1
00:00:01,080 --> 00:00:05,760
Speaker 1: You're listening to taking Stock and Pim Fox on Bloomberg Radio.

2
00:00:06,480 --> 00:00:10,520
Speaker 1: The muddiness of the data, Well, that's according to Chuck Lieberman,

3
00:00:10,600 --> 00:00:15,280
Speaker 1: chief investment officer managing Partner Advisors Capital Management with one

4
00:00:15,320 --> 00:00:19,000
Speaker 1: point three billion dollars of assets under management, joining us

5
00:00:19,000 --> 00:00:23,520
Speaker 1: from Ridgewood, New Jersey. Chuck Lieberman, you describe the muddiness

6
00:00:23,560 --> 00:00:26,960
Speaker 1: of data making it difficult for some market participants to

7
00:00:27,160 --> 00:00:34,600
Speaker 1: anticipate monetary policy. Are you one of those people? Uh? No, Uh.

8
00:00:34,760 --> 00:00:40,080
Speaker 1: We see the data as basically fundamentally solid. Uh. There

9
00:00:40,120 --> 00:00:44,640
Speaker 1: are some numbers that are literally impossible to believe. For example,

10
00:00:44,920 --> 00:00:49,560
Speaker 1: we've seen productivity go negative. That suggests that the business

11
00:00:49,640 --> 00:00:53,720
Speaker 1: people are becoming stupider each year. I'm not inclined to

12
00:00:53,760 --> 00:00:56,560
Speaker 1: believe that, certainly not take that at face value. And

13
00:00:56,560 --> 00:01:00,280
Speaker 1: that's also related to GDP. GDP has been really week

14
00:01:00,320 --> 00:01:04,280
Speaker 1: the last three quarters in a row. That's inconsistent with

15
00:01:04,360 --> 00:01:08,920
Speaker 1: the employment data, which shows much more growth. UM. I

16
00:01:09,000 --> 00:01:12,520
Speaker 1: still believe that it is relatively easy to count noses,

17
00:01:12,920 --> 00:01:14,800
Speaker 1: and so I have a lot more confidence in the

18
00:01:14,800 --> 00:01:18,160
Speaker 1: employment data. Uh. GDP, on the other hand, is much

19
00:01:18,200 --> 00:01:22,440
Speaker 1: more difficult to evaluate, and so I suspect we're understating GDP,

20
00:01:22,680 --> 00:01:25,920
Speaker 1: probably by a considerable margin. So then you must be thinking,

21
00:01:26,040 --> 00:01:29,440
Speaker 1: Chuck Lieberman, that business investment spending has been much stronger

22
00:01:29,480 --> 00:01:32,440
Speaker 1: than the very negative readings we've had the last few quarters.

23
00:01:32,480 --> 00:01:34,960
Speaker 1: And some people say there's too much uncertainty. Businesses don't

24
00:01:35,000 --> 00:01:37,479
Speaker 1: want to commit to long term projects and so they're

25
00:01:37,520 --> 00:01:40,080
Speaker 1: just playing it close to the vest. They're buying backstocks,

26
00:01:40,080 --> 00:01:43,279
Speaker 1: taking advantage of cheap money and more. Well, I prefer

27
00:01:43,360 --> 00:01:46,520
Speaker 1: to dig into the data, Kathleen, as you know, and

28
00:01:46,600 --> 00:01:49,040
Speaker 1: when you dig, what you see is that all of

29
00:01:49,120 --> 00:01:52,840
Speaker 1: the top line weakness is really coming from the energy

30
00:01:52,880 --> 00:01:56,120
Speaker 1: and the mining segment, which we know or a week, Uh,

31
00:01:56,160 --> 00:02:00,640
Speaker 1: those sectors have retired. Retail sales also started break in, Chuck,

32
00:02:00,680 --> 00:02:04,960
Speaker 1: But I mean, you know, aren't retail sales also challenged? No, retails.

33
00:02:05,320 --> 00:02:08,760
Speaker 1: Retail sales at least, consumer spending is probably the single

34
00:02:08,880 --> 00:02:13,880
Speaker 1: strongest part of the economy. Uh. Fat business is doing well. Uh.

