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Speaker 1: This is Bloomberg surveillance. But the question is where are

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Speaker 1: the people who are making three and the full percent

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Speaker 1: wage growth. I don't see them. Nobody else use them,

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Speaker 1: and some people need to sittle around with the data,

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Speaker 1: but I just don't buy that actin there's a sense

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Speaker 1: of nervousness out there. People are sort of confused. You know,

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Speaker 1: you bounced around in terms of what the Fed's gonna do.

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Speaker 1: You're worried about what's going on in the rest of

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Speaker 1: the world, and there's not a real clear serup. While

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Speaker 1: the United States feels good, markets overseason, economies overseas are

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Speaker 1: not as strong, and so these things are now inter twice.

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Speaker 1: So we can't pull these things apart. We have to

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Speaker 1: keep an eye on what's going on in the rest

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Speaker 1: of the world. Bloomberg Surveillance your link to the world

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

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Speaker 1: Michael McKee and Tom Keene thrilled your with us in

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Speaker 1: this hour we look at the equity markets have done

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Speaker 1: a little more of that across all of the morning.

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Speaker 1: Brian Belski with us earlier that was smart Gene Munster

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Speaker 1: darkening the door. We learned a little bit about now ology.

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Speaker 1: We'll look at the industrial space here UH in a

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Speaker 1: mid UH and Valiant we'll have news on that at

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Speaker 1: some point here. Valiant industrially moving higher UH this morning

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Speaker 1: as well. The markets moving, that's what you need to know.

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Speaker 1: Future is negative eighteen. They improved negative fourteen, now negative

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Speaker 1: seventeen a little bit and I'll wait to the markets.

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Speaker 1: The four X brief it's brought to this morning. It's

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Speaker 1: always by Interactive Broker's winner of FX Weeks two thousand

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Speaker 1: fifteen award for the best retail for X trading platform.

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Speaker 1: Visit ib do that at I b k R dot

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Speaker 1: com slash four x. Ib kr dot com slash four x.

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Speaker 1: Slash four x is stronger yet one ten sixty two

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Speaker 1: is jaw dropping way against consensus over the last six weeks.

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Speaker 1: One ten sixty two. Uh. The interesting to see if

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Speaker 1: that can get in the vicinity of one oh nine.

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Speaker 1: We're not there yet. Younger, yeah, weaker euro one thirteen

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Speaker 1: seventy one euro yen through big moves, stronger yen, weaker,

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Speaker 1: euro seventy seven, dollar churning. I think we'll leave it there.

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Speaker 1: Sterling is well, pretty much that's it. I'd say yields

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Speaker 1: lower as well. German yields a ten ure yield point

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Speaker 1: zero nine six h is breathtaking, as is David Wilson,

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Speaker 1: who I'm assuming if you moved beyond Alaska Air Virgin

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Speaker 1: America is that's so yesterday. So yesterday, what do we

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Speaker 1: got to It's fun, it's busy. There's a lot going on, absolutely,

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Speaker 1: and you've got to start with our again. I mean

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Speaker 1: the shares are down seventeen and a half percent, absolutely,

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Speaker 1: I mean stocks really taking ahead. The drug makers proposed

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Speaker 1: one and sixty billion dollar merger with Fiser was put

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Speaker 1: in jeopardy after the U. S. Treasury Department set new

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Speaker 1: rules limiting the deals tax savings. The movement effects inversions,

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Speaker 1: in which US companies effectively go off shore for tax purposes.

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Speaker 1: Now Olegan is legally based in Dublin and run from

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Speaker 1: New Jersey. UH fights were shared by the way up

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Speaker 1: to percent in early training were seen declines among other

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Speaker 1: drug makers as well. This is an industry that has

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Speaker 1: repeatedly gone the inversion route in the past few years

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Speaker 1: in terms of stealmaking. So you've got marked down one

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Speaker 1: and a half percent, Abby down one percent, backs Alt

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Speaker 1: down one and a half percent, and my Land down

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Speaker 1: two percent. In early training, Walt Disney down two percent.

