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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: dot com, the radio, plus mobile and on your radio.

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Speaker 1: This is a Bloomberg Business Flash and I'm Karen Moscow.

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Speaker 1: This updates brought to you by Sector Spider E t S.

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Speaker 1: While to buy a single stock when you can invest

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Speaker 1: in the entire sector, visits Sector s P d r

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Speaker 1: S dot com or call six six Sector et F.

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Speaker 1: Personal spending increasing a tenth percent in February, and the

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Speaker 1: prior months advance was revised down as Americans save more

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Speaker 1: of their incomes. Incomes rose to ten percent, pushing the

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Speaker 1: savings rate to a one year high. Stock index futures

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Speaker 1: are advancing following equities first weekly decline in six and

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Speaker 1: mid data showing slow but steady increases in consumer spending.

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Speaker 1: And we check the markets every fifteen minutes throughout the

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Speaker 1: trading day on Bloomberg SNB E many futures up four

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Speaker 1: points now we many futures up twenty five and nash

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Speaker 1: Dock E many futures up twelve ten. Your treasury little

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Speaker 1: change yield one point nine zero percent, the yield on

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Speaker 1: the two year point eight six percent nine screwed oil

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Speaker 1: at one point one percent or forty four cents to

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Speaker 1: thirty nine ninety barrel comic Schold is down two tenths

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Speaker 1: per cent, or two dollars fifty cents to twelve twenty

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Speaker 1: one an ounce the euro at dollar eleven seventy six

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Speaker 1: the end one thirteen point three five and NTT Data,

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Speaker 1: a unit of Japan's former telephone monopoly, agreeing Tovie technology

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Speaker 1: services businesses from Dell for about three point one billion dollars.

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Speaker 1: That's a Bloomberg Business flash, Tom and Barry Karen, I

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Speaker 1: think so much futures to cherry it up nine earlier,

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Speaker 1: now up four. It is on Wall Street. The following

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Speaker 1: is from Bloomberg View. Opinions and commentary from Bloomberg columnists.

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Speaker 1: I'm a entrepreneuru, a columnist for Bloomberg View. Last week,

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Speaker 1: President Barack Obama Do this ally celebrated the sixth anniversary

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Speaker 1: of the passage of the Affordable Care Act, also known

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Speaker 1: as Obamacare. The law has brought financial security to millions

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Speaker 1: of Americans by expanding insurance coverage, but it has not

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Speaker 1: covered as many Americans as originally projected, and much of

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Speaker 1: that coverage has come through Medicaid, which gives recipients twenty

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Speaker 1: to forty cents that benefits for every dollar it spends.

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Speaker 1: People with employer coverage, meanwhile, have found their financial security

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Speaker 1: declining as Obamacare contributes to large increases in their deductibles.

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Speaker 1: The Congressional Budget Office says that the laws having a

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Speaker 1: negative effect on jobs. All in all, Obamacare was a

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Speaker 1: badly designed law. We could have achieved gains in insurance

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Speaker 1: coverage without Obamacare's regulation heavy approach. People who did not

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Speaker 1: have access to employer health plans could have been given

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Speaker 1: enough money to buy a policy that protected them at

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Speaker 1: least against catastrophic expenses. Modest regulatory changes could have been

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Speaker 1: made to make it easier for people with pre existing

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Speaker 1: conditions to get coverage to Instead, we got a law

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Speaker 1: that most Americans don't like and it is not working

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Speaker 1: very well. I'm a entrepreneuro. For more view, please go

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Speaker 1: to Bloomberg View dot com or view go on the

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Speaker 1: Bloomberg terminal. This has been Bloomberg View and Bloomberg View

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Speaker 1: commentaries came here to hourly weekdays. I'm Bloomberg Radio. There

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Speaker 1: was a book list this weekend out a business insider.

