WEBVTT - 8am-9am: Kass & Zandi 0:00:03.480 --> 0:00:07.280 This is Bloomberg surveillance. We don't feel that we're necessarily 0:00:07.360 --> 0:00:11.319 on the cusp of a recession. Business is okay and 0:00:11.400 --> 0:00:14.239 pretty good in some places. Because the FETs kept raps 0:00:14.320 --> 0:00:17.759 down here at Vera for so long. It's distorting how 0:00:17.880 --> 0:00:21.239 people finance themselves. What happens in the market is it 0:00:21.360 --> 0:00:24.439 only looks at the positives, and it interprets everything positively 0:00:24.600 --> 0:00:26.640 as long as it can, and then it gives up 0:00:26.640 --> 0:00:30.040 the ghost and it flips one eighty. Bloomberg Surveillance your 0:00:30.120 --> 0:00:33.720 link to the world of economics, finance, and investment on 0:00:33.800 --> 0:00:36.840 Bloomberg Radio. Good morning everyone, Michael McKee and Tom Keene 0:00:36.840 --> 0:00:40.880 Bloomberg Surveillance worldwide, indeed nationwide. I'm Bloomberg twolve in Boston, 0:00:41.479 --> 0:00:43.599 Bloomberg eleven three oh New York, home of the New 0:00:43.640 --> 0:00:49.919 York Mets, Bloomberg FM, Washington and Baltimore, Good morning, Baltimore. 0:00:49.920 --> 0:00:54.440 Orioles ascended that according to Minty vensuchi ace Orioles viewpoint 0:00:54.520 --> 0:00:57.360 here at Bloomberg and of course Bloomberg nine sixty the 0:00:57.440 --> 0:01:00.280 Bay Area as well, San Francis. I had no what 0:01:00.280 --> 0:01:03.240 the giants are doing. I've got to get sted. Giants 0:01:03.240 --> 0:01:05.840 have won the World Series the last three even years, 0:01:06.520 --> 0:01:10.360 so there is some thought that just that coincidence alone, 0:01:10.640 --> 0:01:13.759 aside from the fact that they have players, might might 0:01:13.800 --> 0:01:16.160 push them forward. We're gonna talk to the Clayton Kershaw 0:01:16.400 --> 0:01:20.400 of Equity Investments, Douglas Cast to join us here momentarily 0:01:20.880 --> 0:01:24.960 Bloomberg Surveillance. Much of my con a resuc accounting tax advisory. 0:01:25.080 --> 0:01:28.399 To minimize risk and capture value in private equity, you 0:01:28.480 --> 0:01:32.520 need cone residuct or forward thinking creates results. Find out 0:01:32.520 --> 0:01:36.000 how a cone residuc dot com O h N R 0:01:36.080 --> 0:01:39.479 E C N I c K. It's gorgeous February morning. 0:01:39.520 --> 0:01:41.920 The sun is up, it's staying up longer. It's a 0:01:41.920 --> 0:01:44.920 good time to speak to Douglas Cast of Seabers. Doug, 0:01:44.920 --> 0:01:49.640 good morning, Pictures and catches last week. I know it's 0:01:49.720 --> 0:01:53.840 like a good thing. And in America, UM, let's frame 0:01:53.960 --> 0:01:57.560 Doug right now within pictures and Catchers. Obviously l A 0:01:57.680 --> 0:02:00.320 is spending more money than anyone. That's the one way 0:02:00.400 --> 0:02:03.720 that in baseball. Where's the one way that you are 0:02:03.800 --> 0:02:08.560 a feared of Right now? In the equity markets, I 0:02:08.639 --> 0:02:12.040 would um, I think we're in a in a in 0:02:12.080 --> 0:02:16.120 a very difficult and confusing period. UM I mentioned to 0:02:16.160 --> 0:02:18.680 you in a memo to you and Lee the producer, 0:02:18.760 --> 0:02:22.360 that um I was at a James tell a concert 0:02:22.400 --> 0:02:25.280 of all places at Donald Trump's Morrow Lago House in 0:02:25.400 --> 0:02:28.600 Palm Beach on Saturday night, and he was He was 0:02:28.639 --> 0:02:33.919 singing Fire and Rain and invoked to me the obviously 0:02:33.960 --> 0:02:38.760 the Robert Frost poem Fire and Rain, which discusses the 0:02:38.880 --> 0:02:41.320 familiar question about the fate of the world whether it's 0:02:41.360 --> 0:02:44.240 more likely to be destroyed by fire ice. But I 0:02:44.280 --> 0:02:46.680 got back to a famous memo of that our mutual 0:02:46.720 --> 0:02:49.360 friend Barton, the late Barton Biggs Road of Coal Fire 0:02:49.360 --> 0:02:54.440 in I think it's time to fear the ice. Well, 0:02:54.560 --> 0:02:57.880 we are in a period of substandard economic and tempted 0:02:58.000 --> 0:03:02.440 profit growth, and that's our destiny. We have am and 0:03:02.840 --> 0:03:07.000 a broken market mechanism which is dominated by leverage ets 0:03:07.120 --> 0:03:11.880 and by these machines and algois who are agnostic to 0:03:11.960 --> 0:03:15.840 balance sheets, private market value and income statements. So we 0:03:15.919 --> 0:03:18.360 get this market with note what I call no memory 0:03:18.360 --> 0:03:22.720 from day to day. Um. These investment strategies of mass 0:03:22.760 --> 0:03:27.040 destruction tend to exaggerate short term market moves like we've 0:03:27.040 --> 0:03:30.680 experienced in Jabuary to the downside, upside, and now today 0:03:30.720 --> 0:03:33.880 to the upside. So I'm I'm basically fearful that we're 0:03:33.960 --> 0:03:39.160 in um um. You know, we have this upward reevaluation 0:03:39.280 --> 0:03:43.000 of multiples between O nine and to fifteen, and I 0:03:43.040 --> 0:03:45.840 think that the recent rerating of stocks lower themes to 0:03:45.880 --> 0:03:49.280 reflect the recognition that profits too will be lower for longer. 0:03:49.880 --> 0:03:53.000 The critics Doug will say, you go short, you go along, 0:03:53.080 --> 0:03:55.360 you move in and out. Tell us where you are 0:03:55.760 --> 0:04:00.320 right now and what it would suffice the Frankie that's 0:04:00.320 --> 0:04:02.920 the last line of the Robert Frost poem, and what 0:04:02.960 --> 0:04:08.960 would suffice to bring you forward to a new direction? Um. 0:04:09.000 --> 0:04:11.240 I would be more optimistic if I had a sense 0:04:12.160 --> 0:04:19.480 that the secular deterioration and growth prospects um um uh 0:04:19.920 --> 0:04:24.120 morphed into a more rapid period of economic growth at 0:04:24.120 --> 0:04:30.279 our dependency upon monetary policy makers are central bankers to 0:04:30.400 --> 0:04:36.719 stimulate um self sustaining growth and escape philosophy velocity. Uh, 0:04:37.600 --> 0:04:40.280 we're successful, and I just don't see it. So I 0:04:40.560 --> 0:04:44.040 am modestly bullish near term, but embarish into media term. 0:04:44.080 --> 0:04:47.080 I expect the SMP to decline to a low double 0:04:47.120 --> 0:04:50.719 digit percentage this year. I'm currently to answer your question, 0:04:50.720 --> 0:04:55.440 positioned only slightly net short, preferring to see a more 0:04:55.560 --> 0:04:59.760 rapid build up an optimistic investor sentiment before expanding my 0:05:00.400 --> 0:05:03.560 short exposure. It's interesting to note that a bunch of 0:05:03.600 --> 0:05:07.599 the investor surveys came out and market bain bowls remain 0:05:07.760 --> 0:05:13.520 at very low levels. The consensus and um of of 0:05:14.040 --> 0:05:20.359 bears actually rose last week, which is bulisha for the market. 0:05:20.400 --> 0:05:25.240 As a contrarian, would it be I think everybody can 0:05:25.279 --> 0:05:27.960 agree we're not going to see the fiscal policy action 0:05:28.040 --> 0:05:30.520 that the world is calling for. So would it be 0:05:30.560 --> 0:05:33.040 better if central banks just sort of shut up and 0:05:33.120 --> 0:05:35.920 got the heck out of the way, Because yeah, I 0:05:35.920 --> 0:05:37.960 think I think, Mike, it would have been much better 0:05:38.040 --> 0:05:40.240 if we did this a year ago. And first of all, 0:05:40.279 --> 0:05:44.359 if they stopped easing a year ago and um and 0:05:44.480 --> 0:05:48.520 basically let the let the market have have natural price 0:05:48.600 --> 0:05:54.000 discovery as opposed to this artificiality. And you know machines 0:05:54.120 --> 0:05:59.919 that are um um um and algorithms which are moved 0:06:01.080 --> 0:06:05.120 by the next announcement with regard to drag or the 0:06:05.160 --> 0:06:07.719 intention to stay lower for longer. It's just not a 0:06:07.839 --> 0:06:11.679 natural sequence of events. And I think that this whole 0:06:11.720 --> 0:06:14.200 thing has led up that I think the recent market 0:06:14.279 --> 0:06:19.039 weakness reflects the loss of confidence in all central bankers 0:06:19.120 --> 0:06:22.560 and concerns that monetary policy in the US has lost 0:06:22.600 --> 0:06:26.960 its effectiveness and or has pulled forward corporate sales and 0:06:27.040 --> 0:06:30.280 profits and economic activity. I call this the aha moment. 