the equity markets to an important week of international economics. from london, from new york, stay with us. bloomberg "surveillance." ♪

president obama will meet with the chair this afternoon.

device president -- the vice president will attend. the atlanta the gdp statistics -- it is sub 1%. does that speak of attempted american economy? investing in a time of negative american interest rates. forget forarter to banks worldwide is? this is "bloomberg surveillance ," live from our world headquarters in new york. i am tom keene. with me, francine lacqua. the bank story will be fascinating at those conference calls. francine: it will, because we had the panama papers. we will see how they react to that. and in italy today, which is driving european shares, you may have a resolution as the government tries to -- tom: and the italy issue with

unicredit, we saw that last week. as we bring you global perspective on not only that but the american economy as well. here is caroline hyde with first word news. caroline: in belgium, authorities say the extremists struck brussels last month and killed 32 people have planned another assault in the wake of the paris attacks. they are said to have russian attack on brussels. the ukrainian prime minister is resigning after weeks of pressure. newpens the way for a government. the country's parliament is expected to elect the current speaker as the new prime minister. a seoul, korea, officials say kernel from north korea fled to south korea last year. afterws comes three days --

tomakers link the events conservatives trying to muster -- the government denies the claim. furor over theal panama papers is entering its second week. with u.k. prime minister david cameron today facing lawmakers. over the weekend, cameron addressed conservative already activists and admonished shortcomings in his handling of the matter. peru possible presidential election is headed for a runoff, a partial count in the votes in the case. 50% -- she will face premarket -- according to the electoral votee, she has 39% of the will kaczynski has 24%. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am caroline hyde.

tom: thank you so much. i am typing way on the bloomberg terminal. let's look at a data check. dow futures are up 56. the yen does not do that. right on to the next screen. the vix, 15.36. strong yen.ill a i am looking at the euro-swisse. what do you have, francine? , 108.10. you're right wass told the next level 105, and then we are at a hundred. gleaning --ks are overall stocks are gaining.

they will find a resolution to the italian banking system. tom: we have shown this twice this morning. 10-year yield, the cleveland cpi. of the the depths crisis, 2008-2009. we have this real yield of negatives in the u.s., a dip down, and then some of the distortion, maybe a follow-onto negative rates in europe. francine: i also have something on negative rates. the blue line is the topix index. the white line is the topic banking index. negative rates were announced around here. once again we talk about further negative territory, and it is going down. tom: very good. there it is. we have not spoken to him in ages. i have no idea why. decadesuinlan has spent emphasizing the soup out there

for people that u.s. trust. guess we talk about the markets, but i want to talk about the jumble. we will do obama, yellen, and the -- what are the negative yields in germany, in denmark -- what is the so what for american investors? iseph: the global economy still struggling eight years after the crisis. the united states is ok but we are not strong enough to take on the rest of the world. in chinaicative that we are at 5%, 6%. you see policymakers not pushing on the framework. a lot of companies and corporations are standing off to the sidelines. tom: as we go to the imf meetings, let me ask you the same questions i will ask ken rogoff and adam posen. we are not an island, are we? an island.are not

we need to trade, the investment, the capital, the human resources, and we need the demand. tom: so this is demand efficiency right now? joseph: i think so. it is global. francine: the problem is, there is something ugly out there. you are saying the world economy is fragile, but is it ugly enough for janet yellen to not normalize, or is it an excuse for the fed to buy themselves time? joseph: maybe a little bit of both. we have heard the fed talk a couple of weeks ago that international developments are still soft and fragile. they pulled back on the board rate hikes. bebe instead of two it will one. there is no doubt that we are looking at globally. globally, tell us about the risks out there. we know about china, brexit,

japan. is there anything else? joseph: globally, the globalization. tom: what do you mean by that? joseph: de-globalization, the borders are going up. we saw a slowdown in trade, the global supply chains are contracting. corporations are not pulling money home. they are also pulling production home. they are looking closer to home because they do not like the risk factor. is b-l-o-c. word the idea of regional blocs. does the vision of a lack of trade trump everything with the debate? joseph: a could. we have these two big mega trade deals out there bank. tom: are they dead? joseph: i think they are dead on

