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Speaker 1: Broadcasting live to New York Kioomberg eleventh to Washington, d C,

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Speaker 1: Bloomber to Boston, Bloomberg twelve Winners to San Francisco, Bloomberg

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Speaker 1: nine to the country sees ExM Channel one ninety and

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Speaker 1: around the globe the Bloomberg Radio Plus Appen Bloomberg dot com.

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Speaker 1: This is bloomberk Surveillance. Good morning. I'm Karen Moscow along

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Speaker 1: with Tom Keenan Barry rid Holts. In the opening deal

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Speaker 1: brought to you, buy se I imagine your asset management

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Speaker 1: firms operational infrastructure as a competitive advantage. Let us see

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Speaker 1: I show you how at se i C dot com

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Speaker 1: slash Imagine stocks lower at the open. The S and

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Speaker 1: P five hundred down to tenths per cent or three

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Speaker 1: points to thirty three. Dow Jones Industrial Average down two

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Speaker 1: tenths per cent or forty two points to seventeen thousand,

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Speaker 1: four hundred ninety two. NAST Next down two tenths per

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Speaker 1: center ten points to forty seven fifty six ten. Your

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Speaker 1: treasuries up eight thirty seconds. The yield one point eight

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Speaker 1: five percent yield on the two year point eight five percent. No,

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Speaker 1: I'm ex screwed. Oil down three point three percent or

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Speaker 1: a dollar thirty to thirty eight oh nine A barrel

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Speaker 1: call my schoold is up six ten percent or seven

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Speaker 1: dollars ninety cents. The announced the euro a dollar twelve

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Speaker 1: oh seven, the and one thirteen point four seven. Tom

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Speaker 1: and Barry Karen, thanks so much. Oil plunging is the

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Speaker 1: right word. Eight down, thirty eight ten. We're gonna get

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Speaker 1: a thirty seven print here in a bit on West

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Speaker 1: Texas Intermediate, there are some headlines. I'm not gonna say

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Speaker 1: it's related to price, but nevertheless, recently we've seen some

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Speaker 1: headlines involved involving the kuwaitis in the Saudis preparing the

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Speaker 1: tough g oil field for restart. I'm not sure that's

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Speaker 1: the headline moving the market, but that is the headline.

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Speaker 1: Lines up on the Bloomberg again Oil, I'm doing it

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Speaker 1: in about face. Um joining us right now is someone

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Speaker 1: who's enjoyed being right being wrong, which means he's qualified

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Speaker 1: to be on surveillance. President of cbre's part. There's real

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Speaker 1: money contributor, always controversial, always interesting, informative. Douglas cast Doug,

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Speaker 1: good morning, good morning guys. All right, but this is

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Speaker 1: some pleasure. Yeah, but very renalts you can't do better

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Speaker 1: than that. I know I have to come into Bloomberg

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Speaker 1: to get done. Very stidy wouldn't come on Doug unless

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Speaker 1: we talked about your girlfriend, Tina, and Tina is really something.

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Speaker 1: She's a piece of work. There is no alternative, is Tina.

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Speaker 1: I love your idea on that, the idea of a certitude.

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Speaker 1: There is no alternative, I think t I n a.

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Speaker 1: There is no alternative is b dot s And I

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Speaker 1: think you know, I think asset is a legitimate U

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Speaker 1: and cash is a legitimate asset class. It insulates you

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Speaker 1: from the clients in the capital the market's both bonds

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Speaker 1: and stocks um and I think it's the concept of

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Speaker 1: Tina advocated by my friend Jason Trenord, to me, is

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Speaker 1: a very tale that told by strategists who failed to

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Speaker 1: recognize that cash is an alternative asset option. So I'm

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Speaker 1: gonna push back on Dug because I think both Jason

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Speaker 1: and Doug are talking about two different types of investors

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Speaker 1: with two different timelines. What Tom and I were talking

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Speaker 1: about earlier was the individual investor who's got years till

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Speaker 1: retirement and has shown an ineptitude for timing the market

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Speaker 1: well they tend to buy things at the wrong time.