0:06:30.800 --> 0:06:35.600 It's it's not a market friendly moment for valuations. How 0:06:35.640 --> 0:06:39.960 do you filter out the noise? Then? Um As Richard Bernstein, 0:06:40.040 --> 0:06:42.640 you wrote a great book called Navigating the Noise, which 0:06:43.920 --> 0:06:48.120 which I really recommend. It's tough. I just think it's 0:06:48.160 --> 0:06:50.600 where it's really tough, Mike and Thomas for the buying 0:06:50.680 --> 0:06:54.520 whole crowd. It's easy for the traders if you approach 0:06:54.640 --> 0:06:59.000 the market in a kind of emotional less way, buying 0:06:59.640 --> 0:07:03.719 the stream dips, selling or shorting the extreme bouts of 0:07:03.760 --> 0:07:05.880 your four and we've seen four or five of those 0:07:06.480 --> 0:07:10.480 of consequence in the year. So I think the odds 0:07:10.520 --> 0:07:13.480 of a recession on mounting. But I want to add 0:07:13.480 --> 0:07:16.200 an important point I think that was made on Bloomberg 0:07:17.040 --> 0:07:20.320 on Surveillance last week. It's important to note that a 0:07:20.400 --> 0:07:23.840 precondition for a bear market is not necessarily a recession. 0:07:24.080 --> 0:07:27.320 Bear markets can occur even if the US fails to 0:07:27.360 --> 0:07:31.360 fall into recession. It happened in nineteen sixty two, sixty six, 0:07:31.360 --> 0:07:35.360 and eighty seven and nine and eight. I used to 0:07:35.400 --> 0:07:37.160 work with a guy when I was at Putnam. When 0:07:37.160 --> 0:07:41.360 I graduated, Warton called Wally Deemer, who was a fantastic, 0:07:41.400 --> 0:07:45.120 a legendary technical analyst, and he once said, you don't 0:07:45.120 --> 0:07:49.040 buy GDP futures, you buy S ANDP futures. Yeah, that's 0:07:49.080 --> 0:07:53.160 extremely well, said Doug. I I saw the Martian UH 0:07:53.200 --> 0:07:56.040 the other day and it really, really really I thought 0:07:56.160 --> 0:07:59.200 was an excellent effort and is. As Matt Damon says 0:07:59.200 --> 0:08:01.560 in the middle of the movie, let's science this. You 0:08:01.600 --> 0:08:06.200 are known for being an adult about sciencing your belief 0:08:06.680 --> 0:08:11.200 what's Doug casts science right now. But my thocts is 0:08:11.280 --> 0:08:16.520 to be is to be UM basically, to reduce gross 0:08:16.560 --> 0:08:23.280 exposure in an uncertain, volatile, and unpredictable period. There are 0:08:23.280 --> 0:08:26.600 times to play, and there's times, as Warren Buffett says 0:08:26.640 --> 0:08:28.880 to you know what to have your hands on. You know, 0:08:29.840 --> 0:08:34.559 UM wild so hard remiscent. It's hard because of the 0:08:34.600 --> 0:08:41.400 aforementioned discussion of these um UM weapons of financial market destruction, 0:08:41.520 --> 0:08:47.400 the leverage ETFs and UM, the quant strategies gamma hedging, 0:08:47.520 --> 0:08:51.640 risk parity trading, that that worship at the altar of 0:08:51.760 --> 0:08:57.199 price momentum. They they sent they tend to exaggerate your 0:08:57.320 --> 0:09:03.359 term markets, confused investors, they send false market messages, and importantly, 0:09:03.400 --> 0:09:06.840 they blemished the value of stock charts and technical analysis. Okay, 0:09:06.840 --> 0:09:08.880 I'll go with all that, and you've nailed it. But 0:09:09.480 --> 0:09:11.280 what I want to know for traders, and this is 0:09:11.320 --> 0:09:13.120 not what we do in surveillance. A lot we do 0:09:13.160 --> 0:09:16.000 more long term investment. But Mr Cass, what I want 0:09:16.000 --> 0:09:18.559 to know is in the middle of reminiscence of the 0:09:18.679 --> 0:09:21.160 stock operator, like you know, you're the only ones still 0:09:21.200 --> 0:09:23.200 alive and was there when the book is written. But 0:09:23.280 --> 0:09:25.120 there's a point where the guy just says, I'm going 0:09:25.160 --> 0:09:29.000 to Florida. Where I'm in Florida, I know, but pulling 0:09:29.400 --> 0:09:33.679 pulling away from the market actively. Yeah, but there's a 0:09:33.720 --> 0:09:37.600 point I'm trying to capture alpha by exploiting, as I said, 0:09:37.760 --> 0:09:42.360 in an unemotional