francine: the day after indiana, trump wins. cruz quits. can he take on hillary clinton weakened by the sander setback? >> we're never supposed to talk about what is going to happen -- francine: fed presents a rates could rise next month. going down string to beat. -- going down stream. shell focuses on oil refining on, but production. this is bloomberg "surveillance." tom, a little bit of movement on currency, a lot of earnings in europe. of course, we are never bored by

what the fed may or may not do. tom: i have to admit america wakes up to the shock and awe of two candidates for president this morning. address that you both hours of "surveillance." there is the reality, you wonder how brexit will be the morning after. maybe that is the same kind of feeling. francine: it is extremely difficult to make political productions. why the markets are interested in it. let's get to bloomberg first word news. the rules rewrote of how to run for president and now donald jim is the presumptive nominee. he won 52% of the vote in indiana -- and now donald trump is the presumptive nominee. ted cruz has dropped out of the race. we are going after hillary clinton. she will not be a great

president. she would not be a good president or she will be a poor president. vonnie: victory has almost certainly allowed trump to get the delegates he needs that would prevent a contested convention. bernie sanders won 53% of the vote in indiana. senator sanders: i understand the secretary clinton thinks this campaign is over. i've got some bad news for her. we won awe want -- great victory in indiana. an almostinton has insurmountable lead. sanders is trying to persuade superdelegates to switch their votes to him. a panel of british lawmaker says the u.k. should -- consider stopping defending weapon sales to saudi arabia. there have been accusations that the saudi led coalition has

bombed yemeni areas indiscriminate. for a 12th day, there was violence in the city of aleppo. the u.n. envoy was in moscow trying to arrange a partial cease-fire. rebels of hit civilian areas in the city. of an oil residents town in western candidate had been ordered to evacuate from a raging wildfire. the fire had destroyed four neighborhoods. are making the fire are predictable. there are no reports of serious injuries. global news 24 hours a day powered by 2400 journalists in 150 news tour around the world. tom: an odd day yesterday, choir today but it is flighty. equity, bonds and currencies. equities were flat. you literally from the bloomberg, and you look back and they are -7%. yields were better. the euro 1.1490.

panic.y from that 1.16 nymex crude has been soggy. on to the next screen. yen with a 105 handle. -yen does nothing, showing it is about the dollar. and renminbi is worth discussing, francine. quite a move out of beijing. i don't want to make too much about it but nevertheless, renminbi is the story. francine: i agree. it gives us a glimpse of what their currency valuation, whether it be devaluation or not is going further. european stocks under pressure. i want to show you basic resources down 2.8%. bhp, after they brazilian prosecutor filed a $44 billion civil suit over the november dam rupture.

i want to put the ruble in there for good measure. weakening the most amongst currencies worldwide. tom: i want to go over to the terminal now and look at our political economics but our economic politics. we have shown this chart before. productivity out today. this is the back story, is this decline in the efficiency of our nation. productivity moving over 13 years fomr a p -- from a peak of 4%. presidential moving average, down to here, to where we are. this is what mrs. clinton and mr. trump have to focus on. vonnie: this is the conundrum for the fed. the month-to-month data is so up and down. you can tell where the trend is going. tom: a shocking chart. i know you picked up on this. francine: this is shocking because we have the same chart. i was going to adjust -- you keep on saying in europe we take to our lunches and take too

much holiday. it has not been this bad. it is less elegant then your chart but it shows the same. productivity expected to decline. it has not been this bad since 1993. let's get to ubs wealth management investment strategist. great to have you on the program. tom makes an interesting point. i was doing a cheap dig. what this productivity shows you is that because of this, because wagebor, because of growth, because of inequality we now have much more uncertainty in the political world. and inequality is not going to get better anytime soon. >> and that has been -- causing a lot of the political and certainty. clients are starting to look --ards the second european but long-term political risk and

how that impacts policy. look at how germany criticize the ecb. these issues are not going to go away anytime soon. francine: how do you deal with them from a market perspective? do you get back into cash? rey: that is something our clients are more inclined to do in the wealth management space. again, having a balanced approach is right. our cash allocation is always around 5%. there are opportunities. it depends on your approach. going to private markets, for example. or alternative markets that insulate you from the initial volatility spikes. but these are things we are looking up. tom: good morning. yesterday was quite an exciting day. let's bring up the yen chart. this is off the aussie rate cut yesterday. bank of japan, down we go. we are almost down to standard deviations of yen strength. who is the cart and who is the cart?

is it the currency market driving policy or the other way around? started: i think it with the currency market driving policy. i think you have to go back to february where they cut to thetive and two days later, markets went the other way to i think the boj in not acting we silly, they are making a big bet on the u.s. dollar recovering. dollar-yen will go higher because of a stronger u.s. this goes back to research from years ago. when we look at the renminbi the management out of beijing within a floating rate regime. they are trying to move that line from the lower left to the upper right. a wekaker renminbi. will they be successful? ffrey: we are looking at a slight shift higher towards, not toward seven but i think they will be successful in balancing

the need for weakenrs currency. in a few days we will get the reserve numbers for april. it has been a better mother. the are going to be expecting a much better capital flow position -- it ihas been a much better month. francine: giving all these youets, and given that believe that markets to not believe in monetary policy anymore, what do you buy into? frey: i think they're going to be really selected. in japan, there is a lot more skeptical, the ecb officials themselves him and saying, yes, we can do more. well, i think that is the thing. what the central banks are trying -- to in part to politicians, stop criticizing us. get structural reforms in place and that will make monetary policy much more effective. that will be the choke point. who can deliver? francine: thank you so much. he stays with us. coming up later this hour, adam

posen. we have to have a conversation with him about negative rates but also banks worldwide. ♪

inncine: i'm francine lacqua london. tom keene is in new york. a better then estimated quarter for royal dutch shell. shell has also cut thousands of jobs and renegotiated contracts. maerskianish shipping line reported a stronger than

in profit. drop adidas plans to sell its struggling golf business. the german company will look for a buyer for its tailor-made adams and ashworth brand. adidas will keep its golf shoe and clothing business. coming up next, we will speak with the ceo herbert hainer. francine: thank you. here is a treatment for those of you globally, everyone adjusting in america. it is a big day in the united states of america this morning. supportingrk post" mr. trump, takes the high road with a beautiful photo of mr. trump. vonnie: very clever headline. here starting to piece it together. instead of mr. trump in a victory lap? what the hell is bernie sanders doing?