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Speaker 1: They tend to get scared out of the market at

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Speaker 1: the wrong time. Unlike professionals like Doug who have a

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Speaker 1: methodology and have a discipline that allows them to say, hey,

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Speaker 1: I'm wrong, I have to reverse course, individuals don't really

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Speaker 1: seem to do that, do they, Dug They don't. But

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Speaker 1: like the expression, time heals all. I think the notion

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Speaker 1: of an investment outlook beyond three or four years, to

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Speaker 1: me is more barry like a religion or a philosophy

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Speaker 1: than a forecast. So I tend to be excuse the expression,

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Speaker 1: a bit more practical and uh and less worldly, so

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Speaker 1: to speak than you. Yeah, well, I like to combine.

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Speaker 1: I like to combine um, you know, in a normalized

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Speaker 1: environment where there are you know you talked about in

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Speaker 1: a previous segment, Tom Um that Barry Um said that

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Speaker 1: he felt the despondency on the part of the retail

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Speaker 1: investor is as signpost to him that there's a great

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Speaker 1: deal of barishness and opportunity in the equity market. But

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Speaker 1: the other side of the token is that the large

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Speaker 1: four years of outflows from UM equity funds, domestic equity

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Speaker 1: funds has been transferred, and the dominant investor is no

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Speaker 1: longer the retail investor. The dominant investor are the quants

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Speaker 1: and their machines and algorithms. And these guys are agnostic

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Speaker 1: barry to private market value, to balance sheets, and to

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Speaker 1: income statements. So they carry on in the same manner

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Speaker 1: the retail investor and speculator individual investor and speculator carried

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Speaker 1: on in the late nineteen nineties Cast series Partners Real

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Speaker 1: Money contributor Doug, Well, if I look at you with

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Speaker 1: very cautious view in the market, you've reaffirmed that recently.

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Speaker 1: If I look at you are saying cash as an

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Speaker 1: asset class. What do you need to see to become

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Speaker 1: enthused over equities? Well, I need I need to see

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Speaker 1: positive responses to the three questions. But I asked myself

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Speaker 1: every morning, so I get up at four thirty. I

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Speaker 1: need the New York Post Sports section. I I smile

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Speaker 1: when I see um the Yankees dominating the Red Sox,

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Speaker 1: and I have a little smile when the Dodgers do well.

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Speaker 1: And I asked myself three questions. If I can get

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Speaker 1: a positive answer to those In response to your question,

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Speaker 1: if I get a positive response to these three questions,

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Speaker 1: which I cannot today, I become more optimistic. And my

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Speaker 1: three questions are very simple. One, in the paperless and

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Speaker 1: cloudy world, our investors and citizens alike as safe as

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Speaker 1: the markets? Assume we are too? In a flat, uh

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Speaker 1: interconnected world, is it even possible for the United States

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Speaker 1: to be in a oasis of prosperity and a driver

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Speaker 1: or engine of global economic growth? And finally, three, with

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Speaker 1: geopolitical coordination of the G eight at an all time low,

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Speaker 1: if the wheels do come off, how slow and the

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Speaker 1: net the reaction be. So I don't find the answers

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Speaker 1: to any of these questions as um as particularly salutary

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Speaker 1: for the stock market. So so when we're looking at those,

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Speaker 1: let's let's take each of those in in order. So

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Speaker 1: in a cloudy and paperless world, what was the rest

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Speaker 1: of that? That first question, I don't remember I said.

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Speaker 1: I think I said, our citizens and investors alike as

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Speaker 1: safe as the market? Okay. So so that that's a

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Speaker 1: fascinating question because it requires us as investors to substitute

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Speaker 1: our own judgment for the market's perspective, and we know

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Speaker 1: most of the time the market is right it's only

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Speaker 1: at the extremes where where the market goes off the rails,

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Speaker 1: either to the upside or the extreme downside. Well, i'll

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Speaker 1: tell you something there. Since August two thousand fifteen, we've

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Speaker 1: had four ten percent draw downs. That's a lot of drawdowns.