the vine. tom: imf meetings are always behind the scenes. they are done over the four seasons bar out there in alexandria late at night. what do you expect to see at the spring meetings given the dearth of trade? joseph: more caution, more lip service, and more prodding of fiscal infrastructure spending. tom: this is one of our great charts to march here, the exports going flat. of duration of the flatness the world trade is extraordinary. extraordinary, and we are not paying enough attention to it. tom: francine, we are going to do that this week with ken rogoff and adam posen. ,rancine: it is unclear to me and i hope joseph can give us some insight. the economy is depressed, fragile, and we are not seeing anything that can lift us out of

this. can anything bring us to a world recession? should we be more worried about risks, shocks to the financial system? joseph: not yet. central banks are pumping money, everyone to spend more. the key would be corporations. corporations are the one that drive trade. is ok, not great, so they can continue on. you get a cyclical recovery. if china grows by 5%, 6%, that gives us enough lift to keep plodding along at the subpar rate. tom: -- francine: you mentioned little bit of the earnings season. ,ou mentioned cost-cutting synergies. do they have to cut and cut? joseph: there may be some topline growth in technology and industrials, but the forward

guidance will because in. tom: 10 seconds -- do we have a bottom with oil yet? joseph: i think we are making the bottom. tom: we will extend that discussion tomorrow. we are thrilled to bring you jeffrey currie, who will join us. we need to get a recalibration of the bottom in oil. we will do that tomorrow with jeffrey currie. from london and new york, stay with us. "bloomberg surveillance." ♪

francine: i am francine lacqua in london, tom keene is in new york. let's get straight to the bloomberg business flash. here is caroline hyde according to people

familiar with the matter, the london bank is talking with potential buyers for $1.4 billion of stressed loans extended to indian companies. standard chartered has booked record impairments. missed and 11% gain after u.s. crude inventories unexpectedly fell. in intermediate jumped. the next day the federal government reported a 4.9 billion and that errol drop -- a 4.9 billion barrel drop. you k'snt company of "daily mail" says it is in touch with bidders for yahoo! yahoo! said earlier this year it is exploring alternatives. people say verizon and google are up for bidding on bloomberg

at -- up for bidding on yahoo! assets. francine on the daily mail by a yahoo! -- who is next? we have heard from a number of people that there will be a lot of bidders on that. caroline hyde, thank you so much. it is always good to speak to my colleague michael mckee. are two items to talk about this morning. joe quinlan is with us as well. i want to get out of the way the us but i did meeting of the fed. people say what are they going to effort lunch, will they order out pizza. is that a normal thing they do, where they have a closed meeting? michael: it is a normal thing they do. ,asically under the fed rules they can have a private meeting. they need to have private meetings to discuss things like bank enforcement actions and to

discuss monetary policy. this is about the discount rate. districtseral reserve , their governors meet on a regular basis. they send recommendations to the fed once a quarter. they consider those the announcement procedure. saying that we are going to have the meeting is what is expedited, not the meeting itself. a technical term, but it goes to a transparency that the fed has to say what it is going to be doing every minute of the day. michael: they are going to consider the requests from the banks and not make any policy changes. tom: clarity, i say, francine. francine: what about the other way around? i know the president will quiz janet yellen, but if you are janet yellen, you must be looking at the political situation. are they talking about elections? michael: it may come up.

