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Speaker 1: This is Bloomberg Surveillance. Most of global growth is dominated

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Speaker 1: by the emerging economies. China is the single lifest contributed

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Speaker 1: to overall global growth. Now when we look at what's

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Speaker 1: happening in the US, that ultimately is going to be

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Speaker 1: the driver of policy settings around the world. As long

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Speaker 1: as the dollar remains on the defense of not just

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Speaker 1: to the Euro, but also to the end some emerging

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Speaker 1: market currency has been the outlook for gold will continue

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Speaker 1: to be good. Bloomberg Surveillance your link to the world

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Speaker 1: of economics, finance and investment on Bloomberg Radio. Good running everyone,

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Speaker 1: Michael McKee and Tom Keen on Monday after Jobs Day.

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Speaker 1: You're Bloomberg Surveillance coming up. Douglas cass On caution within

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Speaker 1: the equity market's an important interview with Mr cass of Seabres.

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Speaker 1: You love them, you hate him. Doug cass On caution

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Speaker 1: to be Oh, come on, where do you want to start?

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Speaker 1: How about David Ortiz. That's a good place to start.

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Speaker 1: Bloomberg Surveillance this morning brought you by cone Resnik accounting

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Speaker 1: tax advisor. He just sees opportunities in commercial real estate.

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Speaker 1: Your business needs market focused guidance from the industry leading

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Speaker 1: experts at cone Resnick find out how at cone resnec

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Speaker 1: dot com c O H N R e Z and

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Speaker 1: I see k it was something good morning Bloomberg twelve

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Speaker 1: in Boston, the Red Sox not first place, but one

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Speaker 1: baseball the Oh's the Blessed Baltimore oriole six from John Angelos. Yes,

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Speaker 1: they're doing something right over there there doing something right.

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Speaker 1: First place Dodgers the co Faxes paying five sixteen balls.

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Speaker 1: They face off against the first place Mets this week.

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Speaker 1: I did not know that. I got a lovely note

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Speaker 1: from our friend Muhammad Hllarrian, who was in Petco Park

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Speaker 1: in San Diego, sees the game yesterday routing the Mets

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Speaker 1: on I congratulated for Douglas Cast to fly into New

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Speaker 1: York from his Florida to see Dodgers. He's going on

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Speaker 1: to he goes out to Elliot anyway, he's now joining us.

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Speaker 1: Douglas Cast first on baseball, Doug, Is it national pastime?

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Speaker 1: Is it the national pastime? It certainly isn't a horse

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Speaker 1: racing racing? You didn't you didn't like that race on Saturday?

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Speaker 1: Or did you lose money? Just the popularity of um

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Speaker 1: of Thoroughbred racing has gone down dramatically since I was

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Speaker 1: a kid. I think it is still the national pastime.

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Speaker 1: I have no idea what you were talking about with

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Speaker 1: this Newcastle and whatever. You're not following English Premier League

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Speaker 1: soccer not lately. Did you ever? Did you ever? Have

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Speaker 1: you ever done anything with a five thousand to one odds?

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Speaker 1: Never in my life? No, no, Um, it's enough rooting

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Speaker 1: against the Red Sox that you know. Being shown the markets,

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Speaker 1: Um is almost like having to face um your knuckleballer

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Speaker 1: Stephen right on the mound every inning, or to pitch

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Speaker 1: the big Pappy in the batter's box. And I knew

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Speaker 1: this was coming last night as to home runs after

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Speaker 1: those lass he calls by the umpire Friday night. When

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Speaker 1: you look at this dug and it goes importantly back

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Speaker 1: to how someone deploys capital the Leicester City odds of

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Speaker 1: five thousand and one, or horse racing, or are betting

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Speaker 1: within the market, And I go to TALEB which is

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Speaker 1: little bets on rare outcomes, discuss the doug cast reality

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Speaker 1: that you want to be in the market. You want

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Speaker 1: to be long or short, and you're not going to

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Speaker 1: do it with little bets on rare outcomes, then what

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Speaker 1: do you do? What's the cast best act? As an

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Speaker 1: addendant to Taib's view, by the less extreme view, I

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Speaker 1: would just make the statement, uh, Sir Thomas and Michael,

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Speaker 1: that rarely has our world faced the possibility of so

