francine: staying positive on wall street wants 6% of the stock in after-hours trading. and president obama arrive in the listened urging britain to stay in the e.u. this is "bloomberg surveillance," i'm francine lacqua and this is tom keene. we talk about yen and negative rates and president obama.

do you get a welcome like that when you floif london? tom: no. i sort of sneak through heathrow in search of my luggage. it's aal little bit more of a drive for me than the president. francine: first let's get straight to the bloomberg first reviews. here's aaron page. >> the landmark agreement is aimed at reducing pollution and slower rising temptures. -- and s have agreed to fuel their cars. president obama is weighing in the debate over whether the u.k. should -- with prime minister david cameron in an article mr. obama wrote the european union doesn't moderate

the -- they said the united states would never contemplate anything like that. ministers ea finance feet in decide whether or not -- some of the creditors want greece to increase austerity measures if it doesn't comply. and donald trump told top insiders it's all just an act. they have set to easy tensions with republican elders. they tried to convince them that his bombastic demeanor is merely a ploy to get votes. and authorities in minnesota is investigating the death of legendary musician, prince. he died yesterday. he was 67 and aclaimed as a musical prodigy and sex symbol whose hits included "little red

corvette" and he won an oscar for the sound track to the movie "purple rain." tom? tom: rene, nicely done. he is the only one who never left the midwest. there have been very good treatments in the last half-hour and as with madonna and michael jackson he was truly one of our midwest stars but he never left. he stayed in minneapolis and was always associated with the different fabric and culture than anybody else in the business. he was extraordinary. francine: he was. i didn't know ant the fact that he stayed there but from the the london point of view he was one of the most inflame binet original and with the death of david bowie, it seems we are quickly running out of these

cude most to nd the national football league who put tout video of his 2007 super bowl performance, which is nothing short of extraordinary. it is just absolutely stunning compared to the silliness today. let's move on to data here right now. it's a purple rain for the markets. futures at negative three and yield at 1.875% so a real churn to the market. there's really a churn to the market. and it's just basic dollar strong tore get up to a 95 on dxy would be something but francine, let's leave it there on a friday. francine: yes. oil gaining. tom, i wanted to show you yen. this is on the back of that nice bloomberg scoop about b.o.j. officials with positive rates on loan programs and i showed you euro dollar just for

good measure. tom: yes. let's go to plom.com i loved our michael fuchs interview. this is the deutsche bank piece. here's normal. here's good. here's the fade. down we go. and we've come back up with a eg up but nowhere near normal. big on t mike fuchs was the point today. francine: eyes, he said at the end of the day i have to take care of my favors and help negative rates there. i like fact that you put deutsche bank because there's a story with credit suisse and what i take is dollar demand in china. now, this is in the white line

foreign net exchange and you can see it swapping back in march and then deaf renial getting bigger. it tells us swan confidence is still weak. so we have scommine, japan with the bank of japan officials set to be weighing more negative on loans but let's get to gap holding grouch chief economist larry hathaway. we have so many angles to talk to you about. so this is a bloomberg scoop. we understand they may look at offloading and look at putting negative rates on loan. does t it tell you they are nervous? larry: it tells you belatedly that they are to some extent for stability of the system, and it certainly is perhaps also a sign that negative rates alone may not spur the lending activity they would like to see through happen run this those channels.

francine: how much more creative will central banks get and it's not only that they are thinking time-out box. they don't have a box anymore. larry: we have heard from ben bernanke on this particular issue. t we have seen that globally i had an nation had been held down and falling prices to the stheavent they can hold these levels we'll probably see those numbers hold far bit. but not likely to be repeated. tom: larry, it's a friday. not much is going on in the markets. it's time for a hathaway recalibration. how are we doing in our renation? we are reinflating. what scorecard do you give us for our renation? renation for the

things like consumer price sincere only evident in a few places and most evidently in the united states where the fed has largely chosen to ignore the uptick in consumer prices. it's harder to achieve levels of activity. obviously, you don't really support much by way of inflation pressures, but markets and for that matter policy makeers have been a little bit too extreme in their take on what's driveling worldwide economic activity. i think those fears have quite rightly been put to rest. nor are they likely all that just ut those medses we talked about. tom: if you look at a dow jones chart, not all that exciting. positive growth a surprise, larry, you're talking about positive growth surprises. where are they?

larry: so those good surprises are fairly broad based. as we see them across the sectors of economic activity across areas of geography, perhaps the more encouraging have been that services had been holding up both developed and emerging economies through most of the concerned periods of growth that we have re-visitted in the last six months, it does appear as though we are beginning to turn the corner. it some of the adjustments may be more fully realized, and for that perspective, it's also shown a little bit better numbers. francine: larry, are we turning better numbers? i read the key take away from the thursday was the de facto cease-fire agreed in the shanghai meeting of g-20 economies seems to be in force.

is that right? larry: i don't really know if there was a de facto currency war cessation and some of the concerns about dollar strengths, how that might play out in the emerging markets was probably part of that general discussion but surely none of the central banks are going to tie their hands to currency and have strong objections and objectives they are trying to achieve. and the dollar has weakened since that time and we have seen that in commodity prices. tom: larry hathaway will get us through the hour as we consider the finance evaluation. our next hour on this 46th earth day we are thrilled to bring you jeffrey sacks of columbia university and nuclear fizzist and secretary of energy

ernest moniz in our next hour. ♪

francine: i'm francine lacqua near london. tom keene is in new york let's get to the bloomberg slash with neraj. >> looking into possible irregularities. daimler says it was asked to investigate certification process of their cars and a lawsuit claiming mercedes engines violated standards is baseless. they will discuss the state of its own emissions investigation. and the largest british mortgage lender is already planning to eliminate 9,000

