1 00:00:03,520 --> 00:00:07,680 Speaker 1: This is Bloomberg Surveillance. Overall, what we see is a 2 00:00:07,720 --> 00:00:10,400 Speaker 1: slow growth world where the fast growth markets of not 3 00:00:10,480 --> 00:00:12,360 Speaker 1: growing as fast as they used to. I look at 4 00:00:12,360 --> 00:00:15,080 Speaker 1: the banks and sometimes it's hard to differentiate between a 5 00:00:15,120 --> 00:00:17,599 Speaker 1: great large gap versus a great small cap bank on 6 00:00:17,640 --> 00:00:19,400 Speaker 1: the financial side. I don't want to sit here and 7 00:00:19,400 --> 00:00:21,279 Speaker 1: say we have a crystal ball and we know where 8 00:00:21,400 --> 00:00:23,159 Speaker 1: the price of oil is going in the future. We 9 00:00:23,280 --> 00:00:25,119 Speaker 1: just don't know. I mean, it can't fall forever, but 10 00:00:25,200 --> 00:00:28,120 Speaker 1: we just don't know where it's gonna go. Bloomberg Surveillance 11 00:00:28,320 --> 00:00:31,880 Speaker 1: your link to the world of economics, finance, and investment 12 00:00:32,120 --> 00:00:35,800 Speaker 1: on Bloomberg Radio. Good morning everyone, Bloomberg savellas, Michael McKee 13 00:00:35,800 --> 00:00:37,919 Speaker 1: and Tom Keane. We are thrilled you with us in 14 00:00:38,000 --> 00:00:42,920 Speaker 1: this hour. Scott Galloway on Yahoo they're out with important announcements. 15 00:00:43,000 --> 00:00:46,760 Speaker 1: Mr Galloway, Professor Galloway has been way out front and 16 00:00:46,840 --> 00:00:49,720 Speaker 1: criticism of the Yahoo shop. He will join us. We 17 00:00:49,760 --> 00:00:52,760 Speaker 1: are honored to bring you and diagnon of JP Morgan. 18 00:00:52,880 --> 00:00:55,680 Speaker 1: She will join us on the bombshell of John Deere. 19 00:00:55,720 --> 00:00:59,160 Speaker 1: We saw that earlier. Uh this morning, we'll get much 20 00:00:59,160 --> 00:01:01,560 Speaker 1: more on that from Mr Wilson here in a moment 21 00:01:01,560 --> 00:01:04,520 Speaker 1: Our for X brief for the markets moving our FOREX 22 00:01:04,600 --> 00:01:08,080 Speaker 1: brief Launch You by Interactive Brokers, winner of FX Weeks 23 00:01:08,120 --> 00:01:11,360 Speaker 1: two thousand and fifteen award for the Best Retail for 24 00:01:11,600 --> 00:01:14,800 Speaker 1: X training platform. Visit ib at I, b k R 25 00:01:15,200 --> 00:01:18,240 Speaker 1: dot com slash four X some back and force of 26 00:01:18,280 --> 00:01:21,080 Speaker 1: the market. And then cp I moves the market the 27 00:01:21,080 --> 00:01:23,520 Speaker 1: two year yeld point seven five and we see oil 28 00:01:23,800 --> 00:01:27,320 Speaker 1: to sixty six down a stick and eleven a dollar 29 00:01:27,480 --> 00:01:31,319 Speaker 1: eleven the en one eight eight stronger yen not as 30 00:01:31,319 --> 00:01:34,840 Speaker 1: ever strong as it was earlier, but nevertheless stronger dollar 31 00:01:34,959 --> 00:01:38,560 Speaker 1: strength gives way to fractional dollar weakness in the last 32 00:01:38,720 --> 00:01:43,479 Speaker 1: number of moments. Hydro Carbon currencies adapt ruble dollar ruble 33 00:01:43,560 --> 00:01:46,240 Speaker 1: seventy seven point three eight backs it up. We're watching 34 00:01:46,280 --> 00:01:50,400 Speaker 1: cable Caroline Hide very strong on cable and Brexit today 35 00:01:50,440 --> 00:01:54,240 Speaker 1: with surveillance on Bloomberg Television one eight three on cable 36 00:01:54,640 --> 00:01:58,520 Speaker 1: is Prime Minister Cameron extends his stay in Brussels again 37 00:01:58,560 --> 00:02:00,480 Speaker 1: and dig in to join us lay here in this 38 00:02:00,640 --> 00:02:04,680 Speaker 1: half hour she is definitive, John dear, she needs a 39 00:02:04,720 --> 00:02:07,480 Speaker 1: briefing right now from David Wilson. I assume you're gonna 40 00:02:07,480 --> 00:02:12,160 Speaker 1: start with those headlines, David were stunning, absolutely, Tom, I mean, 41 00:02:12,320 --> 00:02:15,840 Speaker 1: and they've certainly had their effect on Deer shares. They're 42 00:02:15,880 --> 00:02:18,560 Speaker 1: down about three and a half percent in early trading, 43 00:02:18,840 --> 00:02:22,160 Speaker 1: the world's largest maker of agricultural equipment reduced full year 44 00:02:22,200 --> 00:02:25,840 Speaker 1: earnings and sales forecasts. The cuts reflect a worsening outlook 45 00:02:25,880 --> 00:02:30,880 Speaker 1: for farmers who face lower commodity prices and declining income. 46 00:02:31,280 --> 00:02:34,920 Speaker 1: And you've also got shares of rivals C and H 47 00:02:35,080 --> 00:02:38,240 Speaker 1: Industrial lower their down about two and a half percent 48 00:02:38,280 --> 00:02:41,080 Speaker 1: at the moment, VFS down seven and a half percent. 49 00:02:41,160 --> 00:02:43,080 Speaker 1: This is a company on the north face. Lee and 50 00:02:43,120 --> 00:02:46,639 Speaker 1: Wrangler clothing brands fourth quarter earnings and revenue failed to 51 00:02:46,680 --> 00:02:49,160 Speaker 1: me at analysts average estments. In the Blueberg survey, the 52 00:02:49,280 --> 00:02:52,080 Speaker 1: f sited relatively warm weather and a stronger dollar, along 53 00:02:52,080 --> 00:02:56,000 Speaker 1: with they what they called a softer consumer environment. And 54 00:02:56,040 --> 00:02:58,040 Speaker 1: you certainly saw that at Nordstrom as well. I mean, 55 00:02:58,040 --> 00:03:00,359 Speaker 1: the stocks down eight and a half percent, the largest 56 00:03:00,480 --> 00:03:03,880 Speaker 1: US luxury department store chain, posting fiscal fourth board of 57 00:03:03,880 --> 00:03:07,400 Speaker 1: profit and revenue trailed estimates. North From's earnings forecast for 58 00:03:07,440 --> 00:03:10,840 Speaker 1: the current year was also lower than projections. On the 59 00:03:10,960 --> 00:03:13,560 Speaker 1: other hand, Yahoo, the most active stock and early trading 60 00:03:13,840 --> 00:03:17,040 Speaker 1: up two percent. The Web Portals Board formed a committee 61 00:03:17,080 --> 00:03:21,240 Speaker 1: of independent directors to review strategic options and hired advisors. 62 00:03:21,440 --> 00:03:24,200 Speaker 1: Yeah who said separating its fifteen percent stake in China's 63 00:03:24,200 --> 00:03:27,880 Speaker 1: Ali Baba Group holding is a must to maximize value. 64 00:03:28,360 --> 00:03:31,440 Speaker 1: That Applied Materials has a gain of eight percent. The 65 00:03:31,520 --> 00:03:34,239 Speaker 1: largest maker of chip production equipment, gave earnings and sales 66 00:03:34,240 --> 00:03:37,960 Speaker 1: forecast for this quarter that beat estimates. All right, how 67 00:03:38,000 --> 00:03:41,320 Speaker 1: about Amaran It's a utility and it's down three and 68 00:03:41,360 --> 00:03:43,960 Speaker 1: a half percent in early trading. Uh, they expect this 69 00:03:44,040 --> 00:03:46,200 Speaker 1: year's profit to be two hours and sixty cents should 70 00:03:46,200 --> 00:03:48,640 Speaker 1: share at best, and was looking with two sixty nine 71 00:03:48,920 --> 00:03:51,640 Speaker 1: on average. And there's a commodity tie in here. Amer 72 00:03:51,680 --> 00:03:55,960 Speaker 1: In citing a projected drop in electricity sales to Randa Alluminum, 73 00:03:56,280 --> 00:04:00,880 Speaker 1: its largest customer. Missouri YEP and Floor are another company 74 00:04:00,920 --> 00:04:03,600 Speaker 1: affected by what's going on the commanding markets down six 75 00:04:03,640 --> 00:04:06,240 Speaker 1: and a half percent in early trading. The construction company 76 00:04:06,280 --> 00:04:08,960 Speaker 1: spourt quarter orainings a revenue drop more than now was expected, 77 00:04:09,200 --> 00:04:12,360 Speaker 1: and that reflected lower demand from metals and mining. You 78 00:04:12,480 --> 00:04:14,440 Speaker 1: are on the dark side today. You've got your pink 79 00:04:14,480 --> 00:04:17,200 Speaker 1: Floyd tie on today, It's Dark side of the Moon, 80 00:04:17,520 --> 00:04:21,680 Speaker 1: the lunatickets in my head. To David Gilroy April ten, 81 00:04:22,120 --> 00:04:24,920 Speaker 1: David Gilmour of Pink Floyd at Radio City Music Hall. 82 00:04:25,279 --> 00:04:28,640 Speaker 1: It's about the toughest ticket in town. It's selling for 83 00:04:29,480 --> 00:04:33,400 Speaker 1: jillion dollars dollars, a gazollion dollars on stub. Of course, 84 00:04:33,440 --> 00:04:35,360 Speaker 1: I'll tell you what else is a tough ticket. Bruce 85 00:04:35,400 --> 00:04:40,880 Speaker 1: Springsteen's makeup show Marchy masson Square Garden. His show which 86 00:04:40,960 --> 00:04:45,360 Speaker 1: was supposed to be January got snowed out. Very good, David, 87 00:04:45,480 --> 00:04:48,920 Speaker 1: I will be there just for the record that um 88 00:04:50,160 --> 00:04:54,039 Speaker 1: the Dead, the you know, the group that played the 89 00:04:54,080 --> 00:04:58,359 Speaker 1: Final Dead concerts with a few adjustments is also coming 90 00:04:58,600 --> 00:05:02,320 Speaker 1: going on tour this s City Field Mayor John Mayor 91 00:05:02,360 --> 00:05:05,760 Speaker 1: on guitar uh in place of Jerry Garcia, who has 92 00:05:05,800 --> 00:05:12,279 Speaker 1: gotten slugged a lot. And Mr Mayor is actually very good. 93 00:05:12,440 --> 00:05:15,000 Speaker 1: Is going? Is this like a music show? What? Well? 94 00:05:15,040 --> 00:05:17,480 Speaker 1: I gotta say we are luck. We shouldn't disten because 95 00:05:17,480 --> 00:05:19,799 Speaker 1: we're lucky to get Martin Hagerty. We're lucky to get 96 00:05:19,839 --> 00:05:23,760 Speaker 1: through to his desk. He is co head of Black 97 00:05:23,839 --> 00:05:28,320 Speaker 1: Rocks Inflation linked bond portfolio and Martin, there's inflation all 98 00:05:28,360 --> 00:05:31,040 Speaker 1: of a sudden. You've been sitting there waiting for years 99 00:05:31,040 --> 00:05:33,240 Speaker 1: to sell your bonds, and now I'm sure the phone 100 00:05:33,279 --> 00:05:36,640 Speaker 1: is ringing off the hook. CPI comes in hotter than expected. 