it is the risk of the political mill. one of the republican presidential candidates have -- one of the republican presidential candidates has been accusing janet yellen of keeping interest rate artificially low to help hillary clinton. it is coincidence that the president and the fed chair will meet at the white house following this discount rate meeting. they did meet march 7 with other financial regulators at the white house to talk about the dodd frank act and how it has been implemented. november of 2014 with the last time they had a private meeting, but it is not unusual for presidents to meet with their fed chairs. francine: because you have been following the fed for decades, you have great insight -- and i spoke to the person who correctly predicted that the yen 115, 110.h he said we may see direct market intervention on yen. would chair yellen introduce an

implicit yes to that? michael: whether it is implicit or not does not matter. the fed would be notified, maybe. the fed does not have anything to do with intervention in the united states. jack lew would have to decide whether the u.s. wanted to get involved. i cannot see any reason why the u.s. would at this point. we have not intervened in currency markets in many years. tom: joe, what is the backstory here? there are a lot of interesting market dynamics. joe: investors still think the g-20 works well. they are really not on the same page. will be meeting this weekend in conjunction with the imf world bank meeting. so there -- joe: so there is not much policy coordination coming out of it. there is really no plaza accord type of agreement. tom: here is what i do to try to

keep up with michael mckee. besides looking at the penguins and the rangers in the playoffs, i look at fomc go. this is the michael mckee screen , and this saves my butt nonstop. that is not from "bloomberg surveillance." april 27 is tomorrow. it is a non-press conference meeting and the economy is not leaning one way or the other so dramatically that they have to act. tom: this is what they all had for lunch at the fomc meeting. francine: this is like the bloomberg lunch, better than some of our rivals that shall not be named on the air. friday, "bloomberg surveillance" will have live coverage of the world bank spring meeting in washington. we will be joined by harvard , and byty's ken rogoff

the president of the peterson institute, david lipton. and adam posen. and the new bloomberg markets magazine, a q&a between the chief and the imf managing director. ♪

tom: welcome to "bloomberg surveillance." chair. in the time-out i am in the francine lacqua time-out chair. let me show you why.

she blew a gasket over in london about the lengths that i am going to drop off the -- with just an fox, you want to quote the whole essay. this is spectacular on u.s. infrastructure, which -- street in new york and 50 nine st are like medieval london. 59th street are like medieval london. tom: they goes on to talk about the other compare and contrast. joe quinlan is with us from u.s. trust. at the end of the day, we run a high cost infrastructure we cannot afford to fix. joe: we had better fix it, or we

will have problems with global competitiveness and global growth. when you go to a city or an airport, you can feel it. tom: if you fly into phoenix, it basically looks like germany or switzerland. it looks gorgeous. it is not about new infrastructure, it is repairing the old stuff. how does london do it? francine: they just shut everything down. see, i think london is a mess. how much is a train ticket in new york for the subway? it is about seven dollars. $2.75, i am told. aboutne: in london, it is seven dollars. you have to make sure that you make it affordable for people who live in the city, in the capital.

d.c. andld argue that new york are way out front. this city is so expensive, that if brexit happens, people will leave. joe: that is an important point, in the sense that if you have less people flowing through, the infrastructure -- if you go to asia, china, cambodia, the first thing you see is a very well functioning airport. and you have the metro rail's connecting the city with the airport. the developing cities have to rethink how we move people, goods, and so forth. to me, it could be a driver of growth. tom: let's leave it there. infrastructure -- i cannot say enough about justin fox, and i will put it out on social media. is there any way to play out infrastructure on global markets? joe: it is kind of the old boring -- tom: is there a value trap right now? joe: if you have the long term,

i think they look attractive here. 5, 10 years out, urbanization is still coming in the emerging market. we have a young population. tom: joe quinlan is with us, and we will move this discussion forward. up, we will link in market strategy with things to do and not to do maybe over the weekend. you discovered that your 201k is looking more like a 101k. faber will join us. there is our infrastructure. ♪ you shouldn't have to go far

to get the help you're looking for. that's why at xfinity we're opening up more stores closer to you. where you can use all of our latest products and technology. and find out how to get the most out of your service. so when you get home, all you have to do is enjoy it.