jobs by the end of next year. that number could rise as part f a cost-cutting effort. lower interest rates has hurt lloyd's. and a floost missedest mats -- company warns profit margins -- and google has to pay more to partners to reach people on their phones. and also down in the premarket. the company says results are so microsoft is trying to focus more on cloud products. and that is the bloomberg usiness slafrpblt fran france? francine: the writing in the teleal graph newspaper president obama stayed european union doesn't moderate the british influence. it magnifies it. now we are joined by white

house correspondent who is traveling with the president and larry hatheway still with us. first of all, talk to us about why the president felt the need to come here a lot of people think this is meddling and does he actually think he can influence voting there? >> he does. he believes he has a high popularity among young voters and undecided voters. he wants those who haven't made up their mind to listen to a message from the american president not someone who is meddling or someone interjecting into a family dispute but someone who can have an impact. francine: they said if we -- and he is intimating it will be a more strained relationship i guess? toluse: yes. he is intimating the trade

relationship that's based on its in my opinion in the e.u. and the president is trying to get a in my opinion and trade a major part of that so he is saying there could be economic and security impacts involved and something that could strain the relationship with the united states and them. tom: what i find strange is that the president is asking the british people to accept a situation that he would not recommend to the american population. can this whole thing backfire on the president? and on prime minister cameron? toluse: that's the argument we are hearing from the critics of this argument because they are saying the president is being a hypocrite saying they should remain in the e.u. when the president is making the argument that the u.s. is part

of the u.n. and how the u.s. partnered with other nations but that is a concern that he could be seen as meddling. tom: there's a thing i spent one day in fourth grade called the monroe doctrine. this is a little different than the monroe dock threaten basically said, get out of our backyard. francine: right. and there is that sentiment among some in the u.k. at the end of the day, the biggest argument, larry, is that we can renegotiate with new or other countries, we can be stronger outside the e.u., and this is almost president obama putting them back in their place. larry: i supposed that's right. the fact that a standing u.s. president will come and take sides it is of course of interest to the united states. we heard from the i.m.f. about the risk that could befall them

but nevertheless does feel a little bit like a hypocrite the type of message. tom: everybody knows texas has their own foreign policy. that say? larry: i suppose those who would like to be independent even with a libertarian streak are perhaps troubled by this, but there are genuine concerns here that are shared by the united states. and from that perspective one n see this is part of u.s. diplomacy, i supposed before this would have been behind closed doors other than in francine: some people say, even i think -- if i get lectured at, i will listen. tom: i am fascinated where we will be the end of june.

president, with the wonderful to see you today with bloomberg news. coming up in our next hour, james glassman. we will look at his optimism on the u.s. economy. talk about the state of entrepreneurial business. this is bloomberg "surveillance ." ♪

francine: we're talking yen, japan, thanks. i'm francine lacqua in london.

tom keene easy new york. a story that fascinated me this morning, credit suisse approaching bond investors with a possible instrument that would cover potential losses from events such as rogue trading and cybercrime. laurent.ined by lionel i woke up, i read the story, and i thought it tells me two things. maybe the ceo who comes from an insurance background wants to do a cap bond. arenderstand that they looking to reduce the risk from rogue trading and cybercrime. this means that he's not very confident about he can combat it at the bank. >> i think it shows there are risks outside the bank's control. kind of funny to see it as a hurricane or earthquake. it makes sense in theory. banks want to be safer. they don't want to add more burden on the shareholders to make that happen.

tois going to become located put a price on that. how comfortable would investors that givenmoney into the past of the banking industry and the future risks? this isfrancine: bloomberg reporting that the bond would kick in for losses to $4.3 billion. what does this tell us about the outlook for the bank? the problem is that psychology is a very big component of everything that underpins share price. >> you can look at it in terms of past and future. we have an big losses from rogue traders in the past. they are not completely fantastical events. in the future, there may be more risk of data fraud. that tells you that these risks exist and they are not going away. whether you can convince investors to lend you money on that basis is a whole other question. topic, something

about going into the summer where with dodd-frank in the united states, we try to figure out how to incentivize people, bonuses, etc. goodw dropped reading what people want to do to incentivize bonuses. i don't think they have any understanding at all of how profits are created in the street. do you see any future that will create bonuses down the income statement off operating income profit or will it still be revenue based at the top? >> i don't know, tom. i think the problem here is that banks do want to show shareholders they can be a safe proposition, but they want to do it by saying, let's transfer the risk. let's ask bondholders to help out. let's stop crushing the

shareholders to try and pay for losses that may be out of their control. it is that question of risk transfer. is that giving away too much? is it going to crush the revenue side and the profit side at the same time? francine: thank you so much. larry stays with us. coming up next, we talk with that,n kanji on apple google, and microsoft earnings. alphabet was down some 6% in after-hours trading. we spoke to an analyst who said wall street was expecting too much. that is next. ♪ 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 morning, everyone. tom keene in new york, francine lacqua in london. let's get right to our bloomberg first word news. here's nejra cehic. : iran will randow its

complaints that it is not getting the sanctions relief its deserves. meets with iran's foreign minister today. certain now allows transactions with iran involving banks and businesses. in mexico, the death toll has risen to 24 from an explosion at a petrochemical plant. the blast occurred on mexico's southern gulf coast. japan has become the fourth country to test fly its own stealth plane. the government hasn't decided whether to put the plane into production. it is made by mitsubishi. speaking of world war ii, next month, president obama will become the first sitting president to visit hiroshima. earlier this month, secretary of state john kerry went to hiroshima. the bombing of that city and

nagasaki are viewed in the u.s. as having hastened the end of world war ii. global news 24 hours a day. i'm nejra cehic. francine: thank you so much. posted first-quarter sales and profit that missed estimates. that at shares falling in premarket. microsoft also down in premarket. for more, we are joined by hussein kanji and larry hathaway. thank you for joining us. when you look at google, we are concerned about margins, not the growth model, but how much money they can make going forward. is it that wall street inflated our expectations or we have questions about the model? >> i think google right now is a cost-cutting business. everyone knows that search engine revenue is plateauing. it is hitting saturation. this has been inevitable. as the world switches over to

mobile, consumption goes up, but the value goes down. google has been spending its big cash horde on investing in new projects that could generate revenue. francine: this is winner take all, or is it? if >> it is, google is number one. >> google is number one in search, but who is the winner take all in next year's market? looks like the dark horse has been amazon with its cloud computing platform. microsoft is a very distant third. google has built up into a number two -- sorry, google is number three, microsoft is number two, but it is nowhere close to where amazon is. let's look at where this has come since 2009. apple a major performer. here's google and microsoft, the yellow line is google and the orange line is microsoft.

