tv Bloomberg Surveillance Bloomberg May 7, 2015 6:00am-8:01am EDT
the u.k. voters go to the polls today. and what ohio got right. good morning, this is bloomberg surveillance from our headquarters in new york. i am brendan greeley, joining me is olivia sterns. let's get straight to top headlines. olivia: it is a $2 trillion selloff that is how much has been raised. around the world, -- has been spiking. yellen said yesterday that long-term interest rates are low , and there could be a sharp rise once the u.s. starts raising its rates. >> low interest rates can certainly incense some investors -- it can send them -- in sent
them to take on investments that if they unwind, can create risks. olivia: australia's benchmark bond hit the highest levels since december, and germany's benchmark bonds rose to its highest levels this year. meanwhile, voting is underway in the u.k. david cameron is facing off. and a, polls have been open for a few hours already. give us the latest? >> pulls up and open for four hours. they will remain open until 10:00 this evening. members of parliament will be elected to represent the u.k.. registered voters are casting their ballots. there are 3000 polling stations across the u.k..
we have some voting restrictions in place, we are not allowed to talk very freely about the election today. we have to stay away from the color we have been bringing you. i found out today that you can vote in your pajamas which is useful. you can take your dog. but don't try and take a selfie. olivia: looking for to having a full breakdown and discussion with you tomorrow. tom: the patriots are under the scandal over the uninflated footballs. it's back. there is speculation that tom brady could be suspended for his role in the scandal. the nfl commissioned a report that says he probably knew the team intentionally underinflated the balls. olivia: global bond yields are
rising. this past cheek -- this past week, germany has risen, and greek debt appears to be coming undone. our very own bond vigilante joins us. >> what's changed? an interesting point. over the past month you have had good data credit conditions are improving. oil is a key factor in this. across europe and globally, is this the beginning of a inflation trade? they are willing to accept a much lower yields u.s. seen a huge yield compression over the last few months.
if we have the introduction of a reflation trade it goes much higher. if you went to greek 12 months ago -- it is still half of where it was 12 months ago. other people are seeing this as a big correction after a monster rally. there was a big debate behind this move. tom: china, greece, yellen -- greece, the steady drip. which do you think is most important in this move? >> probably none of them. china was a very domestic led move. you get a correction, a three-day correction the biggest three-day drop since 2013.
what i would say is that this is a build up a big buildup for 12 months. if you eat lots, you get indigestion that is what's happening over the last 12 months. olivia: perhaps it is some traders getting out of some creative trades. not quite yet the beginning of a global reflation trade. thank you. i want to bring in stephen wyden , he joins us now on set. steve: is thise is this the beginning of the reflation trade? >> i think this makes more sense than where they were before. in the case of switzerland, negative yields.
we did have a really large move up in stocks and bonds. central banks around the world have stretched to provide accommodation. -75 basis points -- you did see really big moves and crowded trades across the world. i do think that 60 billion euros in europe a month i think this could go on. we will see higher yields. tom: is this good macroeconomic news? should we be celebrating? >> i would not be optimistic. we are redistributing savings around the world. it is not quite be big net stimulus that everyone wants to see. in the end, consumers will be better off. but moving that back, and not getting upward economics
surprises that is not to become a nation that would be ideal. unfortunately, over the last couple of days we are seeing stocks and bonds fall off together. but they move together -- >> you just said something that is very important. the moving on oil is not net good, it is just redistribution? >> the decline in oil is a small net stimulus. but i think there are big gross problems with it on the way down. if you think about how asymmetric this is -- it threatens the survival of some oil producers. in the united states, it is a savings of about 3% of income. it doesn't take them from solvent to insolvent.
if you look at the first quarter gpd data you can see a decline in the investment -- it was probably a drag of 75% of one investment point. not all of this will be saved this year, but it became a double-edged sword, it particularly in the u.s.. olivia: just to push brendan's question a little further there are a lot of big fund managers who say we are seeing the whites of the eyes of inflation is what we are seeing. that together with the spike in the employment index we are actually beginning to see a bit of inflation. >> i think it is time to get off the train, and stay off the train. how did it happen? markets are interesting.
it will be confirmed once the fed raises rates. steve, are you telling clients to get off the train? >> with the exception of long-term u.s. treasuries -- inflation is going from zero to positive. it will have somewhere to go. inflation can limit a recovery. a few years out, i doubt you will suddenly see that we are posting the type of inflation readings we see in brazil. brenden: when did you make the call on the line? >> for years now. we are raising over the last couple of years, raising quality in fixed income portfolios. we reduced the extremes as if you think about u.s. treasury yields, they are unappealing. but look back to october 2014
we had u.s. treasury debt rally 10%. -- as a -- in that fixed income yield -- if you take out chinese growth? you are seeing growth globally. it makes sense that yields are low. olivia: how is the -- to your clients changed since the beginning of the year? >> i think the stretching of the banks, 27 central banks cutting rates, they made returns in the first half of the year. we got so far towards the year and return targets, and i didn't think it was about the things that are going on in the marketplace right now. these are very near-term risks
that impacts markets, in the case of the eurozone, we like them. we slightly reduced our weight with china, and we have been overweight with them since 2013. brenden: we're going to talk about alibaba. did bill gross wake up on the wrong side of the bed this morning? tweet us at bloomberg surveillance.
tornadoes also touchdown in kansas and nebraska. shares of tesla are rising. it reports the loss was smaller than expected. tesla also says its new factory will start making storage tracks by last year -- by next year. lieutenant colonel crystalistine --she previously flew over afghanistan. olivia: it is sees asian in the u.k.. we are not allowed to say much more than that but stay tuned. then at 6:40, are we looking at a high wage recovery? then at 6:50 we see what the
right brothers got right. alibaba is on deck to report results. ahead of the report, they share their trading went lower -- leslie joins us now. leslie: what doesn't seem to be a problem with alibaba? we're looking at a company that has had a massive number loss. -- now, since i've talked to him, things are much more temper, he is much more humble. he realizes that things with the chinese regulators have not gone smoothly. they are under fire for their sale of things that seem to be ripped off, and bribery on the site. olivia: so it is not just
euphoria on -- it has gotten worse. >> absolutely. last year, they reported their estimates. and that worried investors. brenden: there are two stories of growth with alibaba one in china and one outside. can his grow outside of china? >> that is the big question. can they expand outside of china gekko ? they're looking at russia to do that. the thing is, when you have a commerce platform that is embedded in china is that actually possible? olivia: steve is on set a know
you look at the overweight of chinese industries which is interesting because it has doubled in the last few months. this has been the biggest three days route. why are you so bullish? >> for one thing we cut our overweight in china, and we shifted it to the local hong kong market. other places like australia and malaysia places that are tied to recovery and commodities. something that is misunderstood outside of china is that of course, they have a slowing trend economic, a middle income economy that is not going to be able to grow 10% a year. that is not required. what you are seeing is only average evaluations. we're seeing catching up in china.
