1 00:00:00,040 --> 00:00:02,600 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:02,680 --> 00:00:07,040 Speaker 1: their trust and independent registered investment advisors to the two 3 00:00:07,040 --> 00:00:10,680 Speaker 1: and four trillion dollars. Why Learn more at find your 4 00:00:10,760 --> 00:00:26,320 Speaker 1: Independent Advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:26,720 --> 00:00:30,440 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:30,480 --> 00:00:35,520 Speaker 1: insight from the best in economics, finance, investment and international relations. 7 00:00:35,920 --> 00:00:40,519 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:40,600 --> 00:00:48,040 Speaker 1: of course on the Bloomberg Now. Ryanair has cut its 9 00:00:48,040 --> 00:00:51,080 Speaker 1: fully your profit guidance today than the frills Carrier blames 10 00:00:51,120 --> 00:00:52,920 Speaker 1: the impact of the slump in the pound following the 11 00:00:52,920 --> 00:00:55,840 Speaker 1: brigs of vote. Let's get more from John Strickland's j 12 00:00:56,000 --> 00:00:59,000 Speaker 1: LS Consulting, aviation analyst with US Paris On and head 13 00:00:59,000 --> 00:01:03,440 Speaker 1: of European Equities Fidelity International. This would probably be very 14 00:01:03,440 --> 00:01:06,440 Speaker 1: painful for Michael Leary because he had campaigned first of 15 00:01:06,440 --> 00:01:08,560 Speaker 1: all for the UK to stay within the EU, and 16 00:01:08,560 --> 00:01:12,640 Speaker 1: then he's held off right trying to not cut profit guidance, 17 00:01:12,640 --> 00:01:15,000 Speaker 1: and then finally today was too much because of course 18 00:01:15,440 --> 00:01:19,479 Speaker 1: a weaker pound ways on fairs that also has quite 19 00:01:19,480 --> 00:01:22,120 Speaker 1: a big impact on yields. Yeah, well, pound Sterling is 20 00:01:22,160 --> 00:01:24,559 Speaker 1: such an important currency for Ryan Air, with around about 21 00:01:24,560 --> 00:01:27,960 Speaker 1: a quarter of their revenues being earned in GDP, their 22 00:01:27,959 --> 00:01:31,200 Speaker 1: biggest flying activities out of the UK stands is by 23 00:01:31,200 --> 00:01:35,440 Speaker 1: far their biggest base airport, even bigger their home market Dublin. 24 00:01:35,959 --> 00:01:38,200 Speaker 1: And they're indicating they're going to work against this in 25 00:01:38,280 --> 00:01:43,040 Speaker 1: terms of further pressuring cost reductions by driving volumes that 26 00:01:43,120 --> 00:01:45,759 Speaker 1: they have a pretty stunning performance in filling their seats, 27 00:01:45,800 --> 00:01:48,760 Speaker 1: they feel aboutcent of seats. But of course the fact 28 00:01:48,800 --> 00:01:50,880 Speaker 1: they have to remit Sterling into Euros as a euro 29 00:01:50,920 --> 00:01:55,480 Speaker 1: denominated company is a fundamental problem. Can they head They 30 00:01:55,600 --> 00:01:57,680 Speaker 1: could have hedged already, but I guess at the present 31 00:01:57,680 --> 00:02:00,920 Speaker 1: time difficult to say. I mean, because there's so much 32 00:02:00,920 --> 00:02:02,720 Speaker 1: of volatility. We just can't tell how this thing is 33 00:02:02,760 --> 00:02:04,680 Speaker 1: going to play out in terms of the next few 34 00:02:04,680 --> 00:02:07,320 Speaker 1: weeks and months, all right, But there's nothing fundamentally wrongs, right, 35 00:02:07,320 --> 00:02:08,799 Speaker 1: I mean, this is it's a currency play and we're 36 00:02:08,800 --> 00:02:10,560 Speaker 1: going to see a lot of I mean, Ryan is 37 00:02:10,720 --> 00:02:13,240 Speaker 1: wrong with how many people actually fly their planes paciety. 38 00:02:13,240 --> 00:02:14,880 Speaker 1: I mean Ryan is the strongest of a lot. As 39 00:02:15,160 --> 00:02:17,240 Speaker 1: you said, they were really once really who had until 40 00:02:17,280 --> 00:02:20,160 Speaker 1: today maintained their guidance. We've seen other players like I 41 00:02:20,320 --> 00:02:22,760 Speaker 1: A G and Easy yet already issue profit warning. So 42 00:02:23,040 --> 00:02:25,240 Speaker 1: I'm sure it's with great reluctance that Ryan I did 43 00:02:25,240 --> 00:02:27,680 Speaker 1: so today. But it's still in a very healthy position 44 00:02:28,160 --> 00:02:29,840 Speaker 1: when you look at the airlines, right, So this is 45 00:02:29,880 --> 00:02:33,360 Speaker 1: a play on okay, pound and currency for for certain 46 00:02:33,400 --> 00:02:35,720 Speaker 1: of the non frill hairlines, but then it's also a 47 00:02:35,720 --> 00:02:38,920 Speaker 1: commodity play in oil. A lot of them were hedged 48 00:02:38,960 --> 00:02:42,919 Speaker 1: wrongly overall. Can they recover? Yeah? I mean, I think 49 00:02:42,919 --> 00:02:45,480 Speaker 1: I think it really comes back to looking at the 50 00:02:45,520 --> 00:02:48,760 Speaker 1: attributes of the business models long term. And we know 51 00:02:48,880 --> 00:02:54,720 Speaker 1: that Ryan there, for example, have a cost advantage versus 52 00:02:54,840 --> 00:02:57,600 Speaker 1: you know, lots of their peers. They're also expanding the 53 00:02:57,639 --> 00:03:00,400 Speaker 1: roots of which they fly. I don't think that Brexit 54 00:03:00,520 --> 00:03:03,720 Speaker 1: changes people's appetite for sort of traveling abroad. So you know, 55 00:03:03,880 --> 00:03:06,520 Speaker 1: I think is is John was saying, you know, you 56 00:03:06,560 --> 00:03:08,360 Speaker 1: have to sort of take a step back from looking 57 00:03:08,360 --> 00:03:10,639 Speaker 1: at the very short term volatility and try and look 58 00:03:10,639 --> 00:03:13,640 Speaker 1: at the longer term attributes of the business models. John, 59 00:03:13,800 --> 00:03:16,320 Speaker 1: help me out your Anthony, bring up the chart if 60 00:03:16,320 --> 00:03:18,360 Speaker 1: you would. Here. Now this is British air I A 61 00:03:18,480 --> 00:03:21,840 Speaker 1: g that Mr Strickland just noted the circle is Brexit 62 00:03:21,960 --> 00:03:24,960 Speaker 1: down we go and to be honest, that's an ugly chart. 63 00:03:25,120 --> 00:03:28,120 Speaker 1: Or John, is this the mother of all buying opportunities? 64 00:03:28,320 --> 00:03:30,960 Speaker 1: The excellence of what British air has done at terminal 65 00:03:31,040 --> 00:03:34,880 Speaker 1: five and worldwide full disclosure folks, I'm a fan, but 66 00:03:35,000 --> 00:03:37,840 Speaker 1: then down we go? So do you pause here or 67 00:03:37,880 --> 00:03:41,920 Speaker 1: is it the mother of all Heathrow buying opportunities? Well? 68 00:03:41,960 --> 00:03:44,080 Speaker 1: I a g that the parents are British Airways is 69 00:03:44,440 --> 00:03:46,680 Speaker 1: still a tho strong performer. As I mentioned, they've also 70 00:03:46,720 --> 00:03:50,280 Speaker 1: issued a profit warning. But he is sending their powerhouse 71 00:03:50,320 --> 00:03:53,320 Speaker 1: in the powerhouse, as you said, a British Airways they are. 72 00:03:53,360 --> 00:03:55,960 Speaker 1: They are also touched by Brexit that they have a 73 00:03:56,040 --> 00:03:59,800 Speaker 1: very diverse exposure, of course to global markets. If you 74 00:04:00,080 --> 00:04:02,280 Speaker 1: to come to the UK, and particularly a business travel 75 00:04:02,320 --> 00:04:04,280 Speaker 1: that heat throws the airport you're going to come into, 76 00:04:04,520 --> 00:04:06,920 Speaker 1: it's already very constrained, which is precisety why we've got 77 00:04:07,000 --> 00:04:10,520 Speaker 1: this big debate now about new runway capacity. I literally 78 00:04:10,640 --> 00:04:14,040 Speaker 1: said this that evening after Brexit, when in all of 79 00:04:14,160 --> 00:04:18,000 Speaker 1: London was nunb isn't the first order condition for any 80 00:04:18,040 --> 00:04:21,760 Speaker 1: new prime minister to say we're open for business, we're 81 00:04:21,800 --> 00:04:26,040 Speaker 1: building Heathrow. I think it's absolutely imperative. It's it's the 82 00:04:26,160 --> 00:04:29,120 Speaker 1: clearest signal that we want to be a global player 83 00:04:29,400 --> 00:04:32,240 Speaker 1: of an increasing nature. If we're going to move away 84 00:04:32,279 --> 00:04:36,120 Speaker 1: from the focus on EU markets and really truly want 85 00:04:36,160 --> 00:04:39,680 Speaker 1: to develop further trading relationships for example, China, then we 86 