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Speaker 1: Broadcasting live to New York, Bloomberg through Washington, d C,

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Speaker 1: Bloomberg to Boston, Bloomberg twelve hundreds to San Francisco, Bloomberg

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Speaker 1: to the country see a Channel one and around the

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Speaker 1: globe the Bloomberg Radio plus Bloomberg dot Com. This is

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Speaker 1: Bloomberg Surveillance. Good morning. In his seven thirty on Wall Street,

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Speaker 1: I Michael McKee along with Tom Keene allgan in the

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Speaker 1: news this morning. Of course, they're failed union with Fiser

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Speaker 1: left them looking for ways to try to boost share prices.

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Speaker 1: Are going to do that by buying back up to

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Speaker 1: ten billion dollars in shares four to five billion, and

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Speaker 1: open market researches repurchases over four to six months, they say,

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Speaker 1: and then they will see how it's going. Credit Sweet

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Speaker 1: CEO T jn Dam telling us today he's confident in

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Speaker 1: delivering planned cost cuts this year, which is important because

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Speaker 1: they had a second quarterly lost in the first quarter,

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Speaker 1: this time three two million Swiss francs, which translates to

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Speaker 1: three d eleven million dollars. They made a profit of

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Speaker 1: a billion francs a year earlier. Volks, so I can

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Speaker 1: apparently close again on a fix for those diesel powered

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Speaker 1: vehicles in the US. Affix. A software upgrade might reduce

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Speaker 1: the risk of an expensive buy back, according to people

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Speaker 1: familiar with the matter. You might also get a new

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Speaker 1: catalytic converter. Today's big earnings report. Disney analysts watching ESPN

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Speaker 1: and theme park revenues, but much of their attention will

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Speaker 1: be on what, if anything, the company says about succession

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Speaker 1: after that Thomas Staggs resignation forced out as CEO. That

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Speaker 1: is after the belt today. Now a second with Michael

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Speaker 1: R and get the latest world of national headlines. Mine,

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Speaker 1: thank you very much, Mike. It his primary day for

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Speaker 1: Democrats and Republicans. And in West Virginia and in Nebraska

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Speaker 1: you will hold Republican primaries there. Meanwhile, the new poll

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Speaker 1: shows a tight race between Hillary Clinton and Donald trumpet

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Speaker 1: three battleground states. According to a Quinnipiac poll taken in

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Speaker 1: Florida and Pennsylvania, Clinton has Trump has In Ohio, Trump

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Speaker 1: leads Clinton to The port Authority in New York and

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Speaker 1: New Jersey is threatening to kick t Say out of

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Speaker 1: the Guardia, JFK and Newark Liberty Airports. The port authority

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Speaker 1: is demanding that passengers get through security faster, or they

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Speaker 1: will bring in a private security company to do the job.

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Speaker 1: Former FBI agent now security expert Manny Gomez privatizing it

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Speaker 1: would make it more efficient and effective and infinitely less

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Speaker 1: costly to the taxpayer. Global News twenty four hours a day,

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Speaker 1: powered by our two hundred journalists and more than a

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Speaker 1: hundred fifty news bureaus from around the world. Down Michael Bart, Mike,

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Speaker 1: thank you, Michael. Time now for the land Over Parsippany Bloomberg.

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Speaker 1: NBC Sports Update with John Stasha, don't stay Warriors of

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Speaker 1: games this season. They still have not lost two in

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Speaker 1: a row. There eightieth win overall one thirty two to

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Speaker 1: one five overtime in Portland and they come home up

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Speaker 1: three games they won. The story was Steph Curry, who

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Speaker 1: they said was doubtful with the knee injury that forced

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Speaker 1: him out of the first three games, but he did

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Speaker 1: play and he scored forty points seventeen in overtime, which

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Speaker 1: has never been done before regular or postseason. Speaking of overtime,

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Speaker 1: Miami needed it to beat Toronto seven to tie that

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Speaker 1: series at two, three and four games of Toronto OT overtime.

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Speaker 1: Again in Nashville, they played three OT s the previous

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Speaker 1: game there again, the Predators won four three over San Jose,

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Speaker 1: so they'll play game seven tomorrow, so will Dallas and St.

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Speaker 1: Louis at the Stars won Game six three two. Good

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Speaker 1: start to the Mets four game series in l A.

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Speaker 1: Curtis Grandison led off the game of the home run.

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Speaker 1: Mets beat the Dodgers four to two, Stephen Matt's No.

