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Speaker 1: Broadcasting Live to New York, Giolberg eleventh wo to Washington,

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Speaker 1: d C, Bloomberg nine nine one to Boston, Bloomberg Well

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Speaker 1: Winers to San Francisco, Bloomberg nine six to the Country

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Speaker 1: Series Exam General one ninety and around the Glow the

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Speaker 1: Bluemberg Radio Plus happened Bloomberg dot com. This is homework surveillance. Hey,

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Speaker 1: good morning, I'm terming Moscow along with Tom Keene and

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Speaker 1: Michael McKee. The opening gill brought to you by s C.

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Speaker 1: I imagine when investment operations predictively respond to regulatory change.

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Speaker 1: See how SCI's global operating platform Give me your catalyst

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Speaker 1: for business transformation at se i C dot com. Slash

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Speaker 1: imagine stocks lower at the open, the S and P

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Speaker 1: five hundred down half per cent or nine points to

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Speaker 1: nineteen ninety Dow Jones Industrial average down a quarter percent

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Speaker 1: or forty points to sixteen thousand, nine hundred sixty eight.

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Speaker 1: Then ASDACS down six ten percent or twenty six points

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Speaker 1: to forty six ninety ten year Treasury down seven thirty seconds,

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Speaker 1: the yield one point nine zero percent. That yield on

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Speaker 1: the two year eight percent no max screwed oil up

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Speaker 1: one or forty seven cents to thirty thirty nine. A

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Speaker 1: barrel comic gold is down to ten percent or two

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Speaker 1: dollars ninety cents to twelve six announced the euro a

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Speaker 1: dollar oh nine five to the N one thirteen point

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Speaker 1: five three. Tom and Mike, thanks so much, Karen, greatly

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Speaker 1: appreciate it. This is a huge deal. I have seen

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Speaker 1: careers destroyed over this, where managers want to hold more

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Speaker 1: cash and by perspectus at a mutual fund or by

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Speaker 1: the dictate of their management, they can't. And the managers

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Speaker 1: get very, very upset. It's a little better than it

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Speaker 1: used to be. They know three four to five seven,

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Speaker 1: whatever the number. But Liza Bramo, it's with an incredibly

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Speaker 1: important observation. This off an f T article. This is

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Speaker 1: a huge deal in your bond space where people are

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Speaker 1: under the table. They're getting shell shocked and they want

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Speaker 1: to hold cash. Can they They are and they have to.

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Speaker 1: I mean, I think that when I talked to high

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Speaker 1: bond fund managers in particular, they're aware of this bifurcation

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Speaker 1: and credit markets right now where you have some fundamental

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Speaker 1: issues with some companies, but there is value there and

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Speaker 1: then you have sort of the volatility of investor sentiment

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Speaker 1: coming in, coming out and having these uh, you know,

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Speaker 1: having to respond to daily redemptions or daily inflows, and

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Speaker 1: they don't want to have to sell what they don't

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Speaker 1: want to sell. And what you nail in your article

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Speaker 1: of a couple of days ago, incredible turmoil unseen in

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Speaker 1: recent histories. Is it's a responsible institutional long only by

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Speaker 1: side versus the players in the market in and out

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Speaker 1: and speculation and all that. Who's winning the battle, I

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Speaker 1: would say the longer term investors because the time this

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Speaker 1: market right now so well is impossible. It looks like

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Speaker 1: a casino at days. I'm looking today at Glencore, for example,

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Speaker 1: which is been rising dramatically from sixty cents some on

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Speaker 1: the dollar at the end of January UH to over

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Speaker 1: ninety cents on the dollar. Glencore commodities company out of

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Speaker 1: London that people were really worried might not even make

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Speaker 1: their bond payments. This is an investment grade rated company. UH.

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Speaker 1: It's debt has rallied almost twenty percent since the end

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Speaker 1: of January. And you know on what again? On what

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Speaker 1: you know? I mean, what has changed so dramatically today

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Speaker 1: we see this massive rally and iron ore, and people

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Speaker 1: attributed to China's commitment to sustain growth. But I mean,

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Speaker 1: is this really any different from what people were expecting earlier? Well?

