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

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

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

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Speaker 1: This updates brought to you by American Arbitration Association. Business

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Speaker 1: disputes are inevitable, resolve faster with the American Arbitration Association,

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Speaker 1: five years. Learn more at a dr dot org. Global

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Speaker 1: equities rising to a two week high and an increasing

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Speaker 1: investor optimism that the world economy can withstand higher US

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Speaker 1: interest rates, oils advancing, gold falling amid a retreat in

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Speaker 1: the dollar. Whicheck the markets every fifteen minutes throughout the

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Speaker 1: trading day on Bloomberg SNP EMNI futures of nine points

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Speaker 1: and now e mini futures of seventy, naz documny futures

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Speaker 1: up twenty two. The decks in Germany's up one point

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Speaker 1: four percent ten Your treasury a little change at one

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Speaker 1: point it's six per cent. Nimex scrude oil up nine

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Speaker 1: tenths per cent, or forty four cents to forty nine

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Speaker 1: oh six of arrel comex gold on how per cent

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Speaker 1: or six dollars twenty cents six an ounced the euro

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Speaker 1: at dollar eleven forty six, the N one ten point

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Speaker 1: one seven sena fee the French drug makers seeking to

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Speaker 1: buy Metivation, seeking to remove and replace the company's entire board.

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Speaker 1: Tiffany down more than three percent this morning after posting

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Speaker 1: quarterly sales that trailed analysts estimates. And Bank of Montreal,

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Speaker 1: Canada's fourth largest lender by assets, said fiscal second quarter

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Speaker 1: profit fell two point six percent after setting aside more

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Speaker 1: money for soured loans and taking a restructuring charge. The

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Speaker 1: firm raised its dividend two point eighty six cents a share.

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Speaker 1: That's a Bloomberg business flash. Tom and Mike Carasco, thank

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Speaker 1: you very much. We are talking this morning about investing overseas,

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Speaker 1: particularly emerging markets and UH places where they are affected

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Speaker 1: by what the FED does, and the FED is UH

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Speaker 1: certainly on everybody's mind these days. Elinos has to be

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Speaker 1: paying attention. She's managing director for for ex Strategy at

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Speaker 1: RBC Capital Markets. Also, the interesting thing to a lot

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Speaker 1: of people in the markets lately is that the FAT

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Speaker 1: is now talking about raising rates and there's a better

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Speaker 1: than fifty percent chance according to futures that they'll do

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Speaker 1: so by the end of July, and the dollar not

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Speaker 1: moving a whole lot, nor are its pairs at this point. Oh,

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Speaker 1: we have seen a bit of a move. So if

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Speaker 1: you look at your dollar, for example, not that long

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Speaker 1: ago we broke through one fifteen, took up a lot

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Speaker 1: of stops stuff there, and now we're back at one

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Speaker 1: fifty um. Equally, if you look at the US dollar

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Speaker 1: against Ozio against he were against the Canadian dollar, if

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Speaker 1: I've had a bit of a replacement. But I think

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Speaker 1: it's important to bear in mind that even now where

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Speaker 1: the market is repricing and hikes for this year, expectations

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Speaker 1: are still lower than they were at the start of

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Speaker 1: the year. So there's still a lot more caution with

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Speaker 1: adust to set what what what's changed from say, late

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Speaker 1: last year early this year when the dollar caught an

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Speaker 1: enormous it on FED speculation. So when the first said

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Speaker 1: hike came in December, everybody, particularly in the US was

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Speaker 1: very focused on the domestic conditions. And you know, if

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Speaker 1: you talked to our UNS economists, they'd say, arguably the

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Speaker 1: conditions have been in place for the Fed to titan

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Speaker 1: policy for a while now, Um, and the expectation was

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Speaker 1: they would follow through on that three sixteen was up

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Speaker 1: to four hikes. That's what they themselves were forecasting with

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Speaker 1: their dots. And then came the foreign developments and the

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Speaker 1: Fed's increased concern over foreign developments. So you know, you

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Speaker 1: had the pressures in China in January, the uncertainty over

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Speaker 1: their exchange rate policy. Um, you had a real risk

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Speaker 1: off shock through the middle of February, and I think

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Speaker 1: the FED reacted to that and really gave the market

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Speaker 1: the message that it doesn't matter what's going on domestically,

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Speaker 1: we're too concerned about foreign developments in order to tighten policy. Also,

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Speaker 1: Ling was good morning, term Keen. Will you I look

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Speaker 1: at also at the dynamics right now? Is it a

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Speaker 1: normal market? I can't figure out really across the equities

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Speaker 1: band's current these commodities, if there's a lethargy, if there's

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Speaker 1: a lack of liquidity, if no one cares, what's the

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Speaker 1: mood of the market if as you see off your desk, Well,

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Speaker 1: we've seen volumes drop, um, and I focused on foreign exchange.

