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

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

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Speaker 1: to the Country Channel one, and around the globe the

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Speaker 1: Bloomberg Radio Plus Abit Bloomberg dot Com. This is Bloomberg

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Speaker 1: Surveillance Now Barnegate thirty on Wall Street at Michael McKee

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Speaker 1: along with Tom Keene. Economic Indicators brought to you by

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Speaker 1: Commonwealth Financial Network. When it's time to change the conversation,

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Speaker 1: talk with a broker dealer r I A that's ready

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Speaker 1: to listen to call or six two three six three

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Speaker 1: eight or visit Commonwealth dot com to learn more. Actually,

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Speaker 1: no economic indicators this morning. We do get the Fed

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Speaker 1: minutes this afternoon two pm Wall Street time, and we

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Speaker 1: will see if there are any it's within Yeah, you know,

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Speaker 1: tell us anything about what's going on. We normally wouldn't

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Speaker 1: say this, but I'm gonna say it. Chili ple. Yeah,

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Speaker 1: I'll let you pronounce it. G d P two. What

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Speaker 1: a joy that is after the gloom of Venezuela, the

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Speaker 1: agony of Venezuela, and the outright gloom of Brazil and

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Speaker 1: the tumulti Argentina. Two GDP looks great for Joan. Uh

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Speaker 1: two percent would have been good for the Minnesota Twins

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Speaker 1: last night fall for a second game in a row.

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Speaker 1: Tigers scores seven in the seventh inn. He beat Minzotazela too.

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Speaker 1: We mentioned that because joining us now is our friend

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Speaker 1: from Minneathlas. Jim Paulson from Wells Capital tough summer so far,

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Speaker 1: worst team in the Major League. Not good, not good.

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Speaker 1: Nice ballpark though, interesting comment from Jim Vogel, who is

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Speaker 1: the fixed incomes try just an FTN financial who says

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Speaker 1: you why not start to price in a FED move now, because,

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Speaker 1: as he puts it, nothing is going especially Row at

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Speaker 1: the moment. And I guess that's what passes for good

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Speaker 1: news these days. Yeah, I you know. I think the thing,

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Speaker 1: Mike that bugs me the most about the suttle reserve

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Speaker 1: of the tightening and whether they're gonna or not is

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Speaker 1: every time historically when the Federal Reserve moves from accommodation

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Speaker 1: to tightening for the first time in the recovery, uh

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Speaker 1: nearly every time, the financial markets struggled around that change.

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Speaker 1: A little before it, a little after they struggle. And

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Speaker 1: this happened in ninety four, it happened nineteen, it happened

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Speaker 1: two thousand four every time when the FET first started

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Speaker 1: to titan. What what's happened here is the FET has

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Speaker 1: suspended the markets at the start here perpetually. It started

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Speaker 1: in two thousand fourteen when they ended quee, and then

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Speaker 1: they paused, and then they did again in December last

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Speaker 1: year when they raised rates, and then they paused, and

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Speaker 1: so now we've had more than two years of suspending

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Speaker 1: exactly exactly in the market continues to stroll. It's like

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Speaker 1: pulling off a band aid a little bit at a

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Speaker 1: time rather than ripping it off and just letting the markets.

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Speaker 1: Did your father do that? Did your father like put

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Speaker 1: the little threader on your tooth and throw the work

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Speaker 1: out the window? Absolutely? I did that. Um you know,

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Speaker 1: I looked Jim Paulson at your two year malais and

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Speaker 1: I love it. In the twelve twelve months moving average

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Speaker 1: of the down breaking just below the twenty four months

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Speaker 1: on m A within that is the old tribe, the Carter,

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Speaker 1: the Carter malaise. Is this the yelling malaise kind of is?