00:04:39,760 --> 00:04:42,159 Speaker 1: have to have a gateway which he is open for 87 00:04:42,200 --> 00:04:44,880 Speaker 1: business and where where airlines can get in. We've seen 88 00:04:44,920 --> 00:04:47,159 Speaker 1: airlines in recent years either struck me to get into 89 00:04:47,200 --> 00:04:49,200 Speaker 1: London or if they've got in a to all, they've 90 00:04:49,200 --> 00:04:51,200 Speaker 1: perhaps got slots of Gatwick and as soon as they've 91 00:04:51,240 --> 00:04:53,440 Speaker 1: had a chance, they've up sticks and moved up the 92 00:04:53,520 --> 00:04:57,520 Speaker 1: road to Heathrow Airport. Does Heathrow make money for the 93 00:04:57,600 --> 00:05:01,760 Speaker 1: people of the United Kingdom. It's a massive contributor to 94 00:05:01,800 --> 00:05:04,800 Speaker 1: the economy because of course it facilitates trade. It's it's 95 00:05:04,800 --> 00:05:07,479 Speaker 1: an access point for tourism. Many people may not know 96 00:05:07,560 --> 00:05:10,280 Speaker 1: it's one of the biggest sources of cargo and freight 97 00:05:10,320 --> 00:05:12,800 Speaker 1: traffic too, because if we think of the belly hold 98 00:05:12,800 --> 00:05:15,800 Speaker 1: capacity of these large wide bodied aircraft, it's not just 99 00:05:16,000 --> 00:05:19,600 Speaker 1: freight aircraft fly cargo and it's Visa aircraft, two vis 100 00:05:19,600 --> 00:05:22,240 Speaker 1: aircraft of the ones which are using Heathrow, so it's 101 00:05:22,240 --> 00:05:26,240 Speaker 1: a massive net contributor to UK economic performance. Yeah, and 102 00:05:26,440 --> 00:05:29,520 Speaker 1: this has been usually controversial because first of all, most 103 00:05:29,520 --> 00:05:31,800 Speaker 1: of the Greens, a lot of the environmentalists were against this. 104 00:05:31,880 --> 00:05:34,359 Speaker 1: A lot of people living underneath this flight path, that 105 00:05:34,480 --> 00:05:37,960 Speaker 1: which is actually one fourth of London, also have been 106 00:05:38,040 --> 00:05:40,720 Speaker 1: arguing against this. I think no London mayor so far 107 00:05:40,760 --> 00:05:42,800 Speaker 1: in the least fifteen years, has been for Heathrow. What 108 00:05:42,839 --> 00:05:45,280 Speaker 1: I don't really understand, and I understand it's a great 109 00:05:45,320 --> 00:05:47,599 Speaker 1: message to say we're open for business, is that the 110 00:05:47,600 --> 00:05:50,599 Speaker 1: government seems to say, well, look we don't mind losing passporting, 111 00:05:50,600 --> 00:05:53,200 Speaker 1: so we don't mind really hurting the city of London, 112 00:05:53,520 --> 00:05:55,600 Speaker 1: but we'll give you Heathrow to make a little bit better. 113 00:05:55,640 --> 00:05:58,960 Speaker 1: It doesn't match up, Yes, I think. I mean when 114 00:05:59,040 --> 00:06:00,920 Speaker 1: you talk about sort of instructure places, I mean these 115 00:06:00,920 --> 00:06:03,440 Speaker 1: are these are sort of very long term investments. I 116 00:06:03,440 --> 00:06:07,080 Speaker 1: mean countries and economies reap the benefits of investment in 117 00:06:07,080 --> 00:06:10,200 Speaker 1: infrastructure over decades, and so I think that this is 118 00:06:10,480 --> 00:06:14,360 Speaker 1: as much a strong long term political message about the 119 00:06:14,480 --> 00:06:17,599 Speaker 1: role of the UK in in the global economy, and 120 00:06:17,720 --> 00:06:20,360 Speaker 1: I think that actually what it touches on is the 121 00:06:20,400 --> 00:06:23,400 Speaker 1: fact that, you know, we could be in an environment 122 00:06:23,440 --> 00:06:27,839 Speaker 1: where the investment in infrastructure more broadly actually starts to 123 00:06:28,120 --> 00:06:29,640 Speaker 1: sort of move in a certain you know, in a 124 00:06:29,680 --> 00:06:33,360 Speaker 1: more positive direction. Right. But but again, does the city 125 00:06:33,440 --> 00:06:35,360 Speaker 1: not need pass But I mean you need to protect 126 00:06:35,400 --> 00:06:37,760 Speaker 1: the city before building a new runway, to make sure 127 00:06:37,800 --> 00:06:41,080 Speaker 1: that that people feel good about the fact that we 128 00:06:41,120 --> 00:06:43,440 Speaker 1: have access to international business gen and I think I 129 00:06:43,480 --> 00:06:45,839 Speaker 1: think the two go together. Obviously, a city and financial 130 00:06:45,880 --> 00:06:49,159 Speaker 1: sector are are key users of Heathrow Airport, and we 131 00:06:49,240 --> 00:06:51,599 Speaker 1: need to be able to access other key financial markets 132 00:06:51,920 --> 00:06:54,880 Speaker 1: within Europe, around the globe and of course all other 133 00:06:54,920 --> 00:06:58,080 Speaker 1: business sectors too. And we have airport capacity elsewhere, and 134 00:06:58,160 --> 00:07:00,760 Speaker 1: it's been quite clear that airlines and not to use it, 135 00:07:00,839 --> 00:07:03,320 Speaker 1: or they've moved out. Some airlines have decided not even 136 00:07:03,360 --> 00:07:05,200 Speaker 1: come to the UK because of a lack of access 137 00:07:05,200 --> 00:07:08,040 Speaker 1: to Heathrow. I got a killer question, you're John. Maybe 138 00:07:08,080 --> 00:07:10,480 Speaker 1: you can help, Francing, you can help Why did they 139 00:07:10,520 --> 00:07:14,200 Speaker 1: move the champagne and salmon bar that was right outside 140 00:07:14,360 --> 00:07:17,520 Speaker 1: Terminal five British air It's such a long walk down. 141 00:07:17,560 --> 00:07:20,440 Speaker 1: Francing helped me here you're starving. You get to the 142 00:07:20,480 --> 00:07:25,680 Speaker 1: airport and there's just great little champagne samon. I'm you know, 143 00:07:25,720 --> 00:07:28,000 Speaker 1: I'm a prep kind of girl. I mean they moved, 144 00:07:28,200 --> 00:07:31,720 Speaker 1: they moved the bar, the restaurant. It was terrible. That's 145 00:07:31,760 --> 00:07:34,200 Speaker 1: a that's a question probably have to put two British 146 00:07:34,200 --> 00:07:38,560 Speaker 1: areways directly to a serious point. I'm trying to save 147 00:07:38,640 --> 00:07:41,920 Speaker 1: Tom Keene out of you know, the champagne and solvent question, 148 00:07:42,280 --> 00:07:46,280 Speaker 1: henceforth known as the pressing Keen question. But actually, how 149 00:07:46,400 --> 00:07:48,480 Speaker 1: how do these terminals get built? I mean you kind 150 00:07:48,520 --> 00:07:51,040 Speaker 1: of think, right, well, we're putting the perfumes after lipstick, 151 00:07:51,240 --> 00:07:53,440 Speaker 1: after the champagne bar, so people drink and then buy 152 00:07:53,480 --> 00:07:55,720 Speaker 1: more lip In an airport like Heathrow, I mean they can, 153 00:07:56,000 --> 00:07:58,000 Speaker 1: they can literally have the pop up shops. The airport 154 00:07:58,080 --> 00:07:59,840 Speaker 1: is a such a large scale and has such a 155 00:08:00,000 --> 00:08:03,360 Speaker 1: I verse cly Ntell. There's an element by which the 156 00:08:03,520 --> 00:08:06,400 Speaker 1: retail and then bevera jeoff has to vary almost by 157 00:08:06,440 --> 00:08:08,040 Speaker 1: the hour, and that can be done in quite a 158 00:08:08,040 --> 00:08:13,720 Speaker 1: sophisticated way. What outbound Japanese travelers might buy, or business 159 00:08:13,720 --> 00:08:16,080 Speaker 1: executives to the US like Tom could be quite different 160 00:08:16,120 --> 00:08:18,240 Speaker 1: to what the holiday brigade who are going to a 161 00:08:18,280 --> 00:08:21,200 Speaker 1: Mediterranean would buy now. That cannot be done at small airports. 162 00:08:21,240 --> 00:08:24,720 Speaker 1: But retail again is important in airports keeping their charges 163 00:08:24,760 --> 00:08:27,280 Speaker 1: down to the airlines. That's a key driver to Salmon 164 00:08:27,320 --> 00:08:30,720 Speaker 1: and champagne. John, do something about JFK. That's all I 165 00:08:30,760 --> 00:08:33,720 Speaker 1: ask for, John Strangling, Thank you so much. The different 166 00:08:33,760 --> 00:08:38,080 Speaker 1: spots between you throw and JFK is absolutely sharky. Heathrow 167 00:08:38,120 --> 00:08:53,880 Speaker 1: has got a totally together. I wouldn't bring in Howard Ward. 168 00:08:53,960 --> 00:08:57,400 Speaker 1: He is Gamecas chief investment officer of Growth Equities. It's 169 00:08:57,400 --> 00:08:59,480 Speaker 1: great to have you here, Howard, and let me just 170 00:08:59,480 --> 00:09:01,480 Speaker 1: start by me. I was looking at your most recent 171 00:09:01,480 --> 00:09:03,760 Speaker 1: note and said, you're more concerned about the economic outlook 172 00:09:03,760 --> 00:09:07,160 Speaker 1: and more cautious on the stock markets prospects than usual. 