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

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

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Speaker 1: US stocks are lower with investors awaiting data on factory

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Speaker 1: and service industries activity for further clues on the strength

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Speaker 1: of the economy. We checked the markets every fifteen minutes

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Speaker 1: throughout the trading day. On Bloomberg SMP five hundred down

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Speaker 1: four tenths per center seven points in nineteen seventy nine

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Speaker 1: down Jones Industrial Average down three tens per cent or

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Speaker 1: fifty one points to sixteen thousand, eight hundred forty eight.

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Speaker 1: The NASTACS down three ten percent or fourteen points to

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Speaker 1: forty six eighty nine ten. Your treasury down one thirty second,

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Speaker 1: the yield one point eight four percent, the yield on

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Speaker 1: the two year point eight four percent. Nine X screwed

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Speaker 1: oil down one point one per cent or thirty cents

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Speaker 1: to thirty four twenty nine a barrel comic schooled a

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Speaker 1: half per cent or six dollars ten cents to twelve

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Speaker 1: forty seven ninety an ounce the euro another oh nine

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Speaker 1: one seven the yen at one thirteen point six zero.

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Speaker 1: Kroger is the worst performer in the SNP five hundred

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Speaker 1: this morning. It is currently down about six point seven

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Speaker 1: percent after predicting slower growth this year, hurt by pressure

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Speaker 1: on prices and it's merger with the Roundees chain. Urban

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Speaker 1: Life is down seven and a half percent. The nutrition

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Speaker 1: company under federal investigation for allegations of fostering a pyramid

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Speaker 1: scheme set it overstated growth of new customers and distributors

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Speaker 1: last year because of database errors and consumer confidence declining

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Speaker 1: in the last week of February to the lowest level

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Speaker 1: of the year. The Blueberg Consumer Comfort Index falling to

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Speaker 1: forty three point six during the period ending February from

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Speaker 1: forty four point to the prior week. A measure of

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Speaker 1: whether it's a good time to spend posted its weakest

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Speaker 1: reading in six weeks. That's a Bloomberg business flash. Tom

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Speaker 1: and Mike Karen, I thanks so much. I add an

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Speaker 1: email over the weekend who said, Tom, your work on

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Speaker 1: Honeywell U t X a number of days ago it

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Speaker 1: was genormous. And the reason was genormous is not because

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Speaker 1: of Michael McKee and Tom Keene were mere mortals. But

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Speaker 1: we got lucky with Peter ar Minister and Age who

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Speaker 1: gave us terrific on the spot, no notes perspective on

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Speaker 1: two American industrial giants. If you haven't kept up with

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Speaker 1: the news, um that mating is shifted. Aside, Peter, you

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Speaker 1: attended the Honeywell International Day. Let me get this out

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Speaker 1: of the way before Mike McKey as shoe about Honeywell

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Speaker 1: and industry in general. Forward. Mr Kote cleared the air

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Speaker 1: on the collapse of the U t X deal. What

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Speaker 1: was the energy like in the room? Yeah, yeah, good morning, Tom.

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Speaker 1: Good to be back on. Yes, I mean he he

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Speaker 1: did clear the air. I think he wanted to basically

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Speaker 1: address the issue, you know, head on, that he had

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Speaker 1: not lost his mind from deviating from the previous plan.

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Speaker 1: I think he just saw an opportunity to try to

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Speaker 1: put two great companies together to create you know, really

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Speaker 1: a lot of shareholder value. But at the end of

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Speaker 1: the day, you need to to tango and they just

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Speaker 1: couldn't get there. Did the board assist Mr Quote in

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Speaker 1: his new clarity of reasoning? I don't think so. I

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Speaker 1: think it uh, this is you know, uh CEO to

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Speaker 1: CEO discussion, and I think ultimately, uh, you know, Honeywell,

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Speaker 1: he did not want this to be a distraction to

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Speaker 1: what is really still a great story for Honeywell long term,

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Speaker 1: and I think that's what he wants to you know,

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Speaker 1: refocus on right now. All right, well what is that

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Speaker 1: great story? Because it looks like a U t X

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Speaker 1: acquisition would have fit what their growth strategy is in

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Speaker 1: the short run, it is it seems to be acquisitions.

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Speaker 1: They you know, sales were lower in two thousand fifteen.

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Speaker 1: This year, they're projecting only a small organic growth. Yeah,

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Speaker 1: that's that's true. But you know, again with with Honeywell, um,

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Speaker 1: they're really unfocused on on driving that organic growth. And

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Speaker 1: what that entails is really refreshing their existing products, are

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Speaker 1: introducing new prod X and a lot of that is

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Speaker 1: all about leveraging services, software enhancements or connectivity. And that's

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Speaker 1: the theme I think everyone needs to focus on, is

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Speaker 1: regarding connectivity. It's gonna be a huge theme that Honeywall

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Speaker 1: is executing on. UM. You know, we all talked about smartphones.

