francine: zero appreciation. singapore surprises policy easing, an asia currency route. can the president reassure russia that they will enter a second year of recession? rates. as the brexit votes, investors put bassh past the first hike. that decision at noon. this is bloomberg "surveillance." tom, we have two significant pieces of news. first of all, euro area

inflation revised upwards. that makes the jobs of central banks around the world a little bit easier. we also have the iaea saying that the oil markets are rebalancing. the and across to atlanta, same idea as what you saw with eurozone inflation. a better feel moving from a lousy 0.1% up to 0.3%. a a lot of things, a sigh of relief. you could even dovetail back to jpmorgan earnings yesterday. francine: you can. it's crazy. we're of plotting 0% inflation. better than we have had, right? that's the brave new world. let's get straight to the bloomberg first world nesws. nejra: ukraine's speaker has been approved as the next prime minister. poroshenko petro will take charge amid a volatile environment.

key administration officials have quit and the imf has halted a $17.5 billion bailout. in south korea, the ruling party in yesterday's parliamentary election. it derail the economic reform plan. pre-election polls showed it extending its hold. censors removed and anonymous posting on the chinese news board for defending president xi jingping, as having offshore holding. xi said he had nothing to fear from the revelation. severalublished on online news portals and circulated on social media before disappearing hours later. u.k. opposition leader jeremy corbyn and the labour party are overwhelmingly in favor of staying in the european union. a detailed make

intervention ahead of the june referendum on britain's membership. thesis staying put will let britain be better placed to deal with things like climate change of the refugee crisis. and on the subject of brexit, one analyst says a 24% chance .s same pollster who correctly predicted -- day,l news, 24 hours a powered by our 2400 journalists in more than 150 news bureaus around the world. tom: thank you so much. let's get right to the data. three days in a row, risk on. the shorts getting absolutely pounded. futures take a positive right now; i wouldn't trust that to get to 9:30. one of the headlines of the yield is it has done nothing. a little bit elevated, but not like you would think. euro much weaker, a stronger dollar, euro down and the yen as

well. onto the next screen, if you would. the big showing of bull markets, 13.84. dividend growing securities showing record highs. dollar index was 95 when i xalked in the door, and asia japan a big deal as well. i love how you open thed the show with singapore, showing no surprises. francine: it's a big deal. i listened to governor kuroda last night and it was interesting to see him rea to defending his negative rates. it drags down other asia-pacific currencies, after the central banks surprise move that fueled speculation the region would follow suit. i want to show you the pound, because it is the only day.

-- because it is boe day. nestle was a surprise, unilever down a bit. tom: right to the bloomberg. dollar, this is year-yen. a a lot of pros look at this, a dynamic of risk on, risk off. the general trend is stronger yen, weaker dollar. down here, the abenomics begin. here's the weakening of the yen, and the rollover. we are right back to key trends coming off the financial crisis of august, 2007. it will be amazing to see if we pound through that. francine: it is boe day, so i wanted to show you something about the pound. this is my chart. pound-dollar volatility. see that? this is on brexit concerns. i also want to show you gdp forecasts. this is not the real gdp figure, but it is forecasts. this is the crossing point.

i wonder whether we will see a reversal of the forecast, as there is more and more brexit concerns. to be smarter about brexit, about earnings, we are joined by james sentence, and bartey. thank you so much to both. james, let's get off with you. we had earnings, cost-cutting. there is almost no growth around the world, but overall we are stagnating. inflation getting better. is it going to be worse than we thought the last couple quarters, or can we go along? >> into the earnings season? francine: you. eah. >> expectations have been cut really aggressively. our u.s. strategist says expectations are around 9%, we think it is maybe -4%. the bar is pretty low. we saw some of that yesterday

with jpmorgan. i'm not sure that this earnings season is necessarily going to be that bad. in many ways, i am more interested about what companies will say about what we are seeing at the start of q2 htathn q1. we have a lot of indicators showing an uptick; china pmi's were better, and there were improving trends in the u.s. for me, the interesting bit of this earnings season is what happens going forward. francine: and what companies -- they're cost-cutting and what they will say, but they have currency to deal with, and currency is the only game in town. this is with central banks are playing on. >> well, currencies are moving around a lot. i think it's understandable, because i don't think currently markets know what to make of central-bank policy. they're often moving in the reverse direction in terms of what the central banks are

trying to achieve. i'm not sure central banks are actually being very successful. the way in which they are trying to approach the currency market. perhaps they would be better off focusing more on domestic indicators for their economies rather than trying to manage currencies. it's a bit of a futile exercise. sentance, let's will in your cambridge work on history and economics. should a central bank, particularly the bank of england, manage for a vote or event like a brexit? should carney be brexit agnostic? >> well, i think there are always going to be things like election referendums, which tactically affect what central banks should be doing. but i think the area of concern i would have is the lack of strategy at the bank of england, that they don't have a strategy for gradually moving away from

these very low interest rates. when something comes along like the brexit referendum, it makes it more difficult for them to make that first rise. but they have some good opportunities in the second half of last year to make the interest rate rise, with the economy going quite well. inflation picking up again, and central banks should take it. i think one of the big criticisms i would make a central banks since the financial crisis is they haven't had a clear strategy for trying to move us back into more normal monetary position. tom: are they precluded from that strategy? this is a polarity of him and david blanchflower. theck of fiscal response in various shades of austerity across the united kingdom and all of europe. are we asking too much of the carneys of the world? >> i think they're more than slightly confused by trying to

expects growth to get back to where they were before the financial crisis. i think there are many good reasons, not to do with fiscal austerity, but to do with what's going on on the supply side of the economy. to expects what i call a new normal. 2% growth we have been seeing, it's pretty good in that normal world. so i think one of the weaknesses of central banks is that they haven't properly calibrated the growth can labor market responses we should be expecting to see. tom: andrew sentance to get us started. amelia durbin will join us. later today, across all of our platforms, on television and on radio, an important interview with dennis lockhart of the atlanta fed. i think gdp will come up. stay with us; from london, from new york, bloomberg "surveillance."