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Speaker 1: We've seen to kind of a drop in foreign exchange,

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Speaker 1: and I think people have been quite frustrated the big trends.

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Speaker 1: I'm just not there at the moment. You know, everybody

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Speaker 1: was looking for the divergence trade this year, and Matt

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Speaker 1: hasn't really played out UM, and I think it's keeping

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Speaker 1: people a little bit cautious. You know. One of the

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Speaker 1: questions I was getting suddenly a month ago, a few

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Speaker 1: weeks ago, UM was how can we find r V

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Speaker 1: in effect? You know, I'm set up of taking a

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Speaker 1: bet on the seat, Will they weren't they? Where can

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Speaker 1: they find relative value outside of that? And is there

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Speaker 1: a place? So there are a few trades you know

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Speaker 1: that's a little bit esoteric for some investors. But short

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Speaker 1: you're a stocky for example, it's both risk neutral and

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Speaker 1: also neutral to general dollar direction. UM yesterday you had

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Speaker 1: a pretty sizeable move, but it's a trade we've liked

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Speaker 1: UM lower for a while. You have a domestic story

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Speaker 1: in Sweden that because it's risk neutral and dollar neutral,

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Speaker 1: you can actually play it out on that cross UM.

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Speaker 1: Other trades, for example, short of the Cad short Pewee

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Speaker 1: CAD like them for a while. I think run quite

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Speaker 1: a long way. You may want to look for a

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Speaker 1: bounce and better levels to sell, but you know there

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Speaker 1: are trades out there for investors searching for them. We're

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Speaker 1: short euro Your zero parody talk is at the surprise

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Speaker 1: that the overshooting Europe could be a much weaker euro.

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Speaker 1: You know, that was a very popular theme last year

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Speaker 1: and it never really played out even this year. It's

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Speaker 1: a bit of a struggle because the set isn't delivering

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Speaker 1: the tightening that some people expect it. You know, I

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Speaker 1: still think you're a dollar worlder flower over time because

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Speaker 1: we're not seeing in fishery pressures in the your area.

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Speaker 1: And it will be a very very long time before

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Speaker 1: the UCB eventually titans policy. But it's not necessarily a

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Speaker 1: trade that people are going to pile in on today

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Speaker 1: and make money in the next three to six months.

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Speaker 1: The C in RBC stands for Canada. Whither the looney

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Speaker 1: from here? It obviously took a big hit as oil

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Speaker 1: prices went down. Oil prices are going back up. Is

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Speaker 1: the Canadian dollar going to continue getting strong? So it's

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Speaker 1: a kind of interesting point here for dollar Canada. We've

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Speaker 1: bounced back from region back up to above one thirty UM.

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Speaker 1: It's obviously had the Obta wildfires, which about tragic in

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Speaker 1: their um implications for the sit ins of Fort McMurray,

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Speaker 1: and you're going to see some impact on qt GDP

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Speaker 1: as results of that UM, but then you should see

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Speaker 1: a bounce back in Q three g d P. So

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Speaker 1: you know, a lot of the underlying drivers for the

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Speaker 1: Canadian dollar are quite evenly balanced at the moment. The

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Speaker 1: Bank of Canada is in no rush to high rates,

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Speaker 1: but equally it's not cutting rates. Forward curve is quite

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Speaker 1: fairly priced. You know, our target for dollar card at

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Speaker 1: year end has been for a while one thirty three,

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Speaker 1: but when you're at current levels, it's hard to get

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Speaker 1: too excited about it. Also, I look at I look

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Speaker 1: at Canada and all of this, and I guess what

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Speaker 1: it speaks to, particularly for people removed from your area

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Speaker 1: phone exchange, is jump conditions. Are you looking at migrations

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Speaker 1: and stability and not lethargy but just a listlessness, or

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Speaker 1: are we setting ourselves up for abrupt and brutal moves

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Speaker 1: across equities, bands, currencies and commodities. Well, the risks, if

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Speaker 1: they're going to come from somewhere, are coming from China.

