tv Bloomberg Markets European Close Bloomberg November 1, 2017 12:00pm-1:00pm EDT
"bloomberg markets." ♪ mark: here are the top stories we are covering from bloomberg and around the world. european stocks hit a two-year high. we will look at whether the pattern can continue despite geopolitical uncertainty. the next 24 hours will be critical for central banks. decision, a possible new fed chair looms. we will look at how investors should be positioning themselves. coming up, pershing square's bill ackman will give us his side of the story in his ongoing battle with adt and we will get his take on some other investments including --
a look at where european equities are trading, 30 minutes away from the end of the wednesday session. stocks rallying across the board. the stoxx 600 up for the fifth day. august the 10th 2015. the gauge still 4% below the april 2015 record. all of these currencies are falling against the dollar. we are awaiting the fed and the next fed chair nominee. that could happen maybe we are hearing in the next day or two. we will see if that the two realizes. let's -- shares were lower and recovered most of their losses and now they are up .3% today. expect earnings growth to remain at the same paste. -- same pace. fighting to insulate newer therapies for the -- from the
pressures that hit the u.s. market. by thekely to intense pressure of the chief executive grappling with lower prices in the u.s. and increasing competition since he took the reins at the start of 2017. shares are up today. house prices in the u.k., house price growth remaining stuck in a relatively slow gear at the start of the fourth quarter according to the nationwide building society. values increased .2% from september and up on the year, that's the white line. about half the pace since -- seen in 2016. stretched valuations dealt a blow to the housing market. nationwide is lagging. london is the blue line. this is a great chart. managers are
betting an interest rate hike this week will be a one time event rather than a signal the bank of england is embracing a more hawkish policy tone. gold versus the euro stoxx 50. remember that chart. abigail, how is it looking? abigail: it's looking like a mix for the major averages. the nasdaq reversed lower. at the open, it was higher by about .5%, now down more than .1%. not a huge decline, but that switch is worth noting. all three major averages on the day have already put in all-time highs. let's take a look at what is dragging on the nasdaq and see whether the other two averages follow because the big drag is apple down one point 6%, the worst day or first down day in five days. perhaps a bit of a cool off on the rally we have seen in apple shares, up 7% on bullish
comments around 3 -- preorders for the iphone x. we will be digging into whether or not anything else is happening. ed in the dow and s&p 500, but less of a waiting -- weighting. electronic arts down 4% after they fell short. check point software down more than 11% on sales forecasts falling short. 2.7%a look at tesla down ahead of the third-quarter report today after the bell. lots of focus on the model three. v4032.take a look at g# bt we have a lot going on, but what we are looking at in blue is the average analyst price target. the stock below that. even though it's below that level, the short interest is beginning to tick back higher.
despite -- i am going to toss it back to you. mark: we are getting headlines from president trump. he is holding his cabinet meeting after the new york terror attack. he said he will end that i diversity lottery program and he said the u.s. needs a merit-based immigration system. we will bring you further details when and if we get them. changing focus, european stocks rising high, surge in metals and abatements of the crisis in catalonia bringing the stoxx 600 to the highest level in two years. to discuss this, let's bring in alexandra -- aleksandra gjorgievska. thee the ecb raised rates, stoxx 600 is up by 2.5%. draghi really put a market --
rocket under this market, didn't he? aleksandra: yes, the meeting last week was a big catalyst for the european stock rally. essentially what he did is ensure investors know any tapering will be gradual. he was quite cautious and that is putting investors at ease that there is not going to be a southern end to the quantitative easing program. mark: the gauge was going nowhere, correlation between shares was the lowest in at least 6 years. what was that telling us? aleksandra: it has been a great .ime for stock pickers what mario draghi did is remind the market that he still holds this broad sweep over european stocks, the stoxx 600. that does not deny the fact -- it is earnings season and that in itself tells investors it's a good time to be picky finding those opportunities. vonnie: what about other asset
classes? what are we seeing in terms of the volatility? aleksandra: volatility has been low. in equity markets, that has been a source of concern for some investors. we are seeing the stocks index of european equity volatility trading near record lows. i can speak to equities. concern, butce of with the earnings season trading well and the euro weakening in europe against the u.s. dollar supporting the german dax, those concerns seem to be abating. we are beginning this month with such a strong rally and what we are hearing as people think this will actually be sustainable so the recovery will not only go on until the end of the year, but into next year. vonnie: as the fed begins to run off more and more securities off it balance sheet, is anybody