people misunderstood financial stability provided by central government resources. recapitalizing banks, creating a municipal bond market to take toxic assets out of local governments, these sorts of things create stronger financial security. it is allowing them to have corporate defaults, instead of bailing out every single company. brenden: you think that the government is managing this transition well? that there will not be a hard landing? >> i think in the context of an economy that has a per capita income that you have an ability to do that better than you would in a really advanced economy. there are all sorts of issues in china, because as you know, you don't get command economy growth -- but the fact that they have been able to address tax
equality issues, that they have some plans to address overcapacity issues in some industries, that this has gone a bit smoother than some people thought. olivia: we should point out that alibaba is traded on the -- it is not traded in china. but you are saying -- >> i'm looking for the mobile monetization. how much the money -- how much the company is getting in regards to mobile monetization. that has been a worry for investors in the past. the transitions from consumers to mobile has been ok. olivia: the overall question hanging over so the valley. we will be hearing from the
taxes, nevermind all that. every german still has an obligation to notice and hit the brakes. this is a classic michael lewis take it looks at pedestrian injuries from traffic has increased, and he says it is not because the drivers are irresponsible. it is because the pedestrians are so self-conscious -- confident in their righteousness. in this metaphor, the greeks are the pedestrians. >> i don't know if your listeners have read the whole story but i know many german executives who have grown up in an environment of her morse over events early in the 20th century. so this is a hard thing to think about.
there are obviously two sides here, -- >> i get the sense that germans have done such hard work since the end of the war, that there is a generation at our age who is tired of her morse. -- of re-morse. olivia: on tuesday night, the legislature in athens pass a bill that sticks the thumb in the eye of -- it says they are going to rehire state workers. that was supposed to be on the table as one of the things that the greek step two with the reform. that is not a good faith initiative. >> keep in mind that the greek economy turned the corner but it was very depressed. you could say the same thing about spain. there is the legitimate case to
be made here, that even in the case of germany, that there was outside assistance through world war ii and a depressed economy has not given the opportunity to recover. but the two sides of this, is that you cannot run an economy like this forever. olivia: no. steve of citiban -- the british go to the polls today. >> bloomberg's morning must-read is brought to you
who are registered to vote. he challenges the labour party's ed miliband. and the global bond selloff has cost more than $400 billion. the benchmark 10-year feelll. yields are higher in japan germany, and australia. long term interest rates are low. we could see a sharp jump in borrowing costs once the fed starts racing rates. the senate has a test bill on iran today. president obama has indicated he will sign the bill as it is. iran's supreme leader says the country will not negotiate with powers over its nuclear program if it is under military threat. the ayotollah has final say over
most matters in iran. brendan: bit settlement in the investigatiog and rigging exchange rates. four companies will pay billions in ines. they include-- pay billions in fines. ubs is also expected to reach a settlement. thde swiss bank will receive immunity from prosecution. marlowe suits -- more lawsuits. pay-per-view customers are suing saying the broadcasters failed to disclose that manny pacquiao had an injured shoulder. meanwhile in los angeles, manny pacquiao has undergone surgery. doctor calls the operation a success. your top headlines. 4.5 hours ago polls opened in the u.k. general election. it is 54 degrees in london. david the weather is all we can
talk about. david: we can say that. we can say there is an election. the polls open and they will that is about it. that is allow that they allow us to say. i did look into the process. it is election day in the united kingdom in every five years brits select members of parliament the men and women who represent them in the house of commons, the lower house. the u.k. is comprised of 650 constituencies. you can think of these like congressional districts. now most of them are in england. 533. 59 in scotland. in wales, 40. 18 in northern ireland. in each of these constituencies the candidate who gets the most votes his first past the post. he or she will represent that part of the country in the house of commons. a few days after the votes are
tallied, everyone will go to westminster and make a solemn affirmation. the prime minister is the head of government in the u.k. the brits do not vote for someone to do that job the way we vote for president. they vote for members of parliament and parties will take their leadership to how might this play out? if one party has a governing majority the head of that party will become the prime minister. if that is not the case, things get complicated. you have a hung parliament. there were two things that happen. one is the party with the most members of parliament could try to form a minority government or one party could work with another party and several parties to form a governing majority. a coalition government. there is not a whole a lot of time to figure this out. the queen is scheduled to deliver a major speech on wednesday, may 27. that is when the new parliament will be declared open. there you go. again, we were alluding to these restrictions -- we are not allowed to offer analysis while the polls are open or talk about
exit polls. until afterward, when bloomberg redo a lot of coverage. i think it is great. brendan: it is almost charming given how heavily we would be covering this in the u.s. olivia: we are on air live in the uk and that is why we are not telling you about elections because of broadcast rules in the country. the queen has to give the rubberstamp. it is a rubberstamp, but she still needs to -- you need to go hat in hand and say, your majesty. brendan: we are debunking one of the biggest myths about the recovery. is it a low-wage or high wage jobs recovery? we will show you the chart. it is not pretty. ♪
brendan: this is bloomberg "surveillance." it is 6:37 and therefore time for our single best chart. if this is a recovery, why isn't everybody dancing in the streets? one of the answers is the subject of today's chart. it comes from deutsche bank. we have stephen whiting with us from citi private bank. here's the deal. we are looking at this and we
have been wondering when wage pressures are going to start to rise for lower wage jobs. what we are seeing in this chart so clearly is that all of the growth has come in high skill jobs, jobs that require a college education. steve: things thaft fit the profile of the american economy. this is one of those things. these were demands that were filled. if it's minimal demand, you have that absence of wage pressure. people take data way to literally. if you look at average hourly earnings for example, how representative is that of what we look at after years of lags and releases and look at income tax returns? in the end, we can tell from high-quality data like unemployment insurance claims that labor demand has been rising faster than labor supply. over the last four years, implement growth has been nearly