hussein, are these blue-chip stocks masquerading as tech companies? >> i think these are still very much tech companies. there is a lot of innovation that has to happen for them to become big. apple called the mobile revolution correct the. it built the iphone and capitalized. microsoft very much missed it. didle played defensive and the android business and has been trying to catch up. it is a winner take all market in this world and apple got first mover advantage. tom: but what is microsoft's new plan besides xbox? where do you see microsoft in three years or five years? >> microsoft, they've replaced their ceo. what he's trying hard to do is shift the market over to cloud oriented business.

that has been the business. that is the future of the business. the mobile business has been a disaster. the nokia action wasn't good. lumia sales are down. the pc market is going down. you've seen the battle that intel is facing because intel also made the wrong call on that. microsoft is trying to play catch-up and win in the cloud business. it is doing a good job, but it is still very distant compared to amazon. microsoft lumps all their businesses in the cloud together. last quarter, they were at $9.4 billion run rate and now they are at $10 billion run rate. does thislarry, how translate into your world? we talk about corporate level earnings, but these are huge companies that make a lot of money, don't spend much cash, and employed very few people. >> there's a political element

to this. these are some of the biggest cash holding companies in the s&p 500. there are concerns about not using that cash, keeping it offshore for tax reasons. essential, they are to long-term productivity growth. productivity growth is very much linked to the technologies we are talking about. microsoft struggling to catch up. others are beginning to revolutionize retail. think of amazon. francine: do governments around the world need to look at these big tech companies more to try and change their models? >> i think there's a tendency to look at the present, extrapolate to the future. that it is a very dynamic process of winner take all in these markets. today's winners may not be tomorrow's winners. as we are trying to focus on the basis of who's on top today, it

could be pretty misguided. tom: larry, i mentioned blue chips earlier. as a general statement, is it a ,ime to capture coupons dividend growth, or can you be more growthy going into 2017? >> when we look at the market, we see a disconnect. cyclicals seem to be underperforming relative to some of these growthy areas. our preference now is to look for where there are modest earnings surprises and things that are more cyclical. i must say that is a fairly short-term and tactical view. over time, latching yourself on to these growth opportunities is going to be part of anyone's portfolio. tom: where do you look at the banks? i go back to francine's interview with michael fuchs about the joys of germany. are the banks viable here or is there so much uncertainty you

need to wait for more information? raises the question of sustainability. from that perspective, banks will be viable. they are making enough to attract capital. the real question is whether preferable ate this juncture. i would say no. we're looking at things that are slightly more cyclical, where there's dividend growth possibility, where there's strong cash flow and relatively low payout. hussein, when you look at a lot of his tech companies, they are in stark contrast with the banks. they attract capital. people ask, are they overvalued? do you need to look at it company by company? >> i don't think it is industrywide. if you look at the companies that have missed the transition,

their stocks have come down. unfortunately, the companies that have figured out the growth engines and predicted the future correctly, a lot of capital is floating towards those. it is a supply-demand market. this is a market that i don't think is as driven i fundamentals as supply and demand. this is happening in an even more inflated way. tom: thank you so much, hussein congee with us this morning. coming up in our next hour, we are thrilled to bring you jeffrey sachs on a number of themes. then a conversation with the nuclear physicists of m.i.t. our secretary of energy. from london, from new york, bloomberg "surveillance." ♪

francine: welcome back. it is sunny and london, a little bit mysterious. plunging intoa this debate over britain's future in the eu as he arrived in london yesterday. let's get to the bloomberg business flash. here's nejra cehic. nejra: sony is delaying the release of its annual forecast because of the earthquake. sony says the forecast will be pushed back until may. it says damage from earthquakes may hurt operating results. there's talk of a deal that would unite two of europe's biggest aerospace companies. saffron is considering an offer for zodiac aerospace. saffron is best known for its jet engine deal with general electric. zodiac is one of the biggest makers of aircraft seats.

bank may helpl financial institutions by offering a negative interest rate on some loans. that may happen along with a decision to make a deeper cut to the current negative rates on reserves. such a move may raise questions about getting subsidies to commercial japanese lenders. that is the bloomberg business flash. tom: thank you so much. time now to do some geometry. we do that with lawrence hathaway. we talked about central banks. karen, wonder over here to the bloomberg. this is not from the bloomberg. it is from out on the web. this is what larry learned long ago and far away. we in the media spend most of our time on the orange line, where everybody living out there spends their time on the green line. mumbo-jumbo ofhe central banks, is it in tune with the dynamics of the real economy or is that an afterthought? >> i'm glad i don't have to sit

here and explain the framework. that aside, i do think there's a disconnect. central bankers and other global policymaking institutions like the imf are fretting far too much about global growth. we all have concerns and mine are about long-term dynamics. in the course of events over the last three to four months, we've seen very little variation in global growth, much less than you would have thought given the volatility of capital markets and the relatively alarming statements we heard from various central bankers and christine lagarde. not that much has changed. the u.s. is growing more or less at the same rate it has for a few years. china's deceleration is moderate. things in europe and japan are as they were. i think there's a little too much excitement. tom: francine, maybe the

president is going to lecture mark carney as well. i would give very high marks the governor carney for taking a meeting ground -- a middle ground between all the mumbo-jumbo of economics and what doesn't mean for the people. francine: we could argue that mark carney has the most difficult job. once the referendum is out of the way, rates could rise rapidly or go down if brexit happens. the fundamentals haven't really changed, but we would have expected given all the central-bank action to have better news out there and we don't. forecasts on growth have come down. the ecb doing more and janet yellen almost verbally going down. >> this is where tom's framework comes into play. central banks have been trying to shift monetary conditions to negative territory. the effect on the economy is relatively limited.

