1 00:00:02,920 --> 00:00:06,279 Speaker 1: Global business news twenty four hours a day. If Bloomberg 2 00:00:06,360 --> 00:00:09,440 Speaker 1: dot Com the radio plus mobile LAP and on your radio, 3 00:00:09,720 --> 00:00:13,920 Speaker 1: this is a Bloomberg Business Flash from Bloomberg World Handquarters. 4 00:00:13,960 --> 00:00:17,279 Speaker 1: I'm Charlie Pellet. The Dow is lower, the SMP five 5 00:00:17,360 --> 00:00:20,919 Speaker 1: hundred index and nez Dack both advancing right now, SMP 6 00:00:21,120 --> 00:00:24,960 Speaker 1: up a point, Nestack oup ten, Dow Industrials down thirteen, 7 00:00:25,520 --> 00:00:28,480 Speaker 1: SMP stalling just below the twenty one hundred level. Brent 8 00:00:28,600 --> 00:00:32,040 Speaker 1: crude pairing gains after topping fifty dollars of barrel for 9 00:00:32,040 --> 00:00:34,839 Speaker 1: the first time in six months. Brent crude right now 10 00:00:35,120 --> 00:00:39,000 Speaker 1: forty barrel, down seven tenths of one percent. West Texas 11 00:00:39,000 --> 00:00:42,720 Speaker 1: Intermediate thirty four a dropped there of point four percent, 12 00:00:43,159 --> 00:00:45,640 Speaker 1: Gold down three fifty the ounce to twelve twenty a 13 00:00:45,720 --> 00:00:48,159 Speaker 1: drop of three tenths of one percent, the tenure of 14 00:00:48,200 --> 00:00:51,360 Speaker 1: ten thirty seconds that yield one point eight three percent. 15 00:00:51,840 --> 00:00:57,800 Speaker 1: I'm Charlie Pellet, and that's a Bloomberg Business Flash. It's 16 00:00:57,800 --> 00:00:59,640 Speaker 1: time now for the e t F Report, brought to 17 00:00:59,680 --> 00:01:02,200 Speaker 1: you by Van Eck Vectors et f S. Expect more 18 00:01:02,240 --> 00:01:05,400 Speaker 1: from your muni's target tax exempt income by maturity and 19 00:01:05,480 --> 00:01:09,600 Speaker 1: credit quality. All with low cost ETFs. Visit vaneck dot 20 00:01:09,680 --> 00:01:14,120 Speaker 1: com slash Muni van Eck access the opportunities. That's go 21 00:01:14,280 --> 00:01:17,160 Speaker 1: to Katherine Cowdery for the e t F report. The 22 00:01:17,200 --> 00:01:20,880 Speaker 1: Bank of Japan is taking an innovative approach to quantitative easing. 23 00:01:21,040 --> 00:01:23,360 Speaker 1: It's using e t F s. The Bank of Japan 24 00:01:23,640 --> 00:01:26,440 Speaker 1: now owns fifty nine percent of all the e t 25 00:01:26,600 --> 00:01:29,920 Speaker 1: F sets in Japan. Bloomberg Intelligence analist Eric Altuna says 26 00:01:29,920 --> 00:01:32,200 Speaker 1: that b o J turned to e t s after 27 00:01:32,240 --> 00:01:36,280 Speaker 1: exhausting other more traditional forms of asset purchases. Now what's 28 00:01:36,319 --> 00:01:39,240 Speaker 1: interesting is the last round of buying they did were 29 00:01:39,319 --> 00:01:42,920 Speaker 1: products that they basically custom made with a asset manager 30 00:01:42,959 --> 00:01:45,480 Speaker 1: there um. In fact, SMP was one of the index writers. 31 00:01:45,720 --> 00:01:47,440 Speaker 1: They basically said, look, if we're gonna buy e t s, 32 00:01:47,520 --> 00:01:49,680 Speaker 1: we want to buy e t s the track companies 33 00:01:50,200 --> 00:01:53,480 Speaker 1: that are you know, investing in the human capital, physical 34 00:01:53,520 --> 00:01:56,240 Speaker 1: capital like you know, capital expenditures. According to bel tunis 35 00:01:56,320 --> 00:01:57,880 Speaker 1: that b o J is using its e t F 36 00:01:57,960 --> 00:02:01,480 Speaker 1: purchases to send a strong message to Japanese companies to 37 00:02:01,520 --> 00:02:05,280 Speaker 1: spend their money on people and capital instead of financial engineering. 38 00:02:05,640 --> 00:02:08,120 Speaker 1: It's trying to eliminate some of the worst side effects 39 00:02:08,120 --> 00:02:12,959 Speaker 1: of que including corporate cash hoarding, wage stagnation, and income inequality. 