210,000 for month. the labor force has expanded 75,000 permanent. -- per month. i think tomorrow we will see something like that again. and we should see somewhat higher wages and incomes over time. i do not think it is going to be riproaring strong, but overall, it is going to be a stronger income level for consumers. brendan: not to get too deep into the weeds, but something that congress talks about -- to get a real picture, you do not look at the bls releases like we do. but you look at tax returns, other better quality sources of data, but you cannot get those in real-time. steve: often you cannot. there are high statistics. unemployment insurance claims are an account of every individual in the country who has been laid off and files a claim. there is no statistical sample. it is complete census data. so there are no extrapolations. you have to take a look at these reports over more than a month. december and january at the turn of last year, the pulmonary reports showed 94,000 jobs on
average in the month. -- the preliminary report showed 94,000 jobs. so we do not use things like that the preliminary employment report to show us what the whole year look like. olivia: the single highest paying chart indicates -- you are overweight discretionary. what are the consequences of this chart for your strategy? steve: i would be aware of one thing. the fact that incomes are going up, that wages are going up does not have to crush advocate corporate profits. if you have a stable savings rate, this money gets recycled into demand for other things. so what happens in individual firms, let's say you're in the oil sector and you get a paycheck and your revenues are down. that is the surgeon labor costs. when revenues are down and wages are up, but that is isolated. in the broader sense, stronger wages does not harm
profitability unless you have a big second downturn in revenue. olivia: in the next hour we will talk about andrew cuomo writing in "the new york times" calling on fast food companies to raise their minimum wage. your bet on retail. does that chart make you want to bet higher up the food chain? do you bet on sex with avenue instead of on family dollar? -- on saks fifth avenue instead of family dollar? steve: -- has ha not been it strong as expected. share prices have done very well. they have done well because of the collapse in energy costs. a bit of this has been frontloaded in markets. brendan: i know you do not weigh in on politics but it sounds like you're giving an answer to the great political debate of our time, which is how are we going to get a recovery -- your answer is when we see increased wages, increased consumption in the median american, not investment at the top. steve: i think that this is
basically a recovery that has been there for more than five years. labor markets have improved the great deal. and you can add all sorts of other statistics for marginally employed to people or people who are working part. and are looking for full-time jobs. you can take a look at all of that, and you can look at for years and which that has been improving. i think people are waiting for a recovery to simply happen. this sad fact is it has been there. olivia: this goes back to what others are telling us. all that matters is labor inflation. things are beginning to change. brendan: in previous recessions, what recovers first is the high wage jobs. the lower wage jobs filter back in. steve: -- the composition of economies over time. we have industries that displays others and make them completely obsolete. we would not have most of the things around us right now if that could not occur.
you know, should we see wage pressures? sure. i would just be aware that a few years down the road, when you really have shortages, that there are limits to what an economy can produce. if you have 75,000 people enter the labor force on average, you cannot grow employment 300,000 forever. so these bogeys, these targets that people set for a robust recovery, from the supply side of the american economy, from labor markets, that potential has not been there. there is a real active that i think, at the federal reserve that when we go very deep into the recovery, the labor markets are very tight, we will see that supply response. but we have record highs of unfilled job openings already. and this is not the environment of 2009 where you are losing one million jobs,. per month. brendan: do not go looking for
recovery when it has been standing next to you. olivia: top photos. number three, the pope. we love this pope. he has been hanging out with the harlem globetrotters. they taught the pope how to spin a basketball on his finger. pope francis became the ninth honorary harlem globetrotter. he received his own jersey with a number 90 on it. tthey will alosso play in australia, south africa, and finland. i love it. he is weighing in on cuba, gay rights and equal pay for women and he is learning how to spin a basketball. brendan: it is amazing the pope is an honorary globetrotter. is god an honorary globetrotter? he's not. olivia: the group of the sistine chapel where god is trouchouching, that is similar to how a harlem globetrotter is spinning a
ball. at the bottom of the colorado river, a snorkeler discovery two skeletons in lawn chairs. they were identified as fake. they were wearing bibs, sunglasses, and were described as having a tea party. authorities are hoping to recover the skeletons later on. brendan: i love the world. olivia: people took the time to develop this prank and bury two skeletons in lawn chairs. our number one photo. another good one. mcdonald's hamburger finally receives a makeover. it comes after the fast food chain's attempt to create more brand excitement. the new hamburger has kept his stripes but has slimmed down. he also wears a trench coat. i guess this is what steve easterbrook ceo of mcdonald's,
thinks as a modern, progressive -- brendan: you grew up with this. i feel like the old hamburger, he could not help himself. he had to steal the burgers. this new guy, i don't know. clearly possesses the sense of and allduylt. why does and he get a job? -- doesn't he get aj job? do you know what bothers me the most? the well-maintained one day stubble. for god's sake buy a razor. olivia: i think you probably is laughing at that pretty hard. brendan: we just got in our ears that we can wrap this conversation. we're done. coming up, what the right brothers got right. how two flight mechanics beat everyone else into the air. ♪
it is considering an investigation. the mayor asked if there is a pattern of civil rights violations. washington has done similar reviews in ferguson and 19 other cities in the past six years. and johnson and johnson is starting a program for dying patients who want to take experimental drugs. the company will ask new york university's medical ethics division to review the request. the program will start with one drug, but it might be expanded. wendy's want to sell 640 restaurants looking to reduce company-owned locations. 85% of the outlets are franchised. wendi's has 5600 locations worldwide -- wendy's has 6600 locations worldwide. brendan: bonds and stocks extend their global rout. we will look into why. at 7:10 we will look into minimum wages. at 7:20 we talk about the iran
deal with peter cook. we will talk about david mccullough. he has written about the panama canal, the american revolution -- the amazing stuff america has done. he has turned his attention to the wright brothers. i asked him the question -- why these guys? david mccullough: theman could not fly. it was accepted fact. anybody who says anything to the contrary was a daydreamer are wacko. - or wacko. these people were couple of cranks crackpots, and the flight at kitty hawk, which was the epic, the world changing event, was done in relative seclusion and when they went back home to ohio, they knew that people would not believe that they had done it. but they also knew that they had not really developed an airplane that was practical. they were brilliant.
