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Speaker 1: Like where a double based company has the freedom the

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Speaker 1: operator in a more competitive way. Now they have actually

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Speaker 1: no material impact on your business. Is that because you

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Speaker 1: aren't doing some of the earning stripping that they laid out,

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Speaker 1: And are you concerned that they might come out with

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Speaker 1: more and look at other ways that there could be

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Speaker 1: inversion tactics that are stripped away from some of the

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Speaker 1: tax benefits that you enjoy. Yeah, So the the way

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Speaker 1: they targeted in earning stripping in these rules, um doesn't

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Speaker 1: impact our structure. That's not the way we we we

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Speaker 1: are structured. That being said, I think it was very

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Speaker 1: difficult for them to do that, and they've acknowledged that

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Speaker 1: there will be some unintended consequences of the rules they wrote,

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Speaker 1: but they will not impact allary. So my senses, they've

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Speaker 1: really worked hard at Treasury to to write these rules.

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Speaker 1: My senses, UH, Secretary lew has already said now it's

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Speaker 1: up to Congress. President Obama has now also said now

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Speaker 1: Congress speeds to make their next move. And so I

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Speaker 1: think the hope here is that Congress will do something

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Speaker 1: to make the American tax system more competitive for global

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Speaker 1: companies to operate. Well, whether you were blindsided or not. Clearly,

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Speaker 1: this is a big smack. Who do you want to

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Speaker 1: give your political dollars to after this? You know, Um,

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Speaker 1: I'm not gonna endorse a specific candidate, but I do

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Speaker 1: want to make sure that the conversation of the politicians

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Speaker 1: changes from punishing companies to figuring out how we can

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Speaker 1: make America more competitive. That would be a much more

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Speaker 1: constructive dialogue. Do you believe what they did here was

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Speaker 1: punishing you? Well, I think they were trying to punish Fiser. Um,

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Speaker 1: clearly they they accomplished what they set out to do,

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Speaker 1: which was to break the deal. And um, both Fiser

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Speaker 1: and Alegant will be fine. Both have strong independent plans

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Speaker 1: and strategies and both will move on and focus on those. So, um, well,

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Speaker 1: they broke the deal. I don't think they succeeded in

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Speaker 1: punishing anybody. All right, Well, you know what you are.

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Speaker 1: Jersey Strong is the CEO and president of Allergan and

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Speaker 1: joining us this morning from Stephanie roll In Cynthia Kunz

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Speaker 1: from Bloomberg News. You've her voice with Bloomberg Surveillance uh

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Speaker 1: many times with an important interview there with Breton Saunders.

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Speaker 1: He is the chief executive officer of Allergan as you

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Speaker 1: heard him mentioned, uh, greatly affiliated with a previous path

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Speaker 1: of Forest Labs and of course Mr Saunders for years

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Speaker 1: we're sharing plow as well. We look at and in

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Speaker 1: this case two after that interview it a dial up

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Speaker 1: fifteen and that of course means the opening bell is

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Speaker 1: always brought to you by the University of North Carolina's

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Speaker 1: Keenan Flaggler Business School Master Year balance Sheet with their

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Speaker 1: world class Master of Accounting, Executive Development and NBA programs.

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Speaker 1: Visit UNC dot E d U slash Business U n

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Speaker 1: C dot E d U slash business. So there we

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Speaker 1: are on a market opening again the vix printing all

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Speaker 1: the vix goes the other way, showing the confusion out there.

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Speaker 1: Fifteen point six zero some of that looks at. This

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Speaker 1: is Kate Warren with Edward Jones Research and she joins

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Speaker 1: us out in student. Wonderful to have you in students.

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Speaker 1: Where are you based in St. Louis. That's a good

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Speaker 1: thing to be based and interesting because Malcrat was an

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Speaker 1: inversion target headquarters that all of the bosses work in St. Louis,

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Speaker 1: but they're head they're domiciled in Ireland. It's it's another

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Speaker 1: company just went through this a few years ago, exactly

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Speaker 1: before the rules staged. Yeah. I look at the path

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Speaker 1: of our economics, and of course you're doing a lot

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Speaker 1: of economic focus for UH Edward Jones, And I guess

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Speaker 1: the first question I would say is who does Janet

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Speaker 1: Yelling represent? If we look at the monetary policy derby

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Speaker 1: and with Edward Jones with a decidedly national perspective, a

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Speaker 1: legitimate national perspective, does ye yet Yelling present the elite?