>> the key question this morning, we saw a win last night by bernie sanders. we want to be clear that hillary clinton's people were saying that they may see a loss in indiana. we have a situation now where we of the republican nominee is set. we have a democratic race where he potentially inflict damage on her. tom: who is the adult and the democratic room? is it secretary kerry? i doubt it. who sits the senator from vermont down and says, this election could be closer if you don't grow up and get out of the race? >> i do not think the democratic toty, the warren wing, wants really inflict damage on what they see in this election which is these surge of voters coming into the party. tom: what are they going to do, vote for mr. trump? >> or stay on the sidelines. bernie like to talk about $27

but that is a huge amount of enthusiasm and money that they do not want to jeopardize of sort of having this at all going on. whether anyone sits down with bernie sanders and says, you need to withdraw for the good of the party, i do not think we are in that situation. i do not think we have gone to the name-calling level. i think the party would be wise to look at the lexus coming out of what they learned and push or even further left on wall street. is this bernie sanders campaign and during or does it tell us that mrs. clinton is mistrusted amongst voters? >> what you see from the campaign is that hillary clinton is just a weak candidate and exposed on several levels. number one being her trustworthiness with voters and her appeal among certain coverts of the voting bloc. very strong and minorities. she will win going forward but she needs to shore up her support among the white working-class voters.

in particular, she needs to shore up her support and continued to shore up her support among women which has been a mixed variable throughout the cycle. francine: how does donald trump amanda berry fractured republican party? >> whether or not he can mend it is a key question going forward. you have elites who are puzzled, angry. i think everyone sits in th party elitee sits in true disbelief where he has the nomination locked up. but there are serious fractions to heal. even as recently, we had ted cruz, a person who is a serial philanderer and putting in place the war of words we have not seen. her want to when the video again. -- tom: come on. the president runs with the assistance of his first lady. you have the trumps with the

iconic new york look. are they benefit or so removed that they are not going to sell to america? america, hisell to children, are some of his strongest surrogates out here. wife, has not played as much of a presence. jr.,hildren, ivanka, don, they have proved to be some of his strongest surrogates. francine: as late as yesterday morning highly is making these wild assertions about ted cruz. vonnie: then he gave a speech that was presidential. now?he change completely >> what he's run on and these wild statements is what has led to his strength. i think we forget that at our peril. i think he is in this bifurcated campaign were certain advisers

are telling them, be more presidential, stop saying the crazy things such as ted cruz's with leeing associated harvey oswald. we cannot forget that has been a huge part of what has driven people who are so frustrated with washington, so frustrated with the media and people like me to back him. vonnie: no one is frustrated with you. francine: i know it is quite difficult to look at the political fallout from any of this, except to look at from an isolationist point of view. if you had trump for president, what happens to america? geoffrey: the trade angle is very important right up. it is not just trump. on both sides. the rhetoric. inequality, free trade. hasn't benefited everyone. in asia, in particular where i would say it is more pro free trade compared to what we are seeing in your. japan, in particular, -- they

are concerned about this entrenchment towards isolationism which hurts globalization. francine: thank you so much for pulling it all night or once again. our washington bureau chief. stay with bloomberg for more coverage. jim piland and mark halperin with "all due respect." -- jim halperin. ♪

we are looking and

markets and currencies. tom, it is time now for the morning must listen. michael mckee has that for us. have beenand tom talking about movements and currency. we want to show you why they are moving. take a listen. >> what's the likelihood because we are never supposed to talk about -- my colleagues are going to say, and we are going to get a lot of data between now and then. in my view, yes, it would be appropriate, given all the things we talk about to go in that next step. a lot can happen between now and the middle of june. mike: john wayne speaking on bloomberg and suggesting that maybe the markets have this wrong. fed are not anticipating a move in june but of said move in june is a real possibility. we also had the same, yesterday from dennis lockhart of the it led to fed -- the atlanta fed. should, obviously, they

try to prepare the markets for at least a realistic range of possibilities. the problem is at the moment fed funds futures are pricing in only a 12% chance of a fed move. andlockhart and williams other fed officials i have been speaking to say that is way too low. have two fedou official saying markets, you are mispricing it. although, john williams then said a lot can happen in the next months and a half. is the market mispricing? should rethink think more about june as a possibility? remember there is brexit. we are not over concerns on china. isffrey: i think 12%, adequate right now. they will never rule anything out. draghi will say we will never pre-commit.

prepare for a range of possibilities and anything can happen. you cannot pinpoint. sometimes you can just say -- right now i do not think it is a live meeting. tom: y2k. michael mckee, you have got to be kidding me. they are going to raise rates 8 days before brexit. mike: the polls suggest the brits are about to vote to leave the european union, then they may put it off, and september becomes the live meeting. but at this point, if the polls are to be believed and the brits are voting to stay in and the economy develops -- we get the 200,000 jobs we are forecasting, they want to go in june. tom: i want to rip up the script. productivity, how big of a thing is it? all of a sudden productivity matters. mike: it has mattered for quite a while. they do not know why it is not

rising. business is not investing. we have not come up with any new products. the question is when does it come back? tom: michael mckee, always wandering through "surveillance." oflistens to every second bloomberg "surveillance." his wife says he needs to get a life. us from theill join peterson institute. a perfect time to speak to dr. posen, about currency wars but far more importantly the economic politics of mrs. clinton and mr. trump. this is bloomberg "surveillance." donald's town. ♪

i am francine lacqua in london. tom keene in new york. we have talked about currencies and markets. let's get to the bloomberg first word news. vonnie: the republican nominee

for president is almost certain to be donald trump heard even ahead of the republican national committee is calling trump the presumptive nominee after his big victory in in the indiana primary. top challenger ted cruz dropped out of the race. the victory paves the way for trump to win the nomination outright. that would prevent a contested convention. for the democrats, bernie sanders surprised hillary clinton. of the about an indiana but clinton has an almost insurmountable lead in delegates and superdelegates. sanders is hoping to persuade the superdelegates to shift their votes to him. the european agreement on refugees is having a huge impact. the greeks took in just 3500 refugees last month. the e.u. reach an agreement with turkey aimed at cutting off the refugees crossing the aegean