that is what you have to wake up to. brendan: you say they were brilliant. what was it that enabled them to do what all these other men had failed to do? david mccullough: wilber like to say there were two ways to train or wildhorse. one was to sit on the fence and watch and make notes and go back to your easy chair and write a paper on how you train a while horse. the other was to get on the horse and ride. they chose the latter. brendan: the concern is that innovation is over. do you subscribe to the idea that perhaps this engine that worked for us for 150 years, thi s amazing span of time that you talk about, the canal that had been unimaginable, the airplane the bridge -- is that over? david mccullough: no. we are in a enormous country with enormous problems, but we also have enormous strengths. we are like no other.
we are historically like no other country in the world. now, if you do not understand the history, then you do not understand why that is true. brendan: you are the great chronicler of american achievement. are we at the start of another american century? david mccullough: of course. brendan: we ended up talking about america. it was beautiful. he said, -- i asked him one question -- to they have to be ohioans. he said, yes. ohio is important. the most important thing is that they were american spirit he cited this quote, "let's start them up and see what breaks." when he said that it sounded like silicon valley, an idea of move fast and break things. he feels like they are uniquely american inventors. that is why they beat the french. olivia: a fascinating
conversation. this great chronicler of american achievement so bullish on the cultural innovative environment in the u.s. what does he think is unique about america that fosters that spirit? brendan: he believes in the historical idea that americans went west and ran out of west so they started making new things. there is a strain of historical fought in american history about that. but you know the other thing he said, i love the example he gave. we just saw it. the real difference was that they were willing, the wright brothers were willing to put their lives at risk. they made flight after flight after flight. hundreds of them before they really disclose what they had done. and every time they went up they were putting their lives in danger. nobody else was willing to do that. because they did that, they learned how flight works. olivia: wow. as you said, there are two ways to ride a horse. he got on back of him.
i know he is big into american universities. brendan: the same thing. he believes that one of the reasons he believes is -- we are approaching american century is that it is american university's everybody wants to go to. we make amazing things. steven weiting this american exceptionalism -- she looks in history and says it is an american character that allowed us to build the panama canal. wehn hen the french failed. you believe we are still looking at another american century? steve: i will believe that the american university system is a draw for people around the world that will benefit if the world of the united states is not careful about the resources we take out of university systems. this is not my field, but we should care a great deal about people who are born here -- what they do and those years. olivia: so higher education is a big part of it. this is a very captain america
conversation. there are other great intellectual arguments to be made for why the u.s. fosters innovation, bankruptcy rights, land rights. brendan: there is one argument that he makes in the book was that the cost of -- it cost the wright brothers $1000. at the time to buiild a plane. going out to kitty hawk to experiment. there was a government program run out of the smithsonian at the same time to get a flying machine. it was a miserable failure. it cost $70,000. it was a public failure. the idea these guys did this on their own. he is a fan of the ability that americans have to make things on their own without actually looking to the government. olivia: and everybody be sure to go to bloomberg.com to watch brendan's full conversation with author and historian david mccullough.
brendan: janet yellen is warning as stocks and bonds extended -- and valuations are " quite high." four nations, 650 constituencies, u.k. voters go to the polls today. a step closer to a historic deal with today senate vote in the iran nuclear agreement. good morning. this is bloomberg "surveillance" live from new york. this is thursday, may 7. i am brendan greeley. tom keene is on assignment in boston. olivia: wow. we are getting alibaba earnings. and it says alibaba is naming a new seo. they are naming dan zang as the new ceo. we will bring your top headlines and get back to this breaking news that alibaba group has named a new ceo. brendan: that is extraordinary and unexpected news. olivia: $2 trillion dollar
drain. that is been how much money has been lost in the two weeks in a global bond and stock selloff. janet yellen saying that yesterday -- long-term borrowing costs are low and may jump when the central bank raises rates. janet yellen: i would highlight the equity markets valuations are quite high. now, they are not so high when you compare the returns on equity'sies to th returns on equity'se on safe assets like bonds which are very low, but there are dangers there. olivia: stocks are down in europe and asia. futures indicate that u.s. stocks will be lower at the open. voting is underway in the u.k. where david cameron is facing off against the labour party's ed miliband. let's go to guy johnson who joins us from london with the latest. good morning. guy: what i can tell you is the polls are open. they opened at 7:00 a.m.
they will close at 10:00 p.m. tonight. the major leaders have voted and it is fairly 0---- sunny. that is all i can tell you because we have strict enforcement roles in the u.k. once the election is underway, once the polling booths are open you cannot say a lot for the simple reason that you would not want me or somebody else to influence how people will vote. what i can tell you, and you are going to love this, you can vote in your pajamas or your sweatpants. you can also potentially, if the pubs are open, if you have had a few pints. apart from that, i cannot tell you much. those are the real highlights -- you can vote in your pajamas and if you've been to the pub. olivia: thank you for that piercing insight. it never occurred to me there might be a dress code or a breathalyzer. i feel relieved to know that you can vote in your pajamas and
after having a beer. alibaba, fourth quarter earnings out and coming out with the issues they named a new ceo. joe tsai will remain on the board as a vice-chairman. four quarter adjusted earnings per-share coming in ahead of estimates. alibaba profiting from extra advertising spending. getting a big boost from the lunar new year. adjusted eb. earnings a --0 ebitda earnings missed. lieslie talked about how they have not -- been able to monetize and mobile. did you see this coming? dan zhang replacing jon lu. leslie: it is not surprising they would make some kind of
management shift. ceo, on the other hand, that was a surprise. it is clear they are looking for someone who still knows alibaba. daneiiel zhang has been with the company since its beginning. it appears he has been with them for 8 years. he is someone who knows alibaba. he is an operator by nature and priestly worked at how about -- at tau bau. the goal is to drive the business forward. and the shares seem to be a great with that decision as well as the numbers. olivia: i am looking at the premarket movement. you see alibaba rising over 7%. i see a headline saying the move will be effective may 10. quickly, what is your response to the broader look of the results? we see a little bit of a beat on the top line, a miss on the bottom line. leslie: it is interesting. a lot ofto vacating on today's