we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. shoshow me more like this.e. show me "previously watched." what's recommended for me. x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity. francine: iamb francine lacqua in london. tom keene is in new york. let's get to the bloomberg first review with caroline hyde. caroline: brazil is deploying

thousands of troops in the city this week. authorities say the country's polarized political climate could reach a fever pitch. a special committee will begin voting today whether to move forward with the impeachment request against president dilma rousseff. the number of refugees entering -- morey the sea has than 53,000 remain stranded in greece. more than one million people have passed through since 2015. new arrivals have peaked above 200,000 in march. have only been 1700 this month. police in new orleans say a case of road rage led to the fatal shooting of will smith. rear-ended smith's

car. a man in custody faces second-degree murder. will smith helped the new orleans saints win a super bowl title in 2009. the oval office meeting will focus on the state of american and global economies as well as wall street reforms. vice president joe biden will also attend. and a shocker at the masters. won the green jacket, finishing five under par for the masters tournament. spieth had a five-stroke lead. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am caroline hyde. tom: caroline, it was really something to see, jordan spieth putting the code on danny

onlett -- putting the coat danny willett. classy of jordan spieth, shattered after that loss. in case -- in his case, the 12th hole. getting spring started, the masters. right now, this is an exceptionally important moment in the history of "bloomberg surveillance." the university of virginia, the last time their lacrosse team had a losing record, meb faber re a tie. it is way too early for you, but not too early to talk about the seriousness of the equity markets. joe quinlan is with us as well. what is the biggest mistake investors are doing right now? meb: there is a classic mistakes they always make. the emotional reaction to what is going on in the market. the other one is paying too much in fees. once you get past the basic

mistakes, one of the of the biggest is being focused too much on what is going on in the u.s. u.s. investors almost always allocate way too much to the u.s. given -- wehave asked them, and it is about 70%. that is a very active that. tom: i want to be a yield halt. you want to pick up 7% foreign debt coupons. do i want to do that? meb: we like both equity and foreign markets. we are value investors, so most of the world equities are much cheaper, most of the bonds are much bonds -- are much higher yielding. for the stocks, it is both developed and emerging looks great. valuations are reasonable all the way down to the cheap stuff, really cheap. p/e ratios are around nine versus about 15 on average. 7% or 8% withg at

bond yields, compared to the global average of around 3%. and then the developed markets are around 50 basis points. tom: let's hang in francine lacqua. -- let's bring in francine lacqua. francine: there is financial repression, and that is hurting bond yields around the board. meb: if you look at 70% of the world that in five countries -- u.s., france, germany, u.k. -- that yields around 50 basis points. those are the ones you want to avoid. you really want to avoid those who. historically, if you invest the highest yielding buckets, it adds about two percentage points per year to a global bond exposure. getting away from these high-debt issuers to some of the markets that are scary -- we just listened on the intro, what thating on in greece and

has been a great pickup in performance, but not a lot of increase with performance and drawdowns. francine: are you saying you are buying some groupon's? that would be surprising. we do not know what the end game is there. meb: we never do, right? greece, also in places like russia and brazil and mexico and colombia. those sound really scary, but if you look at this year, the tide is finally changing. a lot of those markets are having great performance can. close your eyes and hold your nose and own some of these securities, we think long-term it is a great place to be. tom: here is the arc of oil index. here is a boom in hydrocarbons in 2008. down we go, down we go again. trap where, value

you begin to look at the oil stocks beleaguered. joe: we are overweight energy. we are buying some of these big energy oil companies. reason,it a cash flow or is the balance sheet mostly cleared? joe: more balance sheet right now we have to clean up, a lot of consolidation coming. we are going to see the weak players go out and the stronger get stronger. agree?b, do you is: of the stocks, energy one of the cheaper. francine: i don't see with the catalyst for a higher oil price, what that is. a lot of these companies are trying to go out of business. asked the question of the day, which is you never seen the catalyst -- you never

see the catalyst coming. my experience is, you do not know what -- you do not know the why coming up. meb: saudi arabia cannot pump oil at these prices. it is painful. they need these money that they need this money. i think it will be more difficult when it comes to production because they need these prices higher. tom: where do you diversify? where is the value? meb: depending on how you rapid, we think in particular, if you end up in some countries like russia, you end up in a sector, with exposures that are much heavier tilted away from what the u.s. looks like. but in general, a lot of those developed market equities are emerging supercheap. will talk more about some of the valuations.

