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Speaker 1: Global business news twenty four hours a day. If Bloomberg

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Speaker 1: This is a Bloomberg Business Flash and I'm Karen Moscow.

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Speaker 1: This update is brought to you by b n y

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Speaker 1: Melon introducing Assets Strategy View, helping fund managers gain insight

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Speaker 1: to learn about Asset Strategy View. U Stock Index futures

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Speaker 1: are moving higher, with raw material producers poised to follow

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Speaker 1: commodity prices higher before a speech by Federal Reserve Janet Yellen.

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Speaker 1: The pound is dropping to US three week low after

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Speaker 1: poll showed more Britain's favorite quitting the European Union and

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Speaker 1: SMP even A futures are up six points now E

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Speaker 1: Many futures up sixty two NASDAC E many futures up thirteen.

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Speaker 1: We check the markets every fifteen minutes throughout the trading

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Speaker 1: day on Bloomberg. Dacks in Germany's up three tenths percent ten,

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Speaker 1: your Treasury down six thirty seconds, the at one point

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Speaker 1: seven two percent, nim X screw toi L up two

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Speaker 1: point one per cent or a dollar three to sixty five.

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Speaker 1: A barrel co makes gold of three tenths per centers

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Speaker 1: three dollars thirty cents to twelve forty six ounce. The

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Speaker 1: euro a dollar thirteen fifty three the N one oh

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Speaker 1: seven point one one. That's a Bloomberg business flash, Tom

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Speaker 1: and Mike Karen, thanks so much on Wall Street. The

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Speaker 1: following is from Bloomberg View opinions in commentary from Bloomberg columnists.

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Speaker 1: I'm Mark white House, an editor for Bloomberg View. After

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Speaker 1: US employers turned in their worst hiring performance in almost

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Speaker 1: six years, the people responsible for managing the economy must

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Speaker 1: be wondering our business is running up against the limits

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Speaker 1: of how many jobs they can create. Not necessarily true.

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Speaker 1: The unemployment rate at four point seven percent is extremely low,

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Speaker 1: but because it counts only those actively seeking work, it

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Speaker 1: misses millions of jobless who are staying on the sidelines.

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Speaker 1: If those people will work, then employers can keep hiring

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Speaker 1: without unduly pushing up wages and inflation. Gross flows into

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Speaker 1: labor force suggests people are willing. Consider, for example, the

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Speaker 1: large number moving straight into jobs without ever showing up

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Speaker 1: as unemployed on average in the three months through May,

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Speaker 1: about one point seven percent of the population did so,

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Speaker 1: a bit less than in previous months, but still high

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Speaker 1: by historical standards. So workers are available if only businesses

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Speaker 1: saw enough demand for goods and services to employ them.

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Speaker 1: This supports the case for more ambitious stimulus policies, such

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Speaker 1: as government infrastructure investment, to avoid leaving millions of potential

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Speaker 1: workers behind. I'm Mark white House. For more of you,

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Speaker 1: please go to Bloomberg View dot com or if you

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Speaker 1: go on the Bloomberg terminal. This has been Bloomberg View

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Speaker 1: and Bloomberg View commentary can be heard hourly weekdays. I'm

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Speaker 1: Bloomberg Radio. This is a real treat. Howard Marks with

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Speaker 1: us with oak Tree author uh Gentleman of Wisdom linking

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Speaker 1: economics into investment. Right now, we just had a fabulous

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Speaker 1: discussion to Richard Clarida for years of the Colombia Economics

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Speaker 1: Department with PIMCO. Now about the underlying theories that chair

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Speaker 1: you'll learning for that manner Dennis Lockhart believe in. Do

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Speaker 1: you believe in the models of the last twenty years

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Speaker 1: of economics? Though the mathematics, dynamics, stochastic, general equilibrium and

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Speaker 1: others do they still have a vailue. Well, no model

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Speaker 1: captures the entire workings of the economy. Economy is just

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Speaker 1: not that dependable and it's not that simple. I think

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Speaker 1: that uh uh you know, Uh. The real questions are,

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Speaker 1: do you leave it alone, less a fair or do

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Speaker 1: you try to steer it through an activist FED and Treasury? Uh?

