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

the SMP five hundred index. Were brought to you by van Eck Vectors e t f s. Expect more from your muni's target tax exempt income by maturity and credit quality, all with low cost ETFs. Visit Vaneck dot com slash Muni van Eck access the opportunities. Dow Industrials climbing eighty three points, a gain of five tenths of one percent. The SMP five hundred index of fourteen, a gain of seven tenths of one percent, NAZ stack of fifty eight,

a gain of one point three percent. Gold down a dollar fifty the ounce to twelve fifty three, a drop there of point one percent. Crude barrel for West Texas Intermedia crude. That's a drop of nine tenths of one percent. I'm Charlie Pellett. And that's a Bloomberg business flash. This is taking stock with Pins Box and Kathleen Mays on Bloomberg Radio commodities bubble that burst, including for agricultural commodities in the construction industry that is still under pressure around

the world. These are things weighing on the world's biggest agricultural equipment manufacturer, that's Deer and Company. The stock price down five percent today, trading at seventy eight dollars and change. Here to tell us about the quarter, the quarterly results for Deer and even more importantly, what they have to do next and what lies ahead is our own Karen obial Heart. She's industrials analyst for Bloomberg Intelligence. So Karen, Uh, the quarter was a beat, helped by a lower tax rate,

but there was bad news in three segments. Yeah you know. Uh. The big surprise in the quarter was the credits of which usually gives them pretty stable earnings and fluctuates a little bit with volume or uh demand for equipment, but this time there was a real shortfall and operating leases which cut people. By surprise, UM, the company had to write off residual values. UM equipment is being turned in earlier than uh, you know the end of the lease.

Because farmers are under stress. It's just another indication of stress. And Deer had to cut their expectations for the credit sub quite a bit. So that was the biggest surprise. Uh, construction equipment have been weak. Uh, they have largely North American exposure. UM. The pricing was a lot worse there, and they indicated that big competitors were discounting more than

expected and studed that it wasn't necessarily the Japanese. So that's probably UM Caterpillar, which is the biggest construction equipment producer. And then the third piece of bad news is the company did not just aid us from concluding that might be a fourth down year for farm equipment, which is their largest and most profitable business. That was not anticipated UM, and that if a fourth down year would be for

the worst for farm equipment since the late nineties. So uh, you know, even though it looked like they'd be you know, inside the numbers, that looked quite that across the board. Karen speak if you can about the effects of lower prices for oil, natural gas, and other mining commodities. Mainly because if you've got construction equipment and you're not using it, You're going to put that back on the market. That

means a lot of used stuff is available. Yeah, use equipment prices have been a pressure for them in both egg and construction and construction, um, the oil business. What's happened is that's returned a lot of equipment, that construction equipment that was being used in that that market is now the uh you know, being returned to be used in construction markets which aren't that strong in and of itself.

So the oil and gas market is definitely backed up on the on the you know, construction equipment side as well, um, the discounting. We've had tough pricing, but Deer actually said construction equipment prices will be negative this year and I think that that was worse than expected. And they decided sales incentives, which is basically companies trying trying to preserve

market share. So, Karen, what lines ahead. Deer has been taking steps to cut costs right to pull back and you can understand that there was it was a big move upcomudi prices. They were riding high, right, So where are they in a cycle now? Have they? Is it time for people to take a look because there's value there now or do they still have a lot of work to do to get their you know, get their model in line. I think, um, we have to let um, you know, people observed absorb the latest bit news and

that this might be another down year in seventeen. I think the general consensus thinking was, okay, is going to be a third down year, which would be a longer downturn than average. But now we've got another it's yere to uh to perhaps contend with and uh, you know, I think that that has to settle in the numbers had to continue to come down. UM. The company has done very well on an operational level given what they're

dealing with. UM, but I think this latest shot, um, you know, I think we need a little time to um figure out what the implications of that will be for next year. I think basically people were not expecting a big pot next year, but they weren't expecting another down year. Thank you very much, Karen Eubile, Heart Industrials

analysts for Bloomberg Intelligence. Of course, Bloomberg Intelligence providing unique in real time research and context for a variety of industries and markets, as well as government factors that would affect businesses terminal customers just access this function by going to be I go on the Bloomberg. All right, now, let's absorb some political news and perspective from Sahel Kapoor.