earning they were looking at it saying they would be surprised if there was a beat to an upside. they managed to accomplish that in terms of revenue. so that is hopefully we'll do something to temper some of the skepticism surrounding alibaba's ability to whether the chinese economy slowdown as well as competition. so, it looks like, again, investors in premarket trading are very happy with these numbers. very happy with what they are seeing so far in terms of the changes that alibaba is making and we will see how trading pans out the rest of the day. olivia: let me bring it back to governance. on the news that dan zhang is going to replace jonathan lu as ceo. i saw a headline saying that alibabas board will increase to 10 numbers. trading at the lowest level of the year. what has been the criticism from shareholders about governance at alibaba? leslie: alibaba has the unique
structure. they have this partnership structure with their vice-chairman joe tsai came up with as a response to law firms his father worked at. this partnership gives that group of individuals and outsized vote. it is not a dual class share structure but similar to it and that a group of individuals have an outsized vote in terms of certain things that the company decides to do. brendan: there are two strategic movements that alibabas trying to make. one is on to mobile. the other is into rural china. what to we learn about the success of those? leslie: it looks like they are making progress on those two strategic plans that they have embarked on. they obviously need rural china in terms of consumer power, and they focused largely on the logistics of -- to be able to
capitalize on that group as opposed to first, second and third tier cities. they have been able to expand their wherewithal within china. of course, we will hear more on the call about that strategy. olivia: earlier this morning you said it was all about mobile. viewers begin to us on the phone. i will redo some of the headlines. -- you are speaking to us on the phone. i am seeing a headline that says "mobile gmv, amounted for 50% of total transactions." mobile maus grew. does this indicate that jack ma has been successfully monetizing to mobile? leslie: mau's are monthly active users. it looks like they are going into that direction. so, definitely the acquisition of more companies using their
mobile devices to purchase things on alibaba is a strong sign. the transaction value appears to be strong. i'm have not seen anything just yet in terms of take rate. still new at these numbers. that is something i will be looking for in terms of how they have been able to translate that, that user acquisition into $'s for -- dollar signs for the company. olivia: i assume jack ma is going to get on a phone call the shareholders. what is the number one thing you want to hear him say? leslie: i want to hear what their plan for diversification outside of china is. it would be interesting to know how they plan to do that and where their priorities lie in terms of geographies. brendan: leslie picker, thank you. we have the great force and -- t orsan from deutsche bank. the alibabas are a bet on the
chinese consumer which brings us to a broader question -- how china is negotiating this transition from industrialized economy where migrant workers are moving into city from rural to a place where people send money. how do you see china weathering this transition? >> this is an important anecdotal piece of evidence about how the consumer is doing in china. the consumer is what is needed for the chinese economy. we had an export led economy for all these years. now we see it moving towards the consumer. changing the growth model is an important step. brendan: we have seen this usually in fixed income over the last two days and over the last month. how much of the news out of china continues to that? torsten: that is an important debate i have with customers every day. what is the reason why we have seen changes? is it driven by fundamental sources or is it simply that
people walk up and said, wow q.e. is about to end globally? is it the q.e. trade that is taking a break, or are we going back to fundamentals? olivia: staying with us for the rpi to recap this news --alibaba isd replacig its ceo jonathan lu. the stock felt since november. -- fell since november. they are going to replace jonathan lu with daniel zhang. the switch takes effect this sunday. our 20 question -- is the bull run in bonds over? -- our twitter question. ♪
olivia: good morning and welcome back to bloomberg "surveillance ." i want to get straight to my morning must read. it comes from "the new york times" by andrew cuomo. " he says roosevelt paste power -- faced powerful opposition to the minimum wage. -- has any right to continue in this country." governor andrew cuomo writing about how fast food workers deserve a raise in today's "new york times." still with us torsten.
economists are divided over the consequences of raging the -- raising the minimum wage. torsten: it is clear we are getting to a point where the labor market is starting to tighten. it is no quinton's we are debating this now. we -- no coincidence we are debating this now. it reflex we have a tighter market not only for the high wage and mid wage jobs, but it is starting to appear -- for the low wage jobs. olivia: many fast food workers are receiving public assistance. what you're are doing is transferring payments that should be coming out of corporate pockets instead of out of taxpayers'. torsten: from my chair, it is how the fed thinks about this. how to market think -- how do markets think. is there any sign of wage inflation?
for rthethe last many eayrs -- years, they have basically been flat. olivia: brandon used your chart showing that higher paid workers are finding more jobs. andrew cuomo says ceo's in the fast food industry may 23 point $8 million, more than quadrupled the average from 2000. nationally wages for fast food workers of increased by .3%. brendan: in your chart, we do not see any growth in these lower wage jobs. so, if there is no growth, how can we expect to see wage inflation in those jobs as well? torsten: that's what a very important debate is what kind of wages is it? the high end of the labor market, people with education have had no problem finding jobs with his recovery. it is six or seven years into the recovery that we are seeing people with low skills and lower
education finally getting some jobs but that job growth is limited compared to the job growth you're seeing for the high which category. -- high wage category. the answer is mixed, but generally the answer is on. -- is no. olivia: we will be hearing from alibaba cofounder joe tsai. we will get him to weigh in on the new ceo dan zhang. that interview on bloomberg at 9:00 a.m. ♪
olivia: good morning. this is bloomberg "surveillance ." let's get you straight to our top headlines. there is trouble in tornado alley. authorities say -- damage from a series of twisters. 12 people were hurt in oklahoma. tornadoes touched down in kansas, texas, and nebraska flipping cars and wrecking homes. tesla predicts this year will be its best forecasting sales of 55,000 electric cars. the company posted a quarterly
loss that -- was lower than expected. it's factory will start making battery packs by next year. a milestone for the air force. the f-35 strike fighter has a female pilot. she is lieutenant colonel christine mau. she made her first test flight this week. and passed with flying colors. she previously flew f-15's. brendan: coming up, 7:35 a.m. we look at the sovereign wealth funds. less capital going in the before. 7:40 we talk about alibaba's new ceo, daniel zhang. 7:50 a.m, hope for a raise with torsten slak. -- congress could review any final nuclear deal with iran. mitch mcconnell led the way