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Speaker 1: And that the question what people were expecting earlier was

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Speaker 1: it accurate or had markets gone too far? Was Glencore

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Speaker 1: really a sixty cent credit or is it you know,

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Speaker 1: more realistic where it is now? Well? And I think

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Speaker 1: this sort of brings me back to a conversation that

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Speaker 1: I had with gersh On just felt an alliance bursting.

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Speaker 1: He made a very astute observation I thought, which was,

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Speaker 1: you know, leading up to the commodities crash, people bond

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Speaker 1: investors didn't have a view necessarily on commodities. They weren't

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Speaker 1: saying we believe in the commodity supercycle. They were just

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Speaker 1: buying whatever was being sold. But they ended up having

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Speaker 1: an overweight in the commodity cycle. And suddenly you have

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Speaker 1: all these investors who do not have expertise in pricing

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Speaker 1: the commodities markets having to basically take a view and

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Speaker 1: decide whether or not to sell their you know, energy

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Speaker 1: and metals holdings into a downward spiral or or you know,

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Speaker 1: whether to hang on through the ride. So this is

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Speaker 1: sort of part of what's what's behind some of the

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Speaker 1: volatility in these markets. But I would say, back to

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Speaker 1: your point, Tom about sort of the lungs and the

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Speaker 1: shorts battling each other. A lot of this does come

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Speaker 1: back to the debate about bond market liquidity, that there

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Speaker 1: hasn't really been a referee able to step in and

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Speaker 1: sort of create some sense of stability between the people

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Speaker 1: who are trying to squeeze each other out of their positions.

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Speaker 1: And I think that you know, the longer term investor

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Speaker 1: who tries to step back and say, look, we're not

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Speaker 1: interested in that. We are interested in whether we get

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Speaker 1: our money back at the end of the day. Mike,

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Speaker 1: I brought up the Glencore piece out nine years and

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Speaker 1: basically it's a hundred to fifty nine, make it a

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Speaker 1: hundred to sixty up to seventy eight. It's three standard deviations. Like,

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Speaker 1: that's a big move. You know, it's a bond. I mean, great,

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Speaker 1: it's Glencore. I get I get that it's a speculation,

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Speaker 1: but those are huge moves. Well, and to your point,

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Speaker 1: it's a bond. A bond is a contractual agreement. It

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Speaker 1: is math. This is basically whether you believe you are

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Speaker 1: going to get paid back or not. Glencore, as far

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Speaker 1: as I understand, it's still rated investment grade, right, I mean, yes,

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Speaker 1: they're they're about to get uh downgraded probably or may

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Speaker 1: or whatever. But I mean, if it's just about whether

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Speaker 1: people expect to get paid back, should these bonds really

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Speaker 1: trade as other equities? I don't know. I mean this

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Speaker 1: is this sort of comes back to the sort of

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Speaker 1: broader identity crisis right now among some of the traders

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Speaker 1: who I speak with within the credit markets, which is,

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Speaker 1: you know, how how did we get here? Why is

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Speaker 1: the market so volatile right now? Well, again, I go

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Speaker 1: back to the players involved. Now, our listeners get except

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Speaker 1: for those on Global Wall Street can get clambered by this.

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Speaker 1: They can get going both ways. It's institutional players, global

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Speaker 1: and margin markets, etcetera. It's I'm for the I hate

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Speaker 1: to use a phrase, but I am alternative investment investors

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Speaker 1: trying to be opportunistic. What's wrong with that? And the

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Speaker 1: answers there's no depth in the market, I would argue.

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Speaker 1: I've talked to a couple of investment managers who said,

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Speaker 1: to me, you think of the hedge funds as being

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Speaker 1: the smart money and the retail investors is being the

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Speaker 1: dumb money. But it's been the other way around because realistically,

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Speaker 1: the retail investors are actually less fickle in some cases

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Speaker 1: than the hedge fund investors, or they have been recently,

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Speaker 1: and you've seen some pretty negative hedge fund performances, and

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Speaker 1: you've seen a lot of outflows, and you saw pretty

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Speaker 1: big concentrations, and of the bonds that have gotten hammered

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Speaker 1: the most. So you know, when it comes down to

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Speaker 1: who's winning, I would say that, you know, the sort

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Speaker 1: of longer term non trader types are probably doing better

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Speaker 1: this round, but you know, going forward, someone's someone's making

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Speaker 1: a killing. I mean, think somebody's doing really well. But

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Speaker 1: you know, Mike, I just put on a Bloomberg radio

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Speaker 1: plus the log rhythmic chart of the Glencore four of

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Speaker 1: April six. Where else the Bloomberg surveillance can you get

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Speaker 1: a log rhythmic chart of a bond price that quickly?