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Speaker 1: Does Janet Yellen represent the New York photocracy? Does Janet

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Speaker 1: Yellen represent America? Which is it? I think it's closer

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Speaker 1: to representing America because I think she's trying very hard

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Speaker 1: to be sure the economy continues to grow, and that

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Speaker 1: is her main focus with the FEDS focus on, of course,

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Speaker 1: inflation and jobs, and her concern is getting more people

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Speaker 1: back to work in this environment where inflation stayed reasonably low.

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Speaker 1: And we could debate for how long, but I think

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Speaker 1: that's really America about jobs and trying to be sure

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Speaker 1: that people who are sitting on the sunlines and are

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Speaker 1: out at the labor force come back in Mike. Mike's

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Speaker 1: going down to do the minutes here today? Is this

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Speaker 1: a Fed within the minutes or within the speeches that

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Speaker 1: we hear just looking at two America's That's what I

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Speaker 1: think is fascinating, as I understand she's looking in America,

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Speaker 1: But which one is it? Yes? Well, Uh, certainly there

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Speaker 1: are other people at the FED who are more concerned

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Speaker 1: about inflation, more concerned about where we go next as

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Speaker 1: opposed to making sure that every last worker who's sitting

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Speaker 1: on the sunlines has the opportunity to get a job.

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Speaker 1: And I think that really is a conflict right now.

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Speaker 1: We're likely to see it in the minutes with many

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Speaker 1: more uh signs of debate, as we've seen with the

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Speaker 1: FED commentary since then with the doves and the hawks. Basically, well,

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Speaker 1: certainly the focus at two o'clock is going to be

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Speaker 1: and what does this tell us about when the FED

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Speaker 1: is going to raise interest rates next? And that is

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Speaker 1: the big debate out there. Do you really care? I mean,

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Speaker 1: is it on a day to day basis? Uh? Does

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Speaker 1: what the Fed minutes going to tell you're going to

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Speaker 1: make any difference to what you we invest in? Uh? No,

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Speaker 1: But I think we care more as a result of

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Speaker 1: the FED saying your data dependent. And the reason is

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Speaker 1: I think the Fed's actually increased the volatility in the

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Speaker 1: markets as everyone now focuses on the data to try

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Speaker 1: to infer from every indicator whether rate increases our sooner

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Speaker 1: or later and how fast they'll raise rates. So do

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Speaker 1: we care in a broad sense now because we actually

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Speaker 1: think people need to own a mix of stacks and

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Speaker 1: bonds and an appropriate mix for their situation, not based

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Speaker 1: on the environment, and that in that sense, whether the

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Speaker 1: FED is raising rates sooner or later, what we're really

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Speaker 1: concerned about is that they not be behind the curve,

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Speaker 1: that we not see a huge increase in inflation. And

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Speaker 1: the reason is that's one of the most important risk,

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Speaker 1: biggest risks for long term investors. So if the FED

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Speaker 1: gets behind the curb and inflation goes up more than expected,

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Speaker 1: that would actually be bad news for most investors who

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Speaker 1: are putting their money away hoping that it provides them

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Speaker 1: with a good retirement. Have you changed since December sixteenth

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Speaker 1: when they raised rates? Have you changed any investments because

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Speaker 1: of that? No? We no. We continue to think that

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Speaker 1: UH rates will go up slowly and steadily. It doesn't

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Speaker 1: really matter whether it's one or two increases this year

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Speaker 1: or or more than that. We think that investors need

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Speaker 1: to own fixed income because we think that long term rates,

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Speaker 1: which are more tied to inflation, stay low, and short

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Speaker 1: term rates have come up a bit, but not enough

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Speaker 1: to make anybody happy about the rates that they're getting.

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Speaker 1: This is so important. I want to reframe this. You're

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Speaker 1: recommending what in bonds for a financially repressed America, So

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Speaker 1: it depends on how comfortable with risk investors are. So

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Speaker 1: we don't have a single recommendation. We have six different

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Speaker 1: portfolio objectives that are really tied to your comfortable with

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Speaker 1: risk and your time horizon. So for many investors, it's

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Speaker 1: fifty in stocks, in fixed income, in cash, and for

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Speaker 1: some it's in stocks and in fixed income. But we

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Speaker 1: don't want to stay away from bonds even in this

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Speaker 1: low rate environment, and the reason is inflation has remained.

