1
00:00:00,520 --> 00:00:07,760
Speaker 1: Broadcasting Live to New York Bloomberg eleventh, to Washington, d C.

2
00:00:07,960 --> 00:00:13,200
Speaker 1: Bloomberg to Boston, Bloomberg twelve honors, to San Francisco, Bloomberg

3
00:00:14,080 --> 00:00:17,680
Speaker 1: to the Country Series Exam Channel one ninety and around

4
00:00:17,720 --> 00:00:20,960
Speaker 1: the globe the Bloomberg Radio Plus happened. Boomberg dot com.

5
00:00:21,320 --> 00:00:25,520
Speaker 1: This is Bloomberg Surveillance Good Parting seven thirty on Wall

6
00:00:25,520 --> 00:00:29,800
Speaker 1: Street him Michael McKey along with Tom Keane. It is

7
00:00:30,200 --> 00:00:33,120
Speaker 1: a green day on the screen so far. Maybe in

8
00:00:33,320 --> 00:00:37,360
Speaker 1: honor of the masters features higher in the US. One

9
00:00:37,360 --> 00:00:40,800
Speaker 1: of the stocks that is up, Yahoo shares up one

10
00:00:40,840 --> 00:00:44,120
Speaker 1: point to one percent this morning so far, on sign

11
00:00:44,320 --> 00:00:46,840
Speaker 1: somebody wants him. The parent company of the UK's Daily

12
00:00:46,880 --> 00:00:49,839
Speaker 1: Mail newspaper is in talks with private equity firms of

13
00:00:50,120 --> 00:00:55,440
Speaker 1: apparently some sort of h bid for the for the

14
00:00:55,960 --> 00:00:59,600
Speaker 1: for the service or parts thereof headlines just crossing the

15
00:00:59,600 --> 00:01:03,680
Speaker 1: Bloomberg professional Canadian Pacific is ending its efforts to merge

16
00:01:04,080 --> 00:01:07,720
Speaker 1: with Norfolk Southern. We'll keep an eye on that story.

17
00:01:08,240 --> 00:01:14,480
Speaker 1: As those headlines continued to break, Canadian Pacific is uh,

18
00:01:14,560 --> 00:01:19,680
Speaker 1: let's see here, withdrawing its resolution asking Norfolk Southern shareholders

19
00:01:19,680 --> 00:01:22,200
Speaker 1: to vote in favor of the merger and no details

20
00:01:22,319 --> 00:01:25,280
Speaker 1: yet on why. People with knowledge of the matter say

21
00:01:25,280 --> 00:01:27,520
Speaker 1: Standard Chartered seeking to sell at least four point four

22
00:01:27,560 --> 00:01:30,800
Speaker 1: billion dollars of assets in Asia, pairing its balance sheet,

23
00:01:31,640 --> 00:01:35,120
Speaker 1: booking record impairments, and of course Alcoha kicking off earnings

24
00:01:35,120 --> 00:01:37,520
Speaker 1: for the SMP five. After the bell today, we'll talk

25
00:01:37,520 --> 00:01:41,760
Speaker 1: with Sam Stowall of SMP in just a few moments,

26
00:01:41,760 --> 00:01:43,920
Speaker 1: but first we're gonna check in with Michael Barr and

27
00:01:43,959 --> 00:01:46,640
Speaker 1: get the latest world and national headlines. Michael, Mike, thank

28
00:01:46,680 --> 00:01:50,560
Speaker 1: you very much. Republican presidential candidate hopeful Donald Trump is

29
00:01:50,600 --> 00:01:54,760
Speaker 1: blasting the Boston Globe, calling the newspaper worthless and stupid. Yesterday,

30
00:01:54,800 --> 00:01:57,480
Speaker 1: the Globe had a secerriical fake front page on the

31
00:01:57,520 --> 00:02:02,600
Speaker 1: potential Trump presidency front pages day to April nine, seventeen,

32
00:02:02,640 --> 00:02:06,360
Speaker 1: and its main stories about Trump calling for deportations. The

33
00:02:06,440 --> 00:02:09,320
Speaker 1: Hillary Clinton campaign has released a new ad attacking the

34
00:02:09,320 --> 00:02:12,919
Speaker 1: Republican front runner Donald Trump. The ad is aimed at

35
00:02:12,960 --> 00:02:16,840
Speaker 1: New York voters and features Trump's comments on women, Mexicans,

36
00:02:16,880 --> 00:02:20,000
Speaker 1: and Muslims. Secretary of State John Carey is in Japan

37
00:02:20,080 --> 00:02:22,880
Speaker 1: for a meeting with foreign ministers of the world's biggest

38
00:02:22,880 --> 00:02:26,600
Speaker 1: industrialized nations. Carry, along with the others from the G seven,

39
00:02:26,680 --> 00:02:31,200
Speaker 1: visited a revered memorial to Hiroshima's atomic bombing. Today, Carry

40
00:02:31,240 --> 00:02:33,960
Speaker 1: delivered a message of peace and hope for a nuclear

41
00:02:34,040 --> 00:02:37,480
Speaker 1: free world. Global News twenty four hours a day, powered

42
00:02:37,480 --> 00:02:40,480
Speaker 1: by our twenty four hundred journalists and more than a

43
00:02:40,520 --> 00:02:43,080
Speaker 1: hundred fifty news barrels from around the world. I'm Michael

44
00:02:43,080 --> 00:02:46,320
Speaker 1: bar Mike. Thank you, Michael. Now it's time for the

45
00:02:46,320 --> 00:02:51,080
Speaker 1: Bloomberg NBC Sports Update with John stash Hour and John

46
00:02:52,000 --> 00:02:55,639
Speaker 1: Gotta admit. Jordan's speech plays golf like I do. Sometimes.