of experience to show that is the case. what we need if we want to prime growth is to shift that curve, i.e., have governments spend more. but they are not. seems they choose not to do so, we end out in this relatively outcomeble slow growth that seems to generate excessive fears. tom: within those interest rates, and there's some algebra here, we do algebra on wednesday. we are not going to do that on a friday. the interesting dynamics of the real economy are tangible. do you look at the top line nominal rate or the inflation-adjusted or disinflation adjusted real rate? >> i think real rates tell you a lot more about what should drive demand. nominal does matter for some things. namely asset prices. we price bonds in nominal terms.

we discount equities and future cash flows in nominal's too. nominal interest rates matter a great deal for asset prices. when it comes to decisions about borrowing and spending, the real rate should be a precise one. tom: how do i know my nominal rate or my risk-free rate in the other distortions? >> even when rates are not negative, take 10-year treasury yields, that is a rate that is arguably below its long-term equilibrium, held down by the actions of the federal reserve. that is a distortion that can distort asset prices. it is mostly distorted asset prices and fixed income securities and dividend yielding stocks more than the general equity market or commodity prices. but it is a distortion that investors have to be aware of. .om: larry hathaway with us

coming up on bloomberg radio, he is fired up. michael mayo is more than impatient. he is impatient about our big banks. he would like them to get going on governments. bloomberg "surveillance." ♪

tom: good morning, everyone. beautiful new york city. for everybody but the new york rangers. they got trounced last night during a hockey match with the pittsburgh penguins. francine lacqua in london. tom keene in new york. we are talking economics and oil. greg had productivity, a brilliant quote yesterday, where he basically said economists think the economy is going to improve and most retail clients feel that we never left recession. there's an immense polarity summarized in a lack of productivity. what should we focus on? larry: productivity growth is weak cyclically in the united states.

we are at a late stage of expansion, including the arrival of fuller employment specifically associated with low productivity growth. there is a trend behind it of considerably lower productivity growth in the last 10 to 15 years then we had seen in the 1990's. this reflects weak investment outside of certain sectors like tech or energy. without equipping workers with the proper tools, it is hard to see how productivity growth can be sustained at high levels. tom, i think we have some tech problems. this has never happened on "surveillance," a bloomberg "surveillance" first. it is surprising that productivity in this country is mismatched with what we are used to seeing. it is.

the u.k. has a flexible labor environment, not terribly different from that of the united states. yet productivity growth is very low. that flexibility has not really been that present over the course of the period since the financial crisis. in the downturn, u.k. firms didn't shed that many workers. employment growth has largely been the driver behind growth. there seems to be something awry , which befuddles many economists. francine: something else than befuddles many economists is the price of oil. it seems that the trend now for oil is on the upside. is it stuck in a range? know whereon't quite that marginal cost of correction is. whether shale in north america or offshore deepwater drilling, one of the things we do know is that oil prices are reflecting

the probable reductions in output. apex fellths ago, c dramatically in a number of these places. depletions in oil wells are very high. goneale areas, 70% is within a year. therefore, i think what is really stabilizing the energy price is an expectation of greater supply-demand equilibrium. tom: larry, just to bring up exxon mobil, we are to use this with jeff sachs in our next hour, and you are more than qualified to talk about this with your texas academics. is oil done? i don't mean in the next year or five years, but do you assume there's a permanent structural shift to hydrocarbons? it is hard to see that yet in the data. each and every year, including

some of the years passed, the consumption of hydrocarbons has risen. approaching, we are 100 million barrels per day. that has been a steady increase. the need for the world to both provide power for things like eating, but especially transportation, is still very much based on fossil fuels. above all, on petroleum. we are exploring alternatives and perhaps we will see greater use of electric cars to help us in that transportation area, but it still seems premature to talk about a peek in oil demand, especially against population growth and the growth of per capita income in many parts of the emerging complex. tom: what does oil due to gdp? savings rate is up in the united states. you really got to wonder, oil down, and lower for longer, if

that is the theme, what does that do to economic growth? larry: the old rules of thumb have been broken here. lower oil prices would have been a transference of disposable income to consumers. as you note, in the u.s., the savings rate has ticked higher as oil rates have come down. some of that money is being used to save for a rainy day or pay down some debt. the other effect we saw in the was that collapse in investment in the energy sector. that had impacts on overall gdp as well as within certain states or regions. francine: given we've heard a lot of earnings from banks, it doesn't seem to be that very dangerous link to systemic commodity producers or hedge funds, do you think that were rate has gone away? larry: we went through a very big decline in the price of energy without any major

financial casualties. one would imagine those risks have lessened. if we return to $30 a barrel oil, we will return to higher yields in those parts of the high-yield market that are energy intensive. tom: larry, thank you. what a beautiful friday discussion to get ready for the weekend. coming up in our next hour, we wanted to do this, it is earth day, with the signing of important documents on global warming. jeffrey sachs will join us on earth day, but jeffrey sachs also on our nation and our politics. stay with us, 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. in an era of reflation, negative rates is an untested

policy. you need a friday reality check. in this hour, james glassman of jpmorgan on optimism in job formation. and it is the 46th annual earth day. oil,we will see from peak peak earth day. jeffrey sachs on the end of peak oil. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. i'm am tom keene. with me, francine lacqua. i thought your interview with michael fuchs earlier on german banks was something to consider for the weekend. francine: thank you, i'm flattered. he was great. he was on fire. human politicians have criticized a lot of what mario draghi has been doing with negative rates. scoop a nice bloomberg about him going to the loan programs. what kind of world are we living in? tom: it is a strange world.