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Speaker 1: And uh you know, I think that the lass a fair,

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Speaker 1: the free market, uh does the best job of allocating

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Speaker 1: resources in the long run and comes to the most

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Speaker 1: efficient solution. The problem is that it brings pain in

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Speaker 1: the short run, because in a free market there are

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Speaker 1: winners and losers. Have we cleared our markets eight or

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Speaker 1: nine years into the game? Cleared? Have we cleared our

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Speaker 1: markets of the debt the structure of what we had

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Speaker 1: in oh six o seven? Well, we have we we

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Speaker 1: have more debt now than we did uh those years ago,

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Speaker 1: years ago. Uh. Less of it is on the private side,

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Speaker 1: more of it's on the public side. Uh. The financial

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Speaker 1: institutions are less levered. Um. I think that the debt

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Speaker 1: still exists, it's but it is less dangerous. But the

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Speaker 1: back and forth over what the Fed is going to

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Speaker 1: do and when they're going to do it consumes us

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Speaker 1: and it consumes the water cooler talk on Wall Street.

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Speaker 1: But how much does it matter to you as you

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Speaker 1: make investment decisions? It doesn't matter much to me. Um.

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Speaker 1: I'm not what you call a FED watcher UM and

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Speaker 1: I'm certainly not a FED guesser. And I don't think

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Speaker 1: that the uh that the FED is as powerful as

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Speaker 1: the FED watchers UH seem to believe. UM. You know,

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Speaker 1: obsession with what's called the macro has reached a fever

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Speaker 1: pitch in the last ten years, and most people I

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Speaker 1: want to think about risk on, risk off, whether the

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Speaker 1: FED will be UH friendly or or hostile to business.

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Speaker 1: UM And I don't think that's the whole story. At

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Speaker 1: oak Tree, what we try to do is micro. We

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Speaker 1: try to invest in companies and industries and securities UH

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Speaker 1: where we think we're getting good value at a good price. UM.

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Speaker 1: But UM, you know, certainly there is a huge level

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Speaker 1: of interest in the FED. Of course, by now people

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Speaker 1: should have figured out that no matter what the FED

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Speaker 1: puts into action, it doesn't always accomplish its goals, so

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Speaker 1: its actions should be looked at with something of a

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Speaker 1: grain of salt. Well, is there a point at which

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Speaker 1: the level of interest rates makes a difference to the

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Speaker 1: earnings of the companies that you want to invest in,

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Speaker 1: or is that just too far down the road to

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Speaker 1: worry about. Yeah, I think it's too far down the

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Speaker 1: road because I don't think there's going to be a

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Speaker 1: major change in interest rates anytime soon. I think that

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Speaker 1: people who think rates are going up think they'll go

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Speaker 1: up a little and and then other people don't think

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Speaker 1: they're going to go up or think they're going to

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Speaker 1: go down. But I think that you know, UM, if

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Speaker 1: you said, do you think interest rates will be uh

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Speaker 1: at today's level plus or minus let's say a point

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Speaker 1: and a half in five years, I think most people

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Speaker 1: would be within the point and a half plus minus

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Speaker 1: rather then outside. Hundred seventy five thousand people just took

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Speaker 1: the cf exam sweet conversion. It's a level one, level two,

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Speaker 1: level three. I believe somewhere even curriculum as a worship

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Speaker 1: or free cash flow? Is that what matters right now? Well,

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Speaker 1: I think free cash flows are important. You know, I

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Speaker 1: have to say that. I think it was during my

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Speaker 1: lifetime that's something called earnings for share How quick became

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Speaker 1: became venerated. You know, it was considered a new concept. Uh,

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Speaker 1: and now people are looking at all the ways in

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Speaker 1: which that could be inaccurate or manipulated. So people are

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Speaker 1: looking at free cash flow, and I think it's a

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Speaker 1: very useful concept. How do you find value in a

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Speaker 1: distorted world? I mean, if we don't know where the

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Speaker 1: risk free raiders. Jack Trainer just passed away here, if

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Speaker 1: you uh, within the week or so, he's sharp trainer

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Speaker 1: Jensen the rest of him figured out this risk adjusted return.

