Making Sense of the M&A Mania

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June 18 (Bloomberg) -- JPMorgan Private Equity Portfolio Manager Jack Caffrey previews today's markets and discusses his investment ideas with Betty Liu on Bloomberg Television's “In The Loop.” (Source: Bloomberg)

Equity portfolio manager at jpmorgan friday that -- bank.

M&a is being done out of fear rather than good.

Does not sound like a good sign.

Is a good sign you have got eeo's more often and are willing to spend the money or it is like -- listen to what is driving the results, effectively buying sales rather than the trans-limited sales we would have talked about 10 or 15 years ago.

It is good news.

It is effective with the ultimate capital spending.

It is also interest in -- you are saying effectively, my own stock is not as cheap as i thought it was years ago.

? oxidant about their own work.

What examples can you give where you see the trend?

So much of it is not about, we will wire -- to some extent, is not the technology is changing the world erie it is much more about thomas out and i more efficiently drive sales through the network and better deal with buying power on the part of insurance companies buying power on the part of insurance and manufacturers?

Like that is one area.

Another area i know you find quite favorable is discretionary.

You have been looked at some of the risks or him pennies.

Class the sector has rallies evan percent.

A veteran women figure -- more money to buy certain things.

Wages, hourly earnings at the end of march.

It is historically low wage growth.

On the flipside, you have installation picking up, now tracking up 2.1% year on year.

The question is, is earnings growth enough to keep up with what may be building inflation.

You look at the consumer discretionary sector and i would know backup wages.

Start reading jobs.

We look at what happened with jobs last year.

You did not the any dramatic improvement.

That seems to be shipping in the employment reports.

Look at the job opening surveys.

You created demand for labor him a more vocal back to work, and nec wages going area the consumer feels better.

You can take it and instead the more people in looking to borrow a bit more.

What do you see that is severely telling you simmers are feeling better?

Likes to some extent -- to some extent i'm a you look at what they're doing.

They are spending thomas maybe not quite as much of a they are spending more.

They are getting a more area the data remains somewhat more volatile him but housing has been tracking home sales.

This morning, better than expected.

People are looking to engage.

There are two schools.

I know you have a position on this very two schools on whether you should he actively managing or pass play managing your money right now, were passively looking at your portfolio.

Julie is taking a look at asset managers and yes.

The implications from the debate you're talking about tom about the be one of the risks to asset managers erie the other could be the fact that it is a relatively mature industry.

It running to bloomberg industries, we are looking at about 46% penetration in terms of how many have mutual funds.

The other issue for the industry is, if you look at revenue per asset under management, it has been declining to some extent.

To seize on wings, lower than that in the more actively managed funds.

That is the more long-term concerns in terms of the growth of the industry.

Those will go down?

As we will see continued pressure on various arts of the market.

At the same time, the ease on bonds are lower than equities.

Were folios get rebalance toward equity, that should constructive.

It's is an interesting business and it does not iraq a lot of capital.

Your spending is effectively on technology.

You also spend on people but you do not have a capital intention business of some of the other parts of the financial market your request you like them whether they are active or

This text has been automatically generated. It may not be 100% accurate.

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