shutting down to members of his own party. mitch mcconnell: many wish the bill was strong. i do not disagree with them. but this is a piece of legislation worthy of our support. it offers the best chance we have to provide the american people and the congress they elect with power to weigh in on a vital issue. brendan: joining us from d.c. peter cook. i want to get to the details of this bill but first, is this a new tone in washington? are things actually happening? peter: do not let the calm demeanor of mitch mcconnell full you. -- fool you. there has not been an easy pass. there has been a republican fight, just as there has been a fight with the president over his policy towards iran. this is not a done deal. they will have a test vote, a procedural vote today. some questions about what happens after that -- could they wrap this up today and clear the biggest hurdle the president faces ofver the iran nuclear
negotiations? if the senate does rep it up, it does boost the chances that ultimately the president will have the opportunity to have a final deal with iran. there has been more cooperation, do not get me wrong, but is not quite the coup by all moment -- kumbayah moment you think it is. brendan: what powers with this gift to the senate to look over what it is the white house signs? peter: what is important is the current light which of the bill gives the congress a say over this nuclear deal. there will be a vote effectively for the congress, but not so much of a vote that the white house feels it is going to threaten the deal overall. there is a timeframe in terms of the amount of time congress will have to review the final agreement. if there is a final agreement. the onset, specifically, the timetable serves the president's needs in terms of a timely end to the entire event, and
basically, commerce has an up or down say but not the say -- congress has an up or down say. brendan: if you're talking to people on a daily basis on capitol hill, when the supreme leader rattles the sabr as he did, does this change what is going on? peter: basically, they have taken they have been listening to the rhetoric since the deal was first announced. they know there is a lot of domestic policies in both countries -- politics in both countries and false. both sides believe they are moving towards a final resolution. there has been some easing of tensions in terms of the straits of hormuz. the navy had to accompany ships in that area. the iranians -- the seized a cargo ship and released in a few days ago. they do not want outside factors to disrupt things. the final stage of these negotiations, which are still
ongoing. this is not a done deal. this vote in congress would be assigned to the iranians that the u.s. is serious. olivia: releasing that shift this morning does appear to be a bit of an olive branch. critics of the deal say president obama caved. what did we learn from the corker-menendez tonsil about how much the president gave up? peter: what we have learned so far is that at the end of the day, there are enough republicans led by bob corker the one to give the president the latitude to get a final do. they had the opportunity to slam the door shut. they chose not to do that, but there are members of the senate who wanted confrontation -- most notably some of the republican presidential candidates. marco rubio, ted cruz. you also have timed patt -- tom patton who have gone out of
their way to poke holes in this deal and raise questions and block it on the senate floor. that is yet to play out. there is opportunity for some mischief. we are headed for this test vote this morning and possibly a final vote by the end of the day. brendan: we have got torsten who has a quick question. torsten: is there any thinking about what this means for oil prices? for markets, this is important. oil prices have gone upu a a bit. is there any sign that this may push oil prices up or down? peter: the ukrainians have made clear what they think should happen. -- the iranians made clear what they think should happen. $75 a barrel of oil is what they say. they could ramp up production up to four million barrels a day. it could have a big impact on
at mr. tom brady. front and center in deflategate. this morning, other than that, i am looking at a 3% 30 year bond. we have seen this before. the rationalization of lower bo nd prices. that is front and center in marcus this morning. -- that is front and center in markets. brendan: you have been looking at the bunds. tom: the big story is away from bunds. they have had their damage. when you see a u.s. 10-year p iece go down 3% in price as the yield moves up that shows you some of the pain. we had a wonderful night last night. stephen grossman, who has been a great supporter of democratic party politics, and now working with michael porter, he demanded that i give you a shout out from steve grossman in boston. he and many others watching every morning. it was great event -- a great
event with the chamber. olivia: good morning if he is watching. do you agree with fortress who said that something has changed here, that this is or do you think this is people just getting out of crowded trades? tom: i think it's bovement we've heard it before, and it's been wrong. i'm not ready to call all clear on a bull market. what i will say is nobody knows. that's what i know, and guess what olivia, it's data-dependent. what we're going to see in the next coming of weeks is data-dependent, starting with the jobs report tomorrow. olivia: janet yellen said yesterday on stage with christine lagarde, even she's worried there could be a sudden, sharp spike in bond yields. tom, i know you've got to run back to radio. thank you so much for joining us. look forward to seeing you back here tomorrow. let's get you straight to top headlines. a big change at the top of
alibaba. the c.e.o. will be replaced. he's been there for two years. alibaba reported a 45% increase, even while, in fourth quarter revenue. shares are up more than 6% in premarket trading right now. we are seeing a global sell i don't have in stocks and bonds. we were just talking to tom about major european indexes down more than one percentage point, and futures indicate that u.s. stocks will also open lower. since last week of april, the losses have added up to more than $2 trillion across asset classes. the fed chair may have added fuel to the fire. yellen warned yesterday that stock valuations are quite high, to use her words, and that long-term interest rates are low. brendan: lumber liquidators is still feeling the impact of the report on "60 minutes," the company's laminate flooring made in china had excessive levels of formaldehyde.
now they're halting all sales of its chinese laminate floors immediately. earlier the company said the floors were safe. four of the world's largest banks will pay the price for rigging foreign exchange markets, according to "the wall street journal." it says that the banks will plead guilty and will pay billions in fines. the journal says the settlement may be announced as early as next week. u.b.s. is also expected to reach a settlement. the journal says they'll receive immunity from prosecution. and before there's a rematch from saturday's big fight, we may have to get through the lawsuits. pay-per-view customers are suing comcast, hbo showtime and directv. they say they were ripped off by failing to disclose that manny pacquiao had an injured shoulder. two other fans have already filed suit against pacquiao. pacquiao has undergone surgery for that injury. his doctor calls the operation a success. thank the lord for small favors. those are your top headlines.
