surprise costas a got to mitigate shares jumping. shares wipe out their losses for the year. investors like what they see in the strategy update. economists believe a rate hike in june may be on the table and we speak to joseph stiglitz later. michael mckee is in new york. it's a busy day. we have new holes for brexit. we have earnings from europe.

michael: overhanging all that is the fed meeting that's underway today. the bank of japan on friday. it's a busy day at a lot for investors to think about. we give everybody our second clue on the where in the world is tom keene contest. francine: what do we win? let's get to the first word news. here is vonnie quinn. : donald trump is the only one left in the republican race who can reach the number of delegates needed for the nomination. he could when the rest of the primaries and still come up short. hillary clinton -- clinton will leave doubt that she will be the democratic hardy dominate. in recent speeches she has hardly mentioned bernie sanders. preachil, they will him

the president. she will have to step down if the opposition gets enough votes to start a trial. that could start in may. doctors in the national health service are beginning a two-day strike against new contracts. they will refuse to provide a emergency care. they are unhappy over their pay and conditions. senior doctors will cover for them. aance is one of -- has won contract to make submarines for australia. they peanut companies from germany and japan. one -- they has ships are engaged on 8.47 basis with the chinese navy. he calls the chinese completely professional. they accuse each other of militarizing the region.

our 2400wered by journalists. i am vonnie quinn. michael: let's get you caught up or the markets are this morning. i talked with one analyst who said the markets go up and markets go down. at the moment, futures are higher in the united states. the euro is strengthening today. oil is higher. maybe that is helping to drive equities. here's what happens when the markets bet on the fed doing nothing. emerging market index is up. we are seeing the yield curve flattened in the united states. the dollar is still a little bit weak. the malaysian ringgit is down today. that's the other side of the trade. it fell because they aren't afraid the chinese are going to devalue a little bit to make up

for what happens with the fed. at -- let's gook to fran. european stocks are climbing for the first time in four days. we had begun earnings from bp. some estimates on revenue. they are doing a little better. i wanted to show you the yen because it once again a strengthening for a second day. meeting laterj and the fed today. michael: let's stay on that scene. let's talk about the dog that did not bark are in we are looking at the dollar index. instarted rising back october when the fed came out with their statement. at the next meeting they will

probably raise rates. now, the dollar index is falling. why is that? no one really knows. what happens after tomorrow's decision? does it continue to fall? doesn't flatten out. janet yellen has been worried about where the dollar goes from here. right now, it doesn't seem to be a problem. i wonder how long that lasts. a positiveested it's court secret. this is my charge, tom is always on my mind. i am thinking about tom because this is the type of chart he would duplicate golden cross is the pink line. 200 movingline is average. is technical us

analysts are signaling wealth act rules. central banks are dominating this week. there is a possible further easing. , rick joins us. the hour.t host for a what is your take on what janet yellen will do? they are data dependent. they can't really take the market by surprise. they are a little bit more hawkish than when they get together. we expect a dovish tone. the data has not changed much. things are getting better from an employment perspective. there's not been a fundamental change it in some areas they are slipping back during -- back. francine: what are they looking at it so ugly out there? china seems to be stabilizing.

rick: china may be stabilizing in the wrong way. it may be a revival of the model we trying to transition away from. when we look back at the last three months, we have seen things improve. for some people, that has dissipated and maybe the fed will take that into account. i'm not sure things have changed very much. they may shout the next rate hike for a few months yet. are we depended on janet yellen to determine what the markets are going to be? everybody thinks just one rate increase? what would it take to move the markets? atk: they have become adept communication. they will do something that will cause a sharp factor at this

point. the data don't support it. get in the market ready for something to happen later in the , that could revise pretty substantially. i think there is an expectation something will happen. keeping alive that preparation for markets will be very important. there is a rate of whether raising rates will be good for the global economy. i think raising rates in anticipation of a tightening labor market is the right thing to do. tightening for their own sake because of worries about other issues, global issues and the strength of the dollar potentially, i think that's good.ly not it needs to be driven by data. 4.7%ine: core inflation is in the u.s.

thanks if not been able to stoke up inflation. can they abandoned that mandate? there are different factors that are driven? rick: i think the difficult part is you can't have a step function. the new approach to percent, you can't go from an emergency rate rate.s too in equilibrium it's the approach we need to see slow but steady tightening in rates. having a step function at the 2% level is not what's expected at all. i would not expect the fed to do that. that implies that when you haven't hit the target, you may be tightening a little bit. michael: we will continue our discussion. we will know what the fed is going to do at 2:00 wall street time tomorrow. stay with us on

bloomberg for all of your fed coverage. ♪

francine: welcome back. we have live pictures of london and live pictures of york. look at that. london is little bit cloudy. breaking news. michael mckee is in new york. let's get straight to the bloomberg business flash. reported profits. they had a stronger than expected performance. that has offset the collapse of oil prices. they tried to boost earnings by cutting spending and eliminating jobs.

dupont raised its earnings outlook after higher prices moved sales. they plan to merge with dow chemical later this year. it's the biggest combination ever in the chemical industry. in the first drop quarter deposits. revenue fell in every business line. they focused on asia. they are trying to restructure risk the -- risky assets. francine: thank you so much. i am excited. we are talking to bill winters. that is a little bit later today. as bonnie was mentioning, they are getting 10%. stephen covers them for us. let's kick it off with you.