saying that will have an impact on european assets? aleksandra: i think the fed's priced in.te european investors were more focused on the ecb and now that not -- now that that is out of the way, the stoxx 600 was going nowhere in october before the ecb meeting, that was the focus for european stock investors. the fed, yes, people look at it, that the fact it is on a more hawkish -- it is taking a more hawkish tone and quite priced into the european market. mark: i promised we would look at these charts. 50. is the euro stoxx taken from one of your stories, so completely plagiarized. there is a view from j.p. morgan, in arising variable-rate environment -- is tomorrow the boe rate decision -- is it all
about whether we are one and done or whether we are going to see further rate hikes question mark aleksandra: the reason the bank of england is important is because of the pound. the boe is always a pound play. because of the international exposure, ftse 100 measures -- members get a lot of their earnings from abroad. are equity fund managers not taking any big position before the meeting tomorrow because they think this hike we will likely get is priced in. if we see a more dovish of england that doesn't raise rates and sends the pound lower, that could prove a boost for the ftse 100 and vice versa. mark: big day tomorrow. thank you, aleksandra. vonnie: let's check in on the first word news. mark crumpton has that. mark c: authorities in new york are trying to talk to the is
back -- talk to the uzbeck immigrant. andrew cuomornor said the man left a note that referred to islamic state. governor cuomo says he was radicalized after coming to the united states. argentina is morning 5 of its -- mourning 5 of its citizens killed in that attack. they were celebrating the 30th anniversary of their high school celebration. -- graduation. secretary of state wrecks tillerson -- rex tillerson expressed condolences today. secretary tillerson: we stand incomplete solidarity with argentina and all countries in these acts of terrorism. we have seen the evil face of terror in our borders, but this is a phase that knows no borders
. officials say the suspect came to the united states legally in 2010. france lifted its state of emergency for the first time in a few years. tourists theyure will have a good level of security thanks to counterterrorism laws. they were imposed after islamic state attackers killed people in paris in 2015. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. vonnie: thank you. we are getting headlines from president trump as he holds a cabinet meeting. the president saying he will announce a fed chair tomorrow afternoon, thursday afternoon and that people will be impressed by his fed pick.
the president saying he will announce a major company is moving back to the united states. we will find out which company that is and the president is also saying the house is taking a few extra hours on the tax bill. cohn willys -- and not be going to asia because they are working on the tax bill. ackman talks to me about his proxy battle with adp and much, much more. this is bloomberg. ♪
vonnie: let's get back to breaking news. president donald trump says he will announce his fed chair pick tomorrow afternoon. the president saying during a cabinet meeting people will be impressed by his pick. the current fed to announce the latest rate decision at 2:00 p.m. eastern time today. running us now for more insight on the fed is krishna memani, oppenheimer funds cio. worried --t to say but are you nervous about a new fed chair? fedhna: when you have a new chair getting appointed after a very long run, you have to be worried about it. i don't think it's going to be a surprise. the consensus will be powell and if it is powell, probably a continuation of the same monetary policy regime as before. taylor would have been different. vonnie: what if taylor is vice chair? krishna: i think the chair has a lot more relevance to what the
eventual policy is then just another member. we have plenty of people who would like to tighten, but there is enough consensus amongst others to carry the bids for the chair. i think chair matters a lot more than an individual member. mark: if it's powell still three more rate hikes next year, that is what is being penciled in, does anything change? krishna: just from a policy initiative standpoint, nothing has changed. however, the reality on the ground seems to be evolving. we continue to see data coming in much stronger than what any of us expected. theres continues, i think may be a different outcome in 2018. that's not my central case. i think things start slowing down. vonnie: keeping you up-to-date