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Speaker 1: Will forget the smartphone in the industrial world, it's smart building,

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Speaker 1: smart homes. Honeywall has a presence in a hundred and

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Speaker 1: fifty million homes. In aerospace, there's smart controls on the engines.

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Speaker 1: That data is now being used in Honeywell's offering services

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Speaker 1: regarding maintenance. UM. In the cockpit, the passing in the

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Speaker 1: cockpit in the pastor experience is going to radically change

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Speaker 1: in the next five years. And it's all because of Honeywall.

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Speaker 1: The Honeywall's new weather features, which they're going to basically

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Speaker 1: allow crowdsourcing among pilots and that is that is something

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Speaker 1: that just is not done today, and that's gonna allow

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Speaker 1: for smoother air uh pilots to you know, basically navigate

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Speaker 1: around weather much easier. UM. And then with the new

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Speaker 1: satellites that are up with the ku Ban, Honeywell's new hardware,

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Speaker 1: you're your Internet experience is gonna be a hundred times

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Speaker 1: faster in the back of the plane. So it's the

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Speaker 1: equivalent of a fire hose versus a straw. And you know,

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Speaker 1: I think we're all looking forward to that. So so

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Speaker 1: this is a longer term play as a stock. Absolutely.

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Speaker 1: I mean they still show that, you know, their organic

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Speaker 1: growth is actually going to continue to inflect. And the

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Speaker 1: fact that these services and these connectivity themes, they all

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Speaker 1: come with the software piece, and so that software piece

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Speaker 1: comes with a higher margin, so they can they can

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Speaker 1: have a lot of confidence that they still have margin

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Speaker 1: runway in their story. I congratulate you on the granularity

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Speaker 1: of your note, folks. You get that from stern Age,

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Speaker 1: not from us Peter. I meant with his Peter on

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Speaker 1: the use of cash and the m and a framework

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Speaker 1: you mentioned discipline. They're gonna come up with the billion

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Speaker 1: dollar cash load. They're gonna do all sorts of cool

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Speaker 1: things with that, but they're gonna do it within the

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Speaker 1: discipline of an internal radar return greater than their weighted

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Speaker 1: average cost of capital and double digit r o I

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Speaker 1: I'll cut to the David cote Chase. How do you

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Speaker 1: do that where nominal g d P is I don't

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Speaker 1: get it. Well. I mean, again, they have the luxury

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Speaker 1: of having enormous presence and strong market shares and a

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Speaker 1: lot of these markets that they're in, and they know

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Speaker 1: the businesses that they want to go after and they

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Speaker 1: know the high value added CAPEX that they want to

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Speaker 1: spend on. So it's amount of really leveraging that. I mean,

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Speaker 1: I think that that's the most recent deals that you've seen,

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Speaker 1: whether it was els there that further, you know, I

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Speaker 1: gave them a stronger controls in the in the smart

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Speaker 1: metering business, um, some of these recent software deals. That's

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Speaker 1: all kind of leveraging the overall strategy from Dave Cody

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Speaker 1: and the rest of the management TAM. What is their

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Speaker 1: practices versus a train wreck known as international business machines

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Speaker 1: that Romedy and the others could learn from. Uh, well,

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Speaker 1: I think he's uh, you know, I think again they've

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Speaker 1: they've they've allowed themselves to really kind of benefit from

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Speaker 1: some some of the big value themes. Whether they're still

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Speaker 1: penetrating in you know, these China and Indian markets, um,

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Speaker 1: but at the end of the day, they have a

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Speaker 1: big local presence in all these areas where they are

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Speaker 1: are the equivalent of the Chinese competitor because they have

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Speaker 1: a strong presence there and they're able to kind of

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Speaker 1: leverage that in terms of being close to the customers

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Speaker 1: and and and continue to penetrate those markets, um, just

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Speaker 1: in a smarter way, and I think their well positioned

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Speaker 1: for you know, still a lot of organic growth in

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Speaker 1: these markets. It's amazing how much Honeywell product is that

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Speaker 1: our Gulf stream. I had no idea. Yeah, you really.

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Speaker 1: You know that's because you sit in the back and

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Speaker 1: you look at the wood paneling and the aquarium is

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Speaker 1: something that honey Well six acquisitions they're digesting. We're expecting

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Speaker 1: more from them. And is that going to be a

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Speaker 1: theme in industrials and multized like Honeywell for two thousand

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Speaker 1: and sixteen, Well, organic growth is difficult. You just look

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Speaker 1: for for Bolton profit. Yeah, I think that's always the case. UM.