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Speaker 1: How can we adjust? Well, it's very hard to adjust. Uh.

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Speaker 1: First of all, By the way, I want to point

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Speaker 1: out Tom that my c f A certificate is number

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Speaker 1: three nine three. Oh, this is early. This is early.

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Speaker 1: So I figure that of the current c f as

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Speaker 1: got there's after me. It's it's it's amazing how it's exploded.

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Speaker 1: Particularly that's it's it's amazing. That's right. Um, but um,

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Speaker 1: But to take this to the math, because if you

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Speaker 1: have a three ratio DuPont relationship or a five ratio

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Speaker 1: study of the dynamics the Newtonian plug and chug of

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Speaker 1: the four accounting statements and the cost of money? Can

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Speaker 1: you do that today, day in and day out at Oaktree, Well,

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Speaker 1: we're trying what what we try to get a superior

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Speaker 1: understanding of our companies, a deeper understanding, and uh not

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Speaker 1: guess at what's going to happen in the macro. Of course,

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Speaker 1: it is hard to do because what happens in the

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Speaker 1: macro is going to influence the way we are. Uh

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Speaker 1: but uh, you know, uh, I guess what I'm saying

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Speaker 1: is we try to be as isolated from the macro

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Speaker 1: effects as possible and just look at what's going to

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Speaker 1: happen with a very very strong emphstis on free cash flow.

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Speaker 1: Within that emphasis and free cash flow, do you predict

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Speaker 1: that mergers will continue? Is a proxy for finding growth.

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Speaker 1: The only way you can find growth is to go

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Speaker 1: by it, and that puts a premium on things, which

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Speaker 1: right now there's some silly premium some would suggests, but

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Speaker 1: others would find value. Yeah. Well, I'm not a I'm

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Speaker 1: not a big one for guessing at the future. Einstein said,

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Speaker 1: I don't think about the future. It'll come soon enough. Um.

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Speaker 1: I think that, you know, most trends continue until they

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Speaker 1: are brought to an end, and so the interesting mergers,

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Speaker 1: you know, will probably continue until the environment changes. And

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Speaker 1: then this is the important perspective. It goes back to

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Speaker 1: your book on common sense and and such. Do we

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Speaker 1: end with stability and control or do you assume with

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Speaker 1: a great distortion that Cherry Yellen will speak about at

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Speaker 1: twelve noon and Mike mckeehar in moments do you just

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Speaker 1: assume instabilities when this finally ends? Well, I mean it

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Speaker 1: depends on what you mean by instability. I mean the

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Speaker 1: the economy can cannot be a smoothly functioning machine that

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Speaker 1: that shoves along and has the same result year in

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Speaker 1: year out. It's just not the nature of things. Uh,

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Speaker 1: it'll be. It'll have stronger periods and weaker periods. I

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Speaker 1: hope and believe that if it's not over stimulated, it

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Speaker 1: will not over correct. What should just last question? If

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Speaker 1: I could, what should Apple do with all that cash?

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Speaker 1: It's a chart this weekend of the cash relative to

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Speaker 1: other companies. Uh. Well, John Thorndyke's book The Outsiders suggests

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Speaker 1: what they should do is make an assessment of how

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Speaker 1: their stock is priced. And uh, you know, lately people

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Speaker 1: have seemed to be pricing Apple low, thinking that that

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Speaker 1: the sizzle is gone and if the if the if

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Speaker 1: the stock price is low and the free cash flow

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Speaker 1: is strong, then you know, chances are that's a good

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Speaker 1: formula for buying your stock. Well, lieve it there, Howard Marks,

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Speaker 1: thank you so much. Fascinating. Did you have a more

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Speaker 1: gonna silence this weekend for all the people that took

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Speaker 1: the cf A. They were looked equipment leasing. I've studied

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Speaker 1: equipment leasing five times, folks. I'm waiting for the clouds

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Speaker 1: to part and understanding this is Bloomberg surveillance. Stay with us,