Latest / Bloomberg Intelligence / Bloomberg's Ubelhart on Deere, Kapur on Bernie Sanders (Audio)

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Bloomberg's Ubelhart on Deere, Kapur on Bernie Sanders (Audio) · Bloomberg Intelligence

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  Speaker 1: is taking stock with Pins Box and Kathleen Mays on
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  Speaker 1: Bloomberg Radio commodities bubble that burst, including for agricultural commodities
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  Speaker 1: in the construction industry that is still under pressure around
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  Speaker 1: the world. These are things weighing on the world's biggest
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  Speaker 1: agricultural equipment manufacturer, that's Deer and Company. The stock price
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  Speaker 1: down five percent today, trading at seventy eight dollars and change.
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  Speaker 1: Here to tell us about the quarter, the quarterly results
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  Speaker 1: for Deer and even more importantly, what they have to
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  Speaker 1: do next and what lies ahead is our own Karen
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  Speaker 1: obial Heart. She's industrials analyst for Bloomberg Intelligence. So Karen, Uh,
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  Speaker 1: the quarter was a beat, helped by a lower tax rate,
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  Speaker 1: but there was bad news in three segments. Yeah you know. Uh.
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  Speaker 1: The big surprise in the quarter was the credits of
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  Speaker 1: which usually gives them pretty stable earnings and fluctuates a
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  Speaker 1: little bit with volume or uh demand for equipment, but
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  Speaker 1: this time there was a real shortfall and operating leases
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  Speaker 1: which cut people. By surprise, UM, the company had to
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  Speaker 1: write off residual values. UM equipment is being turned in
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  Speaker 1: earlier than uh, you know the end of the lease.
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  Speaker 1: Because farmers are under stress. It's just another indication of stress.
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  Speaker 1: And Deer had to cut their expectations for the credit
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  Speaker 1: sub quite a bit. So that was the biggest surprise. Uh,
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  Speaker 1: construction equipment have been weak. Uh, they have largely North
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  Speaker 1: American exposure. UM. The pricing was a lot worse there,
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  Speaker 1: and they indicated that big competitors were discounting more than
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  Speaker 1: expected and studed that it wasn't necessarily the Japanese. So
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  Speaker 1: that's probably UM Caterpillar, which is the biggest construction equipment producer.
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  Speaker 1: And then the third piece of bad news is the
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  Speaker 1: company did not just aid us from concluding that might
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  Speaker 1: be a fourth down year for farm equipment, which is
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  Speaker 1: their largest and most profitable business. That was not anticipated UM,
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  Speaker 1: and that if a fourth down year would be for
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  Speaker 1: the worst for farm equipment since the late nineties. So uh,
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  Speaker 1: you know, even though it looked like they'd be you know,
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  Speaker 1: inside the numbers, that looked quite that across the board.
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  Speaker 1: Karen speak if you can about the effects of lower
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  Speaker 1: prices for oil, natural gas, and other mining commodities. Mainly
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  Speaker 1: because if you've got construction equipment and you're not using it,
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  Speaker 1: You're going to put that back on the market. That
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  Speaker 1: means a lot of used stuff is available. Yeah, use
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  Speaker 1: equipment prices have been a pressure for them in both
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  Speaker 1: egg and construction and construction, um, the oil business. What's
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  Speaker 1: happened is that's returned a lot of equipment, that construction
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  Speaker 1: equipment that was being used in that that market is
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  Speaker 1: now the uh you know, being returned to be used
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  Speaker 1: in construction markets which aren't that strong in and of itself.
