1 00:00:03,160 --> 00:00:07,480 Speaker 1: Broadcasting live to New York, Bloomberg eleventh RYO to Washington, 2 00:00:07,560 --> 00:00:11,080 Speaker 1: d C, Bloomberg nine nine one to Boston, Bloomberg twelve 3 00:00:11,160 --> 00:00:14,800 Speaker 1: hundred to San Francisco, Bloomberg nine sixty to the Country 4 00:00:14,960 --> 00:00:18,520 Speaker 1: Series Exam General one ninety and around the globe the 5 00:00:18,520 --> 00:00:23,120 Speaker 1: Bloomberg Radio Plus Appen Bloomberg dot com. This is Bloomberg Surveillance. 6 00:00:23,680 --> 00:00:26,040 Speaker 1: Good morning. I'm Karen Moscow along with Tom Keene and 7 00:00:26,079 --> 00:00:28,480 Speaker 1: Michael McKee on the opening valve brought to you by 8 00:00:28,520 --> 00:00:32,640 Speaker 1: se I Imagine your asset management firms operational infrastructure as 9 00:00:32,640 --> 00:00:35,760 Speaker 1: a competitive advantage. Let see I show you how at 10 00:00:35,800 --> 00:00:39,320 Speaker 1: se i C dot com slash imagine stocks lower at 11 00:00:39,360 --> 00:00:42,239 Speaker 1: the open. The sn P five hundred is down about 12 00:00:42,240 --> 00:00:44,600 Speaker 1: a tenth of upper sent down almost three points to 13 00:00:45,400 --> 00:00:48,160 Speaker 1: six down. Jones Industrial Average down a tenth of upper 14 00:00:48,159 --> 00:00:51,640 Speaker 1: Center nineteen points to seventeen thousand, five hundred seventy six. 15 00:00:51,880 --> 00:00:54,760 Speaker 1: Then Astact down two tenths percent or eight points to 16 00:00:54,840 --> 00:00:58,400 Speaker 1: forty eight seven. Tenure Treasury down ten thirty seconds. The 17 00:00:58,480 --> 00:01:00,640 Speaker 1: yield one point nine zero person. That yield on the 18 00:01:00,680 --> 00:01:03,600 Speaker 1: two year point eight five percent no imax screwed oil 19 00:01:03,640 --> 00:01:07,440 Speaker 1: up a quarter percent or ten cents a barrel. Comic 20 00:01:07,520 --> 00:01:10,440 Speaker 1: school down seven or eight dollars twenty cents at twelve 21 00:01:10,520 --> 00:01:14,280 Speaker 1: forty six ten announced the euro a dollar twelve seventy 22 00:01:14,319 --> 00:01:17,120 Speaker 1: three the end one eleven point seven four. Tom and 23 00:01:17,160 --> 00:01:20,600 Speaker 1: Mike Karen thanks so much. He's a former chairman of 24 00:01:20,600 --> 00:01:25,319 Speaker 1: the SEC Arthur Lovitt Arthur. It never goes away. It 25 00:01:25,480 --> 00:01:28,720 Speaker 1: is part of the human condition, which is a bloomberg 26 00:01:28,760 --> 00:01:36,400 Speaker 1: headline that says, material misstatements and therefore and therefore, why 27 00:01:36,520 --> 00:01:42,760 Speaker 1: can't we get auditing and accounting that works. With Valiant 28 00:01:42,840 --> 00:01:47,320 Speaker 1: and with others we just don't see it. Material weaknesses 29 00:01:47,680 --> 00:01:52,000 Speaker 1: exist and turn Why is this so hard? Well, I 30 00:01:52,040 --> 00:01:56,080 Speaker 1: guess it's because accounting is really an art rather than 31 00:01:56,120 --> 00:02:01,240 Speaker 1: a science. It's you can't remove some of the subjectivity 32 00:02:01,400 --> 00:02:08,520 Speaker 1: from it. The rules have never been so totally precise that, uh, 33 00:02:08,560 --> 00:02:13,040 Speaker 1: it's either black or white. There are grays, and so 34 00:02:13,280 --> 00:02:16,000 Speaker 1: be it. It's going to be that way forever. We've 35 00:02:17,040 --> 00:02:22,360 Speaker 1: even politicized accounting issues, as arcane as that may seem, 36 00:02:22,400 --> 00:02:26,040 Speaker 1: it isn't just going by the book, it's interpreting the book. 37 00:02:26,880 --> 00:02:31,640 Speaker 1: And that's where the lines get very fuzzy. I think 38 00:02:31,639 --> 00:02:36,639 Speaker 1: in the Valiant case, that's a different issue. I think 39 00:02:36,720 --> 00:02:41,280 Speaker 1: that's really not a debatable issue. Well you had, I mean, 40 00:02:41,320 --> 00:02:45,760 Speaker 1: you go all the way back to