40 00:02:13,200 --> 00:02:18,400 Speaker 1: That's your Bloomberg ETFF report. I'm Catherine Cowdery. You're listening 41 00:02:18,440 --> 00:02:21,400 Speaker 1: to Taking Stock with Kathleen Hayes and Pin Fox on 42 00:02:21,440 --> 00:02:25,800 Speaker 1: bloom Bird Radio. So what do you do with your money? 43 00:02:25,840 --> 00:02:29,840 Speaker 1: As May often comes to a close. We've heard people 44 00:02:29,840 --> 00:02:32,280 Speaker 1: tell us this week that two stocks are pretty much 45 00:02:32,360 --> 00:02:35,000 Speaker 1: fully valued. We know bond yields are low and prices 46 00:02:35,040 --> 00:02:37,600 Speaker 1: are pretty high. We've heard some people say, hey, maybe 47 00:02:37,639 --> 00:02:39,880 Speaker 1: real estate is not a bad place to be. We're 48 00:02:39,880 --> 00:02:43,560 Speaker 1: gonna put this question now to Heather loomas tie market 49 00:02:43,639 --> 00:02:48,880 Speaker 1: strategists for Black Rocks Family Office, foundations and endowments, to 50 00:02:49,000 --> 00:02:51,720 Speaker 1: get our sense of where things are and where they're heading. 51 00:02:51,840 --> 00:02:56,799 Speaker 1: Welcome back, Good to CEO. So of where shall we start? 52 00:02:57,639 --> 00:03:03,079 Speaker 1: Bottom line? You are dealing with very interesting universe of investors, right, 53 00:03:03,120 --> 00:03:07,240 Speaker 1: so you're getting a window into hopes, fears, what where 54 00:03:07,240 --> 00:03:09,560 Speaker 1: people think it might be good to go. Where are 55 00:03:09,600 --> 00:03:13,520 Speaker 1: you seeing the most interest now, Heather? Right, the most 56 00:03:13,520 --> 00:03:17,600 Speaker 1: interests we're seeing right now is in private market opportunities. 57 00:03:18,080 --> 00:03:20,640 Speaker 1: When you think about the public market landscape, and I 58 00:03:20,680 --> 00:03:23,840 Speaker 1: know black Rock recently came out and said for a 59 00:03:23,960 --> 00:03:28,120 Speaker 1: sixty forty stock bond blend, you could expect something close 60 00:03:28,160 --> 00:03:30,760 Speaker 1: to three percent for the next three to five years. 61 00:03:31,600 --> 00:03:34,399 Speaker 1: That number is shocking to a lot of family offices, 62 00:03:34,560 --> 00:03:38,520 Speaker 1: especially endowments and foundations, which actually have outflows which they 63 00:03:38,560 --> 00:03:41,720 Speaker 1: need to take care of. Family offices have been earning 64 00:03:42,200 --> 00:03:44,840 Speaker 1: a good amount of money and how they accumulated it 65 00:03:44,840 --> 00:03:47,160 Speaker 1: for a while, and so they have an internal rate 66 00:03:47,160 --> 00:03:52,120 Speaker 1: of return expectation. So into that environment, people are looking 67 00:03:52,160 --> 00:03:54,920 Speaker 1: to the asset classes which haven't been bit up by 68 00:03:54,960 --> 00:03:59,440 Speaker 1: central banks by the massive inflows which we're seeing across 69 00:03:59,520 --> 00:04:04,760 Speaker 1: the globe. Is quantitative easing, and monetary policy continues into 70 00:04:04,800 --> 00:04:08,320 Speaker 1: places where they can extract value, extracting a liquidity premium, 71 00:04:08,520 --> 00:04:12,040 Speaker 1: and everyone's sitting on cash. Not just to be clear here, 72 00:04:12,080 --> 00:04:14,560 Speaker 1: if you're going to earn an estimated three percent return 73 00:04:14,640 --> 00:04:17,440 Speaker 1: on an annual basis, aren't you just earning the return 74 00:04:17,440 --> 00:04:19,320 Speaker 1: in order to pay the fees to have someone get 75 00:04:19,320 --> 00:04:22,280 Speaker 1: you that three percent in the first place? That is 76 00:04:22,320 --> 00:04:26,240 Speaker 1: going to become so essentially important because if you think 77 00:04:26,240 --> 00:04:30,720 Speaker 1: of that three percent is before taxes, before fees. If 78 00:04:30,760 --> 00:04:33,479 Speaker 1: you are paying something like fifty basis points to have 79 00:04:33,560 --> 00:04:37,240 Speaker 1: your assets managed in a six to seven percent return environment. 