i guess they were in line in terms of revenue. it was down a touch. investors like what they see. stephen: there was a 10% rise in the shares. investors were looking at other measures. one of the keywords you mentioned were impairments. it is what people were expecting. they have really come to expect the worst. when they all perform, they do get rewarded. francine: we are talking to him later today. he seems tempered. he says it's a complicated process. the market seems to have latched on to the fact that he is improving markets. stephen: it's refreshing honesty from a bank ceo. he was clearing up what can be

a mess at standard charters. he has made some bold moves. the you risk controls on lending they do to commodities, he has cut his exposure to risky chinese companies. i think he's made a good impression so far. we will get to put some tough questions to him this evening. michael: with all of those reforms he wants to make and trade, can you pull up anything that shows in these earnings that some of them are having an effect? the overlay of pad trading conditions is there. can we point to anything and say this is what mr. winters was able to accomplish? stephen: he's only had about nine months. a lot of this hasn't gone through yet. in terms of tone and lending and

deals, they have noticeably gone higher up the credit scale. they are lending less concentrated. they used to give billions of loans to indian conglomerates. that has come back to haunt them of it. is 13.1%.tal level that is a measure which demonstrates how much reserve they have a something goes wrong. as a result, we are seeing standard chartered the the best british bank this year. michael: how is the banking system overall? the: you've got to get in emerging market currency. we might bense that near the bottom in terms of emerging market credit problems. look at the long-term franchise

value, he is doing surgery on this bike. there is a sense that there is a strong long-term franchise value. i think that's true. they're trying to pick up things that are sustainable and reduce risk in areas where there is a problem that isn't going to go away. i think we've seen that across the banking sector is a whole. in europe we have the negative interest rate challenge. that's weighing on bank valuations. i was speaking to the ceo of fed bank. chartered.e they came out unscathed from the financial crisis. emerging markets and not performing as they should have. are we over the worst for emerging markets? defaults have begun to

break out in china. i guess the transition goes from one economy to the new economy. you have to see something happen in terms of that credit double. that's only one country. i think you may see more in the false another areas. discounted really bad news. now it's recovering somewhat. francine: thank you so much for now. watch out for that interview we speak to the winters later on. first interview since becoming ceo last june. ♪

francine: i have picked out something for you in our morning must-read. this is what we found in bloomberg view. they are talking about the ted cruz john kasich pact against trump. how much air time this getting in the states? we are quite obsessed. donald trump has been playing dirty politics and says this is unfair to him.

michael: he does get some air time with it. it's his theme of the last couple of weeks. there is a lot of pushback. the rules have been in place for at least nine months. he should have known that. he's an and competent candidate. that he's trying to rectify his mistakes. it's politics to blame the republican party. it fires up his supporters. in trying to make up for the mistake. goodine: that's a very point. when you look at u.s. politics, i've heard this is different. it's messier and uglier. rick: looking at it from a business perspective, what do businesses like? less regulation, freer trade. your the endu get of the race, the uncertainty on

some of the issues they've had problems with will begin to diminish. maybe you see some increase in business confidence. francine: this holdback spending? we keep going around in circles. what does it take for a ceo to go after dividends or applying something? : there is a perception about the global economy. i think that's influencing people. , the u.s. consumer is such a large part of the economy. i think i will have a rebound effect on business as well. what about the election coming up for the british? michael: i think that would directly affect what business is

able to do in the u k. rick: it affects the u.k. a lot. if we vote for brexit, we have other issues that are in there. the pound has already discounted that. i would be doubtful whether securities markets agree. if there was a brexit, there will be an impact on business confidence in europe. the ecb would way that in terms of their own policy. i don't think that's been discounted. we have any kind of timetable for when either come or brexit gets into the conversation? rick: brexit has been discounted. people following the polls with a sense of skepticism, they have been overturned by the final.

stone ishink the falling in lockstep. michael: rick is with us for the hour. coming up in the next hour of surveillance, we will talk to joe stiglitz. this is bloomberg "surveillance." ♪

michael: good morning. it's time for the first word news.

in franceain service has been hurt by a strike. private companies are offering passenger rail service for the first time in a competition. it's another hit to the malaysian fund. it has defaulted on a $1.8 billion bond. the malaysia fund is at the heart of an investigation. they have denied any wrongdoing. the federal reserve will keep its options open for a rate increase in june. policymakers begin a two-day meeting today. they believe the fed will keep the target range unchanged for a third straight meeting. the fed raised rates for the first time in a long time.

civil rights groups say it unfairly targets minorities. opponents say they will appeal. to overhaul plans the economy. defensel put the industry under a holding company. the will cut out waste in military spending. they have one of the biggest defense budgets in the world global news 24 hours a day. i am vonnie quinn. francine: thank you so much. we were breaking the news out of saudi arabia yesterday. it's incredible when you think about the valuation. when you think of the 2 trillion it's incredible. we have chart for you. i made this up for you.

you can see it's going higher. michael: it's going to go higher still when they get closer to bringing that stock to market. francine: joining us now is the barclays economist. the starts back in october. they were looking at a possible ipo. this is a new saudi arabia. this is probably the biggest transformation we have seen in the middle east. >> the markets are focused. it's only part of this sort of overhaul that they have. i would say they boldly outlined in yesterday. short-term, it is going

treasury at ahe time when oil prices are not enough to finance a larger growing deficit. looking at deficits still in saudi arabia. the second one is really about introducing greater efficiency in the management. do we think this will go through? the reputation is on this. he was very bold. it's going to be a huge challenge. he means business. alia: absolutely. , i way he put it yesterday was still at the office looking at it. the challenges are huge.

