1
00:00:02,120 --> 00:00:05,640
Speaker 1: This is Bloomberg Surveillance. I think we can safely say

2
00:00:05,640 --> 00:00:10,120
Speaker 1: that the bull market that began nine has been reversed,

3
00:00:10,200 --> 00:00:12,400
Speaker 1: so in a way, sort of a cyclical bearer still

4
00:00:12,440 --> 00:00:14,720
Speaker 1: has a hold on on the broader market. You're broadly

5
00:00:14,720 --> 00:00:18,000
Speaker 1: speaking when you know on diverse speech and that decision

6
00:00:18,000 --> 00:00:20,279
Speaker 1: a couple of weeks ago. Now we back chat a

7
00:00:20,320 --> 00:00:22,640
Speaker 1: little bit from that, and the dollar roop had taken

8
00:00:22,640 --> 00:00:25,440
Speaker 1: oil with it. Hiring is still going strong. A lot

9
00:00:25,480 --> 00:00:28,560
Speaker 1: of that strength is coming from younger firm, small medium

10
00:00:28,560 --> 00:00:31,080
Speaker 1: sized firms, and that's really important because if we really

11
00:00:31,080 --> 00:00:33,280
Speaker 1: looked at those firms to account for much of the

12
00:00:33,360 --> 00:00:36,200
Speaker 1: job growth during an economic expansion, it's all very helping.

13
00:00:36,240 --> 00:00:40,520
Speaker 1: Bloomberg Surveillance your link to the world of economics, finance,

14
00:00:40,600 --> 00:00:45,400
Speaker 1: and investment. On Bloomberg Radio. Good Morning, Michael McKay along

15
00:00:45,440 --> 00:00:47,760
Speaker 1: with Tom keat It's seven am on Wall Street and

16
00:00:48,040 --> 00:00:52,160
Speaker 1: on Lancaster Avenue in Villanova, Pennsylvania, where they are celebrating

17
00:00:52,240 --> 00:00:55,040
Speaker 1: an n C double Amn's basketball championship. After the one

18
00:00:55,040 --> 00:00:58,400
Speaker 1: of the most exciting endings in Termit history. John Tucker

19
00:00:58,880 --> 00:01:02,400
Speaker 1: is imitating that last shot, So you had to watch

20
00:01:02,640 --> 00:01:06,920
Speaker 1: the last couple of true, the tying basket from from

21
00:01:06,920 --> 00:01:10,039
Speaker 1: North Carolina and then the winning basket. We now have

22
00:01:10,840 --> 00:01:13,080
Speaker 1: some news here about sports. By the way, crossing the

23
00:01:13,080 --> 00:01:17,639
Speaker 1: Bloomberg Professional Twitter is apparently when has won an ideal

24
00:01:17,680 --> 00:01:22,000
Speaker 1: with the NFL to stream Thursday night games. I'm not

25
00:01:22,040 --> 00:01:24,039
Speaker 1: sure how that fits into the Twitter format, but that's

26
00:01:24,040 --> 00:01:25,920
Speaker 1: something we will look into. It will check out out

27
00:01:26,000 --> 00:01:30,440
Speaker 1: how that affects Twitter's share prices coming up. It is

28
00:01:30,480 --> 00:01:34,320
Speaker 1: also six am in Milwaukee, Madison, Green Bay, and Waukashaw

29
00:01:34,319 --> 00:01:37,360
Speaker 1: in the Wisconsin primary today may have major implications for

30
00:01:37,360 --> 00:01:40,920
Speaker 1: the presidential contest. Take Cruz Bernie Sanders forecast win. We'll

31
00:01:40,959 --> 00:01:44,240
Speaker 1: talk about that with NBC's Chuck cod this morning. No

32
00:01:44,400 --> 00:01:46,920
Speaker 1: winners in the markets this morning. Stocks down around the

33
00:01:46,959 --> 00:01:49,760
Speaker 1: world a second day. Call it a new pessimism. I

34
00:01:49,760 --> 00:01:52,640
Speaker 1: am F Managing director Christine Legard summing it up for

35
00:01:52,680 --> 00:01:55,160
Speaker 1: our Frenzy and lackawaw this morning, saying there's a danger

36
00:01:55,200 --> 00:01:59,000
Speaker 1: of a greater global slowdown and that is reflected inequities

37
00:01:59,000 --> 00:02:02,640
Speaker 1: this morning. Tokyo two point four percent, the yen at

38
00:02:02,680 --> 00:02:07,160
Speaker 1: a seventeen month high of one ten eight. Right now.

39
00:02:07,240 --> 00:02:09,920
Speaker 1: In Europe, the stock six hundred is off by six

40
00:02:09,960 --> 00:02:13,280
Speaker 1: points one and three quarters percent. The decks is down

41
00:02:13,320 --> 00:02:16,760
Speaker 1: two d five points two point three percent, Germany's ten

42
00:02:16,840 --> 00:02:19,600
Speaker 1: year note at a one year low just eighty two

43
00:02:19,600 --> 00:02:23,040
Speaker 1: basis points. Here in the US, futures are down, SMP

44
00:02:23,200 --> 00:02:26,520
Speaker 1: features off by sixteen eight tenths, now evening features down

45
00:02:26,520 --> 00:02:29,680
Speaker 1: a hundred and seventeen seven tenths, and NASDAC one evenion