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Speaker 1: And you know, at the start of the year there

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Speaker 1: was a lot of uncertainty over their exchange rate policy

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Speaker 1: and how they would build a capital outflows. Now there's

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Speaker 1: been a sense of calm setting in because they seems

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Speaker 1: have been able to manage those outloads. But it's still forecasting.

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Speaker 1: Gonta remember ten the year at six five and actually

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Speaker 1: break through seven next year, and I think that's really

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Speaker 1: something the markets are not priced for. You know, the

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Speaker 1: capital flows are still ongoing. UM the pay may have

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Speaker 1: slowed down a little bit, but when we look at

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Speaker 1: UM the M and a outflow from China, and we

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Speaker 1: look at ongoing assets by households to get their money

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Speaker 1: out of the country, this isn't a problem that's gone away.

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Speaker 1: It's just in recession in UM permission at the moment,

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Speaker 1: so it could well come back before the d of

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Speaker 1: this year. I'm going to assume you go to the

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Speaker 1: RBC Capital Markets time out chair if you talk too

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Speaker 1: much about Brexit, but you have a unique perspective on

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Speaker 1: Brussels and EU. Do you perceive a changed Brussels in

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Speaker 1: the next one or five years over all that's going on.

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Speaker 1: Can Brussels even possibly get its act together? Well, it

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Speaker 1: will have to change, and I think we're seeing political

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Speaker 1: forces changing across the European Union. You know, the EU

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Speaker 1: has been quite critical of policy moves in Hungary and

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Speaker 1: in Poland. Um, we've had the rise of the far

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Speaker 1: right in Austria, though they didn't win the presidential election.

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Speaker 1: You know, there is the issue of migration and the

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Speaker 1: refugee crisis that also has to be dealt with him.

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Speaker 1: He's are causing a lot of internal attentions. So it's

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Speaker 1: a lot harder to manage policy from the center when

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Speaker 1: individual countries are facing such big internal challenges. And I

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Speaker 1: think as a result, you will need to see UM

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Speaker 1: Brussels perhaps standing back it's initial ambition before you do integration.

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Speaker 1: Never enough time. Also, Lingos, thank you so much, greatly

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Speaker 1: appreciate it. OURBC capital markets with a great perspective on

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Speaker 1: the continent and Brussels is well. Michael, I look at

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Speaker 1: all this and I can hear a lot of our

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Speaker 1: audience saying, okay, I get it. You know, we're doing

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Speaker 1: a lot of foreign exchange of minutia and grease back

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Speaker 1: on the radar sort of a little bit. But you

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Speaker 1: just really wonder what it means for an equity market

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Speaker 1: with the VIX of fourteen point to zero. Oh, it's

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Speaker 1: fascinating that we are not seeing what we saw, I

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Speaker 1: mean the markets. It's risk on with the Fed. They

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Speaker 1: seem to be buying the idea that the FED has

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Speaker 1: been wanting people to buy for some time, that it

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Speaker 1: reflects confidence in the U s ecind what do you

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Speaker 1: what do you see? I mean, your thing this morning

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Speaker 1: you did on term premium was brilliant. What do you

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Speaker 1: see on June versus July? Is there something smart there?

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Speaker 1: You can say, no, there's not. Really. The real kind

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Speaker 1: of question I think is going to be where we

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Speaker 1: are with the Brexit polls. If there is a still

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Speaker 1: considered a fifty or better chance that the Brits would

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Speaker 1: vote to leave the EU, then the FED may want

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Speaker 1: to hold off and just see what happens in markets.

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Speaker 1: What I'm talking about, Come on, Mike, June or July.

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Speaker 1: The Red Sox are playing six, they've won three in

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Speaker 1: a row. Do they fade in June or do they

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Speaker 1: fade in July? Well, you always have to look because

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Speaker 1: that's when the All Star break is, and it's if

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Speaker 1: you're playing really out and you come to the All

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Speaker 1: Star break. At least the New York Metropolitans suggests that

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Speaker 1: one feeds in this election cycle. You can't make this

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Speaker 1: up headline, espn X, Red Sox pitcher Lee running for

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Speaker 1: governor of Vermont,