35
00:02:13,960 --> 00:02:17,520
Speaker 1: The mix is changing. We're seeing dramatic gains by the

36
00:02:17,560 --> 00:02:21,639
Speaker 1: internet based retailers, and it's just tough for the retailers

37
00:02:21,680 --> 00:02:25,120
Speaker 1: with stores uh to really do well. Uh, And so

38
00:02:25,160 --> 00:02:27,160
Speaker 1: some of them are going to have to retrench there's

39
00:02:27,160 --> 00:02:29,800
Speaker 1: going to be a complete change in the way in

40
00:02:29,840 --> 00:02:33,440
Speaker 1: which goods are distributed in this country. UH companies like

41
00:02:33,600 --> 00:02:37,840
Speaker 1: Uber are getting involved in distributing UH products for FOR companies.

42
00:02:38,200 --> 00:02:41,000
Speaker 1: So you have to look at what is what what

43
00:02:41,160 --> 00:02:42,760
Speaker 1: is really going on. You have to add up the

44
00:02:42,880 --> 00:02:48,080
Speaker 1: numbers consumer spending, solid, capital spending very weak for drilling

45
00:02:48,120 --> 00:02:50,480
Speaker 1: for oil and by the way, oil drilling rigs have

46
00:02:50,600 --> 00:02:53,000
Speaker 1: increased for something like nine weeks in a row, so

47
00:02:53,080 --> 00:02:58,480
Speaker 1: we've probably bottomed there. But everything else, excluding UH energy

48
00:02:58,760 --> 00:03:02,720
Speaker 1: and excluding mining, that capital investment doesn't look bad at all. Okay,

49
00:03:02,760 --> 00:03:05,760
Speaker 1: so we did have the Institute for Supply Management's manufacturing

50
00:03:05,800 --> 00:03:10,080
Speaker 1: and their non manufacturing or services indexes decelerating a good

51
00:03:10,120 --> 00:03:12,280
Speaker 1: bid and of course that's more of a survey based number,

52
00:03:12,320 --> 00:03:14,600
Speaker 1: maybe not quite the hard number you'd want to hang

53
00:03:14,639 --> 00:03:18,120
Speaker 1: your your FED hat on, but more fundamentally, as Leo Brainerd,

54
00:03:18,160 --> 00:03:21,280
Speaker 1: FED governor pointed out dan her speech in Chicago, and

55
00:03:21,560 --> 00:03:23,120
Speaker 1: she doesn't see an inflation threat and a lot of

56
00:03:23,120 --> 00:03:25,320
Speaker 1: people don't, Chuck, is it possible that it's fine for

57
00:03:25,360 --> 00:03:27,239
Speaker 1: the Fed to take it long, take us time to

58
00:03:27,320 --> 00:03:30,079
Speaker 1: high rates and the stock market can do fine because

59
00:03:30,080 --> 00:03:33,280
Speaker 1: you've you've got all the positive fundamentals, but if there's

60
00:03:33,320 --> 00:03:35,040
Speaker 1: not a lot of inflation welling up, why should the

61
00:03:35,040 --> 00:03:37,920
Speaker 1: FED be in a hurry to shift. Well, that's precisely

62
00:03:38,040 --> 00:03:41,600
Speaker 1: lele Brander's position, and she would like to take longer

63
00:03:41,760 --> 00:03:43,960
Speaker 1: like the FED to keep rates down for a while.

64
00:03:44,480 --> 00:03:49,800
Speaker 1: But as you heard from both stand Fisher and from

65
00:03:49,920 --> 00:03:56,200
Speaker 1: Janet Yelling, and from uh Lockhart and from uh rosen Grin,

66
00:03:56,520 --> 00:03:59,760
Speaker 1: and there a couple more. Besides, all of these feder

67
00:03:59,800 --> 00:04:02,240
Speaker 1: fish us have talked about the economy doing a bit better.

