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Speaker 1: This is Bloomberg surveillance. The way to characterize the market

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Speaker 1: in general is soft at the top and firmer in

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Speaker 1: the middle and lower segments of the market. And that

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Speaker 1: has been the developing phenomenon over the last year. Right now,

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Speaker 1: that does seem to be the stealing in the market

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Speaker 1: that they take us a potentially finance result. When you

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Speaker 1: have oil continuing to trend higher and you have the

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Speaker 1: Fed taking an extremely devish stance, that's good for equities.

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Speaker 1: Bloomberg Surveillance your link to the world of economics, finance

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Speaker 1: and investment on Bloomberg Radio. Good Morning, I might come

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Speaker 1: to Key along with Tom Keene. It is seven am

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Speaker 1: on Wall Street t G I F. Maybe that's why

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Speaker 1: markets are hired today. Oil is up the latest production

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Speaker 1: freeze speculation, and that's pushing up equities around the world,

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Speaker 1: along with hope for banks after uncredit CEO there's a

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Speaker 1: says there's a renewed push to fix the European banking system.

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Speaker 1: All themes based on hope, which as we know, is

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Speaker 1: not a strategy, but it might get you through Friday.

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Speaker 1: Right now, the stock six hundred is up by three

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Speaker 1: points eight tenths of eight percent, the docks is hired

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Speaker 1: by ninety points. That's almost a full percentage point gain

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Speaker 1: for the day uh the year, all trading right now

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Speaker 1: at one thirteen sixty five, a touch weaker. German yields

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Speaker 1: continue to follow the two year no yield negative fifty

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Speaker 1: one basis points. In the US futures are decidedly higher,

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Speaker 1: with SMP evening features up by twelve six tenths, Dow

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Speaker 1: evenies up eighty six half a percent, and for and

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Speaker 1: It's like one evening features it's a twenty seven point

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Speaker 1: gain six tenths of eight percent. The dollar index at

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Speaker 1: the moment is trading a little bit higher, but still

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Speaker 1: in the ninety four range. Ninety four five sixty three

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Speaker 1: bonds are lower, yields higher tenure yield one point seven

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Speaker 1: to one one seven for the five year and the

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Speaker 1: two year going for seventy two basis points. Oil, as

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Speaker 1: I had mentioned, is higher thirty eight fifty four dollar

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Speaker 1: higher three point four percent for West Texas, Brent forty

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Speaker 1: across the forty barrier again, dollar twenty higher three percent

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Speaker 1: on the day, and of course we should mention the

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Speaker 1: yen sixty six today it is a snidge weaker financials,

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Speaker 1: as I mentioned, getting a bid something relatively rare these days.

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Speaker 1: The forecast is financial earnings fell in the first quarter.

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Speaker 1: This week, more bad news for banks, the administration moves

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Speaker 1: to curb inversion. M and AS kiss a lot of

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Speaker 1: investment banking fees. Goodbye, Bob Profusik's head of EM and

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Speaker 1: A at Jones Day, Uh Bob. It was said of

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Speaker 1: the administration yesterday that it cannot shrink banks, but it

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Speaker 1: can shrink banking. Is this the death of inversions? What

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Speaker 1: they did this week? And and what does that mean

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Speaker 1: for banks? Bank fees and of course banker pay well.

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Speaker 1: In visions are pretty modest part of the entirety of

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Speaker 1: M and A. It's it was, I was, I just

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Speaker 1: referred to it. Okay, now we know, but it isn't

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Speaker 1: an element of things. And obviously the deal that that

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Speaker 1: that hit the rocks this week was probably the one

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Speaker 1: of the biggest deals ever, if not the biggest, But

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Speaker 1: I don't expect that to be a significant factor. There's

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Speaker 1: only a handful of inversions, even if the dollar volume

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Speaker 1: was huge. UM M and A was much more affected

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Speaker 1: in the lot in the first quarter by the disruption

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Speaker 1: in the equity and credit markets than than something that

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Speaker 1: on a prong of M and A that's really pretty

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Speaker 1: pretty isolated. We did see the markets come back from

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Speaker 1: the disruptions in the early part of the first quarter,

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Speaker 1: but there's still very uncertain and we've had ups and doubts.

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Speaker 1: Is that the outlook for EM and A or or

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Speaker 1: is it fighting footing? Well, it's it's it's still very strong.

