1 00:00:00,760 --> 00:00:04,240 Speaker 1: Good morning everyone, Bloomberg Surveillance Michael McKee and Tom Keane 2 00:00:04,360 --> 00:00:08,840 Speaker 1: live do or Bloomberg eleventh to Washington, d C, Bloomberg 3 00:00:09,760 --> 00:00:13,560 Speaker 1: to Boston, BLUEMBERG dwelve on its to San Francisco, Bloomberg 4 00:00:14,440 --> 00:00:20,320 Speaker 1: to the country. Exam Channel one nineteen. Good morning everyone, 5 00:00:20,320 --> 00:00:23,079 Speaker 1: Bloomberg Surveillance. Michael McKeon time. Can we welcome all of 6 00:00:23,120 --> 00:00:28,920 Speaker 1: you worldwide? On economics, finance, UH and investment Mike at Churn, 7 00:00:29,040 --> 00:00:31,479 Speaker 1: going on before Jobs Day tomorrow. Some of it is 8 00:00:31,480 --> 00:00:35,040 Speaker 1: a holistic sense of our political economy. I hadn't been 9 00:00:35,040 --> 00:00:39,200 Speaker 1: any real um conviction in the economy at this point, 10 00:00:39,600 --> 00:00:43,640 Speaker 1: in the markets, at this point, um futures little changed 11 00:00:43,720 --> 00:00:46,159 Speaker 1: on the day. Okay, well, very good, and now an 12 00:00:46,280 --> 00:00:50,240 Speaker 1: interview on a larger economy. Here's our Eric Shatsker with 13 00:00:50,360 --> 00:00:53,479 Speaker 1: the one Ray Delio on behalf of our Bloomberg television 14 00:00:53,560 --> 00:00:57,120 Speaker 1: viewers and our Bloomberg radio listeners worldwide. Welcome, Thank you. 15 00:00:57,680 --> 00:01:00,400 Speaker 1: Let's get right to it. Ray. People who know you, 16 00:01:00,440 --> 00:01:03,760 Speaker 1: who follow you, know that you've developed models to explain 17 00:01:03,840 --> 00:01:07,039 Speaker 1: how the economy works. And anybody who's even remotely familiar 18 00:01:07,040 --> 00:01:10,720 Speaker 1: with Bridgewater UH knows about the machine for example, knows 19 00:01:10,760 --> 00:01:14,080 Speaker 1: about the importance of the business cycle and furthermore, the 20 00:01:14,120 --> 00:01:17,240 Speaker 1: importance of the long term debt cycle. What are those 21 00:01:17,280 --> 00:01:19,920 Speaker 1: models telling you right now, Well, let me just take 22 00:01:19,959 --> 00:01:22,920 Speaker 1: a second and just review the model. So everybody knows UM. 23 00:01:23,000 --> 00:01:26,360 Speaker 1: So I'm saying that over a period of time, productivity 24 00:01:26,400 --> 00:01:29,080 Speaker 1: matters the most. What you learn is what you can 25 00:01:29,080 --> 00:01:33,000 Speaker 1: get to spend. But around that there are two debt cycles. 26 00:01:33,440 --> 00:01:35,760 Speaker 1: There's a short term debt cycle that lets you spend 27 00:01:35,800 --> 00:01:38,160 Speaker 1: more than you learn over a short period of time, 28 00:01:38,160 --> 00:01:40,679 Speaker 1: but when you pay back you have spend less. And 29 00:01:40,720 --> 00:01:43,640 Speaker 1: that there's that cycle, the five to eight year cycles, 30 00:01:43,680 --> 00:01:46,160 Speaker 1: the business cycle we're used to that. Everybody understands that. 31 00:01:46,760 --> 00:01:50,640 Speaker 1: And then there's a long term debt cycle that UM 32 00:01:50,680 --> 00:01:54,240 Speaker 1: goes on fifty seventy five years, and UM it goes 33 00:01:54,280 --> 00:01:59,440 Speaker 1: through its limitations when you have too much debt relative 34 00:01:59,480 --> 00:02:01,800 Speaker 1: to incomes so you can't service it anymore, and when 35 00:02:01,840 --> 00:02:05,440 Speaker 1: interest rates go to zero so they can't be stimulation. 36 00:02:06,160 --> 00:02:10,240 Speaker 1: We have run out of monetary policy number one and 37 00:02:10,320 --> 00:02:13,920 Speaker 1: we have to go to monetary policy number two. Monetary 38 00:02:13,960 --> 00:02:16,880 Speaker 1: policy number two is quantitative easing. This happened in the 39 00:02:16,880 --> 00:02:21,040 Speaker 1: Great Depression happened recently, and that means the purchase of 40 00:02:21,080 --> 00:02:24,440 Speaker 1: financial assets by the central bank, and the sellers of 41 00:02:24,440 --> 00:02:28,280 Speaker 1: those financial assets then buy other financial assets, and they 42 00:02:28,320 --> 00:02:32,040 Speaker 1: cause those other financial assets to rise in price and 43 00:02:32,120 --> 00:02:36,280 Speaker 1: have the effect of lower rating those expected returns. And 44 00:02:36,280 --> 00:02:41,680 Speaker 1: when those other expected returns are low in relationship to cash, 45 00:02:42,480 --> 00:02:45,280 Speaker 1: one is almost indifferent. And so when you buy that bond, 46 00:02:45,919 --> 00:02:49,080 Speaker 1: when the Fed makes puts that money in the system, 47 00:02:49,160 --> 00:02:53,640 Speaker 1: that person is going to then go not it's indifferent, 48 00:02:53,760 --> 00:02:57,600 Speaker 1: and that that's called pushing on a string, and pushing 49 00:02:57,600 --> 00:03:01,239 Speaker 1: on a string began, and we're going into a situation 50 00:03:01,600 --> 00:03:05,160 Speaker 1: which is generally worldwide somewhat analogous to that. So there 51 00:03:05,200 --> 00:03:08,639 Speaker 1: again we're approaching it. So if I just take country 52 00:03:08,639 --> 00:03:13,360 Speaker 1: by country, now, if I could give you um qui 53 00:03:13,560 --> 00:03:19,240 Speaker 1: okay um so, Japan was there first for a couple 54 00:03:19,280 --> 00:03:21,800 Speaker 1: of decades, for a couple of decades, pushing on a 55 00:03:21,840 --> 00:03:25,800 Speaker 1: string because they hit interest rates at zero and now 56 00:03:26,480 --> 00:03:29,440 Speaker 1: the most aggressive quantitative easing program the world has ever seen, 57 00:03:29,840 --> 00:03:33,200 Speaker 1: and and they're trying to stimulate to get two percent 58 00:03:33,240 --> 00:03:36,000 Speaker 1: inflation and they're going nowhere, it's not working, and it's 59 00:03:36,000 --> 00:03:40,360 Speaker 1: not working. So Europe is there Okay, Europe, if you 60 00:03:40,440 --> 00:03:43,720 Speaker 1: look at the across the curve, we have interest rates 61 00:03:43,720 --> 00:03:48,080 Speaker 1: at zero or slightly negative depending on where. Okay, that's 62 00:03:48,120 --> 00:03:50,720 Speaker 1: so interest rates, it's certainly not going to work. And 63 00:03:50,760 --> 00:03:53,800 Speaker 1: then the purchases of those financial assets are getting transmitted 64 00:03:53,800 --> 00:03:56,640 Speaker 1: and currency movements and the like, and the effect of 65 00:03:56,720 --> 00:03:59,880 Speaker 1: raising those assets is not is very limited. So where 66 00:03:59,880 --> 00:04:03,160 Speaker 1: there in Europe, very close to being there in Europe. 67 00:04:03,800 --> 00:04:06,240 Speaker 1: In the United States we have a little bit more room. 68 00:04:06,240 --> 00:04:09,400 Speaker 1: We're very close to zero interest rates. And then if 69 00:04:09,440 --> 00:04:12,840 Speaker 1: you take the spreads, the spreads are are relatively low, 70 00:04:12,920 --> 00:04:15,000 Speaker 1: so a little less than the two percent bond. You know, 71 00:04:15,200 --> 00:04:19,040 Speaker 1: we think equities expected returns probably around four percent, So 72 00:04:19,080 --> 00:04:22,920 Speaker 1: there's some spread, their some ability. The issue is if 73 00:04:23,080 --> 00:04:26,920 Speaker 1: that creates asymmetric risks to the downside. To the downside 74 00:04:26,920 --> 00:04:30,560 Speaker 1: meaning um, it's tightening is always going to be effective. 75 00:04:30,800 --> 00:04:33,080 Speaker 1: It's easy. You raise interest rates and things will slow 76 00:04:33,120 --> 00:04:35,880 Speaker 1: down because everybody's got a lot of debt. Not a problem. 77 00:04:36,040 --> 00:04:38,760 Speaker 1: The situation is the risk on the downside, because if 78 00:04:38,800 --> 00:04:42,000 Speaker 1: you have a movement on the downside, it's a risky situation. 79 00:04:42,160 --> 00:04:45,200 Speaker 1: So we're going to have to see um and you'll 80 00:04:45,200 --> 00:04:51,000 Speaker 1: see increased exploration of the movement to make to make 81 00:04:51,040 --> 00:04:55,200 Speaker 1: other forms of stimulation, which I'm calling monetary policy three. 82 00:04:55,720 --> 00:04:59,920 Speaker 1: Monetary policy three will not be just through quantitative easing. 83 00:05:00,400 --> 00:05:04,800 Speaker 1: We've got quantitative easing by financial assets from people who 84 00:05:04,839 --> 00:05:07,760 Speaker 1: have it, and it stays in the financial community, and 85 00:05:07,880 --> 00:05:12,560 Speaker 1: we're going to have to move toward increasingly the making 86 00:05:12,680 --> 00:05:17,320 Speaker 1: of purchases that put money directly in the hands of spenders, 87 00:05:17,720 --> 00:05:22,279 Speaker 1: because the linkage between having money in the financial assets 88 00:05:22,360 --> 00:05:26,400 Speaker 1: and having spending is becoming weaker and weaker. Can I 89 00:05:26,480 --> 00:05:29,120 Speaker 1: just pause for a moment, short, So, what you're effectively 90 00:05:29,160 --> 00:05:33,280 Speaker 1: saying to me is that monetary policy one interest rates says, 91 00:05:34,279 --> 00:05:37,479 Speaker 1: sort of run its course. It's become ineffective. Monetary policy 92 00:05:37,480 --> 00:05:42,240 Speaker 1: to quantitative easing, if I take you correctly, ineffective. Central 93 00:05:42,320 --> 00:05:45,000 Speaker 1: banks are now going to have to print money and 94 00:05:45,120 --> 00:05:48,360 Speaker 1: hand it to consumers in one fashion or in another 95 00:05:50,000 --> 00:05:54,200 Speaker 1: um they're going to have to go more directly to spenders. 