way, the gyrations of the market, which 0:09:42.360 --> 0:09:46.840 are random and unpredictable. Are you clearly people aren't fastible 0:09:46.960 --> 0:09:49.440 enough and they should just sit on the hand. Are 0:09:49.520 --> 0:09:52.559 you at a point where it's so uncertain or convoluted 0:09:52.600 --> 0:09:55.160 to the upsilon so high that you just say I 0:09:55.240 --> 0:09:58.120 can't do this and you sit off to the sidelines 0:09:58.200 --> 0:10:01.520 for a while. I think that's the best strategy for 0:10:01.559 --> 0:10:08.240 the average investors. Boring, it's boring. You'll have a lot 0:10:08.280 --> 0:10:12.720 of you'll have a lot of silence that markt No, No, 0:10:12.800 --> 0:10:14.400 we don't want that. We don't want that. But I 0:10:14.440 --> 0:10:16.480 think it's important advice. We're gonna come back with Doug 0:10:16.520 --> 0:10:21.560 cass on all the rage right now financial engineering, which 0:10:21.600 --> 0:10:23.959 is out there, use of cash and you know, someone 0:10:24.000 --> 0:10:26.000 what the actives are doing here recently, but I really 0:10:26.000 --> 0:10:29.880 want to talk to him about financial engineering. America Belli says, 0:10:29.880 --> 0:10:31.920 give me back the money, thank you. A lot of 0:10:31.960 --> 0:10:34.760 other people say there should be this moral high ground 0:10:34.760 --> 0:10:40.439 of using it for other sources like convestment, maybe actually 0:10:40.440 --> 0:10:44.000 creates jobs as well. We'll return with Doug cass of 0:10:44.080 --> 0:10:47.960 Sea Breeze Investment Futures Up twenty two, jol futures up. 0:10:52.840 --> 0:10:54.800 All right, let's check in with John Tucker and get 0:10:54.800 --> 0:10:57.600 the latest world in national news. Michael and Tom. With 0:10:57.679 --> 0:11:02.040 Jeff Bush's departure from the presidential race, Saturday, fundraisers are 0:11:02.040 --> 0:11:05.360 facing the question pick another side or retreat. Most Bush 0:11:05.440 --> 0:11:08.120 loyalist content at Sunday said they were preparing to support 0:11:08.480 --> 0:11:13.040 Marco Rubio or no One in particular. Apple CEO Tim 0:11:13.080 --> 0:11:15.679 Cook has jumped back into the prey over FBI demands 0:11:15.720 --> 0:11:18.640 at the company help hack a locked iPhone used by 0:11:18.640 --> 0:11:21.600 the shooter in a San Bernardino attack. In an early 0:11:21.640 --> 0:11:24.760 morning email to employees, Cook says the government should withdraw 0:11:24.800 --> 0:11:27.839 its demanded. The emerging legal fight is sparked a debate 0:11:27.920 --> 0:11:32.479 on government power, privacy, digital rights, public safety and security. 0:11:32.920 --> 0:11:35.640 An epic chair draped in black is greeting Supreme Court 0:11:35.720 --> 0:11:38.040 justices meeting today for the first time since the death 0:11:38.080 --> 0:11:41.200 of Justice and Toon and Scalia. The remaining a justices 0:11:41.240 --> 0:11:44.400 resumed work today. Scalia's chair will remain as a tribute 0:11:44.679 --> 0:11:47.679 until next month. Global News twenty four hours a day, 0:11:47.679 --> 0:11:50.520 powered by a twenty jouralists more than one fifty news 0:11:50.520 --> 0:11:54.319 bureaus around the world. I'm John, Tucker, Michael and Tom John. 0:11:54.320 --> 0:11:57.920 Thanks so much coming up on use of cash, Doug 0:11:58.080 --> 0:12:02.760 Cass really looking forward to that next Bloomberg surveillance. Good morning. 0:12:06.480 --> 0:12:08.280 The news update was brought to you by Fairley Dickton's 0:12:08.440 --> 0:12:11.319 University Boost your career by getting CFP certified at FDU, 0:12:11.480 --> 0:12:14.120 named one of the great schools for financial planning. Classes 0:12:14.160 --> 0:12:23.120 begin February four. Visit FDU dot du slash FP Bloomboo 0:12:23.160 --> 0:12:26.520 Business News twenty four hours a day at Bloomberg dot com, 0:12:26.760 --> 0:12:29.640 the Radio plus Mobile Lab and on your radio, This 0:12:30.000 --> 0:12:33.560 is a Bloomberg Business Flash and I'm Karen Moscow. US 0:12:33.559 --> 0:12:36.720 stock index future is higher, so is oil. Let's go 0:12:36.760 --> 0:12:39.480 to the first Word breaking news desk for today's morning call, 0:12:39.600 --> 0:12:43.080 and here's Bill Maloney. Good morning Bill, Good morning Karen. 