173 00:09:07,200 --> 00:09:09,400 Speaker 1: Give us the lay of the land as you see 174 00:09:09,400 --> 00:09:12,240 Speaker 1: it here. And the reason for for the caution, well, 175 00:09:12,280 --> 00:09:14,840 Speaker 1: a lot of it UH has to do with the 176 00:09:14,960 --> 00:09:21,280 Speaker 1: lack of significant GDP growth. Nominal growth is UH trendlining 177 00:09:21,320 --> 00:09:26,199 Speaker 1: and you know three real growth two UH. My view 178 00:09:26,360 --> 00:09:29,160 Speaker 1: is that higher labor costs are going to continue to 179 00:09:29,200 --> 00:09:32,920 Speaker 1: pinch profit margins which peaked two years ago, and that 180 00:09:33,040 --> 00:09:37,240 Speaker 1: the earnings expectations for next year are probably too high. 181 00:09:37,679 --> 00:09:41,080 Speaker 1: There's even a risk that we end up resetting earnings 182 00:09:41,120 --> 00:09:45,680 Speaker 1: expectations for next year at flat, possibly even negative. I 183 00:09:45,720 --> 00:09:48,240 Speaker 1: think that if that were to happen, it would be 184 00:09:48,400 --> 00:09:51,199 Speaker 1: very likely that the stock market would would go down. 185 00:09:51,679 --> 00:09:56,000 Speaker 1: I think that globally things are weakening, and that while 186 00:09:56,440 --> 00:09:59,160 Speaker 1: the base case expectation at this point is not a 187 00:09:59,160 --> 00:10:02,880 Speaker 1: recession for next year, the risk of a recession has risen. 188 00:10:03,200 --> 00:10:05,559 Speaker 1: I think it has to be in your conversation at 189 00:10:05,559 --> 00:10:08,520 Speaker 1: this point, how concerned are you about business investment? I 190 00:10:08,720 --> 00:10:10,560 Speaker 1: was listening to the vice chair the FEDS re Board, 191 00:10:10,920 --> 00:10:13,760 Speaker 1: stand Fishery, speaking yesterday, something that that he talked about 192 00:10:13,800 --> 00:10:15,680 Speaker 1: the need for for more of it. When you when 193 00:10:15,679 --> 00:10:18,240 Speaker 1: you look at the prospects for earnings, when you look 194 00:10:18,240 --> 00:10:20,920 Speaker 1: at the climate more generally, how big a concern is 195 00:10:20,960 --> 00:10:23,920 Speaker 1: that for you? Well, business investment comes out of profits, 196 00:10:23,960 --> 00:10:26,160 Speaker 1: and profits have been flat for a year, and as 197 00:10:26,200 --> 00:10:29,000 Speaker 1: I just mentioned, I think the expectations for next year 198 00:10:29,040 --> 00:10:34,680 Speaker 1: are too high. Uh. Another factor that's weighing on investment 199 00:10:35,000 --> 00:10:39,240 Speaker 1: is business confidence, and business confidence has turned down. Uh, 200 00:10:39,280 --> 00:10:42,120 Speaker 1: no surprise, I think given this election season that we're 201 00:10:42,120 --> 00:10:46,760 Speaker 1: facing and policy uncertainty going forward, not just in terms 202 00:10:46,760 --> 00:10:49,400 Speaker 1: of the election, but also in terms of FED policy. 203 00:10:50,120 --> 00:10:53,640 Speaker 1: UM So, I think that right now the prospects for 204 00:10:53,679 --> 00:10:57,599 Speaker 1: business investment growing are not great. It's been weak. I 205 00:10:57,600 --> 00:11:01,080 Speaker 1: think it's gonna stay weak and until you get some 206 00:11:01,720 --> 00:11:06,000 Speaker 1: better growth, which may take UH working with corporate tax code. 207 00:11:06,040 --> 00:11:09,000 Speaker 1: I think that would be the first thing I would attack. UH. 208 00:11:09,120 --> 00:11:11,240 Speaker 1: We need to free up business a bit from a 209 00:11:11,280 --> 00:11:16,319 Speaker 1: regulatory standpoint as well, things that will result in higher profits, 210 00:11:16,760 --> 00:11:19,840 Speaker 1: and that's how you're going to get businesses to invest. 211 00:11:20,000 --> 00:11:22,640 Speaker 1: Have we been ignoring business confidency? Bring it up here. 212 00:11:22,679 --> 00:11:24,679 Speaker 1: We talk a lot about consumer confidence. We look at 213 00:11:24,679 --> 00:11:26,240 Speaker 1: the state of the consumer in the in the U. S. 214 00:11:26,240 --> 00:11:28,719 Speaker 1: Economy and the global economy. Are we not paying enough 215 00:11:28,760 --> 00:11:33,360 Speaker 1: attention to business confidence? Probably not. I think that. UM. 216 00:11:33,440 --> 00:11:38,360 Speaker 1: When we've had some of the big headline risks over 217 00:11:38,400 --> 00:11:41,880 Speaker 1: the macro headline risk over the last several years, you know, 218 00:11:41,920 --> 00:11:45,720 Speaker 1: what we've seen is that the the CEO suite has 219 00:11:45,760 --> 00:11:50,199 Speaker 1: paid much more attention to headline global headline risk than 220 00:11:50,280 --> 00:11:53,640 Speaker 1: has the U. S. Consumer. And so we've had situations 221 00:11:53,640 --> 00:11:56,400 Speaker 1: where the U. S consumer has gone about his business 222 00:11:56,440 --> 00:11:58,960 Speaker 1: as usual for the most part, but the CEOs have 223 00:11:59,040 --> 00:12:02,000 Speaker 1: pulled back because of their fears or their lack of 224 00:12:02,040 --> 00:12:05,520 Speaker 1: confidence in the future, and I think that situation remains 225 00:12:05,559 --> 00:12:08,240 Speaker 1: with us today, and it is worth paying attention to 226 00:12:08,880 --> 00:12:11,600 Speaker 1: more attention to how are we were talking helpha, beta, 227 00:12:11,640 --> 00:12:15,520 Speaker 1: gamma earlier in the basic idea of being more defensive. 228 00:12:15,760 --> 00:12:18,800 Speaker 1: When you're defensive, do you go to cash or do 229 00:12:18,840 --> 00:12:21,920 Speaker 1: you buy something different? Tom, I buy something different. And 230 00:12:22,000 --> 00:12:25,479 Speaker 1: that's because in my forty years in this business, I 231 00:12:25,520 --> 00:12:28,920 Speaker 1: have grown to believe with a lot of conviction that 232 00:12:29,040 --> 00:12:33,880 Speaker 1: market timing is essentially a loser's game. And so when 233 00:12:33,920 --> 00:12:36,960 Speaker 1: I become more concerned and more cautious about the outlook, 234 00:12:37,280 --> 00:12:40,160 Speaker 1: the idea would be to reduce the so called beta 235 00:12:40,280 --> 00:12:44,880 Speaker 1: or volatility of my returns relative to the market, and 236 00:12:44,920 --> 00:12:49,480 Speaker 1: to do that by stock selection, focusing more on uh 237 00:12:49,559 --> 00:12:53,400 Speaker 1: the less mostly the less economically sensitive parts of the 238 00:12:53,440 --> 00:12:58,160 Speaker 1: market consumer staples, healthcare, utilities, telecom. Those areas are more 239 00:12:58,320 --> 00:13:00,920 Speaker 1: likely to hold up well and market the client if 240 00:13:00,960 --> 00:13:04,199 Speaker 1: it happens. And there are many occasions where people much 241 00:13:04,240 --> 00:13:07,199 Speaker 1: smarter than I have expected the market to go down 242 00:13:07,240 --> 00:13:09,480 Speaker 1: for all sorts of good reasons and it doesn't happen. 243 00:13:09,480 --> 00:13:12,800 Speaker 1: And that's the danger in marketing? Is Jamie Diamond high 244 00:13:12,840 --> 00:13:17,000 Speaker 1: beta or low beta? Well, Jamie Diamond as a CEO 245 00:13:17,200 --> 00:13:20,360 Speaker 1: is low beta. JP Morgan as a bank within the 246 00:13:20,400 --> 00:13:24,079 Speaker 1: banking sector is probably one of the lower beta names. However, 247 00:13:24,160 --> 00:13:29,280 Speaker 1: financial services can be a dangerous place to be uh 248 00:13:29,320 --> 00:13:32,800 Speaker 1: in a declining market. So I that's an area that 249 00:13:32,880 --> 00:13:35,120 Speaker 1: I am underweight and would recommend that. I just did 250 00:13:35,120 --> 00:13:38,480 Speaker 1: this because David girls looking at us like greek letters beta. 251 00:13:38,559 --> 00:13:41,079 Speaker 1: What are we talking to? Your define BEATABTA is the 252 00:13:41,200 --> 00:13:44,440 Speaker 1: price movement relative to the underlying index right right, So 253 00:13:44,520 --> 00:13:47,160 Speaker 1: you can you can pick your index. For most investors, 254 00:13:47,240 --> 00:13:49,480 Speaker 1: that would be the S and P five hundred and 255 00:13:49,520 --> 00:13:51,160 Speaker 1: so it's you know, how much of the return of 256 00:13:51,200 --> 00:13:53,640 Speaker 1: your stock can be explained by the enterlying volatility in 257 00:13:53,640 --> 00:13:58,199 Speaker 1: that index? I you know, I know that politics is happening. 