47
00:02:55,639 --> 00:02:58,960
Speaker 1: Well you didn't think so, but yeah, for a little

48
00:02:59,000 --> 00:03:01,480
Speaker 1: bit of a moment yesterday he did. He George Mike

49
00:03:01,520 --> 00:03:04,240
Speaker 1: had already made room in his closet for a second

50
00:03:04,240 --> 00:03:06,800
Speaker 1: green jacket. Led the Masters the whole way, just as

51
00:03:06,840 --> 00:03:08,280
Speaker 1: he did a year ago. As he made the turn

52
00:03:08,280 --> 00:03:10,040
Speaker 1: to the back nine, had a five shot lead and

53
00:03:10,080 --> 00:03:13,800
Speaker 1: then stunning lead two bogies and the quadruple bogey with

54
00:03:13,919 --> 00:03:16,560
Speaker 1: consecutive shots on the part three twelve hold landing in

55
00:03:16,560 --> 00:03:19,720
Speaker 1: the water went from up five to down three and

56
00:03:19,760 --> 00:03:22,400
Speaker 1: twenty eight year old Danny Willett took advantage. Final round

57
00:03:22,440 --> 00:03:24,959
Speaker 1: sixty seven. He's only the second from the UK to

58
00:03:25,120 --> 00:03:27,600
Speaker 1: win the Masters. The story that's driven the NBA for

59
00:03:27,680 --> 00:03:30,360
Speaker 1: six months. Would Golden State break the record for greatest

60
00:03:30,360 --> 00:03:33,080
Speaker 1: regular season ever. They're about to a win Wednesday over

61
00:03:33,160 --> 00:03:36,160
Speaker 1: Memphis and the Warriors will finish seventy three and nine,

62
00:03:36,240 --> 00:03:39,520
Speaker 1: one more win. The Michael Jordan's Bulls of nine six

63
00:03:39,560 --> 00:03:42,400
Speaker 1: and Steph Curry led Warriors first road team all year

64
00:03:42,440 --> 00:03:45,600
Speaker 1: to win at San Antonio to eighties six, Golden States

65
00:03:45,600 --> 00:03:48,760
Speaker 1: first win at San Antonio in nineteen years. Nicksonett's both lost,

66
00:03:48,920 --> 00:03:51,000
Speaker 1: so did the Islanders and the Mets, beaten by the

67
00:03:51,000 --> 00:03:54,360
Speaker 1: Phillies five to two. With Bloomberg NBC Sports Update, I'm

68
00:03:54,400 --> 00:04:00,680
Speaker 1: John stap Shandler. Thank you John uh for Curtly. The

69
00:04:01,480 --> 00:04:03,960
Speaker 1: National Hockey League season is over in the playoffs are

70
00:04:03,960 --> 00:04:06,600
Speaker 1: about to begin. Tom and I will be on opposite

71
00:04:06,640 --> 00:04:11,280
Speaker 1: sides of that debate, so be prepared for that as

72
00:04:11,440 --> 00:04:17,799
Speaker 1: we go forward here on Bloomberg Radio. This is Bloomark Surveillance.

73
00:04:17,839 --> 00:04:21,599
Speaker 1: I'm Michael McKay with Tom Keane. Futures higher this morning.

74
00:04:21,720 --> 00:04:24,480
Speaker 1: SMP evening's up by seven points, four tents of a

75
00:04:24,560 --> 00:04:27,080
Speaker 1: percent of three tents gain for Dow futures. They're up

76
00:04:27,120 --> 00:04:29,640
Speaker 1: fifty six points right now. The stock six hundred in

77
00:04:29,680 --> 00:04:33,839
Speaker 1: Europe is up two points six tenths of a percent.

78
00:04:34,040 --> 00:04:36,320
Speaker 1: Earning season kicks off today. We'll talk about that in

79
00:04:36,440 --> 00:04:39,000
Speaker 1: just a moment, but the Bloomberg n g I T

80
00:04:39,200 --> 00:04:41,680
Speaker 1: STEM Report comes first brought to you by the New

81
00:04:41,760 --> 00:04:44,480
Speaker 1: Jersey Institute of Technology, investing more than a hundred and

82
00:04:44,560 --> 00:04:47,360
Speaker 1: ten million dollars a year and applied research to solve

83
00:04:47,400 --> 00:04:50,520
Speaker 1: problems and improve life. Learn more at Stories of Innovation

84
00:04:50,600 --> 00:04:53,000
Speaker 1: dot n j I T dot E d U. Here's

85
00:04:53,040 --> 00:04:56,279
Speaker 1: Bob Moon, Michael, thank you. Here's what's making news in science, Technology,

86
00:04:56,400 --> 00:04:59,560
Speaker 1: engineering and math. A whole new definition of real estate.

