1 00:00:03,160 --> 00:00:06,560 Speaker 1: Global business news twenty four hours a day at Bloomberg 2 00:00:06,600 --> 00:00:09,680 Speaker 1: dot Com, the Radio plus mobile last and on your radio. 3 00:00:09,920 --> 00:00:14,000 Speaker 1: This is a Bloomberg Business Flash and Bloomberg World handquaters. 4 00:00:14,080 --> 00:00:17,239 Speaker 1: I'm Charlie Pellett. The Dow, the SMP, NASDAK, they are 5 00:00:17,320 --> 00:00:20,120 Speaker 1: all declining and right now we have got the SMP 6 00:00:20,280 --> 00:00:23,919 Speaker 1: five hundred index slumping seventeen points, close to the low 7 00:00:23,960 --> 00:00:27,640 Speaker 1: of the session at seven down eight tenths of one percent, 8 00:00:28,000 --> 00:00:30,840 Speaker 1: thirteen minutes to go ahead of the closed down industrials 9 00:00:30,840 --> 00:00:34,479 Speaker 1: down one fifty four points, down nine tenths of one percent. 10 00:00:34,840 --> 00:00:37,640 Speaker 1: Nastank is down forty four points, a drop of eight 11 00:00:37,640 --> 00:00:40,920 Speaker 1: tenths of one percent. The tenure up at ten thirty seconds, 12 00:00:40,960 --> 00:00:43,960 Speaker 1: that yield one point five eight percent. Gold down a 13 00:00:44,040 --> 00:00:46,680 Speaker 1: dollar fifty the ounce now to thirteen thirty six, a 14 00:00:46,760 --> 00:00:49,720 Speaker 1: drop of one tenth of one percent. I'm Charlie Pellett, 15 00:00:49,840 --> 00:00:53,519 Speaker 1: and that's a Bloomberg Business Flash. Charlie Pellett, thank you 16 00:00:53,680 --> 00:00:56,560 Speaker 1: so very much. It's time now for the et F Report, 17 00:00:56,600 --> 00:00:59,000 Speaker 1: brought you by Bentley University. What's your time of the 18 00:00:59,080 --> 00:01:02,680 Speaker 1: finances a Verse and Managing asset allocations at JP Morgan 19 00:01:02,800 --> 00:01:06,319 Speaker 1: have in common a business degree from Bentley University. Because 20 00:01:06,480 --> 00:01:10,800 Speaker 1: business is everywhere, prepare here. Smart beta? What is it 21 00:01:10,840 --> 00:01:12,760 Speaker 1: and what does it do? For this we turned to 22 00:01:12,800 --> 00:01:16,480 Speaker 1: Catherine Cowterie. There are nearly eight hundred smart beta e 23 00:01:16,600 --> 00:01:19,600 Speaker 1: t s by sun counts, and they vary in complexity 24 00:01:19,640 --> 00:01:23,040 Speaker 1: from a simple change in waiting to multi factor products. 25 00:01:23,080 --> 00:01:26,840 Speaker 1: Here's Bloomberg intelligence analyist Eric Beltunist on smart beta e 26 00:01:26,920 --> 00:01:28,640 Speaker 1: t F s. I think for most people it sounds 27 00:01:28,640 --> 00:01:30,840 Speaker 1: like something you get at the g n C store. Um, 28 00:01:30,840 --> 00:01:32,520 Speaker 1: but it's not that hard to understand. You just think 29 00:01:32,520 --> 00:01:35,039 Speaker 1: of an index like the SMP five right, how does 30 00:01:35,040 --> 00:01:37,880 Speaker 1: it wait the stocks by market cap? Smart beta is 31 00:01:38,000 --> 00:01:41,240 Speaker 1: anything that doesn't do that. It waits it in different ways. 32 00:01:41,280 --> 00:01:43,920 Speaker 1: Maybe it says, hey, let's wait the SMP five hundred 33 00:01:43,920 --> 00:01:47,279 Speaker 1: stocks by their dividend output or by their volatility levels. 