258 00:13:58,200 --> 00:14:00,520 Speaker 1: Obviously we're gearing up for this debate to tomorrow night. 259 00:14:00,559 --> 00:14:03,040 Speaker 1: And a number of people we've spoken to recently, strategists 260 00:14:03,040 --> 00:14:05,719 Speaker 1: and investors, have said, uh, either the elections priced in 261 00:14:05,800 --> 00:14:07,880 Speaker 1: or they're not that worried about the risk? Are you 262 00:14:07,920 --> 00:14:11,800 Speaker 1: worried about it? And and if you're not, UH is 263 00:14:11,840 --> 00:14:13,760 Speaker 1: a proxy for it? That being what's going to happen 264 00:14:13,760 --> 00:14:16,320 Speaker 1: with trade something of greater concern to you. Well, I 265 00:14:16,360 --> 00:14:19,120 Speaker 1: haven't been worried about the debate because I've had the 266 00:14:19,160 --> 00:14:21,800 Speaker 1: mindset that we're going to end I mean about the election, 267 00:14:21,840 --> 00:14:24,400 Speaker 1: because I've had the mindset that we're we're going to 268 00:14:24,440 --> 00:14:27,880 Speaker 1: have a divided government. I have seen, however, with some concern. 269 00:14:28,440 --> 00:14:31,960 Speaker 1: The price action in the health care sector the last 270 00:14:31,960 --> 00:14:35,160 Speaker 1: several days, however, has been decidedly negative. And it's been 271 00:14:35,200 --> 00:14:38,240 Speaker 1: that way primarily because of the growing concern of a 272 00:14:38,280 --> 00:14:42,200 Speaker 1: Democratic sweep, which would of course be more difficult for 273 00:14:42,280 --> 00:14:48,800 Speaker 1: healthcare the healthcare industry given the the the Democrat Democratic 274 00:14:48,840 --> 00:14:53,160 Speaker 1: parties designs to have greater control over pricing in that area. 275 00:14:53,560 --> 00:14:57,280 Speaker 1: So there is some election risk, the risk being a 276 00:14:57,320 --> 00:15:00,280 Speaker 1: Democratic sweep. However, I still don't think that is the 277 00:15:00,320 --> 00:15:05,880 Speaker 1: most likely and most likely outcome. Are you worried about trade? 278 00:15:06,320 --> 00:15:11,160 Speaker 1: Trade is of global GDP. Trade is slowing. Trade I 279 00:15:11,160 --> 00:15:14,120 Speaker 1: think is going to slow further. Uh. If I'm right 280 00:15:14,200 --> 00:15:17,640 Speaker 1: that the U. S economy is going to slow over 281 00:15:17,680 --> 00:15:22,080 Speaker 1: the next several quarters, that's going to have a multiplier effect. 282 00:15:22,080 --> 00:15:25,200 Speaker 1: Through ripple trade. We are through real trade, we are 283 00:15:25,360 --> 00:15:31,120 Speaker 1: the world's largest importer. So if we sneeze, the exporters 284 00:15:31,120 --> 00:15:33,520 Speaker 1: of the world are gonna feeling. Just to bring this up, David, 285 00:15:33,640 --> 00:15:37,720 Speaker 1: predict wise, is this great summary of all the polls, 286 00:15:37,720 --> 00:15:40,440 Speaker 1: somewhat like real clear politics. I think it has been 287 00:15:40,480 --> 00:15:46,160 Speaker 1: widely reported Secretary Clinton, Mr trumpet ten percent is the 288 00:15:46,280 --> 00:15:50,720 Speaker 1: likelihood of investing. David over predict was put out a 289 00:15:50,760 --> 00:15:54,600 Speaker 1: note yesterday making clear ten percent is still a chance 290 00:15:54,640 --> 00:16:02,640 Speaker 1: to win for Mr Trump. The Senate se uh, but 291 00:16:02,720 --> 00:16:04,720 Speaker 1: the House has come in a little bit. It's not 292 00:16:04,760 --> 00:16:07,160 Speaker 1: as grim as it was three or four days ago. 293 00:16:07,480 --> 00:16:09,680 Speaker 1: But Howard, I still don't see it, you know, looking 294 00:16:09,680 --> 00:16:14,000 Speaker 1: at predict Wise, I'd call it less than likely or 295 00:16:14,040 --> 00:16:17,120 Speaker 1: even remote, that the Democrats would take the House. David, Yeah, 296 00:16:17,440 --> 00:16:19,400 Speaker 1: it reminds me of what Stan Collinser from Corvius was 297 00:16:19,400 --> 00:16:21,400 Speaker 1: signed to us last week. He was not exactly the 298 00:16:21,400 --> 00:16:24,040 Speaker 1: most bright out optimist about what's going to happen in 299 00:16:24,120 --> 00:16:26,920 Speaker 1: d C. In the prospects for any sort of change 300 00:16:26,960 --> 00:16:30,040 Speaker 1: to taxes for infrastructure spending seems pretty bleak. Yeah, Tom, 301 00:16:30,040 --> 00:16:33,240 Speaker 1: I would say that if the market truly believed in 302 00:16:33,280 --> 00:16:37,320 Speaker 1: a Democratic sweep, the entire market would be getting hurt, 303 00:16:37,520 --> 00:16:39,680 Speaker 1: not just the healthcare sector. I think you're getting some 304 00:16:39,720 --> 00:16:43,040 Speaker 1: precautionary selling in healthcare. It may already be overdone at 305 00:16:43,040 --> 00:16:48,000 Speaker 1: this point. Apple update, well, how do you spell relief? 306 00:16:50,080 --> 00:16:52,480 Speaker 1: Apple seems to have decided that maybe they don't want 307 00:16:52,480 --> 00:16:55,480 Speaker 1: to get into the business of building cars, and this 308 00:16:55,560 --> 00:16:58,400 Speaker 1: is great news. The last thing the world needs is 309 00:16:58,440 --> 00:17:04,640 Speaker 1: another automobile manufact extra, a business of tremendous capital intensity, global, 310 00:17:05,160 --> 00:17:08,840 Speaker 1: globally competitive like no other, and it would have been, 311 00:17:08,880 --> 00:17:12,040 Speaker 1: I think, just been an an abyss of throwing profits 312 00:17:12,040 --> 00:17:15,959 Speaker 1: into a hole. Uh. And so I'm very, very hopeful 313 00:17:16,000 --> 00:17:20,040 Speaker 1: now that Apple is going to restrain itself and focus 314 00:17:20,320 --> 00:17:24,480 Speaker 1: on the software from automobiles created by Twitter software standards. 315 00:17:25,040 --> 00:17:27,640 Speaker 1: I'm not an owner of Twitter. Um, I don't think 316 00:17:27,760 --> 00:17:31,479 Speaker 1: the Twitter economic model is has is working yet they 317 00:17:31,480 --> 00:17:33,920 Speaker 1: don't make any money time, So even as a bolt 318 00:17:34,000 --> 00:17:37,320 Speaker 1: on Apple, I don't think that Apple and Twitter make 319 00:17:37,359 --> 00:17:40,560 Speaker 1: a lot of sense. Personally, I'd rather see Apple go 320 00:17:40,600 --> 00:17:44,479 Speaker 1: out and buy, uh something like a Time Warner and 321 00:17:44,520 --> 00:17:48,840 Speaker 1: now folks a clinic. Howard Ward of gem COO knows 322 00:17:48,960 --> 00:17:53,960 Speaker 1: as many others do, that scale is everything. The note 323 00:17:54,040 --> 00:17:58,840 Speaker 1: Kochla Coasla rather of all sorts of entrepreneurial issues of 324 00:17:59,400 --> 00:18:02,040 Speaker 1: two decades to go has maybe been the leader on this. 325 00:18:02,680 --> 00:18:06,520 Speaker 1: Let me put things in scale. Time Warner is one 326 00:18:06,640 --> 00:18:12,159 Speaker 1: tenth as big as Apple. Time Warners eb DA is 327 00:18:12,400 --> 00:18:17,399 Speaker 1: less than a tenth of Apple. Their net income is 328 00:18:17,520 --> 00:18:22,080 Speaker 1: less than a tenth of Apple, and on and on. Howard, 329 00:18:22,119 --> 00:18:25,280 Speaker 1: if we lined up a hundred people who are smart, smart, smart, 330 00:18:25,320 --> 00:18:28,160 Speaker 1: they wouldn't know that they know the Time Warners smaller, 331 00:18:28,600 --> 00:18:33,040 Speaker 1: but we forget the scope and scale that allows for 332 00:18:33,200 --> 00:18:37,760 Speaker 1: mergers and next acquisitions transactions to work. Well, Time, You've 333 00:18:37,800 --> 00:18:42,480 Speaker 1: just told everybody, really what Apple's problem is. They're so big. 334 00:18:42,920 --> 00:18:48,080 Speaker 1: The iPhone, which generates about their profit, is so such 335 00:18:48,080 --> 00:18:52,520 Speaker 1: a mammoth product that even if you were to buy, 336 00:18:52,640 --> 00:18:56,200 Speaker 1: as I've suggested, a company like Time Warner, it's not 337 00:18:56,280 --> 00:19:00,960 Speaker 1: going to have a material uh packed on the bottom 338 00:19:00,960 --> 00:19:04,520 Speaker 1: line right away. It may over time, but right away 339 00:19:04,840 --> 00:19:07,000 Speaker 1: the impact would not do that great. That's actually not 340 00:19:07,040 --> 00:19:09,800 Speaker 1: so bad because that means the risk of that kind 341 00:19:09,840 --> 00:19:13,359 Speaker 1: of investment would not be right. How do you suggest 342 00:19:13,520 --> 00:19:17,920 Speaker 1: a set of boltons something? I think I think that 343 00:19:18,000 --> 00:19:21,320 Speaker 1: it's there. Their only choice is to go after and 344 00:19:21,400 --> 00:19:23,840 Speaker 1: you know, you know, they have the luxury of considering 345 00:19:23,880 --> 00:19:26,720 Speaker 1: companies of the the size of Time Warner as a bolton. 