87
00:04:59,680 --> 00:05:04,440
Speaker 1: Under Water scientists, preservationists, architects, and public officials are meeting

88
00:05:04,480 --> 00:05:07,040
Speaker 1: this week to discuss how to adapt to rising sees

89
00:05:07,240 --> 00:05:11,200
Speaker 1: and preserve historic structures. The conference is taking place appropriately

90
00:05:11,279 --> 00:05:14,360
Speaker 1: in one of the threatened areas, Newport, Rhode Island. Scientists

91
00:05:14,400 --> 00:05:17,320
Speaker 1: forecast sea levels will rise anywhere from several inches to

92
00:05:17,480 --> 00:05:21,800
Speaker 1: several feet by hundred Apple's legal fight over data security

93
00:05:21,960 --> 00:05:24,000
Speaker 1: isn't over yet in a New York court, even after

94
00:05:24,160 --> 00:05:26,520
Speaker 1: the government dropped the demand for the company's help in

95
00:05:26,560 --> 00:05:30,160
Speaker 1: accessing a California terrorist iPhone because someone else found a

96
00:05:30,160 --> 00:05:32,440
Speaker 1: way to crack it. The Justice Department said it will

97
00:05:32,520 --> 00:05:34,880
Speaker 1: keep fighting to force the company to help get data

98
00:05:34,920 --> 00:05:38,000
Speaker 1: off and accuse drug dealers phone in Brooklyn because Apple

99
00:05:38,040 --> 00:05:40,920
Speaker 1: provided similar assistance in the past. At the same time,

100
00:05:40,960 --> 00:05:43,520
Speaker 1: an alleged gangster's iPhone is at the center of another

101
00:05:43,560 --> 00:05:47,640
Speaker 1: fight over data security in Massachusetts. And how you doing, Tiger?

102
00:05:48,160 --> 00:05:51,960
Speaker 1: The answer isn't great, but there's reason for possible optimism.

103
00:05:52,080 --> 00:05:55,480
Speaker 1: The world's count of wild tigers roaming force from Russia

104
00:05:55,520 --> 00:05:57,480
Speaker 1: to Vietnam has gone up for the first time in

105
00:05:57,560 --> 00:06:00,560
Speaker 1: more than a century, some thirty eight hundred nights, more

106
00:06:00,600 --> 00:06:03,480
Speaker 1: than half of them in India, counted by conservation groups

107
00:06:03,520 --> 00:06:06,120
Speaker 1: and national governments. Experts say, though that it may just

108
00:06:06,240 --> 00:06:10,200
Speaker 1: be survey methods are better. Tigers are considered endangered species

109
00:06:10,600 --> 00:06:14,360
Speaker 1: under constant threat from habitat loss and poachers. Ministers from

110
00:06:14,400 --> 00:06:16,680
Speaker 1: thirteen countries are meeting for three days in New Delhi

111
00:06:16,760 --> 00:06:20,560
Speaker 1: starting today as they work toward doubling the world's tiger population.

112
00:06:21,240 --> 00:06:24,360
Speaker 1: And that's this morning's Bloomberg and j I t Stem report.

113
00:06:24,440 --> 00:06:28,560
Speaker 1: Michael Tiger Tiger burning Bright Let's not do that, all right,

114
00:06:28,560 --> 00:06:31,160
Speaker 1: A little more details here, uh, not a lot on

115
00:06:31,279 --> 00:06:34,520
Speaker 1: Canadian Pacific ending its efforts to merge with Norfolk Southern,

116
00:06:34,560 --> 00:06:36,720
Speaker 1: that news breaking just a short time ago. The press

117
00:06:36,760 --> 00:06:41,000
Speaker 1: release from Canadian Pacific suggests that with no path to

118
00:06:41,240 --> 00:06:44,520
Speaker 1: a friendly merger at this time, we will turn all

119
00:06:44,560 --> 00:06:48,039
Speaker 1: of our focus and energy to serving our customers. According

120
00:06:48,120 --> 00:06:52,280
Speaker 1: to Canadian Pacific, so it looks like they anticipated a

121
00:06:52,400 --> 00:06:56,680
Speaker 1: negative reaction from Norfolk Southern shareholders and they do not

122
00:06:56,920 --> 00:07:00,880
Speaker 1: want to do a hostile takeover. So Indian Pacific ending

123
00:07:00,920 --> 00:07:04,000
Speaker 1: its efforts to merge with Norfolk Southern, that news breaking

124
00:07:04,120 --> 00:07:07,400
Speaker 1: just a short time ago. This is, of course, the

125
00:07:07,560 --> 00:07:10,640
Speaker 1: opening day, not of the National Hockey League playoffs, but

126
00:07:10,720 --> 00:07:14,960
Speaker 1: of earning season for the first quarter al Coha after

127
00:07:15,040 --> 00:07:19,000
Speaker 1: the Bell reporting. I mean, we can be picky and

128
00:07:19,080 --> 00:07:21,360
Speaker 1: say that some companies have already reported, but we won't

129
00:07:21,360 --> 00:07:25,120
Speaker 1: go there. Sam Stovall is with SMP Global Marketing Intelligence.

130
00:07:25,160 --> 00:07:29,360
Speaker 1: He's an equity analyst, and he keeps track of what

131
00:07:29,600 --> 00:07:33,600
Speaker 1: we are forecasting, expecting and likely to happen during this

132
00:07:33,760 --> 00:07:37,280
Speaker 1: season ahead. And it's it's often, uh, Sam, like, um,

133
00:07:37,560 --> 00:07:40,200
Speaker 1: you know, the the opening of baseball season or football

134
00:07:40,240 --> 00:07:42,040
Speaker 1: season or whatever where we say who who are the

135
00:07:42,080 --> 00:07:45,280
Speaker 1: winners and who are the losers going to be? This year?