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Speaker 1: I mean everybody, people, folks on The number of deals

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Speaker 1: was down ten percent year over year in the first quarter,

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Speaker 1: and volume was down eighteen but was unbelievably blowout year,

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Speaker 1: and the activity level in the first quarter of this

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Speaker 1: year was comparable to the first quarter of which was

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Speaker 1: a good year. So it as long as is we

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Speaker 1: talked earlier on TV, as long as GDP growth is

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Speaker 1: what it is or isn't and the credit markets are

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Speaker 1: basically accommodating, there's gonna be M and A because how

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Speaker 1: in the heck do you otherwise gets your arney scrub

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Speaker 1: Bloomberg Surveillance about profew sec with with Jones Day. Bloomberg

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Speaker 1: Surveillance this morning brought you by Investco. Invesco believes it's

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Speaker 1: time to benchmark bench the benchmarks and to consider active

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Speaker 1: management and factor based strategies. Find out more investco dot

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Speaker 1: com slash high Conviction Bob, you were involved in Sherwin

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Speaker 1: Williams vel Spar val Spar, one of the great great

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Speaker 1: names of Schwack, among other things, and with the work

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Speaker 1: to maximize shareholder value. The twenty year per year on

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Speaker 1: Kansas Sholak is thirteen point five percent per year shareholder return.

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Speaker 1: In the last ten years veil spars return sixteen point

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Speaker 1: five percent. That's to where we are now. Uh, with

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Speaker 1: a with a transaction expected. I don't want you to

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Speaker 1: talk about the specific transaction, but let me just ask

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Speaker 1: the general question that all shareholders want to know. Why

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Speaker 1: aren't there more mergers to create shareholder value? I just

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Speaker 1: I don't get what executives are waiting for in terms

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Speaker 1: of the huge pop we're seeing in some of these stocks. Well,

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Speaker 1: you can always sell your company more than for more

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Speaker 1: than what it's trading at in any given day. The

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Speaker 1: question is compared to what I mean, if you're a

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Speaker 1: long term out look is good, Um, you're you're gonna

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Speaker 1: you know, stay the course. Where where is that compared

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Speaker 1: to what right now? I like that phrase? Well, you know,

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Speaker 1: any company is probably worth more soul than traded UM

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Speaker 1: just by definition the control premium and UM. But the

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Speaker 1: question is where you're going long term and what's your

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Speaker 1: opportunity and particularly in this in this environment. UM, sure

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Speaker 1: it's challenging. But but companies have opportunities. And one of

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Speaker 1: their opportunities is it is M and A. But not

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Speaker 1: sell yourself. But do add ons, do to investitures, Do

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Speaker 1: realign yourself so that your earnings growth is better even

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Speaker 1: if everybody is struggling at the revenue line. What about

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Speaker 1: how do you edentwer the charge that in the long run, UM,

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Speaker 1: very few mergers produce significant additional shareholder value. It's a

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Speaker 1: it's a case that's made all the time. It's certainly

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Speaker 1: has made all the time, and and and certainly there

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Speaker 1: are deals where that have been value destructive. But so

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Speaker 1: have there been investments. I think Steve Case was around

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Speaker 1: here yesterday. So have there have been investments. There's lots

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Speaker 1: of things, UM, But in the main, I just don't

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Speaker 1: buy that. I mean, companies are better, they don't. You know.

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Speaker 1: One of the things is that twenty years ago, I

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Speaker 1: think M and A was criticized somewhat as empire building.

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Speaker 1: There's very little of that anymore. Um. It isn't about

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Speaker 1: making companies bigger. It's about making them better and making

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Speaker 1: them more efficient and better able to compete in a

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Speaker 1: globalized economy. Um. So it is an empire building. It's

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Speaker 1: really making yourself better for the long term. And so

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Speaker 1: that you know, people also criticize that there's job losses

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Speaker 1: associated with mergers. Well, there can be, and frequently are,

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Speaker 1: but there are job losses in all sorts of environments.

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Speaker 1: Can I follow that up to just I don't tell

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Speaker 1: I want to ask a question. But but in the

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Speaker 1: political environment we're in, you know, you saw the presidential

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Speaker 1: candidates rail against the fiser Allergan merger because of inversions

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Speaker 1: and they kill jobs, which statistically they do not do.