let's get to our "bloomberg first word news" with nejra cehic. nejra: one and 150 countries will sign the paris accord today. it is aimed at reducing pollution and slow rising temperatures links to floods, heat waves, and drought. reducees have agreed to fossil fuel emissions by changing the way they generate electricity, power factories, and fuel their cars. insident obama is weighing on whether the u.k. should leave the european union. he arrived in london to meet with david cameron. mr. obama wrote "the european union does not moderate british influence, it magnifies it." boris johnson says the u.s. would never contemplate anything like the e.u., so why should they think it is right for us? first the u.s. dumped andrew jackson from the $20 bill, and

now out will be alan smith. all we know is that there will be someone no one -- no longer present from the -- greece faces a budget confrontation with international creditors. finance ministers me today to decide whether greece should get more money under its third bailout. some creditors want greece to impose more austerity measures if it does not comply with budget targets. authorities in minnesota are investigating the death of legendary musician prince, who died at his home in minneapolis yesterday. he was 57. he was an acclaimed musical prodigy. included "when doves cry" and "little red corvette." global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am nejra cehic. tom? tom: thank you so much.

francine, a lot of people do not know prince's music. he sold a zillion records but was always on the periphery of what i would call popdom. poppy, never like michael jackson. ,ut he could write up a storm when you think of what he did for sinead o'connor as well. francine: i listened to some of his music, and it is different than anything we had out there at the time. what i also did not know, or that i forgot, is that he was the first artist who really pushed to get control of his music. that set the tone for the rest of the industry. tom: a battle with warner bros. for years. he was a gentleman from minneapolis, never leaving his minnesota. let me get to jeff sachs on the nation's capital politics. euro weaker, dollar stronger. oil cannot find where to go, but

a little bit elevated off the same scene months ago. , 13.91, a better than good market. francine: stocks are retreating a touch. commodities are also down. i want to show you carmakers because daimler is being investigated because of it missions. -- because of emissions. off of your interview on the german pension funds, this is a chart of the litmus paper off deutsche bank. this is derivative bond. here we are normal, plunging off panic weeks ago. nowhere near heading back to normal for deutsche bank. francine? francine: that is an important chart. this is another important chart. the white line is china, the foreign exchange settlement, and the blue line is china' balance.

it flipped over since march of 2014. the gap widened a couple of months ago. dollar demand in china is yuan is still the weak because people prefer to buy foreign-currency. to eight orurn seven or 12 or 14 teams of jeffrey sachs, one of our few economists who can truly do that. he is here for earth day. with columbia university. he has been out on the stump for mr. sanders. he is a liberal and proud of it. what is the difference between a liberal and a progressive? jeff: i don't know anymore. the term is used completely differently in europe from the united states. liberal in europe is free market, liberal in the u.s. tends to be you want more government intervention, so the term is a pretty confused term. tom: presidential candidates

moved to the middle. does secretary clinton have that ability, or is she seen so much like the senator from vermont that she will have to keep her liberal base? is in the middle and the status quo candidate by her own account and positioning. she says i want to continue the past eight years. a lot of the electorate overwhelmingly says we are in the wrong direction by a huge margin. tom: when you observe being active is senator sanders -- does the angst go away with better gdp growth? i do not buy it for a minute. jeff: today there is a story running of a new study showing that suicide rates in the united states have gone up significantly. it is shocking. it shows how corrosive the

current situation is for a lot of people in this country. it is really stunning to read this, because we have plateaued on rising life expectancy, something we tend to have thought is automatic, but it is hardly automatic. we are seeing a corrosive social phenomenon in our country right now. francine: is this because you can have gdp growth that helps as long as it is just reviewed it -- as long as it is distributed more fairly? is there a material impact in fostering this inequality? jeff: inequality in the united states have been -- inequality in the united states has been rising for 30 years. we took the position in this country already, 30 years ago, starting with the reagan administration, that we are not going to use redistributive policies, that basically we are going to be in a low-tax, low-government-spending era.

why -- it has not happened in countries where there has been more active government policy, especially northern europe. to say that every kid, every poor kid has the same chances as a middle class or richer kid, in our country, we have just basically allow the inequality to widen for decades. especially for lower skilled workers, real incomes have been going down now for years and years. there is nothing changing this trend, and i think there is a tremendous unhappiness about it. francine: will we see a reversal in that trend? depending on who comes to power? jeff: you can only see a reversal if there is a change of politics and policy in this country. basically, in a different vision of how fiscal policy works, the

countries that keep low inequality -- and again, those are mainly northern europe countries, like denmark, sweden, norway, the netherlands, and germany -- work at it quite hard. they tax more than the united states and distribute more in terms of single-payer health care or free tuition for higher ,ducation, or childcare vacation support. when we do studies, which i put out with colleagues every year -- the so-called world happiness report -- the u.s. comes out low among the high-income countries. the countries that have more income redistribution of lower inequality, are less stressed and less tense and happier. it is showing up in life expectancy and other indicators. tom: whether it is mr. trump or mr. sanders, there is a

pervasive belief that it is a rigged game. us?dee-rigs is basically by the incumbents who are together with the lobbyists and the billionaires, and we know that the whole political process has gone wildly awry. the supreme court gave it a big kick in the wrong direction with citizens united and all those other opinions, but could not tell the difference between free speech and anonymous corporate contributions. really shocking. the supreme court gutted the regulations of how we do election financing in this country, so the game is rate. american -- so the game is rigged it -- so the game is rigged, and americans are sick of it. tom: do you have optimism that

mrs. clinton could right the ship? wholethat was how the democratic party moved, starting with bill clinton, was to pair up with wall street in 1992. you change the nature of our politics. the supreme court opened up this big it entirely -- opened up the spatigot entirely. win based oning to the small contributions rather than those of billionaires someday. tom: we will continue on this earth day. jeffrey sachs, his contributions to his earth institute at columbia. we are honored to bring in the secretary of energy, the , ernestt from m.i.t. munis. ♪

francine: welcome back. this is "bloomberg surveillance ." i am francine lacqua in london. tom keene is in new york. here is nejra cehic. nejra: the maker of mercedes-benz is looking at possible irregularities in emissions testing. the company says a lawsuit claiming that mercedes engines emissions standards is baseless. there is a crucial meeting today to discuss the state of its own emissions investigation. largest british mortgage lender is planning on eliminating 9000 jobs by next year. the number could rise as part of a cost-cutting efforts.