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Speaker 1: Tom Staggs resigned as chief operating officer of the world's

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Speaker 1: legis entertainment company. STATS was widely viewed as the likely

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Speaker 1: successor to chief executive Bob Eiger, whose contract runs through

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Speaker 1: June eighteen. And since Disneys in the down, we might

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Speaker 1: as well mention another down company. Cisco Systems down two

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Speaker 1: and a half percent. The world's biggest maker of computer

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Speaker 1: networking equipment, was lowered to neutral from by Bank of

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Speaker 1: America Merrill Lynch. Twitter, though up four percent. The social

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Speaker 1: media service want to contract to show the National Football

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Speaker 1: League's Thursday night games online. That's a coin of a

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Speaker 1: person from there. With the matter, Twitter was said, we've

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Speaker 1: bidding against Amazon dot Com for rising and Yahoo. We

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Speaker 1: have earnings out today from Walgreen's boots. They didn't go

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Speaker 1: over so well. The stocks down about one percent. The

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Speaker 1: drug store chains fiscal second quarter revenue failed to meet

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Speaker 1: analysts average estimate in the the Bloomberg survey. Walgreen's was hurt

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Speaker 1: by the second straight quarterly dropped in US retail sales

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Speaker 1: at stores open more than a year, so we're talking

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Speaker 1: about sales other than Walgreen's pharmacy departments. Tesla Motors down

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Speaker 1: three and a half percent. The electric car makers shipments

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Speaker 1: for the first quarter. We're about seven and a half

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Speaker 1: percent lower than its forecast. Now in the past two days,

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Speaker 1: Tesla shares gained seven and a half percent as orders

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Speaker 1: for the Model three car beat its estimate. Valiance Pharmaceuticals

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Speaker 1: up seventeen percent in early trading. The drug makers said

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Speaker 1: it completed an accounting review without finding any more items

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Speaker 1: that would require restatements down at seven February that would

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Speaker 1: revise past earnings after reviewing it ties to the specially

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Speaker 1: pharmacy Philidor and I'll mention one more. Marvel Technology of

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Speaker 1: fourteen and a half percent, Chief executive Saga and President

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Speaker 1: Where They Die were fired by the board. Marvel said

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Speaker 1: the last month of the probe into accounting and internal

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Speaker 1: controls found issues with what was called the tone at

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Speaker 1: the top. The tone at the top. That's a great band.

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Speaker 1: I love him, bid Chuck Berry like you would not

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Speaker 1: have believed the tone at the top. New Seal very good. Uh,

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Speaker 1: David Wilson, thank you so much. Fired up on the

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Speaker 1: equity markets, Um, it's a bear market in industrials and agriculture.

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Speaker 1: Larry de Maria. What's great about Larry de Maria is

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Speaker 1: he actually traded equities before. It's very cool to do

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Speaker 1: fundamental research and also understand there's a bid out there.

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Speaker 1: Larry de Maria with de Maria, with William Blair, Have

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Speaker 1: we found a bid on John Deere? We bounced off

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Speaker 1: the level like fourteen times? Is it a value trap

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Speaker 1: or do you climb on board a stock down from

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Speaker 1: the peak? God, thanks and happy to be here. Uh.

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Speaker 1: John Deer is a great company, one of the top

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Speaker 1: class companies that we've in our industrial universe. So I

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Speaker 1: think that there's some folks who want to look at

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Speaker 1: this as a very very long term play and they're

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Speaker 1: comfortable owning a value situation knowing that in three or

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Speaker 1: four years maybe things get better. We would we would

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Speaker 1: argue though, that the fundamental outlook in the agriculture space

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Speaker 1: is quite challenging at least through next year and potentially

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Speaker 1: longer if we look back at past cycles. So, UM,

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Speaker 1: I think we're still gonna have some downside of the

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Speaker 1: stock from these levels and uh, kind of these shortcovering rallies,