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Speaker 1: But politicians and facts aren't always the same thing. But

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Speaker 1: does that become a head wind to doing M and

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Speaker 1: A these days the political pressures that you may be

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Speaker 1: getting um from the M and A division of the

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Speaker 1: Justice Department and other people like that, because uh, the

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Speaker 1: resentment is there of the c e O s who

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Speaker 1: collect these multi million dollar packages golden parachutes, and it

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Speaker 1: set and then all these other people get fired in mergers. Well,

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Speaker 1: em and it doesn't. It doesn't occur in a laboratory.

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Speaker 1: It occurs occurs in the real world. So there's certainly

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Speaker 1: an element of that. I mean, in all candor that

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Speaker 1: I'm surprised at how subdued fighter spent because you didn't

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Speaker 1: see any other inversions go on the rocks. It was

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Speaker 1: just one. And yet they haven't taken on the government

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Speaker 1: and they won't UM. So that you know, that kind

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Speaker 1: of stuff is relevant, but I don't think it's really

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Speaker 1: a big factor. Could it? Could it play a role

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Speaker 1: in a gargantuan transaction, certainly um and and obviously the

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Speaker 1: signals for uh anti trust regulators around the world, not

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Speaker 1: just in the United States, are that I don't know.

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Speaker 1: If you try to do the two and the three

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Speaker 1: to combine to make a new one, that's gonna be

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Speaker 1: a tough deal to do. But most deals are don't

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Speaker 1: raise these issues. Most deals are more much more strategic,

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Speaker 1: and not, in all honesty, anything compartable to find. So

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Speaker 1: let's come back. We're sort to bring you particularly with

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Speaker 1: the Yahoo News Robert Prefusek of Jones Day, and we'll

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Speaker 1: focus on Yahoo here when we returned, Michael, what a

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Speaker 1: sare last night? Free Zakaria. I thought he'd come in

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Speaker 1: and there's geopolitical international relations, you know, hub and spoke

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Speaker 1: post the post American Fed. That would have been perfect

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Speaker 1: free for Freed. He was a pit bull terrier. Yeah,

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Speaker 1: going right after Cherry yelling, I I suppose I did

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Speaker 1: this on television. I suppose I should offer my surveillance

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Speaker 1: correction here on radio as well. I said that there

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Speaker 1: wouldn't be any significant news. But he asked her write

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Speaker 1: off the bat, what about the economy, what about interest rates?

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Speaker 1: And of course she said pretty much what she has said.

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Speaker 1: The economy is good, chape and we're gonna keep raising

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Speaker 1: rates slowly. I'll get out that chart of the era

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Speaker 1: of four chair chairman cheer people, cheer people fascinating, you know,

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Speaker 1: because most of that audience was college students, and the

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Speaker 1: most they weren't even born when uh Alan Greenspan started

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Speaker 1: his term. Let alone, this would be true, but that

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Speaker 1: also includes Michael Barr and John Tucker and Bopara Fry second.

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Speaker 1: Unlike US fossils, unless ore this Martin guys, yes, yes,

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Speaker 1: William like Chesney Martin. I thought he was superb in

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Speaker 1: my hute futures up eleven del futures up Baby, the

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Speaker 1: tenures yield at one point. Now watch it now Wise

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Speaker 1: got it one point seven two on the tenure yield

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Speaker 1: this morning. Now it's time to check in with Michael

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Speaker 1: Barr and get the latest world at national headlines. Mike time,

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Speaker 1: Thank you very much. Presidential candidates are trying to woo

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Speaker 1: New York voters ahead of the April nineteen primary in

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Speaker 1: the state. Republican Ted Cruz fant yesterday in Brooklyn, where

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Speaker 1: he toured in Matza Bakery and met with Orthodox rabbis.

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Speaker 1: Ohio Governor John Casey also campaigned in Brooklyn. Republican front

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Speaker 1: runner Donald Trump has canceled his trip to California. The

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Speaker 1: campaign in New York for the Democrats, Hillary Clinton spoke

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Speaker 1: outside Yankee Stadium yesterday. Bernie Sanders campaigns in Brooklyn's Flatbush neighborhood.

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Speaker 1: This afternoon. Secretary of State John Kerry made an un

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Speaker 1: announced to visit to Baghdad to meat with the Racks

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Speaker 1: Prime Minister about the fight against ISIS. Global News twenty

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Speaker 1: four hours a day, powered by our journalists more than

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Speaker 1: a hundred fifty news bureaus from around the world. I'm

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Speaker 1: Michael Barr. Mike Tell Michael, thanks so much. Features up eleven.

