decades, on its way. we are giving control back to the cities and the states. you know best how to plan your communities, analyze your projects, and protect your local environment. of the get rid redundancy and duplication that wastes your time and your money. our goal is to give you one point of contact and deliver one thesion, yes or no, for entire federal government and to deliver that decision quickly, whether it is a road, a highway, a bridge, a dam. to do this, we are setting up a new counsel to help project managers navigate the bureaucratic maze. this council will also improve transparency by creating a new online dashboard allowing everyone to easily track major

projects through every stage of the approval process. this council will make sure that isry federal agency that consistently delaying projects by missing deadlines will face tough, new penalties. i know it won't happen with this. the bureaucracy accountable. we are also creating a new office in the council of environmental quality to root out inefficiency, clarify lines of authority, and streamline federal, state, and the old procedure so that communities can modernize their aging and structure without fear of outdated federal rules getting in their way. this massive permit reform, and that is what it is, a permit reform. it does not sound glamorous

print they won't write stories about it. they won't talk about it, but it is so important. step in newhe first roadways, rails, and rivers. as i discussed in ohio recently, vision will generate one trillion dollars in infrastructure investment, which we desperately need. we have spent as of a few months ago, $6 trillion in the middle east. think of it. $6 trillion in the middle east. was 15 yearshan it ago by a factor of 10. if you want to build a little road in one of your communities in pennsylvania or ohio, iowa, north carolina, or in florida, you can't get the money.

state and local leaders will have more power to decide which projects get dealt, when they funded,nd how they are and investors will have a much more predict double environment that encourages them to invest billions of dollars in capital that is currently stock on the sidelines. together, we will build projects to inspire our youth, employee our workers, and create true .rosperity for our people we will pour new concrete, and sparks fire our factories as we forge metal from the furnaces of our rust belt and our beloved heartland, which has been forgotten. it is not forgotten anymore. we will put new american steel into these line of our country.

american workers will construct commerce aw lanes of cross our landscape, building monuments from coast to coast, city to city, and with these new roads, bridges, and seaports we will embark on a wonderful new journey to a bright and glorious future. we will build again. we will grow again. we will arrive again. and we will make america great again. thank you. god bless you. i appreciated. thank you very much. thank you. [applause] you have been watching the president kickoff infrastructure week at the department of transportation. he made some public comments in which he said he would cut the takes to get something

passed, permit reform. he said it is time to start building our country again, saying permitting federally funding federal infrastructure projects is slowing everything down. get to "realw to yields" in progress . >> we have been through a lot of political noise. we will wait until we see the weekend and monday, then possibly get a reaction. jonathan: the curve has shifted lower. the market is held by foreign investors. you expect the repatriation story to evolve over the coming months? is the centrale

bank has to do more heavy lifting because there is a lot of uncertainty. the reaction of the market is not unusual. the first thing that goes is the currency. the future ise highly inflationary for the u.k. as the pound gets weaker. the central bank's job becomes more difficult because you have to deal with weak currency, uncertainty, and lack of growth. uncertainty ons repatriation, immigration, trade, so i don't see gilts selling off any time soon. i think it makes everybody's job more difficult, and the reaction to the currency is right on. jonathan: the boe, conversations over the coming quarters, are they going to be uttering the word stagflation? >> i am not sure you will get stagflation. inflation is now slowly risin

to what banks are wanting it to be. onlyu look globally, it is the fed trying to slowly normalize rates. everywhere else, everybody is still easing. areywhere else, they struggling with growth and traction, and we are 10 years since the global financial crisis. jonathan: genius move, isn't it? have a referendum, make sure it is a mess come and hold an election as well. >> we will see how consumers respond to all of this. settlesmight be that it down a little bit from what has been a tough couple of months, a tough first quarter in the u.k., who knows? it will give us something to talk about. jonathan: a big week. everyone sticks with us. coming up on this program,

santander there steps in, raising questions for the $181 billion cocoa bonds market. that conversation is ahead. this is bloomberg real yield. ♪

♪ jonathan: from the city of london, i am jonathan ferro. this is "bloomberg real yield." european regulators decided banko popular of spain, debt was wiped out, senior bondholders protective, and authorities over today run on the bank. textbook success for

the regulator, and captured by the chart, but what about the investor? scott, a success for the regulator, i see that. is there a warning for the investor before they can go in and take a nice 11% coupon come across their fingers, and hope it never gets triggered. >> it is a wake-up call for investors. for subordinated bank bond investors, they have to be aware of the risks they bear for the higher coupon. this be with which the regulator took care of the situation, obviously there was a takeover as part of the deal. that is extraordinary as well. jonathan: it happened quick and there was a question whether this was a test of the cocos.

you suspend coupon payments before the bank fails to keep the bank functioning. week?as it this what was the take away from the first real workout for the securities? >> scott is right. if you think about what risk you are taking, you are getting paid a high interest rate. these are contingent convertibles, which means they convert into equity as a bondholder at exactly the wrong time. when the bank or institution is in trouble, these bonds get converted to equity and you potentially lose capital, but that is the nature of these bonds and investors have to understand they are getting paid a huge amount of premium to buy how debt, and the pace and quickly it happened, something like $2.2 billion of cocos have lost their value, i think people need to be aware of of what they

are getting into. jonathan: well was can you do this with the bank that is too big to fail? can you do this in italy, where are noters of cocos institutional investors? is the point. how do you test the wider market. they were held in a restricted number of accounts. that havethe ones been heavily sold into asia. that is a different set of circumstances. i wld like to think they would then trigger through the coupon and you would see it coming as the capital ratios fell. convenient one to get sorted out quickly. old theo eof the sorting it out under the carpet.

jonathan: where else do you go if you look at single b's and compared to where cocos are, you are almost pushed up there or down the capital structure. isn't that the real take away here? in europe, there aren't many places to go. ,> negative yields in germany like you said, for mom and dad investors to get any income, they have to take more risk, and the question is how much risk are they taking to get that additional income. what investors have to remember is that these are want like instruments that trade more like equity, and equity markets can be more volatile, so you are almost doubling up your investments if you own equities ad cocos, and when there is run on the bank, the only concern is think careful and

understand what you are investing in before you go in for that coupon that is higher than the cash rate. jonathan: we can paint a bearish picture for your quite easily given how tight spreads are. is the bullh case? full andthe punch bowl not drained out anytime soon. this investor behavior that is consistent with buying higher-yielding securities, there is of substitution effect of selling negative yielding government bonds, and that has been promoted by the ecb as we saw this week. it does not surprise me that we don't seek and cajun because everything else was so effectively locked down by monetary policy. we should look at the market as it evolves through time. the spanish bond market has been weak, and italy is the big story

there, but it is monetary policy at the ecb that is pedal down. jonathan: the ecb can't buy bank debt and i would imagine they would be better if the ecb stepped away. is there some insulation away from the ecb? >> look at the european bond is 110 basispread points, but the yield is 85, but the bonds underlying it are negative. corporate ond market does not seem like such a bad idea in the context of the european market, but obviously it is encouraging investors. the ecb is not buying high-yield emerging markets. jonathan: we also saw it in e book for the at tying 30 year, 22 billion euros for an italian

thirty-year at a time we are told the eurozone economy is starting to outperform the united states. why are people getting aggressively long italian duration? you're getting aggressive at the 30 year unless you want to leverage up. they have as many political problems to come in the next year as we have been through in the last couple of days. there is up 40 basis points negative cap a rate in europe. -- depot rate in europe. people are taking it, taking it, taking it. you get a bit of a spread there as well. what they need to do is change their mandate. if i offered you a 30 year in italy with a 3.5% coupon come is that something you would be interested in?

give me a thesis around the career death in europe right now. unless i was an insurance company and i needed coupon income to hedge my liabilities. the european economy is starting to improve, and ecb at some point we'll have to start to normalize rates. i'm not saying today or tomorrow, but you are loin your money for 30 years with some credit risks. the only reason that would work as you have some big geopolitical issue or massive correction in equities markets that people want that duration, but that is a hard call if that will happen. jonathan: where in europe in the fixed income space, and you can go anywhere, are you constructed anywhere? would you get long anything? >> europe is really difficult for us. as mentioned earlier, rates at

the short end are negative, so every bond issued out of germany is a zero coupon, so you are guaranteed to lose money if you to maturity unless you pick up investment grade corporates. is difficult in europe to find via you unless you go down the credit curve, but the risk is the further down you go, the harder it is. we find more if i you and parts of the u.s. jonathan: we will get to the u.s. shortly. you are sticking with us. a check on the market and bonds, grinding higher wi-fi basis points on the two-year and 10 year, up six basis points on the e 30 year the final spread, the wake ahead, a rate decision,

including the fed. you are watching "bloomberg real yield." ♪

♪ from the city of london, i am jonathan ferro. this is "bloomberg real yield." it is time for the final spread. parliamentaryench elections, a wave of central-bank decisions. a hung parliament, prime minister may hanging onto power. confirming right now that chancellor hammond will remain the chancellor in her new. a swiss central bank decision and the boj as well. ahead to break it down,

let's begin with you. but sketcher thoughts on the fed. 10 year yields have rented new lows in the last couple of weeks .14%. is there a message in the curve for the federal reserve? >> bond markets have been rallying. equity markets have gone up, so bond yields falling, equities going up, one of the two is wrong, and the fed as well. the fed would like to start raising rates. it,y time they start to do there is an external issues stopping them from doing it. is a 95% chance they will go 25 basis points next week. i think it is one and done for

the rest of the year. jonathan: a lot of people are saying the treasury's market is one of the most messed priced markets on the planet. is there anything to like about treasuries right now? mostxed income is the missed price because of the intervention of the central banks printing money and buying debt. 10 year treasuries, you should trade the range. longer 10would be year treasuries than shorter because i think the equities are too euphoric on what you will get from the trump administration. i think it there is a disappointment, there is a correction and equities. jonathan: how much is left to d.c. and the th treasury market? >> three if you're optimistic about the total, and that has come down from more than six at one point.

buy 10 year treasuries and stay fully invested in the fixed income market, you have to believe that one and done this year and one for next year, so i get concerned about having exposure to treasury rates, even in the global environment, political environment, we are in. the next surprise on the red are radar screen as the fed walking back this pricing they have done. jonathan: it is the rapid fire round. one word answers. really quick. gils.oco s or cocos?eld europe going to say neither,

but high yields. jonathan: you have to go somewhere. who hikes first, the ecb or the boe? >> ecb. >> ecb. >> ecb. jonathan: there we go. final question. who last longer, may or yellen? >> yellen. >> yellen. >> yellen. too easy. jonathan: i just love how much trouble you will get in. you have been watching "bloomberg real yield." ♪

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vonnie: it is 12:30 in new york. i am finding quinn. welcome to "bloomberg markets." n. i am vonnie quin

♪ vonnie: from bloomberg world headquarters in new york, the top stories and around the world we are following. u.k. prime minister theresa may firm on brexit as she battles to stay in office after a failed election gamble. the english pound sliding after conservative party losses area plunging into uncertainty days before the brexit negotiations are due to start. and elsewhere, a look at how media deals are impacting the public relations. may vowedle theresa lead the u.k. out of the european union. it comes amid calls