346 00:19:27,440 --> 00:19:30,040 Speaker 1: But that's what the numbers would suggest, and I think 347 00:19:30,080 --> 00:19:31,840 Speaker 1: that that is the route you need to go. I 348 00:19:31,880 --> 00:19:34,679 Speaker 1: think content is king. I think Apple is going to 349 00:19:34,760 --> 00:19:39,000 Speaker 1: want to have their own content, uh, to differentiate some 350 00:19:39,040 --> 00:19:41,720 Speaker 1: of their products. So I do think that's the direction 351 00:19:41,760 --> 00:19:44,159 Speaker 1: they should be going in. And if you want to 352 00:19:44,160 --> 00:19:47,480 Speaker 1: innovate with software on the aunomobile side, find But otherwise 353 00:19:47,600 --> 00:19:50,800 Speaker 1: let's go back to more of the the t MT 354 00:19:51,000 --> 00:19:53,600 Speaker 1: kind of business that we would associate Apple with. David 355 00:19:53,640 --> 00:20:00,199 Speaker 1: Guru Time owners cash is approximately one eight zero of 356 00:20:00,280 --> 00:20:06,399 Speaker 1: Time Warner. It's not you say that the Apple should 357 00:20:06,400 --> 00:20:09,879 Speaker 1: be getting into content. What explains the delay in doing that? 358 00:20:09,920 --> 00:20:11,920 Speaker 1: We were talking about the car falling falling to the 359 00:20:11,920 --> 00:20:16,639 Speaker 1: wayside here perhaps wisely. Why has as Apple seemingly lost 360 00:20:16,680 --> 00:20:18,280 Speaker 1: sight of that? You look at the problems they've been 361 00:20:18,280 --> 00:20:20,919 Speaker 1: having with their services just generally over these last few years. 362 00:20:21,240 --> 00:20:22,960 Speaker 1: How worrisome is that to you? Well, I don't think 363 00:20:23,000 --> 00:20:25,600 Speaker 1: that they probably haven't lost sight of it. I think 364 00:20:25,640 --> 00:20:27,919 Speaker 1: that they you know, it's been reported in the media 365 00:20:27,960 --> 00:20:33,200 Speaker 1: previously that they've had conversations with Time Warner and others. Uh, 366 00:20:33,280 --> 00:20:35,600 Speaker 1: you know, who knows where those stand or where what 367 00:20:35,680 --> 00:20:38,840 Speaker 1: happened to them. I do think that maybe they have 368 00:20:38,920 --> 00:20:43,040 Speaker 1: decided to wait and see how this whole evolution of 369 00:20:43,040 --> 00:20:50,480 Speaker 1: the skinny bundle plays out versus versus today's big bundle. Uh. 370 00:20:50,600 --> 00:20:53,840 Speaker 1: For for for cable programming. I think that in the 371 00:20:53,880 --> 00:20:56,600 Speaker 1: case of Time Warner, the Time Warner wins under any scenario, 372 00:20:56,640 --> 00:20:58,359 Speaker 1: whether it's all a card or bundle. They're going to 373 00:20:58,440 --> 00:21:01,000 Speaker 1: win because of the channels they have and they're not 374 00:21:01,119 --> 00:21:05,600 Speaker 1: burdened with the ESPN problem where they're getting where where 375 00:21:05,640 --> 00:21:08,600 Speaker 1: Disney is getting about seven dollars a subscriber for ESPN, 376 00:21:08,640 --> 00:21:10,560 Speaker 1: and if you go to the skinny bundle, it would 377 00:21:10,600 --> 00:21:14,200 Speaker 1: be hard to perhaps replicate that, So uh, Time One, 378 00:21:14,320 --> 00:21:17,600 Speaker 1: I think wins under either condition. Uh. And there may 379 00:21:17,640 --> 00:21:20,480 Speaker 1: be other media companies that Apple could be interested in, 380 00:21:21,040 --> 00:21:25,600 Speaker 1: but I clearly think that the future for Apple, given 381 00:21:25,720 --> 00:21:30,040 Speaker 1: their primary devices are used for viewing content and listening 382 00:21:30,040 --> 00:21:34,240 Speaker 1: to content, that media would would have some synergy. And 383 00:21:34,480 --> 00:21:37,440 Speaker 1: as Time said earlier, scale is important. So I think 384 00:21:37,440 --> 00:21:40,760 Speaker 1: moving in that direction is the logical scenario for them, 385 00:21:40,800 --> 00:21:42,879 Speaker 1: and I wouldn't be surprised if that were to happen. 386 00:21:42,920 --> 00:21:44,399 Speaker 1: What we're in this space I just want to get 387 00:21:44,480 --> 00:21:46,520 Speaker 1: your sense of what's been going on with Viacom and 388 00:21:46,600 --> 00:21:50,960 Speaker 1: CBS and that whole empire looking against the non passive observers. 389 00:21:50,960 --> 00:21:52,600 Speaker 1: You are of that space, what do you make of 390 00:21:52,720 --> 00:21:58,000 Speaker 1: of what's been happening there. Well, that's a drama. That's 391 00:21:58,000 --> 00:22:01,160 Speaker 1: hard for me to talk about, uh in any real 392 00:22:01,200 --> 00:22:04,560 Speaker 1: sophisticated way. I don't own Viacom. I do own CBS. 393 00:22:04,680 --> 00:22:07,440 Speaker 1: You probably know Mario and the values side of our firm, 394 00:22:07,800 --> 00:22:12,280 Speaker 1: our big holders of Viacom. Mario is one of the 395 00:22:12,359 --> 00:22:15,080 Speaker 1: largest in our firm, is one of the largest holders 396 00:22:15,119 --> 00:22:18,399 Speaker 1: of the voting stock of Viacom. So there's a drama 397 00:22:18,440 --> 00:22:20,800 Speaker 1: they're playing out that I'm I'm not part of it, 398 00:22:20,880 --> 00:22:23,520 Speaker 1: and I'm hesitant to comment about that too much or enough. 399 00:22:24,840 --> 00:22:30,560 Speaker 1: You did well, their days tried. However, before we let 400 00:22:30,600 --> 00:22:34,200 Speaker 1: you go, there's a caution on the market you mentioned earlier. 401 00:22:34,200 --> 00:22:37,280 Speaker 1: You don't do cash, you go down to more conservative stocks. 402 00:22:37,280 --> 00:22:40,840 Speaker 1: Are electric utilities today like they were in our ute? 403 00:22:42,359 --> 00:22:45,080 Speaker 1: That's a great question, Tom, because you know, we have 404 00:22:45,160 --> 00:22:47,200 Speaker 1: had a bit of a backup and the interest rates 405 00:22:47,440 --> 00:22:50,200 Speaker 1: in recent months, and the utilities have generally sold off 406 00:22:50,240 --> 00:22:56,040 Speaker 1: intent intandem with that and um, I think that the 407 00:22:56,119 --> 00:22:59,840 Speaker 1: consensus opinion right now or more people than not believe 408 00:23:00,119 --> 00:23:04,399 Speaker 1: interest rates are heading higher. I happen to take the 409 00:23:04,400 --> 00:23:06,399 Speaker 1: other side of that bet. Right now, I think rates 410 00:23:06,400 --> 00:23:10,879 Speaker 1: have have peaked or close to peaking, and consequently, anything 411 00:23:10,880 --> 00:23:13,600 Speaker 1: that's a bond proxy I think represents better value than 412 00:23:13,640 --> 00:23:15,679 Speaker 1: the market believes right now. And I'd be a buyer 413 00:23:15,720 --> 00:23:20,000 Speaker 1: these stocks. The business itself is has changed at the margin. 414 00:23:20,119 --> 00:23:24,280 Speaker 1: Howard Ward, thank you so much. Ever the optimist from 415 00:23:24,280 --> 00:23:34,920 Speaker 1: New York, This is Bloomberg. Who you put your trust in? Matters. 