the big challenge is execution and data. at the end, you need efficient in therats and expertise administration. a know that it's uploaded -- bloated bureaucracy. the second challenge is what you said, building the domestic political consensus to move ahead with these reforms. they have a very conservative society and politics. have time tohey execute this given the low price of oil? they want to do it by 2020. they are in a bit of a funding squeeze. saadi reserves are starting to fall. is that what they are trying to do to bridge that? alia: i don't think they are in

a dire situation in the short term. they are still sitting around $580 billion in reserves. they have a lot of cash. short-term, i don't think they are squeezed. toy have less than 5% debt gdp. financing instruments will come to complement those assets that will be part of this large fund. --t will bring new non-route oil revenue. yes, 2020 could be optimistic. i don't think they are in dire financial conditions.

michael: when you look at trying to reform the economics, you can't not look at the sociology. are the restrictions of saudi society going to make this process work? alia: i think that's the great question. this is one of the key challenges moving ahead with this strategy. all about bringing on board parts of society. i don't think that's going to be an easy way. the crown prince was trying to assert this is a gradual reform. there will be greater participation of women in the labor force. he knows these things are difficult issues to negotiate

with the religious establishment. end society will decide. if they don't want to go in that direction, they won't go there. that is quite a different language. francine: of course the economy is very closed. it's not a systemic risk like china. transition,ave this it will help the region and reduce risk. there are several elements to this transition. completely independent of questions about social issues. it might have important evidence issues which i think are valuable. the real transition is the economy getting more participation in the labor force. i think long-term projects will bring more stability from an

economic perspective. they are creating a huge sovereign wealth fund. is this beneficial to the world economy? all oil reserves are dwindling. what they once and bravest their close neighbors are doing. -- once embraced what their close neighbors are doing. i think what is interesting is they said they would invest 50% externally and 50% in the local economy. i think it will take time. you were talking about incorporating some companies and a more changing legal framework. it will take time. i don't think you will have a dire effect on the world economy. place, youity is in have a newcomer into the interesting states. michael: you've also got iran in

the area trying to make appeals to western financial worlds. countries succeed in doing that? i think that goes back to the timing of the announcement. the announcement of the strategy is linked to domestic conditions in the oil market and the need to reform. i think this goes back to the boldness. he is selling this to the world as another alternative player. he needs the attention of foreign investors to focus on the economy. there is a socioeconomic component with iran that is only starting. we will increasingly see greater competition. that depends on how iran opens up. dealing with the financial sanctions, they have a more difficult business

environment. infrastructure is lagging. humanave their own capital problems. they have low productivity. they both have a large consumer market and large financing needs. that could provide important investing opportunities. it's just only starting on the economic front. francine: thank you so much for joining us today. we will be talking a little bit more about some of the stocks linked to oil. we continue the conversation on oil. posted talk about how bp a surprise profit. can we still show those charts? find out next. ♪

francine: michael mckee is in new york. we are talking about asset allocations. let's get to the bloomberg business flash. regulatorsitrust have signed off on a takeover of time warner cable. -- the takeover would make charter the second-biggest cable operator in the united states. the largest health insurance is pulling out of more obamacare markets. united health. selling individual plans in kentucky. that's the 26th state to quit so far. united health is also leading that market in iowa. they are losing money on the policies. of $6a posted a loss

million. the japanese company makes everything from appliances to nuclear power. the value of the westinghouse unit. that's the latest bloomberg business flash area -- flash. francine: bp had a profit. rick is still on set with us. they didn't do great, but they beat expectations. how the year. airow the javier: that was a big surprise to the market. the refining sector is saving the day it bp.

clear that oil companies have reduce costs. they are beginning to filter down into the bottom line. francine: it's all about cost-cutting and rationalization. at what point can this company grow again? i know it's linked to oil prices. javier: i think we are not going to see any growth until oil prices move higher. they've been telling investors they are guided investors to alan's those books with oil prices between 50 and 55 dollars a barrel. reducing and that's good for investors. when will they start rolling?

i think that will depend on what happens to the price of oil. michael: they may be cutting back further on capital expenses. what are not going to spend money on? back incompanies cut the united states, it took a bite out of gdp. you're not going to see mega oilding on the companies. they're going to be raining down on everything. exploration has been well lead. we see the cost-cutting on the numbers that have gone down 10% over the last few quarters.

at the corporate headquarters, it's falling down 40% compared to a year ago bird ago. building anit at oil project costing $20 billion to the amount of spending on the offices here in london. francine: what does it mean from a business point of view? rick: we've seen this many times before. restore capital and that feeds back to hangoverers the shale at $65 a barrel is a dampener. expectations can't be guided.