sea. the most unpopular leader and french history and he sounds like he is running for reelection. with the year to go before elections, francois hollande said that things are getting better. he pointed to iran as good economic news. multiple survey show that hollande has an 85% disapproval rating. public school teachers in detroit were returned to the classroom after a two-day sick out. lawmakers approved a plan that ensures teachers would get paid even if the school district runs out of money. detroit schools have been under state oversight since 2009. global news 24 hours a day powered by our 2400 journalists in 150 news bureau around the world. it has been aow, lot of fun on international economics and trying to make sense of our odd macro economics. we had a wonderful discussion a number of days ago with adam posen and kenneth rogoff. we are thrilled that dr. posen

joins us on set today to we continue with ubs wealth management geoffrey yu. everything devolves down to this experiment of negative interest rates. you and professor rogoff had a lovely debate about negative interest rates. what is the key distinction viewers need to know about whether negative rates will work? dr. posen: the key distinction is twofold. first, is it a big economy with a lot of -- tom: japan, u.s., not denmark? dr. posen: not singapore, not switzerland, where the capital flows are not a big story. the second thing to think about negative rates is how credible is it that you can go a long way? we try to rationalize what governor kuroda did last week at the bank of japan, not doing anything. that people start worrying you can only go so far

with things. tom: let's look at thing so far. let's bring up the two year negative rate in germany, leading the way in open economy. we're not near record lows but we are lower for longer. right now. yu what is the chronic nature of negative rates mean for our global financial system? geoffrey: right now it is just, what we hope to see globally with negative rates is this portfolio rebalancing effect. it really has not even happen. we are talking to her own clients trying to convince them to move out of high grade and into riskier assets. it's proving difficult right up. it is not that they do not buy the fundamental arguments. they are so worried about the uncertainty with brexit and the .su.s. elections. every three months they see another risk. and unless we achieve velocity, i think that preference is going to -- francine: when you look at

european banks, ubs's wealth management unit, commerzbank consumer lending, record low interest rates and while the market swings are not helping them. and there is no end in sight in the erosion that european bank profits. it's also i think important to recognize in terms of banks and the risks geoffre : was talking about, these are long-term things. these are not just, all of a sudden the ecb went to -25. as the imf pointed out a year ago, the business model for most european banks is unsound. there are only a few that are making it. that is less true in the u.s. but there is still an issue that you cannot make money just doing normal banking, at least not very high profits. more importantly, we live in a world where the new normal is the new mediocre. in the new mediocre you are not going to be getting away from these negative rates. it is less about geoffrey's

clients -- go ahead. francine: i understand christine lagarde has been talking about the new mediocre but it feels like it has shifted from the new mediocre to a darn difficult environment. that is morethink a question of certain industries talking their books and people making excuses rather than adapting. last time you had me on, we talked about this. it's a sustainable growth rate now. these countries, including much of western europe, it is not debt fueled growth, it is not fiscal field, it is sustainable, low growth. tom: what we are is the second derivative action. the idea of trichet's brutal moves. we had euro -dollar yesterday, the shock and off austro you could this morning, michael mckee mentioning emerging-market currencies are weak. is sense of our viewers

these exogenous events going on. should policymakers be aware of those are should they have blinders on looking at their narrow interest? dr. posen: i think they should be aware of those at that is different from saying they should react quickly to those. there are two problems with the fed, for example. reacting to the emerging market currency weakness. inherently sot's volatile you do not want to be joking around your macro economic planning and making more uncertainty. this is why i don't like fed atlanta doing now casting. tom: isn't the peterson is to going to hourly now testing of gdp? ecbposen: the fed and the have mandates, their own economy. under acute political pressure on central banks, suicidal for them to pretend they do not care first about their own economies. francine: geoffrey believes that the fed's june meeting will not

be live. do you see diversions among central-bank starting in june and july? dr. posen: i believe the june meeting is very live. i think john lawyers, th -- john williams, is the median voter on the median ofs the fmoc. this is, when you have job growth as mike mckee was discussing before the break of you000 a month, unless believe the phillips curve system is broken, you will want to raise rates. tom: a question for you as a member of the city. why is wall street so lethargic right now? is it adam posen's fault? is the policy making machine so confused that there is so much uncertainty that wall street is fixated and thus lethargic? geoffrey: i think it is less to do with this side or the sell

side if you're asking about trading, activity and revenues. i think it is one thing on the part of investors, private, institutional. they have been chopped around in january and february and suddenly seeing a pick up. are they willing to extend their interest and risk based on what they've seen over the past few weeks? look at the rba, how they dismissed the china pickup altogether. it's not sustainable. we need to rebalance her own economy. they cut rates. that mood is prevailing. francine: thank you for joining us today. adam posen stays with us. coming up, we will talk with adidas ceo herbert hainer at 6:30 in new york. this is -- this transatlantic show sometimes does that work. i do not know how to pronounce adidas anymore. ♪

tom: 24/7 we are on the market right now. francine lacqua noting europe in.ng yields coming equities were flat when i walked in the door. we have officially moved from that -12 dow futures. yields have reversed the good feeling of the last 12 hours. euro-dollar is weaker. we have got to important guests. euro does nothing and renminbi part of the emerging market meltdown, modest meltdown. i overstate that. nevertheless, an interesting nuanced take now, fran. francine: after seeing a few european banks missing estimates this week. generale reported an

unexpected improvement in profit. french banks, i would not overstated, it is maybe not a lot better than better -- but better than the continental ones or the swiss banks because they are much more focused on retail. >> right. each of them up had a little bit but one-off type of feel they are significantly outperforming. to see profit rise is a rarity among the european banks right now. and the french are showing that. francine: overall, will they have to cut costs like the rest of them? , evenl: even soc gen though they beat, they talked about cost-cutting, especially at the investment bank. you know, that has been a consistent theme. faster cost cuts that we have seen in a while, investors are still calling for more because the revenue droppe d. tom: you are an anglo-saxon kind of guy. are the european banks becoming more anglo-saxon? michael: if by that, you mean

very austere, then perhaps, yes. we have justknow, seen, you know, this is the only lever they have right now. and i think that you know, you saw yesterday, we had four banks report. they had 16 operating divisions and revenue fell in 15 of the 16 . so, it's really a cross the board, every business is getting hit right now. and when you're facing that, you have to cut costs. francine: i like that. more anglo-saxon. that'll make them more efficient, eh? tom: michael moore, great perspective. he is with bloomberg news london. we continue with adam posen linking in finance. come on. this is a search for nominal gdp. should i focus on the real economy of europe or do i focus on the inflation dynamics? dr. rosen: in europe and the u.s. you have the luxury of focusing on nominal gdp.