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Speaker 1: But then uh then tend to come back down. In reality,

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Speaker 1: Sam Allen out of Produce University has done this for

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Speaker 1: a few cycles Deer. What are Sam Allen's best practices

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Speaker 1: at Deer then everybody else has to learn and an

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Speaker 1: agriculture swing down. Well, he's the real dear guy. He's

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Speaker 1: been there for a very long time um as has

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Speaker 1: run to numerous businesses there and is a real dear

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Speaker 1: pedigree UM. I think what he's trying to do is

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Speaker 1: um certainly continue the strong history of operational execution and

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Speaker 1: managing through the cycles. UM and they're having it obviously

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Speaker 1: tough time, but they're managing it well through this down

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Speaker 1: cycle now. So I think that broadly, culture internally is

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Speaker 1: about hunkering down, getting ready for the next cycle, and

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Speaker 1: making sure that they don't cut too much capacity, for example,

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Speaker 1: and making sure there is a good position for that

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Speaker 1: some when things do eventually turn. And Mike, he's under

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Speaker 1: fifty million, nine hundred million cash flow down to four

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Speaker 1: what what's behind your call for a struggles for Deer

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Speaker 1: over the next couple of years. Now that we're seeing

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Speaker 1: reports that we're gonna have a much better year in

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Speaker 1: the fields than people thought, Agriculture Department raising it's forecast

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Speaker 1: for plantings and grain stuff. Yeah, that's a good question

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Speaker 1: because there's a little bit of perversion ject to that.

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Speaker 1: They we're gonna have a very good, full, potentially very

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Speaker 1: good crop, right, we don't know what the weather is

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Speaker 1: going to be, and certainly the farmers need to make

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Speaker 1: sure they have the right inputs in place, like nitrogen

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Speaker 1: to make sure the maximize or yield. Uh. The issue

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Speaker 1: is though that with those big crops, we're gonna have

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Speaker 1: uh smaller lower crop prices and that's gonna hurt farmers.

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Speaker 1: So they're doing everything they can to get that incremental

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Speaker 1: um yield to cover their fixed costs UM. But what

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Speaker 1: we did was we look back at a couple of

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Speaker 1: studies to look back a hundred years of vague cycles

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Speaker 1: and they really run in similar cycles. And we're obviously

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Speaker 1: down cycle now and we needed change in the demand

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Speaker 1: profile to really change that. But had a couple of

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Speaker 1: more recent cycle that we looked at, like the eighties

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Speaker 1: which was really a depression, and the late nineties into

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Speaker 1: the early two thousand's which was like a recession and

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Speaker 1: at lasted actually you know a few years of being

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Speaker 1: sideways for a while. So, uh, to change in the situation,

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Speaker 1: we would need probably a change in the weather um

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Speaker 1: for the worst this summer, which is always possible. I've

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Speaker 1: had a few good years of weather um or an

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Speaker 1: upward taking demand, which is not really what we see

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Speaker 1: given the slow growth out of Asia right now. I

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Speaker 1: look at all this, and I mean, I guess a

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Speaker 1: lot of people make cyclical or structural bets on this.

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Speaker 1: Will you explain to me how you buy industrials given

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Speaker 1: the global backdrop that we have. I mean, I mean,

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Speaker 1: you're you're a young lad. Haven't we ever seen it

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Speaker 1: this gloomy? Uh? It hasn't been this gloomy for a while.

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Speaker 1: I mean, even in the currency crisis in late nineties,

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Speaker 1: and uh, even before that, this has been a it's

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Speaker 1: a pretty tough time. I mean, we're in an industrial

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Speaker 1: recession and we've been that way for probably close to

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Speaker 1: two years. Uh, so it's been pretty gloomy for a while.