46
00:02:29,680 --> 00:02:33,920
Speaker 1: features down twenty six points. That's sixty basis points. Uh

47
00:02:34,280 --> 00:02:39,280
Speaker 1: right now sixty six the basis points percent six tenths

48
00:02:39,280 --> 00:02:41,160
Speaker 1: of a percent is what I meant to say. I'm

49
00:02:41,160 --> 00:02:44,639
Speaker 1: still thinking about the basketball game. Bond Yale's falling tenure

50
00:02:44,639 --> 00:02:47,600
Speaker 1: note yield one point seven to the five year at

51
00:02:47,639 --> 00:02:50,160
Speaker 1: one point one seven percent and the two year at

52
00:02:50,360 --> 00:02:53,120
Speaker 1: seventy two basis points. A stock to keep an eye

53
00:02:53,160 --> 00:02:56,359
Speaker 1: on this morning, Alegan the U S Treasury issuing new

54
00:02:56,480 --> 00:03:01,519
Speaker 1: rules last night to curb inversion transactions. UH the U

55
00:03:02,960 --> 00:03:08,240
Speaker 1: the shares are down this morning by twenty one percent.

56
00:03:09,080 --> 00:03:13,200
Speaker 1: Henrietta Trace is with us. She is an analyst at

57
00:03:13,320 --> 00:03:18,400
Speaker 1: Height Advisors in Washington. Henrietta, how how much could this

58
00:03:18,520 --> 00:03:22,239
Speaker 1: damage efforts to put the two companies together? Well? To

59
00:03:22,320 --> 00:03:25,600
Speaker 1: carry through with your sports reference, it's definitely a curveball. Um.

60
00:03:25,680 --> 00:03:29,360
Speaker 1: The main question is whether or not the allergant activists

61
00:03:29,400 --> 00:03:33,280
Speaker 1: and activist force labs, as well as the Warner Chillcot

62
00:03:33,639 --> 00:03:36,480
Speaker 1: activist transactions are going to be counted towards the ownership

63
00:03:36,960 --> 00:03:40,840
Speaker 1: threshold that Fiser needs in order to remain expatriate. The

64
00:03:40,880 --> 00:03:44,200
Speaker 1: key number is is figuring out what that um threshold

65
00:03:44,320 --> 00:03:46,320
Speaker 1: is going to be and what Fiser will be able

66
00:03:46,400 --> 00:03:51,000
Speaker 1: to um swallow. Well, my expectation, sorry, my execution is

67
00:03:51,040 --> 00:03:55,440
Speaker 1: that um if the map is correct, Treasury has definitely

68
00:03:56,040 --> 00:03:58,400
Speaker 1: put some roadblocks in Fiser's way and made it a

69
00:03:58,400 --> 00:04:01,000
Speaker 1: little bit less um at ottage us for them to

70
00:04:01,080 --> 00:04:04,280
Speaker 1: expatriate a move to Ireland. But they still can if

71
00:04:04,280 --> 00:04:06,760
Speaker 1: they so desire, and that will be the main question

72
00:04:06,840 --> 00:04:08,960
Speaker 1: investors will be the answered today. One of the things

73
00:04:09,000 --> 00:04:11,640
Speaker 1: that all Again and Fiser insisted when they did the

74
00:04:11,680 --> 00:04:14,320
Speaker 1: deal that was was not about inversions. This was about

75
00:04:14,880 --> 00:04:19,719
Speaker 1: long term value. Does is it really about inversions or

76
00:04:19,760 --> 00:04:23,480
Speaker 1: does this affect the long term value? We've seen Fiser

77
00:04:24,080 --> 00:04:27,400
Speaker 1: attempt to expatriate for years now. They kicked off this

78
00:04:27,480 --> 00:04:29,839
Speaker 1: conversation back in two dozen and fourteen when they tried

79
00:04:29,839 --> 00:04:33,440
Speaker 1: to explatreate with Astor Zeneca. I think most investors you

80
00:04:33,520 --> 00:04:36,279
Speaker 1: talked to believe that the deal had real synergy. The

81
00:04:36,360 --> 00:04:40,880
Speaker 1: tax benefits are substantial. So UM my view is that

82
00:04:41,000 --> 00:04:44,200
Speaker 1: if if Siser still can move forward and fall under

83
00:04:44,240 --> 00:04:47,120
Speaker 1: the right you know, ratios for the thresholds of the

84
00:04:47,120 --> 00:04:51,120
Speaker 1: ownership test, they will proceed with this deal. Um because

85
00:04:51,200 --> 00:04:54,520
Speaker 1: they can, because they want to merge with Allagan, but also,

86
00:04:54,720 --> 00:04:58,359
Speaker 1: as you mentioned, because of the benefits of being domtiled

87
00:04:58,360 --> 00:05:00,680
Speaker 1: in the country that doesn't tax reform drive earnings which

88
00:05:00,760 --> 00:05:03,159
Speaker 1: Ireland does. Okay, very quickly before we let you go,

89
00:05:03,200 --> 00:05:09,159
Speaker 1: Aligan shares down twenty two right now, does that make sense? Well,

90
00:05:09,200 --> 00:05:11,840
Speaker 1: I think that Alegant isn't actually a great position. I mean,

91
00:05:11,839 --> 00:05:14,560
Speaker 1: this deal with Fiser may not work out if if

92
00:05:14,600 --> 00:05:17,919
Speaker 1: they find that they can't meet the right numbers, but