96 00:05:54,200 --> 00:05:56,960 Speaker 1: How does that work? Well, it can work in either 97 00:05:57,000 --> 00:06:00,279 Speaker 1: a combination of fiscal and monetary policy. Some there's a 98 00:06:00,279 --> 00:06:03,680 Speaker 1: continuum of how it's worked in history. In some cases, 99 00:06:03,760 --> 00:06:07,080 Speaker 1: you can have the federal government run deficits which the 100 00:06:07,120 --> 00:06:10,960 Speaker 1: central central bank essentially monetize it by lending them money. 101 00:06:11,200 --> 00:06:15,400 Speaker 1: And that that's one path some and then there's a continuum. 102 00:06:15,480 --> 00:06:18,200 Speaker 1: And on that continuum, the far side of that continuum 103 00:06:18,240 --> 00:06:23,920 Speaker 1: is called helicopter money. What helicopter money means is the 104 00:06:24,000 --> 00:06:27,640 Speaker 1: process of essentially putting it directly in your hands. The 105 00:06:27,680 --> 00:06:32,960 Speaker 1: central bank has the capacity legally to essentially get money 106 00:06:33,040 --> 00:06:35,920 Speaker 1: in your hands. There's a legal in the lass change 107 00:06:35,920 --> 00:06:38,320 Speaker 1: from place to place to put it directly in your hands, 108 00:06:38,360 --> 00:06:40,919 Speaker 1: to have you spend it, in other words, to not 109 00:06:41,080 --> 00:06:44,599 Speaker 1: bypass to bypass the financial markets to do that. So 110 00:06:44,960 --> 00:06:47,279 Speaker 1: there's a range of ways that that can be done. 111 00:06:47,400 --> 00:06:50,520 Speaker 1: History is loaded with them. We're just not acquainted with 112 00:06:50,560 --> 00:06:53,440 Speaker 1: them because they haven't happened in our lifetimes before. In 113 00:06:53,440 --> 00:06:56,080 Speaker 1: other words, these long term debt cycles come once a lifetime, 114 00:06:56,760 --> 00:06:59,760 Speaker 1: and people are not treating once a century even so 115 00:07:00,320 --> 00:07:03,039 Speaker 1: they're rare. And but but if you go back over 116 00:07:03,200 --> 00:07:05,359 Speaker 1: history and you see them, they've happened many times. So 117 00:07:05,440 --> 00:07:07,760 Speaker 1: let's look a little more short term, because that's going 118 00:07:07,839 --> 00:07:09,320 Speaker 1: to take some time to play out. I take it 119 00:07:09,840 --> 00:07:12,560 Speaker 1: and and and examine what's going to happen in the 120 00:07:12,600 --> 00:07:16,360 Speaker 1: next little while. Um you have been saying for some 121 00:07:16,440 --> 00:07:19,080 Speaker 1: time that you anticipate the Fed's going to have to 122 00:07:19,080 --> 00:07:21,560 Speaker 1: ease again and possibly even embark on a new rout 123 00:07:21,640 --> 00:07:24,560 Speaker 1: of quantitative easing, that the next big move, that there 124 00:07:24,560 --> 00:07:27,440 Speaker 1: will be minor moves like you make get another twenty 125 00:07:27,440 --> 00:07:30,560 Speaker 1: five basis point move, but the nuts, Yeah you could 126 00:07:30,560 --> 00:07:33,720 Speaker 1: get up. You could you could see another twenty five 127 00:07:33,760 --> 00:07:36,240 Speaker 1: basis point rise in rates. I'm not saying that you 128 00:07:36,280 --> 00:07:38,200 Speaker 1: can see. I just want to be clear. The next 129 00:07:38,200 --> 00:07:40,840 Speaker 1: big move, I believe will have to be toward quantitative 130 00:07:40,840 --> 00:07:43,920 Speaker 1: easing rather than a big titan, and you won't see 131 00:07:43,920 --> 00:07:46,080 Speaker 1: a big the next move, because we could be up, 132 00:07:46,400 --> 00:07:48,800 Speaker 1: could be down to the tick. Yeah, you could get 133 00:07:48,800 --> 00:07:51,520 Speaker 1: an uptick. The next early is a couple of weeks 134 00:07:51,560 --> 00:07:53,800 Speaker 1: from now. I don't think I think that they'd be 135 00:07:53,840 --> 00:07:56,360 Speaker 1: a I've always said and I continue to say, I 136 00:07:56,360 --> 00:07:58,600 Speaker 1: think it would be a serious mistake. I think that 137 00:07:58,640 --> 00:08:03,280 Speaker 1: the Federal Reserve is around to the notion of that 138 00:08:03,480 --> 00:08:06,880 Speaker 1: we're living in a world economy and that the circumstances 139 00:08:06,920 --> 00:08:10,560 Speaker 1: that are now happening are surprising them have surprised them 140 00:08:10,560 --> 00:08:13,080 Speaker 1: because they're not paying enough attention to the long term 141 00:08:13,120 --> 00:08:15,760 Speaker 1: debt cycle. In other words, what is there's a reason 142 00:08:15,800 --> 00:08:18,640 Speaker 1: that their attitudes have changed. And then I think it's 143 00:08:18,640 --> 00:08:21,520 Speaker 1: great that their attitudes have changed about that risk. But 144 00:08:21,920 --> 00:08:24,000 Speaker 1: if you look at their around the world, our risk 145 00:08:24,120 --> 00:08:28,120 Speaker 1: is not inflation and our risk is not overheating economies. Okay, 146 00:08:28,120 --> 00:08:30,920 Speaker 1: so you still feel the same way about the trajectory 147 00:08:30,960 --> 00:08:34,760 Speaker 1: of the Federal Reserve and itstary policy. If the asymmetric 148 00:08:34,880 --> 00:08:38,040 Speaker 1: if the risks that we've talked about it, they're asymmetrically 149 00:08:38,120 --> 00:08:40,640 Speaker 1: to the downside for the global economy and for the 150 00:08:40,679 --> 00:08:44,360 Speaker 1: effectiveness of monetary policy because of this compression of the 151 00:08:44,400 --> 00:08:47,640 Speaker 1: spread between the return on fixed income you know, at 152 00:08:47,760 --> 00:08:51,200 Speaker 1: risk assets. What does that mean for asset prices. Well, 153 00:08:51,200 --> 00:08:55,720 Speaker 1: it means that asset prices correct to a point where 154 00:08:56,160 --> 00:09:00,319 Speaker 1: the risk premiums come back. That's right, and the words 155 00:09:00,320 --> 00:09:03,439 Speaker 1: the correction that's happened in the stock market. Let me 156 00:09:03,520 --> 00:09:05,719 Speaker 1: be clear, I'm not barish on the stock market. No, 157 00:09:06,400 --> 00:09:09,640 Speaker 1: I'm not barish on the stock market. I'm saying that 158 00:09:09,760 --> 00:09:12,800 Speaker 1: what we have is as you have those risk premiums. 159 00:09:13,280 --> 00:09:16,120 Speaker 1: But let's say I expect probably stocks a lot about 160 00:09:16,120 --> 00:09:19,079 Speaker 1: a four percent return, in other words, long term return 161 00:09:19,120 --> 00:09:21,679 Speaker 1: four percent. That's a problem for a lot of savers. 162 00:09:21,720 --> 00:09:25,439 Speaker 1: But nonetheless, the choices are funds like the university we're 163 00:09:25,440 --> 00:09:27,520 Speaker 1: at right now, yes, and pension funds and a lot 164 00:09:27,520 --> 00:09:30,840 Speaker 1: of savers. It's a big problem that is like a 165 00:09:30,880 --> 00:09:35,840 Speaker 1: slow growing cancer because it will not happen overnight, but 166 00:09:35,960 --> 00:09:37,760 Speaker 1: it will mean that we won't have enough money to 167 00:09:37,840 --> 00:09:41,959 Speaker 1: fund those things. But nonetheless, investors make a choice of assets, 168 00:09:42,040 --> 00:09:45,280 Speaker 1: and the choices that are cash, which has zero return, 169 00:09:46,360 --> 00:09:50,040 Speaker 1: a bond which has less than two percent return, and equities, 170 00:09:50,080 --> 00:09:52,520 Speaker 1: as we calculate it has something like a four percent 171 00:09:52,840 --> 00:09:56,079 Speaker 1: expected return. So when you look at those assets, what 172 00:09:56,080 --> 00:09:58,520 Speaker 1: what happen is as they sell off, it has the 173 00:09:58,559 --> 00:10:01,560 Speaker 1: effect of making those assets we're attractive and and and 174 00:10:01,600 --> 00:10:05,200 Speaker 1: then draws us in or draws others in. The issue 175 00:10:05,320 --> 00:10:08,120 Speaker 1: here that we're dealing with is the possibility of the 176 00:10:08,160 --> 00:10:11,439 Speaker 1: negative feedback loop that comes from that and the ineffectiveness 177 00:10:11,480 --> 00:10:15,360 Speaker 1: of monetary policy. So when stocks go down and it 178 00:10:15,400 --> 00:10:18,120 Speaker 1: has a negative wealth effect, that has a negative effect 179 00:10:18,160 --> 00:10:20,800 Speaker 1: on the economy. And when that has a negative effect 180 00:10:20,880 --> 00:10:23,520 Speaker 1: on the economy and you don't have the ability to ease, 181 00:10:23,640 --> 00:10:27,880 Speaker 1: what I'm worried about is should the situation become weak 182 00:10:28,000 --> 00:10:31,120 Speaker 1: enough in the economy, like Japan's situation. The floor it 183 00:10:31,320 --> 00:10:34,439 Speaker 1: like you said, two decades you will have a situation 184 00:10:34,480 --> 00:10:36,880 Speaker 1: where then they have to do something else. I'm going 185 00:10:36,920 --> 00:10:39,720 Speaker 1: to take this opportunity just to remind everybody that this 186 00:10:39,840 --> 00:10:42,040 Speaker 1: is Rad Dalu, of course the FATI chairman Co c 187 00:10:42,240 --> 00:10:45,320 Speaker 1: i O of Bridgewater Associates and we're soundlcasting live on 188 00:10:45,360 --> 00:10:48,920 Speaker 1: Bloomberg Radio, welcoming everybody to the conversation. UM, let's go 189 00:10:49,000 --> 00:10:52,360 Speaker 1: beyond stocks. If the long term average annual return for 190 00:10:52,400 --> 00:10:56,120 Speaker 1: stocks is four percent, and obviously it's less for government 191 00:10:56,120 --> 00:10:58,040 Speaker 1: bonds and cash at the moment and for the time 192 00:10:58,080 --> 00:11:01,960 Speaker 1: being a zero Uh, what makes sense as an investment strategy? 