101 00:05:36,680 --> 00:05:40,640 Speaker 1: The doves are in trouble here. Um. I don't think 102 00:05:40,680 --> 00:05:43,080 Speaker 1: the doves are in trouble by any means as of yet. 103 00:05:43,360 --> 00:05:46,720 Speaker 1: But this is a number. I would say, this number 104 00:05:46,760 --> 00:05:49,000 Speaker 1: is actually higher than we were expecting. But it is 105 00:05:49,040 --> 00:05:51,599 Speaker 1: the trend that that course CPI has been on for 106 00:05:51,600 --> 00:05:55,200 Speaker 1: for probably the better half of last year. Um. When 107 00:05:55,279 --> 00:05:58,560 Speaker 1: you would have have told somebody eighteen months ago that 108 00:05:58,600 --> 00:06:00,680 Speaker 1: oil was going to go down a dollars and the 109 00:06:00,720 --> 00:06:04,359 Speaker 1: dollar was going to appreciate, there weren't many people around 110 00:06:04,440 --> 00:06:06,960 Speaker 1: who who were agreeing with our view that core CPI 111 00:06:07,480 --> 00:06:09,720 Speaker 1: was probably going to breach to percent, and seems to 112 00:06:09,720 --> 00:06:13,360 Speaker 1: have reached it quite convincingly on the back on this report. 113 00:06:13,720 --> 00:06:16,919 Speaker 1: What inflation statistics do you use? I mentioned earlier I 114 00:06:16,920 --> 00:06:21,560 Speaker 1: had dore the Cleveland CPI, which is a unique core calculation. 115 00:06:21,960 --> 00:06:25,800 Speaker 1: What does a pro like Martine hagger to use? You know, 116 00:06:25,960 --> 00:06:28,400 Speaker 1: I think what I've learned is you can't rely on 117 00:06:28,400 --> 00:06:32,359 Speaker 1: one particular index you need to look at multiple different 118 00:06:32,400 --> 00:06:36,480 Speaker 1: industries and and break down each index into multiple different formats. 119 00:06:36,520 --> 00:06:39,239 Speaker 1: One of the great things that we like to do 120 00:06:39,360 --> 00:06:43,440 Speaker 1: with you know, today's CPI print is basically break it 121 00:06:43,520 --> 00:06:46,880 Speaker 1: up into the low volatility components and the high volity 122 00:06:47,160 --> 00:06:50,240 Speaker 1: high valve components. So the low val components are your 123 00:06:50,400 --> 00:06:53,480 Speaker 1: slower moving things that that seem to get on trends 124 00:06:53,520 --> 00:06:57,480 Speaker 1: and move in in that fashion for a reasonably prolonged 125 00:06:57,480 --> 00:07:00,240 Speaker 1: period of time. And our low val component, or of 126 00:07:00,240 --> 00:07:05,159 Speaker 1: course CPI today basically touched two point seven eight um. 127 00:07:05,200 --> 00:07:08,279 Speaker 1: The highball components was have actually picked up aggressively in 128 00:07:08,279 --> 00:07:10,480 Speaker 1: the last couple of months, and these tend to be 129 00:07:10,760 --> 00:07:14,040 Speaker 1: more driven by you know, dollar strength weakness over on 130 00:07:14,040 --> 00:07:17,080 Speaker 1: a month of a month basis, the spillover from commodity 131 00:07:17,160 --> 00:07:21,680 Speaker 1: prices definitely the form of volatile components, but the the 132 00:07:21,840 --> 00:07:25,040 Speaker 1: trajectory of the low vall components, which is you know, 133 00:07:25,080 --> 00:07:28,480 Speaker 1: the shelter, medical care, et cetera, have been what has 134 00:07:28,600 --> 00:07:31,800 Speaker 1: has kept us reasonably constructive on you as CPI up 135 00:07:31,840 --> 00:07:34,880 Speaker 1: until this point. How does rent in housing calculations? I 136 00:07:34,880 --> 00:07:37,880 Speaker 1: think most of our listeners understand the oddity in the 137 00:07:38,120 --> 00:07:42,320 Speaker 1: overweight there how do you filter in real estate dynamics 138 00:07:42,320 --> 00:07:46,520 Speaker 1: in the United States in the calculation of inflation. Well, 139 00:07:46,520 --> 00:07:50,240 Speaker 1: that's when it's worthwhile comparing different CPI industries with each other. 140 00:07:50,440 --> 00:07:54,880 Speaker 1: If you look at the contribution of shelter to CPI, 141 00:07:54,920 --> 00:07:58,320 Speaker 1: as you said, it is a large contribution, but CPI 142 00:07:58,520 --> 00:08:02,720 Speaker 1: is what the tips in tips security is actually priced off, 143 00:08:02,800 --> 00:08:05,000 Speaker 1: so we have to pay past attention to that. But 144 00:08:05,080 --> 00:08:09,240 Speaker 1: then comparing it to the PCE calculation, which has basically 145 00:08:09,280 --> 00:08:11,480 Speaker 1: half of the contribution of housing, which is the Fed's 146 00:08:11,480 --> 00:08:16,280 Speaker 1: preferred measure, helps put it all into context. And um, 147 00:08:16,440 --> 00:08:19,680 Speaker 1: you know, just just maintaining looking at you mentioned that 148 00:08:19,760 --> 00:08:24,080 Speaker 1: the Cleveland FED, there are other said median indicries that 149 00:08:24,080 --> 00:08:26,440 Speaker 1: that give you a pretty good indication as to the 150 00:08:26,520 --> 00:08:29,640 Speaker 1: CPI basket as a whole, and just stripping out shelter, 151 00:08:29,760 --> 00:08:31,840 Speaker 1: you know, there has been a lot of talk about 152 00:08:32,200 --> 00:08:35,440 Speaker 1: how shelter has been such a substantial driver of CPI. 153 00:08:35,960 --> 00:08:39,920 Speaker 1: What's interesting with this report, um, is that when looking 154 00:08:40,000 --> 00:08:43,840 Speaker 1: at this CPI print on an x shelter basis, the 155 00:08:44,000 --> 00:08:47,880 Speaker 1: upturn appears to be fairly widespread, which I think will 156 00:08:47,920 --> 00:08:51,280 Speaker 1: give some members of the FOMC who have been concerned 157 00:08:51,360 --> 00:08:55,760 Speaker 1: about inflation, and many have talked about inflation FX shelter. 158 00:08:56,400 --> 00:08:58,840 Speaker 1: It will give them a little bit more comfort in 159 00:08:58,880 --> 00:09:01,959 Speaker 1: their decision to to lift off in December. Well, you've 160 00:09:02,000 --> 00:09:05,160 Speaker 1: got a number of people in the markets. I mean, 161 00:09:05,200 --> 00:09:07,280 Speaker 1: certainly not the majority, but you do have a number 162 00:09:07,280 --> 00:09:10,520 Speaker 1: of people who have been saying recently that markets may 163 00:09:10,559 --> 00:09:14,760 Speaker 1: be way underestimating the potential for inflation to accelerate and 164 00:09:14,800 --> 00:09:19,880 Speaker 1: therefore the Fed to react this year. I think you're right, 165 00:09:20,040 --> 00:09:23,920 Speaker 1: And the inflation market itself is pricing in a very 166 00:09:24,000 --> 00:09:26,599 Speaker 1: very benign trajectory. And you know, we talked about this 167 00:09:26,720 --> 00:09:28,800 Speaker 1: a little bit last time when when I spoke to 168 00:09:28,840 --> 00:09:31,320 Speaker 1: you guys. But you know, what we like to do 169 00:09:31,400 --> 00:09:34,280 Speaker 1: is to split up the inflation curve into various one 170 00:09:34,360 --> 00:09:38,360 Speaker 1: year components or increments, and look what inflation run rates 171 00:09:38,400 --> 00:09:41,560 Speaker 1: is priced in for these different periods. And looking at 172 00:09:41,920 --> 00:09:45,000 Speaker 1: the inflation run rate that the market is pricing in 173 00:09:45,040 --> 00:09:49,840 Speaker 1: between two thousand and seventeen and two thousand and eighteen UM, 174 00:09:49,880 --> 00:09:53,400 Speaker 1: it's basically pricing in an ex energy CPI rate of 175 00:09:53,440 --> 00:09:56,960 Speaker 1: about sixty basis points. So how we do that is 176 00:09:57,000 --> 00:09:59,960 Speaker 1: we take the slope of the gasoline curve and X 177 00:10:00,000 --> 00:10:03,160 Speaker 1: distracted from the inflation run rate price by the market 178 00:10:03,200 --> 00:10:06,320 Speaker 1: to get an ex energy rate. So with that being 179 00:10:06,400 --> 00:10:10,840 Speaker 1: at sixty basis points relative to today's core print of 180 00:10:10,960 --> 00:10:15,880 Speaker 1: two point two, is ready ready quite quite a widespread 181 00:10:16,040 --> 00:10:18,040 Speaker 1: and something that would have not seen in a very 182 00:10:18,120 --> 00:10:21,600 Speaker 1: very long time. And to me, we're gonna say to Martin, 183 00:10:21,640 --> 00:10:23,120 Speaker 1: we're gonna have to leave up there because of it's time. 184 00:10:23,160 --> 00:10:26,480 Speaker 1: But that last insight was very valuable in taking the 185 00:10:26,480 --> 00:10:30,360 Speaker 1: gasoline segment out of inflation to get a core dynamic 186 00:10:30,400 --> 00:10:34,199 Speaker 1: of sixty basis point six tenths of a percentage point. 