93
00:05:18,120 --> 00:05:22,679
Speaker 1: Allgan is in a position to acquire another US company

94
00:05:23,120 --> 00:05:27,080
Speaker 1: UM or certainly to make acquisitions abroad. UM. I think

95
00:05:27,120 --> 00:05:29,799
Speaker 1: Fiser is the one, for lack of a better phrase,

96
00:05:29,880 --> 00:05:32,280
Speaker 1: that is left standing alone on the dance floor. And

97
00:05:32,400 --> 00:05:34,760
Speaker 1: we had a trace from height. Thank you very much

98
00:05:35,080 --> 00:05:37,919
Speaker 1: for joining us this morning. As I mentioned, Alegan shares

99
00:05:37,960 --> 00:05:41,920
Speaker 1: down twenty two percent right now, and Fiser shares in

100
00:05:42,000 --> 00:05:47,039
Speaker 1: early trading up by two point four. Apple shares down

101
00:05:47,240 --> 00:05:50,279
Speaker 1: by eight tens of a percent in early trading this morning.

102
00:05:50,279 --> 00:05:53,440
Speaker 1: Not a lot given their stock price, but it is

103
00:05:53,480 --> 00:05:57,200
Speaker 1: a big week for Apple. EU Competition Commissioner Marguerite Vestiger

104
00:05:57,320 --> 00:05:59,960
Speaker 1: comes to Washington to meet Treasury Secretary Jack lou Put

105
00:06:00,240 --> 00:06:04,320
Speaker 1: for massive back taxes from Apple. A complicated case, but

106
00:06:04,400 --> 00:06:07,920
Speaker 1: one Apple warrens could have consequential impacts on its earnings

107
00:06:08,000 --> 00:06:12,360
Speaker 1: and share price. Gene Munster covers Apple for piper Jeffrey Jean.

108
00:06:13,360 --> 00:06:17,000
Speaker 1: How much of a threat is this to Apple? I

109
00:06:17,040 --> 00:06:20,120
Speaker 1: guess it's a complicated tax case, but um is it

110
00:06:20,200 --> 00:06:23,359
Speaker 1: really a significant threat to the bottom line for Apple investors?

111
00:06:24,520 --> 00:06:28,480
Speaker 1: Mathematically and from a reported side, it is a threat.

112
00:06:28,760 --> 00:06:31,520
Speaker 1: If you think about a third of their revenue comes

113
00:06:31,560 --> 00:06:34,800
Speaker 1: from Europe and they're paying a low tax rate on that.

114
00:06:34,880 --> 00:06:37,040
Speaker 1: If that was somehow gonna they're gonna get a clawback,

115
00:06:37,120 --> 00:06:40,240
Speaker 1: that would have a negative impact. Hard to estimate what

116
00:06:40,279 --> 00:06:42,799
Speaker 1: that would impact. If you're just gonna do really back

117
00:06:42,839 --> 00:06:44,960
Speaker 1: at the envelope, think of kind of a fifteen percent

118
00:06:45,080 --> 00:06:48,440
Speaker 1: hit to their earnings, and I think most investors would

119
00:06:48,520 --> 00:06:52,640
Speaker 1: probably back that out. This has been long rumor that

120
00:06:52,760 --> 00:06:55,800
Speaker 1: something would happen, So I think that this is generally

121
00:06:55,839 --> 00:06:58,280
Speaker 1: priced in despite the optics of it. The folks of

122
00:06:58,320 --> 00:07:02,320
Speaker 1: Boomberg Intelligence suggested would be an eight billion dollar hit,

123
00:07:02,520 --> 00:07:05,320
Speaker 1: but you know they have more than a billion dollars

124
00:07:05,760 --> 00:07:08,800
Speaker 1: almost two hund billion in cash overseas. Yeah, it's a

125
00:07:08,920 --> 00:07:11,120
Speaker 1: getting optics are big numbers, eight billion, but when you

126
00:07:11,200 --> 00:07:14,720
Speaker 1: look at their overall uh cash position, it's pretty small.

127
00:07:15,160 --> 00:07:19,640
Speaker 1: I'm a billionaire. A billionaire has ever dirks and famously

128
00:07:19,680 --> 00:07:22,400
Speaker 1: once never said, uh, you start talking about real money.

129
00:07:22,520 --> 00:07:25,160
Speaker 1: I don't have the numbers in front of me. But

130
00:07:25,240 --> 00:07:30,040
Speaker 1: if you calculate what Apple does, among others daily, the

131
00:07:30,160 --> 00:07:34,360
Speaker 1: daily generation of revenue, of the daily generation of cash flow,

132
00:07:35,440 --> 00:07:39,600
Speaker 1: it's like an island g DP. It's unreal. Bloomberg Surveillance

133
00:07:40,000 --> 00:07:43,560
Speaker 1: on this Tuesday brought you by Investco. Investco believe it's

134
00:07:43,560 --> 00:07:47,280
Speaker 1: time to bench the benchmarks to consider active management and

135
00:07:47,320 --> 00:07:51,200
Speaker 1: factor based strategies. Find out more at investco dot com.