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  Speaker 1: So the oil and gas market is definitely backed up
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  Speaker 1: on the on the you know, construction equipment side as well, um,
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  Speaker 1: the discounting. We've had tough pricing, but Deer actually said
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  Speaker 1: construction equipment prices will be negative this year and I
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  Speaker 1: think that that was worse than expected. And they decided
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  Speaker 1: sales incentives, which is basically companies trying trying to preserve
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  Speaker 1: market share. So, Karen, what lines ahead. Deer has been
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  Speaker 1: taking steps to cut costs right to pull back and
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  Speaker 1: you can understand that there was it was a big
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  Speaker 1: move upcomudi prices. They were riding high, right, So where
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  Speaker 1: are they in a cycle now? Have they? Is it
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  Speaker 1: time for people to take a look because there's value
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  Speaker 1: there now or do they still have a lot of
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  Speaker 1: work to do to get their you know, get their
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  Speaker 1: model in line. I think, um, we have to let um,
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  Speaker 1: you know, people observed absorb the latest bit news and
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  Speaker 1: that this might be another down year in seventeen. I
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  Speaker 1: think the general consensus thinking was, okay, is going to
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  Speaker 1: be a third down year, which would be a longer
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  Speaker 1: downturn than average. But now we've got another it's yere
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  Speaker 1: to uh to perhaps contend with and uh, you know,
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  Speaker 1: I think that that has to settle in the numbers
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  Speaker 1: had to continue to come down. UM. The company has
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  Speaker 1: done very well on an operational level given what they're
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  Speaker 1: dealing with. UM, but I think this latest shot, um,
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  Speaker 1: you know, I think we need a little time to
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  Speaker 1: um figure out what the implications of that will be
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  Speaker 1: for next year. I think basically people were not expecting
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  Speaker 1: a big pot next year, but they weren't expecting another
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  Speaker 1: down year. Thank you very much, Karen Eubile, Heart Industrials
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  Speaker 1: to be I go on the Bloomberg. All right, now,
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  Speaker 1: let's absorb some political news and perspective from Sahel Kapoor.
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  Speaker 1: He is Bloomberg News politics reporter and producer joining us
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  Speaker 1: from Washington, d C, home to Bloomberg and one oh
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  Speaker 1: five point seven h D two Sahil Bernie Sanders Hillary Clinton?
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  Speaker 1: Are we going to get a contested convention? I wouldn't
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  Speaker 1: say a contested convention, but it does look like we're
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  Speaker 1: going to go to the convention without either of the
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  Speaker 1: two candidates having officially clinched the votes they need UM
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  Speaker 1: to to guarantee themselves the nominee. Because remember, hundreds of
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  Speaker 1: delegates at the convention are super delegates and they can
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  Speaker 1: vote for whoever they want. So if we take the
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  Speaker 1: super delegates out their word, which I think we're pretty
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  Speaker 1: safe to do, then Hillary Clinton is the odds on favorite,
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  Speaker 1: UM overwhelmingly likely, all but certain that she will be
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  Speaker 1: the nominee. And I think that's pretty clear to everyone,
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  Speaker 1: including UM the Bernie Sanders folks, even if they are
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  Speaker 1: fighting to the end. What would happen if Bernie Sanders
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  Speaker 1: won California? Would I mean to a certain extent. It
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  Speaker 1: might not totally change the math. But that's a big
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  Speaker 1: state and there's a lot of delegates there. It is
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  Speaker 1: a big site, and there are a lot of delegates.
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  Speaker 1: But keep in mind these are proportionately allocated. So if
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  Speaker 1: he wins by four or five points, and they'll split
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  Speaker 1: the delegates and he will and he won't net that many, right,
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  Speaker 1: So even if he does win California is not gonna matter.
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  Speaker 1: He's gonna need to win California on the remaining states
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  Speaker 1: by as much as thirty to thirty five points, which
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  Speaker 1: is the sort of thing that that's going to take
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  Speaker 1: a miracle to achieve. So he'll Philadelphia has already approved
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  Speaker 1: four demonstration permits in support of Senator Bernie Sanders for
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  Speaker 1: the July Democratic National Convention. They're figuring on a very
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  Speaker 1: large rally that will be planned near the convention center.
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  Speaker 1: What will that look like and what will that do
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  Speaker 1: to the inevitable race between the Democratic nominee and the
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  Speaker 1: Republican nominee. We can certainly expect a rowdy series of
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  Speaker 1: demonstrations from Bernie Sanders supporter as he's activated a long
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  Speaker 1: dormant element of the Democratic party that's been dormant at
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  Speaker 1: least since the ninety nineties. UM, which is the staunch
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  Speaker 1: left you know, the staunch left wing element of the
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  Speaker 1: Democratic Party, UM that wants almost the sort of fundamental
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  Speaker 1: change that that Donald Trump is pushing for from the right,
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  Speaker 1: they wanted from the left. So we're certainly going to
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  Speaker 1: see that that UM side of the party and that
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  Speaker 1: wing of people that very energized and very mobilized and
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  Speaker 1: demanding certain um demanding certain things from the Democratic Party
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  Speaker 1: in the platform and from Hillary Clinton in the general
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  Speaker 1: election campaign. And a lot of it is going to
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  Speaker 1: depend on, I think what Sanders does, how he uses
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  Speaker 1: his leverage, how he uses these supporters that are on
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  Speaker 1: his side, and how he harnesses that energy. Things could
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  Speaker 1: get out of control. So you have a big story today.
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  Speaker 1: You talked to some leading Democratic Party leaders, public statements
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  Speaker 1: and and sort of you know, more behind the scenes. Uh.
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  Speaker 1: I think when the most interesting ones comes from your
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  Speaker 1: interview with Senator Tim Keane of Virginia. Now it's true
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  Speaker 1: he's a Clinton ally, but he's also former chairman of
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  Speaker 1: the Democratic National Committee. He's not so patient with Bernie
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  Speaker 1: Sanders pushing on. He is starting to lose his patients,
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  Speaker 1: as many Democrats are. They don't like the fact that,
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  Speaker 1: given that it's it's um all but certain at this
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  Speaker 1: point that Hillary Clinton is going to be the nominee,
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  Speaker 1: that Bernie Centers continues to fight that, he continues to
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  Speaker 1: paint Hillary Clinton as the candidate of Wall Street and
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  Speaker 1: in a big business and kind of, you know, suggest
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  Speaker 1: that she's corrupted by all these campaign contributions. They don't
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  Speaker 1: like the fact that one of their own is still
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  Speaker 1: attacking their presumptive UH and likely nominee. So I think
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  Speaker 1: Tim Kane was giving voice to what a lot of
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  Speaker 1: people in the Democratic Party think in terms of arguing
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  Speaker 1: that now is the time for Bernie Sanders to dial
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  Speaker 1: back the rhetoric and shift toward a more unifying UH stance.
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  Speaker 1: So he'll is there an understanding that whoever the Republican
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  Speaker 1: nominee is, and perhaps it would be Donald Trump, will
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  Speaker 1: use the actual words and video of Bernie Sanders in
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  Speaker 1: the national election against Hillary Clinton if she is the nominee. Right, So, firstly,
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  Speaker 1: Donald Trump is the presumptive nominee, he will be the nominee.
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  Speaker 1: And yes, that is a guarante, that is an absolute certainty.
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  Speaker 1: That he will use Bernie Sanders words against Hillary Clinton.
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  Speaker 1: He's already doing it. He's already doing it in tweets
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  Speaker 1: and social media postings, and frankly, the Hillary Clinton campaign
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  Speaker 1: is going to do the same thing with Donald Trump.
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  Speaker 1: A lot of Donald Trump's Republican opponents said some very
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  Speaker 1: fiercely critical, um, some pretty nasty things about him in
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  Speaker 1: the primary as well. So you know, this is just
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  Speaker 1: part of the whole. This is just I guess, part
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  Speaker 1: of the whole exercise of electoral politics. We'll see that
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  Speaker 1: happening on both ends. What does this mean for the
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  Speaker 1: Democratic Party? More brawdly is is Bernie Sanders an outlier
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  Speaker 1: who disappears after this? A lot of people in your
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  Speaker 1: story are not happy with the way he's conducted to
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  Speaker 1: this a point. No, he definitely want to disappear after this. Um,
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  Speaker 1: the question is what kind of figure emerges. So this
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  Speaker 1: is this is sort of the fork in the road
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  Speaker 1: that Bernie Sanders has a content with and decide what
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  Speaker 1: sort of um politician he wants to come out as.
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  Speaker 1: On the other side, now he has two options as
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  Speaker 1: I see it. Wanted to continue as the figure he's
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  Speaker 1: been for the last twenty five years and work within
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  Speaker 1: the party to achieve reforms. The other is to use
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  Speaker 1: his grassroots base of supporters as a sword against this
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  Speaker 1: party and to try to force reforms against their will.
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  Speaker 1: Very interesting, very exciting, so Hil Kapoor, politics supporter and
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  Speaker 1: producer for Bloomberg News based in Washington, d C. History
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  Speaker 1: Sanders to find on the stump, quietly reassures Democrats on unity.
• 11:10
  Speaker 1: Kathleen Hayes and Pim Fox taking stoff on Bloomberg Radio