187 00:10:34,280 --> 00:10:36,920 Speaker 1: And we've got a loaded schedule, folks, with Martin Haggerty, 188 00:10:36,960 --> 00:10:39,320 Speaker 1: thank you so much, so much, with black right, there's 189 00:10:39,320 --> 00:10:41,840 Speaker 1: so much going up to three hours with we could 190 00:10:41,840 --> 00:10:43,360 Speaker 1: do it. We could do an hour with Martin and 191 00:10:43,400 --> 00:10:46,760 Speaker 1: move right on to Scott Galloway on Yahoo and critically 192 00:10:46,760 --> 00:10:53,400 Speaker 1: coming up and diagnon of JP Morgan under let's bring 193 00:10:53,480 --> 00:10:56,680 Speaker 1: him Michael Barr now with the latest world in national headlines, 194 00:10:56,880 --> 00:10:58,920 Speaker 1: Mike Tom, thank you very much. A private service is 195 00:10:59,000 --> 00:11:01,040 Speaker 1: schedule to begin in about a half an hour for 196 00:11:01,200 --> 00:11:05,199 Speaker 1: Supreme Court Justice anton In Scalia. A casket carrying Scalia's 197 00:11:05,200 --> 00:11:08,120 Speaker 1: bonny will lie in repose in the courts Grade Hall. 198 00:11:08,679 --> 00:11:11,280 Speaker 1: After the private service, the casket will be on display 199 00:11:11,360 --> 00:11:14,199 Speaker 1: to the public starting at ten thirty a m. Eastern time. 200 00:11:14,720 --> 00:11:17,520 Speaker 1: Among the thousands of mourners who will pay their respects 201 00:11:17,520 --> 00:11:21,320 Speaker 1: today are President Barack Obama and First Lady Michelle Obama. 202 00:11:21,640 --> 00:11:24,880 Speaker 1: A funeral mass will be held tomorrow. US warplanes have 203 00:11:24,920 --> 00:11:28,440 Speaker 1: struck multiple targets in Libya overnight, hitting at Islamic State 204 00:11:28,440 --> 00:11:31,760 Speaker 1: training camp and a senior extremist leader. According to a 205 00:11:31,840 --> 00:11:34,680 Speaker 1: US defense official, the air strikes at the training camp 206 00:11:34,800 --> 00:11:38,440 Speaker 1: were close to the Tunisian border. French President France while 207 00:11:38,440 --> 00:11:41,720 Speaker 1: oland Is, drafted a bill that would allow businesses to 208 00:11:41,840 --> 00:11:45,480 Speaker 1: increase workers hours above the thirty five hour cap, and 209 00:11:45,520 --> 00:11:48,640 Speaker 1: he's firing rules. Global News twenty four hours a day, 210 00:11:48,640 --> 00:11:51,720 Speaker 1: powered by our two hundred journalists more than a hundred 211 00:11:51,720 --> 00:11:53,959 Speaker 1: fifty news bureaus from around the world. Now Michael bar 212 00:11:54,160 --> 00:11:59,840 Speaker 1: Mike Tom Bacabar Worth watching Oil under Barrel, Scott Galloway 213 00:12:00,040 --> 00:12:06,920 Speaker 1: and diagnon in this hour. Next Market Drivers, brought to 214 00:12:06,920 --> 00:12:09,000 Speaker 1: you by your Mercedes Benz Tri State Dealer. When it 215 00:12:09,000 --> 00:12:11,360 Speaker 1: comes to winter elements, put your best four wheels forward 216 00:12:11,360 --> 00:12:14,240 Speaker 1: with Mercedes Benz Formatic all wheel Drive. Visit your Mercedes 217 00:12:14,240 --> 00:12:23,000 Speaker 1: Benz Tri State dealer for a test drive. Today. Global 218 00:12:23,040 --> 00:12:26,440 Speaker 1: business news twenty four hours a day at Bloomberg dot com, 219 00:12:26,679 --> 00:12:29,400 Speaker 1: the Radio plus Mobile Act and on your radio. This 220 00:12:29,920 --> 00:12:33,160 Speaker 1: is a Bloomberg Business Flash and I'm Cara in Moscow. 221 00:12:33,200 --> 00:12:36,360 Speaker 1: This updates brought to you by Interactive Brokers and CME Group. 222 00:12:36,400 --> 00:12:39,360 Speaker 1: If you're looking for global futures contracts at low trading costs, 223 00:12:39,360 --> 00:12:42,640 Speaker 1: look no further. Interactive Brokers as the industry leader. Learn 224 00:12:42,679 --> 00:12:46,440 Speaker 1: more at Interactive Brokers dot com, Slash, CME Group US 225 00:12:46,520 --> 00:12:49,680 Speaker 1: dot Index futures are lower, mirroring a slide in oil 226 00:12:49,760 --> 00:12:53,559 Speaker 1: prices and an indication the SNPI pair a relief rally 227 00:12:53,880 --> 00:12:56,200 Speaker 1: that put it on track for the best week since November. 228 00:12:56,280 --> 00:12:58,720 Speaker 1: We checked the markets every fifteen minutes throughout the trading 229 00:12:58,800 --> 00:13:01,319 Speaker 1: day on bloomberg S and p Even the futures down 230 00:13:01,320 --> 00:13:04,160 Speaker 1: twelve points down, EVENY futures down ninety four and nashdack 231 00:13:04,200 --> 00:13:07,280 Speaker 1: Emny futures down twenty seven decks. In Germany's down nine 232 00:13:07,320 --> 00:13:10,400 Speaker 1: tenths percent, ten year treasury down seven thirty seconds to 233 00:13:10,480 --> 00:13:12,840 Speaker 1: yield one point seven six percent yield on the two 234 00:13:12,920 --> 00:13:16,080 Speaker 1: year point seven five percent nine mex hered oil down 235 00:13:16,120 --> 00:13:19,079 Speaker 1: about four percent. It's down a dollar twenty one to 236 00:13:19,160 --> 00:13:21,720 Speaker 1: twenty nine dollars fifty six cents a barrel and comex 237 00:13:21,840 --> 00:13:24,319 Speaker 1: gold is little change at twelve twenty six sixty and 238 00:13:24,360 --> 00:13:27,120 Speaker 1: ounce the euro and dollar t e three then one 239 00:13:27,160 --> 00:13:30,400 Speaker 1: twelve point nine and nine. That's a bloomberg business flash. 240 00:13:30,440 --> 00:13:34,640 Speaker 1: Tom and Mike Karen, thank you so much. A future 241 00:13:34,640 --> 00:13:40,600 Speaker 1: is negative twelve watching oil the barrel. In the summer 242 00:13:40,679 --> 00:13:44,760 Speaker 1: of two thousand twelve, Michael McKee, I bought two thousand 243 00:13:44,840 --> 00:13:49,560 Speaker 1: acres of Iowa farmland top of the market. Really, corn 244 00:13:49,679 --> 00:13:54,360 Speaker 1: is down fifty four percent, remember green acres and see 245 00:13:54,480 --> 00:13:57,520 Speaker 1: you in the Eddie Albert role. I can see how 246 00:13:59,040 --> 00:14:04,280 Speaker 1: she is married to Aviagi Bore. She's like a went 247 00:14:04,320 --> 00:14:06,040 Speaker 1: out with me and I wore my suit and Bowti 248 00:14:06,040 --> 00:14:08,800 Speaker 1: and Diagnon just shook her head and said, Tom you 249 00:14:08,840 --> 00:14:12,120 Speaker 1: are Can you see Tom is okay market? Can you 250 00:14:12,160 --> 00:14:15,920 Speaker 1: see Tom in overalls with you know, a little little 251 00:14:15,960 --> 00:14:19,040 Speaker 1: grain hanging out of his mouth there? No, but I 252 00:14:19,080 --> 00:14:21,600 Speaker 1: will tell you I moved to the United States because 253 00:14:21,600 --> 00:14:23,840 Speaker 1: of Green Acres. Because when I was three years old, 254 00:14:23,920 --> 00:14:27,720 Speaker 1: I told my mother farmer's wives in America were ball guns. 255 00:14:28,200 --> 00:14:31,040 Speaker 1: I'm gonna live in America. I like that spokes with 256 00:14:31,120 --> 00:14:34,240 Speaker 1: us and diagnont of JP Morgan. She is authoritative on 257 00:14:34,400 --> 00:14:38,920 Speaker 1: dear caterpillar and what goes on across agricultural America and 258 00:14:38,960 --> 00:14:43,200 Speaker 1: what is different in the farm collapse this time around. Seriously, 259 00:14:43,520 --> 00:14:47,240 Speaker 1: forget about me buying Iowa acreage. What's different this time 260 00:14:47,560 --> 00:14:50,240 Speaker 1: or is it just all the same story? You know, 261 00:14:50,280 --> 00:14:52,960 Speaker 1: at the end of the day, high prices fixed high prices. 262 00:14:52,960 --> 00:14:58,880 Speaker 1: We've gone through seven years of great agricultural profits and 263 00:14:58,920 --> 00:15:02,000 Speaker 1: what that did was at a tracted planting around the world. 264 00:15:02,120 --> 00:15:07,160 Speaker 1: We saw planting increase in places like Brazil, in Argentina, 265 00:15:07,200 --> 00:15:12,600 Speaker 1: in Russia, Ukraine, Australia and Commander with decent weather, and 266 00:15:12,680 --> 00:15:16,200 Speaker 1: we not find ourselves with except supply of all of 267 00:15:16,240 --> 00:15:19,800 Speaker 1: our major crops. Of course, the strong dollar doesn't help. 268 00:15:20,600 --> 00:15:22,920 Speaker 1: It is not a surprise from deer today. I mean, 269 00:15:24,360 --> 00:15:26,920 Speaker 1: farmers income is going to be lower, so they're going 270 00:15:27,000 --> 00:15:30,680 Speaker 1: to be buying less stuff. And I mean, really it's 271 00:15:31,600 --> 00:15:35,040 Speaker 1: farm equipment sales were sort of like auto sales for 272 00:15:35,080 --> 00:15:38,280 Speaker 1: a while. I mean they were just going through the roof. Yeah, 273 00:15:38,320 --> 00:15:40,520 Speaker 1: I think that's very fair. I think the question for 274 00:15:40,640 --> 00:15:45,000 Speaker 1: investors is really around how long is the down cycle? 275 00:15:45,680 --> 00:15:47,840 Speaker 1: You know, when when do we start to see farmers 276 00:15:47,920 --> 00:15:49,960 Speaker 1: spend again? And it could be a long time because 277 00:15:50,400 --> 00:15:55,000 Speaker 1: at the end of the day, tractors last forever, tractors 278 00:15:55,080 --> 00:15:58,880 Speaker 1: less forever, and the technologies there. What does it signal 279 00:15:58,960 --> 00:16:02,360 Speaker 1: about how nuke companies adapted changes. I mean, we make 280 00:16:02,360 --> 00:16:06,520 Speaker 1: a lot of smoking uh fire about General Electric becoming 281 00:16:06,520 --> 00:16:09,600 Speaker 1: a new industrial Might you and I in studied John 282 00:16:09,640 --> 00:16:14,000 Speaker 1: Deer for Lausy Accounting decades ago within the c f 283 00:16:14,080 --> 00:16:17,760 Speaker 1: A program. Okay, fine, it's a new John Deer, But 284 00:16:17,920 --> 00:16:20,640 Speaker 1: is it a John Deer or a caterpillar that are 285 00:16:20,640 --> 00:16:26,560 Speaker 1: more supple? And can they adapt? Can Sam Allen adapt? Well? Again, 286 00:16:26,680 --> 00:16:31,520 Speaker 1: what investors look for during downturns in machinery companies is 287 00:16:31,920 --> 00:16:35,280 Speaker 1: how well are they managing what we call the decrimental profits. 