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Speaker 1: This is just incredibly important, folks. And this goes back

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Speaker 1: to your doctor and competitive strategy. What is the competitive

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Speaker 1: strategy for retirees in America? Besides just brute survival, it's

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Speaker 1: sprute survival. It's saving more, it's investing. But the retirees

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Speaker 1: can't save more. The young guys Michael McKee is so

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Speaker 1: young he can save more. We can't. What are retirees do?

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Speaker 1: I mean you are is n easually qualified and this

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Speaker 1: is anybody that walks in the building. So it's it's

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Speaker 1: a really tough environment. And this is an environment where

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Speaker 1: basically we're facing very low rates and they're well below

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Speaker 1: what people sort of planned on and expected. So so,

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Speaker 1: and that's the tough situation. That means that many people

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Speaker 1: own a little more in stocks than they would have historically.

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Speaker 1: And that's probably what you're thinking about, which is the

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Speaker 1: yields on dividend paying stocks, and especially those that are

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Speaker 1: likely increased their dividends in the future, are going to

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Speaker 1: be a better place to get long term returns than

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Speaker 1: fixed income. But retirees also face market risk, and you

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Speaker 1: don't want to be out of bonds because you want

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Speaker 1: to be sure that you've got a less volatile portfolio,

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Speaker 1: especially when you're taking withdrawals. So don't be out of

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Speaker 1: fixed income, even though those rates are low, because fixed

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Speaker 1: income plays a really important role in your portfolio, especially

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Speaker 1: in retirement. With Edward Jones as well, this is the

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Speaker 1: the arch battle. We got a ton of amount on this. Okay,

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Speaker 1: you guys are so smart. What do you do? There's

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Speaker 1: no coupon. They'll see these, remember, might see these were

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Speaker 1: nine percent? Kate doesn't know that the yen one ten

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Speaker 1: oh five. All right, let's take it with Michael barn

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Speaker 1: Now and get the latest world of national headlines. Miel, Mike, Tom,

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Speaker 1: thank you very much. Republican Ted Cruise and Democrat Bernie

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Speaker 1: Sanders are hoping to take their momentum into the delegated

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Speaker 1: rich New York primary last night, Cruise and Sanders and

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Speaker 1: when the Wisconsin primary front runners Donald Trump and Hillary

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Speaker 1: Clinton have strong ties to New York. It's Trump's turf

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Speaker 1: and Clinton served as a senator in New York. Sanders

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Speaker 1: grew up in Brooklyn. Ferguson, Missouri, isn't sure if it

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Speaker 1: will be able to pay for changes required in the

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Speaker 1: settlement with the U. S. Department of Justice following the

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Speaker 1: police shooting of Michael Brown. Yesterday, Ferguson voters approved a

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Speaker 1: half cent sales tax increase to help pay for those changes,

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Speaker 1: but they rejected a property tax increase. Labors Terry tom

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Speaker 1: Perez is calling it a win for investors. The Labor

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Speaker 1: Department is in availing a new rule that the Obama

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Speaker 1: administration says will help make sure to protect the retirement

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Speaker 1: accounts for Americans. Press says the rule is designed to

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Speaker 1: make sure that investment advisors put the interests of their

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Speaker 1: clients ahead of their own. Consumers best interests must now

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Speaker 1: come before an advisor's financial interest. This is a huge

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Speaker 1: win for the middle class. Global News twenty four hours

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Speaker 1: a day, powered by our two hundred journalists and more

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Speaker 1: than one d fifty news bureaus from around the world.

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Speaker 1: I'm Michael Barr, Mike Tome, and Michael thanks so much

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Speaker 1: the yen moves. I've been trying to do everything I can.

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Speaker 1: Todate did not be hysterical about the yen. It was

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Speaker 1: trading range one. That script is over. The yen is

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Speaker 1: one ten oh three heading for a one o nine

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Speaker 1: handle this morning, a dramatically stronger Japanese yen. This is

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Speaker 1: Bloomberg's surveillance. Bloomberg Savantage, brought to you by Bentley University

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Speaker 1: is Prepared You project. Are millennials ready for the work face?

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Speaker 1: The Prepared You research study has answers that might surprise you.

