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Speaker 1: Global business news twenty four hours a day. If Bloomberg

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Speaker 1: dot com, the Radio plus mobile app and on your radio,

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Speaker 1: this is a Bloomberg Business Flash and I'm Karen Moscown.

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Speaker 1: This updates brought to you by Interactive Brokers and CME Group.

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Speaker 1: If you're looking for global futures contracts with low trading costs,

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Speaker 1: more at Interactive Brokers dot com slash c m E

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Speaker 1: Group futures are higher this morning as investors way a

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Speaker 1: certain hiring that came with a decline in wages that

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Speaker 1: clouds impressions of the economy strength. Who checked the markets

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Speaker 1: every fifteen minutes throughout the trading day on Bloomberg snp

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Speaker 1: EMNI futures up three points, DOWIEMNY futures up twenty eight

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Speaker 1: and as doc eumny futures up eight Dax in Germany's

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Speaker 1: up six tenths per cent. Tend your treasury downy thirty seconds.

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Speaker 1: The yield one point eight six percent yield on the

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Speaker 1: two year point eight six percent non max screw oil

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Speaker 1: up one per cent or thirty four cents at thirty

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Speaker 1: four ninety one A barrel comes called up six tenths

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Speaker 1: percent or seven dollars seventy cents at twelve sixty six

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Speaker 1: announced the zero and all our oh nine six seven,

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Speaker 1: the N one thirteen point eight one, and that's a

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Speaker 1: Bloomberg business flash. Tom and Mike Karen thanks so much.

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Speaker 1: Risk costs through us with Black Rocks Thrill, they have

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Speaker 1: them with us, swarning, Russ, Greenspan Data, Robert Gordon, Alan Krueger,

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Speaker 1: Bill Growth, on and on it goes great conversations. The

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Speaker 1: one right now is the most important one for our listeners.

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Speaker 1: Everybody's in a single digit world and their stock market portfolios.

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Speaker 1: It's sort of the end of March. You've paid for

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Speaker 1: the holidays, you do in your taxes, and you're going,

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Speaker 1: oh mg, what do I do? Tell us Russ what

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Speaker 1: to do in a single digit world? And what to

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Speaker 1: do after a four year, five year bull market run?

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Speaker 1: What's the to do list to be sensible about equities?

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Speaker 1: You know? I think Tom, that that we're sensible is

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Speaker 1: probably the key thing. I do believe you can make

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Speaker 1: money money in stocks this year, but how much money

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Speaker 1: you're going to make is likely to be a lot

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Speaker 1: lower than the spin over the last three or four years,

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Speaker 1: we've had these consecutive years of double digit returns. So

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Speaker 1: thinking about income in the portfolio, you know, looking at dividends,

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Speaker 1: things like preferred up Again, none of these are sexy,

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Speaker 1: None of these sets the heart racing. But if you're

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Speaker 1: in a world of slow nominal growth, if you're a

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Speaker 1: world in which the policy rate is zero or in

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Speaker 1: many cases negative, as it is in Japan and Europe,

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Speaker 1: that's an environment where it's hard to get double digit

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Speaker 1: returns without taking a lot of risk. So I think

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Speaker 1: it's more about that mid single digit in the equity portfolio.

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Speaker 1: It means diversification, it means look in places you might

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Speaker 1: not otherwise. Look where are we in a cycle? Then?

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Speaker 1: Is this something that's going to persist to get We

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Speaker 1: see when we look at the earnings forecasts that there's

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Speaker 1: not a lot of optimists about there there There isn't

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Speaker 1: And I think that's the heart of the problem. So

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Speaker 1: let's take you know, let's take the tail rists off

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Speaker 1: the table. Let's say it's China doesn't collapse. Let's say

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Speaker 1: Well stabilizes. I think the more pedestrian problem if you're

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Speaker 1: an investor in the US equity market is over the

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Speaker 1: last three or four months, you've seen earnings estimates for

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Speaker 1: two thousand sixteen go from nine and a half percent

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Speaker 1: to seven and a half percent down to two and

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Speaker 1: a half percent. And the second problem is, Okay, in

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Speaker 1: the past, even if earnings weren't growing, you had very

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Speaker 1: a combinative monetary policy and that pushed multiples higher. That

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Speaker 1: isn't likely to happen. So if you're stuck with earnings growth,

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Speaker 1: and earnings growth is more about two or three percent,

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Speaker 1: and you put a two percent dividend yield on top

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Speaker 1: of that, that gives you some idea of the type

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Speaker 1: of returns you could be looking at under a good

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Speaker 1: scenario for US equities. You know, Ross I, I look

