1 00:00:02,279 --> 00:00:05,680 Speaker 1: Global business news twenty four hours a day at Bloomberg 2 00:00:05,720 --> 00:00:08,840 Speaker 1: dot Com, the radio plus mobile, and on your radio. 3 00:00:09,080 --> 00:00:13,039 Speaker 1: This is a Bloomberg Business Flash. Good morning, I'm John Tucker. 4 00:00:13,080 --> 00:00:14,840 Speaker 1: Look at some of the stocks on the movie and 5 00:00:14,880 --> 00:00:18,080 Speaker 1: they're really going general financial climbing the most of two 6 00:00:18,160 --> 00:00:21,360 Speaker 1: thousand ten the first quarter profit beating analyst estimates. The 7 00:00:21,480 --> 00:00:25,360 Speaker 1: chief insinctive officer to mcentry working to free up capital, 8 00:00:25,440 --> 00:00:29,120 Speaker 1: meet debt payments and ensure a surgeony twenty one percent. 9 00:00:29,520 --> 00:00:31,520 Speaker 1: Also had the earnings this morning from some of the 10 00:00:31,560 --> 00:00:35,800 Speaker 1: oil majors. And just taking a look right now Exxon 11 00:00:35,880 --> 00:00:39,519 Speaker 1: Mobile shares, they are up one and a half percent now. 12 00:00:39,560 --> 00:00:43,040 Speaker 1: Exxon posted its weeks week as quarterly profit in more 13 00:00:43,080 --> 00:00:46,559 Speaker 1: than a decade, but the per share result was fifteen 14 00:00:46,600 --> 00:00:51,240 Speaker 1: cents above the average estimate of analysts in a Bloomberg 15 00:00:51,440 --> 00:00:56,080 Speaker 1: survey Chris Certnant income falling to forty three cents a share, 16 00:00:56,640 --> 00:01:00,640 Speaker 1: and UH worker pay in the US forecast of first quarter. 17 00:01:01,760 --> 00:01:05,399 Speaker 1: Actually it rose as forecast on the first quarter. Six 18 00:01:05,480 --> 00:01:08,440 Speaker 1: tenths of overcent advanced in the deployment cost index for 19 00:01:08,560 --> 00:01:11,360 Speaker 1: the prior three months, followed a half a percent increase 20 00:01:11,520 --> 00:01:14,240 Speaker 1: in the fourth quarter that was smaller than previously estimated. 21 00:01:14,840 --> 00:01:18,640 Speaker 1: Years of employment gains have only led to gradual pay increases. 22 00:01:19,120 --> 00:01:21,360 Speaker 1: And as we check the market for you every fifteen 23 00:01:21,360 --> 00:01:25,360 Speaker 1: minutes right here during the trading day on Bloomberg, we 24 00:01:25,720 --> 00:01:29,480 Speaker 1: find the Dudgeon's industrial laverage right now down seventy points 25 00:01:29,480 --> 00:01:32,600 Speaker 1: at seventeen thousand, seven hundred and s and P five 26 00:01:32,680 --> 00:01:36,120 Speaker 1: hundred down seven at two thousand and sixty eight. Nows 27 00:01:36,160 --> 00:01:39,640 Speaker 1: DE Composite Index hit sixteen points lower. That's down three 28 00:01:39,680 --> 00:01:44,000 Speaker 1: tenths of a percent at forty seven eight. Now, that 29 00:01:44,120 --> 00:01:47,720 Speaker 1: is Bloomberg Business Flash, David, back to you, John, Thank 30 00:01:47,720 --> 00:01:49,760 Speaker 1: you so much. This is Bloomberg Surveillance, brought to you 31 00:01:49,840 --> 00:01:53,320 Speaker 1: by Interactive Brokers Investors marketplace and online service where traders, 32 00:01:53,360 --> 00:01:56,880 Speaker 1: investors and institutions can meet and collaborate, enhance your trading 33 00:01:56,880 --> 00:01:59,240 Speaker 1: experience or expand your business. Does it, ib k R, 34 00:01:59,360 --> 00:02:02,760 Speaker 1: dot com, slash services and some news this morning out 35 00:02:02,800 --> 00:02:06,640 Speaker 1: of Quebec, of course, the home province of Valiant Pharmaceuticals 36 00:02:06,680 --> 00:02:10,120 Speaker 1: here nominating new board members as the drugmaker overhauls its 37 00:02:10,240 --> 00:02:15,400 Speaker 1: strategy and governance. Joe Papa, the new CEO, goes and 38 00:02:15,440 --> 00:02:18,120 Speaker 1: takes up that job on Monday morning three additions to 39 00:02:18,160 --> 00:02:21,080 Speaker 1: the board. Three additional independent directors here are Jared's Carabelli's 40 00:02:21,160 --> 00:02:23,920 Speaker 1: Russell Robertson and Amy Welshler, according to a statement that 41 00:02:23,960 --> 00:02:27,560 Speaker 1: the company just released a note here also, neither outgoing 42 00:02:27,639 --> 00:02:30,959 Speaker 1: chief executive Officer Mike Pearson nor former chief financial officer 43 00:02:30,960 --> 00:02:35,519 Speaker 1: Howard Schiller will stand for re election to the board. Well. 44 00:02:35,520 --> 00:02:39,440 Speaker 1: This weekend in Omaha, Nebraska, Berkshire Hathaway has its annual meeting. 45 00:02:39,840 --> 00:02:44,000 Speaker 1: It is known, of course as a woodstock for capitalist. 46 00:02:44,080 --> 00:02:47,800 Speaker 1: David cass is a professor at the University of Maryland. 47 00:02:48,400 --> 00:02:52,000 Speaker 1: He covers Berkshire Hathaway and Warren Buffetts like no other 48 00:02:52,040 --> 00:02:54,520 Speaker 1: in the academy, and he joins us how he's managed 49 00:02:54,520 --> 00:02:56,919 Speaker 1: to get a motel room there in Omaha. Very nice 50 00:02:56,919 --> 00:02:59,440 Speaker 1: to talk to you, Professor cass. Oh, thank you very 51 00:02:59,520 --> 00:03:01,720 Speaker 1: much for how me talk to us a bit about 52 00:03:01,720 --> 00:03:04,440 Speaker 1: what you expect to hear this week and of course 53 00:03:04,480 --> 00:03:07,080 Speaker 1: the highlight, the main point of the of the event, 54 00:03:07,280 --> 00:03:10,000 Speaker 1: the weekend long event is this five hour meeting on Saturday. 55 00:03:10,240 --> 00:03:14,200 Speaker 1: What do you expect to be discussed well at the meeting, Uh, 56 00:03:14,400 --> 00:03:18,560 Speaker 1: they'll be questions asked by shareholders throughout the day, and 57 00:03:18,680 --> 00:03:22,160 Speaker 1: it'll be UH. Some questions asked directed by shareholders, some 58 00:03:22,320 --> 00:03:26,240 Speaker 1: rooted through three reporters up on the stage, and some 59 00:03:26,320 --> 00:03:30,079 Speaker 1: asked by insurance industry analysts. But among the topics I 60 00:03:30,120 --> 00:03:34,280 Speaker 1: would expect h to be discussed will be questions from 61 00:03:34,280 --> 00:03:37,240 Speaker 1: shareholders who may be concerned about the economy. What s 62 00:03:37,280 --> 00:03:41,200 Speaker 1: Warren Buffett's view of the economy? Uh, interest rates being 63 00:03:41,240 --> 00:03:44,720 Speaker 1: so low? What's the outlook for interest rates? Possibly? What 64 00:03:44,960 --> 00:03:50,920 Speaker 1: impact the election might have on Berkshire halfway and the economy? Um? 65 00:03:50,960 --> 00:03:54,160 Speaker 1: And specifically there may be questions, as they usually are, 66 00:03:54,760 --> 00:03:59,560 Speaker 1: on succession plan at Berkshire Larren Buffets eighty five years old, 67 00:04:00,440 --> 00:04:02,880 Speaker 1: when he is no longer there, who is likely to 68 00:04:03,080 --> 00:04:07,160 Speaker 1: succeed him? That question comes up every year, certainly in 69 00:04:07,200 --> 00:04:11,760 Speaker 1: recent years that's very likely. And other shareholders generally will 70 00:04:11,800 --> 00:04:16,360 Speaker 1: ask questions seeking personal advice about your education or their career. 