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Speaker 1: I thank them for that. They had marked Helper and

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Speaker 1: John Heilman on the list their political book Game Jays

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Speaker 1: looked for them five PM. With all due respect, Barry

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Speaker 1: Ridolts with me McKees off Michael McKees exhausted after James

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Speaker 1: Buller's interview, exhausted. So Barry Ridolts is here, Barry. One

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Speaker 1: of the books on the list was The Intelligent Investor,

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Speaker 1: Ben Graham and Jason White giving it a freshener here recently,

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Speaker 1: and in the beginning of the book they brilliantly parse

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Speaker 1: the defensive investor. What is a defensive investor versus an

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Speaker 1: enterprising investor? That's an interesting question. Uh. The defensive investor

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Speaker 1: is somebody who's more concerned with preservation of capital than

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Speaker 1: they are with growth. And there are some positives and

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Speaker 1: negatives to a defensive portfolio. It's less volatile, but our

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Speaker 1: natural risk aversion prevents us from taking advantage of the

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Speaker 1: benefits of risk. Risk has upside. You don't get upside

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Speaker 1: without taking on more risks over x amount of years.

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Speaker 1: I'll let you tell me ten, fifteen, three, whatever the

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Speaker 1: number is. Does a defensive investor in the enterprising investor

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Speaker 1: end up on the same point. No, they clearly don't

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Speaker 1: that in any given year, any portfolio can outperform any other.

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Speaker 1: And in fact, if you look at the total returns,

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Speaker 1: go to the peak in in March two thousand, here

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Speaker 1: it is, it's sixteen years later, you're barely up a

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Speaker 1: percent or two a year on average. Now, think about

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Speaker 1: what that means for somebody who was about to retire.

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Speaker 1: That it's a decade and a half of not seeing

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Speaker 1: a whole lot of gains, not counting UH treasury yields

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Speaker 1: and dividends. However, when you're thinking about a longer term perspective,

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Speaker 1: when you're thinking about how much money you need to

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Speaker 1: retire on, you have to embrace some degree of risk.

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Speaker 1: You have to take on some of the volatility. Without

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Speaker 1: risk and volatility, there are no gains. And I would

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Speaker 1: think the great feature here, I'll let Ibbotson and I'll

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Speaker 1: let you can tell me the percentage is the predictability

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Speaker 1: of predictable cash flows is the heart of the debate.

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Speaker 1: That's in the linear regression. That's the coefficient that matters

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Speaker 1: when when you talk about linear regression, that's a mean reversion. Essentially,

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Speaker 1: that is the key to everything. Everything we've talked about

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Speaker 1: today on the show. We've talked about the dollar, Well,

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Speaker 1: the dollar was really strong. Now it's sort of plateau ing.

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Speaker 1: We've talked about emerging markets under performing for periods of time. Uh,

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Speaker 1: the gentleman was here from Gibelly, talked about seven fat year,

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Speaker 1: seven lean years. All those things simply mean this too

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Speaker 1: shall pass. What's strong today is likely to not be

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Speaker 1: strong in the future, and what's weak today is likely

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Speaker 1: to come back. I mean, you look at one of

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Speaker 1: the dog of dogs that has been out there, IBM.

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Speaker 1: The fact is, and I don't know there's sure buyback,

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Speaker 1: but it's a three point five percent yield or increase.

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Speaker 1: Now you have to be careful when you look at

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Speaker 1: individual stocks. It was unthinkable that Bear Stearns or City

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Speaker 1: Group or A I G. Or Lehman could you know,

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Speaker 1: practically go bankrupt during Lehman's case go bankrupt. But any

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Speaker 1: individual stock can go to zero. But when we talk

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Speaker 1: about mean reversion and asset classes, emerging market stocks they're

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Speaker 1: they're having a bad five years, They're not gonna go

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Speaker 1: to zero. Same thing with with fixed income, with tips,

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Speaker 1: with any asset class could really get beat up. But

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Speaker 1: mean reversion means the worst any given asset class is

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Speaker 1: doing the more likely it's some unthinkable distance in the future, three, five,

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Speaker 1: seven years, they're going to be the outperformer because there's

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Speaker 1: value there. They're cheap, and we know eventually they're gonna

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Speaker 1: revert back to their mean. I just I go back

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Speaker 1: to whether it's fixed income or at equities. This new

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Speaker 1: awareness of the coupon, whether it's the yield coupon or

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Speaker 1: the equity coupon, is tangible. I mean, the idea with

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Speaker 1: a shared by back. Uh. Tobias was talking earlier about

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Speaker 1: those that repeatedly buy back shares. If you can calculate

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Speaker 1: that coupon or pseudo coupon you're getting January one from

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Speaker 1: a given company, That really helps things. A decade of

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Speaker 1: zero interest has made people more aware of the fact

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Speaker 1: that it's not just absolute price, it's price plus meaning

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Speaker 1: price plus dividend, price plus tupon price plus yield. Uh.