80 00:04:37,520 --> 00:04:41,240 Speaker 1: When that becomes three, that number is a lot more important. 81 00:04:41,360 --> 00:04:46,520 Speaker 1: So absolutely to your point. When we're talking um with 82 00:04:46,560 --> 00:04:48,520 Speaker 1: our kind of you know, billion or even our billionaire 83 00:04:48,560 --> 00:04:53,440 Speaker 1: family offices, they're saying what exactly are we paying. They're 84 00:04:53,560 --> 00:04:56,240 Speaker 1: looking at all of their active managers on a line 85 00:04:56,240 --> 00:04:59,520 Speaker 1: by line basis and saying, we are only going to 86 00:04:59,560 --> 00:05:02,480 Speaker 1: be paying for active management when it is giving us 87 00:05:02,520 --> 00:05:06,480 Speaker 1: outside returns absent that we must control the bottom line. 88 00:05:06,839 --> 00:05:09,599 Speaker 1: It's kind of like, you know, into tough times for 89 00:05:09,680 --> 00:05:11,960 Speaker 1: equity markets. You know, when you don't beat on the 90 00:05:12,000 --> 00:05:14,240 Speaker 1: top line, you know, how do you make your earnings growth? 91 00:05:14,400 --> 00:05:17,599 Speaker 1: You cut costs. So let's look at equities because the 92 00:05:17,640 --> 00:05:21,240 Speaker 1: earning season was not so hot, and more and more 93 00:05:21,279 --> 00:05:24,039 Speaker 1: people have said, well, you can probably make some money 94 00:05:24,040 --> 00:05:27,440 Speaker 1: in stocks. More people are saying mid to high single digits. 95 00:05:27,480 --> 00:05:29,680 Speaker 1: If you're lucky, then it's like we used to have 96 00:05:29,720 --> 00:05:32,240 Speaker 1: a couple of years ago double digit gains. But you 97 00:05:32,320 --> 00:05:35,120 Speaker 1: have to be more selective in terms of the companies 98 00:05:35,200 --> 00:05:37,640 Speaker 1: you invest in as opposed tos just behind the market. 99 00:05:38,040 --> 00:05:39,920 Speaker 1: What are you doing, what are you advising your clients 100 00:05:39,960 --> 00:05:42,520 Speaker 1: to do yes, Um, and and that was you. You're 101 00:05:42,640 --> 00:05:44,680 Speaker 1: you hit the nail on the head. You need to 102 00:05:44,720 --> 00:05:49,000 Speaker 1: be thinking about the actual corporations which you are owning. 103 00:05:49,480 --> 00:05:54,560 Speaker 1: We UM are seeing some value in the dividend grower space, 104 00:05:54,560 --> 00:05:58,960 Speaker 1: so so paying dividends, growing dividends, clean balance sheets, with 105 00:05:59,080 --> 00:06:02,560 Speaker 1: the ability to grow those dividends, so kind of an 106 00:06:02,720 --> 00:06:06,800 Speaker 1: organic level of dividend growth embedded in some of those companies. 107 00:06:07,120 --> 00:06:09,440 Speaker 1: You You're going to need to be very selective going 108 00:06:09,440 --> 00:06:12,160 Speaker 1: into this time period because you know, as we've seen now, 109 00:06:12,360 --> 00:06:16,840 Speaker 1: equit price to earning multiples with flat returns for the year. 110 00:06:17,600 --> 00:06:20,480 Speaker 1: This is this is a harder game going forward. In 111 00:06:20,520 --> 00:06:25,200 Speaker 1: your conversation with the representatives of these family offices and foundations, 112 00:06:25,680 --> 00:06:28,120 Speaker 1: do you get the impression that they're excited about investing 113 00:06:28,160 --> 00:06:30,240 Speaker 1: their money? Were they just looking for the return? There 114 00:06:30,320 --> 00:06:33,159 Speaker 1: used to be a day in which people were excited 115 00:06:33,600 --> 00:06:36,680 Speaker 1: about specific companies. Oh I've got to buy Apple because 116 00:06:36,680 --> 00:06:39,120 Speaker 1: I'm so thrilled. Is that going away? And they just 117 00:06:39,120 --> 00:06:43,520 Speaker 1: want to look at the number? Now? UM, I'm laughing 118 00:06:43,560 --> 00:06:46,000 Speaker 1: a little bit because you're right, some of that excitement 119 00:06:46,080 --> 00:06:50,640 