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Speaker 1: And I almost think Tom that it that if the

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Speaker 1: if the FED would just get on a course and

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Speaker 1: stay with it, whether they want to raise rates two

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Speaker 1: times a year or three times a year. If they

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Speaker 1: just stayed with her for a while, the market could

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Speaker 1: move on, I think, and so would the economy, and

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Speaker 1: so could corp rations and their capital spending plans and

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Speaker 1: their hiring plans. I think the FEDS become too much

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Speaker 1: of the story here, and when you be you know,

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Speaker 1: I used to have an old man to tell me,

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Speaker 1: when your manager's style starts to affect results, apply less

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Speaker 1: of your management. And I kind of think that's what's

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Speaker 1: happened here at the FED. UM. Personally, I think fundamentally,

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Speaker 1: as as Mike suggested, Uh, I think things look okay

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Speaker 1: by and large. UM, I'm seeing um economic surprising to

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Speaker 1: seize rise around the globe. Me last night, we had

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Speaker 1: an outsized surprise in Japan's GDP. We've gotten better dat

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Speaker 1: out of China, Eurozone data has been better. UM. I

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Speaker 1: think we'll continue to okay in the United States. I

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Speaker 1: think it definitely could handle just the slow, steady rise

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Speaker 1: in monetary policy. And if we did that, I think

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Speaker 1: the market would get off the FED and start focusing

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Speaker 1: on fundamentals again and be a better market. But what

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Speaker 1: are the fundamentals at this point? We're certainly not. The

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Speaker 1: company is making a lot of money now. Earnings has

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Speaker 1: been a very big concern, There's no doubt about that. UM.

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Speaker 1: But I think a few things are going right. Uh.

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Speaker 1: One of them is I think there's a sense that

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Speaker 1: work can maybe back past the worst earning season uh

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Speaker 1: here this year at least, if not in the recovery,

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Speaker 1: and earnings are going to get better for no other

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Speaker 1: reason than the big culprit that dragged him down was

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Speaker 1: a collapse in commodity prices, which is now reversing. UM.

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Speaker 1: So you get a sense of better momentum as we

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Speaker 1: moved through the rest this year. Earnings. In addition, the

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Speaker 1: deflationary abyss story is starting to fall apart, with not

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Speaker 1: only recovering commodity prices, but increases in core costs and

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Speaker 1: wages as well. Um. I As I said, I think

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Speaker 1: economic surprise and disease suggests some revitalization of momentum. And

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Speaker 1: I think the biggest thing I like more than anything

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Speaker 1: right now as an investor is just I just love

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Speaker 1: the widespread pessimism, the climbing a wall of worries back. Um,

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Speaker 1: We're we're within an eyelash and new all time record

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Speaker 1: highs here, and there's nobody, very few touting that we're

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Speaker 1: gonna go to new highs or that it's a good

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Speaker 1: time to be in stocks. I kind of think, I

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Speaker 1: kind of think the surprise is going to be to

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Speaker 1: the upside. That's my guess. Did you know, Michael McKee,

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Speaker 1: there is a YouTube video on how to pull your

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Speaker 1: child's teeth with a string. We didn't have that, we do.

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Speaker 1: I gotta believe that more investors feel that way pulled

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Speaker 1: us too slowly rather than just jerking it out exactly.

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Speaker 1: That's what we gotta do to move on. I love

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Speaker 1: your idea of copy of a new wall of worried.

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Speaker 1: Copy that YouTube linked Tom and send it to Jenny Younges. Yeah,

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Speaker 1: I will, or maybe to Bill Dudley's Why does he speak, Mike,

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Speaker 1: It's like in an hour tomorrow, Okay, excuse me tomorrow.

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Speaker 1: I'm sorry. I get Dudley and uh and Fisher tomorrow. Well,

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Speaker 1: very good. Jim Paulson with us as well. It will

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Speaker 1: continue with Mr Paulson. He's gotta go look at the

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Speaker 1: Minnesota Twins box score again. Massive shout out to the

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Speaker 1: new York Mets and the Washington Nationals um. Yes, the

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Speaker 1: two hours, two hours, thirty two minutes was a game

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Speaker 1: that is bliss, That is a perfect game of baseball.

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Speaker 1: This hour of Surveillance, brought to by Westchester subar Uve,

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Speaker 1: is at Westchester subar out dot com. Here's Michael bar

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Speaker 1: with the latest news Headland, Mike Tom, thank you very much.

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Speaker 1: Still too close to call. In Kentucky. By the Hillary

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Speaker 1: Clinton declared victory and the Democratic primary. Bernie Sanders won Oregon,

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Speaker 1: but he still trails Clinton in the delegate account. Donald

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Speaker 1: Trump has shifted his focus to foreign policy issues. Trump

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Speaker 1: will meet today with former Secretary of State Henry Kissinger.