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Speaker 1: I'm sure there is light at the end of the tunnel,

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Speaker 1: but we have to find the bottom. Version we haven't

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Speaker 1: found the bottom, but I think that it couldn't take

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Speaker 1: some time to do that, and eventually you do buy

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Speaker 1: these titles because in these companies, because you hope for

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Speaker 1: and you uh, you know, higher trough earning with an

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Speaker 1: hire peak runnings in the future and you can sign

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Speaker 1: multiple to that. We we gotta come back with Larry

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Speaker 1: de Marie of William Blair. Um, he's senior vice president. Mike,

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Speaker 1: slit your wrists at William Blair. You look at, folks.

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Speaker 1: We have a screen on the Bloomberg what's called the

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Speaker 1: recommendation screen where I can look at Lawrence de Maria Blair,

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Speaker 1: their address, his phone number, etcetera, etcetera. Not gonna give

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Speaker 1: it out girls, but with them that you can look

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Speaker 1: at his performance and how the stock has done. I

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Speaker 1: don't believe I've ever seen, Mike, a screen is read.

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Speaker 1: A group is lousy? Is Larry de Marie's We'll come

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Speaker 1: back and talk to him about the adversity of agricultural

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Speaker 1: and mining. Good news, you're gonna be covering industrials. The bad.

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Speaker 1: He's got a he's got a fresh look at it.

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Speaker 1: Future is at negative seventeen. All right, Let's check in

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Speaker 1: now with Michael Barr for the latest news headlines. Mike, Tom,

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Speaker 1: thank you very much. It is primary day in Wisconsin

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Speaker 1: for republic Kins and Democrats. Republican Ted Cruz leads and

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Speaker 1: polls over Donald Trump. Heading into today's contest, However, Trump

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Speaker 1: predicts a really big victory for the Democrats. Bernie Sanders

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Speaker 1: leads and polling in the state, but he has an

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Speaker 1: uphill battle. Sanders would need to win sixties seven percent

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Speaker 1: of the remaining delegates to catch up to Hillary Clinton,

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Speaker 1: and right now he's at thirty seven percent. A published

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Speaker 1: report says that if elected President, Donald Trump plans to

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Speaker 1: force Mexico to pay for a border wall by cutting

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Speaker 1: off billions of dollars in remittances by immigrants living in

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Speaker 1: the US. Today's Washington Post signed a two page memo

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Speaker 1: from Trump threatening to change a rule under the Patriot

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Speaker 1: Act anti terrorism law to cut off money transfers. Sent

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Speaker 1: to Mexico Global News twenty four hours a night. I'm

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Speaker 1: Michael bar Mike. I think some a DUC cast lightening

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Speaker 1: up in Florida. He's all fired up, he knows. I'm

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Speaker 1: happy because the Red Sex started the season strong. Mike.

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Speaker 1: The game was postponed. You know, we thought that might happen. Loss.

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Speaker 1: Yet you can't complain. You can't complain new rules. Marcot

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Speaker 1: Remember fd I C Global Business News twenty four hours

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Speaker 1: a day. If Bloomberg dot Com the radio plus mobile

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Speaker 1: lap and on your radio, this is a Bloomberg Business

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Speaker 1: Flash and I'm Karen Moscow. The Bloomberg Futures Report brought

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Speaker 1: more at Interactive Brokers dot com slash CME Group U

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Speaker 1: Stock Index futures are lower, signaling stocks will extend losses.

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Speaker 1: After the SNP five hundred slipped from its highest levels

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Speaker 1: this year, we checked the markets every fifteen minutes throughout

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Speaker 1: the trading day on Bloomberg SNP E many futures down

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Speaker 1: to the seventeen points Dow. We many futures down a

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Speaker 1: hundred one. NASA doc you many futures down thirty three

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Speaker 1: and a half. The dacks in Germany's down two and

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Speaker 1: a half percent, ten your treasury up twelve thirty seconds,

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Speaker 1: the yield one point seven one percent, nim Ex scret

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Speaker 1: oil that'll change down three cents to thirty five sixties seven.