288 00:16:35,920 --> 00:16:39,240 Speaker 1: They have no control over the revenue per se, but 289 00:16:39,320 --> 00:16:41,840 Speaker 1: they have control over how quickly they can take out 290 00:16:41,920 --> 00:16:47,040 Speaker 1: cost and that's what we measured. Managements on dear delivered 291 00:16:47,080 --> 00:16:50,720 Speaker 1: a decent decrimental profit today of about twenty six percent. 292 00:16:50,880 --> 00:16:55,440 Speaker 1: On the agricultural side. However, I would caution that there 293 00:16:55,440 --> 00:16:57,840 Speaker 1: are questions to be answered on the conference column. That's 294 00:16:58,680 --> 00:17:03,040 Speaker 1: while their revenues were down twelve percent in agriculture, at 295 00:17:03,080 --> 00:17:06,919 Speaker 1: their inventories only down six percent. So the question is 296 00:17:07,119 --> 00:17:10,520 Speaker 1: where they kind of stopping the channel or keeping the 297 00:17:10,600 --> 00:17:14,160 Speaker 1: factories running when they shouldn't have been, just to make 298 00:17:14,240 --> 00:17:17,240 Speaker 1: those profit numbers. So, you know, there are some questions 299 00:17:17,280 --> 00:17:20,639 Speaker 1: we have to see whether Sam Allen is indeed running 300 00:17:20,640 --> 00:17:24,879 Speaker 1: the business for the long term or for just efficiencies. 301 00:17:25,040 --> 00:17:26,520 Speaker 1: That was where right where I want to go? The 302 00:17:27,680 --> 00:17:31,960 Speaker 1: inventories a hundred one days, um, how does that affect 303 00:17:32,000 --> 00:17:35,040 Speaker 1: a farm equipment company? If it were an auto company, 304 00:17:35,119 --> 00:17:37,160 Speaker 1: they would just have end of the year going out 305 00:17:37,160 --> 00:17:40,840 Speaker 1: of his clearance saleh But does this mean does this 306 00:17:41,000 --> 00:17:43,880 Speaker 1: push down on dear earnings way out into the future. 307 00:17:45,720 --> 00:17:48,840 Speaker 1: That that's the sixty million dollar question. Frankly, there is 308 00:17:48,880 --> 00:17:52,200 Speaker 1: a little bit of seasonality in agriculture, right They tend 309 00:17:52,240 --> 00:17:54,960 Speaker 1: to build a little bit of inventory in the winter 310 00:17:55,160 --> 00:17:59,040 Speaker 1: so that they're prepared for tractor sales and combined sales 311 00:17:59,200 --> 00:18:01,520 Speaker 1: later in the year. So you know, we'll have to 312 00:18:01,560 --> 00:18:05,679 Speaker 1: see how orders are, whether farmers really are placing any orders, 313 00:18:05,760 --> 00:18:09,959 Speaker 1: or whether this you know, just pushes the the issue 314 00:18:10,040 --> 00:18:14,520 Speaker 1: further out into the later sixteen and even into seventeen. 315 00:18:15,240 --> 00:18:17,280 Speaker 1: Do they have a lot of capex to play with them? 316 00:18:17,280 --> 00:18:19,880 Speaker 1: Looking at the financials off the Bloomberg and digged into 317 00:18:19,960 --> 00:18:22,760 Speaker 1: Samuel and have a lot of whiggle room on maintaining 318 00:18:22,840 --> 00:18:27,400 Speaker 1: free cash flow and keeping constructive use of cash. Yeah, 319 00:18:27,480 --> 00:18:30,200 Speaker 1: they have a pretty lean balance sheet, that's for sure. 320 00:18:30,520 --> 00:18:34,000 Speaker 1: And they did you know, they did keep cash on 321 00:18:34,040 --> 00:18:37,120 Speaker 1: the balance sheet in the good times. I think Sam 322 00:18:37,200 --> 00:18:41,359 Speaker 1: rightly appreciates that his business is cyclical, so you know, 323 00:18:41,400 --> 00:18:43,800 Speaker 1: they do have a fair amount wiggle room and the 324 00:18:43,800 --> 00:18:46,240 Speaker 1: balance sheet. I don't expect anything like a different cut 325 00:18:46,359 --> 00:18:49,720 Speaker 1: or anything like that, so uh, you know, maybe we 326 00:18:49,800 --> 00:18:51,400 Speaker 1: have to address that a year from now if things 327 00:18:51,440 --> 00:18:53,520 Speaker 1: aren't any better, But right now, I think the balance 328 00:18:53,520 --> 00:18:55,919 Speaker 1: sheets in good shape and dig in thank you so much. 329 00:18:56,000 --> 00:18:58,520 Speaker 1: She's a JP Morgan and John Dear, and she will 330 00:18:58,560 --> 00:19:01,280 Speaker 1: go to the conference call it tending. I'm our Rachel 331 00:19:01,359 --> 00:19:04,359 Speaker 1: Lane of Bloomberg News and Bloomberg First World will be 332 00:19:04,359 --> 00:19:08,000 Speaker 1: out worldwide with reporting on that conference call as well. 333 00:19:08,080 --> 00:19:10,760 Speaker 1: Ms Lane is the first person Michael McKee other than 334 00:19:10,800 --> 00:19:13,920 Speaker 1: Mike Bloomberg I ever spoke to at Bloomberg and she's 335 00:19:13,920 --> 00:19:15,880 Speaker 1: still talking to you, She's still talking to me, even 336 00:19:15,880 --> 00:19:18,439 Speaker 1: though we are both diehard Red Sox fans and we 337 00:19:18,600 --> 00:19:21,720 Speaker 1: totally disagree on what the Reders need to do. This year, 338 00:19:22,040 --> 00:19:27,000 Speaker 1: Deer shares down four percent in premarket trading. And you know, 339 00:19:27,119 --> 00:19:29,639 Speaker 1: everybody's right, everybody's wrong in the in the Hardball of 340 00:19:29,720 --> 00:19:33,000 Speaker 1: Saleside and Dignen went to an underweight on John Deere 341 00:19:33,640 --> 00:19:36,800 Speaker 1: like three years ago. I mean, she's been brilliant on 342 00:19:37,000 --> 00:19:40,399 Speaker 1: getting out in front of the structural challenges as well, 343 00:19:40,760 --> 00:19:45,639 Speaker 1: um Green Acres, which was a few years ago. And 344 00:19:45,800 --> 00:19:56,800 Speaker 1: I came to America from her Scotland. Let's listen for 345 00:19:57,040 --> 00:20:04,640 Speaker 1: me right now, keep Manhattan, just give it that Countryside. 346 00:20:06,800 --> 00:20:09,160 Speaker 1: The Bloomberg Ski Report brought to you by land Robber. 347 00:20:09,200 --> 00:20:10,560 Speaker 1: If it's in your nature to cast off the every 348 00:20:10,640 --> 00:20:12,639 Speaker 1: day and seek adventure, the Discovery Sport was built to 349 00:20:12,640 --> 00:20:14,800 Speaker 1: help your search. Visit land Rover try state dot com 350 00:20:14,840 --> 00:20:18,000 Speaker 1: for special offers during the only Adventure Sales event. Land 351 00:20:18,040 --> 00:20:25,280 Speaker 1: Rover above and b L broadcasting live to New York 352 00:20:25,280 --> 00:20:29,160 Speaker 1: Gloomberg eleventh to Washington, d C. Bloomberg nine and nine 353 00:20:29,160 --> 00:20:33,320 Speaker 1: one to Boston Bloomberg twelve unders to San Francisco, Bloomberg 354 00:20:33,440 --> 00:20:37,000 Speaker 1: nine six to the country Shoes X Channel one nineteen 355 00:20:37,160 --> 00:20:40,680 Speaker 1: and around the globe the Bloomberg Radio Most Happened Bloomberg 356 00:20:40,680 --> 00:20:44,960 Speaker 1: dot Com. This is Bloomberg Surveillance. He good morning. I'm 357 00:20:45,000 --> 00:20:47,639 Speaker 1: Karen Moscow along with Tom Keene and Michael McKee and 358 00:20:47,680 --> 00:20:50,200 Speaker 1: the opening deal brought to you by se I Imagine. 359 00:20:50,200 --> 00:20:54,399 Speaker 1: When cognitive computing shapes the experience you create for your investors. 360 00:20:54,400 --> 00:20:57,639 Speaker 1: See how SEIS Global Operating Platform can be your catalyst 361 00:20:57,880 --> 00:21:01,480 Speaker 1: for business intelligence at se I c com slash Imagine. 362 00:21:02,080 --> 00:21:04,919 Speaker 1: Stocks are lower at the open. The SNP five hundred 363 00:21:04,960 --> 00:21:06,760 Speaker 1: is down three ten per cent or six points to 364 00:21:06,880 --> 00:21:09,879 Speaker 1: nineteen eleven. Dow Jones Industrial Average down a tenth of 365 00:21:09,960 --> 00:21:12,560 Speaker 1: upper cent or twenty points, to sixteen thousand, three hundred, 366 00:21:12,640 --> 00:21:15,960 Speaker 1: ninety four Nasdacs down four ten percent or seventeen points 367 00:21:16,000 --> 00:21:19,320 Speaker 1: to forty four seventy ten year Treasury down seven thirty seconds, 368 00:21:19,359 --> 00:21:21,600 Speaker 1: the yield one point seven six percent. Yield on the 369 00:21:21,640 --> 00:21:24,800 Speaker 1: two year points seven five percent. Nimex screwed oil down 370 00:21:24,840 --> 00:21:27,680 Speaker 1: three point one percent or ninety seven cents to a 371 00:21:27,760 --> 00:21:30,800 Speaker 1: barrel comes gold is little change, down sixty cents to 372 00:21:30,840 --> 00:21:34,320 Speaker 1: twelve eighty announced, the euro a dollar ten eighty one 373 00:21:34,359 --> 00:21:37,040 Speaker 1: and the yen one thirteen point oh a, Tom and 374 00:21:37,080 --> 00:21:41,280 Speaker 1: Mike Karen, thanks so much again. Oil two down and 375 00:21:41,320 --> 00:21:43,240 Speaker 1: then a little bit of a bounce off ninety seven 376 00:21:43,240 --> 00:21:46,240 Speaker 1: cents right now. What a strong hour. Scott Galloway from 377 00:21:46,240 --> 00:21:49,760 Speaker 1: New York University with us. He is a uh not 378 00:21:49,880 --> 00:21:53,960 Speaker 1: only watcher, but in in tune participant in media and 379 00:21:54,040 --> 00:21:57,520 Speaker 1: the digital space, and he's made global headlines for us 380 00:21:57,600 --> 00:22:00,760 Speaker 1: on Yahoo. Up sixty one cents right now, Scott, to 381 00:22:00,800 --> 00:22:03,600 Speaker 1: cut to the chase. You are adamant there are multiple 382 00:22:03,680 --> 00:22:08,000 Speaker 1: buyers of this dog. Why is that? I think there's 383 00:22:08,040 --> 00:22:10,520 Speaker 1: dozens of buyers. Tom, By the way, Tom and Michael, 384 00:22:10,520 --> 00:22:13,040 Speaker 1: good to be with you. There's real value here in 385 00:22:13,080 --> 00:22:16,760 Speaker 1: a in an environment where one of the most difficult 386 00:22:16,760 --> 00:22:20,480 Speaker 1: resources to capture is attention. You have an asset that, 387 00:22:20,520 --> 00:22:24,600 Speaker 1: despite the fact that it's declining fairly rapidly, it still 388 00:22:24,680 --> 00:22:27,040 Speaker 1: is one of the most traffic sites in the world. 