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Speaker 1: Some people even call this shareholder yield, which is a

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Speaker 1: combination of dividends and buy backs. Let's take a very

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Speaker 1: successful stock, dan in Her DHR, which over the last

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Speaker 1: ten years eleven point two percent has been per year return.

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Speaker 1: Over twenty years, it's sixteen point two percent for Dana Her.

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Speaker 1: How do you look at an annual report in find

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Speaker 1: the next or find your Danna Her. That's that's the challenge.

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Speaker 1: And here's here's the really fascinating aspect of this. Everybody

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Speaker 1: more or less has access to the exact same public information.

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Speaker 1: So if you think that just pulling down the company report,

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Speaker 1: looking at earnings, looking at a couple of analyst research

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Speaker 1: notes is going to get you there, it's not. You

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Speaker 1: have to pardon the grammatical error that I'm borrowing from Apple.

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Speaker 1: You must think different. You must have a thesis if

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Speaker 1: you want to outperform. And I'm a big fan of

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Speaker 1: having the bulk of your portfolio just take what the

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Speaker 1: market gives you. But if you want to outperform, you

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Speaker 1: have to be outside the box. You have to be

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Speaker 1: thinking in a way that everyone else isn't. Otherwise, if

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Speaker 1: everybody thinks alike, they're gonna perform alike. So why Danaher

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Speaker 1: as opposed to the hot sexy name. This is not

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Speaker 1: exactly the sexiest name in the mark good place. But

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Speaker 1: you look at those returns, they're clearly doing something and

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Speaker 1: respond here please. One of the distinctive features of the

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Speaker 1: little guy owning stocks and being able to sleep with

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Speaker 1: it is to own companies that have a focus but

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Speaker 1: do many things. Dan and her or others is not

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Speaker 1: a one one item company. And the other one you

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Speaker 1: mentioned sleep at night. We we did a study in

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Speaker 1: the office when we looked at Apple for the past

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Speaker 1: thirty years and Apple about why I'm dozing off. No.

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Speaker 1: Apple is one of the most amazing returns over time,

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Speaker 1: but the takeaway from our analysis was that the average

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Speaker 1: individual investor would not be able to hold Apple through

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Speaker 1: the three draw downs of more than fifty the repeated

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Speaker 1: twenty and thirty percent shell lackings. It's the sort of

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Speaker 1: thing that gives people agita and a lot of people

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Speaker 1: have said, look, I made some money and Apple, but

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Speaker 1: I can't I don't want to give it all back,

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Speaker 1: and I can't deal with us up and down, get

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Speaker 1: me out of here. And and that's a very typical

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Speaker 1: individual perspective because they're everything they've seen, everything they've learned,

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Speaker 1: is that I'm really uncomfortable looking stupid when all my

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Speaker 1: profits go away. And how many times has that happened

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Speaker 1: with other names as well? Look at Microsoft with Apple

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Speaker 1: at one oh five. If I do a twenty year

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Speaker 1: chart and I grabbed the moonshot. Let's call it the

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Speaker 1: iPod iPhone moon shot. Starting I went to oh five

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Speaker 1: is basically the center tendency is exactly where we are

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Speaker 1: right now. One standard deviation is nineties six dollars ninety

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Speaker 1: seven dollars a share in one standard deviation up. So

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Speaker 1: look directly on trend. Look at those massive pullbacks late nineties.

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Speaker 1: You saw it seven. I can't own it in fifty seven. Unbelievable,

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Speaker 1: very red Alds. Where there's a little bit there and personal,

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Speaker 1: but Andrew planning, we don't do enough of that. It's

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Speaker 1: good to do that with Mr Ridholds. Tomorrow, Yelling speaks

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Speaker 1: at the Economic Club of New York. Blinder and Hubbard

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Speaker 1: asked questions. It's Bloomberg Surveillance broadcasting live to New York,

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Speaker 1: Bloomberg eleventh Rio, to Washington, d C. Bloomberg to Boston,

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Speaker 1: Bloomberg twelves to San Francisco, Bloomberg to the Country Series

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Speaker 1: X Channel one ninety and around the globe. The Bloomberg

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Speaker 1: Radio Plus happened. Bloomberg dot Com. This is Bloomberg Surveillance.