excuse me, the focus on real gdp. the debt situation is not a crisis like japan and because you're not in deflation. i think focusing on real what is going on with productivity is what counts. i understand why the ecb has to focus on nominal, but i actually think that is less important. tom: what is the posen peterson and hi institute presumption? it has been years and years, do something. nothing is happening. do somen: the two things is first recognize that growth is not so bad in europe now. second, you want to look at using the migration crisis is away a few of -- of unifying europe, issuing great bonds, trying to go forward. and third, build on that. this is something jacob blanchard and i are working on. the idea of using carrots not sticks. you can have more flexibility if you do structural reform.

we are trying to figure out ways to move that forward. the finance minister from the netherlands, and the finance minister from natalie spoke -- from italy spoke on this topic a couple weeks ago. tom: that was a pose shameless plugn. francine: he is also one of the most optimistic economists we have been speaking to on your. yet, we look at what the e.u. said yesterday in terms of inflation forecast and you listen to what they say on budgets in a lot of these countries that they cannot -- it makes me worry. even working? is working..e. it is working in the ways you would expect. it is moving interest rates. within industries and within country's birth the problem is just as in the u.s. and just as in japan, the low interest rates are not translating to be corporate investment. that is why there is the younger

-- the juncker plan in it stead. francine: yesterday we had t from australia. is there exceptions when it comes to stimulus or monetary policy action it is working banks in asia of r central in the asian region are more comfortable to experiment? dr. posen: we can go back to the asian financial crisis, 1997 -1998, where hong kong was intervening in equity markets which turned out to be a good example for now. even though it is politically unpopular. we know on the macro prudential side, what the asian finance and central banks have been more aggressive. reserve bank of australia, has always been more on front -- out front. side tohere is a real this. australia has a real rebalancing problem because

they were so dependent on commodity exports. the nominal growth is not going to take care of that. quickly, one morning you are a member of the bank of england making decisions. are you going to buy rolls-royce shares? dr. rosen: i am going to buy etf's. tom: equity on your balance sheet --. dr. rosen: i would not do it because the outlook is ok. i would do it at the bank of japan right now. f's.equities, buy et tom: is that in the textbook? dr. posen: yes and no. it is about substituting riskier assets. you are trying to force them out. yu said before the break, the problem is there is no appetite for risk. remember, thing is, central bank until the 1970's and 1980's were busy buying and selling. we know the asian central banks have done this and the world has

not come to an end. tom: adam posen with us. the important thing is the historical perspective of central banks of another time. coming up on bloomberg , a perfect time to look into the state of global wall street and our financial system. evercore partners chief executive officer. stay with us. bloomberg "surveillance." ♪

stocks falling with emerging markets, the dollar climate. reserveas two federal officials raise concern that investors have become too complacent in their belief that u.s. interest rates will stay on hold. i'm francine lacqua in london. tom keene in new york. let's get to the business flash. vonnie: second quarter profit beat estimates at siemens. europe's largest engineering company is altering its structure to focus on energy generation and distributional. the largest auto recall ever is about to get bigger. that's raising question about the survival of takata. the japanese companies airbags is the reason for the recall. takata is in talks with u.s. regulators.

and a warning from the air france klm group. the operating -- shrank tahnks fuelanks to a drop in prices. at the carrier says it will be difficult to maintain cost because of a highly volatile market. note reallyt with a reiterating the cautious trading note, we see deterioration, futures -14%. on our economic politics, adam posen of the peterson institute. here is productivity. it comes out today. you have this tattooed to your brain. can a president of any party of any ilk reverse this trend? dr. posnen: not in the time they are going to have a turn. you have to spend a few years doing it.

it is about investing in human capital, corporate investment coming back, changing the tax cut. there is a huge laundry list of structural reform to do in the u.s. the productivity downtrend is impacted by more than that because it is happening around the world. tom: peter or zac talks about the glide path of exponential functions. productivity, capital dynamics. labor dynamics, those glide paths. total factor productivity, which i've never really understood. which are you focused on? dr. posen: i am focused on total facotr productivity. factor productivity. a really important paper six-month ago that they followed up on. it is about the lack of competition in the u.s. industry. that together, that is another force of the lack of productivity growth. tom: i look at the productivity

growth and the election, again. commonwealthfdr speech, the 1930's, do something. that will be the message to the secretary and mr. trump. what is the best they can do? goodosen: a combination of public invention and the people, the education infrastructure and trump was a one if talk business, business is about competition. protecting not entrenched interest. that is what you have to force in the u.s. right now. vonnie: i guess this is one of the main questions about politics we have with the brexit vote. francine: mark carney, the bank of england governor, giving his inflation report next week. how does he talk about brexit without seeming to give a political message? difficult.it's very the message has to be, whether it's from mark carney or

whoever, on any reasonable economic criteria, brexit is a loser. decide,ritish people a majority, decide that seeing anti-into them is more important than economic performance and that's their business, -- being anti-immigrant. but i don't think anybody should be pretending that there is no reality to check against, and brexit is a delusional fantasy. it is like mark carney talking about global warming. either you are in or you're not. they would've been reasonable as beforeor king did governor carney to stay out of these issues. but if you are in, there is no point in pretending to be indecisive. francine: this is the main concern for central banks, including janet yellen? dr. posen: i said this to you guys when we talked around the imf spring meetings.

brexit is hugely important for the future of europe. for carney it is important but it is not a global systemic issue. i do not know why the fund bank s made such a big issue of it. i'm personally committed against the brexit decision. i'm very concerned about the u.k. tom: thank so much. with the peterson institute. adam posen. coming up in our next hour, we look at the corporate world of europe, the challenges of global products. adidas's herbert hainer will join us. we look at oil. softer. oil down $43.50 on west texas intermediate. with markets on the move, bloomberg "surveillance." ♪

tom: let the currency war continue. beijing weekends.