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Speaker 1: many previous, previously low probability disruptive events actually happening with

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Speaker 1: the potential to such a high degree of impact, many

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Speaker 1: of them at birth. Byron Ween had that had a

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Speaker 1: great line. He said that disasters have a way of

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Speaker 1: not happening. But I'm worried it's different time. It's different

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Speaker 1: this time, and even though Byron is always right, he

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Speaker 1: may be wrong this time. The the the gloom over

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Speaker 1: the weekend, and folks, for all of you, we say

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Speaker 1: this immense respect. One of the great things about Doug

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Speaker 1: cass because when he's wrong, he says so, which is

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Speaker 1: a breath of fresh air. Often well that's often, but

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Speaker 1: you know that's the way that you know, I get upset, folks,

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Speaker 1: when people want certitude and equity speculation where you know

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Speaker 1: you're like a baseball players, you're gonna be wrong fifty

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Speaker 1: or sixty percent of the time if you're lucky. Doug

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Speaker 1: cass why the why the gloom over the weekend versus

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Speaker 1: a measured debate of longer short I don't know. I

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Speaker 1: don't know what gloom you're referring to over the weekend.

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Speaker 1: Many articles come on, many articles saying the world's coming

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Speaker 1: to an end, different eight different flavors of the markets

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Speaker 1: terrible in the world. And I'm trying to be objective.

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Speaker 1: And again it's keeping with the notion that rarely have

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Speaker 1: we faced so many outcomes, many of them adverse. Not

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Speaker 1: a teleb view of the world, but a more measured,

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Speaker 1: sober view of the world. I think that the world's

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Speaker 1: markets and global economies are maturing. There are numerous peaks

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Speaker 1: I see. It's my view that an important and major

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Speaker 1: stock market top began to develop in May of two

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Speaker 1: thousand and fifteen. We had confirmation technically and fundamentally, but

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Speaker 1: we have to remember the tops of process is not

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Speaker 1: single moments. In time, the market's leadership and breadth has

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Speaker 1: narrowed well fundamentally. Obviously, corporate profits have materially disappointed. My

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Speaker 1: view is that when I do a range of scenarios

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Speaker 1: and probabilities against these scenarios, the market is the SMP

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Speaker 1: is about two hundred points over valued or about over

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Speaker 1: valued valuations. A stretched the markets multiple on gap earnings

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Speaker 1: is a remarkably high twenty four times, and gap and

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Speaker 1: non gap differences have never expanded to a record wide

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Speaker 1: as they have today. Quantitative failure is talk is talking

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Speaker 1: the world, especially in Japan and the US. QWI has

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Speaker 1: lost its perspectiveness. So a zero interest rates and negative

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Speaker 1: interest rates, I don't believe that the FET is going

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Speaker 1: to raise interest FET funds this year. Economic activity, sales, profits,

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Speaker 1: and stock prices have been pulled forward because of this

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Speaker 1: monetary largesse, which I just explained by the world's central bankers.

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Speaker 1: And I think that the two thousands sixteen seventeen economic

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Speaker 1: outlook is somewhere between a muddle long and garden variety recession.

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Speaker 1: That said, there are many other possible economic and market outcomes,

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Speaker 1: but many of them are adverse. I think that the

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Speaker 1: period of excess economic and market gains is likely over

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Speaker 1: a right, so much there to unpack. I don't even

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Speaker 1: know what I said, I but all seriousness, I think

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Speaker 1: that we are living and this is really really an

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Speaker 1: important and and part of my um. Probably the dominant

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Speaker 1: negative market theme is that we're living in this monetary

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Speaker 1: policy in Wonderland. Um, non thinking consensus to me seems

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Speaker 1: to be the norm these days. And when you combine

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Speaker 1: that with the dirty water provided by central banks, the

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Speaker 1: crowd is starting to resemble the mad Hatter. And I

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Speaker 1: think that history books are going to be written about

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Speaker 1: this period in complete bewilderment about monetary policy, and they're

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Speaker 1: gonna say something like this, Um, let me see how

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Speaker 1: to phrase it. Did investors really invest in bonds or

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Speaker 1: basically bankrupt countries that printed money to make interest payments

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Speaker 1: and to buy bonds they just issued in falling currencies

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Speaker 1: which allow for more bond issuance due to more spending

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Speaker 1: in debt issuance. And not only did they not get

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Speaker 1: interest for doing so, but they paid said governments for

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Speaker 1: the right to do so. Did this really happened? Did

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Speaker 1: they really invest the million dollars to get back N

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Speaker 1: seventy five thousand dollars ten years later? Where invest is

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Speaker 1: really that stupid? Well they aren't, Nielsen. Michael McKee talking

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Speaker 1: about this today from Denmark and you to Credit today amazement.