from -- on the headlines from the president, he says he thinks yellen is excellent. that's another fed headline. we will keep you up-to-date on those headlines. what does it mean for the 10-year yield and the term premium, do we see a slow ride higher or is there at some point a gap move? krishna: the real question is do we see signs of inflation picking up in the economy? growth has been good, inflation has been missing in action. if that continues, i don't think there's going to be a sudden uptick in 10-year rates. on the other hand, if inflation materializes, i think all bets are off. mark: what sort of legs does this equity market have? you say tax reform isn't penciled in. if we get something, even if it's just basic tax cuts, does the market have another leg up? krishna: i think the market has --legonable like up --e
up. it is substantial on a globalized, synchronized basis and that can carry us to moderately high -- modestly high levels. after that, we go back to the trend late because i don't think tax reform is going to change the trajectory of the market in a meaningful way after that one off event. vonnie: the president just mentioning he will tell us tomorrow of a major u.s. company coming back to the united states. his is the opening of the floodgates of companies coming back here to a better tax regime question mark -- tax regime? aishna: the president is politician so anything that happened he has to paint in a certain picture. companies have had a high rate
of profitability and rates have been low. if they want to build of plant -- build a plant in the u.s., they had plenty of reason to do that before. i don't think they start doing that because of tax reform in and of itself. that remains to be seen. vonnie: just another update on , which is front and center in mind of washington, d.c. the president says yellen is excellent and then a reporter his pick if yellen was and he said "i did not say that." and he didn't. room ifen left enough the u.s. hits recession in the next year or two? krishna: that is the mantra that has driven the fed. they want to leave themselves operating flexibility in case we get to the recession. i am sorry to have to
interrupt you for the president of the united states. president trump: a man drove a truck into a pedestrian bike path and murdered 8 people and injured very, very seriously at least 11 more. all of america is praying and grieving for the families who lost their precious loved ones. our hearts break for them and we result inrenew our their memory. my administration is coordinating closely between federal and local officials to investigate the attack and to further investigate this animal who did the attacking and updates will be provided as available. i am, today, starting the process of terminating the diversity lottery program. tom going to ask congress
immediately initiate work to get rid of this program, diversity lottery -- it sounds nice, it's not nice. it's not good. good.n't been we have been against it. we want to immediately work with congress on the diversity lottery program -- on terminating it, getting rid of it. program. merit-based when people come in to the country we want it based on merit and we want to get rid of chain migration. this man that came in or whatever you want to call him -- brought in with him other people and he was the point of contact -- the primary point of contact for -- and this is preliminarily 23 people that came in or
potentially came in with him and that is not acceptable. we want to get rid of chain migration and we wanted to do that for a long time. i have been wanting to do it for a long time and we will be asking congress to start working on it immediately. there are bills already about ending chain migration and we have a lot of good bills in there being stopped by democrats because they are up structure uctionist.ey are obstr we need strength and resolve so we are going to get rid of this lottery program as soon as possible. he came in through the diversity program, as you know, and we are going to stop that. we are going to as quickly as possible get rid of chain migration and go to a merit-based system. terrorists are constantly seeking to strike our nation and
it will require the unflinching enforcement to keep america safe. we will take all necessary steps to protect our people and our communities and to protect our nation as a whole. we need to get much tougher, we half to get much -- we have to get much smarter and we have to get much less politically correct. we are so politically correct we are afraid to do anything and that is not only our country, that is other countries, too, that are having very similar product -- problems. we have to do what is right to protect our citizens. we will never waver in the countryof our beloved and we will never forget the beautiful lives that have been taken from us.
that was a horrible event and we have to stop it and we have to stop it cold. we also have to come up with punishment that is far quicker and far greater than the punishment these animals are getting right now. they go through court for years and at that end they will be -- who knows what happens. strong quick justice and justice. much quicker and stronger than we have right now because what we have right now is a joke and it's a laughingstock and no wonder so much of this stuff takes place. i think i can speak for plenty of other countries that are in the same situation. said, we will be starting our cabinet meeting today.