coming up later this morning, steve ratner. that is at 8:00 a.m. in new york, 1:00 p.m. in london. we look at the currency moves. this is "bloomberg surveillance." ♪

francine: welcome back. im francine lacqua in london. tom keene is in new york. we will talk yen and currency moves. let's get to the bloomberg business flash with caroline hyde. ago occupyive years wall street was in discussions.

in the same period, which is for all other industries rose 21%. haslomerate h in a group bought -- has agreed to buy -- it represents a 20% premium to friday's the deal is the latest in a global acquisition spree of aviation assets. executivesicials and at major banks are planning a funds to buy bankshares -- to buy back shares. people familiar with the plan say final agreement may be reached as soon as this week. that is the bloomberg business flash. tom: there are some headlines right now on overstock rid this is mr. byrne, the chief executive officer. he will take a medical leave of absence.

there are any number of headlines here. it is unknown if he will return to work as well. much more on that across all of bloomberg. patrick byrne to take a leave of absence at overstock. it is economics, finance, investment that we do. international economics with the imf world bank meetings this week. euro-swisse right now. joe quinlan is with us, as well as meb faber. thezerland is not within ecb, but down we go. what you really do not see under 100 there is the latest rollover in the first -- in the swiss. the stronger swiss franc. europe -- meb: europe is so hard to figure out. they are still in that deflationary poll. tom: how do you play europe

right now? talk about straw hats and winners. europe stocks still do well, don't they? meb: we think europe across the board, even the u.k., all those countries are universally cheap. but particularly eastern europe, the czech republic, austria. tom: when you talk to your clients, is europe like venus or mars? meb: worse than that. we do not spend a whole lot of time trying to come up with the clients feel what is working and what is not. we will see. francine: they need to watch "bloomberg surveillance." global perspective on the implications of brexit. how do they view japan? if they cannot figure out the u.k., if they cannot figure out

what to do because of negative rates, what about governor kuroda-- governor 's insistence? meb: looking at asset classes 3, 4, fiveeen down years in a row, which is incredibly rare, you find that future one-year returns are kind of outstanding, 30% or 40% per year on equities and a decent amount for currencies. we put the yen in that bucket, and all of them have been down 3, 4, 5 years in a row. you are seeing the end bounceback maybe because it has been down before, but maybe it has the potential room to run because it has been down for so many years in a row. francine: how much do we understand that negative rates play in banks? aboutere at a record low a week after we announced the

negative rates. do investors run away from japanese banks? meb: japan has been the poster child front charted territory for two decades. equitiesthe biggest bubble we have ever seen in the 1980's. that took 20 years to work off. they have been running what we call the japan playbook, for the last 20 years, of what the u.s. may look like. interest rates are negative again with the u.s. 10-year or you find these massive rallies, huge drawdowns over and over again. when it comes to japan, aging demographics, the best plan in japan is robotics. you can buy good companies, japanese manufacturers. japan is a very rifle-shot approach.

we are paying more sectors because that is going to be the place. treat japanyou knocking on to the rest of asia, including china? joe: the biggest issue is geopolitics. japan and china, the whole region is in turmoil in and around what is happening. me, you're seeing more companies leave japan and go down to southeast asia. they are buying more companies a global m&a. foxconn buy a part of sharp. that could be the catalyst for a japanese rally. tom: this is what we like best other thaneillance," telling you that europe is pluto. meb faber and joe quinlan together -- it is really quite good. francine: we know there is possibly something out there, there is water on mars or this