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Speaker 1: Visit Bentley dot edu slash prepared to download an infographic

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Speaker 1: overview global business news twenty four hours a day at

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Speaker 1: Bloomberg dot com, the Radio plus Mobile Lab and on

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Speaker 1: your radio. This is a Bloomberg Business Flash and I'm

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Speaker 1: curR in Moscow. This updates brought to you by Commonwealth

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Speaker 1: Financial Network. When it's time to change the conversation, talk

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Speaker 1: with the broker dealer r I A that's ready to listen,

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Speaker 1: Call eight six six or six two thirty six thirty

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Speaker 1: eight or visit Commonwealth dot com to learn more. US

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Speaker 1: stocks little changed after the S and P five hundreds

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Speaker 1: saw the steepest decline in almost a month and has

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Speaker 1: gains include oil boosted energy producers, while investors way the

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Speaker 1: recent equity rally. We check the markets every fifteen minutes

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Speaker 1: throughout the trading day. On Bloomberg. S and P five

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Speaker 1: hundred is at four again little change. Dow Jones and

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Speaker 1: astral average down two tenths per center thirty six points

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Speaker 1: to seventeen thousand, five hundred sixty six, the Nasdacs up

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Speaker 1: two tenths per center nine points to forty eight fifty

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Speaker 1: three ten. Your treasury down five thirty seconds, the yield

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Speaker 1: one point seven three percent. The yield on the two

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Speaker 1: year point seven two percent. Nimex screwed oil up two

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Speaker 1: point six percent or ninety two cents to thirty six

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Speaker 1: eighty one a barrel. Comex goal is down half percent,

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Speaker 1: or six dollars ten cents. At twelve twenty three sixty

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Speaker 1: announced the euro another thirteen eighty nine, the yen one

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Speaker 1: ten point oh five, Fiser and Allergan agreeing to terminate

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Speaker 1: their one hundred sixty billion dollar merger. Fiser shares of

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Speaker 1: one point two percent this morning, an Allergan of two

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Speaker 1: point two percent, and Monsanto posting its smallest fiscal second

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Speaker 1: quarter profit in sales since twenty eleven. Is a global

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Speaker 1: slump and agricultural commodity suppress demand IT shares They're down

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Speaker 1: a tenth of a percent, now down about twelve cents

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Speaker 1: to eighty six fifty two a share. That's a Bloomberg

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Speaker 1: business flash. Tom and Mike Karne thinks, so appreciate that

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Speaker 1: the yen stronger end moving from one ten forty down

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Speaker 1: to a jaw dropping one ten oh two. We are

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Speaker 1: now on the one oh nine handle. Watch to review

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Speaker 1: two thousand twelve early two thousand, twelve, seventy six yen

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Speaker 1: per dollar. We went out to a hundred and twenty

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Speaker 1: five yen per dollar, and we've come back about twenty five.

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Speaker 1: Make me seven. This is a stronger yen. We got

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Speaker 1: a long way to go to the center tendency, which

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Speaker 1: is conveniently at exactly one hundred. To give you some

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Speaker 1: perspective there on the yen move. Kate warned with us

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Speaker 1: with Edward Jones, where she has had a tour of

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Speaker 1: duty for because she's seen the St. Louis Cardinals when

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Speaker 1: they were poor and weak, which was a few years ago.

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Speaker 1: I mean every year they do better than the team

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Speaker 1: from Boston. We won't talk about that, Kate. I want

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Speaker 1: to go back to retirement here. Alicia Mannell runs a

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Speaker 1: shop at Boston College about retirees. Way behind is a sweat.

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Speaker 1: There's a panic. You see it every day. I see

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Speaker 1: it every day. One solution is to buy dividend growth,

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Speaker 1: to buy quality blue chips. One of the names Edward

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Speaker 1: Jones trots out is PEPSI would you please explain to

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Speaker 1: our listeners, why does you have confidence and buying a

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Speaker 1: nifty fifty mad been like twenty two multiple these things

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Speaker 1: are priced to perfection under any cycle. How can I

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Speaker 1: own shares in quality blue chips right now. Well, certainly

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Speaker 1: we think you can do that, even though, yes, that

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Speaker 1: Pepsi's near a fifty two week HI and that's because

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Speaker 1: it has a sustainable competitive advantage that we're in. Buffett

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Speaker 1: refers to it as a wide moat. People continue to

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Speaker 1: buy salty snacks, people continue to buy carbonated and non

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Speaker 1: carbonated beverages. They've done a really good job of cutting costs,

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Speaker 1: and those low commodity prices that we complain about it

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Speaker 1: in other segments are actually helping Pepsi in terms of

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Speaker 1: being able to grow its earnings every time has a

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Speaker 1: dividend yield of around two and a half percent, and

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Speaker 1: we expect it's going to grow that it's gonna grow

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Speaker 1: to high single digit, high single digits. Said, not huge returns,

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Speaker 1: but certainly solid returns. And it's defensively positioned and we

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Speaker 1: think that's the most important part of it. And what

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Speaker 1: is so um, there's a headline coming out, folks. Now

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Speaker 1: we've got to prick up. Michael McKee mention this earlier

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Speaker 1: Haliburton sued by the United States seeking to block the

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Speaker 1: Baker Hughes deal. So some more m and a activity.