389 00:22:27,720 --> 00:22:31,199 Speaker 1: You have you couple that with tens of billions of 390 00:22:31,240 --> 00:22:33,760 Speaker 1: dollars sitting on the sidelines from the women to partners 391 00:22:33,760 --> 00:22:35,960 Speaker 1: who want the channel, partners of private ectually funds to 392 00:22:36,000 --> 00:22:38,919 Speaker 1: put the capital of the work. This asset is going 393 00:22:38,960 --> 00:22:41,359 Speaker 1: to go at an I believe tom at a higher 394 00:22:41,400 --> 00:22:44,920 Speaker 1: price than the market is expectant. When you say this asset, 395 00:22:45,040 --> 00:22:48,720 Speaker 1: what is the asset? What is it within Yahoo that 396 00:22:48,920 --> 00:22:54,280 Speaker 1: you want other than standing out? Sure? So every morning, 397 00:22:55,040 --> 00:22:59,000 Speaker 1: hundreds of millions of people get on their mobile phone 398 00:22:59,080 --> 00:23:02,200 Speaker 1: or on their desktop computer and go to a portal 399 00:23:02,280 --> 00:23:06,040 Speaker 1: called Yahoo dot com, Forward, slash fin answer, forward slash 400 00:23:06,119 --> 00:23:08,960 Speaker 1: mail or there is there are a lot of people 401 00:23:09,320 --> 00:23:13,560 Speaker 1: who interact with the Yahoo brand. Uh it is. It 402 00:23:13,640 --> 00:23:16,439 Speaker 1: does not cash. It's a five billion dollar company with 403 00:23:16,440 --> 00:23:19,280 Speaker 1: about a half a billion dollars in etha dot So 404 00:23:19,400 --> 00:23:21,960 Speaker 1: there's It's absolutely an asset. I think it's a third 405 00:23:22,000 --> 00:23:24,520 Speaker 1: most traffic side in the world. Why why could somebody 406 00:23:24,520 --> 00:23:27,720 Speaker 1: else make money with it? When yeah, who can't? Well 407 00:23:27,720 --> 00:23:30,800 Speaker 1: look that's the point. Wait, yeah, who does make money 408 00:23:30,880 --> 00:23:35,160 Speaker 1: with it? That's what is the mystery. They are They 409 00:23:35,160 --> 00:23:38,120 Speaker 1: are making money, but they're just making the lass. And 410 00:23:38,480 --> 00:23:41,920 Speaker 1: what you have here is, I mean, there is a 411 00:23:42,040 --> 00:23:44,520 Speaker 1: robust defense in this meyer and that is nobody could 412 00:23:44,520 --> 00:23:46,760 Speaker 1: have turned this around it. There's a huge secular ship 413 00:23:46,880 --> 00:23:51,760 Speaker 1: from sites two apps that everyone's on Facebook and effectively 414 00:23:52,240 --> 00:23:54,080 Speaker 1: digital media is a great business to be in as 415 00:23:54,119 --> 00:23:56,800 Speaker 1: long as your Facebook or Google, who now control fifty 416 00:23:56,800 --> 00:24:00,000 Speaker 1: one percent of mobile advertising globally, so it's a Google 417 00:24:00,040 --> 00:24:03,360 Speaker 1: goal and Facebook in the seven dwarves. But there's no 418 00:24:03,440 --> 00:24:06,160 Speaker 1: doubt you're gonna have somebody step in with a vision 419 00:24:06,200 --> 00:24:09,040 Speaker 1: for this and pay and let me go this way. 420 00:24:09,040 --> 00:24:11,440 Speaker 1: They're definitely gonna pick pay more than it's getting right now. 421 00:24:11,480 --> 00:24:16,400 Speaker 1: It's effectively being valued at zero when you look at this. 422 00:24:16,680 --> 00:24:18,879 Speaker 1: In in your note to us, your quick note to 423 00:24:18,920 --> 00:24:23,480 Speaker 1: A Scott, you mentioned the dysfunction again of digital executives 424 00:24:24,080 --> 00:24:27,040 Speaker 1: feeling that they play by a different rule book and 425 00:24:27,160 --> 00:24:30,359 Speaker 1: executive VP saying they were focused on user growth whatever 426 00:24:30,440 --> 00:24:33,399 Speaker 1: that means. Is part of the issue here, that that 427 00:24:33,960 --> 00:24:37,760 Speaker 1: they're confronting boards and shareholders that played by a traditional 428 00:24:37,840 --> 00:24:43,320 Speaker 1: rule book. At a fopal question, Tom, I think that 429 00:24:43,440 --> 00:24:46,760 Speaker 1: you have a great asset, and I think you have 430 00:24:47,320 --> 00:24:51,159 Speaker 1: um basically a soap opera that's gone on sort of 431 00:24:51,720 --> 00:24:55,159 Speaker 1: two seasons too long, and it seems to me I 432 00:24:55,160 --> 00:24:57,200 Speaker 1: think there's a lot of writing on the wall here 433 00:24:57,800 --> 00:24:59,800 Speaker 1: that you have an as Meyer who wants and not, 434 00:25:00,720 --> 00:25:03,440 Speaker 1: you know, another swack at the pinata another couple of 435 00:25:03,520 --> 00:25:06,640 Speaker 1: years to do this, whereas a certain faction of the board, 436 00:25:06,640 --> 00:25:08,560 Speaker 1: I said, now it's time, it's time to get rid 437 00:25:08,560 --> 00:25:11,480 Speaker 1: of this thing and the thing that people don't talk about. 438 00:25:11,480 --> 00:25:13,879 Speaker 1: That I think was fairly telling and we'll be interesting 439 00:25:13,960 --> 00:25:16,080 Speaker 1: with what comes out kind of in a couple of 440 00:25:16,119 --> 00:25:18,040 Speaker 1: years from now, if it ever does come out. Is 441 00:25:18,119 --> 00:25:24,520 Speaker 1: Charles Swab resigned mid cycle effectively immediately, and that's very unusual. 442 00:25:26,000 --> 00:25:28,480 Speaker 1: I've been on several public company boards. If you don't 443 00:25:28,600 --> 00:25:30,840 Speaker 1: if you want off the board, you stay to the chairman. 444 00:25:31,320 --> 00:25:33,399 Speaker 1: I'm not going to stand for re election, or if 445 00:25:33,400 --> 00:25:36,359 Speaker 1: the board wants you off, they say we're gonna bring 446 00:25:36,400 --> 00:25:40,000 Speaker 1: in some new blood at the new elections. For for 447 00:25:40,119 --> 00:25:43,320 Speaker 1: him to basically get the hell out of Dodge effective 448 00:25:43,320 --> 00:25:46,520 Speaker 1: immediately means that there was a pretty severe argument at 449 00:25:46,520 --> 00:25:48,439 Speaker 1: the board and he was on the wrong side of it. 450 00:25:48,560 --> 00:25:52,640 Speaker 1: And I, folks, I was stunned by Biss Mayor's response 451 00:25:52,680 --> 00:25:55,879 Speaker 1: to Emily Chang's interview on Mr Schwab believe you might 452 00:25:55,920 --> 00:25:58,720 Speaker 1: jump in here with Scott Galoy, Well, well, you bring 453 00:25:58,760 --> 00:26:03,040 Speaker 1: up Merris and Myron. Where is she in all this? Oh, 454 00:26:03,119 --> 00:26:05,119 Speaker 1: I think she's going to go down. Is one of 455 00:26:05,160 --> 00:26:08,600 Speaker 1: the most overpaid CEOs in tech it's too you know, 456 00:26:08,680 --> 00:26:11,280 Speaker 1: in her defense, it's been a difficult asset. There's a 457 00:26:11,359 --> 00:26:14,080 Speaker 1: question where anyone could have turned it around. But the 458 00:26:14,800 --> 00:26:17,840 Speaker 1: things she'll be remembered for is being the last CEO 459 00:26:18,600 --> 00:26:21,480 Speaker 1: of Yahoo and it did not work. But the thing 460 00:26:21,920 --> 00:26:24,480 Speaker 1: I think it's really going to stand out here in 461 00:26:24,560 --> 00:26:28,040 Speaker 1: retrospect will be the incredible amount of money she was paid. 462 00:26:29,040 --> 00:26:31,200 Speaker 1: She's gonna walk away, It depends on the estimates. You 463 00:26:31,240 --> 00:26:33,160 Speaker 1: look at somewhere between a hundred and fifty and two 464 00:26:33,359 --> 00:26:36,520 Speaker 1: d and fifty million dollars for what would arguably be 465 00:26:36,600 --> 00:26:40,159 Speaker 1: called one of the worst range in in tech company history. 