34 00:01:47,840 --> 00:01:51,120 Speaker 1: That's all it is. Beltuna says. Performance chasing is one 35 00:01:51,120 --> 00:01:53,520 Speaker 1: of the dangerous it's smart beta e t fs pose. 36 00:01:53,720 --> 00:01:56,400 Speaker 1: Do you see the performance like for the past six 37 00:01:56,440 --> 00:01:58,440 Speaker 1: months and you think, oh, it's doing well, I'll get in. Well, 38 00:01:58,440 --> 00:01:59,760 Speaker 1: that may be the worst time to get in, So 39 00:02:00,520 --> 00:02:04,240 Speaker 1: you know, it's really about the same thing with active 40 00:02:04,280 --> 00:02:08,160 Speaker 1: funds in terms of people missing the gains and going 41 00:02:08,160 --> 00:02:10,560 Speaker 1: in at the exact wrong time. Boutoon. It sounds another 42 00:02:10,600 --> 00:02:14,040 Speaker 1: cautionary note about smart y to et s not understanding 43 00:02:14,040 --> 00:02:16,960 Speaker 1: the volatility. He says they can be more volatile than 44 00:02:17,000 --> 00:02:21,080 Speaker 1: other funds. That's your Bloomberg ETF report. I'm Katherine Cowderie. 45 00:02:24,040 --> 00:02:27,320 Speaker 1: This is taking Stock with Kathleen Hayes and Pim Fox 46 00:02:27,440 --> 00:02:32,160 Speaker 1: on Bloomberg Radio. We are broadcasting live from midtown Manhattan 47 00:02:32,200 --> 00:02:34,800 Speaker 1: from the offices of Eisner Amper. They are all preparing 48 00:02:34,880 --> 00:02:38,000 Speaker 1: for their fourth annual real Estate Private Equity Summit. It 49 00:02:38,040 --> 00:02:42,480 Speaker 1: will take place at Piers sixty this Wednesday, Piers sixty 50 00:02:42,680 --> 00:02:46,359 Speaker 1: at the Chelsea Piers and one of the speakers, the 51 00:02:46,440 --> 00:02:52,000 Speaker 1: keynote speaker, indeed, will be Sam Zell of the Equity Group. 52 00:02:52,560 --> 00:02:55,000 Speaker 1: He will be talking about ren estate and his outlook 53 00:02:55,040 --> 00:02:56,799 Speaker 1: for real estate. All right, now, we want someone to 54 00:02:56,840 --> 00:02:59,480 Speaker 1: tell us their outlook for bonds and interest rates, because 55 00:02:59,520 --> 00:03:02,799 Speaker 1: we know that this connected directly to real estate. Dan 56 00:03:02,960 --> 00:03:05,880 Speaker 1: Fuss joins us. He is the chairman of Loumas Sales 57 00:03:05,960 --> 00:03:10,560 Speaker 1: and a company is based in Boston Homeberg and Dan 58 00:03:10,960 --> 00:03:15,480 Speaker 1: manages the firm's Loomis Sales bond f l S b 59 00:03:15,720 --> 00:03:19,080 Speaker 1: d X captured a return of eight and a half 60 00:03:19,120 --> 00:03:22,799 Speaker 1: percent annually over the past three years, Dan Fust, thank 61 00:03:22,800 --> 00:03:24,840 Speaker 1: you for being with us. Well, thanks, Pim. Good to 62 00:03:24,840 --> 00:03:27,799 Speaker 1: be here. All right, So what what accounts for your 63 00:03:27,960 --> 00:03:30,720 Speaker 1: your success eight and a half percent over the past 64 00:03:30,760 --> 00:03:42,400 Speaker 1: three years, beating of your competitors love interest rates? Yeah, um, 65 00:03:42,680 --> 00:03:49,880 Speaker 1: fortunately timed withdrawals from the fun Uh. You never liked that, 66 00:03:49,960 --> 00:03:54,800 Speaker 1: but once in a they help out. Um. And the 67 00:03:55,160 --> 00:03:59,800 Speaker 1: one thing that I think marketing would rather I emphasize 68 00:04:00,480 --> 00:04:06,280 Speaker 1: his issue selection, and that's we have a low market 69 00:04:07,440 --> 00:04:11,840 Speaker 1: col variants. We don't march exactly in line with the 70 00:04:11,880 --> 00:04:14,840 Speaker 1: rest of the bottom bondom market. All here's the same cadence, 71 00:04:14,920 --> 00:04:18,599 Speaker 1: contents to march in the same direction. It's and you 72 00:04:18,640 --> 00:04:21,960 Speaker 1: get trampled if you go completely the other way. But 73 00:04:22,080 --> 00:04:27,720 Speaker 1: there are times to beer away and so it all depends. 