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francine: i'm francine lacqua in london; tom keene is in new york. but first let's get to the bloomberg business flash. nejra: thanks. the chief investment officer of goldman sachs asset management is expecting a wild ride in global stocks and little to show for it. he overseas about $15 million and says bouts of volatility will continue, as nervous investors dump shares at a into bad news. he will expect to miss single digit returns. unemployment rate unexpectedly fell to 5.7% in march, the lowest in 2.5 years. economists had expected it to increase to 5.9%.

it reflects the rise in business confidence and suggests that the central bank is unlikely to ease policy in the near term. and puerto rico is facing a multimillion dollar bond payment next month as house republicans struggle to help the island deal with it $17 billion debt. the house committee canceled the vote on the issue because republicans are divided on how congress should move or word. word arrigo it will likely default on the payment, its first default on general obligation bonds. francine? francine: thank you. if you have concerns about your economy, the russian economy, who are you going to call? vladimir putin is holding his annual televised show. we'll have plenty of headlines. we understand that a lot of the questions have been prescreened. we do hope he will get one or two questions on oil. probably one of the most incredible spectacles on earth. one of the main themes on earth linked to the state of russia's

link tois oil, and the opec. our chief energy correspondent joins us now on set. we are also still with james and andrew. cousink to every day the every day we are trying to figure out what's going on with the price of oil sto. we are expecting some rebalancing by the end of the year. javier: yes. out a positive spin on the numbers today. the fact is that the numbers have changed very little. the market is looking more and more to what the second half of the year, and increasingly into the beginning of 2017, and that will be the balance of supply and demand looking more positive for the russian economy. but the market seems to be going a bit ahead of itself. that's for the later part of the

second half of the beginning of 2017. today we are in april and still building inventory. francine: i'm trying to get the price of oil up. we are currently around $41, away from supply demand. they are also saying whatever happens in delhoha won't change the level of oil. javier: exactly. doha is about freezing production a record highs; that will change the market very much. it is more about sentiment, providing a floor. this morning we are reporting the letter from the minister of qatar, we obtained a letter under the freedom of information act in norway. that's exactly what the minister of qatar is saying; it's about providing a floor to the market and providing positive news about the situation. and so far it has been working very well for vladimir putin and opec, because they have gone up to about $40, a huge increase.

francine: when you were on the -- how difficult was it to predict the price of oil? it seems that things have got even more murky; you have more people talking about it. it's difficult to see what the bid prices. >> yeah. when i was on the mpc, we had a big role when oil went up to nearly $150 for barrel, and then the financial crisis came. before that. to $80 went gradually up and was then stable for quite a while. i think the difficulty people have in the oil market is we're in a different price regime from a couple years ago, when it seemed to be stuck around $100 per barrel. but what is that regime? $45?t $40-40 five is a going to go higher, up to $60?

i think we are going to learn about that from the responses of producers over the next 6-12 months. francine: the problem is producers. if you are an oil producer, shell, exxon, it is difficult to predict where the price of oil is. if you want to continue investing, the need to make sure you are cutting the dividends. >> that's one option, or cutting your capex. it's a delicate line these companies are trying to tread. the one thing i would say is that the levels of oil prices the got to this year, you are starting to see supply destruction. that's with starting to drive the oil price down. levels you in these won't get that restarting. strategy goes into 40's.d-to hig-high tom: andrew, as you know,

technology and technological process can change everything. i want to bring everyone into the future. you will see this across every news organization -- i feel bloomberg is leaving on this. this is our new function, top live. we have mr. putin in russia, and what is amazing about the service which we are just launching on the bloomberg terminal, is it's curated by our senior editors and reporters. it's a running conversation of what's going on, and this language is stunning. this question pulls no punches. asks why her food bill is -- or should i believe? extraordinary, real-time conversation, as we see with putin in moscow. javier blas, thank you so much. that is something mr. putin is whirled about. on international economics

tomorrow, harvard university, adam pozen, and the deputy managing director david lipton will be in conversation on the global economy. ♪

francine: i'm francine lacqua in london; tom keene is a new york. we have been talking so much about the boj and governor kuroda's movement. this is what we pick for our morning must listen. talkis after all of the

about what mr. kuroda has done. atwas defending his policy columbia business school last night. have a listen. >> japan's economy still has some way to go, until the price ability target of 2% is achieved. there's no doubt that there has been a clear change in the inflation trend under the banks 's qb. e. e. francine: he believes the markets would have been much worse if they had not gone to negative territory. >> i guess he's always right; it could have been much worse. i really wonder whether central banks know what they are doing with negative rates, because they're potentially negative consequences for the real economy that could negatively affect the banking system. a negativeso have effect on people's confidence.

individuals are basically holding money, and they are seeing the central value destroy the value of the money. they're setting and negative rate. i think it generally undermines confidence in policy of the central bank, and in the public end of the business community. james, i look at bank of america in europe. what's it do to the real economy? it's a quad-lemma now. i absolutelyt's original. >> it is original. ofre skeptical of the impact negative rates partly because of the impact of the vacuum system, and certainly when you take an economy like europe, the banks are crucial to credit creation and damage their profitability is that. one of the things we were hoping for out of the ecb march was a commitment to further cuts and negative interest rates. i'm going with andrew; i'm not

sure they really work.i think there are other things you can do which are more effective. tom: james, andrew, thrilled to have them this day. coming up, we continue the discussion on a litmus paper for the system. the sporting exchange market, joining us from hong kong, and hsbc's paul mackel. francine leaving the show with action by singapore and monetary authorities; even the tigers are threatened by the global economic slowdown. futures negative, dow futures negative. next.l mackel ♪ 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: even vladimir putin is asked about the roads. he is at his annual call in. it's great. but there are serious headlines on syria as he delicately moves

forward the dialogue. also vladimir putin on the economic growth. for those of you on global wall street with the bloomberg terminal, i can't convey enough the value of top live. the most important technological development from bloomberg news in 20 years. this is a running stream. this is the challenge for mr. putin -- this is the hydrocarbon collapse, and some of the questions are just piercing. i'm not sure they stacked the audience; you really wonder he was in the audience. francine: they're piercing, but they were actually rehearsed. tliv is the most useful tool you can have, looking at the vladimir putin. i'm not inexpert expert on the breakdown of russian reserves, but experts are highlighting that putin is saying wrong things about foreign reserves. they're about $500 billion and