renminbi, emerging markets across the board can we ask, do you want a strong or a weak dollar? when the feds change, i will change. mr. trump plays nice. search for a terminal value for oil. in this hour, i have no clue where oil is heading. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. in the last hour, a real to teary ration to market sentiment. francine: i love your third headline. this is how the fed is also looking at the markets. the markets get their cue from two fed officials. we spoke about it. a live decision for fed. tom: futures -16, dow futures -119. with the news links to the

markets, here is vonnie quinn. rules aboutrote the how to run for president, and now donald trump is the presumptive republican nominee. indiana primary, 53% over ted cruz, who dropped out of the race. going after: we are hillary clinton. she will not be a great president, she will not be a good president, she will be a poor president. the delegation out right will guarantee him the nomination. bernie sanders: i understand secretary clinton thinks this campaign is over. i have some bad news for her. [cheers] bernie sanders: tonight we won a

great victory in indiana. vonnie: sanders is now trying to persuade the superdelegates appointed by the party to slip their vote to him. of british lawmakers says the u.k. should consider sales tog weapons saudi arabia. there have been accusations that the saudi-led coalition has bombed a yemeni-held area indiscriminately. in the syrian city of aleppo, fighting killed at least 20 people. a cease-fire is being arranged. syrian forces and rebels have hit civilian areas of the city. president obama gets a hard look it'sint, michigan, and tainted water supply. the president will speak to 1000 residents at a high school declared dangerous because of

the water. officials have been charged in the case. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am vonnie quinn. tom: thanks so much. the tape has deteriorated dramatically in the last 70 minutes. i walked in the door flat. we have not found a bottom. , negative 1.0 -- -1.09. hammered as they adjust to what the fed will do. on to the next screen with oil weak this morning. 16.65,a of the vix, higher on that. it is about dollar dynamics. the yen weaker with dxy 93. the renminbi is one place of emerging market currency weakness.

francine: stocks are declining around the world. in europe they are down 0.8%. it is about sources losing the most commodities. billitonlliton -- bhp facing legal challenges in brazil. overall, the shift is after two federal officials raised concerns that investors have become too pin placement -- too complacent. it has taken them in a while for them to realize this. you can see sentiment shifting in the last few hours. tom: we have the same chart. yours is more short-term and immediate than mine. tom.ine: i changed mine, i wanted to give you all the love on productivity. tom: i will do productivity later. do yours now. francine: this goes back to what we have been discussing, about container ships and trade. when you look at oil, they basically have set up confidence oil unit.

look at container ships. if you look at the white line here, the container benchmark rate has been dropping with brent oil. this indicates that the trade is grinding to a halt, as you put it. tom: a beautiful way to introduce our next guest. ourre thrilled to continue discussion after adam posen with the peterson institute, with 'slliam lee from willem buiter citigroup. the chart francine showed goes right to the heart of the matter. economy, 1936, various shades of closed economy. there are no close economies anymore. in this new globalization, everything is an open economy. >> one thing that is notable from that chart is the emerging market growth model is busted,

because emerging markets for theuet -- for decades -- advanced economies slow to the point they can no longer do that. they need domestic demand. also because it is a case-by-case. there are some emerging markets doing well, others that are not. tom: our history tells us from the 1990's when you have a busted emerging market, you have sequential moments. where are we in that continuum? william: we are in that structural phase were some countries like china are readjusting. anytime you move, you're not going to move along the frontier. come out.in, they a lot of these emerging markets do not have transparency, so we do not know what is going on there. we have no transparency into the private sector. the only thing we know is gasoline is up. francine: are you talking about china specifically?

for the other emerging markets we have data that we have always been led to believe that i can trust them. the model that is busted, around the world people are becoming more isolationist, and currency wars are alive. william: it is without a doubt that politics have come into play. the one thing that is sure is there are going to be winners and losers, and it is the internal politics of the countries, where they do not have strong micro-foundations. they do not have strong social institutions, political stability. that is when you find , disrupting not just the trade with dealings with the rest of the world, but also disrupting internal dynamics. francine: will china not win this? the leadershipk is trying its best. a lot of leadership are the guys from m.i.t. who got a's. but the political leadership has technocrats on

being able to put in solutions they learned from the west. the only thing about learning about the west is that you have to adapt these solutions. you cannot just plop them in. tom: let's look back at the citigroup call on the possibility of global recession. where are we right now? william: we are better than where we were a few months ago. some of the data coming out of emerging markets and china and advanced economies, it could be doing better. but we think it is a hiatus. the structural imbalances are still there. china is a credit-led, credit-fed economy. tom: trade balance, united states. there is the debacle, the long-term trade deficit. dynamicso, export changed with the crisis of 2008, and there is this gradual fading away. is it about our inability to about weak e.m., or is it exporting our appetite for bmw's

and mercy 80's -- and mercedes? william: what we have to learn is how to export more services to the rest of the world. financial, entertainment services. these are the things that are hard to count, and they are hard u.s. the coasthe production facilities can be anywhere in the world. tom: william lee with us. this will be great, as we continue our discussion on global affairs, and also what we see within the domestic economy. speaking of that, oil. skip york is in town. we will speak with skip york about oil, and really focus on the gaming and the vet of the future value of oil, the so-called terminal value of oil. futures -15. "bloomberg surveillance." ♪

francine: we are looking in the markets. they are worried that maybe the markets are pricing for fed action in june. tom, let's get straight to the bloomberg business flash with vonnie quinn. oil company royal dutch shell the estimates. oil prices were offset, that hit a 12 year low. shell has cut thousands of jobs in renegotiated contract. the world's largest beer maker posted first-quarter sales growth that was less than expected. anheuser-busch inbev blamed weakness in brazil. the company is in the midst of that takeover of sab miller. itsnbev is selling some of european targets beer brand.