193 00:11:02,080 --> 00:11:03,800 Speaker 1: What do you buy? What you know? What do you 194 00:11:03,960 --> 00:11:08,160 Speaker 1: short effectively? Maybe you know broadly speaking, where what what's 195 00:11:08,160 --> 00:11:10,600 Speaker 1: gonna work? Well? I think what is working perhaps more 196 00:11:10,600 --> 00:11:13,760 Speaker 1: appropriately today? UM? I think there are two ways that 197 00:11:13,840 --> 00:11:18,360 Speaker 1: the average investor should think of investing. One is, UM, 198 00:11:18,440 --> 00:11:21,840 Speaker 1: are you going to create a good strategic asset allocation 199 00:11:21,920 --> 00:11:25,120 Speaker 1: mixed that is a balanced portfolio That means that you're 200 00:11:25,160 --> 00:11:27,480 Speaker 1: not going to go to the betting table and bet 201 00:11:27,520 --> 00:11:31,920 Speaker 1: against active investors like me. Look, I'm I'm scared of 202 00:11:31,920 --> 00:11:34,240 Speaker 1: being wrong in the markets. It is not easy to 203 00:11:34,360 --> 00:11:37,000 Speaker 1: win in the market. It is more difficult to win 204 00:11:37,040 --> 00:11:39,600 Speaker 1: in the markets than to compete in the Olympics. Hang 205 00:11:39,600 --> 00:11:41,600 Speaker 1: on a second, Hang on a second. You guys have 206 00:11:41,640 --> 00:11:44,960 Speaker 1: an extraordinary track record of winning. Yeah. Is it harder 207 00:11:44,960 --> 00:11:46,880 Speaker 1: to compete in the markets today than it has been 208 00:11:46,920 --> 00:11:50,240 Speaker 1: since you found a Bridgewater? No? I don't think so. Really, 209 00:11:50,280 --> 00:11:52,280 Speaker 1: not the way we do it. And the reason I'm 210 00:11:52,320 --> 00:11:54,280 Speaker 1: saying not the way we do it is we don't 211 00:11:54,280 --> 00:11:56,959 Speaker 1: take systematic biases. I think for a lot of people, 212 00:11:57,000 --> 00:12:00,440 Speaker 1: they're systematically long everything you know, and so we have 213 00:12:00,480 --> 00:12:03,640 Speaker 1: a world in which there when the world gets bad, 214 00:12:04,360 --> 00:12:06,640 Speaker 1: it's bad for them. In two thousand and eight, it 215 00:12:06,720 --> 00:12:09,040 Speaker 1: was great for us. I don't know. We had nearly 216 00:12:09,160 --> 00:12:11,200 Speaker 1: ten percent return in two thousand and eight. So we 217 00:12:11,280 --> 00:12:13,920 Speaker 1: have the opportunity to go either way. We just may 218 00:12:13,960 --> 00:12:17,520 Speaker 1: be wrong if we're wrong. So so I'm so scared 219 00:12:17,520 --> 00:12:20,240 Speaker 1: about being wrong that it has helped to do not 220 00:12:20,320 --> 00:12:23,600 Speaker 1: reflective of how the leaders are handling the economy based 221 00:12:23,600 --> 00:12:26,319 Speaker 1: on what you've seen, do you feel better about their 222 00:12:26,360 --> 00:12:29,280 Speaker 1: ability to handle their dead situation now than you did, say, 223 00:12:29,320 --> 00:12:35,520 Speaker 1: six months ago? Um? Probably about the same the balance 224 00:12:35,559 --> 00:12:39,160 Speaker 1: of payments issue is going to be a challenge. Let me, 225 00:12:39,400 --> 00:12:40,880 Speaker 1: if you want to get into the balance of payments, 226 00:12:40,880 --> 00:12:42,440 Speaker 1: will to explain it just a little bit, that the 227 00:12:42,440 --> 00:12:44,240 Speaker 1: balance of payments has to do the currency. A lot 228 00:12:44,240 --> 00:12:47,679 Speaker 1: of money leaving the country for and they are draining 229 00:12:47,720 --> 00:12:51,000 Speaker 1: the reserves very quickly. That's right, because money is leaving 230 00:12:51,040 --> 00:12:53,960 Speaker 1: the country. And also these cycles have been every place. 231 00:12:54,840 --> 00:12:56,839 Speaker 1: But what happens is when the money is leaving in 232 00:12:56,960 --> 00:12:59,520 Speaker 1: the country and less money wants to go into the country, 233 00:12:59,520 --> 00:13:02,840 Speaker 1: it creates a olence of payments issue um. In terms 234 00:13:02,920 --> 00:13:04,840 Speaker 1: of that money leaving the country, they have a lot 235 00:13:04,880 --> 00:13:07,439 Speaker 1: of control over that nature of that money because a 236 00:13:07,520 --> 00:13:10,720 Speaker 1: lot of those are state owned enterprises and other things. 237 00:13:10,760 --> 00:13:13,560 Speaker 1: For example, they've just opened the bond market to foreign investment. 238 00:13:14,000 --> 00:13:17,840 Speaker 1: We estimate that probably in UM maybe eighteen months or 239 00:13:17,840 --> 00:13:20,640 Speaker 1: two years, that'll be worth about probably in the vicinity 240 00:13:20,679 --> 00:13:24,280 Speaker 1: of maybe two billion dollars of influence or influence other words, 241 00:13:24,280 --> 00:13:26,880 Speaker 1: you could have by opening the bond market and having 242 00:13:26,920 --> 00:13:30,000 Speaker 1: foreign investors invest in the market. It will also attract 243 00:13:30,040 --> 00:13:33,600 Speaker 1: money in. Many of their companies are state owned companies 244 00:13:33,600 --> 00:13:37,079 Speaker 1: and multinational companies, and they have greater controls over the 245 00:13:37,360 --> 00:13:41,079 Speaker 1: then we might think for ourselves and and so on. 246 00:13:41,400 --> 00:13:44,760 Speaker 1: So while there's a balance of payments challenge there, there 247 00:13:44,760 --> 00:13:47,200 Speaker 1: are also ways to deal with that. I'm not saying 248 00:13:47,240 --> 00:13:50,480 Speaker 1: it's not a challenging situation. It is a challenging situation, 249 00:13:50,800 --> 00:13:53,680 Speaker 1: but on the tools to management, and I would say 250 00:13:53,679 --> 00:13:57,680 Speaker 1: the capabilities of managing it are are excellent. I will 251 00:13:57,720 --> 00:14:00,680 Speaker 1: say that, Um, you know I I get to know 252 00:14:01,040 --> 00:14:05,040 Speaker 1: different economic leaders around the world in different ways, and 253 00:14:05,160 --> 00:14:09,040 Speaker 1: I would say that their capabilities are equal to the 254 00:14:09,080 --> 00:14:12,880 Speaker 1: best that exists anyway in terms of the things that 255 00:14:12,920 --> 00:14:16,400 Speaker 1: need to be done, which in monetary, fiscal policy, restructuring, debts, 256 00:14:16,559 --> 00:14:18,680 Speaker 1: I mean, all of those types of things. And there's 257 00:14:18,720 --> 00:14:21,520 Speaker 1: an advantage there. Look, there are a lot of disadvantages 258 00:14:21,880 --> 00:14:24,680 Speaker 1: to a system like that, but one of the greater 259 00:14:24,720 --> 00:14:28,600 Speaker 1: advantages is that there's also greater controls over things. Do 260 00:14:28,680 --> 00:14:32,120 Speaker 1: you think to fix this balance of payments issue you've described, 261 00:14:32,520 --> 00:14:38,200 Speaker 1: they'll have to devalue their currency. I you know, UM, 262 00:14:38,240 --> 00:14:41,400 Speaker 1: I don't know. UM. I guess the thing that I 263 00:14:41,400 --> 00:14:44,800 Speaker 1: would say is, um, there's a balance of payments pressure. 264 00:14:45,600 --> 00:14:49,920 Speaker 1: I Uh, it's one of those things where that it's 265 00:14:49,960 --> 00:14:52,840 Speaker 1: too close to call the two the tools that are 266 00:14:52,880 --> 00:14:57,120 Speaker 1: there are are really great in many ways, and then 267 00:14:57,400 --> 00:14:59,800 Speaker 1: it's just one of those too close to call situations. 268 00:15:00,040 --> 00:15:02,360 Speaker 1: When we go back to what you were describing the 269 00:15:02,400 --> 00:15:06,440 Speaker 1: failures of UH monetary policy, one interest rates the failures 270 00:15:06,480 --> 00:15:10,520 Speaker 1: of monetary policy to quantitative easing, the possibility of monetary 271 00:15:10,560 --> 00:15:14,800 Speaker 1: policy free where somehow governments get cash directly into the 272 00:15:14,840 --> 00:15:24,440 Speaker 1: hands of consumers. Um, does that augur? What does that 273 00:15:24,480 --> 00:15:27,400 Speaker 1: augur well or poorly? For you know, if you're thinking 274 00:15:27,440 --> 00:15:31,760 Speaker 1: as an investor, well, um, Well, if you're thinking, there's 275 00:15:31,760 --> 00:15:33,640 Speaker 1: the economy, and who's the investor, I was gonna ask 276 00:15:33,640 --> 00:15:35,920 Speaker 1: the answer the economy part of the first, but invested 277 00:15:36,000 --> 00:15:40,440 Speaker 1: from the perspective of the investor. Um. From the perspective 278 00:15:40,480 --> 00:15:45,120 Speaker 1: of the investor, I would use um Japan as being 279 00:15:45,120 --> 00:15:48,800 Speaker 1: more of UM. What is most more likely unless there 280 00:15:48,880 --> 00:15:53,720 Speaker 1: is a debt restructuring to deal with these things, meaning, um, 281 00:15:54,880 --> 00:15:58,200 Speaker 1: we we have a we've raised the limits as the 282 00:15:58,280 --> 00:16:01,200 Speaker 1: debt relative to our incomes as as a group something 283 00:16:01,200 --> 00:16:03,640 Speaker 1: there's a private sector, that's a public sector. But let's 284 00:16:03,640 --> 00:16:06,040 Speaker 1: take us as a country, then take us as a world, 285 00:16:06,200 --> 00:16:09,920 Speaker 1: so include Europe, take China, take the whole world, the 286 00:16:10,000 --> 00:16:12,920 Speaker 1: world has a limitation right now in terms of you 287 00:16:12,960 --> 00:16:15,920 Speaker 1: can't raise much debt, so we can't we can't borrow 288 00:16:16,000 --> 00:16:19,280 Speaker 1: our ways to higher spending with the zero interest rates 289 00:16:19,320 --> 00:16:22,120 Speaker 1: being down there, that's where we are. And then in 290 00:16:22,200 --> 00:16:24,720 Speaker 1: terms of returns, we're going to have a low return environment, 291 00:16:24,960 --> 00:16:28,120 Speaker 1: and that low return environment is the main issue. That's 292 00:16:28,200 --> 00:16:30,040 Speaker 1: that that becomes the main issue when you liken it 293 00:16:30,080 --> 00:16:32,280 Speaker 1: to Japan. Ray and I just want to remind everybody 294 00:16:32,280 --> 00:16:36,280 Speaker 1: who's watching again Bloomberg television viewers and Bloomberg radio listeners worldwide. 