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Speaker 1: Trump also says he's open to speaking with North Carean

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Speaker 1: leader Kim John. Vice President Joe Biden says the middle

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Speaker 1: class is getting clawbered. The Obama administration is announcing changes

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Speaker 1: to overtime rules for workers. I means workers making about

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Speaker 1: twenty three thousand dollars a year have to be paid overtime.

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Speaker 1: I'm to a forty seven thousand, five hundred dollar cap.

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Speaker 1: Biden says employers will have to make a choice either

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Speaker 1: they pay their workers over time the over time that

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Speaker 1: they work, or they cap their salary workers below forty

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Speaker 1: seven thousand, five hundred dollars. They cap their way We're

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Speaker 1: work week at forty hours. Either way, the worker wins.

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Speaker 1: The new rule kicks in December one. Global News twenty

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

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

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Speaker 1: the world. I'm Michael Barr, Mike Tom, Thank you, Michael.

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Speaker 1: Time now for the Landrover Parsippany Bloomberg NBC Sports Update

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Speaker 1: with Rob Bush, Go Rob, Good morning, Mike and Tom. Noah.

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Speaker 1: Synderguard painted a masterpiece of City Phil. He tossed seven

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Speaker 1: scoreless and instruct out ten Nats in the route to

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Speaker 1: a to nothing win in the series Open or Syndergard

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Speaker 1: need a little run support, You got it early on

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Speaker 1: a huge crystal game. Kate, you run out and fanners

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Speaker 1: at the lead off bomb. It really takes a lot

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Speaker 1: of preture on off and then into goes out there

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Speaker 1: and if it's another one. So uh, they were really

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Speaker 1: nice to Bell to go out there and picture of

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Speaker 1: the lead. It was Granderson's seventh home run of the year. Tonight,

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Speaker 1: Geo Gonzalez faces Bartolo Cologne Yankees dropped a five three

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Speaker 1: decision at Arizona. Michael Pineda dipped to one in five. Tonight,

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Speaker 1: Shelby Miller hosts Nathan Uvaldi Alex Rodriguez. He has his

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Speaker 1: return pushed back through the weekend. NBA Eastern Conference Finals

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Speaker 1: Game one Cleveland trounces the Raptors one four. The trio

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Speaker 1: of Lebron Kyrie Irving and Kevin Love at sixty five.

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Speaker 1: The Calves are nine and oh in the playoffs. Nothing

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Speaker 1: new for Lebron. I don't think we have complacency in

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Speaker 1: our in our minds right now. We have a go

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Speaker 1: and our goal is not nine wins. It's just not.

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Speaker 1: It's not my focus of won nine games in the

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Speaker 1: postseason before won fourteen games in the postseason before. Game

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Speaker 1: two is Thursday. The seventies Sixers, owners of the league's

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Speaker 1: worst record, won the NBA lottery on Tuesday. The draft

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Speaker 1: is June at Barkley Center. First round pick this year

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Speaker 1: for both the Knicks and the Nets and NHL playoffs.

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Speaker 1: San Jose even up the Western Conference Finals at one

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Speaker 1: with a four nothing win in St. Louis. Brent Burns

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Speaker 1: had a pair of goals and that is your NBC

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Speaker 1: Bloomberg Sports Update. Mike and Tom, thanks so much greatly

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Speaker 1: appreciate a ten year yield one two year yield advances

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Speaker 1: two days in a row. We've got some real elevation

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Speaker 1: in the two year point eight five. That's a big deal. Seriously,

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Speaker 1: we've seen some real movement there, curve flattening because of that.

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Speaker 1: Rising to your yield. Ten year yield fairly static and

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Speaker 1: the two year yield higher means less of a difference

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Speaker 1: in yield between the tenure and the two year yield.

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Speaker 1: Brent crude forty nine dollars exactly made a real dash

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Speaker 1: for fifty. Didn't get there this morning. Barrel on Brent

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Speaker 1: West Texas twenty year a week dollar modestly stronger this morning.

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Speaker 1: Michael McKee and Tom Kane. We need you to stay

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Speaker 1: with us across this nation. Good morning. The Sports report

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Speaker 1: was brought to you by land Over Participan e. The

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Speaker 1: spring sales event is happening now. Visit Landard for Parcipi

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Speaker 1: dot com, land Rover pup and via Global Business News

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

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Speaker 1: Radio Plus mobile app, and on your radio. This is

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Speaker 1: a Bloomberg business flash and I'm car in Moscow. This

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Speaker 1: updates brought to you by Carbonite. You never know when

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Speaker 1: with offer code. Broadcast target down almost eight percent this morning,

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Speaker 1: after first quarter sales missed analysts estimates and the discount

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Speaker 1: chain delivered a disappointing forecast, adding evidence that the biggest

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Speaker 1: US retailers are suffering from a slump. Mose posting first

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Speaker 1: quarter profit that beat analyst projections and raised its forecast

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Speaker 1: for the year. IT shares are up six tenths per set.