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Speaker 1: Um So, I think we're in a substantially more hostile

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Speaker 1: geopolitically speaking, looney tunes from a political standpoint, and as

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Speaker 1: you mentioned, as I mentioned earlier, subpart economic um uh

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Speaker 1: global growth trajectory. So so I think that's a lot

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Speaker 1: more volatilely ahead. As they said, we have looney tunes

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Speaker 1: and politics, but you have to remember on from Florida,

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Speaker 1: and that's the base of lunatics because that's where Donald Duck,

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Speaker 1: Mickey Mouse, and Goofy live. Well, let's come back, Doug

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Speaker 1: cascar this. We'll talk about the equity markets here, a

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Speaker 1: lot to talk about and all of that within the

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Speaker 1: churning of the last year. The SMP about negative one

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Speaker 1: point for the last twelve months to down negative seventy

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Speaker 1: right now, the vix point five three points fifteen point

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Speaker 1: seven seven, still below the three decade average, A weight

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Speaker 1: to the market a little bit risk off here again,

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Speaker 1: Chair yellin speaking uh at the Economic Club of New York.

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Speaker 1: It of Neon Bloomberg Radio. We'll cover that in its entirety.

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Speaker 1: Um so, I think that will be most interesting as well.

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Speaker 1: Oil Donna dollar eleven wow eleven per barrel. This our

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Speaker 1: of surveillance, bunch of my Mazda white planes. Visit Mazda

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Speaker 1: white Planes dot com with our news. Here's Michael Barr,

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Speaker 1: Tom very thank you, very much. A man who hijack

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Speaker 1: and Egyptian airplane has been arrested. The man who claimed

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Speaker 1: to have an explosives belt forced Egypt Air to land

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Speaker 1: in Cyprus. Egypt Air flight one eight one was under

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Speaker 1: route from Alexandria to Cairo with fifty five passengers on

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Speaker 1: board when the hijacking incident began. Aviation consultant Steve Gannard

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Speaker 1: says this is another setback for Egypt's airline industry. Well,

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Speaker 1: you remember the recent downing of the Chussian airliner in

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Speaker 1: the Sinai points to how weak security actually is in Egypt,

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Speaker 1: and so that certainly isn't surprising that a domestic flight

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Speaker 1: where the security was probably quite poor allowed somebody to

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Speaker 1: get on board with either a weapon or a bomb.

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Speaker 1: A Summit on Nuclear Security starting today, is bringing world

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Speaker 1: leaders to Washington, including those from China, Japan, and South Korea.

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Speaker 1: The goal of the nuclear summit is to keep nuclear

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Speaker 1: material out of terrorrist hands. A snowstorm forecast for I

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Speaker 1: own my Wyoming could be bad news for US cattle herds.

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Speaker 1: The National Weather Service says the snow could make it

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Speaker 1: difficult for farmers because newborn calves are vulnerable to the

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Speaker 1: cold and deep snow. Global News twenty four hours a day,

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Speaker 1: powered by our twenty four hundred journalists more than a

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Speaker 1: hundred fifty news bureaus from around the world. Michael bar

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Speaker 1: Tom Bay, Michael, I think it's so much to turish

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Speaker 1: and negative one seventeen thousand, four thirty six SMP down

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Speaker 1: eight points of VIX fifteen when eight three three three

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Speaker 1: very where haltson Tom Keane with this Douglas cast of

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Speaker 1: sea breeze stay with its Bloomberg surveillance. I'm forty how

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Speaker 1: Wall Street still had more of Bloomberg surveillance with Tom

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Speaker 1: Keane and Barry Redholts. Global Business News twenty four hours