295 00:16:36,920 --> 00:16:40,640 Speaker 1: Does that mean that the United States and Europe the 296 00:16:40,720 --> 00:16:43,080 Speaker 1: developed the world broadly speaking? Of course Japan is part 297 00:16:43,080 --> 00:16:46,680 Speaker 1: of that, But is that the trajectory is that the 298 00:16:46,760 --> 00:16:50,240 Speaker 1: road that we're headed down. We're looking loosely speaking, I 299 00:16:50,280 --> 00:16:54,240 Speaker 1: believe that that's the most likely scenaria meaning slow growth, 300 00:16:54,360 --> 00:16:59,840 Speaker 1: very slow growth, deflation, ups and downs. Okay, um, the 301 00:17:00,160 --> 00:17:06,080 Speaker 1: increased difficulty in stimulating monetary policy that was manifest in deflation, 302 00:17:06,560 --> 00:17:12,320 Speaker 1: the movement toward increasingly other alternatives ways of having monetary 303 00:17:12,400 --> 00:17:18,800 Speaker 1: policy that will produce stimulation, more currency volatility. But in 304 00:17:18,840 --> 00:17:22,320 Speaker 1: other words, I'm not expecting something like two thousand and eight, 305 00:17:22,359 --> 00:17:24,800 Speaker 1: because two thousand eight was a debt crisis. There were 306 00:17:24,800 --> 00:17:28,160 Speaker 1: a lot of debts coming to and they couldn't be paid, 307 00:17:28,240 --> 00:17:30,840 Speaker 1: and that was what two thousand eight was. This is 308 00:17:30,880 --> 00:17:33,800 Speaker 1: not like a crisis situation that way, It's not one 309 00:17:33,840 --> 00:17:35,520 Speaker 1: of them, you know. I don't think we're going to 310 00:17:35,640 --> 00:17:39,439 Speaker 1: probably see the big bang crisis type of thing. I 311 00:17:39,480 --> 00:17:41,560 Speaker 1: think that what we're going to see is this kind 312 00:17:41,600 --> 00:17:45,920 Speaker 1: of situation in which there's the dynamic of a relative stagnation, 313 00:17:46,160 --> 00:17:52,480 Speaker 1: low returns and also the UH you know, not much 314 00:17:52,520 --> 00:17:55,720 Speaker 1: picking up in low returns and sagnent and volatile markets 315 00:17:55,960 --> 00:17:59,000 Speaker 1: choppy or markets probably over a period of time. So 316 00:17:59,080 --> 00:18:03,960 Speaker 1: because like like what we've seen, because as you as 317 00:18:04,000 --> 00:18:05,840 Speaker 1: you have the zero interest rates and then you have 318 00:18:05,880 --> 00:18:08,600 Speaker 1: the market sell off, then the market sell off brings 319 00:18:08,640 --> 00:18:11,800 Speaker 1: back risk premiums and there's a lot of liquidity, and 320 00:18:11,840 --> 00:18:14,520 Speaker 1: so from an investor point of view, okay, then you 321 00:18:14,600 --> 00:18:17,399 Speaker 1: might move out from something like cash or a bond 322 00:18:17,600 --> 00:18:20,480 Speaker 1: or something to uh an asset like equities, and you 323 00:18:20,560 --> 00:18:22,600 Speaker 1: might move out. And so you have this movement up 324 00:18:22,640 --> 00:18:26,280 Speaker 1: and down as those risk previous change. But investors have 325 00:18:26,359 --> 00:18:30,800 Speaker 1: to decide that that those risk assets have repriced enough 326 00:18:31,320 --> 00:18:35,119 Speaker 1: to create an attractive enough spread between that's that's what 327 00:18:35,400 --> 00:18:39,040 Speaker 1: are we there yet? Um well, you know, as I 328 00:18:39,720 --> 00:18:42,240 Speaker 1: no one knows exactly what that range is. I think 329 00:18:42,240 --> 00:18:45,280 Speaker 1: that becomes the nature of it. And then we have 330 00:18:45,440 --> 00:18:50,639 Speaker 1: to see what that whether there's that negative feedback loop, okay, 331 00:18:50,680 --> 00:18:54,240 Speaker 1: because that part of the negative feedback loop is another word. 332 00:18:54,320 --> 00:18:57,760 Speaker 1: Stocks go down, and that then means the wealth effect 333 00:18:57,840 --> 00:19:00,840 Speaker 1: is lessened. And as the dollar go is up and 334 00:19:00,880 --> 00:19:04,119 Speaker 1: the wealth effect is and that makes us less competitive. 335 00:19:04,760 --> 00:19:07,040 Speaker 1: Both the rise and the value of the dollar and 336 00:19:07,160 --> 00:19:10,199 Speaker 1: the decline in the value of stocks is essentially a 337 00:19:10,280 --> 00:19:13,800 Speaker 1: tightening of monetary policy. And there's a type globally, there's 338 00:19:13,800 --> 00:19:18,560 Speaker 1: a tightening of world economic activity. And those negatives, how 339 00:19:18,600 --> 00:19:22,120 Speaker 1: exactly they passed through to the economy is the asymmetric 340 00:19:22,200 --> 00:19:24,880 Speaker 1: risks that I'm referring to. I see, Ray, while you're 341 00:19:24,920 --> 00:19:28,040 Speaker 1: sitting here, I want to touch on something that I 342 00:19:28,040 --> 00:19:30,120 Speaker 1: know is important to you because it's attracted a little 343 00:19:30,119 --> 00:19:33,640 Speaker 1: bit of attention lately, shall we say, which is Bridgewater's culture. 344 00:19:34,080 --> 00:19:36,320 Speaker 1: And the attention that it's attracted is due to this 345 00:19:36,400 --> 00:19:38,760 Speaker 1: notion that there's some kind of a dispute, if you will, 346 00:19:38,840 --> 00:19:41,440 Speaker 1: between you and your co c I O. Greg Jensen, 347 00:19:41,760 --> 00:19:43,719 Speaker 1: give me a sense of what's going on behind the scenes. 348 00:19:44,359 --> 00:19:47,520 Speaker 1: I mean, I don't know, and that the culture is cut. 349 00:19:47,720 --> 00:19:54,679 Speaker 1: People are asking questions, okay. Um. The way that we 350 00:19:54,800 --> 00:20:01,160 Speaker 1: succeed is by having thoughtful disagreement when I um, I'm 351 00:20:01,160 --> 00:20:04,199 Speaker 1: so scared about being wrong, and the key to my 352 00:20:04,600 --> 00:20:07,800 Speaker 1: success and our success is to try to find people 353 00:20:07,880 --> 00:20:10,760 Speaker 1: who disagree with us, who are smart and try to 354 00:20:10,840 --> 00:20:14,680 Speaker 1: understand their point of view so that we can have disagreement. 355 00:20:15,080 --> 00:20:18,679 Speaker 1: In order for us to have independent thinkers, there's going 356 00:20:18,720 --> 00:20:22,200 Speaker 1: to have to be disagreement, a moderation, and of bringing 357 00:20:22,240 --> 00:20:24,639 Speaker 1: together of people in terms of a common mission and 358 00:20:25,119 --> 00:20:28,359 Speaker 1: and thoughtful disagreement. While we're talking about thoughtful disagreement, if 359 00:20:28,359 --> 00:20:29,920 Speaker 1: you could work your way through to get at the 360 00:20:30,000 --> 00:20:34,640 Speaker 1: right answers, Um, then this is all manageable. Um. So 361 00:20:34,720 --> 00:20:37,440 Speaker 1: thats so politics does matter, And answer to your question 362 00:20:37,480 --> 00:20:39,840 Speaker 1: of how we deal with it, we measure what their 363 00:20:39,880 --> 00:20:43,320 Speaker 1: actions are and based on their actual actions, then we 364 00:20:43,640 --> 00:20:46,239 Speaker 1: make our responses. Ray, I want to thank you very 365 00:20:46,320 --> 00:20:49,000 Speaker 1: much on behalf of Bloomberg television doers radio listeners worldwide. 366 00:20:49,040 --> 00:20:51,080 Speaker 1: It's been such a pleasure here at the University of Texas. 367 00:20:51,480 --> 00:20:53,560 Speaker 1: Ray Dalio. He's the chairman, the founder and co c 368 00:20:53,760 --> 00:20:57,960 Speaker 1: i O of Bridgewater Association. Checksker with it, Ray Delio, 369 00:20:58,040 --> 00:21:02,200 Speaker 1: an extended conversation. We do all that around the market opening. 370 00:21:02,200 --> 00:21:03,880 Speaker 1: You're the bell in the background. There was a bell 371 00:21:03,920 --> 00:21:07,200 Speaker 1: in the background as Ray Dalio was speaking our opening 372 00:21:07,200 --> 00:21:10,560 Speaker 1: bell brought you by s c I. Today's competitive marketplace 373 00:21:10,640 --> 00:21:15,760 Speaker 1: requires asset managers to become more operationally adapt. Imagine transforming 374 00:21:15,800 --> 00:21:19,520 Speaker 1: your business with SCIS Global platform. Do that at s 375 00:21:19,560 --> 00:21:24,000 Speaker 1: e i C dot com. Slash imagine se i C 376 00:21:24,280 --> 00:21:27,719 Speaker 1: dot com slash imagine right on the screen. It's been 377 00:21:27,760 --> 00:21:31,600 Speaker 1: a goofy day, markets all over the place, waffling. Maybe 378 00:21:31,640 --> 00:21:35,200 Speaker 1: tomorrow's jobs report negative four is a first print on 379 00:21:35,280 --> 00:21:39,359 Speaker 1: the Dow SMB down two points. We do have a 380 00:21:39,359 --> 00:21:41,639 Speaker 1: print in the VIX a little bit higher after a 381 00:21:41,640 --> 00:21:45,320 Speaker 1: good couple of days, seventeen point to five. I'm just 382 00:21:45,320 --> 00:21:47,439 Speaker 1: gonna mention one stock because we've got so much to 383 00:21:47,440 --> 00:21:50,560 Speaker 1: talk about, and that would be Herbal Life. We do 384 00:21:50,600 --> 00:21:53,800 Speaker 1: have an opening fifty three downs three dollars thirty three 385 00:21:53,800 --> 00:21:57,119 Speaker 1: dollars thirty eight sets on Herbal Life. We'll get to that. 386 00:21:57,760 --> 00:22:02,359 Speaker 1: Uh here in a moment. We look at equities, bonds, currencies, commodities. 