466 00:26:40,160 --> 00:26:42,880 Speaker 1: I think that's I think that's shall be remembered. Yeah. 467 00:26:43,040 --> 00:26:44,879 Speaker 1: But at the same time, you also said maybe nobody 468 00:26:44,920 --> 00:26:47,719 Speaker 1: could have turned it around at the fair point. But 469 00:26:47,760 --> 00:26:49,920 Speaker 1: if somebody couldn't turn it around, should they walk out 470 00:26:49,920 --> 00:26:54,720 Speaker 1: with a quarter or billion dollars? So? Um, does she 471 00:26:54,840 --> 00:27:00,440 Speaker 1: stay until whatever is sold? Or is she basically been Um? 472 00:27:00,480 --> 00:27:02,800 Speaker 1: I think you put it put on an iceberg and 473 00:27:02,920 --> 00:27:07,920 Speaker 1: set off. Was it like the dead Eskimo set off 474 00:27:07,960 --> 00:27:13,399 Speaker 1: to float? Tom? I think she's already been fired effectively, 475 00:27:13,440 --> 00:27:16,119 Speaker 1: and they're just trying to make this Yeah, make this 476 00:27:16,200 --> 00:27:18,840 Speaker 1: as sort of elegant as possible. Somebody's going to come 477 00:27:18,840 --> 00:27:20,920 Speaker 1: in and brought a company. She'll be a good citizen 478 00:27:21,080 --> 00:27:24,000 Speaker 1: and amounts that she's leaving the spend more time with 479 00:27:24,040 --> 00:27:26,840 Speaker 1: her family, and it will be an elegant piece with 480 00:27:26,960 --> 00:27:30,000 Speaker 1: honor for everybody involved. But when the chairman Maynard Web 481 00:27:30,040 --> 00:27:34,280 Speaker 1: is now communicating directly to the street their strategy, saying 482 00:27:34,320 --> 00:27:38,359 Speaker 1: things like, while we support management strategy, but in parallel 483 00:27:38,840 --> 00:27:42,840 Speaker 1: to pursue strategic options, She's basically lost control. The rains 484 00:27:42,840 --> 00:27:45,439 Speaker 1: have been grabbed by somebody else. Scott Kellaway, thanks for 485 00:27:45,440 --> 00:27:47,359 Speaker 1: the briefing. He is at New York University with a 486 00:27:47,480 --> 00:27:51,080 Speaker 1: unique perspective on board dynamics and also of course the 487 00:27:51,119 --> 00:27:54,240 Speaker 1: world of digital Mike. It is a storied path from 488 00:27:54,320 --> 00:27:58,840 Speaker 1: City Group over to Berkeley's Emerging Market Banking, then over 489 00:27:58,920 --> 00:28:02,040 Speaker 1: to all of the banking and finally is co chief 490 00:28:02,080 --> 00:28:05,600 Speaker 1: executive Officer Corporate and Banking and may have two thousand thirteam. 491 00:28:05,720 --> 00:28:09,080 Speaker 1: Mr King will retire from Barclays. I don't know what 492 00:28:09,119 --> 00:28:13,440 Speaker 1: the return. The word retire means. Well, he's been talking 493 00:28:13,440 --> 00:28:17,879 Speaker 1: about this for a while. The UM Investment banking division 494 00:28:17,880 --> 00:28:21,639 Speaker 1: of Barclays is the lowest profit you know, has lowest 495 00:28:21,680 --> 00:28:25,840 Speaker 1: returns within the bank, and jess Daley now in charge 496 00:28:26,720 --> 00:28:29,240 Speaker 1: of the bank to try to boost profits there. So 497 00:28:29,400 --> 00:28:31,720 Speaker 1: it isn't clear whether they don't see eye to eye 498 00:28:32,440 --> 00:28:35,840 Speaker 1: or whether Mr King just feels that the future is 499 00:28:35,880 --> 00:28:37,919 Speaker 1: not going to be great for an investment bank in 500 00:28:37,920 --> 00:28:40,520 Speaker 1: an environment where investment banking is not making a lot 501 00:28:40,520 --> 00:28:42,120 Speaker 1: of money. Yeah, I mean, I mean, we're not gonna 502 00:28:42,720 --> 00:28:45,600 Speaker 1: go into the single headline. Barkley says, Tom King to 503 00:28:45,760 --> 00:28:49,160 Speaker 1: retire as CEO of Investment out of Bowen, out of 504 00:28:49,160 --> 00:28:52,760 Speaker 1: Wharton and of course, beginning his careered Salomon Brothers a 505 00:28:52,800 --> 00:28:56,880 Speaker 1: few years ago. I did not realize that he looks 506 00:28:56,920 --> 00:29:01,120 Speaker 1: like he's, you know, forty nine and holding something like you. 507 00:29:01,360 --> 00:29:04,080 Speaker 1: It looks good. You look like that, Tom King, Tom King, 508 00:29:04,120 --> 00:29:08,200 Speaker 1: you look good at Barclays are retiring as chief executive 509 00:29:08,200 --> 00:29:12,360 Speaker 1: officer of their investment bank. A little deterioration of market. 510 00:29:12,400 --> 00:29:15,080 Speaker 1: Don't want to oversell it. Negative eighty nine, the Vicks 511 00:29:15,200 --> 00:29:17,520 Speaker 1: twenty two point five eight up a full point nine 512 00:29:17,600 --> 00:29:23,720 Speaker 1: four Vicks points. We're watching oil a dollar thirteen. I 513 00:29:23,760 --> 00:29:27,240 Speaker 1: don't have a directional view there, We're just reporting oil 514 00:29:27,960 --> 00:29:32,440 Speaker 1: saggy and fragile through the week. Tenure yield one point 515 00:29:32,560 --> 00:29:39,680 Speaker 1: seven five. This hour of surveillance brought you by Volvo Cars, 516 00:29:39,720 --> 00:29:43,200 Speaker 1: White Planes Visit Vault Cars, White Planes dot Com. Here's 517 00:29:43,240 --> 00:29:46,000 Speaker 1: Michael Barr with the latest news headlines. Mike Town, thank 518 00:29:46,000 --> 00:29:48,360 Speaker 1: you very much. Thousands of mourners will pay their respects 519 00:29:48,400 --> 00:29:50,920 Speaker 1: today to late Supreme Courts not his anton and school 520 00:29:51,040 --> 00:29:54,200 Speaker 1: up his casketball lion repose at the Great Hall at 521 00:29:54,240 --> 00:29:57,880 Speaker 1: the Supreme Court Building today has funeral mass is scheduled 522 00:29:57,880 --> 00:30:01,000 Speaker 1: for tomorrow. Hillary Clinton has all in the fight between 523 00:30:01,000 --> 00:30:04,960 Speaker 1: Apple and the FBI over unlocking the iPhone owned by 524 00:30:05,000 --> 00:30:08,280 Speaker 1: one of the San Bernardino, California shooters, a difficult dilemma, 525 00:30:08,640 --> 00:30:11,320 Speaker 1: Clinton spoke during a town hall in Las Vegas hosted 526 00:30:11,360 --> 00:30:15,280 Speaker 1: by MSNBC. I see both sides, and I think most 527 00:30:15,320 --> 00:30:18,640 Speaker 1: citizens see both sides. We don't want privacy and encryption, 528 00:30:19,000 --> 00:30:21,880 Speaker 1: you know, destroyed, and we want to catch and make 529 00:30:21,880 --> 00:30:25,000 Speaker 1: sure there's nobody else out there whose information is on 530 00:30:25,040 --> 00:30:27,920 Speaker 1: that cell phone of the killer. Bernie Sanders says some 531 00:30:28,000 --> 00:30:31,440 Speaker 1: sort of compromise needs to be met because national security 532 00:30:31,480 --> 00:30:33,560 Speaker 1: is a major priority. I think that has got to 533 00:30:33,600 --> 00:30:36,360 Speaker 1: be a balance. But count me in as somebody who 534 00:30:36,400 --> 00:30:39,400 Speaker 1: is a very strong civil libertarian who believes that we 535 00:30:39,520 --> 00:30:43,680 Speaker 1: can fight terrorism without undermining our constitutional rights and our 536 00:30:43,720 --> 00:30:46,960 Speaker 1: privacy rights. Meanwhile, Apple will get more time to argue 537 00:30:46,960 --> 00:30:49,240 Speaker 1: against the court order to force the company to write 538 00:30:49,240 --> 00:30:52,400 Speaker 1: software to unlock the iPhone. The company now has until 539 00:30:52,480 --> 00:30:55,760 Speaker 1: next Friday instead of Tuesday. A sixteen year old boys 540 00:30:55,800 --> 00:30:58,120 Speaker 1: in a critical condition after being trapped underwater in a 541 00:30:58,160 --> 00:31:02,520 Speaker 1: tourist helicopter crash US today into Hawaii's Pearl Harbor. Global 542 00:31:02,560 --> 00:31:05,120 Speaker 1: News twenty four hours a day, powered by our two 543 00:31:05,240 --> 00:31:08,000 Speaker 1: hundred journalists more than a hundred fifty news bureaus from 544 00:31:08,000 --> 00:31:11,520 Speaker 1: around the world. Michael bar mcabar are paying attention to 545 00:31:11,560 --> 00:31:16,320 Speaker 1: the negative sixteen thousand, two ninety Stay with us. Bloomberg 546 00:31:16,400 --> 00:31:24,400 Speaker 1: Surveillance Worldwide. Bloomberg Surveillance brought you by Volvo Cars, White Planes. 547 00:31:24,520 --> 00:31:38,920 Speaker 1: Visit Volvo Cars, White Planes dot Com. Global Business News 548 00:31:38,960 --> 00:31:42,320 Speaker 1: twenty four hours a day at Bloomberg dot Com, the Radio, 549 00:31:42,360 --> 00:31:45,840 Speaker 1: plus mobile and on your radio. This is a Bloomberg 550 00:31:45,920 --> 00:31:49,000 Speaker 1: Business Flash and I'm Terry in Moscow. This updates brought 551 00:31:49,040 --> 00:31:52,200 Speaker 1: to you by National Realty Returns on cash and rented 552 00:31:52,200 --> 00:31:54,760 Speaker 1: real estate. Find them at n r i A dot net. 553 00:31:55,280 --> 00:31:58,480 Speaker 1: US stocks are following crude oil prices lower, pairing the 554 00:31:58,560 --> 00:32:01,840 Speaker 1: strongest weekly gains the US year, with investors reassessing the 555 00:32:01,840 --> 00:32:05,480 Speaker 1: path for interest rates after data showed stirring signs of inflation. 556 00:32:05,520 --> 00:32:07,960 Speaker 1: We checked the markets every fifteen minutes throughout the trading 557 00:32:08,040 --> 00:32:11,240 Speaker 1: day on Bloomberg down Jones Industrial Average down the six 558 00:32:11,280 --> 00:32:13,640 Speaker 1: tenths per cent or ninety five points to sixteen thousand, 559 00:32:13,640 --> 00:32:16,680 Speaker 1: three hundred fourteen. SNP five hundred down six tenths per 560 00:32:16,680 --> 00:32:19,600 Speaker 1: cent or eleven points to nineteen o six. The NASDACS 561 00:32:19,600 --> 00:32:21,800 Speaker 1: down four tenths per cent or fifteen points to forty 562 00:32:21,840 --> 00:32:24,960 Speaker 1: four seventy one. Ten year Treasury down three thirty seconds, 563 00:32:24,960 --> 00:32:27,240 Speaker 1: the yield one point seven five percent. The yield on 564 00:32:27,280 --> 00:32:30,480 Speaker 1: the two year points seven four percent. NIMEX Screwede oil 565 00:32:30,520 --> 00:32:34,280 Speaker 1: down three percent or ninety seven cents to a barrel. 