that is not the figure they gave. if you want to follow that five-hour marathon q&a -- tom: five hours? that's more boring than "surveillance." hears nejra cehic. nejra: thanks. last year, the -- he crash the plane into the mountainside in the french alps, killing all 150 people on board. the lawsuit was filed in phoenix against the airline trading e training center. its and issuing today you will tit-for-tat report on human rights in the u.s., saying money and family connections are corrupting american politics. gun crimeport cites and excessive use of force by police. china publishes the report each year in response to the u.s. state department's annual

paper on china's human rights. a top treasury department official is arguing against new legislative sanctions on iran, even after -- he says iran will remain blocks from the u.s. financial system. republicans in congress have criticized president barack obama for failing to punish the country for peaceably defying a u.n. missile test ban. day,l news, 24 hours a powered by art with 400 journalists in more than 150 news bureaus around the world. francine: take you so much. -- thank you so much. shockwaves in the singapore dollar and a lot of the asian economies and the asian currencies. what does it mean for other policymakers? will they follow suit? paul mackel joins us now from hong kong. paul, when you look at what singapore announced today, it was a big deal as we came to the

newsroom this morning. this has repercussions in the region as a whole. >> absolutely. i think a lot of central banks definitely look at what it those with monetary policy. the fact that they have been on the dumbest side i think has had some concern; it's signaling. currencyopted gradual strengthen a must be a signal to other central banks to because this. it's quite powerful message. francine: what does this mean for the yuan, for the chinese currency? >> well, from our side of things, it has the direct application for the currency -- it says something about growth overall being relatively subdued, despite this idea that the china growth numbers are probably going to be doing ok. there's still some skepticism in terms of how sustainable that will be. same too on the inflation side;

that's very soft. these countries, these economies, they don't need strong currencies, and that's the message they are putting forward today. tom: let's look at what the dalgaard will look at -- what madonna lagarde will look at. this is the asian crisis of 1997, the collapse of their currency. here are the lessons learned, here's the recovery, here's the rollover of adxy. the money question, paul, if you would answer to madame lagarde or any of the leaders gathering in washington, is how fragile are those asian economies? i can't get a handle on it. how fragile is singapore? how fragile is malaysia? >> look, i don't think -- the current state of play isn't comparable, but there definitely is some fragility there. we know that.

i think the message is already been conveyed. so what do central banks have to do? they have to keep monetary policy relatively loose. we have seen that from a number of central banks in asia, and you are going to continue to see that the the course of the year. tom: what about the debt workout? , talking aboutse a european and greek debt workout. do we need an asian debt workout ? >> [laughter] no. i don't think it's quite like that. but you will have to see this continued deleveraging process. china is a good case in point. a lot of the domestic corporate have built up a lot of fx liability over the years, and that is slowly coming down. that will continue to be the case. it's also suggested there will be dollar demand coming from this client. ndrew, paul was talking about a possible devaluation of the yuan. what do we know that the chinese authority and game? >> well, they made a correction

last year, but they have been quite cautious since then. i think they're trying to create a degree of stability for the currency, but -- when the dollar was strong, that made it quite difficult for them. the dollar has weakened somewhat against the euro and other currencies recently. i think the general idea, however, is that a weaker currency being good for your one that- that's not can be achieved across the world. some have to be strong in some have to be week. but i think they will try to maintain stability in chinese renminbi. francine: are we seeing, paul, a lot more stability? we have experts yesterday -- it was different because of the holiday, but are we looking at a more stable china, growth wise? >> well, i think so.

we started to see these seeds of optimism a month ago. we're certainly going to see it continue to policy direction going on the right path. again, this optimism should be maintained for the next couple months. thereafter, i think market optimism conveyed; that is the risk. i'm a little doubtful be on the quarter about whether we can actually see a sustained turnaround. tom: we're going to do this later and i do want to hit you with quantitative finance is too early in the new york morning, but i am absolutely fascinated by the wrong turn, bipolar bet on yen. there is one crew that says weak yen, another betting it goes back to the 1994 trend of one million years ago. which is it? structurally, three years out, five years out, eight years out, what does hsbc place the japanese yen? >> [laughter] wow.

look, it's anyone's guess. we're lucky to get six or 12 months, but beyond that -- there's a big issue. the risk with japan is that they will be falling back into deflation, which means the risk is that they will be stuck with a strong currency. i get my many people argue the opposite; that eventually there is going to be a big blowout. i'm not in that camp. i think there will be structural appreciation pressure for some time. tom: very valuable. that's why we love to have paul on. the only strategist in the western pacific that will actually say, i have no clue. we love that. thank you so much. we will continue this discussion. here's a bonus round -- the atlanta fed resident has no clue, either. dennis lockhart will delicately answer questions. look for that on television and radio later this morning. ♪

tom: good morning. euro. international economics into the weekend; we will do that with the spring meeting of the ims in washington. right now, with our bloomberg business flash, here's nejra cehic. nejra: thanks. for every group says earnings this year will be at the low end of analyst estimates. the uk's largest luxury goods maker is struggling to cope with ebbing demand in hong kong in europe. they say wholesale revenue will drop about 10% in the first half of the year. debris also reported a slight drop in second-half sales. nestle says first-quarter revenue beat estimates. sales rose 3.9% on an organic basis; analysts expected 3.6%

rise. the first quarter growth rate is the slowest since 2009, into the struggling to get consumers interested in frozen pizza and convenience meals. unilever says growth was in line with estimates in water detergents and personal care units offsetting prices in europe. underlying sales include 4.7% better and analyst expectations. unilever says consumer demand remains fragile, and that volume growth slowed in the quarter. and that is your bloomberg business flash. francine: thank you so much. let's get more on those earnings, and the earnings season in general. we are joined by a former member of the bank of and good monetary policy, andrew sentance, and james bartey. james, when you look at earnings, the european stocks opening of the lower side, just turning positive today, it's the