387 00:22:02,760 --> 00:22:04,679 Speaker 1: Let's look at the fore x report right now, and 388 00:22:04,680 --> 00:22:07,720 Speaker 1: that brief brought you by Interactive Brokers, winner of f 389 00:22:07,880 --> 00:22:11,000 Speaker 1: X Weeks two thousand fifteen award for the best Retail 390 00:22:11,080 --> 00:22:14,159 Speaker 1: for X training platform visit ib at, I, b k 391 00:22:14,520 --> 00:22:18,760 Speaker 1: R dot Com slash four x, and we thank them 392 00:22:18,920 --> 00:22:20,920 Speaker 1: as well for support. We look at equity markets with 393 00:22:21,119 --> 00:22:25,280 Speaker 1: SEI and the opening and Interactive Brokers assisting us with 394 00:22:25,359 --> 00:22:28,640 Speaker 1: our four X brief. The euro a bit stronger, fractually, 395 00:22:29,080 --> 00:22:32,680 Speaker 1: I would not elevated dollars through the day. Michael Purvis 396 00:22:32,760 --> 00:22:37,159 Speaker 1: fascinating this morning on a weaker Asia currency call away 397 00:22:37,160 --> 00:22:40,920 Speaker 1: from Japan, UH with an attendant dollar strength. We will 398 00:22:41,000 --> 00:22:43,760 Speaker 1: that's one of the big mysteries going into this year. 399 00:22:44,200 --> 00:22:48,640 Speaker 1: UH sterling near one and will leave the foreign exchange 400 00:22:48,640 --> 00:22:52,200 Speaker 1: at that um as well. Michael McKee and Tom Keene. 401 00:22:52,280 --> 00:22:55,399 Speaker 1: And now we need to chat on herbal life with 402 00:22:55,520 --> 00:22:59,680 Speaker 1: someone who's followed the soap opera and actually the serious 403 00:23:00,040 --> 00:23:04,920 Speaker 1: counting business behind this. Craig Giomonis with Bloomberg News. Good morning, sir, 404 00:23:05,000 --> 00:23:07,400 Speaker 1: good morning. You know I saw the headlines. I did 405 00:23:07,400 --> 00:23:10,320 Speaker 1: a shot out on Twitter to herb Greenberg who works 406 00:23:10,359 --> 00:23:12,880 Speaker 1: at a private capacity and helps the NBC out as well. 407 00:23:13,520 --> 00:23:18,280 Speaker 1: Herb focused as I did on the actual accounting ballet. 408 00:23:18,520 --> 00:23:22,400 Speaker 1: So let's talk about that. These are not gap questions 409 00:23:22,560 --> 00:23:25,000 Speaker 1: in these headlines this morning, right, that's right, nothing to 410 00:23:25,040 --> 00:23:27,879 Speaker 1: be restated. It's not a number that analysts some analysts 411 00:23:27,920 --> 00:23:29,960 Speaker 1: even having their models. It's not something to do with 412 00:23:29,960 --> 00:23:32,560 Speaker 1: the SEC. It's a it's a mistake. It's an embarrassing mistake. 413 00:23:32,600 --> 00:23:35,240 Speaker 1: It's not good. But it's not an issue of being 414 00:23:35,359 --> 00:23:38,800 Speaker 1: restating results. It is a mistake of of things that 415 00:23:38,840 --> 00:23:42,640 Speaker 1: would be in the annual report. New members, new accountability, 416 00:23:42,760 --> 00:23:46,840 Speaker 1: and that obviously a market reaction, but it does fold 417 00:23:46,920 --> 00:23:49,640 Speaker 1: in at the top line of revenue, which is price 418 00:23:50,240 --> 00:23:54,320 Speaker 1: and units. How do you take non gap miscounting of 419 00:23:54,359 --> 00:23:57,360 Speaker 1: new members and bring that over to the revenue line. 420 00:23:57,400 --> 00:23:59,920 Speaker 1: What questioning will you have in the next few days. 421 00:24:00,160 --> 00:24:02,080 Speaker 1: I mean, I think the big thing for them is 422 00:24:02,080 --> 00:24:04,639 Speaker 1: sort of the psychological impact. This is a company that 423 00:24:04,680 --> 00:24:06,720 Speaker 1: has a cloud over it. There's suspicions, there's people on 424 00:24:06,760 --> 00:24:09,240 Speaker 1: both sides of this issue, but obviously high profile questions 425 00:24:09,240 --> 00:24:12,160 Speaker 1: from Bill Ackman, who's made a three year battle with them. 426 00:24:12,200 --> 00:24:14,879 Speaker 1: So this is a company that has suspicions around it. 427 00:24:14,920 --> 00:24:16,760 Speaker 1: They've made a mistake. That's what I think people are 428 00:24:16,760 --> 00:24:19,720 Speaker 1: going to focus on as far as how could this happen. 429 00:24:19,760 --> 00:24:21,919 Speaker 1: This is a big you know, it was down to 430 00:24:21,920 --> 00:24:24,080 Speaker 1: thirty percent. These weren't sort of rounding errors. These are 431 00:24:24,280 --> 00:24:26,080 Speaker 1: big mistakes that they made. But like you said, not 432 00:24:26,160 --> 00:24:30,199 Speaker 1: a gap question. What's the time period involved? Because if 433 00:24:30,240 --> 00:24:32,960 Speaker 1: you have fewer new members, it would imply for an 434 00:24:32,960 --> 00:24:36,320 Speaker 1: investor that your sales may be lower and you make 435 00:24:36,400 --> 00:24:38,840 Speaker 1: less money. But if these are old numbers, we are 436 00:24:38,920 --> 00:24:41,320 Speaker 1: we would would we already have the sales figures for 437 00:24:41,359 --> 00:24:43,560 Speaker 1: the period, right, So it's fourth quarter numbers they And 438 00:24:43,560 --> 00:24:45,480 Speaker 1: the other interesting thing here is that they only started 439 00:24:45,480 --> 00:24:48,840 Speaker 1: reporting these metrics in July. These are new numbers that 440 00:24:48,880 --> 00:24:51,400 Speaker 1: they have just started to put out. So some analysts 441 00:24:51,400 --> 00:24:54,080 Speaker 1: are saying, you know, maybe we're gonna make excuse them. 442 00:24:54,119 --> 00:24:57,000 Speaker 1: It's an honest mistake. That database just isn't up to 443 00:24:57,040 --> 00:24:58,919 Speaker 1: what it should be. But so these are newer numbers 444 00:24:58,920 --> 00:25:00,800 Speaker 1: and it's dealing with the fourth order, so it's hard 445 00:25:00,840 --> 00:25:03,240 Speaker 1: to draw an implication yet as to what it means 446 00:25:03,280 --> 00:25:06,280 Speaker 1: for future sales, leaving aside the accounting questions, But for 447 00:25:06,359 --> 00:25:08,359 Speaker 1: future sales. That's right. I had one analysts say that, 448 00:25:08,359 --> 00:25:10,520 Speaker 1: you know, these numbers aren't even in my model. If 449 00:25:10,520 --> 00:25:12,760 Speaker 1: they had put the numbers out correctly, it would not 450 00:25:12,800 --> 00:25:15,359 Speaker 1: have changed my view of the stock. That's how one 451 00:25:15,400 --> 00:25:18,199 Speaker 1: analysts put it. But again there's a psychological issue here 452 00:25:18,200 --> 00:25:20,880 Speaker 1: because this is a mistake. These are big, big gaps. 453 00:25:20,920 --> 00:25:24,520 Speaker 1: I mean, I I my amateur take is first quarter 454 00:25:24,680 --> 00:25:27,960 Speaker 1: is the first quarter of fifteen January through March, or 455 00:25:28,000 --> 00:25:30,320 Speaker 1: is at a different calendar? That's right, So it's January 456 00:25:30,320 --> 00:25:33,040 Speaker 1: through March, not much change, but then there were big 457 00:25:33,119 --> 00:25:35,879 Speaker 1: changes through the summer. You're telling me the cell side 458 00:25:36,160 --> 00:25:39,600 Speaker 1: can ignore that, you know. That's it's a very it's 459 00:25:39,600 --> 00:25:41,480 Speaker 1: a fair question because hed like I said, these were 460 00:25:41,520 --> 00:25:43,840 Speaker 1: not rounding errors. This is one number was they said seven. 461 00:25:44,320 --> 00:25:46,600 Speaker 1: It was actually more like thirty. One number was sixteen 462 00:25:46,600 --> 00:25:49,080 Speaker 1: per seven, they said it was more like three. So big, 463 00:25:49,119 --> 00:25:50,960 Speaker 1: big questions about what's going on at this company that 464 00:25:51,000 --> 00:25:52,560 Speaker 1: they would be out on a conference call with those 465 00:25:52,600 --> 00:25:55,040 Speaker 1: kind of discrepance. Do we allow somebody with a bowding 466 00:25:55,119 --> 00:25:57,400 Speaker 1: tie to come into the studio? I mean, I don't 467 00:25:57,400 --> 00:25:59,920 Speaker 1: know if that's part of our agreement here. Did anybody's 468 00:26:00,040 --> 00:26:01,920 Speaker 1: sell this stuff up at Bowden when you were there? 469 00:26:02,119 --> 00:26:04,600 Speaker 1: That's right. Well, I am representing a Boden college proudly 470 00:26:04,680 --> 00:26:06,760 Speaker 1: today as always with I'm glad you noticed that was 471 00:26:07,560 --> 00:26:10,480 Speaker 1: But but did anybody drink this stuff or eat the 472 00:26:10,480 --> 00:26:13,320 Speaker 1: stuff at Boden? No, when you were there, Mike, have 473 00:26:13,400 --> 00:26:16,399 Speaker 1: you ever tried it? Uh? No, I have not tried it. Um, 474 00:26:16,440 --> 00:26:19,200 Speaker 1: there's some in the kitchen, Captain, I'm going home today 475 00:26:19,320 --> 00:26:22,720 Speaker 1: to try her. I've never tried it. All right, we'll 476 00:26:22,760 --> 00:26:27,880 Speaker 1: get a full report for the is you mentioned? Um? 477 00:26:28,320 --> 00:26:31,119 Speaker 1: There there is this other accounting issue going on, and 478 00:26:31,160 --> 00:26:33,680 Speaker 1: it has been for some time for those who only 479 00:26:33,720 --> 00:26:36,479 Speaker 1: dip into the news every once in a while, when 480 00:26:36,520 --> 00:26:38,560 Speaker 1: somebody makes an outrageous claim one way or the other. 481 00:26:38,840 --> 00:26:42,520 Speaker 1: What's the status of that. So the stock before today 482 00:26:42,560 --> 00:26:45,440 Speaker 1: was up for the year, and it surged like last 483 00:26:45,440 --> 00:26:47,440 Speaker 1: week when they put out in a filing that they 484 00:26:47,440 --> 00:26:51,159 Speaker 1: were nearing a resolution with the FDC. So interesting word resolution. 485 00:26:51,359 --> 00:26:53,440 Speaker 1: The market took that as a positive that maybe they're 486 00:26:53,440 --> 00:26:56,880 Speaker 1: going to get out of this without you know, major implications. 487 00:26:56,880 --> 00:26:59,359 Speaker 1: But we've also heard from people saying they said resolution, 488 00:26:59,400 --> 00:27:01,320 Speaker 1: they didn't say one way or another. It was purposely 489 00:27:01,400 --> 00:27:04,359 Speaker 1: vague statement. So I really don't know. There's some sense 490 00:27:04,359 --> 00:27:06,760 Speaker 1: that they're nearing a quote unquote resolution with the FTC, 491 00:27:07,080 --> 00:27:09,280 Speaker 1: whether that's good or bad. We really don't have an indication. 492 00:27:09,400 --> 00:27:11,119 Speaker 1: I want to be clear before we let you go. 493 00:27:11,320 --> 00:27:15,920 Speaker 1: Price Waterhouse is their auditors are not involved in the headlines. 