low interest rates have hurt lloyds earnings. in theare falling premarket. the company warns that profit margins could be pressured by higher mobile phone use. google has to pay more to reach people on their phones. in theft also down premarket. the company says results of being heard by uighurs software sales are my close off buy weaker software sales. the hurt by weaker software sales. tom: i am going to call it a three-ratio, six-dynamic thing. it is a beast called productivity. we speak with jeff sachs now of columbia university. where is productivity? jeff: the productivity is partly there and miss measured because we get a lot of things for free.

it is partly down because we do not invest in this country very much. we basically have stopped saving and investing over the course of the last 20 years. that is a big problem. tom: francine, let's go to the terminal and look at productivity. i have a presidential moving average, four years of productivity, the rollover about 2000 as chairman greenspan. then great productivity, then down we go to a shockingly low level. here is the regression of 10, 12 years as well. this is a most interesting and complex question. does public policy create that investment, or does government have to get out of the way? jeff: government has to absolutely help guide, steer, and inspired changes. tom: inspire it. jeff: more than that, we need direction on how to live. that is what the u.n. signing

agreement is all about. -- we need a and new energy system. unless there is a framework that says here is how we are changing our energy system, everybody is just paralyzed. that is what we have right now, is paralysis. we do not invest in infrastructure. private energy producers do not know which way to go -- or what are we going to do about nuclear, about long-distance transmission lines? what is the grid system for the u.s.? nobody knows. there is no policy. francine: how much does it have to do with what you are saying? percentagewise, not enough, it -- not enough investment. we have an even worse productivity problem in the u.k. jeff: i think we do not count in the information age lots of things properly. there have been huge benefits to get over, and what we our devices, what we are able to

enjoy with information and entertainment, in many other ways, that basically comes for free right now. that is not counted. it is not market transactions the normal way, so i think we need a revamp of our national income accounting, in addition to a revamp of our national policies. francine: for the underlying problem, is it actually central-bank action? i go back to the theme of negative rates around the world or to bank much qe in the u.s. not forcing governments to do enough, making it difficult to understand the way we produce and count productivity. jeff: i do not think it is the central banks doing something wrong. they are trying to compensate for the paralysis of government. the central banks are just facing the fact that we have no coherent long-term fiscal framework. even more than that, we have no coherent public investment framework in the united states. we barely invest in the public

sector anymore, and we somehow were taught that the private sector just picks up. most of what is important in energy and infrastructure, transport, in health care and other areas, is public and private investments complementary, not substitutes for each other. this is the thing in the united states, we demonize the public sector for so long, the private sector is sitting on funds but not investing. tom: we are going to come back and demonize jeff sachs on earth day as well. on the banks.mayo he is enthusiastic about the banks, but less than enthusiastic about their dialogue and transparency to shareholders. "bloomberg surveillance." ♪

francine: i am francine lacqua in london. tom keene is in new york. barack obama has arrived in london. he is urging brits to vote against leaving the e.u. he wrote in a telegraph that the european union does not moderate british influence, it magnifies it. the main question is whether this will be counterproductive, but the president has the strong sense that he needed to do this to make sure the british people know what they are getting into. >> the president was making the case that the u.s. and the u.k.

have a special relationship which is about -- which allows them to intervene in their election in a way we have not seen presidents do in foreign elections. it was making the case that there is a special relationship and the u.k.'s -- the u.s. has a great interest in the u.k. remaining in the you. -- in the e.u. tom: what is the position of the royals? toluse: the president is supposed to wish the queen a happy birthday today. the first lady is celebrating the queen, and after that, he will have dinner with the duke and duchess of cambridge as well. that part of the visit is not supposed to be political, but we will see. have that right. jeffrey sachs is with us from columbia. a young jeff sachs got off the airplane years ago and was

absolutely shocked at the collapse of russia. i remember your voice. if the president had gone to russia at that time and lecture them on policy, we would have been shocked. but he can do that within england? jeff: we will see. i am not sure this plays well, especially weeks after the "atlantic monthly" interview that slammed prime minister cameron for the libya debacle, in which our country shares a lot of responsibility. so i am a little surprised at this op-ed. i could see a real backlash. here isf's history profound, coming back from washington. francine: and a lone voice, right? at the end of the day, this is a relationship about money, trade, and economy, and it is not the same if the u.k. is not in the e.u. the: that may be true, but real question is tactics and

whether the president is helpful to the cause right now -- his cause. i somehow doubt it. it is going to be a very close call. it shows just how unhappy the brits are with their politics. it almost divided great britain itself with the scottish departure. there is a lot of unhappiness around right now with politics. tom: and at the end of june, way out front on brexit. up in our next session, james glassman will join us, senior economist from jpmorgan. jim glassman on optimism of formation. ♪

francine: this is "surveillance." i am francine lacqua in london. tom keene is in new york. here is nejra cehic. advises topd trump

republican insiders it is all just an act. with republican elders. they tried to convince party bosses that his bombastic demeanor is to -- is really stagecraft. iran will knew its complaint that it is not getting the sanctions relief it deserves from last year's nuclear deal. secretary of state john kerry meets with iran's foreign minister for the second time this week. u.s. law allows certain transactions with iran involving foreign banks and businesses. in mexico, the death toll has risen to 24 from an explosion at a petrochemical plant. 19 others were injured. mexico's occurred on southern gulf coast. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am nejra cehic. tom? tom: general electric is out with earnings. they put out a press release,