136
00:07:51,280 --> 00:07:54,280
Speaker 1: Slash high convictions still to being you live in our studios,

137
00:07:54,320 --> 00:07:56,840
Speaker 1: Gene Monster, no doubt would you go to the Apple

138
00:07:56,920 --> 00:08:00,200
Speaker 1: store when you're done with us? Absolutely? When you go

139
00:08:00,240 --> 00:08:03,120
Speaker 1: into the Apple store, what do you look for? Typically,

140
00:08:03,120 --> 00:08:06,000
Speaker 1: what I do is I'll talk to people. I I

141
00:08:06,040 --> 00:08:10,880
Speaker 1: will talk to uh, just consumers, and I always make

142
00:08:10,920 --> 00:08:13,640
Speaker 1: an effort to get one of the geniuses or some

143
00:08:13,680 --> 00:08:15,880
Speaker 1: of the sales people just to ask what's hot and

144
00:08:15,960 --> 00:08:18,520
Speaker 1: what's not and so. Uh. Some of them talk and

145
00:08:18,560 --> 00:08:20,720
Speaker 1: some of them don't, but we always make the effort

146
00:08:20,760 --> 00:08:23,320
Speaker 1: to do so. When you're walking around talking about free cash, well,

147
00:08:23,360 --> 00:08:26,480
Speaker 1: there's mothers and their children going stranger danger. Yeah they did.

148
00:08:26,520 --> 00:08:28,880
Speaker 1: We didn't. You'd be surprised at how many of them

149
00:08:28,920 --> 00:08:31,640
Speaker 1: are are familiar with cash flow, but we do that.

150
00:08:32,600 --> 00:08:37,480
Speaker 1: Their store is packed. Microsoft's two box down on fifty

151
00:08:37,520 --> 00:08:42,440
Speaker 1: three to be polite, isn't. When does Microsoft give up

152
00:08:42,480 --> 00:08:46,040
Speaker 1: the consumer game. I think over the next five years

153
00:08:46,040 --> 00:08:48,000
Speaker 1: they will. They're gonna make another shot at this with

154
00:08:48,040 --> 00:08:51,160
Speaker 1: their hollow lens, which is their mixed reality offering. This

155
00:08:51,240 --> 00:08:54,040
Speaker 1: is still early. This is a paradigm shift that's gonna

156
00:08:54,040 --> 00:08:56,400
Speaker 1: go on over the next decade and that's their position

157
00:08:56,440 --> 00:08:59,440
Speaker 1: within that hollow lens. And so I think from Microsoft

158
00:08:59,480 --> 00:09:02,400
Speaker 1: in the sumer standpoint, uh, they'll give it a run

159
00:09:02,440 --> 00:09:04,200
Speaker 1: with hollow lens. And if that doesn't work. I think

160
00:09:04,200 --> 00:09:06,720
Speaker 1: you're gonna see them more focused on enterprise and business.

161
00:09:07,240 --> 00:09:13,680
Speaker 1: The this tax case and the encryption uh fight that

162
00:09:13,720 --> 00:09:17,080
Speaker 1: Apple had with the government, either of those. Have you

163
00:09:17,080 --> 00:09:20,720
Speaker 1: found anybody expressing concern about buying Apple that their images

164
00:09:20,800 --> 00:09:24,960
Speaker 1: tarnished at all because of their clashes with governments. We've

165
00:09:25,040 --> 00:09:28,240
Speaker 1: done surveys of a couple of thousand people since this

166
00:09:28,360 --> 00:09:31,160
Speaker 1: broke with the FBI, and what we've seen is these

167
00:09:31,200 --> 00:09:32,960
Speaker 1: has just been in the US, is that there's a

168
00:09:33,120 --> 00:09:35,880
Speaker 1: split right down the middle in terms of the people

169
00:09:35,920 --> 00:09:37,960
Speaker 1: who view this more favorable and the people who use

170
00:09:38,040 --> 00:09:40,880
Speaker 1: it less favorably. From a high level, it's important that

171
00:09:40,920 --> 00:09:44,679
Speaker 1: Apple really emphasizes this whole security plane because that's part

172
00:09:44,760 --> 00:09:47,600
Speaker 1: of their brand. So outside of the US, where people

173
00:09:47,640 --> 00:09:50,600
Speaker 1: are more skeptical of their governments than even we are,

174
00:09:51,080 --> 00:09:54,200
Speaker 1: that they tend to like Apple security place. So the

175
00:09:54,280 --> 00:09:56,960
Speaker 1: long story is that this is actually a positive for

176
00:09:57,040 --> 00:09:59,559
Speaker 1: Apples brand. I want to get out of this gene.

177
00:09:59,600 --> 00:10:01,280
Speaker 1: We're gonna have you come back and talk about some

178
00:10:01,360 --> 00:10:04,360
Speaker 1: other things. Apple bi hold. So where are you right now?

179
00:10:04,360 --> 00:10:06,720
Speaker 1: And what's the target? It's our top pick for two

180
00:10:06,720 --> 00:10:09,640
Speaker 1: thousand sixteen. Our price target is a hundred seventy two.

181
00:10:09,640 --> 00:10:12,240
Speaker 1: And that's a belief that as the iPhone goes from

182
00:10:12,320 --> 00:10:14,920
Speaker 1: down thirteen percent of positive in the fourth quarter, the

183
00:10:15,000 --> 00:10:17,680
Speaker 1: multiple is going to expand. It's right now at one

184
00:10:17,800 --> 00:10:22,400
Speaker 1: ten twelve and early trading. That's a big gain in

185
00:10:23,000 --> 00:10:26,640
Speaker 1: what's left nine months now. It's a big monster game.