0:12:43.480 --> 0:12:46.520 Futures are maintaining their games since the last time we spoke. 0:12:46.760 --> 0:12:49.160 Dea Futures hired by a hundred and seventy six points, 0:12:49.160 --> 0:12:51.600 says it He's game twenty one, and Nazak futures rise 0:12:51.679 --> 0:12:54.319 by forty eight. The US ten yel at one point 0:12:54.440 --> 0:12:57.600 seven seven per sec main U pay markets are higher, 0:12:57.679 --> 0:13:00.480 led by two percent gains in Italy and Spain and 0:13:00.520 --> 0:13:03.400 on the US economic front at a thirty Chicago Fed 0:13:03.640 --> 0:13:07.520 and at market US manufactur P M. I Smith their 0:13:07.640 --> 0:13:11.559 fifty two point five. Another news CDC says lumber Liquidated 0:13:11.640 --> 0:13:15.160 is flooring has increased cancer risk. Shares a down sixteen 0:13:15.240 --> 0:13:18.600 percent pre market and in deal news, food distributor Cisco 0:13:19.000 --> 0:13:22.000 to buy break Stroop from Bain for three point one billion. 0:13:22.400 --> 0:13:25.640 Regarding airings this morning, Algan EPs beat and finally some 0:13:25.679 --> 0:13:28.800 of your key wallsheet upgrades and downgrades at Bank of America, 0:13:28.840 --> 0:13:32.319 Genesee and Wyoming raised to neutral. CSX and Union Pacific 0:13:32.400 --> 0:13:35.480 raids to buy Express Strips, cut to sell at Deutsche Bank, 0:13:35.640 --> 0:13:38.640 Parago cut sell Goldman Sachs and finally tripped by a 0:13:38.679 --> 0:13:42.160 Zon Expedia both cut to sell over at Stephle. Live 0:13:42.200 --> 0:13:44.400 from the First Breaking News desk, go on, Bill Maloney, Karen, 0:13:45.080 --> 0:13:47.240 all right, thanks to Baillan to hear live breaking news 0:13:47.360 --> 0:13:49.960 over your Bloomberg type squawk a goo on your terminal. 0:13:50.040 --> 0:13:52.000 That's s Q you a w K go and that's 0:13:52.000 --> 0:13:55.040 a Bloomberg business flash, Tom and Mike, Karen, I thanks. 0:13:55.040 --> 0:13:57.600 Someone's curve flattening. We've seen the two is tens spread 0:13:57.640 --> 0:14:01.160 come in nicely this morning. N nine point nine five 0:14:02.200 --> 0:14:05.720 A flatter yield curve. All in all, that's a distance 0:14:05.760 --> 0:14:07.640 between the ten year yield and the two year yield. 0:14:08.160 --> 0:14:11.000 You move the decimal point over two places. Doug Cass 0:14:11.120 --> 0:14:15.160 knows that Bloomberg Surveillance brought you by Investco. Factor based 0:14:15.160 --> 0:14:20.720 strategies can help investors focus on high quality, low volatility, 0:14:20.880 --> 0:14:25.320 and more. Learn more at investco dot com. Slash High Conviction. 0:14:25.400 --> 0:14:28.400 Douglas cast with us with Sea Breeze as we UH 0:14:28.520 --> 0:14:31.840 go through the emotions of being more active in the 0:14:31.960 --> 0:14:35.320 market away from activity, UH, the DOUG is a quarterly 0:14:35.360 --> 0:14:39.600 ballet of financial engineering. It has become cannon that you 0:14:39.720 --> 0:14:42.800 raise your dividend and you deploy cash, you know, you 0:14:43.360 --> 0:14:46.280 buy back shares, et cetera. Are you a critic of 0:14:46.320 --> 0:14:49.120 financial engineering or is it a good idea that they're 0:14:49.120 --> 0:14:52.360 moving money back to shareholders? Well, I I disagree with 0:14:52.440 --> 0:14:57.200 Mario because there ain't many Henry Singleton's from Televigne around anymore. 0:14:58.040 --> 0:15:00.240 There are a lot of people like Caterpillar. The as 0:15:00.320 --> 0:15:02.400 they stock at a hundred and five dollars a share, 0:15:02.440 --> 0:15:04.680 I think they bought even of the stock a year 0:15:04.680 --> 0:15:06.920 and a half ago. I've been short for that period. 0:15:07.280 --> 0:15:09.040 The chefs have gone from a hundred and six to 0:15:09.120 --> 0:15:12.000 sixty one. I think it is the broader question. The 0:15:12.080 --> 0:15:17.960 broader issue is that the risks and the unintended consequences 0:15:18.000 --> 0:15:21.640 of ever lower interest rates arising. The primary issue is 0:15:21.680 --> 0:15:26.560 that capital spending. Capital spending has been abandoned in favor 0:15:26.600 --> 0:15:30.480 of financial engineering. But there are other issues too. You know, 0:15:30.560 --> 0:15:34.440 the risk of savings ourselves into a recession is expanding. 