is your asset check as we go to the break. european stocks clearly in a reversal. this is on hope that italian lenders get it together. they were the worst performers last week. today we understand they may set to tackle nonperforming loans. 108.27, struggling to advance. ♪

tom: out of salt lake city, overstock with news. patrick burns stepping aside -- patrick byrne stepping aside with a medical leave of absence. he is ill. some talk of hepatitis. overstock, clearly there founder and force, patrick byrne out. let me do the forex report right now. francie likewise in london, i am in new york. the yen, 108.27. swiss.o is strong we are not a big deal there yet. francine: i do not know if it

goes up again or -- it is 105.ved it will touch " with up, "bloomberg david westin, stephanie ruhle, and jonathan ferro. what do you have today echo david: there are a lot of leak forecasts -- and a lot of leak forecasts out there. of bleakare a lot forecasts out there. john micklethwait sat down with an extensive interview with christine lagarde, the head of the imf. we will have john micklethwait with us and talk about the imf. we are talking about that on "bloomberg ." francine: i am looking forward to that interview. she has said she is a firefighter, and now she is going to build on that and become an architect.

mail" says there is no certainty that a deal with yahoo! will take place. alex, great to have you on the program. we allis make sense? have double takes in the newsroom. "daily mail," very popular, a tabloid going with yahoo! assets. sense justcould make from the strategic perspective in the u.s. markets, which is one of the areas where "the daily mail has had success online. there are other parts of "the daily mail. over the last years -- basically now, "the daily mail is a radical this would be a change in "the daily mail."

tom: is this an act of desperation? i understand u.k. media is in turmoil. what is the level of sweat for "the daily mail? alex: the daily mail does not need this. -- their focuses on strategies, not business. it is all about securing a key asset, because yahoo! is looking more like the key seller. there are likely a lot of investors in yahoo! own, ie assets that they think they are valued more. i would not say it is a distressed buyer, but -- the daily mail, which is looking for opportunities, one of them is online. tom: there is the fundamental story from london. to me, it is just a good old use

of cash. there is a lot of cash laying around. risks areoes are downside, not all that great because of the good julian's laying around. -- of the gazillions laying around. joe: we are still doing that for m&a this year. it will continue at least through the first quarter. b, when was the last time you were in yahoo? like 2000? francine, jump in here. i have a yahoo! account. a lot of people still have a yahoo! account. up for sale. everyone is going to have a look at it. does it depend on valuation? it will not be a chinese a company -- a chinese company. alex: the problem will be finding a buyer who wants everything, and i think that is unlikely.

what do you really want when you want yahoo? you have search, which is a big chunk of the company. then you have the constant assets, the websites. in between the two, i do not think you will find one buyer for everything. private equity can buy the whole ,ompany, then sell these assets in different time frames. that is the more likely chances over the next year. tom: thank you so much, alex wisch with bloomberg intelligence. what is your appetite with bloomberg -- with u.s. equities this morning? joe: it is robust long-term. the best place to put money to work right now, equities, large cap, dividend payers. these companies have been through wars, depressions, administrations, oil shock. they are going to come through it. francine, thank you so

much. so great. love it. all in all three francine lacqua -- she is from pluto and we talked about that. coming up on "bloomberg ," vonnie quinn parachuting into "bloomberg " this morning. we are looking forward to a recalibration on oil. a lot of debate on where oil is now, and three or four years out. futures up five, now up eight. point 21.08 it is a dark and gloomy sky as the new york rangers consider the pittsburgh penguins. ♪

season beginss today. analysts are expecting the worst performance since 2009. european banks are on the rise. the italian central bank is leading with the country's

treasury department to create a fund for nonperforming loans. and a warning on negative rates, saying they could have dangerous consequences. welcome to "bloomberg ." i am david westin with jonathan ferro and vonnie quinn. 70 will is off today. ahead of all of that this get, 30 minutes away, let's a market check for you. futures are positive on the points -- upy 60 by 64 points. in europe, italy, outperformance of 1.8%. treasury