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Speaker 1: US Dock Index futures are lower as investors away minutes

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Speaker 1: from the latest FEDO Reserve meeting. We checked the markets

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Speaker 1: every fifteen minutes throughout the trading day. On Bloomberg SNP

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Speaker 1: Emni futures are now down seven points down EVENY futures

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Speaker 1: down sixty now as DOCUMENTI futures down twelve. The acts

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Speaker 1: in Germany's down three tenths per cent, ten Your Treasury

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Speaker 1: down to thirty seconds. The yeld one point seven eight percent.

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Speaker 1: Name x Scrude oil down three tenths per cent or

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Speaker 1: fifteen cents to forty eight sixteen of barrel COMEX gold

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Speaker 1: is down three tens per cent or three dollars seventy

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Speaker 1: cents to twelve seventy three forty n ounce the euro

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Speaker 1: and other twelve seventy four the n one oh nine

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Speaker 1: points three nine and US independent grain trader The Enderson's

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Speaker 1: rejecting a hostile one point oh four billion dollar takeover

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Speaker 1: offer from HC two holding cents of Bloomberg Business Flash,

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Speaker 1: Tom and Mike Karen, thank you so much. Futures again

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Speaker 1: to tier E negative seven. It is on Wall Street.

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Speaker 1: The following is from Bloomberg View. Opinions in the Jerry

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Speaker 1: from Bloomberg columnists. I'm Megan mccartell, a columnist for Bloomberg

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Speaker 1: View in Chicago. This weekend, as security lines at the

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Speaker 1: airport stretched for hours, dozens of people were stranded overnight.

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Speaker 1: The problem is occurring all around the country. The t

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Speaker 1: s A blames inadequate staffing, but the number of passengers

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Speaker 1: isn't actually up at O'Hara that much, so I tend

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Speaker 1: to believe there other explanation. They've slowed down screening after

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Speaker 1: last summer's humiliating failure to detect almost any of the

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Speaker 1: contraband and a security audit. Whole screening involves a trade

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Speaker 1: off between false positives and false negatives. You eliminate one

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Speaker 1: by accepting more of the other. When the t s

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Speaker 1: A decides to ensure they don't miss a single potential threat,

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Speaker 1: they're going to end up flagging every person with an

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Speaker 1: oddly shaped body or a badly packed bag, and the

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Speaker 1: lines will grow. Rational cost benefit analysis might well dictate

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Speaker 1: that it's better to accept some higher risk of threat

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Speaker 1: than to accept the lines. After all, no one blew

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Speaker 1: up a plane last year even with lax or screening,

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Speaker 1: and the collective value of all those man hours spent

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Speaker 1: waiting in ninety minute lines is quite high. But that's

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Speaker 1: not how political and bureaucratic logic works. I bet that

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Speaker 1: in the next six months the t s A will

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Speaker 1: be rewarded for longer lines, having its budget and headcount increased.

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Speaker 1: If that doesn't fix the problem, I guess the t

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Speaker 1: s AS next step would mean to make it look

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Speaker 1: as if it did by relaxing the screening standards to

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Speaker 1: speed up the lines. The end result a bigger and

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Speaker 1: more expensive agency that still doesn't too much to keep

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Speaker 1: us safe. As a nice lady said to me when

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Speaker 1: I finally deplaned, Welcome to Washington. I'm Megan McCardell. For

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Speaker 1: more of you, Please get a movement view dot com

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Speaker 1: or do you go on the Bloomberg terminal. This has

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Speaker 1: been Bloomberg View and Bloomberg View commentary can be here

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Speaker 1: to hourly weekdays. I'm Bloomberg Radio out of the great

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Speaker 1: state known as Iowa State. Jim Paulson is with us

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Speaker 1: with Wells Capital Management. Jim, is there opportunity within our

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Speaker 1: food malaise is a general statement? And look at food stocks,

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Speaker 1: and look at agriculture stocks. I look at Caterpillar, Dear,

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Speaker 1: let's say cat maybe is the global flat on its

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Speaker 1: back moment? Is there an opportunity there? Yeah? I'm more

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Speaker 1: in client time right now towards the more producer capital

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Speaker 1: goods sort of side of the UH economic equation as

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Speaker 1: far as investments in the equity market and and away

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Speaker 1: a little bit from the consumer side. UH. You know,

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Speaker 1: consumer stocks have dominated the performance under this bull market.

