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Speaker 1: Bloombo Business News twenty four hours a day at Bloomberg

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Speaker 1: This is a Bloomberg Business Flash and I'm kerin Moscow.

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Speaker 1: This updates brought to you by Sector Spider e t

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Speaker 1: F so who I buy a single stock, but you

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Speaker 1: can invest in the entire sector as its sector spdr

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Speaker 1: s dot Com are called six sector et F stocks

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Speaker 1: are a little changed to higher as Data East concerns

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Speaker 1: that consumer health is waning while also adding to the

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Speaker 1: case for higher interest rates. We check the markets every

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Speaker 1: fifteen minutes throughout the trading day on Bloomberg. He has

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Speaker 1: in P five hundred up almost a tenth of upper cent,

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Speaker 1: up one and a half points to twenty sixty five.

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Speaker 1: Dow Jones Industrial average little changed, up two points to

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Speaker 1: seventeen thousand, seven hundred twenty two and astacts up three

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Speaker 1: ten percent or thirteen points to forty seven fifty ten.

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Speaker 1: Your treasury up three thirty seconds, the yield one point

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Speaker 1: seven three percent yield on the two year points seven

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Speaker 1: eight percent. Nim X screude oil down nine tenths per

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Speaker 1: center forty one cents to nine a barrel comes Gold

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Speaker 1: down two tenths percent or two dollars fifty cents to

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Speaker 1: twelve sixty seventy the euro An other thirteen o seven

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Speaker 1: the end one oh nine points to five A report

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Speaker 1: showing April retail sales jump the most in a year,

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Speaker 1: contrast with disappointing quarterly numbers and outlooks this week for

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Speaker 1: major retailers, including Macy's and Cole's. Northstrom is down more

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Speaker 1: than fifteen percent this morning after cutting its annual forecast,

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Speaker 1: and j. C. Penny is down two and a half

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Speaker 1: percent as its sales missed analysts estimates. Shake Shack is

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Speaker 1: moving higher, up six point three percent, after posting first

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Speaker 1: quarter profit and sales at topped analysts estimates, help by

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Speaker 1: new locations and the introduction of a chicken sandwich. And

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Speaker 1: that's a Bloomberg business flash, Tom and Mike Karen Moscow,

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Speaker 1: thank you very much. Well. It has been uh an

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Speaker 1: interesting week for all of us, but nowhere has it

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Speaker 1: been more interesting than for the people of Brazil. They

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Speaker 1: lose a president, they gain a temporary president, a new cabinet,

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Speaker 1: including a new finance minister, and maybe some hope. Gabrielle

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Speaker 1: Santos is a global market strategist at JP Morgan Asset Management.

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Speaker 1: She follows everything Brazilian and Gabriella. Thanks um for joining

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Speaker 1: us today to to bring us up to data on

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Speaker 1: what's going to happen there. And the reason I sort

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Speaker 1: of phrase it that way is everybody's been pointing to

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Speaker 1: the rise in the real and the recent rise in

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Speaker 1: the Bovespa as a sign that things are better, But

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Speaker 1: are they really all that much better? Is it a

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Speaker 1: is this sort of a fool there? And to get

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Speaker 1: long on Brazil right now, Good morning Mike. Certainly, as

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Speaker 1: you mentioned, has been a very interesting week in Brazil. Um,

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Speaker 1: I think to your point the interesting explanation for the

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Speaker 1: rise in the BA in sixth income even in Brazil

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Speaker 1: and in the currency, it's all about really expectations. UH.