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Speaker 1: Five and won the bullpen with three hitless and into Believe.

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Speaker 1: Yankees had five solo home runs, all off the Royals

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Speaker 1: Chris Young, all in the first three getings. They beat

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Speaker 1: Kansas City six to three. With the Bloomberg NBC Sports

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Speaker 1: up team, I'm John Station. All right, thank you John.

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Speaker 1: Right now we're looking at stucks. They lost all all altitude.

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Speaker 1: They're gaining it back now. SMP futures were down to

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Speaker 1: a four point game. Now they're up to a six

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Speaker 1: point gain. As we get ready for training day, we'll

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Speaker 1: talk about that in a moment with Jim Swanson. This

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Speaker 1: is Bloomberg Radio Worldwide, and this of course is Bloomberg Surveillance.

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Speaker 1: I'm Michael McKee along with Tom Keene on a day

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Speaker 1: where we're seeing a global rally, not just SNP futures.

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Speaker 1: But the stock six hundred in Europe is up by

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Speaker 1: two points seven tenths of eight percent, so we're seeing

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Speaker 1: some some gains around the world. The Shanghai come even

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Speaker 1: in Shanghai, the Chinese stock market finished higher, not much

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Speaker 1: but up a little bit. Uh. The dollars stronger today.

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Speaker 1: Point of it one for your d x Y. The

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Speaker 1: end is weaker, the euro is weaker as well. Time

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Speaker 1: now for the Bloomberg n j I T STEM Report,

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Speaker 1: broughtly by New Jersey Institute of Technology invest more than

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Speaker 1: a hundred and ten million dollars a year. It applied

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Speaker 1: research to solve problems and improved life. Learn more at

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Speaker 1: Stories of Innovation dot in j I T dot E DU.

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Speaker 1: Here's Bob, Good morning, Michael. Here's what's making news in science, Technology,

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Speaker 1: engineering and math. Potentially nine point three billion dollars is

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Speaker 1: on the line as Oracle and Google make their cases

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Speaker 1: to a jury on who owns parts of the Android system,

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Speaker 1: in legal fights that could profoundly change how software is

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Speaker 1: protected and licensed. They were left at a stalemate four

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Speaker 1: years ago, with Google's Android trophy untarnished. The central question

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Speaker 1: of the trial now underway in San Francisco Federal Court

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Speaker 1: is the same as in the last one. Did Google

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Speaker 1: cheap by using part of Oracle's Java programming language to

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Speaker 1: develop Android without a license? If Oracle wins, Google will

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Speaker 1: have to pay fees for the operating system used in

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Speaker 1: eighty percent of the world's mobile devices. Yahoo may owe

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Speaker 1: more than a hundred sixty million dollars in damages if

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Speaker 1: a class action lawsuit over text messages reaches a final decision.

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Speaker 1: The suit claims Yahoo Messenger service improperly sent welcome messages

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Speaker 1: to more than three hundred thousand Sprint users in March

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Speaker 1: of The law allows damages of as much as five

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Speaker 1: hundred dollars per message. Who's likely to settle the case

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Speaker 1: for less if it can undo a ruling that the

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Speaker 1: case may proceed as a class action. The company could

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Speaker 1: face suits for texts to other carriers if this litigation

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Speaker 1: succeeds and a report build as the first comprehensive look

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Speaker 1: at the world's plants finds a plant solely being ravaged

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Speaker 1: by changing land use, mostly conversion of forests to agriculture

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Speaker 1: and to feed a growing population, and climate change. The

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Speaker 1: States of the World's Plants is designed to provide a

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Speaker 1: baseline for annual reports that it will measure how many

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Speaker 1: plants species are being discovered and how many are being

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Speaker 1: lost forever. That's this morning's Bloomberg j I T Stem Report, Michael,

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Speaker 1: thank you. Revert. James Swanson had an interesting college experience,

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Speaker 1: earning an m b A with classmates George W. Bush

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Speaker 1: and Jim Cuts, the founder of Sam Adams Beer. That

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Speaker 1: must have been an interesting group of people to hang

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Speaker 1: out with. Uh, James, he's the chief investment strategist of

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Speaker 1: MFS Investment Management. What did you guys talk about? Well,

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Speaker 1: it's interesting also Mitt Romney as well, So it was

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Speaker 1: funny from the very first day we thought Mitt Romney

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Speaker 1: was running for president. This is the age of twenty six.

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Speaker 1: He shows up in a suit and we're in sweatshirts.