when Citron Research 41 00:02:46,480 --> 00:02:51,280 Speaker 1: first suggested in a market commentary that there was accounting 42 00:02:51,320 --> 00:02:57,799 Speaker 1: problem with the Philidor Company and Valiant, and at that 43 00:02:57,840 --> 00:03:03,240 Speaker 1: time Michael Pearson, the CEO who is leaving, blasted them 44 00:03:03,880 --> 00:03:09,320 Speaker 1: for being alarmist. Uh. It seems like at this point 45 00:03:09,800 --> 00:03:11,480 Speaker 1: it's good to have these kind of people who are 46 00:03:11,880 --> 00:03:15,280 Speaker 1: digging into company accounting because you can't necessarily trust what 47 00:03:15,360 --> 00:03:18,640 Speaker 1: you hear from the companies. No, I think that's true, 48 00:03:18,720 --> 00:03:23,880 Speaker 1: and that's why you do have accounting overseers. And the 49 00:03:24,080 --> 00:03:29,280 Speaker 1: notion of accountants being paid by their client does remove 50 00:03:29,480 --> 00:03:35,520 Speaker 1: the kind of total on objectivity that in a perfect 51 00:03:35,600 --> 00:03:39,520 Speaker 1: world you'd have. But we don't have a perfect world, 52 00:03:39,600 --> 00:03:44,320 Speaker 1: and all too often the audit function is put behind 53 00:03:44,480 --> 00:03:49,760 Speaker 1: the consulting function. Yeah, and no leverage that gives is enormous, 54 00:03:49,760 --> 00:03:52,760 Speaker 1: delicately stated David Anselm. Will join a Valiant here in 55 00:03:52,800 --> 00:03:56,320 Speaker 1: a bit, folks with Piper Jeffrey has been very good. Arthur. 56 00:03:56,360 --> 00:03:59,280 Speaker 1: I am so glad you're on. You bring up the 57 00:03:59,320 --> 00:04:04,880 Speaker 1: most important must reading corporate America. It is an annual visit, folks. No, 58 00:04:05,120 --> 00:04:10,000 Speaker 1: not the guy from Omaha. Mr Wilmer's from Buffalo, New York. 59 00:04:10,080 --> 00:04:13,560 Speaker 1: It is the single best what's called M d n 60 00:04:13,600 --> 00:04:16,800 Speaker 1: A written out there, Arthur, thank you for highlighting it. 61 00:04:17,279 --> 00:04:20,719 Speaker 1: Mr Wilmer's on the state of our student loan tobaccle. 62 00:04:20,800 --> 00:04:24,880 Speaker 1: He's really quite sharp, isn't he? He really is. Bob 63 00:04:24,920 --> 00:04:30,279 Speaker 1: Wilmer's CEO of the M and T Bank, is probably 64 00:04:30,400 --> 00:04:35,640 Speaker 1: the most effective bank leader in America. And he's recently 65 00:04:35,680 --> 00:04:40,560 Speaker 1: written a piece that calls out the eliminating of the 66 00:04:40,640 --> 00:04:46,600 Speaker 1: federal student loan guarantee program for not really having reduced 67 00:04:46,640 --> 00:04:51,440 Speaker 1: costs to taxpayers, and that the increased debt has contributed 68 00:04:51,480 --> 00:04:56,400 Speaker 1: to lower rates of household formation and home ownership. And 69 00:04:56,560 --> 00:05:02,840 Speaker 1: Bob claims blames the UH that's the Durban Amendment to 70 00:05:03,040 --> 00:05:07,840 Speaker 1: Dodd Frank for imposing price controls on interchange fees that 71 00:05:07,920 --> 00:05:12,000 Speaker 1: banks charge retailers with the hope that their savings can 72 00:05:12,000 --> 00:05:16,400 Speaker 1: be passed on to consumers. And Bob says, and he's right, 73 00:05:16,760 --> 00:05:22,719 Speaker 1: this is simply not happening. We got so he calls 74 00:05:22,760 --> 00:05:27,280 Speaker 1: it straight. Uh, I gotta ask you about you know, 75 00:05:27,400 --> 00:05:31,679 Speaker 1: we're talking about all of these issues here. The consolidated 76 00:05:31,760 --> 00:05:35,880 Speaker 1: audit trail um this is something SEC has been working on. 77 00:05:36,160 --> 00:05:39,120 Speaker 1: Is this something that would factor into some of these cases? 