186
00:10:26,920 --> 00:10:30,679
Speaker 1: It's a big gain. It makes sense from the perspective

187
00:10:30,760 --> 00:10:34,600
Speaker 1: of investor optimism as they think about this returning to

188
00:10:34,640 --> 00:10:37,520
Speaker 1: growth and getting some confidence that the iPhone can grow again.

189
00:10:37,920 --> 00:10:39,640
Speaker 1: And so it is a big game, but we think

190
00:10:39,679 --> 00:10:42,240
Speaker 1: it's justified. Let's come back, Jean Monster with Piper, Jeffrey

191
00:10:42,280 --> 00:10:45,520
Speaker 1: with us and we'll talk financial engineering and USAID cash,

192
00:10:45,600 --> 00:10:51,640
Speaker 1: all that coming up. Futures a negative fifteen. Let's chicken

193
00:10:51,720 --> 00:10:55,160
Speaker 1: with Michael Barr and get the latest world and national headlines. Michael, Mike, Tom,

194
00:10:55,200 --> 00:10:58,120
Speaker 1: thank you very much. Today is primary day in Wisconsin.

195
00:10:58,200 --> 00:11:00,559
Speaker 1: Donald Trump and Ted Cruz are both calling for John

196
00:11:00,640 --> 00:11:02,640
Speaker 1: kasu to drop out of the race for the Republican

197
00:11:02,760 --> 00:11:06,679
Speaker 1: presidential nomination. Both Field Kasick is siphening off votes from

198
00:11:06,679 --> 00:11:10,160
Speaker 1: their potential delegate accounts. Cruise leads Trump and polling in

199
00:11:10,240 --> 00:11:13,520
Speaker 1: Wisconsin for the Democrats. Bernie Sanders leads Hillary Clinton in

200
00:11:13,600 --> 00:11:17,520
Speaker 1: polling in the state. Authorities in Greece have suspended migrant

201
00:11:17,600 --> 00:11:20,840
Speaker 1: deportations to Turkey, and we're part of an EU agreement

202
00:11:20,840 --> 00:11:23,760
Speaker 1: with Turkey. A Greek official says about three thousand people

203
00:11:23,840 --> 00:11:28,240
Speaker 1: held in deportation camps have requested asylum. Villanova beat North

204
00:11:28,240 --> 00:11:30,800
Speaker 1: Carolina on a buzzer beater last night when the men's

205
00:11:30,880 --> 00:11:34,480
Speaker 1: NZ double a basketball championship. Global News twenty four hours

206
00:11:34,480 --> 00:11:37,760
Speaker 1: a day, powered by our twenty four hundred journalists more

207
00:11:37,760 --> 00:11:40,040
Speaker 1: than a hundred fifty news bureaus from around the world. Now,

208
00:11:40,120 --> 00:11:44,680
Speaker 1: Michael Barr Blake, Tom, Tom, we have breaking news here.

209
00:11:44,960 --> 00:11:47,880
Speaker 1: If you are a student at Villanova University, go back

210
00:11:47,920 --> 00:11:51,520
Speaker 1: to sleep. University has announced it has canceled all classes

211
00:11:51,559 --> 00:11:54,840
Speaker 1: today to celebrate the championship. Yeah, and u n c's

212
00:11:54,880 --> 00:11:58,840
Speaker 1: got pop quizzes and study halls till nine pm. Good morning,

213
00:11:58,880 --> 00:12:06,160
Speaker 1: Sally Crawchuck to Bloomberg Surveillance. Bloomberg Surveillances brought to you

214
00:12:06,200 --> 00:12:08,640
Speaker 1: by Mercedes Bands. Outstanding offers are in full bloom at

215
00:12:08,720 --> 00:12:11,200
Speaker 1: your Mercedes Benz Tri state dealers take advantage of limited

216
00:12:11,240 --> 00:12:14,320
Speaker 1: time LEAs and finance programs on select models this spring season.

217
00:12:14,400 --> 00:12:19,040
Speaker 1: Visit m b usa dot com for details. Today, the

218
00:12:19,120 --> 00:12:25,199
Speaker 1: Bloomberg in Global business news twenty four hours a day

219
00:12:25,200 --> 00:12:28,120
Speaker 1: at Bloomberg dot com, the Radio plus mobile lap and

220
00:12:28,320 --> 00:12:32,080
Speaker 1: on your radio. This is a Bloomberg Business Flash and

221
00:12:32,120 --> 00:12:35,280
Speaker 1: I'm Karen Moscow. This updates brought to you by Eisner Amper,

222
00:12:35,400 --> 00:12:40,040
Speaker 1: Hedge Week, Institutional Investor all Credit Intelligence. Fund managers reading

223
00:12:40,080 --> 00:12:44,679
Speaker 1: these publications rank Eisener Amper high for excellence and clients service.

224
00:12:44,960 --> 00:12:48,920
Speaker 1: Find out why Eisner Amper dot Com slash excellence. Walgreen's

225
00:12:48,960 --> 00:12:52,000
Speaker 1: Boots Alliance beat analysts earnings estimates for the fiscal second

226
00:12:52,080 --> 00:12:56,080
Speaker 1: quarter on higher US prescription at drug dispensing and cost cutting.