494 00:27:16,000 --> 00:27:18,480 Speaker 1: We saw this more. That's correct. They're not restating anything. 495 00:27:18,520 --> 00:27:20,840 Speaker 1: These are just a mistake that they made bad numbers 496 00:27:20,840 --> 00:27:22,520 Speaker 1: on a conference call. But this is not an issue 497 00:27:22,520 --> 00:27:26,679 Speaker 1: of gap or sec and they're not restating forcing me 498 00:27:26,760 --> 00:27:29,720 Speaker 1: to try herbal Life tonight. Thank you. I think, thank 499 00:27:29,760 --> 00:27:35,440 Speaker 1: you so much, full report tomorrow if I survive. What's 500 00:27:35,440 --> 00:27:37,400 Speaker 1: it gonna do for me? Herbal life Does it let 501 00:27:37,400 --> 00:27:40,679 Speaker 1: you lose weight? Or is it gain weight? What's it? 502 00:27:40,760 --> 00:27:44,680 Speaker 1: Do you know? Nutrition? Health and wellnesses is the pitch. 503 00:27:44,720 --> 00:27:47,080 Speaker 1: But I think like you raise a good point, which 504 00:27:47,080 --> 00:27:49,040 Speaker 1: is this issue of customers, and you know, you say 505 00:27:49,080 --> 00:27:50,639 Speaker 1: you haven't met anyone who's tried it, and there's a 506 00:27:50,680 --> 00:27:52,000 Speaker 1: lot of people out there that say where are all 507 00:27:52,040 --> 00:27:54,080 Speaker 1: these people that have tried it? That's obviously the big 508 00:27:54,160 --> 00:27:57,360 Speaker 1: question that actmen is raised. Customers. Thank you so much, 509 00:27:57,400 --> 00:28:00,000 Speaker 1: Thank you on Herbal Life and we'll follow us fifth 510 00:28:00,160 --> 00:28:02,600 Speaker 1: it's self here, it's it's moved south. In the last 511 00:28:02,600 --> 00:28:04,840 Speaker 1: ten minutes, fifty three handled down to fifty two and 512 00:28:05,160 --> 00:28:09,440 Speaker 1: five eights. I'm quoting eights this morning. Michael mc roger 513 00:28:09,480 --> 00:28:12,359 Speaker 1: Altman was in earlier talking about sterling a hole. Max 514 00:28:13,119 --> 00:28:15,959 Speaker 1: talked about a name for the past, and uh, if 515 00:28:16,080 --> 00:28:19,200 Speaker 1: Mr Altman can talk sterling hole, Max, we can quote 516 00:28:19,680 --> 00:28:25,200 Speaker 1: in eights. Bloomer surveillance this morning in quarters eights or sixteens, 517 00:28:25,480 --> 00:28:28,360 Speaker 1: brought you by Interactive Brokers and CEME Group. If you're 518 00:28:28,359 --> 00:28:32,200 Speaker 1: looking for global futures contracts with low trading costs, look 519 00:28:32,280 --> 00:28:35,160 Speaker 1: no further Interactive Brokers. As the Industry Leader learned more 520 00:28:35,800 --> 00:28:39,800 Speaker 1: at Interactive Brokers dot com slash sem group. That was 521 00:28:39,920 --> 00:28:42,440 Speaker 1: very good. He was very good on some of the 522 00:28:42,440 --> 00:28:45,400 Speaker 1: new ones. Gifts a good impression of what's going ahead. 523 00:28:45,400 --> 00:28:47,840 Speaker 1: As you say, it's a it's a story stock for 524 00:28:47,880 --> 00:28:50,200 Speaker 1: most people, it's just you debate it out based on 525 00:28:50,240 --> 00:28:54,200 Speaker 1: the headlines. So Herb Greenberg has been nant out on 526 00:28:54,240 --> 00:28:58,320 Speaker 1: Twitter this morning on taking this from the gap hysteria 527 00:28:58,360 --> 00:29:01,440 Speaker 1: and the accounting hysteria over to what we heard from 528 00:29:01,480 --> 00:29:05,080 Speaker 1: Craig gm on very very good. I'm smarter on herban life. 529 00:29:05,960 --> 00:29:09,560 Speaker 1: Unlike the last three years, I sort of ignored the 530 00:29:09,800 --> 00:29:13,840 Speaker 1: entire topic. At ten you yield one five percent West 531 00:29:13,880 --> 00:29:17,680 Speaker 1: Texas South, thirty seven cents, thirty four dollars, twenty cents 532 00:29:17,720 --> 00:29:21,440 Speaker 1: of barrel uh brent two dollars away, thirty six dollars, 533 00:29:21,440 --> 00:29:24,000 Speaker 1: forty nine cents of barrel gold, pulling back up three 534 00:29:24,040 --> 00:29:26,200 Speaker 1: dollars up one dollar. Just sort of a back and 535 00:29:26,320 --> 00:29:30,160 Speaker 1: forth Jobsday. Tomorrow, Bill Gross will join us and is 536 00:29:30,280 --> 00:29:38,600 Speaker 1: always from Princeton. Alan Krueger time to check in out 537 00:29:38,640 --> 00:29:41,240 Speaker 1: with Michael Barr and get the latest world in national headlines. 538 00:29:41,520 --> 00:29:44,040 Speaker 1: Mike Tom, thank you very much. Donald Trump is firing 539 00:29:44,120 --> 00:29:47,040 Speaker 1: back Admit Romney. It is in response to the former 540 00:29:47,080 --> 00:29:50,600 Speaker 1: Republican presidential nominee planning to give a speech later today 541 00:29:50,600 --> 00:29:54,240 Speaker 1: in Utah calling Trump a phony, a fraud, and a 542 00:29:54,280 --> 00:29:58,480 Speaker 1: boon to Democratic candidate Hillary Clinton. Trump made the rounds 543 00:29:58,520 --> 00:30:01,960 Speaker 1: on the morning news shows on NBC. Trump says Mitt 544 00:30:02,000 --> 00:30:05,800 Speaker 1: Romney is a stiff, adding he got killed and decimated 545 00:30:05,800 --> 00:30:09,800 Speaker 1: in the election. On ABC, Mitt Romney was a failed candidate, 546 00:30:09,880 --> 00:30:13,160 Speaker 1: should have beaten Barack Obama easily. There will be only 547 00:30:13,200 --> 00:30:16,280 Speaker 1: four podiums instead of five. At the night's Republican presidential 548 00:30:16,280 --> 00:30:19,440 Speaker 1: debate in Detroit, Ben Carson will be an O show, 549 00:30:19,760 --> 00:30:22,680 Speaker 1: having signaled that he is on the verge of officially 550 00:30:22,800 --> 00:30:25,600 Speaker 1: ending his campaign. Malaysia will be sending a team of 551 00:30:25,640 --> 00:30:30,280 Speaker 1: aviation officials and investigators to Mozambique, the prewashed shore there 552 00:30:30,320 --> 00:30:33,040 Speaker 1: over the weekend. There is speculation it could be from 553 00:30:33,200 --> 00:30:36,920 Speaker 1: a Malaysian Airlines Boeing seven seventy seven had vanished two 554 00:30:37,000 --> 00:30:40,680 Speaker 1: years ago. Astronaut Scott Kelly got a hero's welcome overnight. 555 00:30:41,000 --> 00:30:43,680 Speaker 1: Kelly returned to the Johnson Space Center in Houston A 556 00:30:43,800 --> 00:30:47,440 Speaker 1: day after landing I saw use spacecraft in Kazakhstan. Kelly 557 00:30:47,520 --> 00:30:50,280 Speaker 1: spent three hundred forty days in orbit in the International 558 00:30:50,280 --> 00:30:53,760 Speaker 1: Space Station. Global News twenty four hours a day, powered 559 00:30:53,760 --> 00:30:56,840 Speaker 1: by ours twenty four hundred journalists more than one hundred 560 00:30:56,880 --> 00:31:01,000 Speaker 1: fifty news bureaus from around the world. I'm Michael barr My, Michael, 561 00:31:01,040 --> 00:31:03,560 Speaker 1: thanks so much, shut out to Brendan emailing in Today 562 00:31:03,600 --> 00:31:09,600 Speaker 1: listening on Washington FM Bloomberg FM in Washington. Thank you 563 00:31:09,720 --> 00:31:13,480 Speaker 1: so much for your support in our recent Today visit 564 00:31:13,920 --> 00:31:17,160 Speaker 1: from New York. Today. Michael McKee and Tom Keane Bloomberg Surveillance. 565 00:31:22,240 --> 00:31:24,520 Speaker 1: Bloomberg Surveillance is brought to by Bank of American Maryland 566 00:31:24,600 --> 00:31:27,120 Speaker 1: is global Cash management Solutions, helping you manage to protect 567 00:31:27,200 --> 00:31:30,040 Speaker 1: and invest your global cash whether the where the road 568 00:31:30,080 --> 00:31:32,800 Speaker 1: to global growth leads the power of global connections. Bank 569 00:31:32,800 --> 00:31:34,600 Speaker 1: of America North America re member f d I CE 570 00:31:37,520 --> 00:31:40,920 Speaker 1: Global Business News twenty four hours a day. If Bloomberg 571 00:31:40,960 --> 00:31:44,000 Speaker 1: dot Com the radio plus mobile lapt and on your radio, 572 00:31:44,320 --> 00:31:48,200 Speaker 1: this is a Bloomberg business flash and I'm parent Moscow. 573 00:31:48,240 --> 00:31:51,720 Speaker 1: This updates brought to you buy American Arbitration Association. Business 574 00:31:51,720 --> 00:31:55,840 Speaker 1: disputes are inevitable resolved faster with the American Arbitration Association, 575 00:31:56,080 --> 00:31:59,400 Speaker 1: the global leader in alternative dispute resolution for over eighty 576 00:31:59,400 --> 00:32:02,200 Speaker 1: five years. Learn more at a d R dot org. 577 00:32:02,760 --> 00:32:05,200 Speaker 1: U s stocks are lower with investors awaiting data on 578 00:32:05,280 --> 00:32:08,360 Speaker 1: factory and service industries activity for further clues on the 579 00:32:08,360 --> 00:32:11,120 Speaker 1: strength of the economy. We checked the markets every fifteen 580 00:32:11,160 --> 00:32:14,479 Speaker 1: minutes throughout the trading day. On Bloomberg SNP five hundred 581 00:32:14,480 --> 00:32:16,800 Speaker 1: down four tens per cent, or seven points in nineteen 582 00:32:16,840 --> 00:32:19,840 Speaker 1: seventy nine down Jones Industrial average down three tens per 583 00:32:19,840 --> 00:32:22,280 Speaker 1: cent or fifty one points to sixteen thousand, eight hundred 584 00:32:22,320 --> 00:32:25,080 Speaker 1: forty eight. The nastacs down three ten percent or fourteen 585 00:32:25,120 --> 00:32:28,000 Speaker 1: points to forty six eighty nine ten. Your Treasury down 586 00:32:28,000 --> 00:32:30,320 Speaker 1: one thirty second, the yield one point eight four percent. 587 00:32:30,360 --> 00:32:32,400 Speaker 1: The yield on the two year point eight four percent. 588 00:32:32,840 --> 00:32:35,080 Speaker 1: Nine x screwed oil down one point one per cent 589 00:32:35,200 --> 00:32:37,440 Speaker 1: or thirty eight cents to thirty four twenty nine a barrel. 