71 00:04:17,279 --> 00:04:20,440 Speaker 1: But the questions are full gamut and run a full 72 00:04:20,480 --> 00:04:24,720 Speaker 1: gamut of topics, both domestic and international issues. Let me 73 00:04:24,760 --> 00:04:28,480 Speaker 1: put those questions about succession to you. What's your instinct here? 74 00:04:28,520 --> 00:04:29,680 Speaker 1: What do you think is going to happen to Do 75 00:04:29,760 --> 00:04:32,400 Speaker 1: you expect that we'll hear some names this weekend. I 76 00:04:32,440 --> 00:04:35,040 Speaker 1: know that he has elevated some folks within the Berkshire 77 00:04:35,200 --> 00:04:38,839 Speaker 1: organization to to some higher executive positions. Yes, well, the 78 00:04:38,880 --> 00:04:41,520 Speaker 1: two names. First of all, answer your question. No, I 79 00:04:41,560 --> 00:04:44,839 Speaker 1: don't expect any news to come out, any names to 80 00:04:44,880 --> 00:04:50,360 Speaker 1: be named. But the speculation has been that the two 81 00:04:50,440 --> 00:04:54,520 Speaker 1: leading candidates are A. G. Jane, who runs the Berkshire 82 00:04:54,560 --> 00:04:59,360 Speaker 1: Halfway reinsurance business UH and Greg Abele, who runs the 83 00:04:59,440 --> 00:05:03,920 Speaker 1: Berkshire Hathaway Energy business. A few years ago, Warren Buffett 84 00:05:04,520 --> 00:05:07,480 Speaker 1: did say that his first choice was A G. Jane, 85 00:05:08,000 --> 00:05:11,440 Speaker 1: but A G did not want the job. UH. A G. 86 00:05:11,640 --> 00:05:15,440 Speaker 1: It is also sixty four years old, uh spring taken 87 00:05:15,480 --> 00:05:18,560 Speaker 1: compared to Mr Buffett and Mr Munger, Right, that's right, 88 00:05:18,640 --> 00:05:23,080 Speaker 1: they're just He's just a youngster. Charlie Munger is two, 89 00:05:23,600 --> 00:05:27,440 Speaker 1: Warren Buffet eighty five and A G. Chane at sixty four. 90 00:05:27,520 --> 00:05:30,839 Speaker 1: Greg abel is around fifty four something on that range. 91 00:05:31,279 --> 00:05:34,000 Speaker 1: So if Mr Buffett would like to choose someone who 92 00:05:34,120 --> 00:05:37,720 Speaker 1: might be there for twenty years as the CEO, being 93 00:05:37,800 --> 00:05:43,520 Speaker 1: younger UH among the candidates would certainly appear to be 94 00:05:43,560 --> 00:05:46,719 Speaker 1: an advantage. But at the moment I think his first 95 00:05:46,800 --> 00:05:50,239 Speaker 1: choice Ato Stoopy A G. Chane, but a very close second, 96 00:05:50,320 --> 00:05:54,120 Speaker 1: greg Abel. You mentioned, uh, the insurance business, you mentioned 97 00:05:54,160 --> 00:05:57,000 Speaker 1: the energy business. This is a company that's gotten more 98 00:05:57,040 --> 00:05:59,799 Speaker 1: and more into manufacturing. Of course there was the acquisition 99 00:05:59,839 --> 00:06:02,680 Speaker 1: for Vision Cast Parts and and Dura Cell. Is that 100 00:06:02,680 --> 00:06:06,719 Speaker 1: where this company has been moving It certainly has. In fact, 101 00:06:06,800 --> 00:06:10,440 Speaker 1: the Warren Buffett until recent years said that he would 102 00:06:10,440 --> 00:06:14,440 Speaker 1: like to stay away from capital intensive businesses, but now 103 00:06:14,480 --> 00:06:17,680 Speaker 1: he's going in the opposite direction. I think he he 104 00:06:17,720 --> 00:06:22,359 Speaker 1: always looks for companies with adorable competitive advantage or in 105 00:06:22,440 --> 00:06:24,719 Speaker 1: his words, a company was a moat around it to 106 00:06:24,800 --> 00:06:28,640 Speaker 1: protect it from competition. And precision cast parts, which he 107 00:06:28,760 --> 00:06:32,000 Speaker 1: just closed on in January. It's about thirty two billion 108 00:06:32,040 --> 00:06:35,960 Speaker 1: dollar acquisition of Burlington Northern Railroad a few years ago 109 00:06:36,000 --> 00:06:39,000 Speaker 1: in the same price range. Uh. He's certainly moving in 110 00:06:39,120 --> 00:06:42,800 Speaker 1: that direction and it's becoming a major part of Berkshire. 