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Speaker 1: But Jim Cook would always talk about being a corporate

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Speaker 1: lawyer on Wall Street, and it's interesting to see how

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Speaker 1: his career evolved with beer and Uh, it's actually been

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Speaker 1: great funds and that George W. Bush guy, nobody ever

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Speaker 1: heard from him again? Right, yeah, you know, no one.

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Speaker 1: It's kind of interesting the characters into school, but definitely

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Speaker 1: all right, let me ask you this after the Job's report.

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Speaker 1: Everybody is out there with their opinion on what the

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Speaker 1: Fed's going to do. You think keeps them on hold.

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Speaker 1: But how important is the FED to somebody's investment strategy

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Speaker 1: right now, whether they raised rates basis points in June

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Speaker 1: or not. Look, I don't think they matter at all.

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Speaker 1: And I'm wondering about all this print and rhetoric about

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Speaker 1: FED when I'm looking at the US consumer balance sheet

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Speaker 1: and they're basically de leveraging, their amount of debt still

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Speaker 1: coming down during this whole cycle to their disposed by income,

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Speaker 1: and you know, basis points I don't think matters to them.

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Speaker 1: They have been spending not great, but not poorly during

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Speaker 1: this whole six and three quarter year cycle added you know,

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Speaker 1: a nominal rate of four or four and a half

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Speaker 1: percent without the use of debt. I think that means

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Speaker 1: it's a sustainable cycle. And basis point increase doesn't change

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Speaker 1: any of the real economic landscape here. Well, what did

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Speaker 1: seem to change the stock market landscape is when the

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Speaker 1: FED stopped adding to its balance sheet. We were doing

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Speaker 1: a chart on Bloomberg Survalance TV this morning. The minute

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Speaker 1: they stopped, the S ANDP flattened out. Can the market's

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Speaker 1: trade higher without the FED. I think they can because

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Speaker 1: I hear what you're saying, and I've seen those charts.

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Speaker 1: But the omitted variable here during this cycle might be earnings,

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Speaker 1: and over the arc of long history, it is prices

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Speaker 1: on the SMP do line up with earnings and free

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Speaker 1: cash flow. And I agree there are a lot of

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Speaker 1: players out there who are looking at liquidity what the

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Speaker 1: FED is gonna do quarter to quarter, months and months,

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Speaker 1: but year to year it's going to be a story

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Speaker 1: of earnings and free cash flow from these companies. And

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Speaker 1: that's what I'm disappointed about in this quarters earnings and

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Speaker 1: why I've said, let's stand back, because all the ingredients

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Speaker 1: I thought we're working for us, low cost of capital, capital,

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Speaker 1: light unit, labor costs, all these things have been working

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Speaker 1: for us for six and a half years have kind

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Speaker 1: of petered out. So I personally don't think and not

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Speaker 1: reliant on the FED one way or the other. I'm

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Speaker 1: reliant on the ability these companies that generate earnings, which

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Speaker 1: you have to remember are up higher than the market

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Speaker 1: going back to March of oh nine. Yeah, but we've

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Speaker 1: had this earnings recession for the last four quarters. Is

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Speaker 1: that coming to an end or does it get worse. Yeah,

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Speaker 1: well that's where I come in here. I was thinking

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Speaker 1: this was an earnings recession, and typically, and we've had

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Speaker 1: we've had a few of these in history, two or

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Speaker 1: three they last two quarters maybe three. Now it's four quarters.

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Speaker 1: And now it's spread to other sectors. And this is

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Speaker 1: where I have said, I write this blog, and I said,

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Speaker 1: let's step back. The market usually doesn't go anywhere in

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Speaker 1: the summer, usually does not go anywhere before in the

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Speaker 1: summer prior to a presidential election. And now we're getting

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Speaker 1: this sort of creepy news that margins are deteriorating and

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Speaker 1: everywhere except consumer discretionary telecom. Let's talk about that more

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Speaker 1: when we come back. And Tom Keen's gonna definitely want

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Speaker 1: to talk about free cash flow with you. He loves

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Speaker 1: free cash flow. Jim Swanson, chief investment strategist of MFS

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Speaker 1: Investment Management, here on Bloomberg Surveillance stocks are higher at

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Speaker 1: least futures are heading into trading today. Bloomberg surrounds brought

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Speaker 1: to by National Realty thirty percent returns on cash and

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Speaker 1: rented real estate. Find them at n r IA dot net.