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Speaker 1: Nowhere else? It's an I mean, Michael bar almost burst

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Speaker 1: into tears when he saw It's so beautiful. But you know,

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Speaker 1: I would I would make one other point. You know,

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Speaker 1: I've been watching the correlation between oil and credit markets,

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Speaker 1: particularly junk bonds. It is at the highest level, or

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Speaker 1: about the highest level since two thousand and nine. And

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Speaker 1: you know, this also raises another question, should it really

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Speaker 1: be that way? I mean, at this point it's about

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Speaker 1: you know, energy related dead about twelve of the index.

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Speaker 1: Should it really be trading? Uh? In tandem with one

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Speaker 1: point fortunately in dollar market? Can we talk about something important?

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Speaker 1: Did you have to go see's Utopia this weekend? Yes?

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Speaker 1: I did? Why? Did I know why? Yes? Now, folks,

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Speaker 1: it's time for a surveillance movie review. Lisa Brandma John

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Speaker 1: Tucker usually doesn't. He's very very good getting the outfront

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Speaker 1: oscar consideration for movies where you have to buy a

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Speaker 1: lot of popcorn and soda go Zutopia. I thought it

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Speaker 1: was fabulous by my son enjoyed it, and I found

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Speaker 1: that it's uh, it's very complicated and nuanced message on

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Speaker 1: how to include people and you know how people, the

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Speaker 1: society's perception of people dictates their their future, their their perceptive.

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Speaker 1: This is what your son said, No, this is what

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Speaker 1: I said. That's what I'm saying. I enjoyed it. For

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Speaker 1: the larger batter point, Lisa Grandmo has come back after

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Speaker 1: you don't spend seventy dollars at the movie theater on

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Speaker 1: popcorn and I had a slush Oh, come on slush

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Speaker 1: Zutopia doing better than good for the good people at

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Speaker 1: Walt Disney This weekend The Town Negative forty two The

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Speaker 1: Vix sevent time Now to check it out with Michael

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Speaker 1: Marr get the latest world and national headlines. Michael, my time,

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Speaker 1: Thank you very much. Turkey is insisting on new concessions

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Speaker 1: as the price for housing more asylum seekers. The last

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Speaker 1: minute demands come just before a European Union Turkey summon

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Speaker 1: in Brussels on the refugee crisis. Preparations are underway for

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Speaker 1: the public to pay their respects to former First Leading

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Speaker 1: Nancy Reagan. Her body is now at a funeral home

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Speaker 1: in Santa Monica, California. After several days, her body will

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Speaker 1: be brought to the Reagan Presidential Library, where Mrs Reagan

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Speaker 1: will lying in repose. Responses continue to come in remembering

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Speaker 1: Nancy Reagan. Republican presidential gandidate Marco Rubio. She told us

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Speaker 1: a lot of stories about President Ray and one of

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Speaker 1: them really put me on the spot because she said,

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Speaker 1: you know, Ronnie sent flowers to my mother every year

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Speaker 1: on her birthday, on Nancy's birthday to thank her for

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Speaker 1: having me. And as you can imagine, my wife to

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Speaker 1: that turned to me and looked at me like, you're

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Speaker 1: no Ronald Reagan. You know. Nancy Reagan died yesterday at

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Speaker 1: age ninety four. Remember the Baltimore CVS pharmacy that was

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Speaker 1: destroyed during the Ryot's last April It has reopened. The

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Speaker 1: April riots were over the death of Freddy Gray, who

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Speaker 1: suffered a spinal injury while in police custody. Global News

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Speaker 1: twenty four hours a day, powered by our twenty four

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Speaker 1: hundred journalists and more than one hundred fifty news bureaus

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Speaker 1: from around the world. I'm Michael Barr. To Michael Barr,

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Speaker 1: thanks so much. Coming up, we're gonna do a little

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Speaker 1: bit of politics here. I believe there's a primary tomorrow.

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Speaker 1: Mustless and Greg Villier on the travails of the Grand

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Speaker 1: Old Party. This is Bloomberg's Surveillance. Bloomberg Surveillance is brought

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Speaker 1: a dot org