416 00:23:35,040 --> 00:23:40,080 Speaker 1: Investors have put their trusted, independent registered investment advisors to 417 00:23:40,160 --> 00:23:43,000 Speaker 1: the two and of four trillion dollars. Why they see 418 00:23:43,000 --> 00:23:46,479 Speaker 1: their roles to serve, not sell. That's why Charles Schwab 419 00:23:46,640 --> 00:23:51,160 Speaker 1: is committed to the success over seven thousand independent financial 420 00:23:51,160 --> 00:23:56,960 Speaker 1: advisors who passionately dedicate themselves to helping people achieve their 421 00:23:56,960 --> 00:24:08,679 Speaker 1: financial goals. Learn more at Fine your Independent Advisor dot com. 422 00:24:08,920 --> 00:24:12,240 Speaker 1: This is a real pleasure, folks. For the next half hour, 423 00:24:13,200 --> 00:24:15,879 Speaker 1: we're gonna speak to one of the grizzled prose of 424 00:24:15,960 --> 00:24:20,320 Speaker 1: the heart of America, which is the Midwest. Our agriculture 425 00:24:20,560 --> 00:24:22,760 Speaker 1: or food business and frankly those of us in three 426 00:24:22,840 --> 00:24:26,080 Speaker 1: zip codes in New York Day for granted, and the 427 00:24:26,359 --> 00:24:29,399 Speaker 1: expert on this is one and dignent of JP Morgan. 428 00:24:29,760 --> 00:24:33,560 Speaker 1: We speak first of Caterpillar in the showing of the 429 00:24:33,600 --> 00:24:36,439 Speaker 1: door to Mr Oberhelman, and then we move on to 430 00:24:36,520 --> 00:24:40,720 Speaker 1: the state of our Midwest agriculture economy and thrilled to 431 00:24:40,800 --> 00:24:44,120 Speaker 1: have you with us um this morning. Caterpillar was such 432 00:24:44,160 --> 00:24:47,920 Speaker 1: a juggernaut, and about six years ago it ended you've 433 00:24:47,960 --> 00:24:51,560 Speaker 1: been way out front on tepid revenue growth. Let's begin 434 00:24:51,760 --> 00:24:55,840 Speaker 1: with their chairman and CEO, Douglas ober Hellman. Was he 435 00:24:55,920 --> 00:25:00,439 Speaker 1: shown the door? Well, I think you could answer that 436 00:25:00,480 --> 00:25:05,000 Speaker 1: either yes or no. I suspect that the timing surprised 437 00:25:05,000 --> 00:25:08,960 Speaker 1: people yesterday a little bit. Caterpillar will report its earnings 438 00:25:09,680 --> 00:25:13,160 Speaker 1: two three earnings next week, and they usually give guidance 439 00:25:13,200 --> 00:25:16,280 Speaker 1: for revenue for the following year on that call. And 440 00:25:16,359 --> 00:25:20,960 Speaker 1: so perhaps the interpretation is is that Caterpillar is facing 441 00:25:21,000 --> 00:25:25,199 Speaker 1: a fifth tier of a downturn, and that's unprecedented. So 442 00:25:25,280 --> 00:25:28,400 Speaker 1: if I wanted to put the bear case together, I'd say, 443 00:25:28,800 --> 00:25:32,560 Speaker 1: maybe that's why Doug is leaving earlier than we might 444 00:25:32,600 --> 00:25:37,000 Speaker 1: have expected. What part of securities analysis. Do you judge 445 00:25:37,760 --> 00:25:41,399 Speaker 1: any of the commodity equities on is it is it 446 00:25:41,440 --> 00:25:44,640 Speaker 1: a price to sales? It's the cheap Is it revenue 447 00:25:44,680 --> 00:25:47,080 Speaker 1: growth that isn't there? Do you move down the income 448 00:25:47,160 --> 00:25:51,879 Speaker 1: statement to cash flow or the EBITDA. Yeah, that's a 449 00:25:51,920 --> 00:25:54,720 Speaker 1: good question. We generally for machinery stocks, we think of 450 00:25:54,760 --> 00:25:57,840 Speaker 1: them as being highly cyclical, and so we tend to 451 00:25:57,840 --> 00:26:00,080 Speaker 1: look at a price to earning, so a p E 452 00:26:01,280 --> 00:26:04,480 Speaker 1: and for machinery stops usually when the earnings is at 453 00:26:04,480 --> 00:26:08,920 Speaker 1: the lowest, that's when the multiple PE multiples at its highest, 454 00:26:09,720 --> 00:26:13,800 Speaker 1: generally about twenty times the trough earnings. And then when 455 00:26:13,800 --> 00:26:16,080 Speaker 1: earnings are at the highest, we put the lowest multiple 456 00:26:16,160 --> 00:26:19,040 Speaker 1: on those earnings, and that's generally a ten multiple on 457 00:26:19,200 --> 00:26:22,159 Speaker 1: the PE. So it's a cyclical business. We look at 458 00:26:22,160 --> 00:26:24,480 Speaker 1: how well we're able to manage the earnings through the cycle. 459 00:26:24,840 --> 00:26:28,760 Speaker 1: Let's talk about the last cycle featuring Doug over Helman. 460 00:26:29,359 --> 00:26:30,679 Speaker 1: It was not a good one when you look at 461 00:26:30,680 --> 00:26:32,920 Speaker 1: commodity prices. This was a tough market in which to 462 00:26:33,400 --> 00:26:36,080 Speaker 1: be the chief executive of Caterpillar to be pursuing the 463 00:26:36,400 --> 00:26:40,960 Speaker 1: kind of emana that he was pursuing. Yeah, there's no question. 464 00:26:41,000 --> 00:26:44,520 Speaker 1: When we look back and look at what happens, we 465 00:26:44,760 --> 00:26:49,480 Speaker 1: he did buy be Cyrus, one of the two remaining 466 00:26:50,160 --> 00:26:53,560 Speaker 1: machinery names in mining, and he bought that at the 467 00:26:53,560 --> 00:26:55,639 Speaker 1: peak of the cycle. But you don't did any of 468 00:26:55,760 --> 00:26:57,640 Speaker 1: us see the peak of the cycle at that point, 469 00:26:57,680 --> 00:27:02,080 Speaker 1: at any of the stock on that acquisition. No, I mean, 470 00:27:02,119 --> 00:27:03,880 Speaker 1: I think we were all caught up a little bit 471 00:27:04,119 --> 00:27:08,560 Speaker 1: on the never ending growth in China and the build 472 00:27:08,560 --> 00:27:12,360 Speaker 1: out of infrastructure in China. If there was ill timed 473 00:27:13,320 --> 00:27:17,080 Speaker 1: David Girl from peak, they've taken twenty billion revenue. You know, 474 00:27:17,160 --> 00:27:19,920 Speaker 1: it's it's a crutch to say how's this playing in Peoria? 475 00:27:20,000 --> 00:27:21,840 Speaker 1: But in the case of Caterpillar, we can say how's 476 00:27:21,840 --> 00:27:24,920 Speaker 1: this playing Pory. I wonder what what the folks that 477 00:27:25,080 --> 00:27:27,080 Speaker 1: make of this change? And what you can tell us 478 00:27:27,119 --> 00:27:30,240 Speaker 1: about Mr Overhelman's successor that's been one Jim mump will 479 00:27:30,240 --> 00:27:31,879 Speaker 1: be what do we know about him and how he 480 00:27:31,960 --> 00:27:35,600 Speaker 1: might change course here at Caterpillar. Well, the good news 481 00:27:35,680 --> 00:27:39,320 Speaker 1: is that uncle we ran at the business that's called 482 00:27:39,480 --> 00:27:42,400 Speaker 1: energy and transportation, and that business has been the crown 483 00:27:42,480 --> 00:27:46,120 Speaker 1: jewel of Caterpillar. Or within that business, there's a business 484 00:27:46,520 --> 00:27:51,920 Speaker 1: turbine engine business called solar and that's always been extraordinarily 485 00:27:52,000 --> 00:27:55,159 Speaker 1: well run. Um, so that's the good news. We have 486 00:27:55,240 --> 00:27:58,439 Speaker 1: a good operations guy coming in to take the place 487 00:27:58,480 --> 00:28:01,520 Speaker 1: of Doug, and that's probably what Caterpillar needs as we 488 00:28:01,600 --> 00:28:05,040 Speaker 1: go through this cycle because we don't really know what 489 00:28:05,080 --> 00:28:08,080 Speaker 1: the duration is going to be. So I got a 490 00:28:08,119 --> 00:28:12,040 Speaker 1: good operations gagling in there, that's public, you know. And 491 00:28:12,160 --> 00:28:14,120 Speaker 1: I was going to go out this weekend and look 492 00:28:14,160 --> 00:28:17,040 Speaker 1: for a D three K to Tier four final dozer 493 00:28:17,760 --> 00:28:20,520 Speaker 1: this or the cats C four point four, a certain 494 00:28:20,680 --> 00:28:25,840 Speaker 1: engine eighty horsepower net operating weight you know, seventeen thousand 495 00:28:25,840 --> 00:28:29,320 Speaker 1: pounds what is it eight tons or so? Yeah, put 496 00:28:29,320 --> 00:28:31,919 Speaker 1: it right out there by run it, run it up 497 00:28:31,920 --> 00:28:34,600 Speaker 1: there to the trump rank and then take that puppy 498 00:28:35,000 --> 00:28:38,120 Speaker 1: up to the reservoir. And when you look at this 499 00:28:38,240 --> 00:28:41,880 Speaker 1: in the romance of Caterpillar, and you're the pro on this, 500 00:28:42,320 --> 00:28:44,120 Speaker 1: was it a mistake to have a chairman and the 501 00:28:44,320 --> 00:28:48,520 Speaker 1: CEO together? Would there would would there have been less 502 00:28:49,160 --> 00:28:54,480 Speaker 1: ill decisions, bad decisions, miss decisions if there had been 503 00:28:54,520 --> 00:28:59,000 Speaker 1: a check of a separate chairman. I don't think so. 504 00:28:59,080 --> 00:29:02,360 Speaker 1: In this case. Quite honestly, they've got a very strong board, 505 00:29:02,640 --> 00:29:06,680 Speaker 1: and the board approved the acquisition of peace IRUs. And 506 00:29:06,800 --> 00:29:09,640 Speaker 1: you know again at the time when the acquisition was made, 507 00:29:10,400 --> 00:29:14,160 Speaker 1: you know, construction Glubly was very strong, mining was very strong. 