Speaker 1: has been replaced with um, how can you do this 120 00:06:50,680 --> 00:06:52,760 Speaker 1: for less, and I just want to know if I'm 121 00:06:52,839 --> 00:06:55,920 Speaker 1: beating the averages let's say exactly when they hear okay, 122 00:06:55,960 --> 00:06:58,520 Speaker 1: so we're going to earn less with more volatility. It's 123 00:06:58,520 --> 00:07:02,040 Speaker 1: almost like, you know, this is the environment and we're 124 00:07:02,080 --> 00:07:03,760 Speaker 1: all going to be working with it. But it's it's 125 00:07:03,839 --> 00:07:07,599 Speaker 1: it's not a great one to be in. Certain things 126 00:07:07,720 --> 00:07:11,360 Speaker 1: have excited family offices over the years. Those are private 127 00:07:11,680 --> 00:07:16,560 Speaker 1: direct deals. Those still excite family offices. That in many 128 00:07:16,600 --> 00:07:22,320 Speaker 1: cases is where principles have made their wealth over time, 129 00:07:22,640 --> 00:07:26,680 Speaker 1: and it's still very interesting place to do business. Non 130 00:07:26,720 --> 00:07:30,240 Speaker 1: syndicated parts of the market. UM where you're looking at 131 00:07:30,320 --> 00:07:33,560 Speaker 1: unique deals which tends not to be correlated to public 132 00:07:33,560 --> 00:07:37,440 Speaker 1: equity and fixed income markets. That's still exciting. There are 133 00:07:37,440 --> 00:07:42,200 Speaker 1: places to which which um tied to people's passions, so 134 00:07:42,440 --> 00:07:47,880 Speaker 1: the impact space, renewable energy, things like that, where there 135 00:07:47,960 --> 00:07:50,600 Speaker 1: is an intersection for what they want to see in 136 00:07:50,640 --> 00:07:53,360 Speaker 1: the world going forward, and they can also make an 137 00:07:53,360 --> 00:07:56,480 Speaker 1: investment return in that call at seven to eight nine 138 00:07:56,480 --> 00:08:00,600 Speaker 1: percent range. Those are things which get people excited in 139 00:08:00,680 --> 00:08:05,320 Speaker 1: today's market. Uh, fix income. A lot of time that 140 00:08:05,360 --> 00:08:08,000 Speaker 1: space didn't you and you're still in that space. Just 141 00:08:08,080 --> 00:08:11,239 Speaker 1: you're just look at all the markets. More broadly, Uh, 142 00:08:11,520 --> 00:08:13,920 Speaker 1: we have a story today on the Bloomberg about what 143 00:08:14,000 --> 00:08:17,840 Speaker 1: a two billion dollar corporate bond bender. I mean, corporations 144 00:08:17,840 --> 00:08:21,240 Speaker 1: are issuing debt like crazy. Do you see value in 145 00:08:21,240 --> 00:08:24,960 Speaker 1: that space? And if so, we're um. We have gone 146 00:08:25,200 --> 00:08:29,600 Speaker 1: neutral on corporate credit um and not to differentiate a 147 00:08:29,680 --> 00:08:32,360 Speaker 1: view where we were more positive going into the beginning 148 00:08:32,400 --> 00:08:35,160 Speaker 1: of the year. We think that you're not going to 149 00:08:35,280 --> 00:08:39,959 Speaker 1: experience price return from here for the for the foreseeable 150 00:08:40,040 --> 00:08:42,719 Speaker 1: time period until we change that view, and you're going 151 00:08:42,760 --> 00:08:45,720 Speaker 1: to be dependent to bonding income. Uh. There are also 152 00:08:46,040 --> 00:08:51,400 Speaker 1: risks corporate balance sheet risk out there, leverage, business model risks, 153 00:08:51,640 --> 00:08:56,160 Speaker 1: and so from that standpoint, UM, we this would not 154 00:08:56,240 --> 00:08:59,280 Speaker 1: be our top recommendations to clients to think about the 155 00:08:59,320 --> 00:09:02,040 Speaker 1: corporate bonds space today. We would urge them to think 156 00:09:02,080 --> 00:09:05,040 Speaker 1: about different places to find that yield, to find that return, 157 00:09:05,559 --> 00:09:08,440 Speaker 1: and those are what those kinds of private, non syndicated 158 00:09:08,480 --> 00:09:10,920 Speaker 1: deals that you're talking about