emerging markets that didn't do as badly as we thought. l, i think we will begin to see that come through, and you could say there are signs of improvement across the board. as we look at emerging markets, getting more positive, i'd put my other hat on and we are long with emerging markets. it will look like emerging markets and asset classes. francine: you were saying that cost cutting, synergies, saving money, you have cheap cash provided by central banks and yet a lot of companies are sitting on cash. what will it take for them to spend it if they don't have an optimistic view about the future? >> i don't think they will spend it. to where you eventually get is where they become more comfortable about the future and they start to spend the cash piles. one of the reason why europe has lagged in terms of its economic cycle is that companies haven't

gone to the point -- if you compare to the u.s. are u.k., investment has started to rise. i do think it is coming in europe, because you eventually have to replace worn-out goods, and i think companies will start to increase spending. by the way, we are generally more optimistic as we push into the second half of the year. tom: i just heard from david he's massively overweight in japan. i think david haro, who has been persistently big on japan -- define for me emerging markets. is japan so messed up that even if it is huge, it is actually an em? >> no, i don't think you could classify japan as an emerging market. i would definitely -- as far as we're concerned, you are looking at areas like on call, china, south korea -- those kinds of countries.

that is where you are seeing some improvement in the markets. tom: i love that. this is important. the idea of buying straw hats in the winter -- how much more lonely can brazil get? help me. >> well, i think we starting to see a turn in sentiment there. you have the whole impeachment issue for the president, but there is some hope that whatever the outcome you will start to get a more business friendly government coming out the other side. some things are starting to improve -- it's now running a current account surplus, expectation will start to come down. maybe you are past the worst. particularly china has started to improve with some major export markets. francine: are central banks overvaluing stocks? is everything -- are we in a bubble? >> well, the interesting thing about stock markets -- if you look at their history, they're broadly in line with long-term history. the s&p, european markets, about

in line with the average. but they are the exception. if you look at bond markets, credit markets, every other asset class, it looks very expensive relative to its history. when i am looking at a multi-asset frame, the one place i will run my risk is an equity markets, because that is where you still have got -- they still yield 4%, and you can't find it anywhere in the bond market. francine: the relationship between central banks in the stock market, especially thinking of janet yellen and the s&p, has changed, because she seems to have dictated earnings and markets. >> i don't find that very healthy, that central banks are so sensitive to financial market moves. 2009;bviously not like monetary policymakers have to take notice. but small movements on a short-term basis i think shouldn't really move monetary policy, particularly when they

aren't backed up by what's going on in the real economy. the real economy should be focusing. tom: it's great to have you want. let's check out our next chart, with professor dermot of columbia. james, you will love this. i went back to 1900; i hope that's far enough. here's the dow showing the trend of capitalism. there is the depression, and ,hen what i call the rally from the depths of world war ii, and up we go. it's stunning, james, after 70 years of world war ii and the great boom, or as you say, righ smackt on trend. >> yeah. that's my point. equity markets over the to be betteru tend off in equity markets and other asset classes, and that is because you have high equity risk premium, because they are volatile the short-term. that's your trade-off.

my view is if you can get a 4% build, if you are a long-term investor, that is where you should put your money. but you have to recognize that you will it around that. tom: james, thrilled to have you on with the chart. long-term u.s. equities. we'll come back and talk about the challenges of francine lacqua in the united kingdom, plus equities, bonds, currencies, commodities. euro market 112.59. ♪

francine: i'm francine lacqua in london; tom keene is in new york. this is what we are watching for the rest of the day. today at 7:00 a.m., the bank of england releases its latest interest rate decision. that is ahead of the june 23 referendum on eu membership, arguably the most important central bank at the moment. then at 9:00 p.m. in new york, 2:00 a.m. in london, democratic presidential candidate bernie sanders and hillary clinton

face-off in a debate ahead of the pivotal april 19 new york primary. then at 3:00 a.m. london time, china releases figures were gdp. we are pulling in a later, tom. we're watching everything. to thend, according political blogger, there is a 20% chance of britain voting for the eu. they have a margin of their to some degree, to a very large extent. here to talk about brexit and boe is our senior economic adviser at the bank of england monetary policy, and bank of america merrill lynch's head of european strategy. andrew, when you look at this chart -- this is my chart of the day -- it shows you the implied volatility for pound-dollar, and this is forecast for gdp here in the u k. the problem is if you are the

boe you are not going to take a chance by hiking rates now. but if brexit doesn't happen, then you are left with possibly higher inflation and you may have to act quickly. >> if we stay in the eu, which is what i would expect to happen, there could be quite a bounce in confidence and equity markets. there could be quite a strong bounce in sterling. conflicting signals to the bank of england -- what would worry me about the bank of england's position coming into this is they seem to be kicking off the interest rate not just into the second half of this year but possibly a year or two down the track. strategy --ing is a you can understand technically that they don't really want to raise interest rates ahead of a big referendum like this but if they had a clear strategy you

might expect something to happen in the second half of this year. francine: the problem is that they can't really way in politically on the referendum and we don't really know what the repercussions of the brexit vote would really mean for the u.k. economy. >> we had appeared in the middle of last year when mark carney suggested he would be looking at a rise in interest rates around the turn of the year -- that didn't happen, he let it pass even though the u.s. raise interest rates. since then, the statements that pushed waym to have into the distance is the notion of when that first rate rise might come. that is worrying because it suggests that if they are in a position where they have to raise interest rates and inflation concerns or financial volatility interest rates may go up much more sharply than which issuggesting, why i have always been in favor rises and, gradual

central banks aren't acting in a consistent way. tom: tom steels from francine -- here's the chart show. this is three-month sterling volatility. professor, is his five standard deviations plus 1, 2, 3, 4, 5. come on, it is five standard deviations. james, where is the opportunity there? where is the opportunity on a five standard deviation? >> i think the answer is that you probably don't want to take any hedging or bets on brexit via sterling volatility and the back end of last year we were saying to our clients that they were too low in sterling -- you wouldn't do that today and in terms of what we're saying to clients -- look, briggs it would

be an adverse shock to financial markets in europe and we are advising them to take up some hedging against that and one of the traits we quite like his european volatility, because it would be a volatility event and unlike sterling that one is relatively low. tom: we are out of time. thank you so much. mr. barty has not seen the earnings in advance. andrew sentance, thank you so much. 7:00 a.m. eastern time, the bank of england. coming up on twitter, howard linson. we are thrilled to bring you mathematics. ♪

