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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim

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Speaker 1: Fox along with my co host Lisa Abramowitz. Each day

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Speaker 1: we bring you the most important, noteworthy, and useful interviews

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Speaker 1: for you and your money, whether at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg P and L

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Speaker 1: Podcast on iTunes, SoundCloud and at Bloomberg dot com. I

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Speaker 1: want to prepare for what is ahead in the oil industry.

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Speaker 1: I get confused looking at all the inputs in similar

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Speaker 1: argument for iron Ore that perhaps the rally has gone

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Speaker 1: on too long, has been made for the oil industry,

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Speaker 1: that perhaps oil prices have gotten too high and are

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Speaker 1: due for a fall. I want to bring in Libby

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Speaker 1: two does, a partner and portfolio manager at Cushing Asset

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Speaker 1: Management UH to talk a little bit about what we

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Speaker 1: should be paying attention to with respect to oil. So, Libby,

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Speaker 1: there is so much going on from the political angle,

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Speaker 1: where you've got President Trump, who does seem to be

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Speaker 1: supportive of fossil fuels, but then policy changes that could

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Speaker 1: prove to be challenging frankly for some of the big

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Speaker 1: energy companies that do business in the Middle East. What

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Speaker 1: are you focusing on to determine the course ahead. Yeah,

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Speaker 1: I think when you look at the crude oil, just

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Speaker 1: like any other commodity, there are three main things supply, demand,

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Speaker 1: in inventories, and right now we have several things that

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Speaker 1: are impacting that. We have rig counts that of course

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Speaker 1: impacts supply. Those are going up, so the fear of overproduction,

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Speaker 1: we've got that happening. We've got potential import tax on

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Speaker 1: crude oil, which again that'll affect the big integrated companies,

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Speaker 1: but there are a lot of smaller domestic independent E

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Speaker 1: and P companies that that won't affect refiners. They could

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Speaker 1: potentially be hurt, but it depends on the details of

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Speaker 1: the tax, so you really have to dig into the details.

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Speaker 1: But if you take a step back, Trump centered policy

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Speaker 1: is reduced regulatory burden, increase production, increase infrastructure, and support export.

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Speaker 1: All of that is very positive for the United States. Lebby,

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Speaker 1: I'm wondering if you could help me just get my

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Speaker 1: mind around the world of master limited partnerships. I used

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Speaker 1: to pretend that I knew something about energy transfer partners

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Speaker 1: but then it all went and it got complicated, and

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Speaker 1: I think you would agree that it went from being

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Speaker 1: something that was driven by demand for the yield uh

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Speaker 1: specifically the payouts, because payouts from mlp s are treated

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Speaker 1: as payouts let's say, from a real estate investment trust,

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Speaker 1: so it passes through directly to the investor. So I'm

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Speaker 1: wondering if you could just give me a view of

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Speaker 1: what's going on in the MLP space, and you might

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Speaker 1: even want to use uh, you know, enterprise energy transfer

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Speaker 1: partners almost as an example. Well, it's interesting you pick

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Speaker 1: energy transfer because that's probably one of the most complicated

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Speaker 1: of the energy infrastructure compa's Yeah, exactly. Most of them

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Speaker 1: are pretty straightforward. It's a fee based business to transport, process, store,

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Speaker 1: crude oil, natural gas. I think that MLPs, which as

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Speaker 1: you mentioned, used to be a yield story, probably still

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Speaker 1: are a yield story in relative terms. Even though we're

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Speaker 1: in a rising rate environment, yields are still fairly low,

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Speaker 1: so people are looking for yield reads utilities that's expensive yield.

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Speaker 1: MLPs are still cheap yield. But today, in the age

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Speaker 1: of the energy renaissance, which we're truly in, the story

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Speaker 1: is growth and so there are a ton of energy

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Speaker 1: infrastructure companies that are going to be able to grow

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Speaker 1: these distributions that can be five six seven percent on average.