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Speaker 1: And barrel Comas gold is up one point three percent

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Speaker 1: or fifteen dollar seventy cents at twelve thirty five and

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Speaker 1: ounce the euro at dollar thirteen seventy one, the yen

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Speaker 1: one ten point five zero. And Valiant Pharmaceuticals saying a

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Speaker 1: special ad Hawk board committee has found no additional accounting

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Speaker 1: issues at the company that would require more restatements, and

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Speaker 1: that it plans to file its annual report honor before

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Speaker 1: April nine. And that's a Bloomberg business flash. Tom and Mike,

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Speaker 1: thanks so much. Karen really appreciate that. Good morning everyone.

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Speaker 1: This is Bloomberg Surveillance Duck Cast listening. Thank you for listening.

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Speaker 1: In Florida, of course, to get baseball season started. Mr

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Speaker 1: Cass quoting the ancient American philosopher oil Can Boyd. That's

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Speaker 1: what they get for building a park on the ocean.

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Speaker 1: That is a Red Sox play the Indians. Thank you,

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Speaker 1: Mr Casper. That was the morning they are playing in

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Speaker 1: of course Cleveland. Larry G. Maria knows that he's with

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Speaker 1: William Blair. Would look at the industrial group here, Larry.

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Speaker 1: If we've got a struggling group and manufacturing single digit

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Speaker 1: economy and the old days M M and A away,

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Speaker 1: is mergers and acquisitions combinations part of what managers will

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Speaker 1: do in the industrial space. Yeah, I think so. UM.

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Speaker 1: I think what we've tried to do is really cut

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Speaker 1: costs as far as we can, and NICKI co cost

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Speaker 1: a little bit more probably UM, but we're starting to

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Speaker 1: cut to the bone when we start doing from even

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Speaker 1: more massive structuring into this year. So maybe the next

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Speaker 1: level is to UH is to merge and exploit some synergies.

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Speaker 1: The other thing we're seeing certainly is cross border m

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Speaker 1: and A UM from Asians. Chinese companies looking to buy

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Speaker 1: some assets overseas potentially do avoid their get out ahead

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Speaker 1: of devaluing currency in China. So I think we will

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Speaker 1: see some more M and A in the future as UH.

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Speaker 1: You know overseas companies looking to acquire technology to the

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Speaker 1: extent will allow them to do that and also to

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Speaker 1: exploit synergies from mergers. In the US, I want to

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Speaker 1: ask you about trucking companies. They would seem to be

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Speaker 1: a good measure of how the economy is going because obviously,

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Speaker 1: if we're making more stuff, we're shipping more stuff. What's

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Speaker 1: the outlook there, um, your latest note to suggest recession watch, Yeah,

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Speaker 1: I think obviously, uh, trucking and commercial vehicles are very

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Speaker 1: economically sensitive, and there's a lot of banks in the economy,

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Speaker 1: and everybody's looking to figure out when is an ext

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Speaker 1: rest recession because we're a bit long in the tooth

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Speaker 1: and the recovery and the crew about eighty one months

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Speaker 1: into it, which is about average post war. Uh, So

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Speaker 1: that's the big factor that people are looking at. Um.

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Speaker 1: But the more economically sensitive trucks, the Class eight, are

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Speaker 1: actually pre week right now. The excess great capacity you know,

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Speaker 1: resentual values a week, etcetera. And that's called it's the

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Speaker 1: down cycle on the Class eight. But it's really a

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Speaker 1: microcosmovy economy. So that's being weaker because it's which capacity.

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Speaker 1: And then also you see some weeks from the energy patches.