norway's $900 billion fund, sovereign wealth fund, is running out of fresh capital. that's what happens when an oil-producing nation faces a collapse in crude and unprecedented low interest rates. joining us now on the phone from oslo is bloomberg's news report. just last month, the fund had a record gain of $53 billion, but if i understand correctly, the government is deciding not to inject new money into that fund. >> yeah, basically the government's income, which goes into the fund, follows what the oil price is doing. so oil prices are low. crude output is low, so income to the fund is also low. brendan: what does this mean for norway's government? saleha: the government can use up to 4% of the budget to cover budget did he have sifments the governments so far have increased spending since 200 , staying within the 4% limit,
but that figure has gone up since the fund has gotten so enormous. so if their income is falling from the oil industry, they will soon have to start taking money out of the fund to cover budget needs. brendan: stay with us. we also have torsten on the desk with us here. of course, norway's sovereign wealth fund is a giant in global asset markets. when you see this movement out of the fund, what does this mean for global markets? torsten: when oil prices were high, funds in other countries were doing very well, and the question then has been a lot of careful watching of what exactly were they investing in and what were they doing. so one very important theme, of course has been that if oil-producing companies have been buying a lot of treasuries, will there be fewer purchases? that's a major theme around oil prices. olivia: do you think what's happening right now is a consequence of the oil price or at least that's the way we're
reframing it? torsten: broadly speaking of course, norway has extremely unusual conditions that help them finance the welfare state very reasonablely. olivia: they've tons of oil, part of the eurozone. torsten: that's the political discussion. but it's absolutely clear they have a luxury, huge ammunition here. brendan: now that we're talking about the luxury they've had in norway for so long, given how long we've seen the price of oil move, it's been six months, i think, has there been -- what is the mood in oslo where you are? is there a sense that the party is over and the economy is going to have to adjust long term, or does this just feel like a blip? saleha: i don't know if you can say the party is over. oil will always be an important source of income and employment in norway, but it is time for
restructuring, for sure. brendan: ok, saleha mohsin from oslo, thank you very much for joining thus morning. torsten, the broader question right now, and you alluded to it earlier is about sovereign wealth funds, particularly from oil-producing countries. i'll ask you the same question. do you see this as something that they're all -- a real change long term they're going to have to contend with, or is it just a blip for them as well? torsten: something that's very important to remember, the break even is such that they need high oil prices to finance the spending that they have, and for most oil-producing countries, the break even is a lot higher at the moment, so that means something has to change. either they need to cut spending or they need to find some other revenue sources, which is going to be quite challenging. it's actually very important from a macro economic perspective how long time oil prices stay "low," because if they are permanently low if
this is a shale supply story, then it becomes a very important feature, because then the shock will stay for a longer period. olivia: what's the view on oil? torsten: from here, they'll basically rebound to this level, and basically move sideways. in that perspective, we don't see any near-term changes. but it's clear a lot is driven by, do you think oil prices is driven by one or two things, meaning fundamentals, or is it driven by euro-dollar, meaning exchange rate developments, because the answer should be, well, what do you think will happen on the european front? will they do q.e., or will it be more on the fundamental side you should be looking for the answer. brendan: more broadly, one way of looking back at the last 10 years of global asset markets, if i can be impossibly vague and broad about this, is that there's all of this money coming in from among others, sovereign wealth funds, a giant pool of money is the great way
that this american life described it. is that pool of money running out? are we seeing, with price of oil long term railroad company we going to look at a long-term, 10-year secular change? torsten: this is extremely important. we had a pool of money trade, and they've been driven by central banks and by money coming from sovereign wealth funds and other big sources. on the other side, the macro fundamentals continue to be what people normally look at, so it's drven by q.e. and the pool of money, or are they driven by fundamentals, or will we see inflanges and the markets move more? it's clear that the last few days or weeks have basically been questioning, is it the q.e. trade? brendan: you know i love him, because no matter what i say he looks at me and says that's a very important question. olivia: that's why we look you. i'm also pleased we had a scandinavian guest on to talk about norway, and went to oslo.
"surveillance." alibaba just reported earnings moments ago. revenue at china's biggest e-commerce company was up, but the big announcement, they're replacing its c.e.o. naming a new c.e.o. emily chang will be speaking with the incoming c.e.o. on "in the loop." betty liu joins us now with a bit of a preview. betty, big get for "in the loop." i'm excited. betty: yes. kudos to "bloomberg west" and emily chang for getting the interview. this is no change at the very top. but daniel zhang was formerly the c.o.o. of alibaba. and jonathan lu was really with joe and jack in bringing this company to i.p.o. some people said he was kind of like the yang to the yin of jack, but basically he was kind of like you know, the guy on the shoulder one of the other guys on the shoulder of jack ma through the process.
now, why alibaba shares are rising so much, yes, they beat on their earnings. yes, they beat on their revenue, but it's the mobile side of the business that is really big. 51% now of their gross merchandise volume is on mobile . that is a gain from the prior quarter of 42%. so they've really ramped up mobile transactions. that was part of the reason why somewhere were worried about alibaba, they weren't getting the uptake quick enough. but it looks likes they're focused on, it and the numbers are showing, and that's why the stock is skyrocketing right now. brendan: there are two different stories to tell here. one is 45% increase in fourth quarter revenue, but the other is the longest slump since the i.p.o. we had torsten on the desk, and one of the reasons for that slump is of course, concern about their new relationship with chinese regulators, but also general concern about the economy. when we're looking at the news this morning, what does that tell you about china?
torsten: the chinese economy has been facing structural challenges, particular from the housing market and how it feeds into the financial system. generally authorities have actually done an outstanding job of holding the hands on the recovery, so we continue to be optimistic that this will not be a hard landing for china, this will be slow, soft growth, but nothing dramatic from a macro economic perspective. brendan: which means guessing, betty liu, consumer plays like alibaba are still a good play in china. betty: exactly. torsten, you talk to people who live in china, they say in the cities you know, where there's a lot of consumerism going on, it doesn't feel like it's 7% growth. it feels like 10% 1,% growth still in the urban areas. but in smaller cities, in the rural areas, that's where you start to see the slowdown, and that's the problem. olivia: perhaps it's another reason why they're on right now.
dan zhang is on the line right now. one line that's come across alibaba saw a rise in active buyers in rural areas. betty: there you go. olivia: cue the headline. brendan: olivia i would argue this is growth in rural areas in china, this is the headline of the morning. olivia: it's also the single day was a very good idea, which bloomberg apparently called in. stay tuned. ♪
brendan: this is "bloomberg surveillance." i'm brendan greeley. tom keene is in boston, taking a jog around the basin as we speak. let's get to our top headlines. federal investigators are continuing to investigate why an oil tank train derailed in north dakota. six cars burst into flames. they forced the evacuation of a small town yesterday. no one was hurt. it is the sixth such accident this year in north america t. involves newly designed tank cars that are supposed to be safer. europe's largest engineering company falls short of quarterly target. siemens says profits fell nearly 5%. one big factor, low oil prices. the company plans to cut 4,500 jobs. sales of three units eased losses. and early july bookings at
chicago hotels are lively, thanks to the grateful dead. legendary band is playing three sold-out shows that will be their last. fans are paying more than $350 a night for rooms during that weekend. we will not stop to linger on the irony of that. those are your top headlines. olivia? olivia: still to come -- at 8:00 a.m., we look at the global rout in stocks and bonds. that is why $2 trillion across asset classes in the past week. then 8:05 a.m., we break down tesla's earnings. elon musk is going sell 55,000 electric cars this year. and then at 8:10, we look at the shakeup at alibaba ahead of our interview with the new c.e.o., dan znang. there is hope in the labor market. great news, in recent months wal-mart, target, and mcdonald's have all promised to raise their minimum wage, and the lowest earning american workers are finally feeling upbeat. lower income earningers have become significantly more optimistic they will be making more money next year.