♪ tom: it is risk on as assets

surged to record highs. the dollar-yen approaches 18,000. mike kearney the bank of england represents all of written, england, scotland, brussels. it also represents frankfurt. humility is in order. the certitude of the second rate. this is bloomberg "surveillance." live from our world headquarters in new york on april 14, i am tom keene. with me is francine lacqua in london. london.er-esque the beauty of the city that never sleeps. did not invent that line. we're watching interest rates, the boe, emerging currencies after the surprise move from singapore. tom: we're watching my 201 k implode.

i went from a cash fund into the triple leverage short fund six weeks ago, and i got smoked. back again on a bull market trend. let's get to the trend of the bloomberg first word news. >> happening now, russian president vladimir putin is holding his marathon calling tv show. these are live pictures from moscow. thatent putin says russia's economy will grow next year. they use the event to burnish his image as a strong leader. at of the show, russia's sent more than one million questions to putin. partyng of ukraine, the spokesman has been approved as the next prime minister. willd petro poroshenko take charge amid a volatile environment. the international monetary fund

has been called to halt a $17.5 million bailout. sensors removed an anonymous posting on a chinese news portal defending president xi jinping's name in the panama lake as holdings.shore it was published on several online news portals and is on social media before disappearing. of the brexit, one analyst says there is a 24% chance of it happening. that is the conclusion of the blogger that spotted pulling flaws and predicted the outcome of the referendum. it gives different public opinion about the eu the crucial new york primary is days away. democratic hopefuls hillary clinton and bernie sanders will return to the debate stage. it is being viewed as a crucial opportunity i both camps to snap

a seven-state losing streak for clinton while sanders needs to make up ground in the race for delegates. global news, 24-hours a day, powered by our 2400 journalists, in 150 news bureaus around the world. tom: thank you. llywelyn davis will open that debate. bernie sanders in greenwich village last night, talking it up. it was like out of the 1960's. everyone is on the subway, everyone is out of their limos and golf swings on the subway in new york. equities, bonds, currencies, commodities, the dollar is stronger. on to the next screen as we get to an interesting discussion with howard lindzon and professor derman. the dow near 18,000, showing the excitement of the market. francine?

francine: wti got into positive territory. 600.is the stoxx it is fluctuating a little. it has to do with how much being sold byk is nestle, espresso and grass cafe. singapore dollar's, it dragged by the central bank. while other policymakers do more? not only did the transatlantic show the problems. tom: let me go to the bloomberg. an international economics and financial investment, let's have fun. we will show this later with howard lindzon. i want to introduce it now. a one way. we will do this with howard lindzon in a bit. it has been a train wreck. we will make you smarter on this train wreck. francine, do something on the

pound. francine: when you bought twitter or when we got on twitter? tom: when i bought twitter. right at the top. francine: when i joined twitter it went down. this is a picture for the pound. the pound-dollar volatility chart. that is in white. this is what mark carney is looking at with interest rates what he is worried about in the brexit debate. p forecast. gd we have been worried about the brexit, but the volatility is so bad it will impact the forecast for gdp going forward. tom: let's turn to fun. within our discussionderman, i'r than that on quantitative finance. the stock about howard -- let's talk about howard lindzon. 14 or 15 on the golf

course. he joins us. how is stock twitch doing? howard: faster than it ever has. what we have learned from the social networks and global chat products is that vertical is smiling hit. now, we need to fill in the verticals. yahoo! did this early. yahoo! finance and sports, but the others have gone global. tom: horizontal. howard: uber is attacking china when the united states has not even won yet. all kinds of new strategies. for us, it has been good. twitch continues to grow. tom: we get have a four-hour european lunch and never have run out because there's so much going on. howard: and to so many new people coming into the market. tom: i want to go to the motion,

what are we going to do with video? the idea that video is there, but no one is making money. is trying. everyone is trying. a lot of articles are saying "yeah, but." what is the yeah, but? howard: in 2006 i started a show .alled wallstrip it was a spoof on wall street acquired by cbs within six months. there has been excitement see that moment. saying you can make a show on the streets of new york and one of the networks will buy you. youtube took off and ate everyone. hundreds of video companies that have competed with you to oregon. -- are gone. netflix comes on, dominated. amazon is doing a great job with

amazon prime. now you have periscope brought on by twitter. what happened is that mark zuckerberg sat down and to said video is important enough that we cannot lose. they have to do it. i don't see it working, but at the same time, they have to. francine: bloomberg surveillance correction, we do not have or our lunches in europe any longer. sometimes we are even more productive. -- more productive than the u.s. i tweeted yesterday that because the algorithm had changed on twitter you also had fictitious moves on stocks because people tweet things that came out two to three weeks ago. how do you deal with that? howard: i don't. i don't use twitter for that, that is why we started stocked which. i need a couple hundred thousand people with my list of 40 to go to. since the days of area well, i

think the world has been about smaller groups of chat. bloomberg is smaller in a sense because you pay your money and you are in the network. it is not how many you follow, it is who you follow. i do not think i ever heard of this until yesterday and i don't believe it is true. machines are trading up, that is old news. i don't believe this is happening. tom: where is marissa mayer's next job? what is the -- where is the best place for her to go? howard: alaska state governor. tom: be nice. howard: i am not impressed. from the first hire on down, she did the alibaba thing. i'm not impressed. the site stinks. they let the core assets die. i have not been forthcoming with the real plan. the foray into digital magazines

was half-baked. themselves. full of not really sure what their real business was. they did not commit. you have to commit. tom: i want to talk about this idea of a little too full of ourselves which permeates digital. you just heard howard lindzon on his mayor and on yahoo!. tomorrow, we will look to the imf spring meetings. adam pozen and a conversation with david lipson, the deputy managing director of imf. bloomberg "surveillance" on twitter. ♪