much like jpmorgan, where it is actually in english and relatively clear. they have a nice beat of 21%. what is interesting is you always go to the organic numbers, and they are actually, pretty moldy.e, i have orders up 1%, and we will have to check that number. at first glance, that is really something. moving parts, moving from an industrial -- or rather, from a financial company over to industrial. there are a lot of moving parts. rachel, put up here what the stocks are doing, if we have any early-morning reaction to ge. this is a great thrill. we have jeff sachs joining us from columbia university. and jim glassman joins us from jpmorgan, who gives us terrific perspective on jobs day and shows up today. i want to talk to you both about

the two americas. this is my jim glassman chart. jobless claims as compared to total employment. we have never been there. jeff sachs is writing books and thee civilization, 50%, 60%, 70% we are leaving behind. when you see jeff sachs' urgency, how do you dovetail that with his massive optimism? jim: there are a lot of crosscurrents going on. are the most, timely, comprehensive, and accurate reading of what goes on in the economy. it tells us the economy is moving forward, but that does not mean that everybody is enjoying it. with your career out of northwestern and working with robert gordon, have you ever been in a position where you have such a good-news chart and

such a jeff sex world? struggling toill understand this. it has a lot to do with innovation, which is very disruptive. a lot of people's skills have become obsolete. tom: this is critical. if john edwards has a two americas, does bernie sanders have four? solved this --s how much of this change in the labor market is simply the result of deep technological change -- robotics and artificial intelligence? how much more is to come? the jobs of the lower skilled work, that division of the labor market is even going to soar. it is a really hard question because we are trying to appear into the future without having the -- to.

into are trying to peer the future without having to -- francine: what do you see as the main shift? do we protect ourselves against such a radical shift? on the side down that the changes in information technology are huge, are ethical, so i think the nature of work is going to be profoundly transformed in the next 30 or 40 years. i think that is really going to incomemassively the distribution. if we continue basically with policiesdistribution that we have set up over the past 30 years, it means higher and higher inequality. we have to do something different in the face of these powerful market forces. this are veryke disruptive, but it creates new

opportunities. what i see in our business clients is people looking really hard to develop in-house training programs. the business community recognizes the issue, and they are trying to help people get the skills. the nature of the job market has changed dramatically. my suspicion is that some of the curate hipness will come from the business community. francine: tom is a lot on education on this program, and there is an appetite to understand what education you need. at what level do you have to retrain your workforce? jim: at all levels. we used to have shop classes in high school, and we picked up a lot of skill. when you look at the business community, they need people with communication skills, managerial skills, and technical skills. it is quite profound how much the change has been. the way i look at this, this is the process that has frankly lifted our living standard over the years, so i hope we embrace it and figure out how to take it

of these opportunities that are opening up. fix, take ahave a road in new york that is bad. wait, they are all bad. jeff, the infrastructure policy that we need to develop, i do ct need to be able to write to move a construction flight. a lot of america does not want to write code. jeff: it is a pretty narrow portion of the labor force. you look at this 60% or 70% that are not in that category at a hurting and they are right now. i do think infrastructure does a bit of that, but that is not also enough to change the basic dynamic that the machines are replacing labor. tom: are we creating good jobs? , 200,000 a month or

whatever it is, are they good jobs or are they a fiction? jim: the best way to look at it is job growth by pay level. the first job you get is never your best job, and you hope -- you pull people into the market, they get some skills, and they move up the ladder. that is where we are going. tom: the economic policy institute, at the very low end there is decent growth. at the high end there is decent growth, and in the middle there is nothing. guess that will even expand. the spread will expand as we go forward if we do not do something actively about it. you look at your research and how you look at the labor market, especially for small business, is there any other country in the world that does it better? it seems that we are very focused domestically, and their

is very few cross-fertilization of that country doing it better, so we should take from that. jim: the challenges we have, frankly, everybody faces. it is a global phenomenon. we are sort of in the middle of the pack when you look at what happens to the distribution of income, and what we are doing about jobs. if you have a strong economy and job market, that is the first step to solving it. culture gap that will never solve it? jeff: we need to do what europe is doing. we should, but we have decided so far not even to look. and we should look. tom: it is an interesting culture question. forget about norway with the oil, but it is an interesting question. do you see any indication that we can transfer their cultural economics over to us? the basic insight that you

have to have -- you have to help -- y kid getting education jim: it takes time. it is easy to forget how long these things take. isnkly, what is remarkable that in seven years we have prepared an awful lot, recovered an awful lot. i do not think people thought seven years ago that this would be manageable. tom: i saw a chart where full-time males are above where they were. jim: young people who dropped out of the market, they are coming back in. that is a good sign. tom: we will continue here with jeff sachs. coming up, a conversation with the secretary of energy. he is the most interesting guy. the physicist from m.i.t.. stay with us. "bloomberg surveillance." ♪

francine: we talk currencies. japan, markets, and finance. let's get straight to the bloomberg business flash. here is nejra cehic. nejra: hsbc says it may have to restructure some of its british unit if the u.k. gets out of the european union. at the bank's annual shareholder meeting, the chairman says hsbc has the option to move some stocks to paris if needed. the bank says it will not donate money to either side of the debate. sony is delaying the release of its annual forecast because of the recent earthquake in they are due out next week when the company announces earnings. now the forecast will be pushed back to may. may helpentral-bank

financial institutions by offering negative interest rates on loans. that may happen along with a decision to make it deeper cut to the current negative rate on reserve. such a move may also raise questions about getting subsidies to commercial japanese lenders. tom: very good. thank you so much. it is earth day. world leaders gather at the u.n., and they will sign the landmark cop21 climate agreement. francine and i were there. it was a most interesting and surprising event. one of the most interesting players in our discussion of energy policy is ernest moniz, out of boston college and stanford, with his work for decades at the massachusetts institute of technology. a vote of 97-0 agreed that he should be our next energy secretary. we are honored that he joins us

this morning. i want to cut to the chase on what cop21 will do. do you actually believe that cities can scale to give us a better energy world, versus what nations and states can do? secretary moniz: that question is interesting. let me start by saying that this is a great earth day for our stewardship of climate of the earth. in terms of cities, cities clearly have to play an important role, as you know. we are well past 50% urbanization globally. we will be at 70% by midcentury. cities do present interesting opportunities, precisely because of their density. we could see much greater electrification of cities served by carbon-free sources. we could see opportunities for efficiency in how people live, so cities are going to play a critical role.