something you know, but for 159 00:09:10,920 --> 00:09:13,440 Speaker 1: for family offices, we could even just take it even 160 00:09:13,520 --> 00:09:16,200 Speaker 1: even more basic. Communis are still okay. You know, the 161 00:09:16,200 --> 00:09:20,320 Speaker 1: immunity treasury ratios look good. We're seeing good demand in 162 00:09:20,360 --> 00:09:24,679 Speaker 1: this space. Picking credits, just like the question on equities 163 00:09:24,760 --> 00:09:27,880 Speaker 1: is still critical even in a high quality space. So 164 00:09:27,920 --> 00:09:30,880 Speaker 1: we like munis. But then yes, as we say, alternative 165 00:09:30,880 --> 00:09:34,360 Speaker 1: sources where you could pick up an income stream which 166 00:09:34,400 --> 00:09:38,400 Speaker 1: isn't correlated, which has some tax benefits. That in the 167 00:09:38,440 --> 00:09:40,520 Speaker 1: private space, if you're willing to give up liquidity, can 168 00:09:40,559 --> 00:09:44,720 Speaker 1: be very interesting in terms of so you're so, so 169 00:09:44,800 --> 00:09:48,360 Speaker 1: get credit your neutral there? You do like munies. Does 170 00:09:48,400 --> 00:09:50,600 Speaker 1: anybody have any reason invest in treasury these days besides 171 00:09:50,640 --> 00:09:52,520 Speaker 1: foreign central banks and people just want to grab some 172 00:09:52,640 --> 00:09:54,800 Speaker 1: yield in a world of negative bond yields. I mean, 173 00:09:54,840 --> 00:09:56,480 Speaker 1: we see it at the very short end where people 174 00:09:56,480 --> 00:09:59,640 Speaker 1: are just holding them as a cash proxy. Um, they're saying, 175 00:09:59,640 --> 00:10:01,480 Speaker 1: you know, we want to keep some dry powder in 176 00:10:01,480 --> 00:10:04,640 Speaker 1: case we see some market volatility. Everyone is still waiting 177 00:10:04,920 --> 00:10:06,960 Speaker 1: for the next you know, two thousand and eight, two 178 00:10:06,960 --> 00:10:09,400 Speaker 1: thousand nine to come, and that's still very real in 179 00:10:09,440 --> 00:10:11,800 Speaker 1: the lives. So we see that there. But at the margin, 180 00:10:11,840 --> 00:10:14,080 Speaker 1: what we've been saying, for people who are natural holders 181 00:10:14,080 --> 00:10:16,720 Speaker 1: of treasuries and that's a position for them, think about 182 00:10:16,720 --> 00:10:20,200 Speaker 1: swapping that into tips. You know, we're deflation is no 183 00:10:20,320 --> 00:10:23,360 Speaker 1: longer something that we're worried about. We're not ready to 184 00:10:23,400 --> 00:10:26,160 Speaker 1: say that we're in an inflationary environment, but it's certainly 185 00:10:26,160 --> 00:10:29,080 Speaker 1: not dead. Thanks very much for coming in and spending 186 00:10:29,120 --> 00:10:32,480 Speaker 1: time with us. Interesting. Heather Loomas Tie is the managing 187 00:10:32,480 --> 00:10:37,280 Speaker 1: director and market strategist for Family Office, Foundations and Endowments 188 00:10:37,640 --> 00:10:40,040 Speaker 1: at black Rock. Thanks very much for coming in. Thank you. 189 00:10:40,800 --> 00:10:43,199 Speaker 1: This is taking Stock on Bloomberg. I'm PIM Fox my 190 00:10:43,280 --> 00:10:46,480 Speaker 1: co host Kathleen Hayes. Kathy, We're gonna take everyone through 191 00:10:46,559 --> 00:10:48,920 Speaker 1: to the clothes and uh, I think that we're going 192 00:10:49,000 --> 00:10:51,040 Speaker 1: to take a look at maybe Dollar Tree stores. You 193 00:10:51,040 --> 00:10:53,800 Speaker 1: know that they are up more than thirteen percent today 194 00:10:53,840 --> 00:10:56,240 Speaker 1: after that earnings report. I want to take a look 195 00:10:56,280 --> 00:10:59,719 Speaker 1: at Costcoe. PIM, that's another one that's leaving higher, Yes, 196 00:11:00,000 --> 00:11:02,960 Speaker 1: by more than three and a half percent. We're gonna 197 00:11:02,960 --> 00:11:05,959 Speaker 1: take you through to the clothes right here on Bloomberg Radio.