111 00:06:43,240 --> 00:06:45,479 Speaker 1: Our investor is comfortable with that. That's a that that 112 00:06:45,600 --> 00:06:47,320 Speaker 1: is a transition, as you say, is it's something that 113 00:06:47,360 --> 00:06:51,680 Speaker 1: Berkshire investors have have gone along with quietly. Yes. I 114 00:06:51,720 --> 00:06:57,680 Speaker 1: think Berkshire investors have confidence in Warren Buffett's judgment and 115 00:06:57,720 --> 00:07:01,200 Speaker 1: actions and actually to the stent, and he is moving 116 00:07:01,240 --> 00:07:04,960 Speaker 1: in this direction. It makes the company actually much more 117 00:07:05,040 --> 00:07:10,200 Speaker 1: durable UM and eases the transition when Warren Buffett is 118 00:07:10,240 --> 00:07:13,520 Speaker 1: no longer there. You have these companies that are self run. 119 00:07:14,120 --> 00:07:18,040 Speaker 1: When Warren Buffett acquires the company, he keeps management in place. 120 00:07:18,960 --> 00:07:24,480 Speaker 1: And the fact that now approximately of Berkshire's assets are 121 00:07:24,520 --> 00:07:30,239 Speaker 1: operating companies only, it's common stock portfolio. It's a complete 122 00:07:30,240 --> 00:07:34,040 Speaker 1: reversal from say twenty years ago. UH as certain amount 123 00:07:34,040 --> 00:07:38,400 Speaker 1: of stability to the business going forward. When Warren is 124 00:07:38,440 --> 00:07:42,200 Speaker 1: no longer there, they don't ask you about Warren Buffett's influence. 125 00:07:42,280 --> 00:07:44,680 Speaker 1: I was in Shanghai about a year ago and met 126 00:07:44,680 --> 00:07:47,320 Speaker 1: with some executives from the Folson Group, a big Chinese 127 00:07:47,320 --> 00:07:51,800 Speaker 1: conglomerate UH and and those executives were totally devoted to 128 00:07:51,880 --> 00:07:54,960 Speaker 1: the investment philosophy espoused by by Warren Buffett. I was 129 00:07:55,040 --> 00:07:57,960 Speaker 1: thumbing through the thumbing through looking at the Omaha Herald 130 00:07:58,000 --> 00:08:00,440 Speaker 1: online this morning, and there was an article about UH 131 00:08:00,480 --> 00:08:02,840 Speaker 1: the number of Chinese coming to the to the event 132 00:08:02,920 --> 00:08:06,000 Speaker 1: this weekend two to three thousand, it's estimated to be. 133 00:08:06,200 --> 00:08:10,840 Speaker 1: We're seeing his influence spread across the Pacific yes, we 134 00:08:10,960 --> 00:08:13,440 Speaker 1: certainly are a loot. It was a little slow to 135 00:08:13,480 --> 00:08:18,640 Speaker 1: get there, but it has arrived. Uh this weekend where 136 00:08:18,640 --> 00:08:23,880 Speaker 1: Berkshire is expecting about forty shareholders altogether, and we uh 137 00:08:24,000 --> 00:08:28,240 Speaker 1: Berkshire had that many shareholders a year ago. UH, with 138 00:08:28,440 --> 00:08:33,160 Speaker 1: three thousand coming from China, that would be large uh 139 00:08:33,200 --> 00:08:36,320 Speaker 1: and growing share In the recent years, more and more 140 00:08:36,400 --> 00:08:40,320 Speaker 1: shareholders from China and other countries in Asia have been 141 00:08:40,400 --> 00:08:44,400 Speaker 1: coming to the meeting, so there is more of an 142 00:08:44,400 --> 00:08:49,679 Speaker 1: international recognition and respect. Fore warn Buffett and Berkshire halfway. 