the cost-cutting and the disposals taken may be harsher than normal. have an beginning to impact in the sector. we found some interesting stocks. it's priced as if something is never going to approach normal. our thanks. withg up, a conversation roger goodell. you don't want to miss that. tom brady doesn't want to miss that. this is bloomberg "surveillance." ♪

themel: michael mckee is new york. your base scenario is raising rates. : he is in order to get a

return. you cautious about that we are being reported for the risk of the equity market. volatility is choppy. are long on credit. we are little underweight in equity. schumer: overall equity -- equity. rick: europe has more catch up potential. what do we say to our clients? you're not being rewarded for the risk. michael: what kind of credit are you buying? is that what you want? overweight inbeen

both high yield investment-grade credit for some time. we've been under equity. the economic cycle is going to continue for some time. things are picking up slightly in europe. it's better to be in credit and equity. when you buy credit, are you buying outside the u.s.? fedrice will go down if the moves higher. u.s. economyct the to recover slowly. doesn't necessarily mean it's bad news for credit we are not in an environment where the blake -- brakes are being slammed on. the you think we are mispricing overall? at some point, negative rates

start hurting banks. ok the moment they are nothing good can come out of them. rick: it's a business model challenge. to keepral bank needs on the evening track. as the economy restores growth. francine: there is hardly any structural reforms. unless government takes this seriously. reforms will be incredibly helpful. little bit of a growth in europe this year. it's impossible to say ecb policy hasn't affected things. it will be turbocharged with other levers.

michael: do you want to trade of what central banks are going to do? are you looking at the fundamentals of what companies can earn? rick: you will plot your strategy. from our perspective, we are not plotting an extreme outcome from the fed or the ecb. a consensusding on viewpoint. michael: are you buying or selling volatility at this point? rick: we are a little underweight. volatility has been chopping last year. i mentioned some of the issues. credit markets are where people expect challenges. small rooms in terms of news flow have resulted in

changes in the fx market. for me its seem to be across the asset classes in creating a more difficult environment for investors. the barclaysng up, head of global inflation will talk about fixed income. joe stiglitz from columbia university when we continue on bloomberg "surveillance." ♪

francine: standard chartered

rallies wipe out there -- it is a big profits is five states hold primaries in the run-up to the presidential election. and as the fomc meets today, economists say a rate hike engine may be on the table. we speak with joseph stiglitz. good morning, this is "bloomberg from london." live michael mckee is joining me in new york. michael, we have a great, busy day ahead of us in a busy week. the boj tomorrow, and a slew of earnings. a lot of different things for investors to parse. so crazy, and we have the primary elections again here in the united states today. keene sohey made tom crazy, he had to get out of town. listene: i bet he will to the first foreign-policy speech by donald trump tomorrow. let's get to first word news with vonnie quinn, who has more on politics. the only one left in the

presidential race with -- he could when the rest of the primaries and still come up short. for hillary clinton, winning all of today's races with leave little doubt that she will be the democratic party's nominee. in recent speeches, she talked about bernie sanders. in brazil, selected members of the committee that would recommend whether to impeach president dilma rousseff. she would have to step down temporarily. the trial could happen as many as -- as early as may 12 30 doctors in the national health -- in the u.k., for the first time they will buy care. refused to navy -- china's navy, the head of the u.s. carrier tells bloomberg his ships are

engaged on a rocky 24/seven basis with the chinese navy. the u.s. and china accuse each other of militarizing the region. ifpro football, no word yet the new england patriots will appeal the four-game suspension of quarterback tom brady. a three-judge panel reinstated his punishment for the deflategate scandal. coming up, we will talk exclusively with national football league commissioner roger goodell at a: 30 eastern on "bloomberg ." global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i'm vonnie quinn. i can only imagine what the first question will be. michael: the nfl or tom brady could appeal to the supreme court. but would tom brady asked roger goodell to make the suspension shorter? what would roger goodell think of that?

vonnie: so many questions. michael: let's get you caught up on the markets. it is a bit of a risk-on day. as you can see, futures are higher, and note yields are following a little bit at the long end, people putting some money into bonds. the euro is trading higher on the day. we are looking at oil maybe also having an effect on equities at the moment. you look at our second board, and it is about the fed. doy are not going to anything, so emerging markets can trade higher. the yield curve flattening. the two-year is up 310-year note is down -- and the malaysian ringgit, i put that out there as a symbol of what is happening. the chinese yuan is a little bit lower, maybe perhaps preparing for the fed, and that will have an effect on other currencies in asia.

and the bank of japan decision on thursday. francine: i really like when we look at emerging market currencies, mike. datais my picture for the porting your. the stoxx 600 gaining a touch. bp, standard chartered both rising. standard chartered, i probably should have put it on the board. i did not. it was a mistake. it is gaining at 8%. you can see some strengthening ahead of the boj. the pound also jumping. it is less likely the u.k. leaves the eu. bill winters said, why didn't you put that on the board? i finally have a good day. fed is concerned about the dollar impact on the u.s. economy. the question is, what impact? take a look at my bloomberg here. you look at the dollar index over the last year, and you see what happened in october when

the fed said they were going to raise rates at the next meeting. the dollar shot higher. then they raised rates, and now the dollar has gone down. why is that? that is the real conundrum for the fed. will he go higher if they again talk about raising rates, or does it stay where it is? that will have a big cap -- that will have a big impact on inflation and whether or not the u.s. companies can sell goods overseas. a key question for fed decision-makers as they may -- as they meet today and tomorrow. francine: it also relates to the fed decision. this is the s&p, looking at technical levels. the 200-day moving average is the yellow. this is what we call golden cross. it is the second time in six months it has happened. the last time was december. it tells us, technical analysis, it is pointing to what may mean equity boards are right. michael: the fed would like to