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Speaker 1: A lot of people don't like what the central banks

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Speaker 1: have done, but like I, I gotta ask, is it

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Speaker 1: is this an unusual time? I mean, as Rosanna res

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Speaker 1: in Adana would say, it's always some, it's it's always something.

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Speaker 1: So or is it that in an age where information

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Speaker 1: is so widely available instantaneously, that the markets are just

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Speaker 1: so much more sensitive to what's raises the danger? There's

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Speaker 1: a great and that's a great question. I do know,

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Speaker 1: like Rosanna Danna, with every conflict, whether it's in the

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Speaker 1: EU or it's a geopolitical event, you do get another

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Speaker 1: Rosanna Danna expression, never mind, and the market comes right

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Speaker 1: back into the highs. Doug cast, help me with where

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Speaker 1: the risk free rate is? We all, whether we're long short,

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Speaker 1: whatever our belief, we have an anchor like a keel

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Speaker 1: on a boat, and an anchor is the risk free rate?

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Speaker 1: The interview and because that's the hardest thing, because you know,

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Speaker 1: when I went to Lorton and got my m b

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Speaker 1: A a a couple of years ago, UM, we dealt with

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Speaker 1: discounted cash flows and we used a risk free rate

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Speaker 1: of return assumption. And the problem is no one knows

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Speaker 1: what that verstory rate of return is, so in large

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Speaker 1: measure we get the sort of volatility that we have

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Speaker 1: seen in the last uh sixteen or twenty four months.

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Speaker 1: We're gonna come back with Doug cass right now. Doug,

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Speaker 1: quickly here, what is your position this morning? For those

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Speaker 1: that trade tick my tick? What is the Doug cast

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Speaker 1: position right now? I am in my largest um aggregatet

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Speaker 1: metro position in probably two years and how many years?

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Speaker 1: Two years? Two years? Okay, we'll come back with Doug

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Speaker 1: cast of Sea Breeze as well. The point of clarifications

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Speaker 1: please never mind was Emily Litella. I'm sorry, oh my god,

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Speaker 1: a surveillance correction. John Tucker, very good, John, Michael John John,

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Speaker 1: John Tucker helping out Doug cast with his Saturday Night

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Speaker 1: Live expertise is well. Lending Club helping out the markets

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Speaker 1: with clarity their CEO and chairman exits. They've got some

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Speaker 1: challenging accounting lending treat down at the sending club. Lending Club.

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Speaker 1: Excuse me, Lendon Club, excuse me? I misspoke, Like Dug

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Speaker 1: cass On, Emily Lettell, the futures up, three down, features,

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Speaker 1: up points all right. Time to check out with Michael

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Speaker 1: BYRN now don't get the latest world and national headlines.

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Speaker 1: Mike Tom, thank you very much. Fire officials in Alberta, Canada,

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Speaker 1: say they are more optimists sick as they battle a

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Speaker 1: huge wildfire that escorched almost four hundred thousand acres. The

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Speaker 1: forecast is calling for cooler temperatures and light rain. The

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Speaker 1: blaze has black in the town of Fort McMurray. Today

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Speaker 1: is the deadline set by the Justice Department for North

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Speaker 1: Carolina to re send the so called bathroom law involving

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Speaker 1: transgender rights or lose federal funding. The low prohibits people

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Speaker 1: from using a bathroom of their identity and only allows

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Speaker 1: them to use facilities of their born gender. The world's

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Speaker 1: most expensive rough diamond has sold for sixty three million dollars.

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Speaker 1: The Constellation and eight d carrot diamond was sold by

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Speaker 1: the Vancouver based The Current Diamond Corporation. Global News twenty

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Speaker 1: four hours a day, powered by our two hundred journalists

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Speaker 1: and more than a hundred fifty news bureaus from around

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Speaker 1: the world. I'm Michael Barr. To Michael, thanks so much.