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Speaker 1: But I don't think they're in a in a rusted

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Speaker 1: deal just because the global economy is UH softer. I

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Speaker 1: think they really it's all about the strategy and they

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Speaker 1: want to execute on that. And you know, thankfully that

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Speaker 1: this has been a strategy that Honeywell had in place

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Speaker 1: UH for several years now and with Dave's leadership. Tell

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Speaker 1: us about the rest of industry. I mean, it's great

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Speaker 1: to go to a road show and honey Well has

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Speaker 1: been a wonderful performer. Can you go to other road

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Speaker 1: shows with the new instrument group and get the same

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Speaker 1: kind of operating excellence. I mean, look, these are all

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Speaker 1: I mean taking out of technologies there. Uh you know

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Speaker 1: we're neutral rated, but you know they have you know,

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Speaker 1: very strong margins and a lot of cash generation. Um.

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Speaker 1: These are all I think companies that are executing very well. Um. Again,

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Speaker 1: it's just about a different story of who's got some

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Speaker 1: strong organic growth and able to leverage that. Um, you

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Speaker 1: know in the aerospace, which is you know where I

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Speaker 1: spend most of my time. Um. You know you still

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Speaker 1: have a very big backclock between Boeing and Airbus. Uh

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Speaker 1: there with that's providing a lot of organ organic growth

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Speaker 1: for the for the entire industry and supply chain. So

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Speaker 1: there is a lot of leverage here. I mean I

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Speaker 1: look at some of the you know, forget about the

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Speaker 1: excitement of Honeywell holding water in a bear market. There's

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Speaker 1: some right on the screen to say the least. I

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Speaker 1: mean something giant like Boeing Raytheon actually doing pretty well.

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Speaker 1: But like b e aeros Space. You know, these are

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Speaker 1: companies we don't talk about much. Is there an opportunity

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Speaker 1: when something creators like that? Oh? Absolutely, I mean, you know,

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Speaker 1: b Aerospace is one of three interior parts company. They're

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Speaker 1: not inside the cockpit, but basically they're in every other

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Speaker 1: area and knows the tail inside, the inside the airplane.

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Speaker 1: And you know, one of the things that we're seeing

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Speaker 1: in the last few years and it's going to continue

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Speaker 1: this year, is global traffic growth continues to be very robust,

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Speaker 1: and so basically the airplace of the takeoff and landing play,

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Speaker 1: the more wear and tear, the more interior parts have

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Speaker 1: to re refreshed. And of course they also benefit from

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Speaker 1: the higher deliveries of Bowing and Airbus. We're got to

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Speaker 1: come back with that. B E A V is the

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Speaker 1: simil Peter Iman. Thank you so much, stern A. You

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Speaker 1: mentioned the wood paneling might be Aerospace makes the wood

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Speaker 1: paneling that those that's the company. That's why you went

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Speaker 1: to that company. Yes, you know, yes, we know it's

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Speaker 1: hard knowledge that Peter Iman, seriously, folks has been just

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Speaker 1: superb with us and the heat of the Honeywell U

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Speaker 1: t X up down. I thought there was some really

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Speaker 1: interesting stuff there on. Um. You know, not that we

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Speaker 1: have an opinion on my old cell, but at least

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Speaker 1: how to present a successful company to the street, Mike, Um,

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Speaker 1: we have something tomorrow. It's Super Friday, Super Friday. We

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Speaker 1: put the um the jobs numbers to the public and um,

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Speaker 1: we certainly have a favorite in that race. Good numbers.

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Speaker 1: But we'll see Bill Gross. Bill Gross. It's a movement,

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Speaker 1: the Bill Gross movement. Yeah. Well, he has a new

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Speaker 1: you can look it up. And he go to the

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Speaker 1: Janis Capitel's website and he has a new investor Outlooking

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Speaker 1: Out Today where he examines the financial something people look

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Speaker 1: at while they're waiting to hear from him tomorrow. Within

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Speaker 1: the politics of the moment, Jonathan Stearns and Toulouse all

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Speaker 1: nipa on Mr Romney. Governor Romney tries to slow Mr

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Speaker 1: Trump's rise. Krama drawing billion billionaires. Ire is the headline.

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Speaker 1: This is Michael McKee and Tom Keane. We hope you

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Speaker 1: join us tomorrow. We'll do five hours of Bloomberg surveillance.

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Speaker 1: Will do that moving towards job's day eight thirty. Be

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Speaker 1: with us tomorrow