78 00:05:40,960 --> 00:05:45,840 Speaker 1: I think it would. I think that the consolidated audit 79 00:05:45,920 --> 00:05:51,600 Speaker 1: trail is something that regulators, particularly the SEC, have been 80 00:05:51,680 --> 00:05:57,760 Speaker 1: talking about now for nearly thirty years, and finally it 81 00:05:57,920 --> 00:06:02,599 Speaker 1: appears that we're going to have such an audit trail, 82 00:06:02,760 --> 00:06:08,279 Speaker 1: and that's going to be of enormous importance to regulators 83 00:06:09,360 --> 00:06:16,600 Speaker 1: to follow in real time exactly what's being done by 84 00:06:16,720 --> 00:06:21,320 Speaker 1: those who might wish to manipulate our markets. And that 85 00:06:21,560 --> 00:06:26,000 Speaker 1: following is really instantaneous. The system has been hampered by 86 00:06:26,160 --> 00:06:33,240 Speaker 1: constant delays, but really represents a terrific accomplishment for Chairman 87 00:06:33,920 --> 00:06:37,280 Speaker 1: Mary Joe White, and I think she should be applauded 88 00:06:37,360 --> 00:06:43,839 Speaker 1: for finally driving this home after many, many years of effort. Arthur, 89 00:06:43,960 --> 00:06:45,600 Speaker 1: thank you so much. Arthur love It with us the 90 00:06:45,680 --> 00:06:50,039 Speaker 1: former chairman of the SEC, and it greatly appreciates his perspective. 91 00:06:50,120 --> 00:06:52,840 Speaker 1: I just put out on Twitter with great thanks to 92 00:06:52,920 --> 00:06:56,840 Speaker 1: Chairman love It. The actual annual report for M and 93 00:06:56,920 --> 00:07:00,680 Speaker 1: T Bank to give you an idea, m DNA are 94 00:07:00,839 --> 00:07:07,640 Speaker 1: usually three maybe six pages is long. Mr Wilmer's m 95 00:07:07,760 --> 00:07:12,720 Speaker 1: d NA is thirty pages six six to thirty six. 96 00:07:12,800 --> 00:07:16,320 Speaker 1: So that's out on Twitter from mt in thank David 97 00:07:16,400 --> 00:07:19,200 Speaker 1: Anselom joins us now from Piper Jeffrey. David, good morning, 98 00:07:19,840 --> 00:07:23,600 Speaker 1: Good morning, tumultuous morning. What is your first to do 99 00:07:23,840 --> 00:07:28,840 Speaker 1: for Mr Ackman and the new board members? Well, um, 100 00:07:29,360 --> 00:07:33,000 Speaker 1: no easy fixes, no easy answers, but UM, I think 101 00:07:33,080 --> 00:07:38,600 Speaker 1: the first thing is the really clean house, UM, and 102 00:07:39,200 --> 00:07:44,480 Speaker 1: bring some financial discipline UM to the company. Bring some 103 00:07:45,160 --> 00:07:48,720 Speaker 1: adequate internal controls into the company. I mean that's really 104 00:07:48,800 --> 00:07:52,360 Speaker 1: the first order of business. Have the company, uh start 105 00:07:52,480 --> 00:07:56,360 Speaker 1: to be run professionally, David. I want I gotta be 106 00:07:56,440 --> 00:07:59,760 Speaker 1: delicate here within securities analysis and the pressures you face 107 00:07:59,840 --> 00:08:03,240 Speaker 1: at Piper Jeffrey. There's always a question about going concern 108 00:08:03,840 --> 00:08:07,320 Speaker 1: is the securities analyst and your good track record is 109 00:08:07,480 --> 00:08:10,880 Speaker 1: valiant this morning a going concern that you and your 110 00:08:10,920 --> 00:08:15,960 Speaker 1: general council feel you can still cover? Um? Can I 111 00:08:16,040 --> 00:08:19,080 Speaker 1: still cover it? Can you still cover it? Given accounting, 112 00:08:19,160 --> 00:08:23,680 Speaker 1: tumult Well, for now I could cover it. Do we 113 00:08:23,840 --> 00:08:27,360 Speaker 1: know when we will see audited financial as? The answer 114 00:08:27,560 --> 00:08:32,000 Speaker 1: is the answer is no. For now, I will say yes, Um, 115 00:08:32,760 --> 00:08:36,440 Speaker 1: as this drags out. If it drags out, um, it's 116 00:08:36,480 --> 00:08:39,520 Speaker 1: a fair question to ask. But for now the answer 117 00:08:39,760 --> 00:08:43,240 Speaker 1: is yes. The yeah. The question is can they continue 118 00:08:43,320 --> 00:08:47,000 Speaker 1: to sell the drugs that they own or are they 119 00:08:47,040 --> 00:08:51,040 Speaker 1: going to have to find somebody else to take them over? Well, 120 00:08:51,120 --> 00:08:53,959 Speaker 1: I think for now that the answer is yes. You know, 121 00:08:54,200 --> 00:08:56,240 Speaker 1: there's a but there is a lot of question marks 122 00:08:56,360 --> 00:09:01,880 Speaker 1: regarding their customer relationships. So um, that's going to remain 123 00:09:02,000 --> 00:09:04,600 Speaker 1: to be seen. I mean, this is not a company 124 00:09:04,800 --> 00:09:09,839 Speaker 1: that has a lot of friends in the pharmaceutic Okay, David, 125 00:09:09,840 --> 00:09:12,960 Speaker 1: We've gotta leave it there, unfortunately. David Anson with Piper Jeffrey. 