136
00:07:45,360 --> 00:07:48,320
Speaker 1: Seems if you're gonna describe the SNP five hundred this year,

137
00:07:48,360 --> 00:07:51,640
Speaker 1: it sounds like nobody's going to make the playoffs. Well,

138
00:07:51,680 --> 00:07:54,880
Speaker 1: good morning, Mike. Uh, well, it looks as if those

139
00:07:54,920 --> 00:07:57,160
Speaker 1: that are going to make the playoffs they're very few

140
00:07:57,240 --> 00:08:01,960
Speaker 1: and far between. For the first quarter, consumer discretionary is

141
00:08:02,040 --> 00:08:06,080
Speaker 1: the only outstanding quarter expected to show an eleven point

142
00:08:06,200 --> 00:08:10,280
Speaker 1: four percent gain and operating results. Telecom is going to

143
00:08:10,360 --> 00:08:13,600
Speaker 1: be half that, up five point one percent um, and

144
00:08:13,720 --> 00:08:16,720
Speaker 1: then healthcare just sort of eking out a two point

145
00:08:16,800 --> 00:08:21,000
Speaker 1: nine percent increase. Everybody else expected to be a negative territory,

146
00:08:21,200 --> 00:08:27,160
Speaker 1: with materials down almost and Energy expected to post its

147
00:08:27,240 --> 00:08:31,680
Speaker 1: first loss on record. Uh since we've been capturing their

148
00:08:31,720 --> 00:08:35,480
Speaker 1: operating results since the last twenty six years. Yeah, I

149
00:08:35,640 --> 00:08:38,640
Speaker 1: note that at least coring. I know that the Bloomberg

150
00:08:38,679 --> 00:08:40,880
Speaker 1: methodology and S and P methodology a little bit different,

151
00:08:40,880 --> 00:08:44,480
Speaker 1: but Bloomberg is saying a hudd percent drop in UH

152
00:08:44,679 --> 00:08:49,000
Speaker 1: profits compared to the same quarter a year ago. For Energy, Yes, well,

153
00:08:49,120 --> 00:08:52,560
Speaker 1: Energy has just been having such a difficult time. We've

154
00:08:52,600 --> 00:08:56,400
Speaker 1: been seeing declines of more than fifty percent for each

155
00:08:56,480 --> 00:08:59,920
Speaker 1: of the four quarters in two thousand and fifteen. Uh.

156
00:09:00,000 --> 00:09:02,840
Speaker 1: I'm looking for an outright laws in this first quarter

157
00:09:02,880 --> 00:09:06,400
Speaker 1: of two thousand and sixteen, uh, and then still being

158
00:09:06,520 --> 00:09:09,480
Speaker 1: off by more than ten percent by the fourth quarter

159
00:09:09,679 --> 00:09:12,840
Speaker 1: of this year. So energy is still just having an

160
00:09:12,880 --> 00:09:16,040
Speaker 1: awful lot of problems. M one reason being that we

161
00:09:16,240 --> 00:09:19,760
Speaker 1: estimate that oil prices will average around thirty seven dollars

162
00:09:19,800 --> 00:09:22,800
Speaker 1: a barrel this year, and we have found that energy

163
00:09:22,880 --> 00:09:27,000
Speaker 1: earnings have had a correlation with the price of oils,

164
00:09:27,040 --> 00:09:31,080
Speaker 1: so obviously, as goes the price of oil, so goes earnings. Well,

165
00:09:32,120 --> 00:09:34,000
Speaker 1: before we have to take a break here, let me

166
00:09:34,040 --> 00:09:37,920
Speaker 1: ask you this, how much faith can we put in

167
00:09:38,040 --> 00:09:41,959
Speaker 1: analysts estimates because every year, uh, they seem to be

168
00:09:42,080 --> 00:09:44,199
Speaker 1: so much more pessimistic than where we end up. And

169
00:09:44,440 --> 00:09:47,800
Speaker 1: I'm speaking specifically of energy now. It seems like the

170
00:09:47,920 --> 00:09:52,439
Speaker 1: majors always find a way. Oh, you're absolutely right that

171
00:09:52,679 --> 00:09:54,800
Speaker 1: the major's found a way to do so in two

172
00:09:54,880 --> 00:09:57,880
Speaker 1: thousand and eight, two thousand and nine, UM. And I

173
00:09:58,040 --> 00:10:02,040
Speaker 1: think you're absolutely correct when you say that prices lead fundamentals,

174
00:10:02,160 --> 00:10:06,880
Speaker 1: but price declines I think also influenced fundamentals, meaning that

175
00:10:07,080 --> 00:10:10,960
Speaker 1: because prices have been down so dramatically for the stocks

176
00:10:11,040 --> 00:10:13,319
Speaker 1: within the sector, I think a lot of analysts have

177
00:10:13,520 --> 00:10:16,800
Speaker 1: just decided to really slash their earnings estimates and say,

178
00:10:16,880 --> 00:10:18,520
Speaker 1: you know what, I don't want to be the blade

179
00:10:18,559 --> 00:10:20,680
Speaker 1: of grass that's sticking up. I'm going to just sort

180
00:10:20,720 --> 00:10:23,680
Speaker 1: of slash and I will wait to raise them later

181
00:10:23,840 --> 00:10:26,480
Speaker 1: if need be. But right now, in a sense, they're

182
00:10:26,600 --> 00:10:30,040
Speaker 1: letting the trend decide where the earnings growth will be.

183
00:10:30,840 --> 00:10:32,760
Speaker 1: All right, let's come back with Sam Stow, all of

184
00:10:33,280 --> 00:10:37,520
Speaker 1: SMP and continue our conversation about earnings season al CoA

185
00:10:37,720 --> 00:10:40,920
Speaker 1: today after the bell supposed to make two cents a

186
00:10:41,120 --> 00:10:45,839
Speaker 1: share um that is like a decline from last year.