227
00:12:56,320 --> 00:12:59,360
Speaker 1: The yen is jumping to a seven seventeen month high,

228
00:12:59,360 --> 00:13:02,720
Speaker 1: and government as are climbing as increasing concern that global

229
00:13:02,760 --> 00:13:06,320
Speaker 1: economic growth is faltering stokes demand for haven assets. US

230
00:13:06,280 --> 00:13:10,240
Speaker 1: stock index futures are lower, SNP EVENY futures down fifteen points,

231
00:13:10,440 --> 00:13:12,680
Speaker 1: now E many futures down a hundred twelve and NASDAC

232
00:13:12,720 --> 00:13:15,400
Speaker 1: eve any futures down twenty six ten. Your treasury up

233
00:13:15,440 --> 00:13:18,000
Speaker 1: twelve thirty seconds. The yelled one point seven two percent,

234
00:13:18,360 --> 00:13:20,480
Speaker 1: and I'm ex screwed. Oil down four ten percent or

235
00:13:20,520 --> 00:13:23,360
Speaker 1: fourteen cents at thirty five fifty six of barrel. That's

236
00:13:23,360 --> 00:13:26,440
Speaker 1: a Bloomberg business flash, Tom and Mike Francine, thank you

237
00:13:26,480 --> 00:13:30,840
Speaker 1: so much in our studios. Karen, thank you, Francine. Karen.

238
00:13:32,080 --> 00:13:34,599
Speaker 1: My excuses, I stayed up to watch every moment of

239
00:13:34,679 --> 00:13:38,599
Speaker 1: the basketball game. I'm sorry, Rich, I don't even know

240
00:13:38,640 --> 00:13:40,800
Speaker 1: where Villanova is in the map. Get Chris Whalen on

241
00:13:40,840 --> 00:13:43,559
Speaker 1: the phone. But you talked to Chris Whalen about Villanova.

242
00:13:43,600 --> 00:13:47,160
Speaker 1: You did. You did finish a respectable twenty one in

243
00:13:47,240 --> 00:13:51,760
Speaker 1: the category of the Bloomberg Bround. Beat some significant names

244
00:13:52,000 --> 00:13:55,040
Speaker 1: the financial industry. Francine Laquis and I went with the

245
00:13:55,040 --> 00:13:57,880
Speaker 1: blue jersey. Of course I beat the heck out of you. Yes, well,

246
00:13:57,920 --> 00:14:01,079
Speaker 1: I won't mention that we won't Gene Munster with us

247
00:14:01,080 --> 00:14:04,040
Speaker 1: with Piper Jeffrey before he goes over the Apple store.

248
00:14:04,440 --> 00:14:05,840
Speaker 1: One more on Apple, and then I want to go

249
00:14:05,880 --> 00:14:09,440
Speaker 1: to other things. Um use of cash, three year net

250
00:14:09,440 --> 00:14:13,760
Speaker 1: growth of dividend. Obviously that's not going to be sustained.

251
00:14:14,200 --> 00:14:16,000
Speaker 1: But we are at a point where we can really

252
00:14:16,000 --> 00:14:18,120
Speaker 1: begin to model what Mr Cook wants to do with

253
00:14:18,160 --> 00:14:20,640
Speaker 1: the dividend. What does he want to do. It's pretty

254
00:14:20,640 --> 00:14:22,840
Speaker 1: small right now. It's they have a two percent yield.

255
00:14:22,920 --> 00:14:25,760
Speaker 1: They spend just about ten billion dollars a year, so

256
00:14:25,920 --> 00:14:28,560
Speaker 1: when you compare their generating about sixty billion a year,

257
00:14:28,600 --> 00:14:31,000
Speaker 1: it's a pretty small amount. And I think you're gonna

258
00:14:31,040 --> 00:14:33,400
Speaker 1: see a shift over the next few years where the

259
00:14:33,440 --> 00:14:35,520
Speaker 1: dividend starts to get a little bit more meaty. The

260
00:14:35,600 --> 00:14:39,400
Speaker 1: reason why his investors will pay for that better income stream.

261
00:14:39,440 --> 00:14:42,000
Speaker 1: Apple has been reluctant to do that because when you

262
00:14:42,040 --> 00:14:43,960
Speaker 1: sign up for a bigger dividend, you're on the hook

263
00:14:44,000 --> 00:14:45,960
Speaker 1: for doing it year in and year out. But I

264
00:14:45,960 --> 00:14:47,640
Speaker 1: think you're gonna start to see some movement on that,

265
00:14:47,720 --> 00:14:49,720
Speaker 1: not when they report the March quarter, but we're talking

266
00:14:50,640 --> 00:14:54,360
Speaker 1: obviously ten as a demarcation line. But I would look

267
00:14:54,400 --> 00:14:57,360
Speaker 1: at a dividend as a percentage of nominal GDP and

268
00:14:57,720 --> 00:15:00,960
Speaker 1: there's damp and economic growth on that. Now is other

269
00:15:01,040 --> 00:15:05,000
Speaker 1: people ratchet down their dividend growth? Can he be the

270
00:15:05,160 --> 00:15:12,160
Speaker 1: exception and sustain a double digit dividend purely from cash flow? Absolutely,

271
00:15:12,240 --> 00:15:15,240
Speaker 1: it doesn't require them to grow that meaningfully, and they

272
00:15:15,280 --> 00:15:18,160
Speaker 1: can grow the top line in around five percent. And again,

273
00:15:18,240 --> 00:15:21,400
Speaker 1: had the sixty billion in operating cash flow, and so

274
00:15:21,800 --> 00:15:24,320
Speaker 1: I think that this is an area that's going to shift.