508 00:29:14,800 --> 00:29:19,880 Speaker 1: China's GDP growth was accelerating, not decelerating. So I don't 509 00:29:19,920 --> 00:29:23,680 Speaker 1: think that having a separate CEO and Sherman would necessarily 510 00:29:23,680 --> 00:29:26,760 Speaker 1: have made any difference in this case. I think it 511 00:29:26,840 --> 00:29:30,120 Speaker 1: was just everybody got excited about the up cycle. And 512 00:29:30,880 --> 00:29:33,880 Speaker 1: you know, remember other companies like he were considering getting 513 00:29:33,880 --> 00:29:37,040 Speaker 1: into the mining equipment also, so you know they weren't 514 00:29:37,080 --> 00:29:39,520 Speaker 1: the only ones chasing their dreams. Let's get to our 515 00:29:39,560 --> 00:29:41,280 Speaker 1: next action. We've got a couple more minutes here in 516 00:29:41,360 --> 00:29:44,200 Speaker 1: dining with JP Morgan. What's the state of the American 517 00:29:44,240 --> 00:29:49,480 Speaker 1: farmer right now? The American farmer is facing fourth here 518 00:29:49,560 --> 00:29:54,040 Speaker 1: of probably losing money, if our at least break even 519 00:29:54,080 --> 00:29:57,840 Speaker 1: to losing money. I would say, to excuse the pond, 520 00:29:57,960 --> 00:30:01,719 Speaker 1: our farmers in the Midwest looked like deer headlights. They 521 00:30:01,760 --> 00:30:04,720 Speaker 1: are not buying equipment and they will not be buying 522 00:30:04,720 --> 00:30:09,120 Speaker 1: equipment for what could be several years. We've had seven 523 00:30:09,160 --> 00:30:12,320 Speaker 1: great years. And when you asked farmers, what in agricultural 524 00:30:12,400 --> 00:30:15,800 Speaker 1: cycle looks like they say, uh, maybe seven years like 525 00:30:15,840 --> 00:30:18,480 Speaker 1: the Bible. So we've had seven great years. We're probably 526 00:30:18,520 --> 00:30:21,920 Speaker 1: looking at seven horrible years. So it's not looking good 527 00:30:21,920 --> 00:30:24,720 Speaker 1: at there in the Midwest for our US farmers. Having 528 00:30:24,880 --> 00:30:28,120 Speaker 1: reported in the Midwest on agriculture, I'm always struck by 529 00:30:29,400 --> 00:30:34,320 Speaker 1: how involved farmers are in studying those cycles. How on 530 00:30:34,360 --> 00:30:38,040 Speaker 1: top of those cycles they seem to be here. Uh 531 00:30:38,200 --> 00:30:39,800 Speaker 1: your sense as well that they have a pretty keen 532 00:30:39,800 --> 00:30:44,120 Speaker 1: sense of where we stand, where we're headed. Yes, actually, um, 533 00:30:44,160 --> 00:30:45,680 Speaker 1: you know, some of them have told me over the 534 00:30:45,760 --> 00:30:50,040 Speaker 1: years that they are always pessimistic because they know that 535 00:30:50,320 --> 00:30:52,880 Speaker 1: somebody is going to squeeze the profit from them somehow. 536 00:30:53,720 --> 00:30:56,720 Speaker 1: So I think they recognize you know, they most of 537 00:30:56,720 --> 00:31:00,960 Speaker 1: them lived through the eighties when the farming economy was horrendous, 538 00:31:01,000 --> 00:31:04,800 Speaker 1: so they have long memories, and so you know, they 539 00:31:04,880 --> 00:31:06,920 Speaker 1: tend to be they spend when they have money, and 540 00:31:06,920 --> 00:31:09,840 Speaker 1: they don't spend when they don't have money. Do you 541 00:31:09,840 --> 00:31:12,000 Speaker 1: have a by Holt sell anything and what you're strong 542 00:31:12,080 --> 00:31:16,360 Speaker 1: by right now? Given the dignant bloom imry, I'm not 543 00:31:16,680 --> 00:31:20,000 Speaker 1: very upbeat on our group in general and in particular 544 00:31:20,240 --> 00:31:24,479 Speaker 1: part machinery. If we look forward into you know, if 545 00:31:24,560 --> 00:31:27,760 Speaker 1: interest rates start to rise, that is not the same 546 00:31:27,840 --> 00:31:31,480 Speaker 1: for the purchase of machinery. So I'm pretty neutral to 547 00:31:31,560 --> 00:31:37,200 Speaker 1: negative the group. Let's just John Dear okay, and diged 548 00:31:37,240 --> 00:31:39,480 Speaker 1: in with us, so JP, Morgan, David Gerr and Tom 549 00:31:39,600 --> 00:31:42,160 Speaker 1: Keene and we said good morning to everyone across the Midwest. 550 00:31:42,240 --> 00:31:47,400 Speaker 1: And hundred and forty nine acres in Fulton County, Illinois. 551 00:31:47,760 --> 00:31:49,240 Speaker 1: And you know, I got a lot of family that's 552 00:31:49,240 --> 00:31:51,080 Speaker 1: from out there, David, I'd say like a quarter of 553 00:31:51,080 --> 00:31:54,800 Speaker 1: my family, the rich ones are from Fulton County, Illinois. 554 00:31:55,200 --> 00:31:58,520 Speaker 1: Hundred and forty nine acres for four and SEVD. It's 555 00:31:58,600 --> 00:32:02,680 Speaker 1: some you know pasture in in in acreage I should say, 556 00:32:02,720 --> 00:32:04,680 Speaker 1: cut out of a forest and then there's some rough 557 00:32:05,040 --> 00:32:08,160 Speaker 1: pasture in the back side. I mean. And that's the 558 00:32:08,280 --> 00:32:12,520 Speaker 1: dynamic that we perceive of America. That's not the world 559 00:32:12,560 --> 00:32:15,239 Speaker 1: of vandignon is. I mean, we look at that like 560 00:32:15,280 --> 00:32:18,680 Speaker 1: as farmland for sale, but it really isn't. What's the 561 00:32:18,760 --> 00:32:22,840 Speaker 1: normal land you look at across the Great Midwest. How 562 00:32:22,920 --> 00:32:27,040 Speaker 1: much acreage is a real farm? Oh? I would say 563 00:32:27,120 --> 00:32:30,920 Speaker 1: that ten or fifteen years ago, two thousand acres was 564 00:32:31,000 --> 00:32:36,560 Speaker 1: considered a large farm and then we had the agricultural 565 00:32:36,640 --> 00:32:40,520 Speaker 1: cycle and farmers started to buy acres or rent acres. 566 00:32:41,240 --> 00:32:43,880 Speaker 1: And I would say today a large farm is considered 567 00:32:43,880 --> 00:32:48,840 Speaker 1: about three thousand acres, and I have spent time with 568 00:32:48,960 --> 00:32:52,880 Speaker 1: farmers in Iowa who farm as much as ten thousand acres, 569 00:32:52,920 --> 00:32:57,280 Speaker 1: So you know, we've really seen acres grow and farms 570 00:32:57,320 --> 00:33:02,320 Speaker 1: get larger over the years. You know, when you look 571 00:33:02,320 --> 00:33:04,480 Speaker 1: at a company like Caterpy, let's just use that as 572 00:33:04,480 --> 00:33:07,160 Speaker 1: the as the perch from which to look at at 573 00:33:07,160 --> 00:33:10,640 Speaker 1: this sector. Where's the growth is it in agriculture, is 574 00:33:10,640 --> 00:33:13,200 Speaker 1: it in mining? What? What what's the future look like 575 00:33:13,240 --> 00:33:17,080 Speaker 1: in terms of growth? Well, I think that that's unclear 576 00:33:17,200 --> 00:33:19,760 Speaker 1: right now. You know, what we are seeing in mining, 577 00:33:19,840 --> 00:33:22,960 Speaker 1: for sure, is a lot of supplies coming out on 578 00:33:23,000 --> 00:33:25,520 Speaker 1: the mining side. So we've closed a lot of US 579 00:33:25,600 --> 00:33:28,959 Speaker 1: coal mines, We've closed a lot of minds around the world, 580 00:33:29,120 --> 00:33:32,640 Speaker 1: and so we're resetting supply and demand. What we really 581 00:33:32,680 --> 00:33:37,360 Speaker 1: need to see now is demand accelerate. China is consuming 582 00:33:37,720 --> 00:33:41,920 Speaker 1: hard commodities, but its economy is kind of stabilizing at 583 00:33:41,920 --> 00:33:44,880 Speaker 1: about six percent growth, and that's still growth, but it's 584 00:33:44,960 --> 00:33:48,400 Speaker 1: just slower growth than everyone had anticipated. So I think 585 00:33:48,480 --> 00:33:51,640 Speaker 1: mining might be the first end market that we could 586 00:33:51,720 --> 00:33:54,080 Speaker 1: see some light at the end of the tunnel, because 587 00:33:54,640 --> 00:33:56,959 Speaker 1: mining companies are now beginning to make a little bit 588 00:33:56,960 --> 00:33:59,959 Speaker 1: of money, and perhaps in seventeen or eighteen, if you're 589 00:34:00,000 --> 00:34:01,640 Speaker 1: making a little bit of money, you opened the purse 590 00:34:01,720 --> 00:34:04,600 Speaker 1: strings a little bit. So I think of all the 591 00:34:04,680 --> 00:34:07,040 Speaker 1: end markets we look at, mining might be the first 592 00:34:07,040 --> 00:34:09,040 Speaker 1: one to put a bottom in. So we've gotten a 593 00:34:09,120 --> 00:34:12,000 Speaker 1: sense of sentiment among farmers. Let me ask you here, 594 00:34:12,040 --> 00:34:14,920 Speaker 1: Ann about sentiment among the companies themselves. You were out 595 00:34:14,920 --> 00:34:17,200 Speaker 1: at a big conference in Las Vegas last month wandering 596 00:34:17,200 --> 00:34:20,719 Speaker 1: around talking to two companies, to folks who are buying equipment. 