-- the question is, what do they do next? joining us now, head of barclays inflation global research. us why the dollar is falling when the u.s. has come on a relative basis, the highest interest rates around? michael: the fed is in a tight spot. if it signals it will be raising rates, at least faster with the market anticipates, than the dollar is going to go up. that tends to slow import inflation and manufacturing production, and then the economy slows and the fed has to reverse course. which is essentially what they did from the december meeting. they would not have gone in december if they did not think they were going to raise rates in march. the dollar rally, the economy

slowed, and it was not in the right spot for them to raise rates at that point. so they are in a bit of a tight spot with the dollar. if a signal raising rates, the dollar rallies and then they have to signal they are not going to raise rates. michael: you think it does rally again? michael: a bit. if it is more than what the markets are priced or prepared for, the fed has set the table, if you will. goes two hikes, as a predictive in march, then the dollar probably without a little bit. probably rallies a little bit. highere: a slightly dollar will not be that bad for the -- michael: we are forecasting two rate hikes for this year.

the downside risk to that rather than upside risk -- we think tomorrow the fed will signal that while financial conditions, as we talked about, the s&p is higher, the dollar is falling financial conditions have improved since the march meeting, but data has come in weaker. the gdp for q1 is likely to come in quite soft. francine: what about inflation? core inflation 1.7. do you see a pickup? michael: core inflation has picked up from where it was earlier this year, but "volatile items" is the phrase that the chair used. they do not think it has picked up in a sustainable matter yet -- in a sustainable manner yet. francine: what is that doing to inflation linked securities that you are looking at? michael: the break-evens have come up a bit this year from where they were at the end of the year. but they have done so to counteract negative carries.

so the drag from oil prices declines earlier this year means the inflation depreciation was negative. the front end has gone up a bit, but the 10-year, adjusted justification, is actually down so far this year. so inflation applications have not picked up as much as would be implied if you are only looking at spot breakeven moves. purely so is the market looking at growth and inflation as opposed to purely what the fed might do? michael: that is right. downive-year are still year to date. yourine: michael, what is take on the devaluation of the yuan? are we over that debate? we understand the pboc would hold off for now, or does that still worry you? michael: we do think it will

hold off for now. if the fed signals tightening, the yuan moves too much, slowing the chinese economy, and that gives the fed concern about growth abroad. tie-in from the chinese economy into the u.s., is slowing the fed's hand here. michael: what will the fed signal? we will find out tomorrow? stay with us on bloomberg. i will join scarlet fu and joe p.m.nthal for that at 1:00 new york time, 6:00 p.m. in london. "his is "bloomberg surveillance on bloomberg television. ♪

atncine: we are looking

bonds, currencies, macroeconomics. i am francine lacqua in london. michael mckee is in new york. let's get to the bloomberg first word flash. vonnie: bp has reported a surprise first quarter profit. they had a stronger-than-expected performance in refining and trading, and that helped upset the impact of the collapse of oil prices. they are trying to boost earnings by cutting billions in spending, a limiting thousands of jobs and deferring projects. the crisis that wiped out half market --shi's motor the fuel economy of its cars has been tested incorrectly for the past 25 years. antitrust regulators have signed off on charter communications $55 billion takeover of time warner cable. the justice department says

charter cannot reach deals with programmers that would make it harder for streaming companies like netflix to obtain content. the takeover would make charter the second-biggest cable operator in the united states. that is the latest "bloomberg business flash." the race for the white house continues with primaries in five northeastern states today. the democratic republic and contenders will face offering connecticut, maryland, pennsylvania, delaware, and rhode island. megan, we are looking for a clean sweep on both sides of the aisle. does it matter if it is a clean sweep for trump and clinton? megan: i think we would be surprised if it was not a clean sweep on both sides tonight. in many respects, the race has moved on to the following week in indiana, where we have seen this strange deal between ted cruz and john kasich in a bid to stop trump. pointss up by almost 30

in a state like connecticut. vonnie: will the impact of today carry through to states like indiana? megan: indiana is a different battleground. tonight, thely see core primaries, is where the race has turned in states like wisconsin and carrying through for hillary clinton and ultra. huge rallies in new york, not only in -- for hillary clinton and donald trump are huge rallies in new york. the more interesting stay tonight is dental then you. a big win tonight by donald trump, that he does not win all the delegates, we will keep a close eye on pennsylvania. michael: you can only have 17 of the 71 delegates in pennsylvania awarded to the overall winners. the rest are to directly elected. the ted cruz cap things they can get 30 of those. if that happens, does that change the conversation about

the prospects of mr. trump? megan: there is no question that ted cruz has been more effective at securing these conventions. but if donald trump wings by huge markets desk by huge margins in pennsylvania, it will be difficult for ted cruz to shoulde case that they support him. donald trump needs to convince the delegates that if they go in to a contested convention and do not support him in pennsylvania, they are truly unbowed and that will not affect the will of the people. it -- it fits into his thing that this nomination is actually rigged. francine: donald trump is kicking off a series of speeches this week, starting tomorrow, to gain credibility on foreign policy. are threerk at go speeches going to be game changers? megan: i am not sure it will be a game changer. that is an interesting way to put it. i think it is putting flesh on the bone where there was literally no flesh.