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Speaker 1: It's been dominated by disinflation. I think we're starting to

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Speaker 1: see some rise in inflation happening, and that's going to

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Speaker 1: benefit more of the producers and economy. Uh So some

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Speaker 1: of those names you mentioned certainly fit, uh fit that

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Speaker 1: bill Um. I think a big part what fits is

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Speaker 1: there's much more producer capital goods based economies outside of

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Speaker 1: the United States than there is within the United States,

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Speaker 1: and so international investments I have have good appeal. That's

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Speaker 1: an old radio trick, Jim Paulson. If I mentioned eight sectors,

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Speaker 1: I can at least say I'll be right down the

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Speaker 1: road investment advisors drink right's gonna say you're scratching an

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Speaker 1: old analyst here. Well, when you when you talk about

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Speaker 1: being heavy and you're climbing the wall, worry work us

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Speaker 1: to a new hikes? Can we go much higher at

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Speaker 1: this point? Do we need a consolidation again? Yeah? I

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Speaker 1: you know, I'm not saying that we're going to have

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Speaker 1: you know, ten to by an old return to the

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Speaker 1: rest of the bull market, Mike. But I just think

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Speaker 1: right now we may well break the new highs, move

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Speaker 1: up towards and then maybe struggle a little bit with

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Speaker 1: rate increases, in inflation and margin erosion. But right now

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Speaker 1: I think we moveing higher. I like a couple of things.

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Speaker 1: I think that domestic demand, to me, of all things

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Speaker 1: I look at, is the best thing that's happening is

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Speaker 1: ours worked just soared to new high here in the

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Speaker 1: latest month. They had stalled out earlier this year, and

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Speaker 1: they now broke out to new highs. And even look

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Speaker 1: at the Jolts numbers that are there, the unemployment claim numbers. Uh,

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Speaker 1: there's good reason to believe that ours worked are gonna

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Speaker 1: contain to climb. The domestic demand is going to stay firm. Now.

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Speaker 1: What we got in addition to that, which was what

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Speaker 1: we haven't had, is we just had the real value

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Speaker 1: of the broad US dollar declined by five to six percent,

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Speaker 1: which has reversed about one quarter of its rise that

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Speaker 1: occurred since for in two thousand fourteen. That is a

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Speaker 1: huge change which rather than the rise and dollar reducing

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Speaker 1: international demand for US, we're now going to see tail

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Speaker 1: winds from the currency boosting international demands at the same

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Speaker 1: time that domestic demands stay firm. I think that's a

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Speaker 1: really good fundamental change and will likely surprise people maybe

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Speaker 1: how fast earnings come back a little bit and UH

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Speaker 1: growth in the United States right now, the Atlanta Fed

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Speaker 1: GDP now numbers two and a half percent for this quarter,

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Speaker 1: and the PC the personal consumption number is estimated at

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Speaker 1: three point six percent for the quarter we're in. If

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Speaker 1: there's anything close to those numbers, UM, with the tail

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Speaker 1: win of dollar weekness, I think we'll feel a lot

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Speaker 1: better about international companies in the U. S. In general.

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Speaker 1: This may be something of an embarrassing question to us

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Speaker 1: and to others in a sense, Um, we like to

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Speaker 1: interview c e o s and everybody makes a big

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Speaker 1: deal out of it. But do you really when you

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Speaker 1: listen to c e o s do you get much

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Speaker 1: out of it? Do you listen to them? I was

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Speaker 1: just thinking as you were speaking about Gary Stern, who

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Speaker 1: used to be the president of the Minneapolis Fed up

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Speaker 1: in your area, did a very famous study where you

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Speaker 1: found the last people to recognize when a business cycle

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Speaker 1: and the markets were turning were CEOs either because they

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Speaker 1: were you know, not seeing the forest for their own

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Speaker 1: companies trees, or because there was no percentage in it

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Speaker 1: for them because as long as they are um undercutting

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Speaker 1: expected you know, expectations, they overperformed and under under forecast

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Speaker 1: that they're going to keep their jobs. Well, they said,

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Speaker 1: you're scratching an old analyst, and there's plenty of blame

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Speaker 1: to go around. And in my pretty three years, I've

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Speaker 1: I've had a checkered history, So I live as you say,

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Speaker 1: if you live in a glass house, you don't of stones.