597 00:34:20,719 --> 00:34:22,520 Speaker 1: What what did it feel like out there in Las 598 00:34:22,600 --> 00:34:26,160 Speaker 1: Vegas last month when you're there for that conference. You know, 599 00:34:26,200 --> 00:34:29,160 Speaker 1: we were kind of hoping to find a bright spot. 600 00:34:29,280 --> 00:34:32,879 Speaker 1: We were hoping that, you know, somebody would come and say, yes, 601 00:34:32,880 --> 00:34:36,640 Speaker 1: we're buying equipment and things look great. I actually sat 602 00:34:36,719 --> 00:34:39,680 Speaker 1: beside a gentleman who was on his way to the 603 00:34:39,760 --> 00:34:42,640 Speaker 1: Mine Exposure show on the airplane when I was heading 604 00:34:42,640 --> 00:34:46,080 Speaker 1: out there, and he was from Kazakhstan, uh And I 605 00:34:46,120 --> 00:34:48,320 Speaker 1: think he said it best. He said he was coming 606 00:34:48,360 --> 00:34:51,160 Speaker 1: to the show to look and talk and see what 607 00:34:51,200 --> 00:34:53,960 Speaker 1: equipment was out there, but he wasn't going to be 608 00:34:53,960 --> 00:34:56,040 Speaker 1: buying anything. So I think there's still a lot of 609 00:34:56,040 --> 00:34:59,600 Speaker 1: hesitancy as they're around the world in terms of actually 610 00:34:59,640 --> 00:35:02,919 Speaker 1: spend money. And I just said with the Chicago Fed, 611 00:35:02,960 --> 00:35:05,480 Speaker 1: and of course all of our federal reserve systems is great, 612 00:35:05,840 --> 00:35:09,719 Speaker 1: great research on land costs in that and the Chicago 613 00:35:09,800 --> 00:35:13,800 Speaker 1: Fed has a great district farm loan portfolio with major 614 00:35:13,880 --> 00:35:17,080 Speaker 1: or severe repayment problems. The good news is we're not 615 00:35:17,200 --> 00:35:20,040 Speaker 1: back to the eighties. But regarding back where we were 616 00:35:20,080 --> 00:35:24,279 Speaker 1: fifteen years ago, rather rapidly, how sustained do you see 617 00:35:24,320 --> 00:35:27,520 Speaker 1: these challenges on farm loans and do we have a 618 00:35:27,640 --> 00:35:30,560 Speaker 1: risk getting back to the ugliness of the nine eighties? 619 00:35:32,280 --> 00:35:34,200 Speaker 1: You know, the only thing we can say about the 620 00:35:34,200 --> 00:35:38,000 Speaker 1: difference this cycle versus the nineteen eighties is that farmers 621 00:35:38,200 --> 00:35:40,920 Speaker 1: did not leverage up as much as this cycle. I 622 00:35:40,920 --> 00:35:43,239 Speaker 1: think they learned their lessons in the eighties when they 623 00:35:43,239 --> 00:35:47,320 Speaker 1: had interest rates at about eighteen percent and debt to 624 00:35:47,360 --> 00:35:50,680 Speaker 1: total capital on the farmer's balance sheet was north of 625 00:35:52,520 --> 00:35:54,920 Speaker 1: so the psycle farmers did not leverage up. They had 626 00:35:54,960 --> 00:35:58,120 Speaker 1: a good time. They spent cash as some of them 627 00:35:58,200 --> 00:36:01,200 Speaker 1: did take on debt to expand, but we're nowhere close 628 00:36:01,280 --> 00:36:03,840 Speaker 1: to where we were in the eighties. Now, all that 629 00:36:03,960 --> 00:36:06,000 Speaker 1: being said, it doesn't mean that we don't have a 630 00:36:06,040 --> 00:36:08,440 Speaker 1: long down cycle ahead of us, and farmers are going 631 00:36:08,480 --> 00:36:11,360 Speaker 1: to have to continue to tighten their belts. So it 632 00:36:11,400 --> 00:36:13,520 Speaker 1: doesn't mean that it's going to be all roses for 633 00:36:13,600 --> 00:36:18,120 Speaker 1: somebody like John Deer. But the farmers themselves, you know, 634 00:36:18,200 --> 00:36:21,680 Speaker 1: they're not nearly as in as bad a position as 635 00:36:21,680 --> 00:36:23,920 Speaker 1: they were back in the eighties. John Deer hasn't had 636 00:36:23,920 --> 00:36:27,959 Speaker 1: a bear market. It's basically a two thousand eight two 637 00:36:27,960 --> 00:36:31,960 Speaker 1: thousand seven valuations is really held up quite well. Why 638 00:36:32,239 --> 00:36:36,440 Speaker 1: is that and why are you so cautious? Well, I 639 00:36:36,480 --> 00:36:40,279 Speaker 1: think investors keep looking at demand and as long as 640 00:36:40,320 --> 00:36:44,719 Speaker 1: the world's population continues to grow, there is this pieces that, 641 00:36:45,640 --> 00:36:48,160 Speaker 1: you know, we have to feed the world, and eventually 642 00:36:48,320 --> 00:36:52,360 Speaker 1: supply and demand will come back into balance. John Deer 643 00:36:52,400 --> 00:36:56,840 Speaker 1: had expected perhaps one weather event would help the supply 644 00:36:56,920 --> 00:36:59,879 Speaker 1: side of the equation, but instead this year we got 645 00:37:00,160 --> 00:37:03,120 Speaker 1: almost perfect weather in the Midwest, and so you know, 646 00:37:03,200 --> 00:37:05,800 Speaker 1: farmers are very crowd when they grow a great crop, 647 00:37:05,840 --> 00:37:09,359 Speaker 1: and when they grow record crops. However, it doesn't help 648 00:37:09,360 --> 00:37:12,160 Speaker 1: when everybody has a great crop. So you know, we're 649 00:37:12,160 --> 00:37:15,480 Speaker 1: now looking into seventeen and eighteen is maybe, you know, 650 00:37:16,040 --> 00:37:18,120 Speaker 1: maybe the weather will help them next year or the 651 00:37:18,200 --> 00:37:22,280 Speaker 1: year after. Michael sends in a message and also Carl 652 00:37:22,400 --> 00:37:25,560 Speaker 1: North of New York City and dignant, is there money 653 00:37:25,640 --> 00:37:29,840 Speaker 1: in chickens? Yeah? I don't think there's a lot of 654 00:37:29,840 --> 00:37:33,600 Speaker 1: money in the livestock side right now. What happened when 655 00:37:33,640 --> 00:37:36,200 Speaker 1: corn got to seven dollars, we saw a lot of 656 00:37:37,040 --> 00:37:40,240 Speaker 1: the protein side contract. You know, you killed all your beef, 657 00:37:40,280 --> 00:37:43,800 Speaker 1: you killed all your dairy cows, you killed all your pork, 658 00:37:43,960 --> 00:37:46,840 Speaker 1: and and and your and your chickens. And now we 659 00:37:46,960 --> 00:37:51,240 Speaker 1: have rebuilt all of the supply side on the protein side. 660 00:37:51,280 --> 00:37:54,759 Speaker 1: So I would be cautious on the protein side in 661 00:37:54,800 --> 00:37:58,040 Speaker 1: the new term. And never enough time, And thank you 662 00:37:58,080 --> 00:38:01,719 Speaker 1: so much for JP Morgan. We get a ginormous response 663 00:38:01,800 --> 00:38:05,240 Speaker 1: when Ms Dagon joins as she is with JP Morgan 664 00:38:05,320 --> 00:38:09,280 Speaker 1: and she's well, folks, there's there isn't a fireplace mantle 665 00:38:09,360 --> 00:38:12,000 Speaker 1: that could hold the trophies that she has brought home 666 00:38:12,360 --> 00:38:14,960 Speaker 1: with her dedicated work. Again, we protect the copyright of 667 00:38:15,000 --> 00:38:18,000 Speaker 1: all of our guests. I've got fifty five pages here 668 00:38:18,040 --> 00:38:20,040 Speaker 1: of Van Dagden. I'm not going to send it out. 669 00:38:20,400 --> 00:38:33,799 Speaker 1: Please contact your representative at J Pete Morgen. Thanks for 670 00:38:33,880 --> 00:38:38,319 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 671 00:38:38,480 --> 00:38:43,600 Speaker 1: interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. 672 00:38:44,320 --> 00:38:47,200 Speaker 1: I'm out on Twitter at Tom Keene. David Gura is 673 00:38:47,320 --> 00:38:51,120 Speaker 1: at David Gura. Before the podcast, you can always catch 674 00:38:51,200 --> 00:39:07,000 Speaker 1: us worldwide. I'm Bloomberg Radio. Who you put your trust 675 00:39:07,040 --> 00:39:10,960 Speaker 1: in matters? 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