francine: i am francine lacqua in london. york.ene is in new

we continue our conversation on microeconomics and finance. let's get to the bloomberg business flash. recalling avalon and camry sedans because front passenger airbags may not deploy in a crash. it involves avalon and camry year.he owners will be notified and dealers will recalibrate the system for free. uric city's pension fund is considering whether to exit is one $.5 billion portfolio of hedge funds investment. it could come as soon as today. the vote comes amid concerns of fees,g performance, high and the riskiness of the asset class. singapore's central bank used its monetary stance, adopting a

policy used during the 2008 global financial crisis. the move to a zero appreciation stands on a current becomes as the asian financial hub deals the effect of the global downturn and china's week in the economy. that is your bloomberg business flash. the bank of england releases its interest rate decisions at 12:00 p.m. london time amid signs of a weakening economy. that is ahead of uncertainty because of the june 23 brexit referendum. joining us is the economist of bloomberg intelligence. we were talking about a possible hike eight months ago from the boe. no hike anymore. >> we know they will not do anything until after the referendum. the minutes my to be quite boring. francine: unless we get calls for a rate cut. >> i think that is unlikely.

it is more likely they will sit it out. they do not want the interference of the brexit referendum affecting broader expectations for policy. you want to get to beyond that and see where they are. i would expect a significant repricing of expectations for interest rates. the bank has to ease because of the brexit. generalization that the bank of england is out front of the ecb and the fed? mark carney lead the dialogue in every meeting that he does? it is slightly different for the ecb where mario draghi speaks for the committee pretty firmly. i think mark carney is more likely to take a balanced town and reflect a broader spectrum of views.

one of the main thought leaders at the bank of england. tom: go ahead, francine. i'm sorry. don't know, it is nuanced. the boe is sitting on a time bomb. they cannot do anything until we have the referendum. what happens if inflation goes up quickly? we might get quite a lot of aggressive normalization. an increase in rates quickly if we don't get a brexit. ,amie: if we don't leave the eu inflation is likely to pick up quickly over the rest of the year. on percent by the end of the year unless commodity prices change. the general tone of discussion will change very quickly over the summer. tom: one of the great ideas, it might be a lot quicker because it is smaller and a more focused economy. howard lindzon is with us.

a gentleman of wisdom and tech knowledge he. one of the foundations in your world is cheap money. central banks have given you a punch bowl filled to the brim. how do you react when they 2029.ize in 2019 or they found blogging and platforms to pontificate about economics and timing markets. interesting to see people paid to invest for 15 or 20 years to time the market. when you have a trend that goes this long, even people that are supposed to be happy start pontificating about when the end will come. as early as the fourth quarter last year, many said this is the end. those first quarter, the best for venture capital firms. the venture capitalists are wrong. here's what you have the identical currency, it works. it is the millennials gold.

it is portable and volatile, but so is gold. it is good enough. if you want to put 1% of your assets in gold, you can theoretically put it in bit coi ns. then you have in this capital. you have places to set up businesses. you have areas where you can go build a business for 100 grand and get a product of market. then you have the kickstarter's. people with good intentions and ideas are doing great things in every market. what i love about the early stage market is a people driven industry. the technology will do with the technology will do. tom: it is fueled by the cheap money of mark carney, mario draghi, and janet yellen? howard: no. tom: we will leave it there. jamie murray, thank you. we drive forward with the debate

on central banks. dennis lockhart, his gdp now statistic. atlanta gdp now is the great focus of american economics. look for that on television and radio today. ♪

♪ tom: good morning. bloomberg "surveillance." thecine lacqua in london, home of the imperial college and other quantitative fortresses. i am in new york. we are thrilled to welcome emanuel derman of columbia

university, who has been historic at his over 40 years at columbia in quantitative finance . i want to bring up my must-read. he changed his client ability. of mathematics. as the mathematics of finance reaches higher levels, the levels of common sense seem to drop. it is clear that a re-think is required if the world is to avoid a mathematician led market that down. did we have a mathematics meltdown in 2008-2009? prof. derman: i think mathematics played a part, but the real purpose was the desire and stretchingt for high-yield in a world where interest rates were low. people used mathematics to try to construct that. big short,u see the

the one that won the academy award, what has changed? you describe cheap money, i believe it is 2016. prof. derman: i think things have not changed that much. there is a move away from derivatives. they have become unpopular. i teach at columbia, and a lot of students who wanted to go into derivatives now want to go into algorithmic trading. tom: let's bring up the chart of too big to fail, the united states economy. a chart back to 1900. the blue box is the depression. then the regression. why should i worry about professor derman's world at the line goes from the lower left to the upper right? it has been successful. prof. derman: where does it start? tom: 1900, then we take up in world war ii up to 20 16. wider like me need to worry

about volatility if the economy itself is ever prosperous? i don't know why you need to worry about volatility. volatility is driving a lot of what goes on. we are in a risk on risk off world when volatility increases people make use of derivatives. derivatives are a tool and reflection of the politics and economics in what is going on. the actual driver. u.k., london,he almost everyone in banks that is structuring derivatives is french. why is that? is it a better mathematical, engineering school? tom: she asks such a delicate question. love derman: the french mathematics. i'm a physicist by background, but i think the french overdo it. there are a lot of articles about how the french have too

much of a systematic approach -- a pure mathematic approach to finance. it is about the real world. it is strange that economists and french finance people go to pure mathematics. francine: i love that. tom: francine, you asked such a delicate question. francine: oh la la. the dollar is rallying, hitting commodities. areeuropean stocks unchanged. food and beverage are higher by 0.8%, and that is led by higher figures from nestle. a lookout for emerging-market currencies like the singapore dollar. ♪