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Speaker 1: As we just spoke to the elegant CEO as well,

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Speaker 1: if you're just joining fightser elegant that blows up today

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Speaker 1: as well. And I believe Justice suing Halliburton moments ago

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Speaker 1: Kate Warren with us with Edward Jones again getting back

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Speaker 1: to price to perfection stocks. I get the mode idea,

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Speaker 1: but we've seen this before where we've rationalized not buying value. Basically,

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Speaker 1: we're buying growth right in a low nominal GDP environment. Yes,

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Speaker 1: it's earnings growth, not so much sales growth, because Pepsi,

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Speaker 1: like every other consumer staples company, is struggling a little

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Speaker 1: bit with sales growth, but what they've been able to

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Speaker 1: do is still generate the earnings growth. So you're absolutely

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Speaker 1: correct that you know, we'd be looking at a mix

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Speaker 1: of companies that have done well and once where the

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Speaker 1: price has dropped a lot and the value is better.

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Speaker 1: So always keep in mind that we don't want people

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Speaker 1: just buying consumer staples, which have been sort of a

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Speaker 1: defensive haven that many investors have run into where the

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Speaker 1: prices are high. You always want to build a much

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Speaker 1: better diversified portfolio than than just one stock one step.

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Speaker 1: If you know from the c f A, I mean,

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Speaker 1: come on, it's sharp ratio one oh two, except I

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Speaker 1: don't know, and you know, the sophisticates like you and

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Speaker 1: me don't know. Much more importantly, the non sophistics just

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Speaker 1: get it, which is, we don't know where the risk

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Speaker 1: free free return is if we're if we're diversifying not

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Speaker 1: by individuals. There's a whole debate, folks, whether you should

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Speaker 1: diversifize by individual stocks, by sectors, or by asset class.

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Speaker 1: And we can you know, that's a three hour show

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Speaker 1: right air, But we don't know. Am I right? The

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Speaker 1: risk free rate and our original economics right now, that's correct,

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Speaker 1: And in particular, we don't know because the things that

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Speaker 1: we usually use as proxies for the risk free rate,

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Speaker 1: and though it's things that sort of tell us what

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Speaker 1: it is, are being affected by monetary policy where those

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Speaker 1: rates are a lot lower than we would otherwise expect.

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Speaker 1: Is v Body of Boston University does he have a

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Speaker 1: case He's been way out front with Gary Shilling on

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Speaker 1: a low yield environment, low nominal, low real yield environment.

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Speaker 1: Is it just we gotta I mean, for ver g

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Speaker 1: Jones clients, do you just got to get used to

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Speaker 1: a four percent coupons? Living large? Uh. Certainly, if inflation

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Speaker 1: stays low, you're likely to be in a low return environment.

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Speaker 1: I think the key to whether rates go up is

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Speaker 1: whether inflation moves higher. And there's certainly no signs of

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Speaker 1: underlying trends that push inflation above U something around two percent,

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Speaker 1: and it's we continue to have low or commodity prices.

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Speaker 1: We continue to have people in the labor force that

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Speaker 1: keep wages from rising. So that's us rates don't go

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Speaker 1: back to what we all think of as normal levels

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Speaker 1: anytime since to your work with the White House years

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Speaker 1: ago with President Reagan, and to your international work at

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Speaker 1: the London School of Economics. Does Kate Warren redefined globalization? Though?

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Speaker 1: Do you do? You say the globalization? It's St. Louis

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Speaker 1: at Bullard in St. Louis or Williams in San Francisco.

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Speaker 1: Excuse me, I'm gasping over the end one ten oh

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Speaker 1: six h The new globalization for America is the same

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Speaker 1: old same olders. There's something different this time. To me,

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Speaker 1: there's something different, But let let me let you answer.