and adidas will look for a buyer for its adams and ashworth brands, which have been a drag on profits. coming up later this hour, we will talk with the new ceo. that is our bloomberg business flash. tom: i get a lot of e-mails. real?" mic for vonnie's was broken, so i moved this over to her so that she could do the news. was ray hield's. we have technical difficulties. marty shanker is running all our economics and government. we out front on getting respect

to mr. trump. take us back to iowa. what did you see in mr. trump long ago and far away as we stand in awe this morning? marty: i saw his -- saw his popular appeal. it felt like his was a message that was resonating and that he was not going to go away. tom: who would be his vice presidential candidate? are you on the shortlist? marty: i hope not. i have to stay unbiased. vonnie: he mentioned sarah palin last night. i actually do not think that is going to happen. conventional wisdom in this election cycle you can throw out the window. geographical issues, you can also dispense with. donald trump will pick whoever he is comfortable with. vonnie: the win is being put at 29% at the moment, but but unfavorables will come to trump. versus hillary, he does quite well. he does better than trump versus

bernie heard what happens here? unfavorablesk the are something that you can dismissed or the has a 75% unfavorable rating and he just blew the ball out of the park last night in indiana. all along thatd this is going to be a very close race. despite what the polls say, i think it will be a cliffhanger in november. francine: can donald trump amend this deeply divided, deeply acrimonious, and fractured republican party? marty: that is actually the question of the moment. can he bring the coalition of gop elites, fundraisers together to back his candidacy? an interesting issue for me will be donald trump's effectiveness as a fundraiser. he has run a populist campaign, but those 25,000 at his rallies, he has not asked them for any

money. it will be interesting to see how effective a fundraiser he is. tom: what will be the reaction in washington this morning to mr. sanders staying in the race? it is a shift within our 2016.cal debate, within how will democrat washington respond to mr. sanders? marty: i think they will take their cue from the front runner, hillary clinton, who has been respectful of sanders as to not alienate his base. she will need that base when the time comes in november. so i think they will be accepting of this continued pursuit of the nomination. theren is a rare chanceo that he could possibly overturnv hillary, but he is going to be in it to the end. francine: will a prolonged democratic primary hurt the party possibly eventual nominee? marty: it depends on how strident bernie sanders gets.

so far he has been relatively mild when it comes to hillary clinton. if he gets more pointed in his criticism, that could undermine her candidacy. -- bernie it, she has sanders continues to win primary races, and it does make her seem more vulnerable than you would think she would be. enker, thankch you so much. the debate will continue. most certainly, it will be refined tonight on the u.s. politics and on the election. john heilemann and mark halperin, "with all due respect," 5:00 p.m. this evening. ♪

tom: good morning, everyone. "bloomberg surveillance." markets moving, futures -15. dow futures -11. on oil, a mixture this morning. brent, west texas intermediate. morningerspective this from the vice president would mckenzie integrated energy. let's go to the single best chart. we have sent -- we have shown this many times. back to the last time mr. trump ran for president -- i am kidding. it is adjusted for rising incomes, which shows oil is cheap, cheap, cheap. skip york, you have been most aggressive about the markets finding a terminal value, a

future value for oil. when will that happen? skip: we think the long-term is closer to $75, $80 a barrel, but it will take a several years to get there. we still have to claw our way out of oversupply. tom: what are you most focused on at wood mackenzie right now? skip: is that demand going to hold up? so far we started off the year pretty good. there was fear going into january, in particular about china, but demand is holding up. as long as it holds to 1.2 million barrels a day, we think the rebalancing starts near the end of this year. francine: when you look at oil, four out of the six major oil companies have been expectations because they have been cutting costs. are you concerned they will not have enough investment, and then

the price of oil shoots through the roof? skip: the risk is at the end of the decade. we have cut $400 billion out of the investment. the concern we have is once you choose through the oversupply, will you be able to stimulate enough supply within the last couple of years so that at the end of the decade, we will see a pop? one of the things we obsess about is new term we think it is an oversupply problem. the key to us is that all of our clients say how a lasting is the supply of shale oil? you hit like the minute a 55 or 60 barrier -- tom: the responsiveness of the supply of shale oil? did i get that right? william: yes. skip: we have never seen shale oil go through a full price

cycle, and we are now going to see it. the typical shale oil could go from spud to first oil in about six months. prior to shale oil, you are looking at two to three years. how fast does it respond? how fast do the guys turn the investment triggers back on, and how fast can they put the cruise together to get them out there? tom: francine, that is spectacular. that is a jargon alert for 2016. "from spud to first oil." we have a worth the -- we have a worthy candidate. francine: i have been looking at the futures, and the futures indicate that the oil price rally we have seen cannot be sustained, but also is not as deep-rooted as it was at first glance. skip: we think that there is no doubt of volatility as we move

through this process, but when we look at the forward curve, we are concerned about why doesn't the forward curve see the decline in non-opec production -- not that it is on its way, it is happening right now. it is just a matter of time of the market not wanting to get fooled again, that this time the correction is for real. we have had a couple of periods throughout late 2015 and early 2016 that the supply was going to start to bleed off, and supply ended up surging and becoming stronger than we thought. the market is not getting credit for that yet. tom: short-term and technical may be away from your competency. where is oil right now? is anybody -- is everybody long on oil? skip: that is what we are seeing. we see that happening in the future as well. tom: skip york, thank you so much. -- vonnie francine: i was just wondering

-- skip: the upstream part of the industry was not part of it. at the same time, it was the sign of how stressed the oilfield services are. now everybody is asking, what is plan b? tom: skip york, thank you so much. you will continue on bloomberg radio later this morning. coming up, a conversation with somebody knee-deep in retail. herbert heiner of adidas. really looking forward to that conversation. futures -15. this is "bloomberg surveillance ," from london and from new york. ♪ [ soft music ]

e.t. phone home. when you find something you love,

you can never get enough of it. change the way you experience tv with xfinity x1. shoah, ha ha.ew artist. show me top male artist. my whole belieber fan group. it's not a competition, but if it was i won. xfinity x1 lets you access the greatest library of billboard music awards moments, simply by using your voice. the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc. tom: good morning, everyone. francine in london, i am tom keene in new york. the markets have changed in the last three hours.