187
00:10:45,920 --> 00:10:50,080
Speaker 1: We'll talk more about alcohol, about earnings, about what to expect.

188
00:10:50,240 --> 00:10:53,000
Speaker 1: Is this the worst that we're going to see in

189
00:10:53,160 --> 00:11:02,199
Speaker 1: two thousand and sixteen. This is Bloomberg Radio Worldwide Bloombergs Rounds,

190
00:11:02,200 --> 00:11:03,839
Speaker 1: brought to you by Engine Block and Engine named the

191
00:11:03,840 --> 00:11:06,120
Speaker 1: best accounty firm in North America for the sixth year

192
00:11:06,160 --> 00:11:18,480
Speaker 1: in a row by Hedgeweek dot Com. Global business News

193
00:11:18,600 --> 00:11:21,480
Speaker 1: twenty four hours a day at Bloomberg dot Com, The

194
00:11:21,640 --> 00:11:24,719
Speaker 1: Radio plus Mobile Act and on your radio. This is

195
00:11:24,760 --> 00:11:28,439
Speaker 1: a Bloomberg business flash and I'm Karen Moscow. This updates

196
00:11:28,480 --> 00:11:31,240
Speaker 1: brought to you by Interactive Brokers and CME Group. If

197
00:11:31,240 --> 00:11:34,120
Speaker 1: you're looking for global futures contract with low trading costs,

198
00:11:34,200 --> 00:11:37,600
Speaker 1: look no further. Interactive Brokers as the industry leader. Learn

199
00:11:37,640 --> 00:11:42,040
Speaker 1: more at Interactive Brokers dot com, slash, CME Group, Canadian

200
00:11:42,120 --> 00:11:45,479
Speaker 1: Pacific Railway and it efforts to buy Norfolk Southern Corporation

201
00:11:45,559 --> 00:11:49,280
Speaker 1: after the US carrier rejected several proposals. U S DOT

202
00:11:49,360 --> 00:11:52,400
Speaker 1: Index futures, meanwhile, are rising, with investors racing for the

203
00:11:52,480 --> 00:11:54,760
Speaker 1: start of what's forecast to be the biggest earning slump

204
00:11:54,800 --> 00:11:58,120
Speaker 1: since the financial crisis. SNP E mini futures have about

205
00:11:58,160 --> 00:12:00,439
Speaker 1: eight points. Dow E mini futures up stick C two

206
00:12:00,920 --> 00:12:03,240
Speaker 1: NASA doctimity future is of nineteen and we check the

207
00:12:03,320 --> 00:12:06,520
Speaker 1: markets every fifteen minutes throughout the trading day. On Bloomberg.

208
00:12:06,840 --> 00:12:09,160
Speaker 1: The decks in Germany's up one point one percent, CAC

209
00:12:09,200 --> 00:12:11,800
Speaker 1: in Paris of six tents percent, FT one hundred little

210
00:12:11,920 --> 00:12:14,800
Speaker 1: change ten, Your Treasury down six thirty seconds, the yeld

211
00:12:14,840 --> 00:12:17,959
Speaker 1: one point seven three percent, no X screwede oil down

212
00:12:18,000 --> 00:12:20,720
Speaker 1: six tents percent. Or twenty three cents at thirty forty

213
00:12:20,760 --> 00:12:23,360
Speaker 1: nine of barrel comes gold is up half per cent

214
00:12:23,559 --> 00:12:26,480
Speaker 1: or six dollar seventy cents. The twelve fifty fifty announced

215
00:12:26,880 --> 00:12:28,920
Speaker 1: the euro and on the fourteen oh four the end

216
00:12:28,960 --> 00:12:31,520
Speaker 1: one oh eight point to two and al CoA is

217
00:12:31,559 --> 00:12:34,679
Speaker 1: scheduled to report earnings today. That's a Bloomberg business flash.

218
00:12:34,800 --> 00:12:38,439
Speaker 1: Tom and Mike Caramaska, thank you very much. We are

219
00:12:39,200 --> 00:12:43,400
Speaker 1: talking about the most important news out there for investors today.

220
00:12:43,760 --> 00:12:46,599
Speaker 1: The hockey playoffs begin UM. Tom and I will be

221
00:12:46,960 --> 00:12:51,760
Speaker 1: discussing that at length later also today, as I understand it,

222
00:12:51,840 --> 00:12:56,160
Speaker 1: it's earning season alcohol reporting after the bell. Sam stowall

223
00:12:56,240 --> 00:13:00,800
Speaker 1: with us from S and P Market Intelligence UM equity

224
00:13:00,840 --> 00:13:02,800
Speaker 1: analysts there and I don't know if he has a

225
00:13:02,920 --> 00:13:06,079
Speaker 1: favorite hockey team he's following into the playoffs, but he

226
00:13:06,200 --> 00:13:09,480
Speaker 1: does follow all the earnings news, and we were talking

227
00:13:09,480 --> 00:13:14,480
Speaker 1: about the big declines we are expecting for most of

228
00:13:15,280 --> 00:13:17,880
Speaker 1: the sector. Sam and I wanted to ask, is this

229
00:13:18,520 --> 00:13:21,840
Speaker 1: going to be the worst of it for the year,

230
00:13:23,400 --> 00:13:27,360
Speaker 1: because the disconnect seems to be between the economy, which

231
00:13:27,400 --> 00:13:31,120
Speaker 1: seems to be modeling along just fine and the UH

232
00:13:31,280 --> 00:13:35,839
Speaker 1: and the corporate earnings which don't. Yes, I think that

233
00:13:35,960 --> 00:13:39,560
Speaker 1: this is going to be the worst quarter, but unfortunately