566 00:32:34,520 --> 00:32:37,120 Speaker 1: Comacs gold up two tens percent or two dollars thirty 567 00:32:37,160 --> 00:32:40,280 Speaker 1: cents to twelve eighty an ounce. The euro A dollar 568 00:32:40,360 --> 00:32:43,960 Speaker 1: ten ninety nine, the yen one thirteen. North Strom the 569 00:32:44,000 --> 00:32:47,040 Speaker 1: worst performer in the SNP five hundred this morning, it's 570 00:32:47,080 --> 00:32:50,560 Speaker 1: down ten percent. The largest US luxury department store chain 571 00:32:50,600 --> 00:32:54,000 Speaker 1: reporting holiday results that missed analysts estimates, and the company 572 00:32:54,040 --> 00:32:57,360 Speaker 1: gave a week earnings forecast. Deer In Company, the world's 573 00:32:57,400 --> 00:33:00,840 Speaker 1: largest agricultural equipment maker, cut its fiscal full year profit 574 00:33:00,880 --> 00:33:04,959 Speaker 1: in sales forecast. It shares are down three point nine percent, 575 00:33:05,040 --> 00:33:08,440 Speaker 1: and that's a Bloomberg business flash. Tom and Mike Karen, 576 00:33:08,480 --> 00:33:11,840 Speaker 1: thank you very much. Uh. We're gonna be speaking now 577 00:33:11,920 --> 00:33:15,040 Speaker 1: with Read Morris, and he's a principal in the advisory 578 00:33:15,080 --> 00:33:20,800 Speaker 1: group for Price Waterhouse Cooper's in Houston, covering the energy industry, 579 00:33:20,960 --> 00:33:25,200 Speaker 1: and he's the US advisory energy sector leader and Read, Um, 580 00:33:25,280 --> 00:33:27,120 Speaker 1: we've talked to a lot of people who say, basically, 581 00:33:27,160 --> 00:33:29,280 Speaker 1: these days, we have no idea where oil prices are 582 00:33:29,320 --> 00:33:31,960 Speaker 1: going because they keep fooling us. We keep thinking we're 583 00:33:31,960 --> 00:33:37,560 Speaker 1: in the bottom and we're not. Uh. That said, somebody 584 00:33:37,560 --> 00:33:40,800 Speaker 1: has to make a decision in April when all the 585 00:33:40,960 --> 00:33:46,680 Speaker 1: energy company bank loans come up for their quarterly review. Uh. 586 00:33:46,760 --> 00:33:49,360 Speaker 1: And I think that the key question for everybody these 587 00:33:49,440 --> 00:33:52,160 Speaker 1: days is how many companies are gonna go out of business, 588 00:33:52,200 --> 00:33:55,680 Speaker 1: how many companies are going to uh be bought out? 589 00:33:56,520 --> 00:33:59,880 Speaker 1: How big is the carnage going to be? When the 590 00:34:00,000 --> 00:34:04,120 Speaker 1: these loans come due. It's an interesting dynamic because when 591 00:34:04,120 --> 00:34:06,560 Speaker 1: you see a lot of times is a moment of 592 00:34:06,880 --> 00:34:10,719 Speaker 1: between both the financial institutions and the operators, and a 593 00:34:10,719 --> 00:34:13,279 Speaker 1: lot of times in this case, you'll see a new 594 00:34:13,320 --> 00:34:16,319 Speaker 1: degree of flexibility come into the conversation where if the 595 00:34:16,400 --> 00:34:19,640 Speaker 1: operator is willing to take a long term on that 596 00:34:19,680 --> 00:34:22,160 Speaker 1: payment but pay more interest in the bank is looking 597 00:34:22,200 --> 00:34:24,480 Speaker 1: at the situation of do we want to actually become 598 00:34:24,520 --> 00:34:27,080 Speaker 1: an operator? And they've learned their lesson a lot of 599 00:34:27,120 --> 00:34:28,759 Speaker 1: times that they don't want to be the operator. They 600 00:34:28,760 --> 00:34:30,360 Speaker 1: just want to get a fair and safe return on that. 601 00:34:30,760 --> 00:34:33,480 Speaker 1: So what we're seeing is a lot of redeterminations are 602 00:34:33,520 --> 00:34:36,640 Speaker 1: triggering restructuring of those debt covenants, and that just kind 603 00:34:36,680 --> 00:34:39,600 Speaker 1: of allows more time for the operator to get their 604 00:34:39,600 --> 00:34:41,880 Speaker 1: house in order. Read. Let me answer the question with 605 00:34:42,000 --> 00:34:44,400 Speaker 1: p WC and with your history and energy and oil 606 00:34:44,440 --> 00:34:47,080 Speaker 1: and gas. I think it's critical my answers. I always 607 00:34:47,080 --> 00:34:49,640 Speaker 1: go to the Houston Chronicle. They know a lot more 608 00:34:49,640 --> 00:34:52,960 Speaker 1: than I know about the dynamics in the Houston Chronicle. Today, 609 00:34:53,320 --> 00:34:57,359 Speaker 1: Shell Oil wants to sub lease three fifty square feet 610 00:34:57,440 --> 00:35:00,480 Speaker 1: one Shell Plaza. Cushman and Wakefield is going to help 611 00:35:00,520 --> 00:35:03,440 Speaker 1: them with the wake. Um. You know there's a lot 612 00:35:03,520 --> 00:35:06,759 Speaker 1: of empty office space in Houston. Is this like Midland 613 00:35:06,800 --> 00:35:10,000 Speaker 1: twenties something years ago? Is there something new this time? 614 00:35:10,440 --> 00:35:14,880 Speaker 1: Is sub industries adapt to the energy collapse? That's interesting 615 00:35:14,920 --> 00:35:16,640 Speaker 1: you talked about Houston. If you talk to the commercial 616 00:35:16,640 --> 00:35:18,919 Speaker 1: real estate folks, I'll tell you when all prices are high, 617 00:35:19,080 --> 00:35:22,040 Speaker 1: the west side of Houston where the expression companies, they 618 00:35:22,040 --> 00:35:24,040 Speaker 1: do really well. When all prices are low, and east 619 00:35:24,080 --> 00:35:26,040 Speaker 1: side of town does really well where the refiner and 620 00:35:26,120 --> 00:35:28,759 Speaker 1: chemical plants are. And that's what you see and what 621 00:35:28,880 --> 00:35:31,280 Speaker 1: you're seeing a lot of times, these companies you had 622 00:35:31,400 --> 00:35:33,839 Speaker 1: a portfolio of things that spread across the value chain 623 00:35:34,040 --> 00:35:35,759 Speaker 1: and their weathering the storm because they're able to be 624 00:35:36,040 --> 00:35:40,160 Speaker 1: on a side. But that those companies that have plays 625 00:35:40,200 --> 00:35:43,200 Speaker 1: in different basins, they're having to re evaluate which ones 626 00:35:43,239 --> 00:35:45,000 Speaker 1: they want to been on long term and that's causing 627 00:35:45,080 --> 00:35:48,120 Speaker 1: some structural changes. When does the balance sheets clear? I mean, 628 00:35:48,160 --> 00:35:50,440 Speaker 1: we've been on surveillance for the last my year and 629 00:35:50,440 --> 00:35:55,160 Speaker 1: a half years. Everybody said spring spring of what's the 630 00:35:55,200 --> 00:35:58,080 Speaker 1: temperature today in Houston? It's like eighty five degrees? Right, 631 00:35:59,120 --> 00:36:01,680 Speaker 1: You're killing me? Is spring year? Yet? I mean are 632 00:36:01,719 --> 00:36:04,080 Speaker 1: we going to start to see the good will that's 633 00:36:04,120 --> 00:36:07,760 Speaker 1: bad will become no will. Well we're looking at closely 634 00:36:07,880 --> 00:36:11,120 Speaker 1: is the reserver placement ratio and the demand cycle as well. 635 00:36:11,280 --> 00:36:15,520 Speaker 1: We had historical demand growth last year in a stagnant economy, 636 00:36:15,600 --> 00:36:17,839 Speaker 1: and the reserve placement ratio was at an all time 637 00:36:17,880 --> 00:36:19,560 Speaker 1: low last year and this year. You can look at 638 00:36:19,560 --> 00:36:22,040 Speaker 1: the expiration companies. They're not gonna be drilling new wells 639 00:36:22,480 --> 00:36:24,920 Speaker 1: and it's simply the matter of the inventory of wells 640 00:36:24,920 --> 00:36:27,000 Speaker 1: that they can produce from are going to be depleted 641 00:36:27,040 --> 00:36:29,760 Speaker 1: at a steady rate and they're not bringing new wells online. 642 00:36:30,080 --> 00:36:31,719 Speaker 1: So you look at that demand side, you look at 643 00:36:31,719 --> 00:36:34,520 Speaker 1: the reserve placement ratio, and those inflection points are on 644 00:36:34,560 --> 00:36:37,360 Speaker 1: the horizon, and you look at the trading market in 645 00:36:37,440 --> 00:36:40,840 Speaker 1: the future prices of these oil contracts for two thousand, 646 00:36:40,880 --> 00:36:43,799 Speaker 1: seventeen eighteen are thirty to fifty pcent above where they 647 00:36:43,800 --> 00:36:46,719 Speaker 1: are today. So people see it coming. When is it 648 00:36:46,840 --> 00:36:49,279 Speaker 1: December of this year? Is that July of next year? 649 00:36:49,640 --> 00:36:52,319 Speaker 1: You know that's the guess. Well, there's a question though 650 00:36:52,320 --> 00:36:55,560 Speaker 1: that comes up when we talk about this, and to 651 00:36:55,600 --> 00:36:57,440 Speaker 1: get to what you said earlier in the show, the 652 00:36:57,480 --> 00:37:00,960 Speaker 1: cure for rising prices is rising prices. The feeling is 653 00:37:01,360 --> 00:37:04,320 Speaker 1: the price goes up, the fractors just turned the taps 654 00:37:04,320 --> 00:37:08,080 Speaker 1: out again. If it was only that easy. But the 655 00:37:08,160 --> 00:37:10,880 Speaker 1: swing producer role that the shale players are gonna have 656 00:37:11,080 --> 00:37:14,440 Speaker 1: is legitimate. There's a significant number of oils have been 657 00:37:14,480 --> 00:37:17,560 Speaker 1: drilled but not completed, and also there's a significant amount 658 00:37:17,560 --> 00:37:20,080 Speaker 1: of wild that's in storage these days. What that does 659 00:37:20,200 --> 00:37:23,399 Speaker 1: for the overall economies it flattens out that price spike 660 00:37:23,480 --> 00:37:25,200 Speaker 1: that we may have had in the past because the 661 00:37:25,239 --> 00:37:29,000 Speaker 1: only swing producers were the large national companies. The Actually, 662 00:37:29,080 --> 00:37:31,840 Speaker 1: when we're talking dark clients, we're saying that the forward 663 00:37:31,840 --> 00:37:34,080 Speaker 1: look isn't going to have that hockey stick effect, but 664 00:37:34,120 --> 00:37:36,720 Speaker 1: it's gonna be a more of a saw tooth effect. 