68
00:04:03,000 --> 00:04:06,160
Speaker 1: And my sense of it is if they're trying to

69
00:04:06,160 --> 00:04:08,640
Speaker 1: send the message that the FED is now a lot

70
00:04:08,640 --> 00:04:11,840
Speaker 1: closer to hiking rates, that's a message that the market

71
00:04:11,880 --> 00:04:14,640
Speaker 1: does not want to hear. When Eric rosen Grin spoke

72
00:04:14,720 --> 00:04:17,880
Speaker 1: on Friday and suggested that we were closer to a

73
00:04:18,000 --> 00:04:21,760
Speaker 1: rate hike, the market sold off pretty sharply. Today, Lyle

74
00:04:21,839 --> 00:04:25,039
Speaker 1: Branner suggested that she would like the FED to give

75
00:04:25,200 --> 00:04:28,320
Speaker 1: on hold, and in fact the market is up to fifty.

76
00:04:28,360 --> 00:04:31,279
Speaker 1: So I think we're getting that message where we're getting

77
00:04:31,320 --> 00:04:34,640
Speaker 1: mixed messages, uh, and the market is is telling you

78
00:04:34,680 --> 00:04:37,880
Speaker 1: what the market would prefer. The market would certainly prefer

79
00:04:38,080 --> 00:04:41,520
Speaker 1: for the FED to leave rates unchanged. I don't think

80
00:04:41,520 --> 00:04:45,400
Speaker 1: that's terribly realistic. Uh. And when I speak to clients

81
00:04:45,440 --> 00:04:48,880
Speaker 1: and to investment professionals, you know, probably out of a

82
00:04:48,960 --> 00:04:51,719
Speaker 1: hundred think that rates ultimately are gonna rise. And the

83
00:04:51,760 --> 00:04:55,000
Speaker 1: real issue is timing and how quickly and that sort

84
00:04:55,000 --> 00:04:58,800
Speaker 1: of stuff, not whether they are going to rise. Chuck Lieberman,

85
00:04:58,920 --> 00:05:01,760
Speaker 1: when you speak to alliance and potential clients that they

86
00:05:01,800 --> 00:05:05,919
Speaker 1: ask you for one really amazing investment idea, what do

87
00:05:06,000 --> 00:05:10,400
Speaker 1: you tell them? Well, one sector we like are the financials,

88
00:05:10,440 --> 00:05:14,000
Speaker 1: the banks in particular, because they will benefit when rates

89
00:05:14,040 --> 00:05:18,000
Speaker 1: go up. Uh. Their profit margins have been compressed. Uh.

90
00:05:18,160 --> 00:05:22,239
Speaker 1: City Group is trading at a severe discount to book value,

91
00:05:22,880 --> 00:05:26,160
Speaker 1: but its profitability will improve very sharply if rates increase.

92
00:05:26,960 --> 00:05:29,400
Speaker 1: We think that that's a great example of a company

93
00:05:29,440 --> 00:05:34,120
Speaker 1: that will do well. One more in another sector, in

94
00:05:34,240 --> 00:05:41,000
Speaker 1: another sector. Um, Blackstone Mortgage is another one we like.

95
00:05:41,440 --> 00:05:46,960
Speaker 1: So here's a company that makes commercial mortgages, not residential mortgages. Uh.

96
00:05:47,160 --> 00:05:51,160
Speaker 1: They lend to businesses that provide real estate as collateral

97
00:05:51,400 --> 00:05:55,440
Speaker 1: and there are also positioned to benefit from rising interest rates. Alright,

98
00:05:55,520 --> 00:05:57,560
Speaker 1: Chuck le Roman, thank you so very much, Chief investment

99
00:05:57,560 --> 00:06:00,360
Speaker 1: officer at Advisor's Capital Management. He started his career the

100
00:06:00,360 --> 00:06:02,320
Speaker 1: New York Fed. Is a FED economist, so we definitely

101
00:06:02,360 --> 00:06:05,320
Speaker 1: want to listen to whatever Chuck says about the FED

102
00:06:05,480 --> 00:06:08,680
Speaker 1: and where it's heading next. I'm Kathleen Hayes along with

103
00:06:08,720 --> 00:06:10,520
Speaker 1: Pim Fox, and this is Bloomberg