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Speaker 1: Lending club cl you'd be simil LC seven dollars ten

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Speaker 1: cents and joining five dollars twenty three cents down right

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Speaker 1: now from New York. Michael McKeon, Tom King with Doug

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Speaker 1: Cass Bloomberg Surveillance. This news update brought to you by

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Speaker 1: Audi Metal Ends and Scaucus, New Jersey, powered by Benzo Bush,

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Speaker 1: to find the way you drive global business news twenty

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Speaker 1: four hours a day at Bloomberg dot com, the Radio

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Speaker 1: plus mobile lap and on your radio. This is a

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Speaker 1: Bloomberg Business Flash and I'm Karin Moscow US dot In

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Speaker 1: Next Futures are higher. Let's go to the First Word

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Speaker 1: Breaking news desk for today's morning call. Here's Bill Maloney.

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Speaker 1: Good morning Bill, Good morning Karen. US features have paired

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Speaker 1: some of their games since the last time we spoke down.

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Speaker 1: Future is now up thirty two points, sysips Game four

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Speaker 1: and Nazac Futures rise by eleven. The US tennial at

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Speaker 1: one point seven seven per cent. Regarding earnings, Stay Tyson

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Speaker 1: q tw EPs beat Tava beat Southoby's Missed and Wayfair

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Speaker 1: qu revenue top highest estimates in deal news, Crispy Cream

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Speaker 1: to be acquired for twenty one dollar to share in cash.

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Speaker 1: And in other news, Freeport to sell t F Steak

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Speaker 1: for two point six five billion in cash. Medicine sells

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Speaker 1: assets for up to seven ninety two million, letting Club

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Speaker 1: down thirty one percent. Pre market CEO resigned on near

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Speaker 1: prime loan practices and valance. He's flying tank you by

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Speaker 1: June tenth, that's ahead of credit deadline. Had finally some

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Speaker 1: of your wallsheet upgrades and downgrades. Centerpoint Energy raised neutral

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Speaker 1: of Goldman Sachs at would cut a hold of Jeffrey's

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Speaker 1: Occidental cut to neutral at JP Morgan Depot med raised

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Speaker 1: to buy it, Miszoojo and l Brands cut to neutral

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Speaker 1: over at ubs live from the first breaking news Ascombo

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Speaker 1: Maloney Karen thanks bail to hear live breaking news over

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Speaker 1: your Bloomberg type squawk and go on your terminal. That's

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Speaker 1: s qu a w K go and that's a Bloomberg

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Speaker 1: business flash. Tom and Mike, Karen, thanks so much. Breaking news,

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Speaker 1: I mean break Crispy from breakfast and by the whole company.

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Speaker 1: They're going private is basically the bottom line here. They're

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Speaker 1: being bought by this J A B Holding company j

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Speaker 1: A B. Beach. They own a lot of things they

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Speaker 1: you know this this works great for their portfolio because

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Speaker 1: they also own Carrot Green, Mountain Coffee, Caribou Coffe Company,

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Speaker 1: Pets Coffee and Tea so you can get donuts. And

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Speaker 1: they have Mighty Leaf Tea, which is we we have

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Speaker 1: that at home, Mighty Leaf Tea. And then of course

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Speaker 1: for those of you who have had enough coffee eco shopping,

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Speaker 1: they own um, Jimmy cho the shoe company, Cody, the

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Speaker 1: makeup people, Olivia. I hope I'm pronouncing that right. Yeah,

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Speaker 1: it's fascinating. Krispy Crean taking out Who to Thunk. Anyway,

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Speaker 1: Bloomer Surveillance this morning and every morning were brought to

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Speaker 1: you by Investco. Investo believes it's time to bench the

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Speaker 1: benchmarks to consider active management and factor based strategies. Find

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Speaker 1: out more at investco dot com. Slash High Conviction, which

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Speaker 1: brings us to Doug Casson, is a perfect segui into

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Speaker 1: Mr cass Doug writing up a storm on diversification. Um,

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Speaker 1: I mean, once again we're learning that you cite Mr

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Speaker 1: Ackman and the ugly Friday he had, But but there's

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Speaker 1: just something about we all know we need to be diversified,

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Speaker 1: but then you can be too diversified. What's the right

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Speaker 1: cast prescription for diversification? Well, I think in an certain

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Speaker 1: economic and market environment, UM diversification UM gains UH with

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Speaker 1: apologies to Bill Ackman and Warren Buffett gains greater credibility UM.