275
00:15:24,640 --> 00:15:26,680
Speaker 1: When they report the March quarter, we're probably not going

276
00:15:26,720 --> 00:15:30,200
Speaker 1: to hear about it. Then they will increase the buyback meaningfully.

277
00:15:30,240 --> 00:15:31,760
Speaker 1: But I think you could see over the next few

278
00:15:31,840 --> 00:15:35,080
Speaker 1: years a shift to the dividend. No dividend, Amazon, give

279
00:15:35,160 --> 00:15:37,520
Speaker 1: us an update on basis. Mike and I are invite

280
00:15:37,560 --> 00:15:41,760
Speaker 1: are Mike's outside Mike's front door. The boxes sometimes get

281
00:15:41,800 --> 00:15:45,000
Speaker 1: as high as a hockey goal. They're ordering so much Amazon.

282
00:15:46,680 --> 00:15:48,840
Speaker 1: I am not lying when I tell you that we

283
00:15:48,920 --> 00:15:52,480
Speaker 1: got four packages from Amazon yesterday and I have now

284
00:15:52,520 --> 00:15:55,520
Speaker 1: taken away my children's ability to order. YEA, yeah, we're

285
00:15:55,520 --> 00:15:57,960
Speaker 1: doing We're doing the same thing. That's true. How did

286
00:15:58,440 --> 00:16:03,920
Speaker 1: excuse me? Revenue sixty one billion, seventy four nine hundred

287
00:16:04,000 --> 00:16:07,840
Speaker 1: and seven and Bloomberg is modeling a hundred and fifty

288
00:16:08,160 --> 00:16:12,520
Speaker 1: six billion a double in five years. There's no end,

289
00:16:12,600 --> 00:16:14,280
Speaker 1: is there? There is no end? And part of it

290
00:16:14,320 --> 00:16:16,960
Speaker 1: is because they have an infrastructure that cannot be competed with.

291
00:16:17,240 --> 00:16:19,480
Speaker 1: The reason is that to build these fulfillment centers, they

292
00:16:19,480 --> 00:16:21,480
Speaker 1: have about a hundred and thirty of them globally. You

293
00:16:21,520 --> 00:16:24,200
Speaker 1: don't even need that. It's beyond the construction. You gotta

294
00:16:24,240 --> 00:16:27,120
Speaker 1: go and procure the land and do the policy around that.

295
00:16:27,200 --> 00:16:30,560
Speaker 1: So this is a really difficult beyond just a technology problem.

296
00:16:30,760 --> 00:16:32,400
Speaker 1: I would also point out that if you look at

297
00:16:32,440 --> 00:16:34,720
Speaker 1: the percentage of what's bought online, it's still small. It's

298
00:16:34,720 --> 00:16:37,360
Speaker 1: about ten percent in the US today, and so well,

299
00:16:37,400 --> 00:16:40,520
Speaker 1: these numbers are staggering. They can continue to be staggering

300
00:16:40,560 --> 00:16:43,000
Speaker 1: for a decade. This is John Tucker. Let's repeat this again.

301
00:16:43,040 --> 00:16:45,840
Speaker 1: This is ten percent of what we buy ten percent,

302
00:16:45,880 --> 00:16:49,520
Speaker 1: and what's bought in the US is bought just I

303
00:16:49,600 --> 00:16:51,520
Speaker 1: just want to point out. I go by Newark Airport

304
00:16:51,600 --> 00:16:53,840
Speaker 1: on the way to work. There's a fulfillment center for

305
00:16:53,960 --> 00:16:58,240
Speaker 1: Shoprite gigantic, uh and Amazon just bought it for pennies

306
00:16:58,240 --> 00:17:01,440
Speaker 1: on the dollar. Amazing film et center. And what a

307
00:17:01,440 --> 00:17:03,880
Speaker 1: piece of land that is. Yep. And that's part of

308
00:17:03,920 --> 00:17:06,600
Speaker 1: this whole infrastructure play. And so I think it's more

309
00:17:06,600 --> 00:17:10,680
Speaker 1: and more people are enlightened to the benefit of e commerce.

310
00:17:10,760 --> 00:17:12,880
Speaker 1: Amazon is going to continue to gain share. To put

311
00:17:12,880 --> 00:17:16,560
Speaker 1: that into perspective, as they grew units last quarter, the

312
00:17:16,600 --> 00:17:19,040
Speaker 1: overall e commerce market in the US grew about nine

313
00:17:19,680 --> 00:17:22,720
Speaker 1: and so this is meaningful market share games. Well, who

314
00:17:22,760 --> 00:17:25,040
Speaker 1: loses in this case. I mean we talk about them

315
00:17:25,080 --> 00:17:30,520
Speaker 1: gaining share, but UM from whom the biggest is traditional retailers.