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Speaker 1: a day at Bloomberg dot com, the Radio Plus mobile app,

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Speaker 1: and on your radio. This is a Bloomberg Business Flash

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Speaker 1: and I'm Karen Moscow. The updates brought to you by

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Speaker 1: American Arbitration Association, International Trade or Business Dispute Resolve Faster

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Speaker 1: with the International Center for a Dispute Resolution, the leader

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Speaker 1: in Alternative dispute resolution around the world. I see d

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Speaker 1: r dot org. A fourth day of declines in the

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Speaker 1: price of crewe to sending U stocks lower with commodities

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Speaker 1: prices and emerging market currencies, while treasuries advanced as investors

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Speaker 1: await a speech from Federal Reserve Chair Janet Yellen for

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Speaker 1: clues on the path of interest rates. Who checked the

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Speaker 1: markets every fifteen minutes throughout the trading day on Bloomberg

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Speaker 1: SNP five down three tenths per cent or six points

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Speaker 1: to twenties thirty down. Jones Industrial Average down half per

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Speaker 1: cent or eighty one points to seventeen thousand, four hundred

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Speaker 1: fifty three. The Nastacks down three ten percent or twelve

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Speaker 1: points to forty seven fifty four. Ten year Treasury up

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Speaker 1: nine thirty seconds, the yield one point eight five percent

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Speaker 1: yield on the two year point eight five percent. NIMEX

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Speaker 1: screwed oil down three and a half percent or a

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Speaker 1: dollar thirty five to thirty eight oh three of barrel

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Speaker 1: comex schold is up four tens per cent or four

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Speaker 1: dollars forty cents to twelve twenty six twenty announced and

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Speaker 1: the euro a dollar eleven ninety nine the end one

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Speaker 1: thirteen point four two. Home values in twenty US cities

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Speaker 1: kept climbing. In January, the S and P K Shiller

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Speaker 1: Index of property values increased five point seven percent from

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Speaker 1: January twenty fifteen, following a five point six percent gain

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Speaker 1: in the year ending in December. Federal Reserve Bank of

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Speaker 1: San Francisco President John Williams said the U S economy

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Speaker 1: appears to be weathering cooler global growth, and he repeated

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Speaker 1: at the Central Bank will raise interest rates at a

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Speaker 1: gradual pace, and that's a Bloomberg business flash. Tom and

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Speaker 1: Berry Earn thanks so much with us. Doug Kiss, President

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Speaker 1: Series Partners, Real Money contributor UH is well, Doug, if

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Speaker 1: you're cautious on the market, and I get the idea

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Speaker 1: of comfort in cash, what are you short here? What's

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Speaker 1: the dumbest thing out there that sets up for a

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Speaker 1: perfect Southern move? UM, I would say that the only

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Speaker 1: certainty in this market, Tom, is the lack of certainty.

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Speaker 1: But the sectors that I like on the short side,

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Speaker 1: UM would be the life insurance sector, where the reinvestment

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Speaker 1: challenges are profound in a lower for longer interest rate environment. Uh. Secondly,

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Speaker 1: the media industry is exposed to court cutting. It's a

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Speaker 1: real theme. It's a secular change in the business model

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Speaker 1: of the company is exposed or companies like Comcast and Disney.

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Speaker 1: Can I just very briefly respond one more time, because

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Speaker 1: it's an addendum to Barry's question, because it's really important

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Speaker 1: the whole issue risk profile and time frames. Barry Um,

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Speaker 1: most of my investors are not thirty years old and

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Speaker 1: don't have forty year time frames. I would say that

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Speaker 1: in the four decades I've been investing, I can't recall

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Speaker 1: a time when there have been so many possible market

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Speaker 1: and economic outcomes, many of them adverse tom Our markets

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Speaker 1: and our economies have never been so monetary policy dependent,

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Speaker 1: and our physical authorities have never been so partisan and inert,

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Speaker 1: and this is a huge problem. I do have a