he has not announced a significant policy other than the wall at mexico. on some of the other republican candidates -- i think anything he fleshes out may help his legitimacy of his candidacy overall. we will have to see what he says to judge it on merit. michael: megan murphy will be keeping an eye on the primaries tonight. the conversation on those and u.s. politics continues with john heilemann and mark halperin with -- "with all due respect." ♪

i michaelood morning, mckee in new york. francine lacqua is in london. let's take a look at the big meeting of the day. today and tomorrow, the federal reserve will decide whether or not to raise interest rates. you raise interest rates if you think inflation is picking up, but they do not take effect for some months down the road, so you have to base your decision on what your expectations are. take a look at the expectations chart. the white line is the university of michigan consumer sentiment survey. what americans think inflation will be over the next five years. gold line,line, the is what wall street professionals think it will be. those are five-year, five-year forwards. the question is, who is going to be right? barclays' michael pond is still with us.

the interesting thing here is that the fed continually tells us they do not like the wall street numbers, they like the survey-based numbers, and they --ll show that people in that people think inflation will be much higher going forward. it is running well above where the market has been priced. they had edged down slightly. they are moving in the wrong direction. they are still high and have not moved down much, but they had edged down somewhat recently, and that she give the fed a little bit of a pause, concern that they are losing credibility with the markets. and consumers alike. michael: i did extend back the date, the start date for this chart. you are right, in terms of consumers and wall street, we are seeing them go down somewhat.

consumers are still holding in over 2.5 percent, which is well above where the fed's target rate is. you are coming down on the market side, but is it realistic to think we get almost no inflation for five to 10 years out? right now the five-year, five-year is priced at 1.6%. that is below the fed target, particularly if you take into account this is based on cpi. pc,fed target is based on which tends to be lower. the market is priced for the fed to continually miss its target over the next 10 or longer period. inflation has been low, and the fed is tightening. it is tough to imagine fed expectations going up significantly in till inflation picks up. francine: how do you explain such low-inflation? it is a problem that the fed has and the ecb has and the boe has.

there are deflationary pressures around the world. if you strip out energy and look at core inflation, it has been running below the fed and the central bank's target. if you break that out into the services and goods components, the service component, which reflects inflation pressures from the domestic economy. service inflation is falling. it is usually dominated by global factors and remains weak. economyally the global and the weakness there that is causing inflation to be low. we think the fed at the march meeting, and chair yellen's recognizesspeech this fact, that global factors have been more important than the fed has predicted, and therefore they are going to be a bit more patient than they had anticipated.

francine: i want to come back to an earlier point you made that the fed is losing credibility with the markets. do we care? isn't it a dangerous and almost vicious circle that the fed is watching what the markets are doing? sometimes it feels as if chair yellen is dictating to the markets. chart isthe five-year the fed watching the market watching the fed. factor, but itr is because if the fed loses credibility with the markets, the monetary policy becomes less effective. it is really only if the markets or consumers believe that the fed can do what they say they want to do, that they could actually achieve their goals. so credibility is very important to monetary policy here. michael: michael pond, thank you very much for being with us here on "bloomberg surveillance." "surveillances on radio" later this morning.

are going to speak with columbia university economics professor joe stiglitz. we will get his views on rates. and lily is just out, a reversal from what we are used to seeing. it beat on the top line and missed on the bottom line. shares coming in at $.83, which is a two cents miss. adjustedlion, and it its earnings per share in guidance to the year am a pretty much upward. many companies have been doing that. it will be interesting to see how the rest of this earnings season played out. have u.s.it does futures trading higher. s&p futures up by three. the sox 600 -- the stoxx 600 up by .3. ♪

morning, i michael mckee in new york, along with france in the quad in london, and vonnie quinn here with me in new york, who has bloomberg's

first word news. vonnie: train service in france has been hurt by the third strike in two months. private come in his are preparing to offer passenger rail service for the first time, in competition with state-owned operators. about half of all high-speed trains and a third of local trains are running today. france has won a $39 billion contract to build a submarine for australia. a french company will -- a french company will underbid, .eating out companies in japan it is another hit to malaysia's reputation. the company development fund has defaulted on a $1.8 billion bond. malaysia's bond is already at the heart of investigations of claims it refused to funnel money to politically connected individuals. denied wrongdoing. include -- civil

rights groups say target of -- global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus i am vonnieorld, quinn. knownl: as long as i have joe stiglitz, he has been concerned with the impact of the economy on those without advantage. in a series of books he has taken on the issue, including his newest book, "the great ."vide it has an updated paperback edition. between the hardcover and the paperback edition, we have not solved the problem. into theas moved political campaign. my campaign to raise the concern about inequality in our country has been winning. michael: let's talk about inequality.

we have always had inequality, and most economists would say you want some inequality because it in since -- because it incentivizes people to raise themselves. why is it such a problem? joe: it has become extreme. everybody, as you said, felt you needed some inequality, but not the extremes of inequality that are exhibited in the united states and some other countries. the way the inequality is generated. there is a growing concern that a lot of inequality is associated with monopoly power, and the council of economic advisers, president obama 10 days ago came out with a report showing the extent to which industry after industry in the united states has become more monopolized, and there is persistent profit, and that aree differences in returns

inexplicable in terms of any model of competitive economies. model thatber, is a it wasbook economics -- about competition and how that always drives profits down to zero. no longer true. stiglitz,professor when you look at inequality and say it is no longer true, do you think the problem of equality, the great division, has been exacerbated by qe? is it the fault of central banks around the world? joe: i will not say it is the fault, but the policies that have been pursued since the financial crisis have undoubtedly exacerbated the inequality. one number that always stuck in my mind, in the first three 2009-2012ur recovery,