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Speaker 1: It's a rebound after a really interesting day yesterday. Yan

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Speaker 1: is what everybody's watching the articles today in the on

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Speaker 1: the analysis, there's a real mystery to that. We'll try

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Speaker 1: to take some of that mystery today. Await in the

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Speaker 1: next hours of Bloomberg. Sir Das, Good morning. Bloomberg. Shaveillance

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Speaker 1: Flash and I'm Karen Moscow. There's updates brought to you

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Speaker 1: stocks rebounding with oil while bonds of Europe's most indebted

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Speaker 1: countries rise on the final day of a week that

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Speaker 1: saw markets whips on currency volatility approach the highest twenty eleven.

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Speaker 1: We checked the markets every fifteen minutes throughout the trading

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Speaker 1: day on Bloomberg SNP EMNI futures up eleven points. DOWI

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Speaker 1: many futures of a D two NASA I gave any

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Speaker 1: futures up twenty six The decks in Germany's up one percent,

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Speaker 1: pen your treasury down eight thirty seconds. The yield one

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

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Speaker 1: seven one percent. No mex scrude oil at three point

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Speaker 1: six per cent or a dollar thirty four and a

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Speaker 1: thirty eight sixty a barrel Comex gold down a tenth

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Speaker 1: of upper cent or a dollar thirty to twelve thirty

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Speaker 1: six twenty ounce. The Euro a dollar thirteen sixty four,

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Speaker 1: the yen one oh eight point six nine. That's a

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Speaker 1: Bloomberg business flash, Tom and Mike Karen, thanks so much, folks.

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Speaker 1: I want to draw your attention to the former president

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Speaker 1: of the Minneapolis now at the University of Rochester writing

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Speaker 1: an exceptionally important op ed piece for Bloomberg View this morning,

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Speaker 1: and Mr Coach A Dakota Michael mckeem minces no words.

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Speaker 1: The FED should ease. That's a stunning headline out of

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Speaker 1: Bloomberg View, and the former presidents of Arguments UH from

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Speaker 1: members of the current FED. I mean, the question is

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Speaker 1: to what end, and we'll put that out on social

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Speaker 1: and that will be a point of discussion through the morning,

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Speaker 1: through the weekend and into next week and into April.

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Speaker 1: I guess to May, but maybe not. Is Yahoo Robert

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Speaker 1: Profusek is with Jones Day ahead of their mergers and

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Speaker 1: acquisitions and Bob, you get the formalities out of the way.

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Speaker 1: You're not involved with Fortress Meyer or Verizon or Google. Right,

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Speaker 1: that's correct. Okay, Uh, this is such an interesting story.

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Speaker 1: Do you put an asterisk next to Yahoo or is

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Speaker 1: it just another transaction waiting to happen. Well, yeah, it's

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Speaker 1: an interesting company because it's got you know, different businesses

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Speaker 1: and different assets there and appeal to different people. Um,

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Speaker 1: certainly the company has been trying, uh to maximize value

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Speaker 1: and well we'll see what happens in this process. But

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Speaker 1: from the outside, it clearly looks like a structured and um,

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Speaker 1: fairly typical process where they they have gotten their first

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Speaker 1: round bids. We'll see what happens. The jargon, I don't

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Speaker 1: want to put you on the spot here if you

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Speaker 1: don't know the board bank up. But everybody talks about

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Speaker 1: it's a strong board or it's a weak board. What

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Speaker 1: does that exactly mean, Well, it really is. I think

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Speaker 1: reflects the backgrounds and personalities of the directors and whether

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Speaker 1: they're dominated or not. Is it one director or boards

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Speaker 1: operate on a collective basis, certainly people rising to the

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Speaker 1: occasion on in various events. But this is a board

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Speaker 1: that's had, that's been that's turned over some um, that

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Speaker 1: has a lot of very um well known and respected

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Speaker 1: people on it um and under attack for years by

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Speaker 1: activists telling them what to do UM. And it's it's

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Speaker 1: presumably trying to do the right thing, which is to

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Speaker 1: maximize value in these circumstances. What's the You say, it's

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Speaker 1: a fairly routine deal. So what do you think of

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Speaker 1: a timeline for routine process? Not a routine deal at all,

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Speaker 1: because you know, yeah, who's got as I think about it,

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Speaker 1: it's got three very different businesses, got Yahoo Japan which

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Speaker 1: is quite successful, it's got the stake and Ali Baba

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Speaker 1: and it's got a space business. So those pieces will

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Speaker 1: probably appeal to different people. Now, you know, I know

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Speaker 1: that there's an activist out there who's saying that he

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Speaker 1: wants to run a proxy fight to replace the whole board,

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Speaker 1: But you know, the board has been working to maximize

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Speaker 1: shareholder value for quite some time, and it's not easy.