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Speaker 1: And that's diversification across UH in terms of company exposure,

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Speaker 1: but also importantly across industry exposure. So I think you

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Speaker 1: keep a higher degree of cash and you no only

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Speaker 1: have and you become ever more diversified rather than more concentrated,

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Speaker 1: as we have learned Pershing at Pershing's the lack I

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Speaker 1: suffered from you know this hedge, this Polish hedge of

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Speaker 1: being long, valiant and short um herbalife. Yeah, I don't

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Speaker 1: know if that's a true hedge. Duck Cass, you were

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Speaker 1: honored by one W. Buffet to join the suare in Omaha.

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Speaker 1: When was that two years ago? Three years back when

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Speaker 1: the Red Sox were in the last place right? Yeah?

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Speaker 1: Within the media manipulation of Mr Buffett in Berkshire, Hathaway,

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Speaker 1: what is the value gained from their unique annual meeting UM? Well,

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Speaker 1: first of all, it's appearing physically and watching them is

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Speaker 1: losing its value because now you have live stream available,

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Speaker 1: which I went on in lieu of going to Omaha

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Speaker 1: which is a pain in the neck because it's hard

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Speaker 1: to get there because the plane is sold out. Um

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Speaker 1: you know, yeah, there will never ever be another Warren Buffet.

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Speaker 1: I think that structurally, um uh it will. It precludes

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Speaker 1: another Buffet and Manger, So his pearls continue to come

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Speaker 1: out of his mouth even though he's going to be

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Speaker 1: eighty six in August, and obviously Manger will be nineties three.

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Speaker 1: And his common sense approach to investing is and and

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Speaker 1: his and and his ideas of how to become a

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Speaker 1: better investor. For example, read everything you can possibly read

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Speaker 1: a very simple um solutions and and and fixes to

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Speaker 1: becoming better investors. Well, and I a better investor if

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Speaker 1: I own a price to perfection dividend growing consumer stock.

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Speaker 1: That seems to be all the rage now is we

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Speaker 1: hunt for yield equivalent growth? How do you handle somebody's

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Speaker 1: four one K that is not loaded up but has

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Speaker 1: a wide percentage of these quality stocks. These quality stocks

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Speaker 1: are accorded extraordinarily high, at least on the stark basis valuations.

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Speaker 1: So I don't think quality equates necessarily as it relates

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Speaker 1: to consumer stables um as superior investment returning vehicles. What

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Speaker 1: what what could go wrong in your scenario going forward?

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Speaker 1: What can go in? What you go right? Since I'm

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Speaker 1: negatively yeah, okay, what can the white Swan is that

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Speaker 1: this uh, this eight year period of zero interest rates

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Speaker 1: and increasingly needly negative interest rate policy around the world

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Speaker 1: produces um um trickles down, serves to trickle down to

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Speaker 1: the average Joe, and uses escape velocity and self sustaining

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Speaker 1: economic growth around the world. But I simply don't see it.

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Speaker 1: I see um. You know, I don't see it. You know,

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Speaker 1: the market to me, Apple is to me apples, My

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Speaker 1: law has been my largest short as you know, Tom

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Speaker 1: Apple to me is sort of a metaphor for the market.

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Speaker 1: I can't see a pivot at Apple. I don't see

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Speaker 1: any new product um um needle moving a new products

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Speaker 1: for Apple. I only see an endless victory lap at Apple.

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Speaker 1: And the same applies to the stock market. I don't

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Speaker 1: see a re acceleration of global economic growth. I see

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Speaker 1: more malinvestment, and I see increasing chances of you know,

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Speaker 1: we've had four We've had four consecutive years of disappointing

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Speaker 1: corporate profit growth. I thought you were gonna say four

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Speaker 1: consecutive years at disappointing Red Sox Doug Cass with Sea Breeze,

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Speaker 1: Thank you so much. This is Bloomberg's surveillance coming up

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