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Speaker 1: Where do we get a list? I can give you

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Speaker 1: a whole list of energy infrastructure count so so olivy

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Speaker 1: you oversee almost four billion dollars of assets. Where where

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Speaker 1: are you investing right now? So right now, given the uh,

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Speaker 1: what we've come through sixteen and coming out of the

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Speaker 1: trough and the energy cycle, it's been interesting because the

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Speaker 1: upstream companies, the production companies, there are price times volume game.

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Speaker 1: Price went down crude those companies, cash flows went down.

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Speaker 1: The MLP companies went down right in conjunction with the

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Speaker 1: production companies, but their cash flows didn't go down. Why

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Speaker 1: because it's just a volume game. So as long as

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Speaker 1: the demand was there, the cash flows were going to

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Speaker 1: be there, and so the opportunity. There are a lot

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Speaker 1: of MLPs that now have trade a very attractive valuations,

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Speaker 1: whether they have parents that have billions of dollars of

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Speaker 1: infrastructure to drop down, or they become a value story

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Speaker 1: because they've been beaten up unfairly. Let's do the value story.

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Speaker 1: Tell us give us a couple of examples. Okay, so

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Speaker 1: h n g L Energy Partners company that has been

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Speaker 1: um was really beat up. Saw it's yield blowout tot um.

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Speaker 1: They have, uh, they have done several things to improve

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Speaker 1: their balance sheet, bring leverage down. Uh. Their big pipeline,

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Speaker 1: Grand Makes of Pipeline is now online, it's moving crude,

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Speaker 1: and they entered into a strategic partnership with oak Tree.

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Speaker 1: This is going to provide all kinds of opportunities. They

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Speaker 1: are going to be able to grow that distribution twenty

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Speaker 1: plus percent this year and in three years after that

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Speaker 1: at ten plus. So how do you, as an investor

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Speaker 1: away from oak Tree get in on that? So you

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Speaker 1: buy the public stock and g L and g L

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Speaker 1: right and g L trades right now four dollars somewhere

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Speaker 1: around there, and you say growth, that's what you want

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Speaker 1: to be looking for, right, because I often note that

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Speaker 1: in dividend portfolios people are saying it's not just the yield,

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Speaker 1: it's whether the company can actually grow the dividend into

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Speaker 1: the future. All right, that was a value name, correct? Yes? Okay,

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Speaker 1: what what you say that? There are maybe names out

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Speaker 1: there also that are just going to provide new growth. Yeah,

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Speaker 1: so let me touch on them. The fact that this

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Speaker 1: business is going to have uh five billion dollars of

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Speaker 1: infrastructure that has to be built out in the United

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Speaker 1: States to handle the existing supply sources. So you have

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Speaker 1: many companies who have a very nice footprint in the US,

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Speaker 1: companies like Williams Partners that's the premier natural gas UH

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Speaker 1: pipeline system in the United States. This is a company

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Speaker 1: that has done some things to reduce their cost of

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Speaker 1: capital UH. It's a company that is going to be

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Speaker 1: able to grow at five to seven percent UH and

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Speaker 1: a company that UM is really in the premier sweet

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Speaker 1: spot of the energy renaissance. Williams Companies Williams Companies ticker

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Speaker 1: w p Z. So right now, how much of your

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Speaker 1: investments are predicated on the idea that oil prices will

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Speaker 1: not fluctuate too much to the downside, meaning, you know,

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Speaker 1: beyond forty five a barrel or lower. Yeah, that's a

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Speaker 1: great point because the energy infrastructure business and and the

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Speaker 1: success of the energy infrastructure business is predicated on the

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Speaker 1: energy supply chain functioning normally. And when you get down

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Speaker 1: below fifty dollars UH, it's difficult for producers. There are

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Speaker 1: some that can can operate in that area, but there

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Speaker 1: it's difficult for some producers to operate economically. So that

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Speaker 1: becomes an issue if you get too higher prices, say

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Speaker 1: we blow out, you have demand destruction, either of those things.