234
00:13:39,640 --> 00:13:42,240
Speaker 1: we've said that over the last couple of quarters. But

235
00:13:42,480 --> 00:13:46,320
Speaker 1: right now SMP Capital i Q estimates showing more than

236
00:13:46,360 --> 00:13:49,360
Speaker 1: an eight percent decline and operating results for the first

237
00:13:49,440 --> 00:13:53,600
Speaker 1: quarter of two thousand and sixteen down about three percent

238
00:13:53,720 --> 00:13:57,520
Speaker 1: in the second quarter. I can hear Tom clearing his throat, uh,

239
00:13:57,640 --> 00:14:00,240
Speaker 1: and then up four and a half and then nine

240
00:14:00,280 --> 00:14:02,679
Speaker 1: percent for the rest of the year. So I think

241
00:14:02,720 --> 00:14:04,920
Speaker 1: we're probably going to see a bit of a V

242
00:14:05,240 --> 00:14:10,199
Speaker 1: shaped recovery for the overall market, primarily because the drag

243
00:14:10,440 --> 00:14:14,160
Speaker 1: from energy will be lessened as the comparables get a

244
00:14:14,280 --> 00:14:17,319
Speaker 1: lot easier. UH. And if you take out energy for

245
00:14:17,480 --> 00:14:20,080
Speaker 1: all of the earnings for this year, UH, the SMP

246
00:14:20,400 --> 00:14:22,880
Speaker 1: would be up about three and a half percent in

247
00:14:23,000 --> 00:14:27,600
Speaker 1: earnings rather than the expected gain of only eight SAM.

248
00:14:27,680 --> 00:14:29,480
Speaker 1: I was clearing my throat because I looked at the

249
00:14:29,560 --> 00:14:33,360
Speaker 1: standard and Poor's dividend e t F, which is sixty

250
00:14:33,640 --> 00:14:37,040
Speaker 1: of your company's bundled in for dividend growth. Let me

251
00:14:37,080 --> 00:14:39,920
Speaker 1: cut to the chase, folks. It's near record high, and

252
00:14:40,000 --> 00:14:43,800
Speaker 1: with dividend reinvestment, it's way out to a new high.

253
00:14:43,800 --> 00:14:47,000
Speaker 1: Would you like to make fourteen point four percent per

254
00:14:47,160 --> 00:14:51,280
Speaker 1: year from the bottom the bear market bottom of oh nine? Sam,

255
00:14:51,400 --> 00:14:56,200
Speaker 1: When does the dividend consumer discretionary game end or does

256
00:14:56,240 --> 00:15:00,720
Speaker 1: a grizzled pro like you keep him at five star forever? Well,

257
00:15:00,800 --> 00:15:03,360
Speaker 1: you're talking about n O B L, which is the

258
00:15:03,720 --> 00:15:07,320
Speaker 1: the e t F that follows the SMP dividend aristocrats.

259
00:15:07,440 --> 00:15:10,480
Speaker 1: These are companies that have increased their cash payoffs to

260
00:15:10,640 --> 00:15:14,480
Speaker 1: investors in each of the last twenty five years UM.

261
00:15:15,120 --> 00:15:18,040
Speaker 1: They have also shown a pretty low beta versus the

262
00:15:18,120 --> 00:15:20,920
Speaker 1: overall market. And I guess the old saying goes, if

263
00:15:20,960 --> 00:15:23,280
Speaker 1: you lose less on the way down, you have less

264
00:15:23,320 --> 00:15:26,840
Speaker 1: to make up when you recover overall. Right now, the

265
00:15:26,960 --> 00:15:29,960
Speaker 1: dividend yield on the SMP five hundred succeeding that on

266
00:15:30,080 --> 00:15:33,160
Speaker 1: a ten year note. And since nineteen fifty three, whenever

267
00:15:33,280 --> 00:15:35,760
Speaker 1: we've had that kind of a setup, UH stocks have

268
00:15:35,880 --> 00:15:40,600
Speaker 1: done exceptionally well, up almost twenty year on year and

269
00:15:40,760 --> 00:15:43,080
Speaker 1: also gaining more than eighty percent of the time. So

270
00:15:43,320 --> 00:15:46,280
Speaker 1: no guarantekay, but it still makes them attractive. When does

271
00:15:46,400 --> 00:15:51,560
Speaker 1: that party end or historically how does it end? That's

272
00:15:51,600 --> 00:15:55,840
Speaker 1: a huge question for everybody, absolutely, and I think that

273
00:15:56,240 --> 00:15:59,080
Speaker 1: as a result, you really don't want to be yielding

274
00:15:59,160 --> 00:16:02,480
Speaker 1: to tempta and to use a bad pun. Uh. Focus

275
00:16:02,560 --> 00:16:06,680
Speaker 1: on the fundamentals as well. Right now, the valuations for

276
00:16:06,800 --> 00:16:10,240
Speaker 1: the dividend aristocrats are at the slight premium to their

277
00:16:10,320 --> 00:16:14,160
Speaker 1: long term average. Right now, they're trading it about a

278
00:16:14,360 --> 00:16:18,640
Speaker 1: seven percent premium. Normally they traded a two percent premium

279
00:16:19,000 --> 00:16:22,280
Speaker 1: this going back over the past twenty so years. UM,

280
00:16:22,480 --> 00:16:24,920
Speaker 1: So I would say you have to be careful, UM,

281
00:16:25,400 --> 00:16:28,640
Speaker 1: don't just buy into something because it offers a nice yield,

282
00:16:28,680 --> 00:16:31,040
Speaker 1: to make sure that the growth prospects are also there.