590 00:32:37,680 --> 00:32:40,040 Speaker 1: Comex schooled a half per cent or six dollars ten 591 00:32:40,080 --> 00:32:43,320 Speaker 1: cents to twelve forty seven ninety ounce. The euro another 592 00:32:43,320 --> 00:32:45,960 Speaker 1: oh nine one seven The yen at one thirteen point 593 00:32:46,040 --> 00:32:49,160 Speaker 1: six zero. Kroger is the worst performer in the s 594 00:32:49,200 --> 00:32:51,600 Speaker 1: n P five hundred this morning. It is currently down 595 00:32:51,640 --> 00:32:55,040 Speaker 1: about six point seven percent after predicting slower growth this year, 596 00:32:55,160 --> 00:32:57,280 Speaker 1: hurt by pressure on prices and it's merger with the 597 00:32:57,360 --> 00:33:01,040 Speaker 1: Roundies chain. Urban Life is down seven and a half percent. 598 00:33:01,080 --> 00:33:04,640 Speaker 1: The nutrition company under federal investigation for allegations of fostering 599 00:33:04,680 --> 00:33:07,920 Speaker 1: a pyramid scheme set it overstated growth of new customers 600 00:33:07,960 --> 00:33:11,720 Speaker 1: and distributors last year because of database errors and consumer 601 00:33:11,760 --> 00:33:14,160 Speaker 1: confidence declining in the last week of February to the 602 00:33:14,160 --> 00:33:17,440 Speaker 1: lowest level of the year. The Bloomberg Consumer Comfort Index 603 00:33:17,440 --> 00:33:19,800 Speaker 1: falling to forty three points six during the period ending 604 00:33:19,840 --> 00:33:23,240 Speaker 1: February from forty four point to the prior week, a 605 00:33:23,280 --> 00:33:25,400 Speaker 1: measure of whether it's a good time to spend, posted 606 00:33:25,440 --> 00:33:28,760 Speaker 1: its weakest reading in six weeks. That's a Bloomberg business flash. 607 00:33:28,800 --> 00:33:32,240 Speaker 1: Tom and Mike Karen, I thanks so much. I add 608 00:33:32,280 --> 00:33:35,960 Speaker 1: an email over the weekend who said, Tom, your work 609 00:33:36,080 --> 00:33:39,640 Speaker 1: on Honeywell ut X a number of days ago was 610 00:33:39,720 --> 00:33:42,520 Speaker 1: genormous and the reason was jenormous is not because of 611 00:33:42,520 --> 00:33:45,440 Speaker 1: Michael McKee and Tom Keane were me your mortals, But 612 00:33:45,520 --> 00:33:47,720 Speaker 1: we got lucky with Peter R. Minister and AG who 613 00:33:47,720 --> 00:33:52,760 Speaker 1: gave us terrific on the spot no notes perspective on 614 00:33:52,920 --> 00:33:56,840 Speaker 1: two American industrial giants. If you haven't kept up with 615 00:33:56,880 --> 00:34:01,600 Speaker 1: the news, um that mating is shifted. Aside, Peter, you 616 00:34:01,720 --> 00:34:05,080 Speaker 1: attended the Honeywell International Day. Let me get this out 617 00:34:05,080 --> 00:34:08,040 Speaker 1: of the way before Mike McKay ash you about Honeywell 618 00:34:08,120 --> 00:34:12,520 Speaker 1: and industry in general. Forward, Mr Kote cleared the air 619 00:34:13,520 --> 00:34:15,640 Speaker 1: on the collapse of the U t X deal. What 620 00:34:15,800 --> 00:34:19,160 Speaker 1: was the energy like in the room? Yeah you good 621 00:34:19,160 --> 00:34:21,040 Speaker 1: morning time, good to be back on Yes, I mean 622 00:34:21,160 --> 00:34:23,359 Speaker 1: he he did clearly here. I think he wanted to 623 00:34:23,440 --> 00:34:26,200 Speaker 1: basically address the issue, you know, head on, that he 624 00:34:26,640 --> 00:34:30,479 Speaker 1: had not lost his mind from deviating from the previous plan. 625 00:34:30,600 --> 00:34:33,239 Speaker 1: I think he just saw an opportunity to try to 626 00:34:33,280 --> 00:34:36,120 Speaker 1: put two great companies together to create you know, really 627 00:34:36,520 --> 00:34:38,480 Speaker 1: a lot of shareholder value. But at the end of 628 00:34:38,480 --> 00:34:41,040 Speaker 1: the day, you too to tango and they just couldn't 629 00:34:41,080 --> 00:34:44,239 Speaker 1: get there. Did the board assist Mr Kote in his 630 00:34:44,560 --> 00:34:48,560 Speaker 1: new clarity of reasoning? I don't think so. I think 631 00:34:48,560 --> 00:34:52,239 Speaker 1: it uh, this is you know, uh CEO to CEO discussion, 632 00:34:52,280 --> 00:34:55,239 Speaker 1: and I think ultimately, uh, you know, honeywell, he did 633 00:34:55,239 --> 00:34:57,719 Speaker 1: not want this to be a distraction to what is 634 00:34:57,760 --> 00:35:00,560 Speaker 1: really still a great story for honeywell on term and 635 00:35:00,560 --> 00:35:02,839 Speaker 1: I think that's what he wants to you know, refocus 636 00:35:02,880 --> 00:35:05,080 Speaker 1: on right now. All right, well what is that great story? 637 00:35:05,080 --> 00:35:07,919 Speaker 1: Because it looks like a U t X acquisition would 638 00:35:07,960 --> 00:35:11,680 Speaker 1: have fit what their growth strategy is in the short run, 639 00:35:11,960 --> 00:35:14,839 Speaker 1: it is it seems to be acquisitions. They you know, 640 00:35:14,920 --> 00:35:18,239 Speaker 1: sales were lower in two thousand fifteen. This year they're 641 00:35:18,239 --> 00:35:24,440 Speaker 1: projecting only a small organic growth. Yeah, that's that's true. 642 00:35:24,520 --> 00:35:27,799 Speaker 1: But you know, again with with Honeywell. UM, they're really 643 00:35:27,840 --> 00:35:31,520 Speaker 1: unfocused on on driving that organic growth and what that 644 00:35:31,719 --> 00:35:35,759 Speaker 1: entails is really refreshing their existing products, are introducing new products, 645 00:35:35,840 --> 00:35:38,200 Speaker 1: and a lot of that is all about leveraging services, 646 00:35:38,280 --> 00:35:41,640 Speaker 1: software enhancements or connectivity. And that's the theme I think 647 00:35:41,640 --> 00:35:44,120 Speaker 1: everyone needs to focus on his regarding connectivity. It's going 648 00:35:44,160 --> 00:35:47,560 Speaker 1: to be a huge theme that Honeywell is executing on UM. 649 00:35:47,600 --> 00:35:49,800 Speaker 1: You know, we all talk about smartphones. Will forget the 650 00:35:49,840 --> 00:35:53,520 Speaker 1: smartphone in the industrial world, it's smart building, smart homes. 651 00:35:53,840 --> 00:35:56,520 Speaker 1: Honeywell has the presence in a hundred and fifty million homes. 652 00:35:57,120 --> 00:36:00,720 Speaker 1: In aerospace, there's smart controls on the engines. That data 653 00:36:00,760 --> 00:36:04,840 Speaker 1: is now being used in Honeywell's offering services regarding maintenance. UM. 654 00:36:04,880 --> 00:36:07,040 Speaker 1: In the cockpit, the passing in the cockpit in the 655 00:36:07,040 --> 00:36:09,680 Speaker 1: pastor experience is going to radically change in the next 656 00:36:09,680 --> 00:36:12,040 Speaker 1: five years and it's all because of Honeywall. The Honeywall 657 00:36:12,160 --> 00:36:15,520 Speaker 1: new weather features which they're going to basically allow crowdsourcing 658 00:36:15,520 --> 00:36:18,400 Speaker 1: among pilots and that is that is something that just 659 00:36:18,560 --> 00:36:20,560 Speaker 1: is not done today and that's gonna allow for smoother 660 00:36:20,680 --> 00:36:24,360 Speaker 1: air uh, you know, pilots to you know, basically navigate 661 00:36:24,400 --> 00:36:27,319 Speaker 1: around weather much easier. Um and then with the new 662 00:36:27,440 --> 00:36:30,920 Speaker 1: satellites that are up, with the ku Ban Honeywell's new hardware, 663 00:36:30,960 --> 00:36:33,239 Speaker 1: you're your Internet experience is going to be a hunter 664 00:36:33,320 --> 00:36:35,040 Speaker 1: times faster in the back of the plane. So it's 665 00:36:35,239 --> 00:36:37,360 Speaker 1: the equivalent of a fire hose versus a straw. And 666 00:36:37,719 --> 00:36:39,239 Speaker 1: you know, I think we're all looking forward to that. 667 00:36:39,400 --> 00:36:41,640 Speaker 1: So so this is a longer term play as a 668 00:36:41,719 --> 00:36:45,719 Speaker 1: stock absolutely. I mean, they still show that, you know, 669 00:36:45,719 --> 00:36:48,239 Speaker 1: their organic growth is actually going to continue to inflect. 670 00:36:48,600 --> 00:36:51,640 Speaker 1: And the fact that these services and these connectivity themes 671 00:36:51,880 --> 00:36:53,719 Speaker 1: they all come with the software piece, and so that 672 00:36:53,800 --> 00:36:56,120 Speaker 1: software piece comes with a higher margin, so they can 673 00:36:56,160 --> 00:36:57,759 Speaker 1: they can have a lot of confidence that they still 674 00:36:57,800 --> 00:37:00,480 Speaker 1: have margin runaway in their story gradually. You on the 675 00:37:00,480 --> 00:37:03,240 Speaker 1: granularity of your note folks, you get that from stern Aging, 676 00:37:03,320 --> 00:37:06,239 Speaker 1: not from us Peter. I meant with his Peter on 677 00:37:06,320 --> 00:37:08,360 Speaker 1: the use of cash and the m and a framework 678 00:37:08,400 --> 00:37:11,360 Speaker 1: you mentioned discipline. They're gonna come up with a twenty 679 00:37:11,400 --> 00:37:14,200 Speaker 1: five billion dollar cash load. They're gonna do all sorts 680 00:37:14,239 --> 00:37:16,560 Speaker 1: of cool things with that, but they're gonna do it 681 00:37:16,600 --> 00:37:20,480 Speaker 1: within the discipline of an internal radar return greater than 682 00:37:20,520 --> 00:37:23,360 Speaker 1: their way to the average cost to capital and double 683 00:37:23,400 --> 00:37:26,440 Speaker 1: digit r o I I'll cut to the David kote Chase. 