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Speaker 1: Good morning everyone, Barry Ridholts in from Michael McKee, Bloomberg

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Speaker 1: surveillance on a Monday. Economic indicators on this Monday, brought

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Speaker 1: you by Commonwealth Financial Network. Want it's time to change

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Speaker 1: the conversation. Talk with a broker dealer r I A

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Speaker 1: that's ready to listen. Call eight six six four six

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Speaker 1: two three three eight or visit on Wealth dot com

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Speaker 1: to learn more. Vinny Deale judaicces massage a raft of

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Speaker 1: economic data. Vinny, what do you see? Hello, Tom? Personal

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Speaker 1: income according to the Commerce Department, up point two percent

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Speaker 1: in February, a smaller increase than the prior month. The

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Speaker 1: same with personal spending up point one percent in February. Uh,

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Speaker 1: actually that has been revised now, so it's the same

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Speaker 1: as the prior month, up point one percent. Let's look

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Speaker 1: at inflation core PC year over year, unchanged in February

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Speaker 1: at one point seven percent. Again, personal income up point

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Speaker 1: two income spending, Tom, I'm getting tongue tied. It's Monday.

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Speaker 1: Income up point two percent, spending up point one percent.

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Speaker 1: PCE core year over year one point seven sent at

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Speaker 1: the Bloomberg First Word Desk company dealt you come back

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Speaker 1: to you if you look at the revisions, I mean,

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Speaker 1: the revisions get your attention. They're like they have a

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Speaker 1: certain weight to them, don't they Well, yes, um do'sn't

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Speaker 1: the uh it doesn't. It looks kind of kind of

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Speaker 1: lackluster to people. I was like dinner yesterday of Vinyl Judas,

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Speaker 1: thank you so much, greatly appreciated that. Very riddles and

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Speaker 1: time Keenan joining us with prospective Paul Mortimer Lee with

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Speaker 1: being prepared by their North American chief economist, global head

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Speaker 1: of all of market economics. Paul, what's the new runway

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Speaker 1: for America? One of our themes today's that's three percent?

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Speaker 1: Is that's three point two? Don't tell me it's one.

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Speaker 1: We think trends one point five. We're above trend at

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Speaker 1: the moment. I mean, you know, this is when the

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Speaker 1: consumers benefiting from weak gasoline prices, and let's say say

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Speaker 1: you know, the economies were very reliant upon the consumer trades.

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Speaker 1: The drag we saw from durable goods last week, investments decreasing,

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Speaker 1: not increasing, and so therefore soft consumer is very worrying. Indeed, hey, Paul,

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Speaker 1: Barry Ridholtz here, So we just got personal income and

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Speaker 1: personal spending. But the number that stood out to me

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Speaker 1: was the year over year inflation number one point seven.

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Speaker 1: What does that mean for the Fed? Are are they

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Speaker 1: stuck in neutral? Are they running out of reasons to

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Speaker 1: raise rates? What does one point seven percent mean for

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Speaker 1: the urgency at which they want to get off of

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Speaker 1: zerp get off of a zero interest rate policy. I

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Speaker 1: don't think there's any great urgency defect spaces asymmetric risks.

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Speaker 1: We're seeing the economy weaken. If it goes and the

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Speaker 1: economy goes into the pit, that goose is cooked. If, however,

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Speaker 1: the inflation rises, well that's what they they're aiming to do.

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Speaker 1: Their aiming to get inflation out. So one point seven

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Speaker 1: is hardly catastrophic. And after the Fed has run below

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Speaker 1: it is two percent target for very, very many years,

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Speaker 1: it shouldn't worry about over shooting a little bit. Even

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Speaker 1: where are debt dynamics w the raging debates We've already

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Speaker 1: framed it a few times this morning. Is the amount

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Speaker 1: of debt overlay the corporation's individual have are we? Are

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Speaker 1: we running smarter now? Paul? Well, I think I think

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Speaker 1: households are probably by and large, okay, you know, household

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Speaker 1: debt to income ratios have come back to trend after

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Speaker 1: a long period adjustment and borrowing is being very weak.

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Speaker 1: But what the FAIDE has done is stimulate corporate borrowing.