283
00:16:32,440 --> 00:16:36,400
Speaker 1: Where do we find growth prospects these days? Well? The

284
00:16:36,680 --> 00:16:41,360
Speaker 1: uh we just mentioned the consumer discretionary category expected to

285
00:16:41,440 --> 00:16:45,320
Speaker 1: post double digit earnings increases for each of the four

286
00:16:45,440 --> 00:16:50,080
Speaker 1: quarters of this year. Um, we're expecting healthcare to also

287
00:16:50,240 --> 00:16:54,560
Speaker 1: post mid to higher single digit gains, averaging close to

288
00:16:54,680 --> 00:16:57,920
Speaker 1: six percent for all of two thousand and sixteen. UM.

289
00:16:58,360 --> 00:17:01,200
Speaker 1: And really those are the only who that are consistently

290
00:17:01,280 --> 00:17:05,240
Speaker 1: expected to show earnings increases for the year. Now, is

291
00:17:05,320 --> 00:17:10,399
Speaker 1: it fair to look at sectors? I mean, should we

292
00:17:10,520 --> 00:17:13,239
Speaker 1: be looking at when you say those are the only two? Yeah, well,

293
00:17:13,240 --> 00:17:17,119
Speaker 1: those are sectors. But there's got to be uh some

294
00:17:17,600 --> 00:17:22,200
Speaker 1: companies that are doing things right within the downbeach sectors.

295
00:17:22,240 --> 00:17:26,320
Speaker 1: You were talking about the majors in in energy right right, Well,

296
00:17:26,320 --> 00:17:28,879
Speaker 1: you're bringing up another good point sort of similar to

297
00:17:29,000 --> 00:17:33,040
Speaker 1: what Tom was mentioning. The dividend aristocrats are twenty five

298
00:17:33,200 --> 00:17:37,720
Speaker 1: years of increasing cash payouts. You could take that one

299
00:17:37,800 --> 00:17:41,600
Speaker 1: step further to say, well, what about increasing earnings and

300
00:17:41,880 --> 00:17:45,800
Speaker 1: dividends over an extended period. Here we've got the SMP

301
00:17:46,040 --> 00:17:50,560
Speaker 1: quality ranks, which are letter grades an A, A plus

302
00:17:50,720 --> 00:17:55,680
Speaker 1: showing consistency of raising earnings over the last uh ten years.

303
00:17:56,280 --> 00:17:59,280
Speaker 1: And taking a look at stocks in the energy category,

304
00:18:00,240 --> 00:18:03,840
Speaker 1: what you find are actually are none that fit that

305
00:18:04,000 --> 00:18:07,960
Speaker 1: category right now? Uh So you really have to look

306
00:18:08,040 --> 00:18:12,880
Speaker 1: to other areas, typically in the consumer staples category. Um

307
00:18:13,400 --> 00:18:17,800
Speaker 1: like Walt Disney is one. Also the CBS healthcare would

308
00:18:17,800 --> 00:18:20,240
Speaker 1: be another one. So a lot of your a little

309
00:18:20,320 --> 00:18:24,800
Speaker 1: more boring names, um taking that International Business Machines is

310
00:18:24,880 --> 00:18:27,680
Speaker 1: one that has an A plus ranking right now. See

311
00:18:27,760 --> 00:18:29,720
Speaker 1: that's why we love Sam Stole. Did you see what

312
00:18:29,800 --> 00:18:33,520
Speaker 1: he just did said international business machines like an adult,

313
00:18:34,359 --> 00:18:36,720
Speaker 1: I mean, very few people when you look at the

314
00:18:36,800 --> 00:18:40,720
Speaker 1: Walt Disney Company or the Ford Motor Company with a

315
00:18:40,840 --> 00:18:43,840
Speaker 1: low nominal GDP sam Stova, We don't want to be

316
00:18:43,960 --> 00:18:47,240
Speaker 1: yield hogs or dividend pigs. What's a good dividend growth

317
00:18:47,400 --> 00:18:49,600
Speaker 1: right now? To me, it's not even double digit anymore.

318
00:18:49,880 --> 00:18:53,200
Speaker 1: You got to go to high single digit? Oh, absolutely

319
00:18:53,480 --> 00:18:55,280
Speaker 1: right now. I mean with a dividend yield on the

320
00:18:55,359 --> 00:18:58,800
Speaker 1: five dred being about two point two p m. When

321
00:18:58,840 --> 00:19:01,520
Speaker 1: you're looking at being give it end aristocrats n O

322
00:19:01,720 --> 00:19:05,200
Speaker 1: b L or the older one s D Y the

323
00:19:05,320 --> 00:19:08,159
Speaker 1: high yield aristocrats, you know you're dealing with maybe a

324
00:19:08,240 --> 00:19:11,560
Speaker 1: two and a half percent UM yield for the companies

325
00:19:11,720 --> 00:19:14,680
Speaker 1: on average. So I would be saying that you want

326
00:19:14,720 --> 00:19:16,880
Speaker 1: to look for something two and a half to three.

327
00:19:17,960 --> 00:19:20,720
Speaker 1: Make sure you're not over paying um, make sure that

328
00:19:20,800 --> 00:19:23,480
Speaker 1: the valuations are attractive, but also that a company is

329
00:19:23,560 --> 00:19:26,359
Speaker 1: not borrowing in order to make that give it end.

330
00:19:26,520 --> 00:19:29,720
Speaker 1: So look for a payout ratio and cash flow of

331
00:19:30,160 --> 00:19:33,960
Speaker 1: maybe sev or less. Where's where are you on healthcare?