, when the president said the economy has recovered, and americans did not believe that -- when we got the data, 91% of -- of all of it went to the top 1%. so no wonder americans were saying there is no recovery. he does incomes were not going up, people could not spend more. so there is a vicious circle going on. part of the reason qe contributed to inequality was it was a version of trickle-down economics. you lower interest rates, do not pay attention to small businesses, whether they can get access to credit. the whole crisis in the markets failed and it got the stockmarket up, but the start market fell -- the stock market fell for the people at the very top. francine: so you talk about inequality being exacerbated as a kind of side effect.

we see more and more expansive monetary policy that sometimes feels like negative rates is just testing it out. are you concerned about monetary action around the world? for me, the key problem is the access of credit to small and medium-size enterprises. the key problem is getting that flow of money into the real economy. the problem is that they have been focusing on some financial markets, nice to have a stock market bubble if you have a lot of stock. but if you are in the bottom 80% of america, you have a little stock and you can feel a little good about the stock going up. let's face it, the overwhelming bulk of our stockmarket is owned by the 1%. but whatthat is true, is it the fed could do about it? they control and interest rate. joe: they have a lot more

instruments in their control. they could do more to channel the flow of money. they could tell banks, if you want access to the fed window, you have to lend to sme. you have to have so much lending going into mainstream america. other countries have done something parallel to this. you could -- another area they could do something is, do something to lower the credit card and debit card interchange fees, the fees they charge the merchants and small businesses. michael: but those are set by congress. joe: no, they are set by the fed. frank, have itdd only affecting credit cards, not debit cards. thanks use my not -- banks use monopoly power. they delegated the debit-setting fee through banks are in cahoots

with the federal reserve, and the fee that the federal reserve set was much lower than what it had been. but much higher than economists have looked at it say that have buted at it and say they -- much higher than economists have looked at it and say it ought to be. it is not help ordinary america get going. michael: do you want the central bank out credit in that way? joe: i want the central bank concerned about jobs. i want the central bank to do the globaluring that credit stimulates the economy. it is not just about financial markets, it is about the economy. it has been creeping jobs, which has been the one bright spot -- it has been creating jobs, which as been the one bright spot. joe: not enough.

we need to have a stronger stimulus. the fed has been the only part of our government that is really doing its job in stimulating, so i do not want to be overly critical. we need a fiscal policy. the imf meetings a couple of very ago in washington -- clear there that monetary policy was running out of steam and the world needed fiscal policy to stimulate it. the will is not there. but i do believe that monetary policy in the united states could do more than it has been doing to make sure that the flood of liquidity is actually going where it is supposed to go -- not to create a stockmarket bubble or to create a bubble overseas and not to create in foreign exchange markets, but to actually do what it does in the textbooks. when you were studying economics and had monetary policy --

francine: but the textbooks have been completely abandoned. we are in negative territory with negative rates, which six months ago would have fed -- would have felt very odd, if not weird, in japan. do you think negative rates are a mistake? joe: yes, i am. liquidityis to make going where it is supposed to be. the dangers of negative interest rates, if you do not manage it extraordinarily well -- some companies are doing it reasonably well and some are not -- it actually weakens the banking system. many banks have been complaining about that. if it weakens the banking system, the banks are going to provide even less credit. so while it might have some effect on financial markets, in terms of what we really should be concerned about -- which is the flow of credit to businesses

-- that is not working. francine: but, professor, right at the time that governor kuroda is saying counterfactual is difficult to call -- do you dispute the fact that it could have been worse had we not had negative rates? joe: i did have a long conversation with governor kuroda. they have done an extraordinary careful job of trying to make sure that it does not affect the balance sheet of banks. they have only had negative rates on excess reserves, excess deposits over a certain level. so they have actually been very worried about the balance sheet effect. theme, i thinkhe the net effect of these negative interest rates is at most very limited. and what has to be done is to

get back to the main theme of what monetary policy used to be about, which was getting liquidity, getting money into the hands of businesses that will spend the money and that will stimulate the economy. stiglitz,ore with joe and coming up on bloomberg radio, we continue talking about inequality. somebody who knows some thing about that and is also writing about it. yanis varoufakis. ♪

francine: we are looking at currencies, commodities, and we are also looking at politics. mike, let's get straight to the

bloomberg business flash with vonnie quinn. vonnie: to punt raise its earnings forecast -- dupont raised its earnings forecast higher. dupont is cutting 10% of its workforce before the merger takes place. standard chartered shares are rising. reported a bank -- rise decline in that is our latest bloomberg business flash. francine? francine: thank you so much. coming up tomorrow, we will bring you a chunk of my exclusive conversation with standard chartered ceo bill winters. it is the first tv interview he has given since he became in charge of standard chartered last year. now let's get back to columbia university's joseph stiglitz. professor stiglitz, thank you so much for sticking around.