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Speaker 1: sense that we might be in an inflection point in

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Speaker 1: its extreme Barry, two thousand sixteen two thousand eighteen could

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Speaker 1: look like two thousand seven nine to me. You know,

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Speaker 1: it's earlier today we were speaking with Um Todd Scott

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Speaker 1: of CNBC who who was specifically talking about the fear

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Speaker 1: on the side of the establishment gop Old school folks

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Speaker 1: who are horrified of not a Donald Trump presidency, but

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Speaker 1: a Donald Trump candidacy that crashes and burns and has

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Speaker 1: the opposing party run the tables. Is that what you're

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Speaker 1: referring to as part of a uh oh seven o

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Speaker 1: nine realignment is that that's one of my concerns. It's

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Speaker 1: it's not my primary concern I was, you know, I

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Speaker 1: look at Patty Power and the other British um London

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Speaker 1: based betting parlors to figure out what the real odds are.

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Speaker 1: And if you look back at Donald Trump his odds

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Speaker 1: of winning the election in November back, let's say, five

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Speaker 1: months ago, they were in next one. Two months ago,

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Speaker 1: they were in excess of ten to one. Now they're

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Speaker 1: basically a little under three to one. In Hillary Clinton

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Speaker 1: is roughly two to five. Um, I think that you

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Speaker 1: know that Trump is a real wild card. He's a

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Speaker 1: political blank slate. He presents himself as all things to

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Speaker 1: all people without detail and which road he's going to

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Speaker 1: take in his policies. Um obviously perfect for the botist

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Speaker 1: current sitgeist. He's writing this this wave of discontent among

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Speaker 1: those are sick of the way things are. But it's

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Speaker 1: unpredictable and it's somewhat uninformed and a good example. You

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Speaker 1: mentioned the tariff on China a couple of segments ago.

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Speaker 1: Doug cass with this a very redulto has been driving

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Speaker 1: the interview because I just discovered David Ortiz is batting

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Speaker 1: one seventy one in spring training. Trying to get my

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Speaker 1: handle ord and get that figured out. Doug Kidder Pebody,

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Speaker 1: you work for the small shop of ten twenty for

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Speaker 1: the future. We were killing ourselves here force when we

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Speaker 1: started out in the business. Banking has changed. I think

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Speaker 1: with everybody, whether Doug they agree with you or disagree

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Speaker 1: with you, would love to know your perspective on where

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Speaker 1: your Kidder Peabody or the major banks are at my job,

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Speaker 1: my job as it relates to your question before Kider

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Speaker 1: p Bondy. While I was awarded, I wrote the book

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Speaker 1: with Ralph Nader called City Bank, which was pretty well received.

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Speaker 1: In fact, my sister was that at the University of

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Speaker 1: Wisconsin would start banking textbook UM, and I still speak

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Speaker 1: to Ralph when we talk about dot Frank all the time.

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Speaker 1: Where is is really screwed in the current environment UM.

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Speaker 1: Up until about eighteen months ago, I thought that they

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Speaker 1: were in better shape UM. Capital ratios mandated to go lower,

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Speaker 1: leverage ratios went lower, and the industry was UM sorry

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Speaker 1: getting out of their forty billion dollar UH penalty feat

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Speaker 1: of the government by reducing overhead, reducing lines of businesses,

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Speaker 1: businesses as well as this pendulum of higher regulatory and

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Speaker 1: compliance costs, we're starting to ebb and move in the

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Speaker 1: other direction. However, of late, a combination of the deteriorating

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Speaker 1: capital markets activity. I don't know if you saw the

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Speaker 1: cribs with Swiss last week, the capital markets business was

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Speaker 1: down forty five spent year to date over last year's

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Speaker 1: year to date. Coupled UM with number one, the kind

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Speaker 1: of resuscitation of the Sanders and candidacy, and actually both

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Speaker 1: Trump and Hillary Clinton are anti banks, that appears so

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Speaker 1: that pendulum may switch back. Certainly, sentiment is negative UM

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Speaker 1: and UH. Most importantly net interest margins because of rates

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Speaker 1: being so low as they are. Do you see consolidation?