332
00:19:34,000 --> 00:19:36,960
Speaker 1: And had such a run off the Affordable Care Act?

333
00:19:37,080 --> 00:19:40,600
Speaker 1: And again, folks, there's stocks there that they're not in

334
00:19:40,680 --> 00:19:43,160
Speaker 1: a bear market, they're not in a slit your risk

335
00:19:43,280 --> 00:19:46,920
Speaker 1: weekend dooming gloom. I'm not going to mention the names.

336
00:19:46,960 --> 00:19:49,800
Speaker 1: I don't think it's appropriate, but some of these quality

337
00:19:49,840 --> 00:19:54,000
Speaker 1: healthcare stocks simply break out the new highs. Well, we're

338
00:19:54,040 --> 00:19:58,000
Speaker 1: still favorable on the health care group UM, primarily because

339
00:19:59,240 --> 00:20:03,440
Speaker 1: we had last year the greatest number of new entities

340
00:20:03,520 --> 00:20:07,440
Speaker 1: approved by the FDA in the past twenty years. So

341
00:20:07,680 --> 00:20:11,480
Speaker 1: you have the potential for new blockbuster drugs that will

342
00:20:11,520 --> 00:20:14,479
Speaker 1: be coming on board over the next couple of years. UH.

343
00:20:14,680 --> 00:20:18,520
Speaker 1: You still have the Affordable Care Act that is causing

344
00:20:18,920 --> 00:20:24,200
Speaker 1: twelve point seven million people to be enrolled in health insurance. Yes,

345
00:20:24,320 --> 00:20:27,800
Speaker 1: drug companies have taken it upon themselves to reduce UH

346
00:20:27,960 --> 00:20:31,800
Speaker 1: some of the price increases that were initially UH in

347
00:20:31,960 --> 00:20:35,359
Speaker 1: place to be UH to be seen, but because of

348
00:20:35,440 --> 00:20:39,840
Speaker 1: the political UM framework backdrop right now, it's not certainly

349
00:20:39,960 --> 00:20:43,040
Speaker 1: a good time in which to be raising prices. So

350
00:20:43,520 --> 00:20:46,480
Speaker 1: I still think it's a good area. But you're you're

351
00:20:46,520 --> 00:20:49,879
Speaker 1: looking at only about three percent earnings growthiness quarter and

352
00:20:49,960 --> 00:20:52,600
Speaker 1: then maybe six percent for the full year, much better

353
00:20:52,640 --> 00:20:56,680
Speaker 1: than the market, and also therefore trading at lower valuations.

354
00:20:56,920 --> 00:21:00,880
Speaker 1: SAM SMP Capital Markets thank just so much. This want

355
00:21:00,920 --> 00:21:07,760
Speaker 1: to greatly appreciate that. Michael let's summarize the Jack Lieu headlines. Um, again,

356
00:21:07,840 --> 00:21:10,720
Speaker 1: this is a new essay out of Foreign Affairs. Is

357
00:21:10,760 --> 00:21:14,399
Speaker 1: that correct? Just out this morning? Um, Jack lou the

358
00:21:14,520 --> 00:21:18,640
Speaker 1: Treasury Secretary, writing a very lengthy defense of the Obama

359
00:21:18,720 --> 00:21:22,880
Speaker 1: administration's efforts to rebuild the US economy and to keep

360
00:21:23,160 --> 00:21:27,960
Speaker 1: the global economy propped up. Talks in some specifics about currencies,

361
00:21:28,040 --> 00:21:32,560
Speaker 1: in particular that it is important countries don't manage their

362
00:21:32,600 --> 00:21:36,320
Speaker 1: currencies for competitive advantage. Talks about the need to pass

363
00:21:36,480 --> 00:21:40,760
Speaker 1: the trade the Specific Partnership, and the Export Import Bank

364
00:21:40,800 --> 00:21:43,120
Speaker 1: as well, which is expected. I mean, there's no surprise

365
00:21:44,240 --> 00:21:48,200
Speaker 1: with that. But Luke calls for sustaining US leadership and

366
00:21:48,280 --> 00:21:50,760
Speaker 1: global economy. It's just interesting it comes out the same

367
00:21:50,840 --> 00:21:53,959
Speaker 1: day he's meeting the President is meeting with Janet Yellen. Uh.

368
00:21:54,080 --> 00:21:56,800
Speaker 1: It seems to be a concerted White House effort to

369
00:21:56,840 --> 00:21:59,560
Speaker 1: push back against the idea that the US economy is

370
00:21:59,640 --> 00:22:01,960
Speaker 1: in big trouble. Yeah, well, there it is. We're trying

371
00:22:02,000 --> 00:22:05,160
Speaker 1: to give your perspective through the weekend. Lots of I thought,

372
00:22:05,240 --> 00:22:09,880
Speaker 1: you know, an inflammatory meter. It was somewhat gloomy. OMG,

373
00:22:10,040 --> 00:22:13,320
Speaker 1: the world's gonna end this weekend, not not out to excesses,

374
00:22:13,400 --> 00:22:15,800
Speaker 1: but nevertheless it was there. We're trying to give you

375
00:22:15,880 --> 00:22:20,520
Speaker 1: a reset for Monday morning, with relatively grizzled experts with

376
00:22:20,640 --> 00:22:25,639
Speaker 1: their cautions and their enthusiasms about the different markets. Another

377
00:22:25,760 --> 00:22:27,960
Speaker 1: hour of Bloomberg's surveillance. Good morning,