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the germanwings crash is suing the lights go where the pilot trained. andreas lubitz crashed into the mountainside in the wrench outs, killing all 150 people on board. againstuit was filed the training center in arizona. andreas lubitz was treated for depression before attending the school. a treasury department official is arguing against new tensions on iran even after the ballistics test. iran will remain blocked from the u.s. financial system. republicans in congress have criticized barack obama for failing to punish the country in ballisticsyou test the ban. there are new regulations on offshore drilling today that impose costly requirements for coastal wells and emergency equipment and to limit environmental damage. it is confirmed by persons familiar with the matter and comes six years after the fatal

deepwater horizon blowout in the gulf of mexico. books.t for the history the golden state warriors became the first team in league history to win 73 games, beating the memphis grizzlies with 43 points from superstar stephen curry. record set by michael jordan and the chicago bulls two decades ago. 37-year-old kobe bryant played his final game. he's going 60 points for the los angeles lakers for a victory. marks the finale of his 20 year career. global news, 24-hours a day, powered by our 2400 journalists, in 150 news bureaus around the world. -- they w -- tom: lawrence frank moving the ship forward at black rock. it is a soggy quarter, their operating margins are down 250

basis points, but they are moving forward. this comes off of j.p. morgan with bank of america in an hour. black rock out with earnings now. this is a lot of fun. emanuel derman at the heart and soul of quantitative finance. he is legendary within the racket at columbia university for 40 years. we are thrilled to bring you into his world, and the world of quantitative finance. we will do that with the bloomberg. howard lindzon is joining us as well. this is the xyz of what everyone on the street is betting on japanese yen. it is an anti-abenomics bet. here is time function in the future. axis is volatility. what is great about this is that when you look at the politics

and fold in abenomics into a given pair, it is not just pure mathematics? prof. derman: i'm actually writing a book on that. it is the confidence of mathematics and behavioral economics and finance. outsee people's prejudices of the money or in the money. tom: here we have a smile looking like a carved pumpkin. it is very common. as i move out in time, you can see it become a smirk. , i find it stunning to go out three years or five years. the bipolar analysis of the future of japan is expressed in dollar yen. it is rare to see such a sharp bipolar nature. prof. derman: you tend to see it more in the currency world in the equities world because everyone is long equity. in a currency world, some like dollars, some like yen.

you see a rise to both sides. tom: did i do ok? it was skill and kurtosis paris. -- kurtosis free. francine: is there a model we are looking at but is fundamentally wrong because of all of the qe and negative rates around the world? the. derman: everyone uses black scholes model. there are replacements. there are a lot of replacement models, but none of them work that well. tom: within that -- go ahead. francine: i'm trying to understand. i tried to follow technical support. you might have the answer, what does qe due to models? -- do to models? prof. derman: until recently, no one allowed rates to go negative in any of the models.

the classic models had a barrier at zero interest rates. now, no one knows how long they can go, how low. modeling point of view it is interesting. there is not a final answer. tom: this links your world with the world of howard lindzon. he is looking for investments to work out. worked withs fischer black based on a bell curve gaussian world. simplisticng a welker model -- using a simpstic bell curve model destroyed in the financial crisis? prof. derman: everyone knew that it was not strictly correct. are smart, they make mental adjustments for the fact that they know they are off. short" he isbig amending the certitude of the models. prof. derman: yes. you are surprised "the big

short" would come up? prof. derma i have not seen the movie. i've read the book. he is perfect for amazon prime? then you can download "the big short" and throw a shoe at the screen. mental derman, thank you, he is with columbia university. we will have this on our platforms are you can revisit the world of bruno to appear. are thrilled to bring you christine harper a bloomberg news after the good news of j.p. morgan yesterday. stay with us. ♪

francine: a busy day between currency stories and myths. let's get straight to the bloomberg business flash. >> burberry says earnings will be at the low end of analysts' estimates. they are struggling to cope with demand in hong kong and europe. wholesale revenue will drop 10% from the first half of the year. burglary reported a slight drop in second-half sales. nestle beat estimates led by nass cafe -- nescafe coffee. the company's first-quarter growth rate is the slowest since 2009. it is struggling to enter is -- to interest consumers in convenience meals.

laundry detergent and personal care unit offsetting all in prices in europe. underlying sales increased 4.7 percent, 10% better than expectations. unilever says consumer demand is fragile and volume growth slowed. that is your bloomberg business flash. tom: thinking coming up. right now, howard lindzon is giving us an incredible perspective on the ups and downs of tech. we must stop everything and focus on twitter. i bought twitter, you sold. what a train wreck and a persistent mystery around this. first, why has this occurred? howard: the main thing that has occurred is that facebook has -- if you flipped it -- it will look like facebook. ballmer, here is their stakeaying

into twitter. i think what happened with twitter, it is probably a board level like yahoo!. the board was focused on facebook and scale. they were focused on global and audience. what twitter has is a really smart network. it is not a friend network. it was a wonky smart network. lower-priced.mrs. is microeconomics the answer? howard: the answer was bloomberg . twitter should have recognized the two verticals that would have made them money, sports and finance. it would not be as big as facebook, but sports and finance rule the day. twitter was the pulse of that. owned -- have the same with sports. a deal with the nfl for $10

million. no, the deal was to control the transaction. twitter moved away in the transaction, whether it is lying draft kings and then tool, they would have controlled soup to nuts the entire package of sports. they lost that. how do they get back on track? do they need to look at another niche or get into sports and business? question.at is a good it comes down to acquisitions. twitter is twitter. it is stuck being twitter. if twitter put up a phone number -- there are so many answers -- they could put up a phone number and send the lists every day. if i could figure out that i could talk to tom keene and 32 that know the most about economics, twitter would resonate with me immediately. because they cannot do it, people drop off. the community was helping

twitter. the community wanted to help people find to they want. the way is -- francine: you're telling me twitter is not doing great. how do they turn it around? do they need to be bought by a media company? do they send out headlines that a newspaper can, but they are not being read because people do not buy the physical paper anymore? howard: there is so much movement of employees and headcount in and out of that company i don't think it is that easy. they feel and look like a yahoo!. the product is fantastic and i love it for what it is, but it does not go deep enough. it is the same product that existed with me talking to tom keene quickly and was buried and lost with a lot of noise. i was a hello to my daughter on twitter, and some people that might not like me will save me things. save mean things. it is a very difficult platform to get things done sometimes. bank of america, jp morgan,

surprising yesterday. christine harper, the executive editor of finance for bloomberg news. she wears black during bank earnings season. it was not black yesterday for mr. dimon. christine: we have written stories about how far down estimates were going. it did not mean it was a fabulous quarter, it just meant they were better than -- game three than the weeks before. what is critical is the idea of the view forward. what did you learn yesterday? it is a further malaise for the next few days? christine: arch and april were better on the trading side. the loan book is growing, net interest margins are not as bad. there are some signs of optimism