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Speaker 1: But do you see a consolidation now they the large

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Speaker 1: banks can't get larger, there will be such an uproar

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Speaker 1: politically and by the populace that and the politicians that

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Speaker 1: there's no chance that they'll be um can knock on acquisitions.

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Speaker 1: They're just the opposite occurring. In fact, I think there's

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Speaker 1: probably a thirty or forty chance that City Bank splits up.

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Speaker 1: These large banks have been doing nothing but increasing size

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Speaker 1: and increasing market share. They've been getting bigger and bigger

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Speaker 1: than anyone that their role in the Wells Fargo's role

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Speaker 1: in back America's role in the mortgage UH market has

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Speaker 1: never been larger. Yeah, you want to market, you want

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Speaker 1: to mortgage? These days? Uh, the odds very much look

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Speaker 1: like it's coming out of Wells Fargo. You're lucky if

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Speaker 1: it's another bank, or even another money center bank, or

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Speaker 1: even a smaller bank. Right, A very back to question.

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Speaker 1: My real concern is not the looney tunes in politics.

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Speaker 1: You know, it said that history has this delicious car

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Speaker 1: relation to the past, that it rarely repeats itself, but

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Speaker 1: it often rhymes. And there are conditions that exist today,

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Speaker 1: especially with regards to the proliferation of debt, which is

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Speaker 1: so rhyming like to the late uh nineteen nineties and

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Speaker 1: obviously the housing crisis in the mid two thousands. So well,

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Speaker 1: go ahead, time, I think we have to leave it

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Speaker 1: there just because of the time we got too much

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Speaker 1: to work on a Doug cast. Thank you so much,

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Speaker 1: greatly appreciated. With Sea Breeze partners are real money contributor

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Speaker 1: as well. All we get a ton of response from

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Speaker 1: Mr cass Is on the market participants really upset with

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Speaker 1: his caution out there now, Barry, I do find it

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Speaker 1: interesting that people that are cautious on the market are

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Speaker 1: always reticent to state shorts. You know, Doug, I heard

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Speaker 1: that from Doug. You really had trouble other than the

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Speaker 1: media stocks talking about where well, it's it's easy to

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Speaker 1: get squeezed, you know, when you're on the long side.

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Speaker 1: It's very, very different because there's sends to be some

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Speaker 1: institutional sponsorship and ownership on the short side. It's not

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Speaker 1: a a even battle. But I also state that there

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Speaker 1: are gentlemen like Mr cass and I give great credit

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Speaker 1: to Jim Chainos as well, where there's an industry culture

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Speaker 1: back well over a hundred years that you don't tout

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Speaker 1: your shorts. It's it's just it's just hardwired into us.

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Speaker 1: It's different long as societal code to not tout your shorts,

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Speaker 1: whether right or wrong, for for all the aforementioned reasons,

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Speaker 1: you you put yourself at risk. Look what happens with

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Speaker 1: Bill Akman and with herb alife. He touted that, and

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Speaker 1: people basically look at it as an opportunity to squeeze

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Speaker 1: fish in a battle to combine my metaphors. It's a

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Speaker 1: dangerous thing to do to reveal a short book. Absolutely, Barry,

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Speaker 1: this is Are you here tomorrow? I am here all week?

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Speaker 1: Try the village. It's just too exciting to survive. I

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Speaker 1: I don't know. We'll see. We'll have analysis scores of

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Speaker 1: cher yellows, fresh speech, and a lot. I would mention

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Speaker 1: oil down a dollar thirty sixteen with a print of

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Speaker 1: thirty eight point zero zero on West Texas Intermediate. We

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Speaker 1: are produced by y U N can follow you our

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Speaker 1: global technical director. It's Bloomberg Surveillance. Good morning,