0:15:34.480 --> 0:15:37.480 You know, they call that the paradox of thrift. And 0:15:38.160 --> 0:15:41.880 when you get low rates like this, people are hoarding 0:15:41.960 --> 0:15:47.720 cash and reducing the personal consumption expenditures. And finally, as 0:15:47.720 --> 0:15:51.960 Brad Hinton talked about earlier in an earlier segment, when 0:15:51.960 --> 0:15:55.160 you have rates so low with sixty of the world's 0:15:55.720 --> 0:16:02.760 sovereign yields in negative territory, banknet interest margins and profitability 0:16:02.840 --> 0:16:06.200 suffer may become challenged and lending his curd tailed. So 0:16:07.120 --> 0:16:10.040 you know, we're in a tough stew As James Taylor 0:16:10.120 --> 0:16:14.280 said in Steamroller or in a demolition derby, well, hefty 0:16:14.920 --> 0:16:18.000 hunk of steaming junk, Mike, what we like to do 0:16:18.320 --> 0:16:22.120 is have the hefty hunk of steaming junk. Doug Casson, 0:16:22.320 --> 0:16:26.360 because he used his history. Henry Singleton, who you just 0:16:26.400 --> 0:16:29.120 heard Mr cass speak of, is not only one of 0:16:29.200 --> 0:16:33.160 the heroes of American finance, but a giant of engineering. 0:16:33.240 --> 0:16:36.280 He was at Annapolis first in his class, had to leave, 0:16:36.480 --> 0:16:40.160 went to m I t reinvented himself and then did 0:16:40.200 --> 0:16:43.440 the oddest of things. Mike. He bought shares when the 0:16:43.520 --> 0:16:47.120 stock was cheap and issued them to the public when 0:16:47.120 --> 0:16:51.200 the shares were expensive. Is this This is a rare 0:16:51.240 --> 0:16:55.360 and beautiful thing. And then and then when rates interest 0:16:55.440 --> 0:17:02.120 rates declined, he issued an enormous amount of bonds in 0:17:02.240 --> 0:17:04.440 order to buy back stock in the future. Just a 0:17:05.160 --> 0:17:08.159 just a brilliant guy in a billionaire when a billion 0:17:08.200 --> 0:17:12.480 dollars really made meant something? What what you would be? No, 0:17:12.680 --> 0:17:15.760 but what you see today was invented by Mr Singleton. 0:17:15.800 --> 0:17:17.040 There was no other way to put it. A tele 0:17:17.960 --> 0:17:21.040 Omega's Lee Kooperman had done a great job. In fact, 0:17:21.119 --> 0:17:25.960 he's to courses at Columbia Business School talking about Singleton's 0:17:26.000 --> 0:17:29.359 allocation of capital strategy. Everyone should get a hands on 0:17:29.640 --> 0:17:32.680 their hands on it. By the way, Tom, I noticed 0:17:32.760 --> 0:17:35.120 you don't talk about the Red Sox anymore. You talking 0:17:35.119 --> 0:17:41.120 about the Dodgers. You're talking about the giant to come. Well, 0:17:41.240 --> 0:17:44.400 you remember last year, Doug He said in the beginning 0:17:44.400 --> 0:17:46.440 of April that the Red Sox were done for the year, 0:17:46.440 --> 0:17:48.240 and he actually turned out to be right. So he 0:17:48.320 --> 0:17:53.399 thinks he's a baseball prognosticator. Now, a lot of people, 0:17:53.560 --> 0:17:55.399 a lot of people would suggest maybe this year the 0:17:55.400 --> 0:17:58.199 Red Sox are going to play a little better. I 0:17:58.200 --> 0:18:03.200 didn't really know. Angel. Oh No, it's like Mike save 0:18:03.320 --> 0:18:07.240 me or play Bowden? Did you get my we wandered 0:18:07.280 --> 0:18:09.560 off the reservation. So let's just ask Doug as you 0:18:09.640 --> 0:18:14.320 keep an eye out on on the National League in particular. Um, 0:18:15.359 --> 0:18:18.520 your uncle had sort of a soft spot for the 0:18:18.520 --> 0:18:21.560 New York National League team, your cousin and and the 0:18:21.840 --> 0:18:25.919 UH and the Los Angeles team. UH, do you have 0:18:25.960 --> 0:18:29.560 a view on either one of their um performances coming 0:18:29.640 --> 0:18:32.240 up in two thousands sixteen? I think the God just 0:18:32.280 --> 0:18:37.600 could go on defeats. It's like the Warriors, you know, 0:18:37.680 --> 0:18:39.600 you know at this concert Saveny night, I know we're 0:18:39.680 --> 0:18:42.440 running out of time. James Taylor saying Angels of Fenway, 0:18:42.480 --> 0:18:44.720 and I love the opening line, which is a killer 0:18:44.800 --> 0:18:48.400 to you, Tom A six Summer's Gone by, Bambino put 0:18:48.400 --> 0:18:50.520 a hex on the bean. We were living on, a 0:18:50.600 --> 0:18:53.520 tear and a sigh in the shadow of the Bronx machine. 