665 00:37:36,800 --> 00:37:38,920 Speaker 1: And you know, with a slow walk up as opposed 666 00:37:38,960 --> 00:37:41,440 Speaker 1: to the spike, you have perfect preparation for this. You 667 00:37:41,480 --> 00:37:45,200 Speaker 1: have a degree in psychology from Southwestern at University. What 668 00:37:45,360 --> 00:37:49,000 Speaker 1: is the psychology of independent oil? I mean I understand exons, 669 00:37:49,040 --> 00:37:51,960 Speaker 1: a bank, etcetera, etcetera. And there's all the big companies, 670 00:37:52,000 --> 00:37:56,239 Speaker 1: we know, mid tier and small guys, what's their psychology now? 671 00:37:57,320 --> 00:38:00,799 Speaker 1: They they love to be in the growth mode, and 672 00:38:01,000 --> 00:38:03,319 Speaker 1: this mode is where the hard work has to get done. 673 00:38:03,800 --> 00:38:07,640 Speaker 1: There's at least twenty cost involved in the total life 674 00:38:07,640 --> 00:38:09,960 Speaker 1: cycle of these wells that can still be leaned out. 675 00:38:10,160 --> 00:38:13,800 Speaker 1: But that's nickels and dimes. And it's ironic when oils 676 00:38:13,800 --> 00:38:16,560 Speaker 1: around nine and two thousand and fourteen, we were talking 677 00:38:16,560 --> 00:38:18,720 Speaker 1: to our clients, not saying we're going to predict the price, 678 00:38:18,800 --> 00:38:21,800 Speaker 1: but pressure testing. Are you ready for a fifty environment? 679 00:38:22,239 --> 00:38:23,960 Speaker 1: And I can't tell him and my clients that are 680 00:38:24,000 --> 00:38:26,560 Speaker 1: friends that just told me, don't be dramatic read respect 681 00:38:26,640 --> 00:38:28,480 Speaker 1: you too much, but now you're kind of upsetting us. 682 00:38:29,280 --> 00:38:32,040 Speaker 1: Flast forward a year and after that price is now 683 00:38:32,120 --> 00:38:36,439 Speaker 1: dropping fast and they're able to actually pivot um. It's 684 00:38:36,560 --> 00:38:41,000 Speaker 1: amazing to see how this industry can really buckle down nine. 685 00:38:41,080 --> 00:38:43,520 Speaker 1: When oil went to thirty eight, they survived because they 686 00:38:43,520 --> 00:38:45,400 Speaker 1: know how to rotate the business and get down to 687 00:38:45,400 --> 00:38:47,640 Speaker 1: those nickels and dimes. And that's what they're doing right now. Well, 688 00:38:47,680 --> 00:38:50,239 Speaker 1: not that you're doing market economics, but it's Friday. Do 689 00:38:50,320 --> 00:38:58,319 Speaker 1: you wc have a call on oil? No? Did you ever? 690 00:38:58,480 --> 00:39:01,080 Speaker 1: In other words, has everybody gotten out of the business 691 00:39:01,120 --> 00:39:04,360 Speaker 1: at this point of calling oil? Now? If I was 692 00:39:04,440 --> 00:39:06,239 Speaker 1: that good, I would be sitting on a beach in 693 00:39:06,280 --> 00:39:09,160 Speaker 1: the Caribbean. Well, I'm sure a lot of people would 694 00:39:09,200 --> 00:39:14,120 Speaker 1: if especially if you're figured out a way to short it. Um. 695 00:39:14,440 --> 00:39:17,319 Speaker 1: Interesting point that you make here in your note is 696 00:39:17,520 --> 00:39:25,640 Speaker 1: the contango market um suggesting that traders know something about 697 00:39:25,680 --> 00:39:29,080 Speaker 1: what's going to happen. But is it a question of 698 00:39:29,800 --> 00:39:33,759 Speaker 1: just thinking logically or do they actually have a clue 699 00:39:33,840 --> 00:39:37,520 Speaker 1: as to where we're gonna go. Everyone has access to 700 00:39:37,680 --> 00:39:39,839 Speaker 1: relatively the same data, and so it's a matter of 701 00:39:40,000 --> 00:39:43,399 Speaker 1: which pattern or cycle do you want to put your 702 00:39:43,400 --> 00:39:46,400 Speaker 1: money into. And there's really four main drivers to this 703 00:39:46,440 --> 00:39:50,799 Speaker 1: whole thing, separate from the government side of things and 704 00:39:50,840 --> 00:39:53,760 Speaker 1: the socio economic things and the stability of the different 705 00:39:53,760 --> 00:39:56,520 Speaker 1: regions the world, and those four things of the financial markets, 706 00:39:56,600 --> 00:40:00,959 Speaker 1: the demand side operations, and then the rocks and each 707 00:40:01,000 --> 00:40:02,640 Speaker 1: one of us in this industry you know that those 708 00:40:02,680 --> 00:40:04,279 Speaker 1: four are the things to pay attention to. And you 709 00:40:04,320 --> 00:40:05,880 Speaker 1: just have your own point of view. Run is the 710 00:40:05,960 --> 00:40:08,520 Speaker 1: US dollar gonna get stronger or weaker? And a lot 711 00:40:08,520 --> 00:40:10,920 Speaker 1: of people in the industry know the stronger the US dollars, 712 00:40:11,040 --> 00:40:13,440 Speaker 1: the more the price of wall gets traded down. And 713 00:40:13,560 --> 00:40:16,839 Speaker 1: so those types of drivers that everyone is studying and 714 00:40:17,000 --> 00:40:19,200 Speaker 1: everyone has their own models to take a look at them. 715 00:40:19,320 --> 00:40:22,879 Speaker 1: One final question quickly, Uh, would you advise a young 716 00:40:23,000 --> 00:40:29,960 Speaker 1: upstart to go into petroleum engineering? Absolutely, as it's a 717 00:40:30,320 --> 00:40:34,120 Speaker 1: it's a fascinating industry and it's grossly underappreciate it. But 718 00:40:34,160 --> 00:40:35,879 Speaker 1: when you actually get into the industry and you see 719 00:40:35,920 --> 00:40:39,200 Speaker 1: the goodness that the industry does for all different parts 720 00:40:39,200 --> 00:40:42,320 Speaker 1: of our our life, those of us in the industry, 721 00:40:42,360 --> 00:40:43,680 Speaker 1: we take a lot of pride in the fact that 722 00:40:43,719 --> 00:40:45,680 Speaker 1: there's a lot of things that happened in this world 723 00:40:45,719 --> 00:40:49,160 Speaker 1: because there's a reliable and safe supply of energy. And 724 00:40:49,200 --> 00:40:51,279 Speaker 1: to be one of the young upstarts who's learning their 725 00:40:51,280 --> 00:40:54,120 Speaker 1: way through that, it's a great career to have. You 726 00:40:54,400 --> 00:40:56,960 Speaker 1: get to learn a huge amount about the emerging technologies 727 00:40:57,000 --> 00:40:58,399 Speaker 1: and then you get to go home and not knowing 728 00:40:58,400 --> 00:41:01,279 Speaker 1: that you actually made a positive contribute. Read Morrison, thank 729 00:41:01,320 --> 00:41:03,799 Speaker 1: you so much. With p WC on AMAG. You know, Mike, 730 00:41:03,840 --> 00:41:06,839 Speaker 1: I didn't get to the philosophical question a moment. Where 731 00:41:06,840 --> 00:41:11,080 Speaker 1: did the Houston Astros go for spring training? It's already 732 00:41:11,719 --> 00:41:14,799 Speaker 1: I think in Arizona. They go to Arizona. I've never 733 00:41:14,840 --> 00:41:17,000 Speaker 1: done it, have you gone to the cast, not to 734 00:41:17,040 --> 00:41:20,080 Speaker 1: the Cactus League. We should do that something it says remote, 735 00:41:20,120 --> 00:41:22,360 Speaker 1: I mean, why you what do you think? Why it 736 00:41:22,440 --> 00:41:30,000 Speaker 1: doesn't even know what baseball is? Very good? No, I 737 00:41:30,040 --> 00:41:35,480 Speaker 1: am wrong, surveillance correction. The Houston Astros are in Kissime, Florida, 738 00:41:36,000 --> 00:41:39,000 Speaker 1: there in the Grapefruit I would have guessed Arizona, and 739 00:41:39,840 --> 00:41:44,000 Speaker 1: I am I have been to the Grapefruit League. I 740 00:41:44,080 --> 00:41:46,800 Speaker 1: haven't been to the Astros. Well, there we go baseball. 741 00:41:46,920 --> 00:41:49,600 Speaker 1: It is exciting. Douglas cast out with timely notes and 742 00:41:49,640 --> 00:41:53,719 Speaker 1: picture show with Doug cast to spring training. I think 743 00:41:53,719 --> 00:41:58,200 Speaker 1: we should let's start the message happy Happy Friday, Doug 744 00:41:58,280 --> 00:42:02,560 Speaker 1: and everybody in the Phoenix area and in all over 745 00:42:02,640 --> 00:42:07,319 Speaker 1: Florida in the Cactus we need to say thank you 746 00:42:07,360 --> 00:42:09,120 Speaker 1: to our team. They've done a great job in a 747 00:42:09,280 --> 00:42:11,680 Speaker 1: very odd and strange week. Of course we leave it 748 00:42:11,719 --> 00:42:16,960 Speaker 1: with oil barrel uh down a dollar and change. It's 749 00:42:17,000 --> 00:42:20,400 Speaker 1: worth watching into the afternoon. But within the clumsiness of 750 00:42:20,400 --> 00:42:22,720 Speaker 1: the week, we had a killer Friday thanks to our team, 751 00:42:22,960 --> 00:42:26,920 Speaker 1: particularly nine o'clock hour Read Morrison, Scott Galloway joining us 752 00:42:26,960 --> 00:42:29,600 Speaker 1: and dig them from JP Morgan on short notice. We 753 00:42:29,680 --> 00:42:34,160 Speaker 1: really appreciate guests who, particularly on short notice, can drop 754 00:42:34,200 --> 00:42:38,960 Speaker 1: everything to come to you. Our global perspect just terrific. 755 00:42:39,440 --> 00:42:42,520 Speaker 1: We are produced by Why You and our global technical director, 756 00:42:42,920 --> 00:42:45,840 Speaker 1: Ken Falio. It's Bloomberg surveillance