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Speaker 1: Global business news twenty four hours a day. If Bloomberg

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Speaker 1: dot com, the radio plus mobile act and on your radio,

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Speaker 1: this is a Bloomberg Business Flash and I'm Carra at Moscow.

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Speaker 1: This updates brought to you by Interactive Brokers and CME Group.

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Speaker 1: If you're looking for global futures contracts with low trading costs,

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Speaker 1: more at Interactive Brokers dot com slash, CME Group US

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Speaker 1: dot Index futures are lower, mirroring a slide in oil

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Speaker 1: prices and an indication the SNP fill pair a relief

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Speaker 1: rally that put it on track for the best weeks

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Speaker 1: ince November. We checked the markets every fifteen minutes throughout

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Speaker 1: the trading day on Bloomberg SNP eveny futures down twelve

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Speaker 1: points down eveny futures down ninety four and NAS documuny

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Speaker 1: futures down twenty seven decks. In Germany's down nine tenths

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Speaker 1: per set ten year treasury down seven thirty seconds, the

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Speaker 1: yield one point seven six percent yield on the two

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Speaker 1: year point seven five percent, Ninemex screwt oil down about

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Speaker 1: four percent. It's down a dollar twenty one to twenty

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Speaker 1: nine dollars five six cents of barrel and comics gold

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Speaker 1: is little change at twelve the euro of dollar three

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Speaker 1: the end one twelve point nine and nine. That's a

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Speaker 1: Bloomberg business flash. Tom and Mike Karen, thank you so much.

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Speaker 1: A future is negative twelve watching oil the barrel. In

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Speaker 1: the summer of two thousand and twelve, Michael McKee, I

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Speaker 1: bought two thousand acres of Iowa farmland top of the market. Really,

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Speaker 1: corn is down fifty four percent. Remember green Acres. And

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Speaker 1: see you in the Eddie Albert role. I can see

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Speaker 1: she is. You're married to abagi boar. She's like a boar.

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Speaker 1: Went out with me and I wore my suit and

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Speaker 1: bowtime and digged and just shook her head and said,

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Speaker 1: Tom you are seeing you see Tommy market? Can you

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Speaker 1: see Tommy in overalls with you know, a little little

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Speaker 1: grain hanging out of his mouth? There? No, but I

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Speaker 1: will tell you I moved of the United States because

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Speaker 1: of Green Acres, Because when I was three years old,

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Speaker 1: I told my mother farmers wives in America were ball downs.

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Speaker 1: I'm going to live in America. I like that. Spolks

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Speaker 1: with us in diagnon of JP mortgage. She is authoritative

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Speaker 1: on dear caterpillar and what goes on across agricultural America

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Speaker 1: and what is different in the farm collapse this time around? Seriously,

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Speaker 1: forget about me buying Iowa acreage. What's different this time

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Speaker 1: or is it just all the same story? You know,

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Speaker 1: at the end of the day, high prices fixed high prices.

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Speaker 1: We've gone through seven years of great agricultural profits. And

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Speaker 1: what that did was it attracted planting around the world.

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Speaker 1: We saw planting increase in places like Brazil, in Argentina,

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Speaker 1: in Russia, Ukraine, Australia and Commander with decent weather, and

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Speaker 1: we not find ourselves with except supply of all of

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Speaker 1: our major crops. Of course, the strong dollar doesn't help,

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Speaker 1: and it is not a surprise from deer today. I mean,

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Speaker 1: farmers income is gonna be lower, so they're gonna be

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Speaker 1: buying less stuff. Uh, And I mean really it's farm

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Speaker 1: equipment sales were sort of like auto sales for a while.

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Speaker 1: I mean they were just going through the roof. Yeah,

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Speaker 1: I think that's very fair. I think the question for

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Speaker 1: investors is really around how long is the down cycle?

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Speaker 1: You know, when when do we start to see farmers

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Speaker 1: spend again, and it could be a long time because

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Speaker 1: at the end of the day, tractors last forever, tractors

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Speaker 1: less forever, and the technologies there. What does it signal

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Speaker 1: about how new companies adapted changes. I mean, we make

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Speaker 1: a lot of smoking uh fire about General Electric becoming

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Speaker 1: a new industrial Might you and I N studied John

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Speaker 1: Deer for lousy accounting decades ago within the c f

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Speaker 1: A program. Okay, fine, it's a new John Deer, But

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Speaker 1: is it a John Deer or a Caterpillar? There are

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Speaker 1: more supple Can they adapt? Can Sam Allen adapt? Well? Again?