74 00:04:27,720 --> 00:04:30,120 Speaker 1: And when you stop the clock at same bonds, new 75 00:04:30,200 --> 00:04:34,640 Speaker 1: prices and okay, Kathleen, I just have to Okay. So 76 00:04:34,680 --> 00:04:38,080 Speaker 1: we've had but four years or five up until this year. 77 00:04:38,320 --> 00:04:41,400 Speaker 1: Although so far, so good. I think when the bond 78 00:04:41,440 --> 00:04:43,760 Speaker 1: market bet and fed doesn't know what they're doing. They're 79 00:04:43,760 --> 00:04:46,560 Speaker 1: not going to raise rates, and bonds rallied and bonds rallied. 80 00:04:46,760 --> 00:04:49,760 Speaker 1: Now maybe we're at a turning point now. Obviously your 81 00:04:49,920 --> 00:04:53,440 Speaker 1: mean stay is not treasury bonds, but they do kind 82 00:04:53,440 --> 00:04:55,320 Speaker 1: of call the tune for the rest of the market. So, 83 00:04:55,360 --> 00:04:57,719 Speaker 1: how has been fuss what's the number one thing you've 84 00:04:57,760 --> 00:05:01,560 Speaker 1: done to have that trend benefit you? But then you 85 00:05:01,600 --> 00:05:04,520 Speaker 1: know had in the direction you've been touting lately, which 86 00:05:04,560 --> 00:05:08,920 Speaker 1: is more credit risk list interest rate risk, Well, number one, 87 00:05:09,440 --> 00:05:13,320 Speaker 1: I'll be self critical. I've been too cautious too. Conservatives 88 00:05:13,640 --> 00:05:18,280 Speaker 1: kept reserves um, you know, short term sitting in short 89 00:05:18,400 --> 00:05:25,440 Speaker 1: term governments UM. And that has proved unnecessary insurance and 90 00:05:25,480 --> 00:05:28,080 Speaker 1: it's been costly insurance. That have been better off putting 91 00:05:28,120 --> 00:05:31,479 Speaker 1: all the reserves in thirty year treasuries and going to 92 00:05:31,560 --> 00:05:37,400 Speaker 1: learn how to play golf. UM. The because I think 93 00:05:37,480 --> 00:05:42,360 Speaker 1: the setting is there, uh, foreign eventual rise and interest 94 00:05:42,440 --> 00:05:47,960 Speaker 1: rates It's been there domestically for a while. Internationally it's not. Internationally. 95 00:05:49,480 --> 00:05:52,200 Speaker 1: I think the only major central bank likely to raise 96 00:05:52,360 --> 00:05:54,599 Speaker 1: rates is our own, and they'll wait till the election 97 00:05:54,760 --> 00:05:58,960 Speaker 1: is over. And the domestic pressures behind that. The international 98 00:05:59,040 --> 00:06:05,160 Speaker 1: pressures are not the short wrap up statement is that 99 00:06:05,960 --> 00:06:10,440 Speaker 1: our central Bank, and the European Central Bank and the 100 00:06:10,520 --> 00:06:15,680 Speaker 1: Japanese Central Bank, and to a lesser degree, much lesser degree, 101 00:06:15,839 --> 00:06:22,720 Speaker 1: UK and Swiss in Canada are caught in a mismatch 102 00:06:22,839 --> 00:06:26,599 Speaker 1: with their domestic mandates. Their domestic mandates say you look 103 00:06:26,640 --> 00:06:31,560 Speaker 1: after your own situation, and not under the