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Speaker 1: Heard it, but we think we're writing the sweet spot

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Speaker 1: fifty six. Thank you very much to do his partner,

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Speaker 1: portfolio manager Cushing Asset Management. Apple. It's been touted as

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Speaker 1: the world's most expensive company, at least by market share

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Speaker 1: at one point or another. Apple coming out with their

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Speaker 1: results after the market closes today here to tell us more.

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Speaker 1: Michael Scanlan, portfolio manager Manu Life Asset Management, based in Boston. Michael,

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Speaker 1: thanks for being with us. All right, so give us

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Speaker 1: your your best estimate, guestimate and everything Apple. What's gonna happen?

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Speaker 1: What are they gonna tell us? Thanks for having me.

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Speaker 1: You know, I think when you when you look at

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Speaker 1: the report tonight, there's obviously the results from last quarter.

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Speaker 1: I think the bigger focus for everybody, uh they released

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Speaker 1: tonight and conduct the conference call later on this evening

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Speaker 1: will likely be more focused on what the guidance is

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Speaker 1: going forward forward. I still think when you look at

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Speaker 1: this company last year, there was a lot of focus

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Speaker 1: on the fact that it was actually a down year

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Speaker 1: for them in terms of revenues and uh, the actual

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Speaker 1: iPhone units that they sold this year, they should give

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Speaker 1: the back on a growth trajectory getting back to where

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Speaker 1: they were in two thousand fifteen. So you know that

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Speaker 1: will likely help prevent the type of stell off that

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Speaker 1: we saw early last year in the stock. Have we

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Speaker 1: gotten any indications already about what their iPhone sales are

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Speaker 1: going to be like? And how much is the response

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Speaker 1: to Apple's earnings hinged on that all important iPhone sales number. Well,

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Speaker 1: I think when you look at the quarter, you know,

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Speaker 1: people tend to focus, uh probably laser like focus on

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Speaker 1: that growth margin number that they were report. And there

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Speaker 1: are some one off items that they have had the

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Speaker 1: last couple of quarters, especially last quarter with FX and

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Speaker 1: some other things. Uh, and you know the stock tends

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Speaker 1: to overreact to that number. You know, if you take

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Speaker 1: a longer term focus on the Apple, you know it's

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Speaker 1: it's a stock that offers a phenomenal total return. Right.

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Speaker 1: You get thirty five billion dollars of stock being bought

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Speaker 1: back every year, You get just about a two percent

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Speaker 1: dividend that buy backs about six percent of the company.

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Speaker 1: See you add those two things together, you're getting an

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Speaker 1: eight percent return before they do anything in terms of

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Speaker 1: earnings growth or multiple expansions for the name. Well, well,

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Speaker 1: just to do a little bit more math to make

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Speaker 1: your head spin, we're talking about sales of anywhere between

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Speaker 1: seventies six and seventy eight billion. That would actually be

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Speaker 1: the highest revenue in a single quarter ever. Also gross

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Speaker 1: margins of between thirty eight and thirty eight and a

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Speaker 1: half percent. That does compared to about forty in the

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Speaker 1: year ago quarter. Correc think that's one of the big

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Speaker 1: things too. I mean, you look at this company. Nobody

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Speaker 1: makes money in smartphones, right, and people are talking about

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Speaker 1: this new Google Pixel phone, and you know, even the

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Speaker 1: most robust projections are nowhere near the two thirty million

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Speaker 1: or so iPhones at Apple cells in a year. So

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Speaker 1: you know, the numbers are big. Yes, the market cap

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Speaker 1: is big, but when you look at it from evaluation standpoint,

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Speaker 1: I mean, Apples at roughly thirteen thirteen and a half

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Speaker 1: times this year, even cheaper than that, maybe nine and

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Speaker 1: a half times free cash flow because they're pre cash

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Speaker 1: flows greater than the EPs. So it's not like you're

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Speaker 1: paying a premium multiple for those huge absolute numbers that

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Speaker 1: you just mentioned. My uh, as an investor, how much

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Speaker 1: you're hoping to hear from Apple about bigger pushes into

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Speaker 1: for example, content creation or new apps and new services,

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Speaker 1: So that that's been a big controversy on the stock.