another issue which has been emphasized recently is how urban areas and the networking of urban areas in different regions can play a very important part in going to a low-carbon future. tom: i like the idea of networking urban areas. have you seen a change in your tenure of the climate deniers? changed theirthey tone over the last two years? so, buty moniz: i think let me also say that my very first day, before being on the job formally, i made it clear that i did not come to washington to debate what is not debatable. i'm happy to debate exactly how we implement the programs to address climate change. shift, andthere is a that shift is driven by the realities of what the public is seeing, the realities that publicly polls show the

clearly understanding that we need to address climate change. again, we still have debates going on about what exactly to do, how to do it. we clearly have different regional questions that need to be addressed, but it is not that we needtable to be prudent and address climate change in a strong way. francine: do you expect to ratify the agreement in paris before president obama's term is up? secretary moniz: today, as you have said, what we will see is the vast majority of countries signing on to the agreement. there is a second step that involves internal processes to do note acceptance. the united states and china have announced that both of us plan to reach that stage this year. so the answer is yes, we are going through the internal

processes to reach acceptance this year. francine: how do you get from the current deal, present -- pledges on the table, adding up to three degrees of warning, to the below two degrees actually signed on? secretary moniz: the paris accord is a very major first step. it is a first step because, as you have implied, exercising our programs internationally will, again, bring down global warming expectations dramatically. but by themselves they will not get us below two degrees. there is no question there. that is why the agreement also has a five-year review period, why there is anticipation of greater ambition in the future, and one of the critical issues parisrests on another discussion being implemented, namely something called mission innovation.

that is where 20 countries have come together and pledged to -- thedoubling of energy united states among them. we believe that will lead to more innovation, more cost reduction, and more cost reduction will lead to more ambition. tom: let me bring in jeffrey sachs of columbia university, with a question for you. jeff: first i want to say how nice it is to be with you, mr. secretary. it is nice that america has one of the smartest people in our country as the secretary of energy. it is really a great thing. i wonder if you could say something about the nuclear future in our country. it is a low-carbon energy source that provides a substantial part of our electricity, highly controversial. many of us think it needs to be part of a low-carbon future for the u.s. how do you see the politics and the thinking and the technology on this now?

certainly, the: president and i agree that we need to keep nuclear on the table as an option, essentially a zero-carbon option for the future. the challenge with nuclear power, a major challenge, is that with today's reactors, there is a very large upfront capital cost, although a comparatively low operating cost. given that capital structure, what we are seeing is new reactors being built in the southeast, where the rate recovery mechanisms are operative. we will see how that propagates across the country. but you mentioned technology. as one example of something that i certainly think it is very important for us to see through is the development of much smaller modular reactors. the department of energy has helped to support a company on

that, and they will be submitting a design certification. it is a 50-megawatt, rather than a 1200-megawatt reactor. tom: mr. secretary, please stay with us, and jeffrey sachs as well, of columbia. 2, dell futures up fractionally as well. on this friday, earth day, from london and new york, "bloomberg surveillance." ♪

tom: good morning, everyone. a forex report. dollar,en, a smaller but a turn to the market today. francine: coming up shortly is "bloomberg ." what do you have, david? our guest tease -- from goldman sachs will talk about the weaker yen, and whether it may just the related to a bloomberg report or positive rates coming out of japan. that and more coming up on "bloomberg ." francine: let's get back to the u.s. energy secretary, live from washington, ernest moniz. we were talking about climate change, but we also need to talk about the price of oil.

how will the price coming down arect future investment? you concerned about a significant oil spike in the near future? secretary moniz: in terms of the lower oil prices we currently have, speaking for the united states, we remain a significant oil importer. the lower prices are good for the overall economy and consumers. in terms of climate change, it means we need to stay the course in terms of efficient vehicles, electrification of vehicles, and the development of alternative liquid fuels like advanced biofuels. we are doing that. tom: thank you so much. we will continue with you on bloomberg radio on "bloomberg surveillance" in a moment. jeffrey sachs, remember the first earth day? it was a few years ago. it was a joke. it is not a joke anymore, is it? jeff: now we have our backs to

the wall. the warmest year in instrument history last year. this year is going to be even warmer than last year. we know that global warming is real, it is serious, it is a huge threat. we spent decades doing nothing. now we really have to move fast. tom: with all the things moving around, the ice melt and all that, what is the number one indicator of global warming that you pay most attention to? big things --wo one, a massive disruption and food supplies because we are seeing more droughts, floods, thermal stress to crops. and the second is the sea level, which we know from my colleague 's recent study, james hansen, that we could have catastrophic ofes in sea level because losing part of antarctica and greenland. it is very, very frightening. that is why 196 signatories

unanimously agree about the paris climate agreement that is being signed today. tom: jeffrey sachs, thank you so much. wonderful to have you here. ranting, i assume you are having lunch with the president and the queen? -- francine, i assume you are having lunch with the president and the queen? francine: right. extremely important. tom: very good. "bloomberg " is next on television. ," weloomberg surveillance continue with the secretary of energy. jim glassman joins us as well. from new york and london, "bloomberg surveillance." ♪

david: technical difficulties. out of that and microsoft are leading tech stocks lower on difficult -- on lower earnings. the yen is dropping the most

in seven weeks as the bank of japan ways offering negative rate loads -- as the bank of japan weighs offering negative rate loans to banks. david: welcome to "bloomberg ." i am david westin, with vonnie quinn. jonathan is in london. the cohead of global fixed income, a lot on the plate for him today. blackrock portfolio manager will talk emerging markets with us. mayo,nking analyst mike managing director of cms a americas. jon: what a guess lineup we have. let's get to work. stocks down across the board.