143 00:08:50,280 --> 00:08:53,360 Speaker 1: Has the Oracle of Omaha gone any less oraculous? You 144 00:08:53,400 --> 00:08:54,880 Speaker 1: mentioned people here and I want to hear him talk 145 00:08:54,920 --> 00:08:58,480 Speaker 1: about the election, uh, talk about the economy. We hear 146 00:08:58,559 --> 00:09:02,079 Speaker 1: him talk more frequently now. He isn't as an accessible 147 00:09:02,080 --> 00:09:05,240 Speaker 1: as as as he was in the past. Uh. You know, 148 00:09:05,280 --> 00:09:08,079 Speaker 1: are are are we still traveling to Omaha to hear 149 00:09:08,120 --> 00:09:10,280 Speaker 1: from somebody that we you know, we we only hear 150 00:09:10,320 --> 00:09:14,840 Speaker 1: from rarely. Well, we hear a lot more from him 151 00:09:14,880 --> 00:09:18,960 Speaker 1: in Omaha, and he answers every question when he is 152 00:09:19,080 --> 00:09:25,800 Speaker 1: peering now more in the media on TV more frequently. Um, 153 00:09:25,840 --> 00:09:28,280 Speaker 1: but usually you know, it could be once in three months, 154 00:09:28,320 --> 00:09:31,400 Speaker 1: once in six months or a very brief interview in 155 00:09:31,480 --> 00:09:35,920 Speaker 1: a short period of time. But at the annual meeting UH, 156 00:09:35,960 --> 00:09:40,240 Speaker 1: this is essentially six hours of Q and A from shareholders. 157 00:09:40,480 --> 00:09:44,040 Speaker 1: There will be over sixty questions asked, and he generally 158 00:09:44,679 --> 00:09:49,120 Speaker 1: answers everyone. He doesn't rule out a question as in 159 00:09:49,160 --> 00:09:53,000 Speaker 1: general as being out of bounds. So a lot more 160 00:09:53,040 --> 00:09:58,240 Speaker 1: information is certainly derived by being at the annual meeting. 161 00:09:59,120 --> 00:10:04,000 Speaker 1: You're there in Omaha, I imagine you'll stroll through the 162 00:10:04,000 --> 00:10:06,160 Speaker 1: centry Link Center, maybe look at what's on offer there 163 00:10:06,160 --> 00:10:09,560 Speaker 1: at the Shareholders Shopping Day, I saw that Ces Candies 164 00:10:09,720 --> 00:10:12,920 Speaker 1: is selling Warren's favorite peanut brittle. What what are you 165 00:10:13,000 --> 00:10:14,800 Speaker 1: looking for? Is somebody who's been there and been there before? 166 00:10:14,840 --> 00:10:16,840 Speaker 1: What's exciting about this weekend to you? What do you 167 00:10:16,840 --> 00:10:20,040 Speaker 1: want the lookout for? Well? Today I was starting with 168 00:10:20,200 --> 00:10:24,319 Speaker 1: last year. The Shareholder Shopping Day was initiated on Friday, 169 00:10:24,360 --> 00:10:28,080 Speaker 1: the day before the meeting. The meetings tomorrow Saturday, and 170 00:10:28,559 --> 00:10:33,040 Speaker 1: the meeting UH. The shopping area alf the centry Link Center, 171 00:10:33,080 --> 00:10:35,640 Speaker 1: it will be open between noon and five pm today 172 00:10:35,760 --> 00:10:39,200 Speaker 1: in Omaha, and I'll be going there. I'm here with 173 00:10:39,320 --> 00:10:43,920 Speaker 1: some friends and I've also brought several students ten students 174 00:10:43,960 --> 00:10:46,040 Speaker 1: from the University of Maryland. They bring them to the 175 00:10:46,080 --> 00:10:51,080 Speaker 1: annual meeting every year from last seven eight years or so. UM. 176 00:10:51,120 --> 00:10:55,160 Speaker 1: But I UH personally go through the sitting Shibit area. 177 00:10:55,280 --> 00:10:59,880 Speaker 1: There are eighty plus Berkshire companies UH, such as Fru 178 00:11:00,040 --> 00:11:03,679 Speaker 1: the Loom, where some shareholder would like to buy some 179 00:11:03,800 --> 00:11:07,040 Speaker 1: discount underwear. There you go, There you go, David, thank 180 00:11:07,040 --> 00:11:09,120 Speaker 1: you very much as David Cass, Professor at the University 181 00:11:09,120 --> 00:11:11,240 Speaker 1: of Maryland, d A Berkshire Hathaway watcher. You're listening to 182 00:11:11,240 --> 00:11:13,439 Speaker 1: the Bloomberg Surveillance on Bloomberg Radio.