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Speaker 1: The market was pricing in the beginning of the impeachment trial,

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Speaker 1: the beginning of a new UH economic policy, let's say,

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Speaker 1: with this new president and cabinet in Brazil. So now

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Speaker 1: that part of the expectation is done, and I think

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Speaker 1: now is when really we need to watch the measures

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Speaker 1: that are actually introduced UH in the economic and fiscal

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Speaker 1: side in order for Brazilian assets to improve, because really

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Speaker 1: in terms of growth, nothing has changed. So really it's

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Speaker 1: about are we actually going to see, uh, the expectations

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Speaker 1: really meet, really being met here in Brazil given the

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Speaker 1: political situation, the political corruption situation down there where the

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Speaker 1: president is out now at least temporarily, but a lot

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Speaker 1: of her judges are still under investigation. What's the likelihood

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Speaker 1: they take dramatic action to improve things. That's that's such

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Speaker 1: an interesting point because it doesn't necessarily spell the end

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Speaker 1: of political paralysis in Brazil. That's the hope that this

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Speaker 1: new president, new cabinet can better cooperate with Congress in

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Speaker 1: order to get measures passed. But I think you're absolutely

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Speaker 1: right that there is still this underlying corruption investigation that

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Speaker 1: can still cause still has the potential to cause some

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Speaker 1: political turmoil. So the way that we're positioning ourselves in

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Speaker 1: Brazil is telling clients that things haven't a hundred percent change, right.

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Speaker 1: There's reason for optimism, but still reason to be cautious,

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Speaker 1: especially with the outlook for the equity market. I would say,

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Speaker 1: versus the fixed income market, where is the opportunity in

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Speaker 1: emerging markets right now? So within emerging markets, uh, I

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Speaker 1: would say that we're looking at this recent improvement in

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Speaker 1: performance still a bit cautiously. Uh. We've had such a

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Speaker 1: better few months here for e M. A lot of

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Speaker 1: it though, has been driven by the external backdrop, so

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Speaker 1: improvement in China, commodities fall in the dollar, and so

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Speaker 1: far we actually haven't seen fundamentals really improve. So the

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Speaker 1: way that we're looking at emerge markets is still cautiously,

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Speaker 1: still looking at names that have had stable growth stories

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Speaker 1: for the past few years. Uh. And and some of

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Speaker 1: these countries include Korea, for example, Mexico. UH. So we're

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Speaker 1: looking at some of the still more cautious stable growth

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Speaker 1: stories as well as some markets actually that have just

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Speaker 1: become incredibly cheap. And here I would put Russia in

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Speaker 1: that category instead of a Brazil for example. Well, how

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Speaker 1: much does Brazil matter to the world at this point

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Speaker 1: or is it largely confined to Brazil. It certainly matters

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Speaker 1: for the Latin America region. Uh. It is the biggest economy,

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Speaker 1: the biggest market in Latin America. And you have seen

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Speaker 1: spillover effects from uh the weakening in the economy and

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Speaker 1: policy in Brazil. You've seen that spill over into other

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Speaker 1: economies and markets in the region. So I think it

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Speaker 1: it does have its importance within Latin America and emerging

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Speaker 1: markets sly uh and and so it would be a

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Speaker 1: really great sign to see things improved in Brazil like

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Speaker 1: they have in Argentina, right, I think that would be

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Speaker 1: a really important factor for the region and emerging markets.

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Speaker 1: One of our themes this morning, Gabriel and Gabriel Santos

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Speaker 1: with this folks with JP Morgan. One of our our

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Speaker 1: themes this morning has been cash flow. Can you a

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Speaker 1: judge or account cash flow around the world like you

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Speaker 1: can within the United States, and I mean within the

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Speaker 1: other major economies as well. Can you do free cash

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Speaker 1: flow on Philippine or Korean companies. It's it's certainly a

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Speaker 1: little trickier when you look at whether it's earnings or

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Speaker 1: whether it's cash flow for emerging markets, um and and

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Speaker 1: that's why we tend to prefer in terms of valuation measures,

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Speaker 1: we tend to prefer something like price to book for

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Speaker 1: emerging markets exactly for that reason. It's a little bit

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Speaker 1: more straightforward that way. Uh So we tend to look

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Speaker 1: at slightly differentvaluation measures for that reason. The Latin American

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Speaker 1: nations have been very differentiated over the last couple of years.

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Speaker 1: And then they seem to have converged. Over the last year.

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Speaker 1: You see Mexico, which was making a lot of progress

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Speaker 1: sort of slipped back. Is that all energy related or

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Speaker 1: is is there some other factor at work? From Mexico specifically,

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Speaker 1: I would say that there there are two components there.