it was mighty good when i walked of the door. it is not good now. futures -1.13. i am watching most closely the german curve. the news is it has not moved. , ever greater,nd negative yields, lower yields. it is something worth watching. also worth watching is our bloomberg first word news with vonnie quinn. vonnie: the republican nominee this fall is almost certain to be donald trump. the republican national committee is calling him the presumptive nominee after his victory in the indiana primary. ted cruz has dropped out of the race. it clears the way for trump to get the delegates he needs to win the nomination outright. that would prevent a contested convention. won 53% of the vote in indiana, but clinton has an almost insurmountable lead in delegates and superdelegates. sanders is hoping to persuade

the superdelegates to flip their notes -- to flip their votes for him. there is an 87% drop in refugees in greece from march. nato is upgrading its ties with israel. israel will now have a place at nato headquarters in brussels. it has already taken part in joint military or -- in joint military operations with the organization. it may help benjamin netanyahu due to criticism progress in peace talks with the palestinians. 80,000 residents of an oil town in western canada have been evacuate from a raging wildfire. the fire has already destroyed whole neighborhoods in fort mcmurray, canada. the fire is unpredictable. there are no reports of serious injury.

public school teachers in .etroit will return michigan lawmakers approved a plan to ensure that teachers will get paid even if the school district runs out of money. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am vonnie quinn. tom: here is the quote of the moment. there is a world, maybe for five computers." maybeas thomas watson five years ago with international business machines. he got that wrong. 's arew you where ceo going, we have richard lesser with us. where have you been? richard: traveling the world. tom: i love the report that your team put together, subtitled "the art of staying on top." what is the level of panic and

sweat of corporate leaders as they try to stay on top? struggling toare stay on top. aretaying where they historically, and corporate leaders need to find a way to navigate that. the second is transformation, not just in a cost-cutting sense, but how do you win in the medium-term, how do you strengthen organizations? the third is digital. tom: when i saw you in davos, i observed the decline of the strategic plan from five years to the new five-year plan, which andhree years, or two years 10 months. there seems to be an urgency to refine strategy. is it successful? richard: i would say that is partially true. the near term performance pressure on companies is immense, and the need to deliver is high. but i think what digital is doing, its applications for how

you connect with consumers and bring innovation and products, how you rewire the company, is forcing a medium to longer term look at what is the business model for the future, what is the customer offering for the future? it is the duality of that that can be tricky. francine: you are right, the need to deliver is very high. , because ofof qe certain safety nets around the world, it seems we do not have nearly enough bankruptcies. are we going to see more defaults or bankruptcies as interest rates go higher? richard: the evidence that interest rates are about to shoot up is not strong. thet now i think that pressure to keep interest rates low on economies around the world -- we see it here in the u.s. -- will remain. the underlying business performance has the potential to be reasonably good. i do not see bankruptcies shooting up. i think the pressures to deliver and find growth in today's world are in men's, and that will --

are immense, and that will continue. tom: let's bring in a legitimate economist, bill lee of citigroup. bill: everyone is complained to me, why is investment so low? my question for you keys off what we just heard from francine. with qe having rates so low, can ceo's price uncertainty of risk in a way that allows them to find good investment projects, or is the urgency to get -- anything that has a positive pulse, we have to do? ceo's are looking for an environment that spurs growth and investment. william: you cannot identify it with rates so low. risk is not priced anymore. every project looks ok. richard: but we are not seeing enough in business investment, and some of it is the dollar -- we think u.s. manufacturing has

the potential to continue to strengthen in the years ahead and has weathered the massive increase in the value of the dollar in a way that is far better than one would have guessed two or three years ago. william: i'm glad you said that. it is in mining and extraction and energy. tom: can i ask you a question regarding secretary clinton and mr. trump? are we going to need new bodies to help us with our business, or is it a nonlabor future? richard: the pressures on traditional jobs, frontline jobs tot are more road manufacturing, road in services, will come under in norma's pressure in the years ahead. -- will come under enormous pressure in the years ahead. we are having the discussion about global trade and whether that is supporting the discussion that we should be having. how do we invest in our current generation of workers and the generations coming along to deal

with the technology that has replaced many traditional jobs? francine: do we need a cathartic moment to be able to have this conversation? anywhere you look, ceo's are concerned and are not spending cash because of that concern. richard: ceo's are looking for a private growth environment to invest. right now when you look at the challenges, the debates in the u.s., whether it is energy policy, corporate taxes, infrastructure, and navigating all the uncertainties, you can get the investment done. in europe, the challenges are even harder. the rail toward framework, people are -- the regulatory framework, people are offering that also. tom: more "bloomberg surveillance" coming up with richard lesser. coming up, implementing strategy and bringing it to the tactical world. ceo, herbert hainer, will join us on the many challenges that adidas faces. from new york, futures -15.

"bloomberg surveillance." ♪

francine: we are looking at markets in all asset classes. tom, let's get to some of our earnings report. herbert hainer joins us. thank you for coming here on "bloomberg surveillance." this morning we had the announcement that you are in talks with potential buyers to buy the bulk of the gulf units. are you -- of the gulf units. are you comfortable with that? how can you ensure shareholders that you will get a good price for the unit? herbert kohl at first and foremost, let me say i am quite happy -- herbert kohl and at

we rebuildoremost -- the bulk business and we are the number one driver on the golf course. are doing what his rifle for the brands long-term. we have good analysis, and we will start negotiating for the hardware business. francine: how important is it that the sale goes through before your successor actually joins the company in october? are not looking for the fastest solution, we are looking for the best solution. , getting intonow talks with interested parties, and then see what the best fit for our golf business and our company is. tom: your performance is extraordinary. wander over here to the bloomberg and let's take a

victory lap with adidas right now. what is amazing about this chart, it is a logarithmic chart. you do not need to know fashion, celebrities. this is called minting money by any means. the does for added almost 30 years. what is the secret sauce to the stock market performance? that we i do believe know sports inside out, and this is what drives us, what drives our company, what drives our brand, and we want to be the sports brand in the world. this is what i do believe athletes and consumers really appreciate. this is reflected in our share performance. tom: the reality in america is you have substantial opposition from a small company on the west coast. how will you compete with nike? what is the plan over the next four quarters to put more adidas shoes in my household? herbert: first and foremost, we

invest more into the u.s. market. we have changed our management and we believe we have the right strategy for being successful in america. and then you just look at the first quarter. adidas, and that is just the beginning. there is no doubt we will have a strong future in america for the next quarter. and i am convinced we will for the next years. francine: progrowth margin improved quite a lot. is that thanks to china? china, and doing in what is growth in that country going to be like? herbert: we are doing very well in china. but it is not only to china. our growth margin -- the region -- the reason why it is so good is because the reliability for our brands is such high, and we able to raise prices because