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Speaker 1: There's some parallels between you know, the run up to

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Speaker 1: the two thousand and two thousand one recession, but it's

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Speaker 1: not the same because corporations have not overinvested. What they've

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Speaker 1: done is overleveraged and built up their debt, brought back

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Speaker 1: their equity to keep earnings push shared going going up.

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Speaker 1: But that leaves them in quite a difficult position because

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Speaker 1: earnings are profits are getting squeezed, and many of them

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Speaker 1: have too much debt, and I think that's one of

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Speaker 1: the reasons why we're seeing weak investment. And presumably at

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Speaker 1: some stage they'll start to higher less, but their coupon

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Speaker 1: is low, right, I mean they get such a phenomenal

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Speaker 1: lownomenal low real yield, right, that's right. I mean, although

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Speaker 1: the spread has gone up, the actual rate of which

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Speaker 1: they're borrowing is quite low. And one of the good

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Speaker 1: things about that this borrowing spree that we've seen birth

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Speaker 1: for corporations and emerging markets is that the maturity of

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Speaker 1: the day is very long, and so they're not facing

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Speaker 1: big rollover risk. Um. You know, you you hurt a

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Speaker 1: lot if your profits are going down and you have

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Speaker 1: to refinance your debt when the markets close. That's not happening,

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Speaker 1: and so I don't think we should get too worried

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Speaker 1: about the corporate position, but it is definitely going to

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Speaker 1: be a break on on on investment. And you know,

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Speaker 1: the main driver of investment at the end of the

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Speaker 1: day's profits and profits are not going anywhere, and if

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Speaker 1: the consumer is slowing and global inflation remains low, it's

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Speaker 1: going to be very difficult to build margins. In fact,

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Speaker 1: they're gonna get squeezed. So in light of that, I've

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Speaker 1: been hearing people stream about peak profits for seven or

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Speaker 1: nine quarters. Are we in any sort of danger in

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Speaker 1: the in the last minute and a half that we

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Speaker 1: have we in any sort of danger of really seeing

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Speaker 1: a profit recession? Or are we just gonna see a

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Speaker 1: little come back off of off of these high level

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Speaker 1: of profits we've enjoyed the past few years. I think

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Speaker 1: they're going to come back because the reason is that

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Speaker 1: the labor market is tied, real wages are going up,

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Speaker 1: and productivity is very poor, and that means squeeze on profits.

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Speaker 1: And I think we're going to face that for several

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Speaker 1: quarters to come. Paul, thank you so much. Paul Mortimer,

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Speaker 1: Leader the briefing this morning B and P paried by

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Speaker 1: North American Econos Barry. Yeah, I look at the numbers

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Speaker 1: that came out, including core PCM month over month, light

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Speaker 1: year over year one point seven. We talked about elevating

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Speaker 1: inflation back to two percent, even above that looking in

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Speaker 1: Cleveland cp I. But all of that devolves down to

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Speaker 1: personal income and personal spending. I don't think we spend

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Speaker 1: enough time on those two related statistics. Well, they're the

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Speaker 1: key to the entire economy. You want to see income

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Speaker 1: tick up, not just through wage increases, but more people

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Speaker 1: moving up the ladder getting better jobs. And at the

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Speaker 1: same time, we want to see money spent by consumers

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Speaker 1: in ways that are productive overall for the economy. That's

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Speaker 1: been the big wild card given the changes in sentiment. Yeah,

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Speaker 1: I'm looking at McKee. Does this so much better than me?

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Speaker 1: The personal savings rate went up the last three months.

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Speaker 1: The personal savings rate five point zero, five point three,

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Speaker 1: five point four percent. That gets your attention. In this

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Speaker 1: hour of Bloomberg, Savannahs a bunch of by Volvo Cars,

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Speaker 1: White Planes. Visit Volvo Cars White Planes dot com with

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Speaker 1: our news in New York. Here's Michael Barr, Tom Berry,

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Speaker 1: thank you very much. Four more people wounded in last

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Speaker 1: week's terror attacks and Brussels have died. The Belgian minister

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Speaker 1: says the death toll is now thirty five. Meanwhile, you

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Speaker 1: has authorities have confirmed that four Americans were killed in

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Speaker 1: the attacks. Hillary Clinton says Republican presidential rival Donald Trump

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Speaker 1: could roll back the rights of individuals, power corporations, and

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Speaker 1: undo some of the nation's progress if he takes the

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Speaker 1: White House. Clinton plans to deliver a speech today in

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Speaker 1: medicine Wisconsin. Ted Cruz is working Wisconsin ahead of its

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Speaker 1: April five primary. It could be key to getting the

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Speaker 1: Republican presidential nomination or increase the chances of a contested convention.