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Speaker 1: I don't see any particularly U CEO is being any

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Speaker 1: worse than any of the rest of us at UH

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Speaker 1: sort of forecasting growth. Um. But what I do see

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Speaker 1: right now when I go around the country is UH

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Speaker 1: a lot of fear, a lot of concern about the

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Speaker 1: economy in general, about the global economy, about weakness, and

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Speaker 1: I think it's a bit overdone, not only among CEOs

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Speaker 1: but among analysts and economists, and that to me smells

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Speaker 1: like an opportunity. I often look for where sentiment is

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Speaker 1: and then try to judge whether that is overdone or underdone,

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Speaker 1: and if it has to move, what does that mean

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Speaker 1: for securities pricing? And right now I think CEOs are

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Speaker 1: going to find themselves not expanding enough and having to

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Speaker 1: catch up as well as investors when we look over

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Speaker 1: the balance of this year, well within that and within

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Speaker 1: the wall of worry, is it almost a buying hold

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Speaker 1: strategy where you just ignore the news and climb on board. Well, uh,

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Speaker 1: I think right now, as I say, Tom, I like

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Speaker 1: to be overweight equities right now, and and uh I

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Speaker 1: think we my best guesses, we're gonna have a decent

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Speaker 1: little rally here to new highs over the balance of

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Speaker 1: this recovery. However, I really think returns on average on

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Speaker 1: a buy and hold is maybe like five percent annualized

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Speaker 1: returns with a two percent dividend, or even four. You know,

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Speaker 1: I don't think earnings can grow nearly as fast as

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Speaker 1: they have going forward now, simply because we were got

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Speaker 1: a very mature profit cycle with very high margins, and

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Speaker 1: so I think at best earnings grow at or less

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Speaker 1: nominal GDP, which tells me four to five plus two

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Speaker 1: percent divon. That's you're buying old return. But that doesn't

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Speaker 1: mean that we could fly up to rise and then

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Speaker 1: pull back again maybe later on. And I think a

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Speaker 1: little timing at the margin right now in the market,

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Speaker 1: which I've referred to from here as a bunny market

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Speaker 1: that hops around a lot but doesn't go very far um,

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Speaker 1: I think makes some sense. So your core call, this

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Speaker 1: is critically your core call is the idea of the

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Speaker 1: two year range continuing it is, But I think we're

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Speaker 1: gonna set up higher high, and people will become convinced

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Speaker 1: that we're breaking out the bulls resuming by and hold

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Speaker 1: his back. At that point, you might find me getting

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Speaker 1: more defensive again. Okay, it sounds like you're rooting for

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Speaker 1: the twins. Jim Paulson, go away. Jim Paulson Wells Capital Management,

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Speaker 1: giving his perspective on I guess, Mike the definition of range,

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Speaker 1: which is a good way to flunky if a level one, two,

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Speaker 1: three four the Bunney market, Doc, well, there it is.

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Speaker 1: Futures are deteriorated, Mike and I have no reason yields

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Speaker 1: don't move. I mean the two year yield is higher

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Speaker 1: point eight five one three percent dollar dynamics micro they're

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Speaker 1: a little bit stronger. Dollar oil has not broken higher

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Speaker 1: lower forty nine oh six on Brent. True, but none

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Speaker 1: of those. There's equities just it's probably fit related to

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Speaker 1: a certain extent. You know, people bad news is good

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Speaker 1: news or good news is bad news, or whatever kind

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Speaker 1: of feeling. At this point. There it is. We're looking

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Speaker 1: at equities, funds, currencies, commodities. We do that with economics,

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Speaker 1: as Mike mentioned tomorrow, Bill Dudley and Vice Chairman Fisher

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Speaker 1: speaking as well, give you a perspective on that with

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Speaker 1: many of our steemed guests. Bonus ground another hour of

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Speaker 1: Bloomberg surveillance