316
00:17:30,600 --> 00:17:33,880
Speaker 1: This is Target and Walmart their stocks that I don't cover,

317
00:17:33,960 --> 00:17:35,720
Speaker 1: but they're the ones who are gonna lose. The reason

318
00:17:35,880 --> 00:17:38,280
Speaker 1: is that the things that we would use traditional retail

319
00:17:38,359 --> 00:17:41,360
Speaker 1: for stopping and getting things immediately are starting to be

320
00:17:41,400 --> 00:17:44,359
Speaker 1: annexed by Amazon. They have Prime now which gives you

321
00:17:44,440 --> 00:17:46,240
Speaker 1: one hour deliver. You pay a little bit more about

322
00:17:46,240 --> 00:17:49,120
Speaker 1: seven dollars for those, but over time, as the behavior

323
00:17:49,119 --> 00:17:51,520
Speaker 1: and people start to realize that they can get anything

324
00:17:51,520 --> 00:17:54,119
Speaker 1: that they want within an hour, there's about thirty cities

325
00:17:54,119 --> 00:17:56,920
Speaker 1: in the US that offer this today. That's when traditional

326
00:17:56,960 --> 00:17:59,560
Speaker 1: retail really feels it. Mike, look at the game changer.

327
00:17:59,680 --> 00:18:03,320
Speaker 1: Here's the headline. Twitter said to win n FDAL will

328
00:18:03,400 --> 00:18:08,480
Speaker 1: stream non paytent manning games Thursday night games which are

329
00:18:09,119 --> 00:18:13,480
Speaker 1: already carried on UM other networks will now be streamed

330
00:18:13,520 --> 00:18:16,679
Speaker 1: by Twitter. But the question in my mind is how

331
00:18:16,680 --> 00:18:18,960
Speaker 1: do you make money on it? And nothing in the

332
00:18:19,240 --> 00:18:22,400
Speaker 1: reporting so far tells us what they paid to get

333
00:18:22,440 --> 00:18:27,160
Speaker 1: the rights. Gene and other people are having trouble making

334
00:18:27,160 --> 00:18:30,120
Speaker 1: money because the rights fees are so high. I don't

335
00:18:30,200 --> 00:18:33,600
Speaker 1: cover Twitter, but I do cover Facebook, and Facebook overlaps

336
00:18:33,680 --> 00:18:35,680
Speaker 1: with Twitter, and so I think one of the big

337
00:18:35,800 --> 00:18:38,560
Speaker 1: questions that investors have about Twitter is where is the

338
00:18:38,560 --> 00:18:41,520
Speaker 1: growth going to come from. The usage is changing. People

339
00:18:41,520 --> 00:18:44,040
Speaker 1: are using Messenger more in Facebook, and so I think

340
00:18:44,080 --> 00:18:47,080
Speaker 1: the reason why investors may look positive on this despite

341
00:18:47,160 --> 00:18:49,919
Speaker 1: not knowing what the financial impact is, it is just

342
00:18:49,960 --> 00:18:51,679
Speaker 1: this idea that it's opening them up to a new

343
00:18:51,720 --> 00:18:54,720
Speaker 1: opportunity that they didn't have. It's interesting because you know,

344
00:18:54,760 --> 00:18:57,359
Speaker 1: we saw the Disney news. Uh. One of the problems

345
00:18:57,359 --> 00:19:00,359
Speaker 1: with Disney, you know, and the succession play in there

346
00:19:00,840 --> 00:19:03,840
Speaker 1: is the ESPN paying so much for sports rights these

347
00:19:03,920 --> 00:19:07,480
Speaker 1: days that they're not making nearly as much money. Yeah,

348
00:19:08,080 --> 00:19:11,160
Speaker 1: tell me about Mr thirty seconds left. Should Mr Bezos

349
00:19:11,160 --> 00:19:14,960
Speaker 1: buy Twitter? He bought the Washington Post with no do diligence.

350
00:19:15,760 --> 00:19:18,440
Speaker 1: Should he buy Twitter? I don't think so. I think

351
00:19:18,440 --> 00:19:22,120
Speaker 1: that that's a really competitive space that Facebook has an engine,

352
00:19:22,520 --> 00:19:25,360
Speaker 1: and so I think he should stick to the broader

353
00:19:25,400 --> 00:19:27,920
Speaker 1: theme of changing how we buy things. This is great.

354
00:19:27,960 --> 00:19:29,840
Speaker 1: I would love I'd be honored one day to go

355
00:19:29,880 --> 00:19:32,560
Speaker 1: with you to the Apple Store and just watch and

356
00:19:32,680 --> 00:19:36,640
Speaker 1: bring the kids. That's pretty entertaining. Uncle Jean will buy

357
00:19:36,680 --> 00:19:42,080
Speaker 1: them toys with special Uncle Jean to cook car. Mr

358
00:19:42,200 --> 00:19:46,120
Speaker 1: Munster is with Piper Jeffrey. We have thrilled you here.

359
00:19:46,200 --> 00:19:49,240
Speaker 1: We look forward to a perspective. I'm new a nine

360
00:19:50,840 --> 00:19:54,960
Speaker 1: eleven chip as well. Futures were negative eighteen, they've improved

361
00:19:55,680 --> 00:19:59,719
Speaker 1: negative fourteen. I'll wait till the market this morning. This

362
00:19:59,800 --> 00:20:09,200
Speaker 1: is Boomberg Surveillance. Bloomberg Surveillance prought you by SCNB, the

363
00:20:09,320 --> 00:20:11,159
Speaker 1: bank for Businesses on the Move. Are you looking for

364
00:20:11,200 --> 00:20:13,560
Speaker 1: the right banking partner? Go to scnb dot com to

365
00:20:13,680 --> 00:20:15,679
Speaker 1: learn more. Now open in Long Island City. Get your

366
00:20:15,720 --> 00:20:17,639
Speaker 1: business moving with SCND