this chart comes from torsten, the chief international economist at deutsche bank securities, and he joins us now on set. is this false open? torsten: i think it's real. for the last six or seven years, the recovery has benefited people with education and with higher wages. what we're finally seeing here is that expectations for the future among low-income groups have actually skyrocketed the last six months. the debate is is this driven by oil prices or by more job creation for that category of people? it's clear that job creation for that category has been improving. we'll see tomorrow whether the jobs report delivers, but it's clear that we are seeing the recovery broaden out so it's benefiting basically everyone in a much broader scale. olivia: what do you think we'll see tomorrow? torsten: we think the unemployment will be 4.5%. olivia: 4.5%? torsten, i'm sorry 5.4%, that was a mistake. we continue to see it getting better and better and we
should continue to see more pressure to communicate more clearly. olivia: this all sounds very healthy, but this week we got some very doggy productivity numbers, and that has a lot of people including russ coster, a little bit concerned. i made a chart. we have a productivity problem. why should we be worried about this? torsten: this is the end result behalf we do. are we more productive? when it's low and companies want to sell more, then they need to hire more workers. the other side of the problem is that employment is going up because productivity is so low. in other words, if we had a company and we had to sell some products if we couldn't squeeze more productivity out of or workers, we'd have to high more workers. that's why hiring has been accelerating. that's why employment is good as a result of low productivity, but it is, from a long-term perspective, a very serious issue that productivity has been so low.
groip it's also cyclical. you try to squeeze more out become more productive, and then you get fatter and lazier at the top. where does that put us in the cycle? torsen: that is an important question. have we lost our ability to invent things, come one better ways of doing things? is it simply we're no lorninge as good as we used to be? groip you have a long-term secular concern? torsten: i just don't. we squeeze the worker and squeeze companies so much the last several years that we're not able to squeeze more productivity out which is why we've come to the place in the recovery where we need to increase hiring, which is why it's been accelerating. olivia: it's all about wage inflation. that's what janet yellen wants to see. the employment cost index does look like inflation. worker pay appears to be accelerating. where do you think we are in wage inflation? torsten: the chart you had right there shows you that more
recently -- this came out last week -- we have seen an acceleration, but there are two important measures of wages. the one on the chart, and the other one which comes tomorrow, which is earnings. that has been flat as a pancake. so the debate is, just because one series starts to go up and the other is flat, which one should you put weight on? should it be the one that goes up? olivia: which does janet yellen put weight on? torsten: the fed has historically been putting more weight on it, because it's more comprehensive t. covers costs for companies of hiring and having people working for them. that's why we put more weight on that trend that has appeared over the last year as an important development. i think it feeds into the fed's decision whether they want to hike in june, september, or december. groip let me put up something else, a chart we lifted directly from you. olivia: do it. i'm learning a lot. brendan: it was our single best chart last hour. what we're seeing here is that it is a high-skill recovery. of course, you need growth in
low-wage jobs or demand for low-wage jobs in order to increase low wages. my question is, we've been talking about, we want to see wage inflation before we move. how much and for how long? because wouldn't a little wage inflation be really good for the economy, and shouldn't we sit on it for a while? torsen: can means higher top-line growth for companies. we basically had no top-line growth in the equity market, roughly speaking, the last six or seven years f. wages start to go up, it actually would finally mean we will have more top-line growth. that's why this is not only a fixed income issue it's actually important for equities if top-line growth starts to come around. companies report over the next several quarters could look different. olivia: interesting. obviously top-line growth very elusive. we scud, what do you think is the bull run in bonds over? a lot of responses this morning. first one, not just yet,
overreaction to er? not sure. the oil price moving back towards a norm. second answer, this selloff is more about people neutralizing overcrowded positions, so, no, not yet. the third and final answer it's spring, and the bears are restless, and the bulls are getting tired, yes. bear run with peek-a-boo inflation. that seems to be the great debate hanging over the market this morning. brendan: that being the name of my garage band. olivia: are we see this go up $60 or people just get out of many very crowded consensus trades and everybody realizing that, no did t didn't make sense for the german 10-year to be zero? brendan: it's entirely possible. maybe this is just letting off steam, and maybe this is the pretan item tantrum. that's entirely possible. we are moving on to our agenda of the day. i am, of course, watching bonds like everybody else in the world of finance right now.
torsten, is this a pretantrum tantrum, is this all a letting of steam and we're going to be ok? torsten: i think it's letting off steam. the outlook for the u.s. economy is not that great. we've had temporary support, and it's very important, temporary, because of lower oil. when that shock starts to fade then we will have the more slow growth environment coming back. olivia: true but the european commission said this week that inflation in europe was going to be north of 1.5% next year? brendan: let me jump in here. we cannot have this conversation without one tom keene, waiting to talk to us in boston. tom: in boston, looking at the bond market, it is one big rationalization, there's no question about that. i don't know which way it's going to go. as i said earlier, it's going to be completely data dependent. boston, i can't convey to all of those worldwide, particularly across america the new boston.
it is the legacy of tom menino, the fabulous bhire passed away recently. you have to come to boston -- sounds like a song from years ago -- you got to come to boston to see the gradations of change made truly for a new boston. it's extraordinary. olivia: of course, another big story in morning boston this morning, it's tom brady, by the balls, a little uncouth. thanks so much to everybody. look forward to more coverage throughout the morning on "bloomberg surveillance" from boston. on my agenda, it is the shakeup at alibaba. dan zzhang will replace jonathan lu. dan was previously chief operating officer. apparently he's sort of the mastermind behind making single days such a big deal. he was just speaking on the conference call for alibaba group, saying he is seeing sales growth in rural china. shares are sharply higher, and dan zhang will join "in the
bloomberg headquarters. alibaba's new incoming ceo daniel zhang will be "in the loop" in the next hour. the committee reporting a 45% jump in the fourth of the revenue. mobile getting much better. stock is surging in the premarket. able replace jonathan lu -- he will replace jonathan lu. wall street giant hank greenberg joins us. we will get his take on jobs at 8:30 a.m. he is fired up about many things including the president's free-trade deal with asian countries. rolls-royce's north american president is going to talk to us about his committee's renaissance and why he keeps a jar of rape upon on his desk -- a jar of grey pupon on his desk. it is a