formal language 104 00:06:31,560 --> 00:06:33,440 Speaker 1: of the mandate are you supposed to go out and 105 00:06:33,480 --> 00:06:35,520 Speaker 1: look after the rest of the world. And the problem 106 00:06:35,600 --> 00:06:38,480 Speaker 1: is the rest of the world. And if the rest 107 00:06:38,480 --> 00:06:41,960 Speaker 1: of the world really goes wrong, the funds goes sailing 108 00:06:42,000 --> 00:06:45,800 Speaker 1: out of it. That creates a problem for us. And 109 00:06:45,920 --> 00:06:48,800 Speaker 1: that's part one. Part two is there is a mismatch 110 00:06:48,960 --> 00:06:54,599 Speaker 1: between fiscal policy and monetary policy, and monetary policies carrying 111 00:06:54,640 --> 00:06:58,080 Speaker 1: that load. Now that I think it is about to end, 112 00:06:59,040 --> 00:07:02,320 Speaker 1: but the international else not going away all right. Now. 113 00:07:02,320 --> 00:07:04,120 Speaker 1: You mentioned that you think this is going to end. 114 00:07:04,200 --> 00:07:08,359 Speaker 1: This uh, this monetary and fiscal imbounds. You think that 115 00:07:08,400 --> 00:07:10,240 Speaker 1: there will be a lot of spending on the part 116 00:07:10,280 --> 00:07:15,520 Speaker 1: of whoever's running the Showcomba November. We'll have to see 117 00:07:15,520 --> 00:07:23,400 Speaker 1: who whoever is and oftentimes missed in the understandable interest 118 00:07:24,200 --> 00:07:27,760 Speaker 1: for the chief executive of the president is how the 119 00:07:27,880 --> 00:07:34,320 Speaker 1: Congress is going to shake out, and they you know, 120 00:07:34,440 --> 00:07:37,760 Speaker 1: here you have a spectrum of views as to what 121 00:07:37,960 --> 00:07:41,720 Speaker 1: ought to be done on fiscal policy side. It can 122 00:07:41,760 --> 00:07:45,600 Speaker 1: be very hard to do anything new matter who the 123 00:07:45,760 --> 00:07:50,480 Speaker 1: president is unless you get some sort of agreement within 124 00:07:50,560 --> 00:07:53,400 Speaker 1: the Congress, which seems to be at a very very 125 00:07:53,600 --> 00:07:59,040 Speaker 1: very low app uh. So uh, all you can do 126 00:07:59,120 --> 00:08:03,000 Speaker 1: is make your guess is it would greatly help, greatly 127 00:08:03,080 --> 00:08:07,360 Speaker 1: help from my point of view, the Central Bank, the 128 00:08:07,440 --> 00:08:14,520 Speaker 1: FED deal with its side of the domestica equation. If 129 00:08:14,560 --> 00:08:19,600 Speaker 1: you could get more opened to the economy to spending. 130 00:08:19,960 --> 00:08:26,200 Speaker 1: But also in these are contradictory, Um, a little more 131 00:08:26,200 --> 00:08:31,040 Speaker 1: revenue gathering by the federal government. Now those two things 132 00:08:31,080 --> 00:08:34,360 Speaker 1: are contradictory. You say, well, they ought to spend more money, 133 00:08:34,360 --> 00:08:36,200 Speaker 1: but they ought to have more revenue to pay for it. 134 00:08:36,240 --> 00:08:39,840 Speaker 1: What are your odds politically getting that thing through. Everybody's 135 00:08:39,880 --> 00:08:43,200 Speaker 1: saying that we need more physical spending. The US federal 136 00:08:43,240 --> 00:08:46,560 Speaker 1: Service saying Mario Draggy pround of the table again today 137 00:08:46,600 --> 00:08:48,920 Speaker 1: in front of the EU Parliament, inside of the ECB, 138 00:08:49,559 --> 00:08:54,000 Speaker 1: Governor Cororoda, you know, Fuster plus he's also pounding the table. 