126 00:09:13,080 --> 00:09:20,160 Speaker 1: This morning This hour Savanan Spotty by Volvo Cars, White Planes. 127 00:09:20,240 --> 00:09:22,640 Speaker 1: Visit Volvo Cars, White Planes dot Com. Here's Mike a 128 00:09:22,720 --> 00:09:25,160 Speaker 1: bar with headlines My Tom, Thank you very much. President 129 00:09:25,200 --> 00:09:28,720 Speaker 1: Obama is in today two of his history trip to Cuba. Today, 130 00:09:28,800 --> 00:09:33,319 Speaker 1: President Obama will meet with Cuban President Raul Castro. President 131 00:09:33,360 --> 00:09:36,439 Speaker 1: Obama and an exclusive interview with ABC. David Muir was 132 00:09:36,480 --> 00:09:39,720 Speaker 1: asked about the future of the longtime US and bargo 133 00:09:39,800 --> 00:09:42,640 Speaker 1: of Cuba. There's no doubt that we still have some 134 00:09:42,720 --> 00:09:44,760 Speaker 1: work to do and a part of that is bringing 135 00:09:45,280 --> 00:09:48,600 Speaker 1: an end to the embargo that isn't currently in place. 136 00:09:48,720 --> 00:09:52,120 Speaker 1: Does that happen during your presidency. It may not happen 137 00:09:52,240 --> 00:09:55,000 Speaker 1: between now and then, particularly since we're in an election year, 138 00:09:55,360 --> 00:09:58,000 Speaker 1: but it is an evident President Obama says. One of 139 00:09:58,080 --> 00:10:01,400 Speaker 1: the things that will be announced is that Google has 140 00:10:01,480 --> 00:10:04,199 Speaker 1: a deal to start setting up more WiFi access and 141 00:10:04,320 --> 00:10:08,679 Speaker 1: broadband access in Cuba. All the Republican and Democratic presidential 142 00:10:08,720 --> 00:10:14,080 Speaker 1: candidates except Bernie Sanders will address America's leading pro Israel group. 143 00:10:14,360 --> 00:10:17,880 Speaker 1: Democrat Hillary Clinton will speak to the American Israel Public 144 00:10:17,920 --> 00:10:22,199 Speaker 1: Affairs Committee Policy Conference in Washington this morning. Tonight, it 145 00:10:22,200 --> 00:10:25,319 Speaker 1: will be Donald Trump who speaks to the group. Police 146 00:10:25,440 --> 00:10:28,840 Speaker 1: and Turkey are searching for three suspected Islamic State militants 147 00:10:28,840 --> 00:10:31,679 Speaker 1: who they believe are planning to carry out a sensational 148 00:10:31,760 --> 00:10:34,839 Speaker 1: act in the country. Turkey has been rocked by six 149 00:10:34,880 --> 00:10:38,200 Speaker 1: suicide bombings since the summer. Global News twenty four hours 150 00:10:38,280 --> 00:10:41,520 Speaker 1: a day, powered by our journalists and more than a 151 00:10:41,600 --> 00:10:44,080 Speaker 1: hundred fifty news bureaus from around the world. I'm Michael 152 00:10:44,160 --> 00:10:47,200 Speaker 1: bar Tom Micha, thanks so much. We greatly thank David 153 00:10:47,240 --> 00:10:49,760 Speaker 1: Anselman of Piper Jeoffrey for dropping in for just a 154 00:10:49,840 --> 00:10:54,720 Speaker 1: few short minutes. This uh crazy morning for Valiant with more. 155 00:10:55,080 --> 00:11:02,680 Speaker 1: This is Bloomberg's Surveillance. Blombergs amillance is brought you by 156 00:11:02,679 --> 00:11:05,160 Speaker 1: WITHAM Smith and Brown cb as audit, tax and advisory 157 00:11:05,200 --> 00:11:07,520 Speaker 1: services to help your business being a position of strength. 158 00:11:07,720 --> 00:11:10,720 Speaker 1: Experienced the WITHAM way by visiting WITHAM dot com.