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Speaker 1: But the medium duty outlook is actually relatively resilient and

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Speaker 1: actually pretty strong and growing, which is more a factor

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Speaker 1: of the service economy, which is what was doing far

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Speaker 1: better in the economy in the US might pick up

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Speaker 1: on this, But with John Riding, Steve Stanley, Joshua Shapira

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Speaker 1: and others analyzing trade, I'll go to Mr Stanley and

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Speaker 1: at Amer's purepunt Mike looking for a quote unquote dismal

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Speaker 1: first quarter. But even with the import export imbalance, a

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Speaker 1: number of things leading to a pickup and growth through

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Speaker 1: the year. I believe that you buy straw hats in

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Speaker 1: winter and on a train dynamic, you wonder what it

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Speaker 1: means for the industrial space. Well, exports in the latest

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Speaker 1: report came out of the sporting work higher, which may

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Speaker 1: be good news. How much are we very dependent on

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Speaker 1: exports the industrial sector here in the US. Well, in

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Speaker 1: the least few years, it's been a less hell because

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Speaker 1: of uh uh currently dynamics and stuff. Um, but exports

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Speaker 1: are important, but certainly they're far more important for Europe

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Speaker 1: than the or for North America. So one of the

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Speaker 1: reasons why I think our economy has been a bit

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Speaker 1: more resilient is because we're less dependent on experts. Obviously

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Speaker 1: they are important, um, and they can help when obviously

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Speaker 1: the dollar is weaker, but an apple apples basis, we're

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Speaker 1: in a better position than Europe, for example. So is

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Speaker 1: there any bright spot out there? Yeah, that's the McKee.

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Speaker 1: Always with McKee gets you to come to work day.

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Speaker 1: It's not as bad as it sounds. And when you

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Speaker 1: look at your screen and it's all read um, you

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Speaker 1: know sometimes that happens. But thinks A couple of things

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Speaker 1: we want to remember Christ Well, there are secular stories

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Speaker 1: in the industrial world, for example, around safety and commercial vehicles.

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Speaker 1: We're seeing companies that are outgrowing cyclical in markets because

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Speaker 1: of the adoption of safety technologies. Companies like Wabco UM

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Speaker 1: also did the big trend industrial and technology convergence. Are

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Speaker 1: smart companies are really embracing silicon valley technologies UM looking

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Speaker 1: to ways to get more recurring revenue, this high margin

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Speaker 1: and then finally, don't forget um. You know what when

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Speaker 1: you know what it hits the sand. Where do we

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Speaker 1: go back to the companies that make things? And these

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Speaker 1: are companies that are long lived assets. They've been around

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Speaker 1: for a very long time and they make tangible goods.

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Speaker 1: So when there's concerns over credit and concerned the roads

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Speaker 1: and things, I think we tend to rotate into companies

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Speaker 1: at the right price where then make tangible assets, not

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Speaker 1: necessarily business plans that don't have profits right now won't term.

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Speaker 1: I think we're in better present, will be in an

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Speaker 1: okay position, Larry, Thank you, Larry, Jim Maria with William Blair.

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Speaker 1: As you look at the industrial so so, Mike, you

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Speaker 1: really wonder what the trade numbers will do to the

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Speaker 1: Atlanta GDP now forecast zero point six up to zero

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Speaker 1: point seven and they what do they tweet that once

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Speaker 1: a week? Mike? Is that no? After there goes. It's

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Speaker 1: just a compilation of what the numbers mean when you

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Speaker 1: add them all up for GDP, and they put it

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Speaker 1: out pretty much every time there's a new indicator. So

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Speaker 1: we might see another one later today. Interesting, Well, there

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Speaker 1: it is with the trade numbers. I haven't really looked

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Speaker 1: at them in quarters, and all of a sudden they

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Speaker 1: become tangible. With the basic summary of the good researchery

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Speaker 1: read being imports are pretty good, in exports are not

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Speaker 1: so good. Future is negative sixteen down, futures a negative

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Speaker 1: one fourteen to review early this morning, exceptional weight across

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Speaker 1: assets actually green on the screen with oil thirty seventy

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Speaker 1: four up four cents on West Texas. They yield one

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Speaker 1: point seven in the end was a one ten thirty

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Speaker 1: nine is down one on the end, slightly weak in

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Speaker 1: the last nineteen minutes. It's Bloomberg surveillance lookinting you down

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Speaker 1: at the opening bell, brought you by the Jeep Grand Cherokee,

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