0:18:55.400 --> 0:18:59.320 That's hateful, hateful. Can our global technical director cut the 0:18:59.359 --> 0:19:03.240 line right now? Is that feasible? Did you see the 0:19:04.119 --> 0:19:07.280 Yankees have the by far the highest season ticket price 0:19:07.560 --> 0:19:11.080 in all of baseball, and the baseball they're playing does 0:19:11.119 --> 0:19:14.119 not justify Doug Cash. Thank you so much, greatly appreciated. 0:19:14.160 --> 0:19:18.919 Sea Breeze Partners and I do spring training and we 0:19:18.960 --> 0:19:21.320 can lead Cash. He can guess hosts with us for 0:19:21.400 --> 0:19:23.679 like the five or six days it will need for 0:19:23.760 --> 0:19:28.680 us to visit every park. Yeah, exactly. Um, I think 0:19:28.720 --> 0:19:33.560 anybody's listening, they could affect that trends act. Yeah. Yeah, 0:19:33.560 --> 0:19:35.760 our boss is saying, are you out of your mind 0:19:36.400 --> 0:19:41.480 at this point? Okay? Features up twenty, Features up seventy one. 0:19:41.840 --> 0:19:46.200 It's a very nice correlated screen with one screaming exception, 0:19:46.800 --> 0:19:49.120 and that is curve flattening. Two is ten spread nine 0:19:49.520 --> 0:19:52.000 point seven, the difference of deal between the tenure and 0:19:52.000 --> 0:19:56.760 the two year point points. That's a big deal. Curve 0:19:56.840 --> 0:20:02.440 flattening is something different this morning. Economic data next, Bloomberg 0:20:02.480 --> 0:20:08.000 Surveillance coming up there, with all due respect, highlight brought 0:20:08.040 --> 0:20:09.520 you by land Rover. If it's in your nature to 0:20:09.560 --> 0:20:11.480 cast off the every day and seek adventure, the Discovery 0:20:11.520 --> 0:20:13.600 Sport was built to help your search. Visit Landrover tri 0:20:13.680 --> 0:20:16.080 State dot com for special offers during the only Adventure 0:20:16.080 --> 0:20:25.320 Sales event. Landrover Above and Beyond broadcasting live to New York, 0:20:25.359 --> 0:20:30.359 Bloomberg eleventh Rio to Washington, d C, Bloomberg to Boston 0:20:30.440 --> 0:20:34.520 Bloomberg twelve hours to San Francisco, Bloomberg nine to the 0:20:34.600 --> 0:20:38.480 Country Series Exam Channel one ninety and around the globe 0:20:38.600 --> 0:20:42.000 the Bloomberg Radio plus Happen Bloomberg dot Com. This is 0:20:42.080 --> 0:20:47.280 Bloomberg Surveillance is a thirty Michael McKee along with Tom 0:20:47.400 --> 0:20:49.800 Keene and our economic indicators are brought to you by 0:20:49.840 --> 0:20:52.959 Commonwealth Financial Network. When it's time to change the conversation, 0:20:53.160 --> 0:20:55.280 talk with the broker dealer r I A that's ready 0:20:55.320 --> 0:20:58.920 to listen. Call eight six six four six to visit 0:20:59.000 --> 0:21:03.360 Commonwealth dot com to learn more. No major indicators today. 0:21:03.400 --> 0:21:07.879 The Chicago Fed National Activity Index is out at zero 0:21:07.960 --> 0:21:11.639 point to eight. That's up from a negative zero point 0:21:11.720 --> 0:21:15.520 three four in December and is much better than the 0:21:15.560 --> 0:21:18.640 survey of a negative zero point one zero. Not sure 0:21:18.680 --> 0:21:20.480 how much it tells us about what's actually going on 0:21:20.520 --> 0:21:23.480 the market. US Manufacturing p M I do out later 0:21:24.000 --> 0:21:27.840 this morning. Marks Andy is with us now and of 0:21:27.880 --> 0:21:33.040 course uh Mark is chief economist at Moody's Analytics, and 0:21:33.240 --> 0:21:36.280 he keeps track of all things going on around the world, 0:21:36.359 --> 0:21:39.120 which makes him the perfect person to follow Doudcasts who 0:21:39.200 --> 0:21:42.040 suggested that we may have about a thirty five pc 0:21:42.280 --> 