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Speaker 1: at equities and I want to go back to the

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Speaker 1: single digit world. And everybody, whether there's sophisticates or not,

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Speaker 1: everybody understands the actual real assumptions. Everybody's got to save more,

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Speaker 1: everybody's got to be careful. What is the number one

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Speaker 1: way you see to quote unquote diversify to not get

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Speaker 1: hammered and the next crisis. Don't tell me it's sixty

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Speaker 1: And if you tell me, it's part of a carefully

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Speaker 1: balanced portfolio. I'm going to take Larry Fink out and

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Speaker 1: shoot your general counsel as well. What's the reality that

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Speaker 1: we do if we're behind? Okay, So I'll give you

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Speaker 1: one tangible example about, you know, giving to two decimal

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Speaker 1: points the allocation. One thing that is working in this environment.

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Speaker 1: And again it's not of your portfolio. It's not the portfolio.

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Speaker 1: It's a modest number. Is actually has been gold. And

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Speaker 1: you ask why do I own gold? I know this

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Speaker 1: is topic that you know in sites very very passionate responses.

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Speaker 1: The simple answer is that gold is reasserting itself as

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Speaker 1: a hedge. Five years ago it was a reflation asset.

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Speaker 1: Today you're seeing it more trade as a hedge against

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Speaker 1: risky assets. And what tends to happen is when you

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Speaker 1: do get periods where volatility is spiking, and I think

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Speaker 1: we'll have more of those this year. Gold is a

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Speaker 1: reasonable job of moving in the opposit the direction. So

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Speaker 1: what do you do to help help, not totally help

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Speaker 1: insulat the portfolio. You think about a little bit of

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Speaker 1: that gold exposure is part of your diversification. I mean,

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Speaker 1: shift gears just a little bit in the two minutes

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Speaker 1: we have left and bring it back to a question

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Speaker 1: that we put to Robert Gordon earlier and Alan Cruder.

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Speaker 1: When you sit there thinking about what's going to happen

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Speaker 1: over the next nine months or so, how much difference

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Speaker 1: does the president make to the economy and will you

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Speaker 1: adjust your investment portfolio depending on what happens going forward

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Speaker 1: with the nominating process. You know, I think it's a

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Speaker 1: great question. It's funny when I've been outside of the

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Speaker 1: US a lot the last three or four months, this

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Speaker 1: is arguably the biggest question. People are very They're trying

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Speaker 1: to understand what is a very unusual U S election.

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Speaker 1: So it's a couple of things. The first of which

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Speaker 1: is that, at least historically, the party that's controlled the

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Speaker 1: White House, the composition of government has had a lot

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Speaker 1: less effect on any markets than people suppose. So I

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Speaker 1: don't think you run out and you change your portfolio,

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Speaker 1: at least not at a high level based on the outcome. Now,

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Speaker 1: clearly you've got candidates running on very different platforms. I

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Speaker 1: do think they're parts of the market where how the

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Speaker 1: election breaks will influence certain types of stocks. So thinking

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Speaker 1: specifically about healthcare companies, energy companies, utility companies, maybe banks,

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Speaker 1: these are all parts of the market that I can

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Speaker 1: see being affected depending upon the outcome in November. Russ,

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Speaker 1: thank you so much. Brilliant as always, rustcosters this job

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Speaker 1: to day. It's nice Souch. You know, we do the

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Speaker 1: economics in the view from sixty feet and then we

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Speaker 1: get you know, Bill growth sort of shifts it towards

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Speaker 1: his fixed income world. And Mike, it's great to have

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Speaker 1: Ross Costers come in here and get us back to

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Speaker 1: you know what actually what actually means for the rest

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Speaker 1: of us. Yes, uh, to come down to the level

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Speaker 1: instead of he's a black rock. He has a courage

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Speaker 1: to do the big fancy institutional stuff and also talk

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Speaker 1: about what may mean for we mere morning. So far,

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Speaker 1: it's been a great week. Scott Maddo coming up next

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Speaker 1: from PIMCO, and you know he in his tweet he says,

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Speaker 1: listen to Scott Mather on Bloomberg Surveillance at six thirty am.

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Speaker 1: He's thinking, Pacific time. Isn't what you get when you

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Speaker 1: get people from out there, and well yeah, and it's

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Speaker 1: it's Francine la quad just wants to go back to London,

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Speaker 1: so she gets up at a decent hour. Yes, we said,

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Speaker 1: good morning, to all of you on the West Coast

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Speaker 1: listening through the day, particularly Bloomberg nine six the Bay Area.

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Speaker 1: We really appreciate you get up early and listen to

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