we are talking about negative rates and this great inequality, and the divide that is happening in the u.s. but also across the continent in europe. when you look at the inequality and the divide, it plays into the brexit debate. when you look at the world economy and risks, is brexit one of your top three concerns? joe: it is obviously a concern. to me, it is more than just about the economics, what will happen to the u.k. it is about the politics. leaves, there is a whole train of political consequences. many people think that scotland, which had a very close vote leaving the u.k., will revisit that question. on after the last election scottish independence, the scottish national party got all but one of the seats in

scotland. so they are very strong about being part of europe and they will be very unhappy. , i effect on italy, spain think is very significant. remember, the eurozone has been a failure, a dismal failure. they promised two things. they promised that it would lead to economic prosperity. they promised it would bring a kind of political cohesion. it has failed dismally on both accords. the economies are doing -- francine: professor, it makes me think of what we heard from your president, barack obama, yesterday in hanover when he said it has not been that much of a failure because at least we have not started a war amongst each other. let's go back to that let's go back to brexit. joe: that is nonsense. would this be a shock that would freeze the financial

markets if brexit were to happen? joe: financial markets are always volatile, always looking for a reason for a shock. in that be a big event term. but as i say, i think the big event is the train of events on. will likely lead there there is a failure of the has led tond that large constituencies in each of these countries wanting to get out. they have a much stronger argument for getting out of the euro than britain has for getting out of the e.u. if you look at the economics and you say, if you are a country where your unemployment rate is 20%, 25%, youth unemployment at 50%, no lookout, germany dominating totally.

economic discussions, you have lost your economic sovereignty. let me tell you, there is a compelling case, particularly for young people who are losing their jobs. it is an economic case there that is much stronger. michael: but they are not losing their lives. you said it was nonsense, but the idea of binding together the countries economically so they do not kill each other for so many times for so many centuries -- why is that nonsense? joe: there are many other forces that have changed the world. we have the united nations. stranges toward war has -- has changed dramatically. i think every bit of integration helps, so i do not want to say that it did not have any effect. if i do a thought experiment, to is if one of the things that

most dangerous right now -- one of the things that is most dangerous right now is the weak economy that is giving rise to forces like the neo-nazi party in greece. that is because of the euro and mismanagement of the euro. mismanagement of the euro is giving rise to divisions in europe that we have not seen for a long time. the wrong economic policies can be very dangerous. michael: very quickly, can the eurozone be fixed? joe: yes, i believe it can be. is,more difficult question with the influence of germany at the helm, will it be fixed? almost surely not. michael: joe stiglitz is with us. we will talk more about monetary policy when we come back. coming up tomorrow, speak give monetary policy, you will want to stay with bloomberg for all your fed coverage, starting at 1:00 p.m. in new york, 6:00 p.m. in london. we will be with you here on

bloomberg tv. ♪

michael: let's give you a quick forex report.

we are trading on central banks with the yen weakening, the euro strengthening a little bit. asian currencies move -- the ringgit getting hammered because china is lowering the value of its yuan. chinese forwards are moving lower. mike, thank you. coming up shortly on "bloomberg ," it is david westin and jonathan ferro. ceo's and then you are talking nfl. david: we are joined by rick it makes sense to invest on in the bond market. and roger goodell will be joining us. we will talk to him a little bit bigt bradygate, the tomsion that came down on brady yesterday. francine: for a global audience -- michael: you have to pay

attention, yes. the entire city of boston will be listening in a few moments. we will continue our conversation at columbia university's -- with columbia university's joseph stiglitz. five states are voting in primaries today. hillary clinton is in the lead. bernie sanders has made a big deal of the inequality you talk about. it does not look like he is going to get there. has a confrontation -- has the conversation changed in a way that will make a difference? the fact that bernie sanders talked about it, will that carryover after january 21 of next year? joe: hillary has also talked about it. everybody looking at what is going on on the other side, they are also talking about it because they are trying to understand what is happening to american politics and the lack of jobs, and the fact that in the middle, median income, for a full-time worker it is lower

than it was 30 years ago. that is part of the backdrop to the peculiar politics of this year. michael: "peculiar" being an interesting word. the trump phenomenon -- is this a result of the inequality that you talk about? joe: i think so. certainly it is a major contributor. the fact that the median income of a full-time male worker is lower than it was, more than 40 years ago, when wages at the bottom are as low as they were 60 years ago. the american economy is not delivering for a very large fraction of the population, and when other candidates say our economy is great, they say it may be great, but we are not seeing anything. vonnie: do you see any policies out there that can stimulate without looking for global amand to pick up again? joe: i put a lot of emphasis on global demand, but there is a lot that we can do here in the united

states. is no magicw, there bullet. it is not going to change overnight. --is not one of those things the inequality has been created over a third of a century. but something that hillary has talked about is long-termism. a great this is conversation. unfortunately, we are out of time for "bloomberg surveillance " on television. but stay with us on bloomberg radio, where we continue the conversation with joe stiglitz from columbia university. "bloomberg " is coming up next on television. coming up tomorrow, special coverage of the fed decision. 1:00 p.m. in new york, 6:00 p.m. in london. this is bloomberg, worldwide. ♪ iaae-m"

pricesvercomes lower oil , pushing stocks higher. david: when will janet yellen raise rates again?

we bring you the decision ahead of tomorrow's statement. >> and apple reports after the bell. is the iphone the gift that will stop giving to apple's bottom line? ♪ david: a warm welcome to bloomberg go. i'm jonathan ferro alongside david westin. david: it's good to be here. i read your newsletter for years and benefited from it. welcome. we will also hear from eli lilly's ceo. and roger goodell talking about the business of the nfl. and may be the tom brady decision yesterday. jonathan: