Surveillance: Subway Shooting with Mayor Adams

conversation this morning with the Mayor of New York. Based on the briefing I'm from my law enforcement officials and based on the evidence that we were able to accumulate, he has now been upgraded to a suspect and we're asking all New york Is to assist us in his apprehension. H please do not approach him. If you see him, or if you know about his you know his whereabouts, please notify law enforcement. Can you tell us what you and all of your staff have learned about Mr James

in the last six or seven hours. Well, you know this is moving and is extremely fluid of There is a host of evidence that we have been recovering of the NYPD, the FBI, as well as our state law enforcement entities have all collaborated together. I cannot say enough about the fast of growth that you have you are witnessing of. They had to piece together this case, from the band arrival here to the city, to the devices, things that we collected. They're doing a great job in

bringing this person to justice. Mayor, I want to talk here about what we're gonna do. As Governor Hoco said about crime, you know the numbers in Chicago, you don't know the numbers here. I would say that you are arguably the most qualified politician in the nation with your experience from Bushwick years ago, after where you are now to talk about this First, I'm cameras in amendments and civil liberties and all that London is covered with cameras

after terror events. Is this the tipping point where New York City one fifth of the cameras of London, begins to monitor the public like London. Well, I think that I've been talking about this since the time I took office. In January. I sent to my deputy mayor public safety across the globe to find out, how are we protecting human beings throughout the entire globe. And we are not going to sit back and allow this technology to exist and not protect the people of the city. And we're

going to continue to explore it. Mayor Adams, you also had put more police forces into subway stations to protect the people of the city, given that this is just one in a series of events that have unfolded over the last year during the pandemic, even in subway stations, acts of violence. Clearly that failed yesterday. I know you've said you given yourself an incomplete on crime in the

first one hundred days of your campaign. Is that incomplete looking more like a failure, less like anything of semblance of a passing grade. Well, we should be clear. We've been here before, as New York is. You know, I often talk about my mid eighties when I started into transit police ironically, and I'm aware of what it takes to turn around generational poverty, generational crisis, that violence in our cities. And then we cannot ignore the over proliferation

of guns. Uh No, NYPD. My administration has not failed. We have removed eighteen hundred guns up the streets of our cities since being elected. Think about that. You are experts at the study of games. On January four, you stated you showed up at a press conference and said, we gotta do something about gangs. These kids three dead in the last twenty four hours, not the headlines like Brooklyn, but three days on Gates Avenue, on the Avenue, on

Laconia Avenue. What are we gonna do about the gangs that pull these kids into crime and violence at a zero And it's called precision policing, not just throwing out a wide net. Having a precision approach to those who are trigger police and violent gangs. That is at the heart of our crisis. Uh, they're the mayor of New York City and an important conversation and we really need to be abundantly clear that we had a headline at that moment of the apprehension of the suspect, and that

was corrected by ABC or sorry for that. That happens within the news flow that we have, as you know on Bloomberg surveillance. We've done everything we can to speak to experts into people who have lived so much of continental Europe and this new war. It is our honor now to speak to Nina Krascheva, professor of International Affairs at the New School, with the hair didge of her

family far and back to World War Two. And you know, we don't have time to go into the story of your family coming out of the death of I believe your grandfather in World War Two. But we can speak to you with your academics at New School, your work at Princeton, of the mind of Vladimir Putin. As we've talked to Angela Stent, you have studied Putin and his affair with not the Russia the Soviet Union of Christeff

but the Russia and Soviet Union of Stalin. What is the distinction of how Vladimir Putin looks at the early Soviet Union. Well, we thank you very much. We know that he doesn't like the early Soviet Union because he thinks it was an interruption of great imperial history when the Soviet Union was trying to become part of its own self, sort of as Stallion put it, um country within its own nation. So socialism or communism with um

within one taken country Putin wants to be. And I disagree with a lot of experts who say he wants to recreate the Soviet Union. He actually wants to go back into history thousand years and the only reason he's interested in study, well, one of the reasons he's interested in studed because Studin was a gather of lands such as Catherine the Great, right such just Peter the Great. So he was a gather of lands, and he sees

cruse Chef as somebody who gave away those lands. And if you need to be very brutal and very firm and very angry at the world together lands, Putin is going to be that. Mr Kristcheff was very much affiliated with Poland in the news this morning, Professor Kristcheva is Finland. I refuse to believe that Vladim and Putin will not focus on Finland, given this heritage of Leningrad and St. Petersburg. What is the embolism to Mr Putin of this new

independence of Sweden and the eight under mild border of Finland. Well, it is you know, originally the Russians were saying, well, we're not afraid of Finland and Sweden becoming part of

NATO because we have good relationship with them. I think the tone may be changing, but I think what's important here is that Putin trying to prevent NATO from expanding east, in fact made NATO even more expensional in in the East and that in the East, and that's that's what should really give them pause on the other hand, what I also know about Puttin is that once you challenge him,

he's going to challenge back. So I think that it's about time for Sweden and Finland to think about NATO, because if Putin gets angry, he does get angry, and we did. We do see it. We we've seen it and we do see it in Ukraine. Now, Nina, does this end with regime change in Russia? Well, this is a very terrifying words to say, because we go to prison for this for even utter those words. Um No, I don't think it does. Uh, it may get less toxic,

because Puttin is toxic. But I do think that. I mean, what happened now, and we've never seen it before, even under Stallion, because now the KGB over that security Forces, the FSB and Putting they are one and the same. Even on the Stallion they were sort of on parallel tracks. But starting with the brutal Dictator and f F KGB Uh it was a different name then, but security forces worked for him. Now Putting works with He is the

security force. And so in this sense, even if the main hydroid at the top of it is the main dragon, is gone, the system will remain the system is not going to give itself up, so maybe they would be slightly better relationship with outside world. But for the Russians, it really doesn't look good inside. Well, let's talk about inside Russia, professor. Does domestic feeling within Russia a have a bearing on the Kremlin or on Vladimir Putin's decision

making whatsoever? And be what is that feeling at this moment? Well, it was. It's really very interesting what happened because at the beginning was such a shock on February twenty and about fifty one of the country was just terrified, horrified, and a lot of people went, as you remember, went to protest, and then the state completely regrouped and basically any word of opposition now became a crime. Everything is a crime. People just stopped in the streets. My niece

was arrested three times. Uh stopped and asked why are you here when you're um when your passport shows that you live in an entirely different part of part of Moscow. So it is like that, I mean, it's very stealininless right now, and so slowly but surely, with also great propaganda on TV that we are liberating with the Russian liberate our Ukrainian brothers from Nazi regime installed by the United States and NATO. Then now about support they as

they call it special Operation. I mean, the numbers are fudge, but there is a lot of patriotism. And one of the patriotism part is because the sanctions now and not just financial and economic, they are cultural, they are society, they're humanitarian and everything, and so Russians have no other choice but to rally around the flat. Professor, I've got thirty seconds. We saw Vladimir Putin yesterday at the Cosmo Drome in the far east of Russia. Is he healthy?

A lot of rumors once again, a lot of rumors. He doesn't look sick to me, but the people do, saying that the reason he went into Ukraine sort of follow up the cliff so quickly and on Februar, because he's rushing for something. I don't know that, but they're rumors. For Nina Kristcheffer, thank you so much for joining Bloomberg this morning, Professor kristef at the New School UH here in New York City, and of course, with their heritage age across so many decades of the Soviet Union in

the Russian Federation. We're now gonna do what we do best at Bloomberg Surveillance, and that is speak to someone truly expert. Stephen Englanders, Global head of G ten FX Research at Standard Charter. They have a fantastic Bill Winter's remit to look at emerging markets and particularly the Pacific rim up to Japan. Stephen Englander, thank you so much for joining us this morning. The ramifications of a weaker

Japanese yen now at one out to one thirty. What does that do to the degrees of freedom that Powell and Laguard have? How does weak yen redound back to and unraveling of the yen red down back to America? In Europe, well, I'd say that the yend is the very optional along with the euro where the central banks have some ambiguity with respect to how hockey is they want to be. In fact, the the b o J's downright dubbish ecbats kind of on offense. UM. I don't

think it's going to change very much what the Fed does. UM. I don't think the impact on US inflation or global growth is that strong. Um And the end is weakness is probably partly reflecting Chinese economic growth weakness, and the you know, the Governor Coroda's adamant insistence that they can continue the same kind of policy with Japanese rates drifting further and further away from everyone else's. It is such an artificiality, particularly with this phrase of buying their own

paper on board at the Bank of Japan. The standard charter view on this is Japan something that will amend in a melleable way to the shocks of weekend and all around it. In this experiment of y s C or do you worry that something could snap, Well, I'd say we're not very exciting about the continuation of y

c C under current circumstances. Um. We we don't see a huge benefit to Japan from a weaker yen at this point in a world where um growth is is kind of limited by supply, having a weaker currency doesn't really increase your ability to supply more um. You just pay more for imports. Now, in the case of Japan, the they've wanted to get their inflation up um, you know,

for many years, almost a decade or more. But the problem is that they want to get domestic inflation up, not kind of make the population poorer because the port costs are higher. So, you know, so we don't see kind of where this has ended. And I'm looking right now at a very confusing picture when you take a look at the at the words from the Bank of Japan, Governor Quarta versus other authorities that are concerned about what

you said, which is rising costs. Quota meanwhile is the one who's doubling down uneasing policies and the sort of yield curve control. At what point will there be a break and will be he'd be forced to back away from the purchases that Tom was talking about and really pay more attention to the end. It may not be immediate. Um. You know, in a number of places, the you know, the limit to how weak the currency can be in g ten countries and sometimes how expensive it is to

travel abroad. But there's not that much of it now. Um. Quite possibly the erosion of real wages to Japan is going to become a political issue down down the road, So that might end up being the limiting factor. And I think as um, you know, many have discussed. I mean, y CC is great if it's kind of demand shocks that you're kind of trying to control and if your forecast of developments are are good and it provides guidance

when circumstances have changed as much as they have. UM, it's not clear that y CC is the tool that that really gives you the flexibility that you need. Steve, you mentioned that part of the end weakness may have to do with the growth story in China, and it strikes me that the b o J isn't the only central bank we're talking about keeping policy easy while everyone else is out there hawking. China is as well. We were just talking about China, uh, talking about further triple

our cuts if needed. Why aren't we seeing more weakness for unman B that we're seeing for the Japanese end. Well, you know, there's lots of moving parts for China. I think that the entry of China into the global um, you know, financial system, the the opening up of China markets, so there is capital inflow into China and the it's very music. But you know the fact that they have such a large trade surplus on an ongoing basis, UM,

they're just not spending much abroad. They usually travel a lot or not and UM, you know, their current account is strong and they have capital influence that usually you know, that's that's a good sign for the currency. Obviously. I think that there's some concerns about the impact of the latest COVID wave and their ability to UM grow and how aggressive the policy easing is going to be, but there's some tail winds to c n Y that you

you can't ignore. Steve Angelders, thank you so much. Greatly appreciated. With Standard Charter Bank, we get a perspective, a change perspective on the American economy. Kathleen bus Johnstick joins us right now. We are thrilled for that here with mixed moments in the market. Kathy, thank you so much for joining us from Oxford Economics. Kathy, what has changed for you on the duration of high inflation in the last

twenty four hours. Thanks Tom, happy to be with you. Um. You know, the numbers really just confirm our view that we've had for a while now that inflation is untolerably high, and you're hearing that from Fed officials. That's why they're saying we need to get to neutral quickly and then actually moved to restrictive. Now we're going to debate whether the peak and inflation for consumer prices that is is in whether it was March or April May, and we

think it's probably April. But nevertheless, the real issue is how quickly does it decelerate um and and there I think most believe it's going to be much more gradually than previously thought. And we still see headline inflation still above five percent by the end of the year. So yes, it's a bit of a reprieve, but still really high

and uncomfortably high for the Fed reserve. Kathleen, can you make that help us understand that can action between pp I and cp I Basically the prices that consumers pay in stores when they go out to eat versus the prices that producers have to pay and how much that directly gets passed through to future inflation that people feel in the grocery store or when they go on a vacation. What do we have a sense of how direct and what the time is for that transmission. Yeah, so it's

a great question. And you know what we have seen in this business, Suguli, So that's really different than the prior decade is that Corporate America has really strong pricing power. So let's say if we went back five six years ago, you would have hopefel prices would have won up, but corporations would have had a hard time pass laying it on to consumers and it would have erode it profit margins.

Now we're not really seeing that right Earnings. I know you've been speaking a lot about earnings for the last few days. We're going to get the um the next quarterly earnings data rolling out, But up until this point, everything have actually been quite good and that's helped fuel the equity market. That's because Corporate America has pricing power and we see that many surveys. But Kathy, are we

starting to reach the limits of that? Lisa has brought it up a few times during the show bed Bath and beyond disappointing facing inflationary pressure, supply chain headwinds, and a headline just coming out from the company, they see a slowdown in consumer demand. If demand starts to deteriorate, consumers start to push back against higher prices, are less tolerant of it. Is that the point we're at now, we may be and that is the critical point of

the cycle. Right we all know we're late cycle. How late are we in the cycle and how much pressure on corporate profits. Right, So if you see input costs still rising as a PPI data suggest unit labor costs, we know wage games are still high. If companies are no longer able to pass it on as easily to consumers, then it is gonna start to bite into corporate profit margins. There's no way around that, and we may be reaching

that point now. The consumers to us still look like they're in really good shape, but remember they don't have that fiscal stimulus, right, the checks that we're given out a year ago, that's gone, and now you really have to rely on private wage gains to really carry you through and the expect savings. The real question really for all of us when we fork I asked and look at this, is how much of that you know, two point seven trillion worth of accumulated savings does the consumer

rely on? Kathy, We're also talking about an inflation surge stemming from commodities, and this often has been thought of as something that's temporary, transient, pick your poisonous word. How much is that changing in an era where it does seem like we are deglobalizing and it seems like these shocks are all having the same impact even though they

are very different in nature. Yeah, that is something that could play out, you know, over the medium to long term and it and it is a real potential game changer to the backdrop um that globalization really brought in disinflationary forces where it kind of capped overall price games. If that's changing and praying on the ends, which it

looks like it may be, that is very different. You know, scenario doesn't necessarily it's hard to say, you know, we're exactly oil prices or or copper or where that will play out. But what we can say is that you know that disinflationary impulse could be behind us or economics. This is a very confusing moment. I am here with

Tom Keane, with Kaylee Lines. We are broadcasting both on radio as well as on television at a delicate moment where we're looking at earnings reflecting both strength when you take a look at delta and the incredible demand, and then you look at JP Morgan talking about increased credit loss provisions as a result of some of this uncertainty. Peter Sheer has been passing through all of this and has a fantastic view uh joining us right now, Peter sheer a orse I have with back economics with the

full view. What's your view on how we should read this moment. So I'm starting with equities. I think equities right now are to me an easier read. I expect equity indust needs to go back to the pre March fed lows. So I think we get back and retest that. So I think you're gonna see ongoing pressure in the equity markets. To me, that translates to pressure on credit spreads. So I think we see credit spreads wide in particularly the I G spector, which is held in pretty well

in the last month or so. And then finally on treasury yields, it's a little bit more up in the air. I really actually think the two year, three or four year stage I want to be buying those. I think those yields can head lower. I'm a little bit more confused in the tense to thirties. Peter, You're great at looking across equities, bonds, currencies, commodities. I'm seeing tangible currency signals of an unraveling with your almost hitting a one

oh seven. It's almost like a David focus landal moaning from Deutsche Bank. With the depreciation we're seeing against the dollar. From where you sit at the academy, is the system malieable now and functionable or do you look at it with kinks or with breakpoints? So I think we're at this early stages of a real shift and how we have to think about Europe, how we have to think about dealing with autocratic nations, not just Russia, but also

China the Middle East. And I think that's creating this new shift where you're getting the commodity nations and the autocrats aligning with China because China is a massive consumer of what they're selling, they need it. I think Europe is going to struggle. I think you're gonna start seeing all these second order effects and you don't know what it's gonna be, whether it's gonna be car harnesses or neon production. Europe is gonna have a lot of trouble, and food is going to be a problem over the

summer as well. So I think it makes sense to, you know, avoid European assets right now. Well, and when we're talking about food, that leads me to the idea of just higher prices across the board, higher input costs that companies are facing. You're starting to see that showing up in earnings Bed Bath and Beyond. One example, it's down about twelve at the opening bell after posting a

surprise lost warning of supply chain issues. And the interesting line out of the company is they're starting to see consumer demand taking a hit. Peter, are we reaching or at the limit of the ability of these companies to exercise pricing power and to pass costs on? Yeah, I think that's very exact here right now. People are just kind of getting hit left, right, and center right, whether it's gas, whether it's food, whether it's all the goods

and services they're buying. So we're seeing that at the same time, you're seeing mortgage rates go spike higher. So I think you could get this double whammy where consumers are a little bit spent out, they're tapped out, it's getting too expensive for them to buy, and the housing market could start turning very quickly. So that's why I do think that the FAT is gonna be able to

maintain QUT, which is dangerous for stocks. I think they're going to have to back pedal on all the rate hike talk though, because I think that economy is more precarious than people are talking about and Peter, this is perhaps reflected in the banking sector as well. As we passed through some of the earnings and take a look at some of the opening bell moves. JP Morgan now down uh substantially at one point down more than four percent.

Now down about three percent. But I was just looking, that is the lowest since January five, two twenty one. For sspective, JP Morgan gained twenty five percent last year. We have almost erased those gains. Peter, what is this saying at a point when we are seeing a resteepening in the yield curve and you're actually getting some income for overnight rates. Well, what I think is people overestimate what two s tends means for banks. Most banks are

fairly well hedged and that affects their income. But that's really slow and over time, where banks make a lot of their money is on transactions. And if you see that housing market slow, the number of re fives goes down, the number of you mortgages go down. I think that's a bigger hit if people start tapping out of their credit cards and saying, hey, I better start paying this

off now because yields are getting too high. So I think you could see a bit of a consumer lead slow down, a housing led slowdown, and that to me is much worse for bank earnings than anything to do with two sends yield curve peter. A lot of people will say this is an overbeared market. People have gotten so bearish and so down in the dump set of time,

when companies are still doing pretty well. How do you sort of pass through that noise which is real and come up with some sort of conviction about the direction of travel. You know, I think it's very tricky. You try and sit here and read the signs in the page and get lucky, like yesterday morning, where we're telling people, okay, we're barish, but it felt like you really want to pop after cp I, we got that that guy to

a chance to reload. So you're managing that, and it does seem though it swings accessively to extremebarishnist to extreme bullishists. One thing we spend a lot of time thinking about is that there is very little liquidity either direction, right. We always think about no liquidity on the way down. There's no liquidity on the way up or down, which means any signal you get is lost. So I think

you've gotta be a little bit in nimbo. You're running smaller position size, and so I'm trading this from the Berry side, and again at the back of that you look for long ideas. I want to be lawns some emerging markets, especially how it in South America. I love

the oil and energy space. I think we are going to spend so much money not only building out sustainable energy, but reinvesting and refocusing on traditional energy sources, the oil services, those companies like that are going to do very, very well. So there's opportunities within this whole kind of mess to try and trade around. Peter. You know the Lehman Index, the Bloomberg aggregate indexes, the credit index I believe is down pretty much the largest draw down in history. That's

French Peter tiered academy for a bond bear market. I'm fascinated by the equity language. Do you buy the bond dip? So I want to start shifting into some bombs. I think you are going to see people looking at this and saying, Okay, this a little bit more permanent, and to me, when we had quantitative easy, what that does is at every part of the point on the yield curve and risker, someone gets pushed out, and I think the reverse is gonna happen on the way back end. Peter.

Come on, we're friends. We've been doing this a while. Peter. You're an academy of securities. Your monthly statement is delivered by carrier pigeon or whatever they do. You know, you're a bunch of davy guys. Great, I'm looking at my monthly statement and I'm self three years yield or four years yield. You're telling me to buy the dip. First off, I think on the retail side, everyone just keeps contributing to a G G and B n D monthly. It's in there for one case, I think already seen a

lot of selling pressures. When you look at the e p s, there's a lot of men already a lot of outflows. So I think people are able to reload right now. It's the institutional investors that are driving. I think people are starting to take a little bit of a niblett yields here. What does that mean for the equity market, Peter? When it didn't seem to blink at yield at two and three quarters of a percent, are we going to reach the point where it does indeed

blink and the Tina thesis is called into question. Yeah, I think we're at that stage right now. I think we're already seeing that where if you tackle a bitcoin right, it keeps struggling, and as yields go higher risk assets. When you look at the the higher risk text stocks right, they've done worse. So I think you're seeing people repriced risk and they're focused on steady growth, they're focused on dividends,

they're looking for opportunity, they're looking for energy. So I think you're gonna again, I'm not comfortable with equities until they get back to both the March levels of this year, which for most coincides with one level. So I think that's where we get back. It's another you know something on the SMP maybe a bit lower. That's where I can get constructive again. What's going to be the leadership to the downside if that makes sense, Peter? What what

creates the drag? What area of the equity market in particular? And I think it's still gonna be this, you know, the big high tax stocks where people question the valuations, where people say, well, you know what, we've got a good run. We can take some gains and look for something else, and maybe we just want to be a little bit conservative with so much going on right now. Peter Sheer, thank you so much for being with us of Academy Security as head of macro strategy, some really

insightful moments. This is the Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays from seven to ten am Eastern on Bloomberg Radio and on Bloomberg Television each day from six to nine am for insight from the best in economics, finance, investment, and international relations. And subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com, and of course on the terminal. I'm Tom Keene, and this is Bloomberg