0:21:47.160 chance of recession and is extremely worried about the stagnant 0:21:47.240 --> 0:21:51.520 economic growth prospects for the world and what central banks 0:21:51.520 --> 0:21:54.000 are or are not doing about it. Mark, would you 0:21:54.080 --> 0:22:00.359 share the pessimism, or at least the lack of optimism 0:22:00.400 --> 0:22:03.359 about where we are going over the next six months 0:22:03.520 --> 0:22:06.040 to a year, Well, I'd be I'd be a bit 0:22:06.080 --> 0:22:09.800 more optimistic, you know, subjectively. Put the odds of recession 0:22:09.800 --> 0:22:13.919 in the United States that's somewhere between fift no. Globally, 0:22:14.040 --> 0:22:18.199 there's more concern uh, And I would concur with some 0:22:18.280 --> 0:22:20.480 of the worries about what's going on overseas. But here 0:22:20.520 --> 0:22:23.920 in the US, I think we're fine, We're okay shape. Well, 0:22:23.920 --> 0:22:27.639 are we able to be an island and we continue 0:22:27.680 --> 0:22:31.440 to grow if the rest of the world is having trouble? Yeah, 0:22:31.640 --> 0:22:33.959 I think, and we're the engine of growth. We're driving 0:22:33.960 --> 0:22:37.640 the train now, and it's really the American consumer that's 0:22:37.720 --> 0:22:40.800 driving the train and the American consumers doing their part. 0:22:41.640 --> 0:22:44.600 Growth last year was very strong. Real consumer spending growth 0:22:44.680 --> 0:22:47.919 was over three and as we've been seeing in the 0:22:47.960 --> 0:22:51.920 recent data retail sales, vehicle sales, housing activity, I think 0:22:51.920 --> 0:22:53.760 the consumer is going to continue to do their part. 0:22:54.280 --> 0:22:56.919 You know, Tom, this reminds me of well is it 0:22:56.920 --> 0:22:58.920 about a decade ago? I remember a book came out 0:22:59.000 --> 0:23:04.080 called Flying on an Engine as an ancient home immediately 0:23:04.080 --> 0:23:10.160 went to the bargain visiones. Tom Keane put that together. Um, 0:23:10.320 --> 0:23:12.840 look at how the States was the only engine of growth. 0:23:13.480 --> 0:23:16.560 Well there's another engine. Europe is okay too, you know, 0:23:16.680 --> 0:23:19.640 it's you know, it's not gamebusters in Europe, but they 0:23:19.640 --> 0:23:23.720 are growing solidly and uh, you know, I think everything 0:23:23.800 --> 0:23:26.439 suggests that they'll continue to push forward. So it's not 0:23:26.520 --> 0:23:29.560 just the US. But but you know, your sentiment is correct. 0:23:29.760 --> 0:23:33.639 The global economy is is troubled. Mark. I want to 0:23:33.680 --> 0:23:35.920 go back a little bit within your optimism and and 0:23:36.040 --> 0:23:38.480 your immense chops in the books that you've done on 0:23:38.520 --> 0:23:42.280 the New American Century and such, what happened in the 0:23:42.440 --> 0:23:46.119 last two years. You were a great optimist, not an outlier, 0:23:46.720 --> 0:23:50.120 but but you were looking for three percent plus real 0:23:50.200 --> 0:23:53.199 GDP growth. You even voiced I don't want to put 0:23:53.480 --> 0:23:57.040 in your mouth, but you've voiced a four percent real 0:23:57.400 --> 0:24:03.440 maybe six percent nominal. It didn't happened. I'm fascinated. What's 0:24:03.600 --> 0:24:07.800 your why for what we've experienced? Hey, A good question. Well, 0:24:07.800 --> 0:24:10.040 you know it's interestingly not. The job market has done 0:24:10.119 --> 0:24:13.600 better than I would have thought. Yes, we produced more jobs. 0:24:14.240 --> 0:24:17.199 Unemployment fell faster, we've gotten back to full employment are 0:24:17.240 --> 0:24:20.360 close to pretty quickly. Wage growth is picking up. So 0:24:20.880 --> 0:24:23.040 do you look at the economy to the prison of 0:24:23.040 --> 0:24:25.720 the labor market, No problem. You know, we're doing very 0:24:25.800 --> 0:24:30.760 very well. So the you know, the the arithmetic suggests 0:24:30.760 --> 0:24:33.640 that the reason that uh that I'm I was wrong 0:24:33.680 --> 0:24:37.320 without GDP is productivity. Productivity growth has been very weak 0:24:37.359 --> 0:24:39.760 and it has not picked up. And you know that 0:24:39.800 --> 0:24:42.240