684 00:37:26,760 --> 00:37:29,640 Speaker 1: How do you do that where nominal g d P 685 00:37:29,920 --> 00:37:33,759 Speaker 1: is I don't get it. Well, I mean, again, they 686 00:37:33,800 --> 00:37:38,480 Speaker 1: have the luxury of having enormous presence and strong market 687 00:37:38,480 --> 00:37:40,960 Speaker 1: shares and a lot of these markets that they're in, 688 00:37:41,000 --> 00:37:43,239 Speaker 1: and they know the businesses that they want to go after, 689 00:37:43,320 --> 00:37:45,440 Speaker 1: and they know the high value added capex that they 690 00:37:45,440 --> 00:37:49,040 Speaker 1: want to spend on. So it's amount of really leveraging that. 691 00:37:49,200 --> 00:37:51,920 Speaker 1: I mean, I think that that's the most recent deals 692 00:37:51,920 --> 00:37:54,240 Speaker 1: that you've seen, whether it was else there that further, 693 00:37:54,680 --> 00:37:57,200 Speaker 1: you know, I gave them a stronger controls in the 694 00:37:57,280 --> 00:38:00,120 Speaker 1: in the smart metering business, um, some of these and 695 00:38:00,160 --> 00:38:03,719 Speaker 1: software deals. That's all kind of leveraging the overall strategy 696 00:38:03,760 --> 00:38:05,440 Speaker 1: from Dave Cody and the rest of the management in 697 00:38:05,680 --> 00:38:08,279 Speaker 1: what is their practices versus a train wreck known as 698 00:38:08,320 --> 00:38:12,760 Speaker 1: the International Business Machines. What does Cot doing that Romedy 699 00:38:12,760 --> 00:38:17,439 Speaker 1: and the others could learn from. Uh, Well, I think 700 00:38:17,480 --> 00:38:20,879 Speaker 1: he's uh, you know, I think again they've they've they've 701 00:38:20,920 --> 00:38:24,200 Speaker 1: allowed themselves to really kind of benefit from some some 702 00:38:24,280 --> 00:38:27,440 Speaker 1: of the big value themes. Whether they're still penetrating in 703 00:38:27,680 --> 00:38:30,120 Speaker 1: you know, these China and India markets. Um. But at 704 00:38:30,160 --> 00:38:32,360 Speaker 1: the end of the day, they have a big local 705 00:38:32,400 --> 00:38:36,480 Speaker 1: presence in all these areas where they are the equivalent 706 00:38:36,480 --> 00:38:39,359 Speaker 1: of the Chinese competitor because they have a strong presence there, 707 00:38:39,640 --> 00:38:41,719 Speaker 1: and they're able to kind of leverage that in terms 708 00:38:41,760 --> 00:38:44,720 Speaker 1: of being close to the customers and and and continue 709 00:38:44,760 --> 00:38:47,640 Speaker 1: to penetrate those markets, um, just in a smarter way. 710 00:38:47,680 --> 00:38:49,640 Speaker 1: And I think they're well positioned for you know, still 711 00:38:49,680 --> 00:38:51,880 Speaker 1: a lot of organic growth in these markets. It's amazing, 712 00:38:51,920 --> 00:38:54,279 Speaker 1: Like how much Harneywell product is that our Gulf stream? 713 00:38:54,320 --> 00:38:57,000 Speaker 1: I have no idea? Yeah, you really. You know that's 714 00:38:57,000 --> 00:38:58,440 Speaker 1: because you sit in the back and you look at 715 00:38:58,480 --> 00:39:03,400 Speaker 1: the wood paneling and how the aquarium is something. Listening 716 00:39:03,960 --> 00:39:07,960 Speaker 1: honey Well six acquisitions they're digesting. We're expecting more from them, 717 00:39:07,960 --> 00:39:10,600 Speaker 1: and is that going to be a theme in industrials 718 00:39:10,600 --> 00:39:14,440 Speaker 1: and multis like Honeywell for two thousands sixteen. Well, organic 719 00:39:14,440 --> 00:39:19,640 Speaker 1: growth is difficult, you just look for for bold profit. Yeah. 720 00:39:19,680 --> 00:39:21,879 Speaker 1: I think that's always the case. Um. But I don't 721 00:39:21,880 --> 00:39:24,239 Speaker 1: think they're in a in a rush to do deal 722 00:39:24,400 --> 00:39:28,799 Speaker 1: just because the global economy is uh softer. I think 723 00:39:28,840 --> 00:39:30,879 Speaker 1: they Really it's all about the strategy and they want 724 00:39:30,880 --> 00:39:34,279 Speaker 1: to execute on that. And you know, thankfully that this 725 00:39:34,400 --> 00:39:37,560 Speaker 1: has been a strategy that Honeywell had in place, uh 726 00:39:37,800 --> 00:39:42,319 Speaker 1: for several years now and with Dave's leadership. Tell us 727 00:39:42,320 --> 00:39:44,279 Speaker 1: about the rest of industry. I mean, it's great to 728 00:39:44,320 --> 00:39:45,960 Speaker 1: go to a road show and honey Well has been 729 00:39:45,960 --> 00:39:49,320 Speaker 1: a wonderful performer. Can you go to other road shows 730 00:39:49,360 --> 00:39:51,799 Speaker 1: within the instrument group and get the same kind of 731 00:39:51,840 --> 00:39:56,680 Speaker 1: operating excellence? I mean, look, these are all I mean 732 00:39:56,719 --> 00:39:59,440 Speaker 1: taking out of technologies there. Uh you know we're new 733 00:39:59,480 --> 00:40:01,640 Speaker 1: to rated but you know they have you know, very 734 00:40:01,680 --> 00:40:05,600 Speaker 1: strong margins and a lot of cash generation. Um. These 735 00:40:05,600 --> 00:40:09,960 Speaker 1: are all I think companies that are executing very well. Um. Again, 736 00:40:10,000 --> 00:40:12,319 Speaker 1: it's just about a different story of who's got some 737 00:40:12,360 --> 00:40:15,239 Speaker 1: strong organic growth and able to leverage that. Um. You 738 00:40:15,280 --> 00:40:17,359 Speaker 1: know in the aerospace, which is you know where I 739 00:40:17,400 --> 00:40:20,040 Speaker 1: spend most of my time. UM. You know, you still 740 00:40:20,080 --> 00:40:23,160 Speaker 1: have a very big backclock between Bowing and Airbus. Uh. 741 00:40:23,280 --> 00:40:25,840 Speaker 1: There with that's providing a lot of organic growth for 742 00:40:25,920 --> 00:40:28,839 Speaker 1: the for the entire industry and supply chain. So there 743 00:40:28,920 --> 00:40:30,759 Speaker 1: is a lot of leverage here. I mean I look 744 00:40:30,800 --> 00:40:32,520 Speaker 1: at some of the you know, forget about the excitement 745 00:40:32,520 --> 00:40:35,080 Speaker 1: of Honeywell holding water in a bear market, there's some 746 00:40:35,160 --> 00:40:36,920 Speaker 1: red on the screen to say the least. I mean 747 00:40:37,120 --> 00:40:40,560 Speaker 1: something giant like Boeing Raytheon actually doing pretty well, but 748 00:40:40,640 --> 00:40:44,080 Speaker 1: like b E Aeros Space. You know, these are companies 749 00:40:44,120 --> 00:40:47,160 Speaker 1: we don't talk about much. Is there an opportunity when 750 00:40:47,239 --> 00:40:51,239 Speaker 1: something creators like that? No? Absolutely, I mean, you know, 751 00:40:51,360 --> 00:40:54,799 Speaker 1: b Aerospace is one of three interior parts company. They're 752 00:40:54,800 --> 00:40:57,479 Speaker 1: not inside the cockpit, but basically they're in every other 753 00:40:57,840 --> 00:41:01,160 Speaker 1: area and knows the tail, inside, the in side the airplane. 754 00:41:01,160 --> 00:41:03,120 Speaker 1: And you know, one of the things that we're seeing 755 00:41:03,120 --> 00:41:04,880 Speaker 1: in the last few years and it's going to continue 756 00:41:04,880 --> 00:41:08,440 Speaker 1: this year, is global traffic growth continues to be very robust, 757 00:41:08,480 --> 00:41:11,919 Speaker 1: and so basically the air of the takeoff and landing play, 758 00:41:11,960 --> 00:41:14,520 Speaker 1: the more wear and tear, the more interior parts have 759 00:41:14,640 --> 00:41:16,960 Speaker 1: to be refreshed. And of course they also benefit from 760 00:41:17,000 --> 00:41:19,160 Speaker 1: the higher deliveries at Bowing and Airbus. We gotta come 761 00:41:19,200 --> 00:41:21,200 Speaker 1: back with that. B E A V is a simil 762 00:41:21,239 --> 00:41:24,040 Speaker 1: Peter Iman, Thank you so much, Stern agent. You mentioned 763 00:41:24,040 --> 00:41:27,080 Speaker 1: the wood paneling might be Aerospace makes the wood paneling 764 00:41:27,600 --> 00:41:30,239 Speaker 1: that those that's the company that's why you went to 765 00:41:30,320 --> 00:41:32,839 Speaker 1: that company. Yes, you know, yes, we know. We've hard 766 00:41:32,880 --> 00:41:36,240 Speaker 1: knowledge that Peter Iman, seriously, folks has been just superb 767 00:41:36,320 --> 00:41:38,239 Speaker 1: with us and the heat of the Honeywell U t 768 00:41:38,560 --> 00:41:41,160 Speaker 1: X up down. I thought there was some really interesting 769 00:41:41,200 --> 00:41:43,880 Speaker 1: stuff there on Um, you know, not that we have 770 00:41:43,920 --> 00:41:46,600 Speaker 1: an opinion on my wold cell, but at least how 771 00:41:46,640 --> 00:41:50,080 Speaker 1: to present a successful company to h the street. Mike, 772 00:41:50,560 --> 00:41:54,480 Speaker 1: we have something tomorrow. It's super Friday, Super Friday. We 773 00:41:54,719 --> 00:41:59,759 Speaker 1: put them the jobs numbers to the public, and we 774 00:42:00,000 --> 00:42:02,840 Speaker 1: certainly have a favorite in that race. Good numbers. But 775 00:42:02,920 --> 00:42:06,920 Speaker 1: we'll see Bill Gross. Bill Gross. It's a movement, the 776 00:42:06,960 --> 00:42:10,080 Speaker 1: Bill Gross movement. Yeah. Well, he has a new you 777 00:42:10,080 --> 00:42:11,400 Speaker 1: can look it up and you go to the Janis 778 00:42:11,440 --> 00:42:14,359 Speaker 1: Capitel's website and he has a new investor Outlooking Out 779 00:42:14,400 --> 00:42:18,799 Speaker 1: Today where he examines the financial something people look at 780 00:42:18,840 --> 00:42:20,960 Speaker 1: while they're waiting to hear from him tomorrow. Within the 781 00:42:20,960 --> 00:42:25,080 Speaker 1: politics of the moment, Jonathan Stearns and Toulouse all NIPA 782 00:42:25,400 --> 00:42:28,719 Speaker 1: on Mr Romney. Governor Romney tries to slow Mr Trump's rise. 783 00:42:28,880 --> 00:42:35,920 Speaker 1: KRMA drawing billion billionaires. Ire is the headline. This is 784 00:42:35,960 --> 00:42:39,839 Speaker 1: Michael McKee and Tom Keane We hope you join us tomorrow. 785 00:42:40,719 --> 00:42:43,680 Speaker 1: We'll do five hours of Bloomberg surveillance. Will do that, 786 00:42:43,800 --> 00:42:47,480 Speaker 1: moving towards Jobs Day. Be with us tomorrow