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Speaker 1: They tried to do as looked at a spin off

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Speaker 1: of the Ali Baba piece, have been doing other things.

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Speaker 1: So we'll see what happens in this process. It's not

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Speaker 1: necessarily the end of Yahoo. It could be a piece

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Speaker 1: or two. We'll see. I get I'll go back to

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Speaker 1: our original question. I'm glad you clarified, though, Uh, how

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Speaker 1: long does a process like this go or can you

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Speaker 1: put a time? Why not? Well, probably it's done this year,

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Speaker 1: but frankly, when they go longer, it's usually really good

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Speaker 1: or really bad. Um If if you don't have that

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Speaker 1: much interest, it's sometimes to ex out, but very often,

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Speaker 1: if there's there is a lot of activity in the

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Speaker 1: auction process, it can go multiple Multiple rounds were in

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Speaker 1: round one according to the media reports. Dude, and I

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Speaker 1: don't mean you've speculating the specific transaction, but when you

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Speaker 1: have two players like this, Verizon and Google, separate attorneys,

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Speaker 1: obviously separate accounts, I assume do they talk to each

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Speaker 1: other at all? Or is it like is it the

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Speaker 1: movies where one sets up in one hotel, any other

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Speaker 1: sets up four blocks over at another Hotel and Jones

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Speaker 1: Day associates scurry back and forth. Usually you're not allowed to,

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Speaker 1: in fact, almost always, you're not allowed to talk to

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Speaker 1: another bid or without permission of the company. And you know,

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Speaker 1: we've heard about Verizon, um UH and and Alpha that

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Speaker 1: has been in the process. I'd be surprised if there

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Speaker 1: weren't quite a few others that are looking, including private

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Speaker 1: equity firms UM that that either by themselves or with

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Speaker 1: a corporate partner. So I would guess there are a

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Speaker 1: lot more people than we've read about that are in

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Speaker 1: the process. The real economy is flat on its back.

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Speaker 1: We had the tumult of the end yesterday and and

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Speaker 1: all that. People are saying banking in New York and worldwide,

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Speaker 1: big banking particularly, it's flat on its back. Is your

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Speaker 1: business busy? We're very busy. Um. You know, some of

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Speaker 1: it candidly reflects the flat on your back piece, which

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Speaker 1: is in the distress side. Um, you know, especially in hydrocarbons,

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Speaker 1: but commodities in general are are difficult. UM. But it's active.

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Speaker 1: UM I do I do think, um, it's not going

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Speaker 1: to be as active as it was in But that's like,

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Speaker 1: you know, comparing your average jump shot to the final

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Speaker 1: shot that villanova hit. I mean, it's just not gonna happen.

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Speaker 1: All that last year was a villanova. It was absolutely um.

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Speaker 1: But that you know, the environment is essentially the same,

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Speaker 1: low growth, almost free money if your investment aide company,

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Speaker 1: and available money if you're not. What will you see

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Speaker 1: in Industrial America. We put all the media focus on

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Speaker 1: Yahoo and all the sex appeal of Silicon Valley, and

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Speaker 1: that then there's boring Industrial America where a lot gets

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Speaker 1: a lot gets done, a lot gets done. And part

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Speaker 1: of the story for industrial America is the globalization of

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Speaker 1: almost all industries UM. So that a huge part of

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Speaker 1: what people are doing is you know, the classic debate

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Speaker 1: versus by versus built. If you're really not strong and

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Speaker 1: in China, do you doubi um or do you already

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Speaker 1: try to build it on your own in a very

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Speaker 1: difficult environment. So the buy build um dichotomy almost always

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Speaker 1: gets settled in favor of buyings. It's just it's just

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Speaker 1: cheaper and more reliable. Thank you so much. Robert produced

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Speaker 1: like most generous with his time this morning. He has

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Speaker 1: had of mergers and acquisitions at the law firm of

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Speaker 1: Jones Day. We Migrate Forward on a Friday, Michael McK

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Speaker 1: and Tom Keane Bloomberg Surveillance. Bloomberg Surveillance brought to you

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Speaker 1: by the New York Community Trust, where donors like you

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