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Speaker 1: Donald Trump is planning his first campaign visit to the

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Speaker 1: state tomorrow. The I R S is wanting people to

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Speaker 1: be on the lookout for scammers. Some crooks will call,

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Speaker 1: claiming to be from the I R S demanding a

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Speaker 1: huge tax bill. Scott Alexander says his son was on

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Speaker 1: the business end of a con artist when they said, Hey,

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Speaker 1: we're gonna come get you. That's when it just changed

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Speaker 1: in his mind and he had to comply. The I

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Speaker 1: R S is urging anyone who gets these calls to

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Speaker 1: just hang up, because if they ever want to contact you,

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Speaker 1: it won't be by phone. Global News twenty four hours

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

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Speaker 1: fifty news bureaus from around the world. Now, Michael Barr,

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Speaker 1: Tom Bill, are you're gonna want that? I ARI a

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Speaker 1: story every day of the week. Time Now for the

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Speaker 1: Bloomberg NBC Sports Report. His brackets better than my bracket. Wait,

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Speaker 1: everyone's brackets better than my backet. Here's John Stesshower. All right, Tommy,

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Speaker 1: at least my album monitors going to the Final four.

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Speaker 1: And that was pretty unlikely that Syracuse is heading that way.

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Speaker 1: Nobody really was sure they would even make the field.

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Speaker 1: But a bubble team with thirteen losses still alive after

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Speaker 1: coming from fifteen down in the last ten minutes to

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Speaker 1: beat top seed Virginia sixty two freshman Malichi Richards in

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Speaker 1: the hero three points, didn't make a field goal the

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Speaker 1: first twenty eight minutes, and Syracuse has dominated the second half.

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Speaker 1: Sobout the Attorney. They're just the fourth double digit seed

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Speaker 1: to reach the Final four. The coaches Jim behind we

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Speaker 1: got back in a pretty quick and then when we

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Speaker 1: got the league, I knew they would beat op pressly.

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Speaker 1: They just weren't finishing. So we felt like, let's go

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Speaker 1: back in his own may come. You know, play from behind.

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Speaker 1: It's a little tougher than make shots when you're behind.

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Speaker 1: We kept playing good off and we kept getting to

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Speaker 1: the basket and make him play. I'm just so proud

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Speaker 1: of this team. Used and they'll play in North Carolina

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Speaker 1: they lost to twice in the regular season. The tar

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Speaker 1: Heels trailed Note Dame in the second half and pulled

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Speaker 1: away eighty eight to seventy four. This season is not

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Speaker 1: over for Columbia eighty to sixty five over in j

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Speaker 1: I T the c I T semifinals, the Lions twenty

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Speaker 1: three win Moson's nineteen fifty one the host you see Irvine.

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Speaker 1: Tomorrow's championship game at the Garden, Rangers got two goals

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Speaker 1: from Eric Stall but lost with it happening left in

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Speaker 1: overtime on a Sidney Crosby gold red hot Pittsburgh one

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Speaker 1: three to two. The Devil's also lost three tow at

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Speaker 1: Carolina and Jason Day now number one in the world

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Speaker 1: after winning the match play in Austin, Texas with the

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Speaker 1: Bloomberg NBC Sports Update. I'm John Stash. John, thank you

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Speaker 1: so much. I appreciate that. Uh And this morning. He's

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Speaker 1: with us all the week. Barry Ridholets coming up. We'll

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Speaker 1: speak to Mr Ridholds about what do you do? I mean,

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Speaker 1: what are the great things about his big picture and

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Speaker 1: his writings for Bloomberg View is less economics, finance, investment

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Speaker 1: and what do you do? And so much of what

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Speaker 1: do you do centers on foundational not to do, So

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Speaker 1: we'll start on that next would Barry, I'll look for

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Speaker 1: his Masters in Business on Bloomberg Radio and on iTunes.

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Speaker 1: It's Bloomberg Surveillance, brought to you by the Jeep Grand Cherokee,

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