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Speaker 1: I think that globalization is changing in terms of how

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Speaker 1: fast information flows. So if you're talking about that, then yes,

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Speaker 1: But if you're talking about the reluctance to trade. I

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Speaker 1: think we're just in that part of the cycle. The

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Speaker 1: whole notion of you know, whenever times get tough, everybody

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Speaker 1: gets more protectionist. I think that's just the part of

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Speaker 1: the cycle. I think we'll go back to seeing more

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Speaker 1: opportunities there in the future. So I don't see that

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Speaker 1: as changing per minente. But does the nation to have

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Speaker 1: a bimodal or trimodal economics where the elites look at

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Speaker 1: unemployment claims is just one example of how terrific the

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Speaker 1: economy is. Um do the halves that are employed and

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Speaker 1: our internationalist are they working under a globalism that leaves

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Speaker 1: behind so much of America? I think it looks that

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Speaker 1: way right now, but I think we have to think

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Speaker 1: about where the opportunities are. And we are still seeing

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Speaker 1: a lot of innovation, a lot of things that are

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Speaker 1: coming in the US that give us growth in the future,

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Speaker 1: but nobody is exactly sure how that works, and people

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Speaker 1: are quite worried that they don't employ a lot of

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Speaker 1: Americans who don't have the skills to get into the

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Speaker 1: higher wage and the more that's part of that bimodal Americans,

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Speaker 1: people without the skills so how do you change that.

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Speaker 1: It's certainly not by stopping globalization. It's by figuring out

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Speaker 1: how do we get people into the workforce then able

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Speaker 1: to take advantage of the benefits of what one one

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Speaker 1: final NERD question for you, do you get advantage out

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Speaker 1: of micro analysis? Weekly, monthly, daily of g d P reports?

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Speaker 1: The Evil group at Macroeconomic Advisors and your St. Louis

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Speaker 1: they're good at this Atlanta GDP. Now is all the rage?

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Speaker 1: Is that a value? Or would you rather see a

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Speaker 1: stasis of just quarterly analysis? Now? I think it's really

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Speaker 1: valuable to be looking at that kind of micro analysis.

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Speaker 1: It doesn't help investors very much, and the reason is

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Speaker 1: that I think you do need to take a much

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Speaker 1: longer term perspective. But does this help us understand better

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Speaker 1: what's going on in the economy and how it fits together?

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Speaker 1: I think the answers yes, this has been great. Come back.

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Speaker 1: I will come back. I just noticed Atlanta g DP

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Speaker 1: a zero point four percent. I think that's brand new,

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Speaker 1: and maybe yesterday it was. All of the numbers for

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Speaker 1: first quarter are looking really glad. Do you extrapolate those

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Speaker 1: out in the second, third, fourth quarter? No? In fact,

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Speaker 1: I think We're going to continue to see the pattern

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Speaker 1: we've seen over the last couple of years, which is

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Speaker 1: quarterly GDP is incredibly bumpy of quarter and a week quarter.

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Speaker 1: Why does it happen? When? When? Did? What? Why is that?

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Speaker 1: I think it's partly inventory swings, but it's also the

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Speaker 1: uncertainty of what's going on. And we keep seeing uh

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Speaker 1: these offsetting moves where something strong and then it weakens out.

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Speaker 1: So every time we see a trend, it doesn't last.

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Speaker 1: It really peters out very quickly. Come back when the

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Speaker 1: Cardinals lose three games in a row. But I may

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Speaker 1: never I mean he may never be back. Thank you

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Speaker 1: for okay, Well, come back when the Red Sox lose

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Speaker 1: three games in a row. Kate Warren with us with

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Speaker 1: Edward Jones of St. Louis. In a week, if we

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Speaker 1: get the Friday, we may not even get the Monday.

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Speaker 1: On that John Tucker uh SATs Kate Warren with a

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Speaker 1: really wonderful synthesis in perspective on what we're doing in America.

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Speaker 1: We got a mix on the screen negative twenty eight

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Speaker 1: in the Dow SMP, A little bit of green on

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Speaker 1: the screen, just a churn out there with a little

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Speaker 1: bit of corporate data as well, moving from Alaska Air

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Speaker 1: and Virgin America over the viser Allgan collapses. Cynthia Coon's

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Speaker 1: with that great interview with Steph Roll of the CEO

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Speaker 1: of Alligan and onto the Baker Hughes Halliburton UH announcement.

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Speaker 1: You'll hear much of that on Bloomberg Radio through the day.

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Speaker 1: We are produced, I mean produced by y U Yen

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Speaker 1: ken Folio, our global technical director from New York coast

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Speaker 1: to coast and in St. Louis, Bloomberg savantas