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Speaker 1: And you know, the last quarter, when you think back

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Speaker 1: to the earnings called, they spent a lot of time

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Speaker 1: talking about the services business there and the strong growth

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Speaker 1: trajectory and the contribution that they get because that's pretty

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Speaker 1: high margin revenues, so that's really critical. I wouldn't expect

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Speaker 1: that you're going to hear anything new tonight in terms

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Speaker 1: of new product lines or anything that along those lines.

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Speaker 1: They tend to keep that pretty close to the vest,

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Speaker 1: and obviously they have those well advertised product announcements that

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Speaker 1: they do. That being said, there is um uh, you know,

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Speaker 1: a lot of the talk right now in the industry

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Speaker 1: in terms of original content production being Netflix and Amazon.

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Speaker 1: Apple has dipped their toe into that area very very

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Speaker 1: slightly with this karaoke in cars initiative that they have.

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Speaker 1: You know, I think the market would reward the stock

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Speaker 1: if you can ultimately do something with the TV product

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Speaker 1: where you can get a skinny down chord shaped type

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Speaker 1: bundle product. But thus far they haven't been able to

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Speaker 1: reach an agreement with the content providers. Hey, no, Michael,

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Speaker 1: you follow much more than than Apple, and I'm wondering

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Speaker 1: if you can sort of give us a little bit

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Speaker 1: of a window into the John Hancock Balanced Fund and

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Speaker 1: some of the other funds that you run. Sure, so

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Speaker 1: you know, specific to the John Hancock Balanced Fund. Tech

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Speaker 1: is a pretty healthy wait for us in the portfolio,

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Speaker 1: and you know, it's it's an area where we've done

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Speaker 1: pretty well from an individual stock selection perspective. Tech thus

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Speaker 1: far this year has been a pretty good sector. I

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Speaker 1: believe it's second the second best returning sector only two materials,

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Speaker 1: and we've had some nice winners in there with Seagate

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Speaker 1: reporting blowout earnings last week. Applied Materials has had a

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Speaker 1: really nice run here to start the year. Facebook has

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Speaker 1: been another big winner for us. I guess if you

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Speaker 1: were to look at it and point to the negative,

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Speaker 1: really the only blemish for us thus far this year

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Speaker 1: in tech has been Google, which you know, when you

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Speaker 1: when you sort of back out the one off items

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Speaker 1: that they had this quarter. Um, you know, that's still

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Speaker 1: a name that we like a lot, and it is

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Speaker 1: our biggest position in the portfolio overall, um by you know,

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Speaker 1: quite a wired margin over the number two holding that

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Speaker 1: we have. Well, I'll just tell you that the fund

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Speaker 1: is up I think a little bit more than one

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Speaker 1: point so far this year. Michael Scalon, thank you so

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Speaker 1: much for joining us. Michael Scalin, folio manager for Manu

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Speaker 1: Life Asset Management, talking about Apple. Max Neeson, my Bloomberg

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Speaker 1: Gadfly columnist, my neighbor who sits next to me all day. Uh, Max,

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Speaker 1: I want to talk to you about a lot of

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Speaker 1: things going on. There's certainly a lot of earnings coming

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Speaker 1: out from the pharmaceutical companies, but we need to really

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Speaker 1: start with some of the rhetorics we've heard from President

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Speaker 1: Trump after his meeting with some pharmaceutical CEOs. Can you

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Speaker 1: give us your impression of the comments that we've heard

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Speaker 1: so far. Yeah, So we're we're kind of just starting

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Speaker 1: to get some details that are coming out of the meeting,

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Speaker 1: from the part that the press eded on and and

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Speaker 1: from the ceo that are now out of the meeting.