it will be a discussion that will focus on vital issues of tax cuts and tax reform. it will be the largest tax cuts in the history of our country, by far. the house is doing very well. they have taken an extra few hours which will go in tomorrow -- into tomorrow and they will be announcing -- and i will probably be standing with them. we leave for asia, as you know, we are leaving friday morning so i will be standing with them sometime tomorrow announcing massive tax cuts and reform. , which to mecuts is the most important, but it will be tax cuts and reform. we have had tweo straight -- two straight quarters of economic growth gdp. our country cannot take off the way it really should so it is really competitive with the rest of the world unless we get the kind of tax cuts for our
companies and middle-class, our workers, unless we get the jobs we need. it can't really take off until we get the tax cuts and reform passed. this week, the house ways and means committee will unveil a historic tax plan that will create new jobs, higher wages which hasn't happened in many years and now it is starting to happen i am happy to tell you. people making less money today than they made 20 years ago. it will lead to tremendous prosperity for american families, communities, and also for our job-producing businesses. at the center of the plan are tax cuts for working americans. we will reduce tax rates and decrease the amount of income that is taxed at 0 and increase the child tax credit, which is
important to families. we will make the tax cut simple and fair so the vast majority of americans can file their taxes on a single sheet of paper. we will be simplifying. it will be called certification , our tax code.on we will restore america's competitive edge by lowering the tax cut on businesses and it will be a historic tax cut. right now other countries are so far below us and you see all these companies leaving one after another -- that is not going to be happening. this,ped it even before but we are going to be stopping it in full. people are going to be coming back. we will be announcing very shortly, possibly right after i get back, a major company movie -- moving back into the united states. people are going to be very surprised.
especially the country from which they are leaving will be very supplies. under our plan we will be one of the -- go from being one of the highest taxed nations in the world to one of the lowest. it will mean more opportunities here in america, where we want them. we will reduce taxes for businesses of all sizes. i must add that we are also negotiating right now -- my full team here -- tremendously different trade deals. our trade deals are horrible. they are made by people -- they were made by people that honestly -- it is sad. it's very sad for our country. every trade deal we had is disaster is. we are -- disasterous. if we have support from congress, we will make trade shows intoare horror
respectable trade deals that are good for many countries. renegotiate that we our trade deals. with mexico as an example, we have a trade deficit of $71 billion, that is nafta. we have trade deficits with china that are through the roof they are so big and so bad that it is embarrassing saying what the is, that you know what the number is. i don't want to embarrass anybody four days before i land in china, it is horrible. , where we areok doing trade, we are doing bad trade deals. that is going to be a big factor in our growth. our plan will bring back trillions of dollars from offshore. we have $4 trillion that will come back into our country, that will he put to work and will be spent by our companies that could never get the money back,
for many years. it is something that republicans and immigrants have agreed on, for years. what is not to agree? bring the money back and they could not get it done because of a lack of leadership. they all agreed it should be done but could not get it done. we will be bringing that money back, for rebuilding america. i will be announcing the new head of the federal reserve, tomorrow afternoon. you will be notified as to the time. i think you will be impressed by this person. as part of our per -- push to her new our prosperity, i will be making a historic trip on friday, or visit will take us to japan, south korea, china, vietnam, the philippines. philippine, the last visit by the president that
was not so good, never got -- never quite got to land. we will host meetings across the indo pacific region. i look forward to it. we will meet a lot of presidents and leaders of countries that and ween friends of mine have great trade relationships other than the fact that we are being taken advantage of, but i think they will start changing them, pretty quickly. key administration officials from thetaying back trip to asia, to remain vigilant in making sure the tax cuts passed. if i have any problems, i will be blaming mnuchin and co. they will be hearing from me. i think they will do very well. the houses have been working really hard in coming up with a great plan, and the senate is
coming up with a great plan and they will be put together and something is going to come out goodat that will be really , something very special. we are doing senate, house, put together and then we have our beautiful new tax cuts and reform and i think it will be very special. our great vicen president, mike pence and the rest of my cabinet to continue to push for the tax cuts and reform while i am away. they will be all over the country, working on it, specifically they will be working on the members of the house, members of the senate. we think we will actually get some democrats to join us in the senate because rightly, i think they will lose their elections because the people of those states and all states need tax
cuts. we are the highest taxed nation, just about, and the world. we need tax cuts. with that, we will start our cabinet meeting. we have a wonderful group of people. a great. they are doing an incredible job. i don't think they have been given the credit they deserve. we will let you know when it is time. at the border, we have done a fantastic job. we have done great with the military. decimated, but they quickly move to other places in the world, like africa , and we are there to meet them. more to annihilate isis than eight years of the previous administration. job,e doing a real
actually making tremendous strides in afghanistan and i think you see what is happening. largely -- a job that has been very well respected by many. one of the things that has happened that nobody is paying attention to, our federal judges , not only justice gorsuch, who is doing fantastically on the supreme court, but we have many judges that are being approved at the district level, federal district judges and court of appeals judges. ofwill be up to the approval 145 federal judges. we will have a big percentage of the court will be changed by
this administration over a short period of time. anybody has come ande, so we will have 125 that number will be increasing with time. 145 district court judges and 17 court of appeals judges and i must tell you, the wall street journal gave us great reviews on that. fantastic reviews. it is an important element that should be pointed out because a lot of people don't know it. tomorrow is a big announcement and we will have another announcement having to do with the tax cuts, out tomorrow, pretty early and i appreciate it and we will see you on the trip to asia. thank you. i would certainly consider that. no -- to gitmo.
they say he came and through that program that came in through that program -- he came in through that program. what we are demanding is merit-based immigration. we want people that are going to help our country. we want people that are going to keep our country safe. lotteries where the wrong people are in the lotteries and guess what, who are the sufferers that get those people? we want a merit-based system. we do not want chain migration were someone like him will be allowed to bring in many members of his family. we don't want that. thank you very much. they could. they certainly could.
they could represent a threat. thank you very much. i think janet yellen is excellent. much.you very mark: president -- vonnie: president trump speaking at a cabinet meeting. you heard him saying janet yellen is excellent although if asked if she was a pick, he did -- he said he did not say that. we will hear details of the tax reform plan in a few hours. he said they will get democrats on tax votes or they will lose their elections. mark: what a busy 36 hours we
have. the fed, tonight, the boe tomorrow. this is what happened today. stocks up, the highest since august 2015. earnings propelling stocks higher. fidelity international, someone cautious on the u.k. gilt market. james at the from aberdeen standard says the boe could get a couple hikes without doing any real damage to the economy. it is not currently have an active position in guilt -- in gilt. -- allianz global investors see deals in roughly 1.5%. those are the three calls ahead of the boe, tomorrow. this is a wonderful chart. sequence -- since
the 1990's and have expanded interest rates. he says the bubble may have arrived in interest rates, european bond bubble as it is called by this chart. check it out. vonnie: that is fantastic. the proxy battle between pershing square's bill ackman and adp is in its final week with a shareholder meeting next tuesday. adp says it plans to file a complaint with the securities and exchange commission alleging ackman made false and misleading statements to the advisement company. this as he fights for three seats on adp's board, including one for himself. he says adp has not learned the lessons of the likes of ibm or kodak and is losing ground to smaller more innovative competitors. he also says he has a strategy to increase margins.
bill ackman joins me now. thank you for joining me. what do you want your holders to vote, this week? literally five business days left to make up their minds. do you want to replace three members? bill: we are seeking three directors on a board of 10. we love -- we would love all three to be elected and we think that would help recast the board and change the culture. in light of how far the company has bought back on the latest accusation, i think it is a huge win for us to get on the board. we were certainly an underdog at the beginning of the contest and we are in a good place at the beginning of the auction. vonnie: one person on the board, which would be yourself would be a complete when? bill: no question it would be a win, not a complete win. we have people that would add a lot of value.
gettinghe benefits of three seats is we would be replacing three of the longest-running members. -- it is part of for them to challenge the status quo. , two other chairman directors on the board, you will now have three committee chairs they'll have to be redone and that recasts the board and enables it to operate like a new board. vonnie: some statistics about adp being a great company for shareholders. bill: all of those things are true. it thiswine attack particular way -- why attack it this particular way? couldn't you just suggest some potential changes? and: we are not waging war we have stayed away from ad hominem attacks.
we focused on the core issues and this is a great company, but that is looking backwards. the company has fallen behind competitors. companies have taken a lot of companyay and for a with as much financial resources and a strong market position that adp has had, to allow new entrants to take away customers that have been with you for a decade or more is not a good thing. the second component is that they have about 20% margins. they could be 60% higher than where they are, now. basic reorganizing the structure of the business. this is a company that operates with a very old-fashioned organizational structure. too many layers of management. --efficient return inefficient returns. these are things that can be
fixed, but you can't do them by making light suggestions. the culture of this company is very ingrained. our goal is to meet with the board, convince them of this, privately and then get a couple seats on the board and work with the company. they forced us into a proxy contest. bill: i want to -- vonnie: i want to ask you about your first point. competition is moving a lot. bill: -- vonnie: shareholders own the overall company. bill: but the reality is that in the enterprise segment, adp is geeking the -- keeping the payroll account from many of these clients. they rely on adp to partner with them, but a very valuable part of the business is the human capital management business. that is where the growth is and the revenues. that is where the company is losing.
it has reduced its disclosures to investors to mask the fact that they are losing large -- a large number of clients in their enterprise phase. something that is misleading is they tell you how many clients they have each year and that number has grown. the reason why is the small business segment is growing, but they are losing the big customers. one big customer and that is the equivalent of about 100 small customers. vonnie: in fairness, they have made changes in the smaller and medium-sized enterprises. one would argue they are getting to the larger enterprises and you don't really know what their plan is. andoke to the ceo of adp have a listen to what he had to say. carlos: a different idea about the pace and the risk involved in moving as quickly and aggressively. prior experience with other companies like jcpenney and valeant. we just want to make sure we don't make the same mistakes.
vonnie: we will get to the valeant thing in a minute. the risk reward is fair. carlos rodriguez says he will improve margins by 500 basis points over five years. he says maybe as an -- you say may be as many as 1200 over three. he is looking to give me some good value back. bill: i am not seeking to become the ceo. some neweking to add directors to the company that will change the minority. these are skill sets that are not present on the board of directors and send a message to the company that the status quo is not adequate. the company, it is not just in their plan. in three years, we expect margins to expand from 20% to 21% or a max of 22%. a two percentage point increase over three years. that is completely inadequate. they should be showing a lot more progress.
for the small customer and the medium customer, they have migrated that client on to more modern systems. they are not promising any operational benefits from that. our message to the board is that is inadequate. vonnie: what message does it send to put the company through an expensive proxy battle? why not talk to them? bill: our first choice was not to run the proxy contest. i have not run a proxy contest in a situation like this since canadian pacific, more than five years ago. we asked for -- we asked for a one-week extension. they were not going to grant it to us. we propose various settlements with the company where our directors would be added to the board. we said he did -- if you do not like our candidates, we have others. they chose a flat no.
i do think it is a healthy thing for the company. is that happened shareholders have an educated about elements of the business that they did not know. 90% plus of the shareholders are supportive of the notion that this business could be doing better and could have substantially higher margins. vonnie: are you talking about the survey? bill: we also went out talking to sir -- to shareholders. no one is arguing against making it a more efficient business. the ceo is claiming now he beat -- he agrees with us. in the beginning, he said we did not know what we were talking about. vonnie: and they have changed board members. bill ready. bill: we are not seeking to replace him. we think they are terrific. the problem is they are new to the board and the power on the board is controlled by the legacy old-timers. directors like jon jones.
he is an industrial ceo. we were able to step into air products and make it a more reasonably run company. i think mr. jones was embarrassed by what happened but does not want it to happen at adp. sometimes you enter a proxy contest because the board does not want to fix a problem so quickly because they think it is a bad reflection of their time on the company. vonnie: -- bill: company stock is up 140% over the last six years. before the increase in price as the result of our involvement. competitors are up 190%. vonnie: which competitors? bill: paychecks, workday, a composite. vonnie: it is a composite -- a composite of business segments.
adp does it all. paychex does a portion. i'm not sure you are comparing apples to apples. bill: we are because the competitors compete against adp in every segment of the business. when you benchmark a company, you benchmark it against a competitor set. 80 pick -- adp has cherry picked competitors. ibm is a major factor in their comparison. ibm does not compete with adp. workdayompeting against answer really in. -- and cerulean. adp overstated its overturn to shareholders and understated the return on the comparison. vonnie: you get on the board. shareholders vote u.n.. jobs say you have done your and you get your seat. what makes you think that even given no impedance from the board and all your ideas
including the acquisition target that you have, they all go through, what makes you think the value will go up? bill: the opportunity is it is great business in a great sector. the economy seems to be doing well. a nice macro tail end. interest rates are likely to rise. benefits will favor a macro environment. you have a nice set up. if you add onto that the opportunity to take margins from 20% to 32%, that is a great investment. you can accelerate the enterprise segment, revenues are down in the enterprise business, 10% over the last six years. that workdayod went from a startup to aip out to a $22 billion market gap, adp revenue is down 10%. the notion of the company is keeping pace with where they were is just not true.
if we can fix that and we have a couple of ideas on how to fix it, we think the company needs to consider acquiring one of their competitors. once you lose a customer and the enterprise business, you are not getting a mac for a decade or more. vonnie: what makes you think you can convince the board? bill: we are not seeking control of the company. we just need to get some new ideas in the board room. vonnie: but they have those ideas already. bill: i can be a pretty effective director. owning on benefit of behalf of investors of $2.6 billion. all the ideas we have are based on due diligence we have done, but we are limited to public information. if i become a director, i will have access to every piece of information i want. i can see precisely where the company is underperforming. then i think it can work with
the board and i can only be effective as one director convinced the rest of the board to take a look at the cost structure and ticket look at the incentives and i believe the facts will confirm the arguments we have made from outside and we will get to the right answer with myself and ideally our other two candidates as part of the conversation, focused on the best interest for shareholders. one of the key things missing in this board room is a shareholder. these are all professional good human beings, but none of them in 13 years, only one director has bought stock in the company. it is not a board of owners. vonnie: that whole argument, we could have a discussion about that because there are departures. bill: let's do. vonnie: i have other things i would rather talk about. you talked about the idea that you have some way -- have sway. bill: i don't have sway. if i make a compelling argument
as a director, based on the facts, i would expect the other directors to listen to it. i am one voice out of 10. the other benefit i would bring is a team behind me. all of the insights we have developed, how much -- imagine how much work we can do with perfect access to information from the company. when i joined the board of a company, i join with a team behind me. vonnie: is it trading to richly? bill: it is if the company is not going to make changes. vonnie: why did you buy it at 30 times earnings? bill: we bought it at 25 times earnings. driven by the market expectation that things are going to change. if theck is overvalued company operates according to the status quo. if shareholders vote me on the board or the other candidates, this is going to be a different company, going forward.
it is going to be a more profitable, more efficient company. the best sales force in the world, but without a competitive product, it does not matter. vonnie: i want to talk about another couple of stocks and to get back to the nastiness. this is -- this did get a little nasty. they brought up valeant and herbalife. bill: we have had a few disappointments. valeant was a passive investment and we stepped in after the stock crashed. vonnie: do you regret jumping out where you did? bill: i think valeant is a good company. i helped recruit a superb leader. i think they got the right strategy. they got a tough hand and we did our best to help stabilize the company after the crash. i was not part of the decision-making process that led to the collapse. i made the mistake of being a passive member. vonnie: would you get back in? bill: i have had my fill of
pharmaceuticals. vonnie: in a manner of speaking. you are back in herbalife. bill: the development i mentioned today, a short position in the common stock of the company. that exposes us to the risk of a growing liability if the stock price rises. we converted the entire position into a good option. we have the same upside as we did before. our exposure is limited to -- limited to 3% of our capital. less downside, a lot more upside. vonnie: we're out of time. i am not on the board of the company, so i am not part of that decision. vonnie: would you want to, as a shareholder, a new ceo? bill: i think the board will figure out how to make it a more effective company. we like model these -- model lee's --
i think it is attractive as a standalone company. one of the cheapest highest-quality is this is in the package space. vonnie: are you in the hedge fund industry making the same mistake as you say a is making, that it is a old model and you need to innovate? bill: we have innovated, for sure. a large base of our capital has been public investment holding companies. vonnie: bill ackman, pershing square ceo, thank you. mark: we have special coverage of the latest fed decision, 7:00 p.m. in london. this is bloomberg. ♪ retail.
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are following. another setback for the gop as the tax bill is pulled -- is delayed by a day. will the infighting threatens her effort to pass legislation before thanksgiving? have democratic congressman earl blumenauer from oregon. we will have what he has to say about the 24 hour delay and his thoughts on the congressional agenda, moving forward. we've got one fed decision out today, another tomorrow. investors wait for the president picked to be the next fed chair. -- presidents pick to be the next fed chair. ♪ david: we are told we would get one by tomorrow. republicans having trouble getting the team behind a plan. let's go to capitol hill.