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Speaker 1: What investors look for during down turns in machinery companies

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Speaker 1: is how well are they managing what we call the

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Speaker 1: decremental profits. They have no control over the revenue per se,

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Speaker 1: but they have control over how quickly they can take

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Speaker 1: out cost and that's what we measured managements on. Dear

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Speaker 1: delivered a decent decremental profit today of about twenty six percent.

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Speaker 1: On the agricultural side, However, I would caution that there

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Speaker 1: are questions to be answered on the conference calling that

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Speaker 1: while their revenues were down twelve percent in agriculture, at

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Speaker 1: their inventories were only down six percent, So the question

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Speaker 1: is where they kind of stuffing the channel or keeping

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Speaker 1: the factories running when they shouldn't have been just to

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Speaker 1: make those profit numbers. So, you know, there are some

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Speaker 1: questions we have to see whether Sam Allen is indeed

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Speaker 1: running the business for the long term or for efficiencies.

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Speaker 1: That was where right where I want to go? The

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Speaker 1: inventories a hundred one days? Um, how does that affect

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Speaker 1: a farming equipment company. If it were an auto company,

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Speaker 1: they would just have end of the year going out

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Speaker 1: of this, you know, clearance sale. Uh. But does this

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Speaker 1: mean does this push down on dear earnings way out

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Speaker 1: into the future? Uh? That that's the sixty million dollar question. Frankly,

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Speaker 1: there is a little bit of seasonality in agriculture, right

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Speaker 1: They tend to build a little bit of inventory in

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Speaker 1: the winter so that they're prepared for tractor sales and

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Speaker 1: combined sales later in the year. So, you know, we'll

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Speaker 1: have to see how orders are, whether farmers really are

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Speaker 1: placing any orders, or whether this you know, just pushes

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Speaker 1: the the issue further out into the later and even

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Speaker 1: into do they have a lot of capex to play

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Speaker 1: with them? Looking at the financiers off the Bloomberg and

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Speaker 1: died into see m L and have a lot of

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Speaker 1: wiggle room on maintaining free cash flow and keeping constructive

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Speaker 1: use of cash. Yeah, they have a pretty lean balance sheet,

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Speaker 1: that's for sure. And they did, um, you know, they

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Speaker 1: did keep cash on the balance sheet in the good times.

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Speaker 1: I think Sam rightly appreciates that his business is technical,

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Speaker 1: so you know, they do have a fair amount wiggle

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Speaker 1: room and the bound sheet. I don't expect anything like

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Speaker 1: a different cut or any thing like that, so uh,

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Speaker 1: you know, maybe we have to address that a year

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Speaker 1: from now if things aren't any better. But right now,

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Speaker 1: I think the balance sheets in good shape. And dog

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Speaker 1: didn thank you so much. She's with JP Morgan and

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Speaker 1: John Dear and she will go to a conference call attending.

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Speaker 1: I'm our Rachel Lane of Bloomberg News and Bloomberg First

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Speaker 1: World will be out worldwide with reporting on that conference

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Speaker 1: called as well. Ms Lane is the first person Michael

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Speaker 1: McKee other than Mike Bloomberg I ever spoke to at Bloomberg.

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Speaker 1: And she's still talking to you. She's still talking to me,

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Speaker 1: even though we are both diehard Red Sox fans and

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Speaker 1: we totally disagree on what the rarest need to do.

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Speaker 1: This year. Deer shares down four in pre market trading

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Speaker 1: and you know everybody's right, everybody's wrong in the in

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Speaker 1: the Hardball of salth Side and Iden went to an

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Speaker 1: underweight on John Deere like three years ago. I mean

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Speaker 1: she's been brilliant on getting out in front of the

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Speaker 1: structural challenges as well. Um Green Acres, which was a

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Speaker 1: few years ago. And Iden came to America from her Scotland.

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Speaker 1: Let's listen for me, but now Keith Manhattan, just give

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