He is Bloomberg News politics reporter and producer joining us from Washington, d C, home to Bloomberg and one oh five point seven h D two Sahil Bernie Sanders Hillary Clinton? Are we going to get a contested convention? I wouldn't say a contested convention, but it does look like we're going to go to the convention without either of the two candidates having officially clinched the votes they need UM

to to guarantee themselves the nominee. Because remember, hundreds of delegates at the convention are super delegates and they can vote for whoever they want. So if we take the super delegates out their word, which I think we're pretty safe to do, then Hillary Clinton is the odds on favorite, UM overwhelmingly likely, all but certain that she will be the nominee. And I think that's pretty clear to everyone, including UM the Bernie Sanders folks, even if they are

fighting to the end. What would happen if Bernie Sanders won California? Would I mean to a certain extent. It might not totally change the math. But that's a big state and there's a lot of delegates there. It is a big site, and there are a lot of delegates. But keep in mind these are proportionately allocated. So if he wins by four or five points, and they'll split the delegates and he will and he won't net that many, right, So even if he does win California is not gonna matter.

He's gonna need to win California on the remaining states by as much as thirty to thirty five points, which is the sort of thing that that's going to take a miracle to achieve. So he'll Philadelphia has already approved four demonstration permits in support of Senator Bernie Sanders for the July Democratic National Convention. They're figuring on a very large rally that will be planned near the convention center.

What will that look like and what will that do to the inevitable race between the Democratic nominee and the Republican nominee. We can certainly expect a rowdy series of demonstrations from Bernie Sanders supporter as he's activated a long dormant element of the Democratic party that's been dormant at

least since the ninety nineties. UM, which is the staunch left you know, the staunch left wing element of the Democratic Party, UM that wants almost the sort of fundamental change that that Donald Trump is pushing for from the right,

they wanted from the left. So we're certainly going to see that that UM side of the party and that wing of people that very energized and very mobilized and demanding certain um demanding certain things from the Democratic Party in the platform and from Hillary Clinton in the general election campaign. And a lot of it is going to depend on, I think what Sanders does, how he uses his leverage, how he uses these supporters that are on his side, and how he harnesses that energy. Things could

get out of control. So you have a big story today. You talked to some leading Democratic Party leaders, public statements and and sort of you know, more behind the scenes. Uh. I think when the most interesting ones comes from your interview with Senator Tim Keane of Virginia. Now it's true he's a Clinton ally, but he's also former chairman of the Democratic National Committee. He's not so patient with Bernie Sanders pushing on. He is starting to lose his patients,

as many Democrats are. They don't like the fact that, given that it's it's um all but certain at this point that Hillary Clinton is going to be the nominee, that Bernie Centers continues to fight that, he continues to paint Hillary Clinton as the candidate of Wall Street and in a big business and kind of, you know, suggest that she's corrupted by all these campaign contributions. They don't like the fact that one of their own is still

attacking their presumptive UH and likely nominee. So I think Tim Kane was giving voice to what a lot of people in the Democratic Party think in terms of arguing that now is the time for Bernie Sanders to dial back the rhetoric and shift toward a more unifying UH stance. So he'll is there an understanding that whoever the Republican nominee is, and perhaps it would be Donald Trump, will use the actual words and video of Bernie Sanders in

the national election against Hillary Clinton if she is the nominee. Right, So, firstly, Donald Trump is the presumptive nominee, he will be the nominee. And yes, that is a guarante, that is an absolute certainty. That he will use Bernie Sanders words against Hillary Clinton. He's already doing it. He's already doing it in tweets and social media postings, and frankly, the Hillary Clinton campaign is going to do the same thing with Donald Trump.

A lot of Donald Trump's Republican opponents said some very fiercely critical, um, some pretty nasty things about him in the primary as well. So you know, this is just part of the whole. This is just I guess, part of the whole exercise of electoral politics. We'll see that happening on both ends. What does this mean for the Democratic Party? More brawdly is is Bernie Sanders an outlier who disappears after this? A lot of people in your story are not happy with the way he's conducted to

this a point. No, he definitely want to disappear after this. Um, the question is what kind of figure emerges. So this is this is sort of the fork in the road that Bernie Sanders has a content with and decide what sort of um politician he wants to come out as. On the other side, now he has two options as I see it. Wanted to continue as the figure he's been for the last twenty five years and work within

the party to achieve reforms. The other is to use his grassroots base of supporters as a sword against this party and to try to force reforms against their will. Very interesting, very exciting, so Hil Kapoor, politics supporter and producer for Bloomberg News based in Washington, d C. History Sanders to find on the stump, quietly reassures Democrats on unity. Kathleen Hayes and Pim Fox taking stoff on Bloomberg Radio