. we will see if the optimism is squashed by the bank of america and wells fargo. like rock earnings were worse which iscted, interesting. " are good, but the fees are low. thing that is hurting wall street firms like jpmorgan is money is moving into index products and they cannot make as much money trading with client. tom: what were you look for big bank of america. jp morgan out earnings better than anyone out there. .ank of america is a torture what would you look for when it comes to fortress moynahan? christine: revenue is important. it is expected to be down for the group. it was down for jpmorgan. we will see if anyone can do differently. expenses are critical looking at the loan loss reserves in the oil/gas space. whether the queue of a is

adequately reserved. we have a fantastic story from the real estate team about the commercial real estate outlook and commentary around asset classes like that will be interesting to investors in these groups. tom: to be fair, they put out six high -- six headlines, and it is the polar opposite of what jamie dimon does. francine: $97 billion, it seems in line with expectations. the first quarter return is 0.5%. will we focus on energy lending risks? one of the problems is -- christine: one of the problems is setting aside money to the oil and gas industry, but also metals and mining. fargo a story about wells becoming the top energy lender.

we will see how their results are. tom: yesterday the energy lending of jpmorgan, i skelter total assets, it is miniscule. bank of america and wells fargo, is the market moving into the press releases? christine: it will be something that people are going to be watching to see if it becomes more market moving. i am not expecting it to bring down any of the companies, but there are growing risks to focus on. tom: we finally get headlines we can use, head count down 3%. average common equity is the rite aid percent, which is why you and christina are in black today. equities, trading a little better than expected. fixed income down 17%. it is what we sow with jp. they are not doing as badly as we -- what we saw with j.p.

morgan. they're not doing as badly. christine: making estimates that are little bit bearish. managing to beat them. it was a quarter where if you are speaking in february, things looked really bad. it is interesting how jamie dimon was -- it was well reported how he bought a bunch of stock at the low in february. everything recovered. yesterday, he gave more jews to the market. -- more juice to the market. tom: on the bloomberg in real time, the chart for bank of america. not the responses from j.p. morgan, a hockey stick up, go penguins. it was more down as they rollover. i see that with the new wants of -13% versus -16% on trading. christine: it looks lower than

what we had on the bloomberg terminal for estimates. i don't know the details, but they may have disappointed. tom: they would g better coverage for "surveillance" if they sent me rangers tickets. we will look forward to wells fargo. howard lindzon is with us. across all of our platforms, a conversation with dennis lockhart of the atlanta fed. good morning. ♪

♪ tom: good morning. bloomberg "surveillance." a quick report. mark carney in the bank of england coming up on a busy day. yen weakness, euro weakness, dollar strength. one to two point 96. christine harper will be with us to furer analyze wells fargo and the bank of america. the stock is very non-dimon. yesterday wells fargo jumps and pulled back. $21 billion us energy exposure. the u.s. economy is $17 billion. is that a big number?

trillion -- sorry, getting my zeros next up. -- mixed up. christine: it is probably just an exposure number. if they lose $21 billion, that is a big number. they have a loan book that is substantially bigger. what is the distinction between the business plans. what does brian moynihan try to accomplish? christine: simplistically, what nothey have that they do have a jpmorgan? a thundering herd of merrill lynch financial advisors, which, if you think back to the dark days of the crisis, it was one of the reasons the bank of america was interested in buying merrill lynch. will be interesting what they say about the department of labor's judiciary roll and if they are changing anything.

they are studying the effects of that. that is a different business model. the bank of america bought countrywide to become big in mortgage lending, but they have not then as big as j.p. morgan. tom: trading is down 17%, that is a good indication. francine: if it is fixed income or better than expected, like jpmorgan, the first reaction for share price is iffy. a lot of it has been priced in because of yesterday. comparison with the bank of america, jp morgan, morgan stanley. over thein lockstep last four weeks. is that surprising? .hristine: no everyone has been looking for a gloomy outlook for the trading business and the investment banking business. there is a very weak environment. really started the

year on a terrible note. that will be emphasized on the calls today as well as what we heard yesterday with j.p. morgan. tom: thank you. john stumpf never gets the credit he should. final thoughts with howard lindzon. we will do a sake you -- we will do a segue over to the world of yahoo!. armstrong arguably had the transaction of the year. is tim armstrong and verizon am a should they be the ones here? howard: it sounds like they have wanted to. i think that tim has the respect , somehow, of the powers that be that he can balance all of the content together. let's be honest. i don't trust verizon to deliver me anything.

i trust that my bill will be confusing. when i hear yahoo! and verizon, my eyes roll back. it means more miss execution will be tolerated at the media level. tom: thank you so much. greatly appreciate you coming. howard lindzon with stock twitch. he has a perspective on what we see with facebook and twitter we should you bank earnings every day. the bank of america, disappointment versus what we saw with j.p. morgan. tomorrow, we focus on international economics. we have more on bloomberg radio, bloomberg "surveillance." ♪

♪ david: welcome to bloomberg

"." i am david westin with jonathan ferro and vonnie quinn. morgan o stand former investment officer. jonathan: 13% drop in profit, that is the discussion point. the bank of england doing nothing. the benchmark interest rates staying in 0.5%. the bank of england maintaining the benchmark interest rate without showing any mpc members making explicit cuts. there was some talk around the meeting that potentially those policymakers could shift. someone says may we should cut rates ahead of the referendum on june 3. holding rates at a record low for another meeting. no big surprise. david: any talk about the brexit? jonathan: