Avenue Capital founder and CEO Marc Lasry joined hosts Stephanie Ruhle and David Westin for the debut of Bloomberg TV’s new flagship morning program, Bloomberg <GO>. He spoke about the lack of liquidity in the markets and pressure on investors to show short-term results.
On the U.S. economy, Lasry said: “I actually think the U.S. economy is doing great compared to the rest of the world. So the first question is where would you want to invest? Do you want to invest in the U.S., do you want to invest in Europe, do you want to invest in China, do you want to invest in emerging markets? At the end of the day, the best place to invest is the U.S. So if I was going to be an equity investor, I would be an investor in the U.S.”
On the idea of more Fed stimulus, Lasry said: “I think it would be the worst thing in the world…I think right now, we have been living off of theses low interest rates and having more stimulus isn’t what you need. What you actually need is you need to get back to a little bit of normalacy and understand that the Fed can’t keep on pumping more and more stimulus into our economy. Our economy is fine. Let it grow and let it do what it needs to do.”
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Lasry: More Fed Stimulus ‘Worst Thing in the World’
Short-Term Pressure Ends Long-Term Market Patience
DAVID WESTIN: We are now about 30 minutes from the opening bell here in New York. Welcome to Bloomberg Go. I am David Westin.
STEPHANIE RUHLE: And I am Stephanie Ruhle. Here with our favorite Canadian, our co-anchor Erik Schatzker.
WESTIN: Welcome, Erik.
ERIK SCHATZKER: Good morning Stephanie, good morning David.
RUHLE: Good to have you.
SCHATZKER: Great to e here. The first day of Bloomberg Go, but as you both know, I’m not the only person who’s here. Marc Lasry is here too. He’s the co-founder and CEO of Avenue Capital, the $14 billion distressed debt hedge fund. Marc, good morning.
MARC LASRY: Good morning.
SCHATZKER: Great to have you on this inaugural show.
LASRY: My pleasure.
RUHLE: I would like to point out he is the co-founder with two women. You get that? Women. Important point.
SCHATZKER: Since we are talking about markets, isn’t this the perfect time to talk about the five stories that matter to markets now, and we have to begin with Trian Fund Management taking a $2.5 billion stake in General Electric. This is the biggest investment yet for Nelson Petlz, the guy at the top of Trian, and it makes his firm a top 10 GE holder. What does Trian want? You probably know by now: faster, deeper cost cuts, more disposals of those GE finance assets, the house that Jack Welch built, and caution on acquisitions, plus an increase of some $20 billion in debt so that GE can buy back more stock.
Here’s my question to Marc Lasry. Marc, we’re all used to activists sort of swinging for the fences right now, but what does it say to you that a firm like Trian would target the bluest of American blue chips, General Electric?
LASRY: Well, look, I think if you have a day — the reason they’re doing is they believe that there is a lot of value there that they can get to. And because it is GE, GE has been slower. A the end of the day, if I am GE, I would call Nelson and say thank you. By the way, it’s very kind of you, but you have 1 percent. In my world, the only way people listen to us if we buy 20 or 25 percent of the debt. So I always find it amazing that someone who has 1 percent of the debt — of equity is able to get as much attention as Nelson is getting.
RUHLE: Yeah but —
WESTIN: Depends on part, Marc, on Nelson’s ability to get some of the biggest institutional investors to listen to what he has to say and come along with him?
LASRY: 100 percent.
WESTIN: Because there have been some instances where people have taken small positions but actually made a big difference in the company.
RUHLE: –atJanna (ph). That guy had huge impact which has taken small stake.
LASRY: Yes, but you’ve got to get everybody else to agree with you. Right? So it’s not just — it’s not just — he may have 1 percent, but you’ve got to get all the other large holders. You ended up saying he’s now one of the top 10. So if he can get the other 10 guys, then you can put pressure on GE. But at the end of the day, you can do that whether you have half a percent, a quarter of a percent; it’s just convincing everybody else that you’re right.
SCHATZKER: But how is that — to your point, and what Stephanie said — how is it there is so much symbolic value in just the entry of an activist, not just to a company like GE —
RUHLE: That’s a good point. You’ve got activist —
SCHATZERK: But you mentioned Qualcomm, you talked about — we have to add to that Carl Icahn, Apple, for example. I want to go back to what you said — thank you very much, Nelson, but I’ve got a business to run. Why isn’t it more talk to the hand, right? Like we’re working for shareholders already, in case you hadn’t noticed?
LASRY: They should. I never understand why they don’t. It doesn’t make any sense.
SCHATZKER: So you want management and boards, for that matter, to have more backbone when it comes to dealing with activists — ?
LASRY: Absolutely. It’s just that everybody’s so worried with what the press is going to say. Everybody’s so worried. So all of sudden, now GE is in the news and everybody is going to focus on all the things that Nelson has said. And people are going to focus on that, and then you’re going to ask all the other holders would you agree with him? Would you not agree with him? And either Nelson’s going to be able to get everybody else to agree, or GE is going to be getting all theirshareholders to agree with what they are doing.
SCHATZKER: But what explains, then, why these — why these managements and boards keep rolling over?
LASRY: Because I think at the end of the day, everybody is worried and nobody likes being in the news. So when you’re in the news, you feel that there is a lot more pressure. And I think boards end up reacting to that pressure. And if I was the board, I would end up saying, look, at the end of the day, we know what we’re doing. This has been our plan. Thank you and we’re happy to talk to you because you’re a shareholder. By the way, we think we’re doing what’s in the best interest of all shareholders, not just you.
RUHLE: Erik, it’s like the Trump effect. Donald Trump has come out guns ablazing