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Speaker 1: Trump did bring up pharmaceutical pricing again, called it astronomical.

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Speaker 1: That's obviously not a particularly good sign for the industry,

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Speaker 1: but that aside, it seemed to be comparatively friendly. He

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Speaker 1: talked up friendly at tax reform and some de regulation

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Speaker 1: at the f d A which might be a little

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Speaker 1: bit more mixed, But um, the pricing thing is still

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Speaker 1: out there, and that's kind of kind of remain illuming, toright.

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Speaker 1: I'm sure that the CEO has tried to kind of

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Speaker 1: talk him away from his preferred remedy, which is allowing

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Speaker 1: Medicare to negotiate drug prices directly. Those are the issues,

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Speaker 1: right that drug price, uh, competition perhaps, and maybe even

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Speaker 1: the bidding they were talking about, you know, bidding for

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Speaker 1: specific contracts that would not necessarily petitive bidding. Yeah, that

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Speaker 1: that would be definitely a big downside risk for a

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Speaker 1: lot of firms that do a lot of business with

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Speaker 1: the government. The government, you know, if it chooses to

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Speaker 1: has essentially unlimited negotiating leverage because they grant the monopolies

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Speaker 1: that these companies rely on. So if they use that

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Speaker 1: as a negotiating tool, they can pretty much push prices

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Speaker 1: down whatever they want. They can set prices, so there's

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Speaker 1: a lot of kind of a wide range of things

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Speaker 1: can happen, from just getting the same rebates that are

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Speaker 1: seen on the private market to something much more drastic,

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Speaker 1: which is what I think firms are afraid of. You know, Max,

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Speaker 1: based on the market reaction, do we have a sense

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Speaker 1: of what his President Trump's rhetoric means of astronomical pricing?

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Speaker 1: I mean, do people have a sense of what the

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Speaker 1: implications are for these companies based on the stock price

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Speaker 1: moves subsequent to the language being released. You know, it's

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Speaker 1: very much a guessing game whether this is going to

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Speaker 1: be a serious policy pushed by the president or if

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Speaker 1: he just wanted what happened today, you know, all the

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Speaker 1: seas to combine sort of kissed the ring and promise

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Speaker 1: to move manufacturing back and higher Americans, um or if um,

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Speaker 1: you know. And then there's the other kind of outstanding issue,

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Speaker 1: which is can Trump actually get the Republican Party to

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Speaker 1: come along on a policy that they've historically opposed. So really, um,

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Speaker 1: I think the CEOs and investors are still kind of

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Speaker 1: trying to guess what's going to happen next. Yeah, well

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Speaker 1: it is a challenge. I mean, I just I would

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Speaker 1: throw this quote at you and then you can tell

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Speaker 1: me which president said this. The pricing has been astronomical.

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Speaker 1: Now you could fill in the blank with a lot

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Speaker 1: of different presidents named there, because the many presidents have

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Speaker 1: been critical of the pharmaceutical industry for the prices of drugs. Yeah,

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Speaker 1: and that was today. Yeah, and that that's that's not

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Speaker 1: a quote you want to hear from the President exactly.

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Speaker 1: Another thing you don't want to hear is that the

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Speaker 1: US court system doesn't believe that you have a sufficient

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Speaker 1: patent restriction on some of your drugs. And that seems

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Speaker 1: to be what happened with Tava Parmaceuticals, which plunged to

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Speaker 1: its lowest in more than a decade following um. Yeah,

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Speaker 1: there's a there's an amazing story because there was stuff

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Speaker 1: going on. Just can you send mac sinistrate about Tava

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Speaker 1: and how it came to be its generic business plus Yeah,

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Speaker 1: and it's in debt, it's really were it's a it's

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Speaker 1: a pretty fascinating company that that's in pretty rough shape

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Speaker 1: right now. So they're the world's largest generic company and

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Speaker 1: very much the world's largest generic company after they spend

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Speaker 1: forty billion to buy Allorgan's legacy generic's portfolio. Now the

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Speaker 1: purchase price for that deal and its detload are larger

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Speaker 1: than its market cap after this uh setback to its

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Speaker 1: lead drug, It's which is a multiple scrosser strug. So

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Speaker 1: I totally bungled it. What is the setback? Can you

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Speaker 1: explain it? Yeah? Absolutely. So they have a drug called

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Speaker 1: capac zone. It treats multiple scorros is. Actually the lead

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Speaker 1: patent expired some years ago, but they got patents on

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Speaker 1: a more convenient dosage of the drug was just a

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Speaker 1: couple of times a week instead of more frequently, so

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Speaker 1: that they managed to switch patients to that and kind

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Speaker 1: of extend the sales life of this drug much farther

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Speaker 1: than anyone expected. But this might be the end of

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Speaker 1: the road for that strategy because the patents on that

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Speaker 1: extension got knocked down by by the district court. Holy cow,

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Speaker 1: Tava has more than a hundred billion dollars of debt.

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Speaker 1: That's insane. That's according to Bloomberg the A G G

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Speaker 1: D function. Uh m hmm. I wonder if that's accurate. Well,

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Speaker 1: so I'm going to check that. But it shares it down.

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Speaker 1: Uh Does Tava have a generics business that would be

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Speaker 1: attractive if it was spun off? I mean, well, the

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Speaker 1: generics business is the business. It's it's more than substantially

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Speaker 1: more than half of the revenue and should grow to

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Speaker 1: half the profit this year. Kind of as the the

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Speaker 1: activist acquisition matures. So I mean the they've kind of

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Speaker 1: made that acquisition in order to reduce dependence on on

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Speaker 1: copac zone, so that that's kind of what they're betting

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Speaker 1: on too, you know, see synergies from that and improved performance,

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Speaker 1: but to date it's been pretty difficult. They haven't seen

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Speaker 1: the expected to return from that deal or um or

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Speaker 1: improving the generic's business for a while now. Another being

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Speaker 1: hit by the slowdown in the generic's business is Fiser.

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Speaker 1: Can you talk about uh that company? Their shares are

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Speaker 1: currently falling after their report. Yeah, so they they missed

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Speaker 1: on EPs in the fourth quarter and also gave revenue

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Speaker 1: forecast that came in below expectations because they expect to

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Speaker 1: see greater than expected genneric compet shoot on their branded drugs,

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Speaker 1: So they're gonna lose sales to generics companies like Teva

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Speaker 1: at at an accelerated rate and don't quite have the

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Speaker 1: horses in terms of newly approved or or expanding drugs

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Speaker 1: to to kind of make up for to the degree

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Speaker 1: that animals expected. So that's why they're down. Just just

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Speaker 1: to clarify, when you set a hundred and thirty billions,

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Speaker 1: you were looking at Israeli shekels I did the math.

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Speaker 1: It's okay, thirty five billion, thirty four points seven billions,

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Speaker 1: all right, thank I love it. This is why you

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Speaker 1: have a bloomberg, uh you know, a Max just to

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Speaker 1: continue that that thought, No, don't. She's worried to continue

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Speaker 1: that that thought. You know, we heard today earlier about

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Speaker 1: the ups and they kind of said, you know, foreign

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Speaker 1: currency issues hurt their results. Do you hear that from

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Speaker 1: pharmaceutical companies um on on a pretty frequent basis? I mean,

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Speaker 1: you know, they do business all of the world, and

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Speaker 1: the strong dollars is not necessarily to their benefit. And

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Speaker 1: you know, most of the largest pharmaceutical companies in the

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Speaker 1: world reporting dollars, so they're they're facing that and you

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Speaker 1: know everything from the Euro two two problems in Venezuela.

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Speaker 1: So it's definitely. They keep a lot of their currency overseas.

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Speaker 1: You know, they do exactly, which is why you saw

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Speaker 1: the the You know, they keep a lot of cash overseas.

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Speaker 1: You saw that massive thirty billion dollar actially on deal,

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Speaker 1: which was as much about using that currency in a

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Speaker 1: tax efficient manner as it was in actually expecting and

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Speaker 1: speaking with the president today, Max Neeson, Thanks very much,

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Speaker 1: our gad fly when it comes to all things healthcare

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Speaker 1: as well as pharmaceutical related. I want to bring in

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Speaker 1: Patrick donohue. He's a German government reporter for Bloomberg in Berlin,

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Speaker 1: and Patrick, Um, just can we start with uh, your

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Speaker 1: lay of the land and Angela Merkel's response to this

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Speaker 1: assertion via President Trump's administration. Yeah. Sure. Michael was asked

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Speaker 1: about Peter Navarro's comments shortainly after he made them. Um.

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Speaker 1: The specific accusation was that Germany, Germany benefits from a

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Speaker 1: grossly undervalued thunder valued euro. Um. I mean, German officials

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Speaker 1: are pretty used to defending themselves against criticism about an

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Speaker 1: excessive trades there plus, But in this case, Michael simply

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Speaker 1: said that Germany upholds the independence of the e c

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Speaker 1: B and that she plans she's happy to do nothing

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Speaker 1: about the exchange rate. Well, she might not want to

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Speaker 1: do anything about the exchange rate, but traders might have

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Speaker 1: a different idea. Well, I mean, it's it's it was

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Speaker 1: kind of uh, I mean, it seemed to be a

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Speaker 1: version of this the of a standard criticism of Germany's

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Speaker 1: current account silurplus and the frame at Peter Navarro was

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Speaker 1: speaking to the Financial Times. Um, he seemed to articulate

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Speaker 1: this as a reason why they were dropping The US

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Speaker 1: administration was dropping U T TIP the MARKEEEU U S

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Speaker 1: trade agreement, and that to show that the EU was

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Speaker 1: not a bilateral partner, but was a multi lateral partner.

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Speaker 1: Therefore they would not pursue it. So, Uh, Navarro's comments

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Speaker 1: seemed to go in a lot of directions. You know,

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Speaker 1: it sort of brings up this other story that's on

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Speaker 1: the Bloomberg this morning. Let's talking about how the EU

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Speaker 1: President Donald Tusk said that the Nation Block is facing

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Speaker 1: the most dire threats in its six decade history, in

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Speaker 1: large part because of President Trump's pronouncements as well as

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Speaker 1: those by his staff. Um, what do you make of that? Well, you,

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Speaker 1: before the election was already facing huge problems with Brexits,

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Speaker 1: the threats of you know, possible disintegration of of of

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Speaker 1: the block, and it was a refugee crisis and everything. Um,

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Speaker 1: the unpredictability that's coming from Washington, according to Pusk, and

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Speaker 1: he was talking I think in the Baltic States adds

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Speaker 1: to that. And uh, he placed the new administration alongside

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Speaker 1: other you threats such as Russia and China, And so

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Speaker 1: that is kind of a snapshot of where we are

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Speaker 1: now and where European officials see this. Right, Um, Dave,

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Speaker 1: I want to bring you in here. You know, there's

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Speaker 1: a lot of catastrophic talk about the biggest risk, uh,

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Speaker 1: you know, in decades potentially we're getting closer to you know,

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Speaker 1: the end of the world's calculator or whatever. Uh. Some

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Speaker 1: some researchers talking about the atomic clock. Right, Uh, David,

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Speaker 1: where are we seeing this in the market. Well, all