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Speaker 1: There's the energy component, which has a big role to

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Speaker 1: play in the Mexican pesso and in general risk perception

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Speaker 1: there um. But Mexico is also a story about the

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Speaker 1: US UH. It's certainly very very tied to US manufacturing

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Speaker 1: UH and with the slowdown in US manufacturing last year,

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Speaker 1: a lot of it the effect of the strong dollar,

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Speaker 1: you see Mexico suffer as a result of that as well.

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Speaker 1: So two stories there. I would say from Mexico, for

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Speaker 1: the region as a whole, it does tend to be

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Speaker 1: a commodity story um. And you do see currencies and

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Speaker 1: risk perception generally for the region aligned with commodity prices.

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Speaker 1: I would say, go ahead. I would say that for

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Speaker 1: this year, what's been driving them higher has been that

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Speaker 1: commodity link they have in common as well as politics

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Speaker 1: UH and and anticipation. Right, so politics in Argentina and

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Speaker 1: Brazil and Peru that's been a common theme for the

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Speaker 1: region as well. Before we let you, guy gotta ask

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Speaker 1: um does Venezuela collapse? And is an investment implication for

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Speaker 1: that question? Good questions, UM. It is a very sad

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Speaker 1: example within our region. UH And I think I would

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Speaker 1: say investors have been waiting for a while for for

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Speaker 1: Venezuela to collapse so called um or or default in

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Speaker 1: its debt, and so far they have been able to

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Speaker 1: skirt that, a lot of it through loans from China actually, UM.

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Speaker 1: And so we're certainly edging closer and closer in Venezuela,

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Speaker 1: and it would be wonderful to see a shift in policy.

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Speaker 1: They're keeping pace with what we're seeing in the rest

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Speaker 1: of the region. Grim news out of Venezuela in the

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Speaker 1: last couple of days. Gabriel Santos thanking so much with

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Speaker 1: JP Morgan, appreciate her attendance. UH to finish up? Are

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Speaker 1: we Mike retail sells better than good. I think we're

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Speaker 1: gonna get adjustments up in the g d P view

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Speaker 1: each week and we get in the next week on

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Speaker 1: economic data and it's a big it's it's an interesting

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Speaker 1: week coming up. I mean, I guess c p I

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Speaker 1: is a huge deal along with you know, maybe we

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Speaker 1: get a turnaround an industrial production on the seventeenth. Well

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Speaker 1: right now it doesn't seem to be a yeah, a

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Speaker 1: little bit of improvement in industrial production is seen, so yeah,

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Speaker 1: I mean, I mean, those are the kind of things

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Speaker 1: where the the whole thing, to me, Mike, has been

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Speaker 1: allows the first quarter shift, second quarter hasn't happened, and

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Speaker 1: maybe today was the day it shifted. Where the optimists

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Speaker 1: get their two point eight or whatever statistics. It is

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Speaker 1: so hard to know because of the way we've been

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Speaker 1: buffeted by all of these and one off news events.

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Speaker 1: We'll see there it is. We thank you so much

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Speaker 1: through the week. We need to thank all of our

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Speaker 1: team worldwide for assisting, particularly our team in Brazil. Lad

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Speaker 1: in London by John Frere, greatly appreciate the effort to

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Speaker 1: and yesterday on Brazil UH the historic moment for that

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Speaker 1: UH nation. We will be here for you Monday doing

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Speaker 1: all we can in economics, finance, investment and international relations

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Speaker 1: for you. Don't forget all of our work out on Twitter, Facebook,

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Speaker 1: social media, iTunes, podcast engagement, were engagement. We're engaging with

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Speaker 1: you and we thank you for engaging with us. We

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Speaker 1: love the notes. I get the hate notes, my gets

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Speaker 1: the love notes. That's always a case. But we say,

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Speaker 1: have a great weekend. Mixed screen nesdeq one green on

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Speaker 1: the screen down negative. We are produced by y U

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Speaker 1: n ken Folio, our global technical director,