139 00:08:54,040 --> 00:08:56,320 Speaker 1: But I particularly want to ask you about Governor Corota 140 00:08:56,360 --> 00:09:01,000 Speaker 1: Bank of Japan. There are hell bat now on twisting 141 00:09:01,200 --> 00:09:04,640 Speaker 1: their yield curve right. They want those long term meals up. 142 00:09:04,679 --> 00:09:06,439 Speaker 1: They don't want to run out of bonds to buy 143 00:09:06,520 --> 00:09:10,440 Speaker 1: the big big switch. They were targeting money supply. Now 144 00:09:10,440 --> 00:09:12,439 Speaker 1: they've got the yield curve. Is this going to work? 145 00:09:12,440 --> 00:09:15,319 Speaker 1: And what does it mean for a bond investor? Well, 146 00:09:15,360 --> 00:09:20,200 Speaker 1: it means confusion. Um. The basic problem is sort of 147 00:09:20,320 --> 00:09:25,319 Speaker 1: none of the above. The basic problem is a people problem. 148 00:09:25,559 --> 00:09:30,480 Speaker 1: Lack of the population in total numbers I look at 149 00:09:31,440 --> 00:09:38,760 Speaker 1: is is shrinking, the work age, the traditional whatever to 150 00:09:38,880 --> 00:09:46,679 Speaker 1: age six population is shrinking. The populations are is increasingly 151 00:09:46,760 --> 00:09:51,120 Speaker 1: coming together in the major cities the countrysides being left. 152 00:09:51,160 --> 00:09:57,080 Speaker 1: I mean it's a very very very civilized, uh you know, 153 00:09:57,640 --> 00:10:01,040 Speaker 1: good place and every aspect to life you can think of, 154 00:10:01,200 --> 00:10:05,280 Speaker 1: except there are less and less people. And it because 155 00:10:05,320 --> 00:10:09,600 Speaker 1: of the water and the policy, you don't have other 156 00:10:09,679 --> 00:10:14,079 Speaker 1: people moving in to fill that vacancy. So, how in 157 00:10:14,200 --> 00:10:18,800 Speaker 1: God's earth are you gonna get two percent real growth 158 00:10:19,080 --> 00:10:24,440 Speaker 1: in total gene you know, gross whatever with less and 159 00:10:24,520 --> 00:10:28,360 Speaker 1: less people? Yes, how are you going to do it? 160 00:10:29,640 --> 00:10:31,240 Speaker 1: What do you think the federal serve. Is gonna do 161 00:10:31,280 --> 00:10:37,440 Speaker 1: with December? Raise rates a quarter? How many times? Next year? Two? 162 00:10:37,960 --> 00:10:42,600 Speaker 1: Two times? Yeah, that's gets work. Pim okay, is that 163 00:10:42,640 --> 00:10:44,719 Speaker 1: just quick, quick, quick finance? You got five seconds? Is 164 00:10:44,760 --> 00:10:47,600 Speaker 1: that going to get the ball market's way and will 165 00:10:47,679 --> 00:10:50,560 Speaker 1: help they'll help? All right? Well, Dan Fust, you're gonna 166 00:10:50,600 --> 00:10:53,080 Speaker 1: help us. You gotta come back soon. I'll do that, 167 00:10:53,200 --> 00:10:56,240 Speaker 1: all right. Dan Fust as chairman Lomas Sales and Code 168 00:10:56,240 --> 00:10:58,480 Speaker 1: based in Boston. He's in New York City today and 169 00:10:58,520 --> 00:11:02,640 Speaker 1: that's why he joined us here at the Eisner Amper 170 00:11:02,760 --> 00:11:07,080 Speaker 1: real Estate UH event ahead of their private equity summit 171 00:11:07,200 --> 00:11:10,360 Speaker 1: this week. We're having a very special live broadcast with 172 00:11:10,440 --> 00:11:13,280 Speaker 1: Eisner Amper. This is taking Stock and this is Bloomberg.