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Speaker 1: you have to do is look at the results out

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Speaker 1: of the United Parcel Service UPS. I mean, their fourth

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Speaker 1: quarter earnings coming up short of analysts low assessment in

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Speaker 1: Bloomberg survey, uh, their profit forecast for this year missing projections,

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Speaker 1: and a lot of its currency related. Among other things

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Speaker 1: they're talking about UPS is that adjusted earnings may get

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Speaker 1: hit before taxes by four hundred million dollars this year

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Speaker 1: because of currency moves. And it all has to do

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Speaker 1: with the dollar strength. So don't investors look past that? Well,

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Speaker 1: and I was about to say, I mean, that's that's

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Speaker 1: not that's not hysteria. That's looking at the results and

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Speaker 1: responding it's not you know, people really all of a

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Speaker 1: sudden moving to cash or sort of preparing for armageddon.

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Speaker 1: This just people responding to earnings. I mean, I guess

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Speaker 1: when you hear the histrionic talk, you wonder, how do

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Speaker 1: you pair that with what we're actually seeing in the market. Yeah,

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00:25:07,280 --> 00:25:09,840
Speaker 1: that's true. I mean, then again, you do have UPS

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Speaker 1: shares down almost seven percent in today's trading, So it's

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Speaker 1: something that clearly hasn't been quite factored into the extent

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Speaker 1: that you're seeing that move. You know, is it going

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Speaker 1: to be arm again? Well, I mean certainly UPS isn't

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Speaker 1: talking about arm again. At the same time, it is

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Speaker 1: clearly something that's having an effect on their performance. Let

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Speaker 1: me just to break it and Dave, is it possible

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Speaker 1: that any infrastructure spending plans that would upgrade roads, highways, bridges, etcetera.

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Speaker 1: Would be beneficial to FedEx as well as UPS they

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Speaker 1: would get to use these Well, sure, I mean you

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Speaker 1: have to think more in terms of the companies that

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Speaker 1: are actually going to do the work, the construction companies

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Speaker 1: or whoever. Uh. Nonetheless, I mean there is the benefit

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Speaker 1: down the line for companies that actually use the roads,

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00:25:52,119 --> 00:25:54,480
Speaker 1: no question. And also just want to mention you don't.

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Speaker 1: I know this is off topic slightly, but you know

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Speaker 1: the Super Bowl is coming up on Sunday, right, super

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Speaker 1: Bowl fifty one. Guess who is delivering the Vince Lombardi

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Speaker 1: Trophy to Houston in advance of that FedEx There you go.

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Speaker 1: You know I could see your I could say, I

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Speaker 1: could see your face. Just I'm talking about global. Well,

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Speaker 1: well you can. I think they'll the world will be

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Speaker 1: around at least until Sunday to see them play the

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Speaker 1: Super Bowl. Just have a feeling, I hope. So, Patrick Donahue,

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Speaker 1: thank you so much for joining us, German government reporter

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Speaker 1: from Bloomberg in Berlin, as well as they both said,

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Speaker 1: thank you so much as always for joining us Bloomberg

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Speaker 1: SOX blumnist and a member of the live blog. Thanks

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00:26:42,560 --> 00:26:45,159
Speaker 1: for listening to the Bloomberg P and L podcast. You

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00:26:45,200 --> 00:26:49,320
Speaker 1: can subscribe and listen to interviews at iTunes, SoundCloud, or

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00:26:49,359 --> 00:26:53,440
Speaker 1: whatever podcast platform you prefer. I'm Pim Fox. I'm out

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00:26:53,440 --> 00:26:56,320
Speaker 1: there on Twitter at pim Fox. I'm out there on

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00:26:56,359 --> 00:26:59,560
Speaker 1: Twitter at Lisa Abramo. It's one before the podcast. You

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Speaker 1: can always to catch us worldwide on Bloomberg Radio m

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Speaker 1: HM