the brand is in such demand around the world. it is cool for you and for shareholders, but is your pricing power stronger for your shareholders and around the of course you: have different parts of the world, but we have long invested in china, and as you have seen the last 10 years, we have grown double-digit year on year. for sure, the chinese consumer is highly appreciating our brand, and therefore we have a certain pricing power. there is an innovation to our products that the chinese consumers appreciate what they get from us. greateryour partnerships with paul mccartney and kanye west -- what is it about the golf division that was not working? was it just declining demand for the sport in general? thatrt: there is no doubt

we have a huge expertise in sporting goods in terms of footwear and apparel, and this is what you can see also now in the footwear and apparel business. the hardware business is definitely more difficult. the market is not growing, and we want to focus in our company on really the things which we understand best that will give us the growth potential for the future. and this is footwear and apparel. the adidas check rio wrestling shoe -- i decided i needed a wrestling shoe, so i brought -- so i bought your wonderful custom shoe for the olympics. advertising big event? how critical is rio for what you are going to do? herbert: are you going to rio for competing?

tom: i am going for wrestling. herbert: rio is definitely a great platform for the sporting goods companies and the sporting goods industry, to show their product. obviously it is not -- for example, the european football championship, but rio is definitely a showcase for the olympic brand, and we are outfitting wrestlers. through thece showcase is 12.9% annual return for the last 10 years. herbert hainer, thank you very much, the adidas chief executive officer. would you like to make 12.9% per year? what a performance. can you see me wrestling? is like this. you have to do the next thing. i was playing hockey, and they are doing wrestling. how did you fit in the

circle on the ground? tom: i can't even do it. i love the wrestling shoes. a data check here. equities, bonds, currencies, commodities. stability after a really ugly hour and a half. you need to stay with us. william lee of citigroup. we will talk about the american economy, the challenges that we face. "bloomberg surveillance." ♪

tom: after the fireworks yesterday, modest stability today. interesting foreign-exchange. 1.16.ro comes in from the almost three stand the -- almost three standard deviations yesterday. euro-sterling is part of the debate as we get nearer to the end of june. francine, tell me about "bloomberg ." francine: we're joined by david westin. i know you will talk politics and you will also talk to the ceo of evercore. david: we are going to put them together. the big indiana primary yesterday, it looks like donald trump will run against hillary

clinton. we have the head of evercore, who is a prominent democratic intruder. we also have megan murphy, and douglas holtz-eakin. have two fed governors who seem to be trying to keep the june rate hike on the table. we will talk about that on "bloomberg ." start of ahat is the real reversal on europe. tom? tom: we continue with william lee of citigroup, paying attention to the american economy. let me bring up a chart right away, which explains senator sanders and mr. trump are long ago and far away, the green line , not bad, gdp morning in america. then we had struggling, a little bit of improvement, and short-term we have fallen off to subpar gdp. william: the short-term answer

is, there is so much more uncertainty now. the headmans that have come about, not only because generally -- the headwinds that have come about, not only because of the uncertainty generally, but because we can measure the uncertainty. they said policy itself has become a source of uncertainty and a source of headwind. the question to us is, will the headwind stay strong, or will the fed be reassuring and reduce the uncertainty? , is on this important day it a gilded age? are we living a plutocracy? william: we are living in an age that politics has so stifled the scope policy, it has been off the table. when you rely on monetary policy to create growth, you are living a full's dream because monetary policy cannot create growth -- you are living a fool's stream

because monetary policy cannot create growth. i'm sure you will address that fiscal conundrum on "bloomberg " with douglas holtz-eakin. i want to see who is going to spearhead the structural reform the -- or who will spearhead spending. william: it seems you always need some sort of emergency to get structural reform. at the end of every draghi speech, it is when to put the stuff in place so that you can get long term and permanent growth. with monetary policy, all you are doing is buying time and moving growth from one country to another. taking growth from tomorrow into today. that is all monetary policy does, buy you that time without political consensus and political cohesion. we will not find growth from the basis. tom: who is going to -- francine: who is going to use

that window of opportunity that the central bank has been giving politicians, when you look at the equality debate and the fact that it is so difficult to be a moderate politician nowadays, be it in the u.s. or in europe? william: i need a politician who can draw consensus i do not care whether the policy will be right or left, i just want clear-cut policy. hasof the things that hampered investment is that we do not know where the policy is going. what is the optimal rule under certainty? you do less. tom: you nailed this in your research report, looking at volatility with bonds and equities. there.s a lethargy out what is your reading of history on how you jumpstart to a better animal spirit? william: the animal spirit comes with growth. that means you have to have what people perceive as sustained growth before they want to invest. how do you do that? tom: that comes with

technological progress. william: that is the instrument, but we need a conductor. we need a conductor to say this is how we pulled together american ingenuity, technology, and global opportunities. this is what is missing from our politicians right now. vonnie: is trumped or clinton the answer? william: it does not matter who, it is how they do it. trump may surprise people by being so much of someone who can make a deal. if he lives up to his advertisement that i am a deal maker, let's go for it. i'm not advertising trump, by the way. francine: how can you talk about lethargy, when you see all walks of life, people going to vote for the trump's of the world and the sanders of the world. william: it is an electorate that is frustrated. the politicians are able to harness that frustration and coalesce congress into real policy -- that is the

politicians that will succeed. so far we have not seen anyone able to do that. clinton represents an old guard. trump represents a so-called other guard. tom: on this important political day, william lee with citigroup. coming up, later this morning, an important conversation with one of the great success stories from a land where content is king. look for that in the 11:00 a.m. hour now with les moonves. futures at -14. a foggy new york. "bloomberg surveillance." ♪

david: it is trump. donald trump becomes the presumptive republican nominee. bernie sanders beats hillary clinton in indiana. jon: we get earnings from time

warner and priceline, just seconds away. vonnie: the june rate hike is a real option. david: welcome to "bloomberg ." what better day to have our washington bureau chief here? megan: a big day in politics. we have several great guests over the next few hours come including ralph schlosstein from ever court. -- evercore. in theother soft session cards, maybe. futures and soft in the u.s., stocks down in europe as well.