Speaker 1: Global Business new is twenty four hours a day at
Speaker 1: Bloomberg dot com. The radio blows mobile Labe and on
Speaker 1: your radio. He's a Bloomberg Business label from Bloomberg World Headquarters.
Speaker 1: I'm Charlie Pellotondal. The SMPNZDAC all advancing stocks are rising
Speaker 1: for a fourth day. The dollar is strengthening after data
Speaker 1: bolstered optimism that the U. S. Economy is on firm footing.
Speaker 1: SMP five hundred index up ten a gain of four
Speaker 1: tenths of one percent, the Dow up eleven, a gain
Speaker 1: of one tenth of one percent. Nestack hired by sixty
Speaker 1: one points, up one percent. The ten year down three
Speaker 1: thirty seconds, the yield two point one four percent, Gold
Speaker 1: down for eight ounce down four tenths of one percent.
Speaker 1: Crude oil West Texas Intermediate down one percent to forty
Speaker 1: five ninety nine of barrel gasoline surging now by six
Speaker 1: point two percent. I'm Charlie Pelloton. That's a Bloomberg Business flash,
Speaker 1: all right, got it, Charlie, Thank you so much. You
Speaker 1: are listening to Bloomberg Markets. It is time for the
Speaker 1: Bloomberg e t F Report, brought to you by black
Speaker 1: Rock worried about market volatility. Minimum volatility strategies may be
Speaker 1: able to help. To learn more, please visit black Rock
Speaker 1: dot com slash factors prepared by black Rock Investments LLC.
Speaker 1: Here at the Bloomberg et F Report Bloomberg's Julie Hyman,
Speaker 1: I'm here with Eric baltoonist of Bloomberg Intelligence. The United
Speaker 1: States oil fund Erica is the world's largest and most
Speaker 1: traded oil et F. But you see it hasn't actually
Speaker 1: been a great investment. Why not, Well, it's because it
Speaker 1: holds oil futures and you always have to manage that position.
Speaker 1: And I won't go into the gritty details, but basically
Speaker 1: that's called rolling, and that will cost you anywhere from
Speaker 1: ten to four percent a year. And so what people
Speaker 1: don't realize is that the oil market, the spot oil
Speaker 1: could go up like it is this year, and yet
Speaker 1: the oil et F could be flat if you hold
Speaker 1: a long term That's why it's better used as a
Speaker 1: short term trading vehicle and not a long term holding.
Speaker 1: Is there a chance though that it could improve? Yeah,
Speaker 1: So the amount of roll cost changes as the oil
Speaker 1: future's curve changes, and it's getting a little flatter, which
Speaker 1: is good. News, but who knows how long never last,
Speaker 1: and it's not something that you really should bank on. Gotcha,
Speaker 1: So the USO better trading tool than a long term investment.
Speaker 1: Thanks Eric. I'm Julie Hyman with the Bloomberg et F Report.
Speaker 1: You're listening to Bloomberg Markets with Carol Messer and Corey
Speaker 1: Johnson on Bloomberg Radio. Let's up with a little bit
Speaker 1: about making money in this financial market. Our next guest
Speaker 1: does look at the market on a technical basis, notes
Speaker 1: that the stock market, specifically that the latest stretch without
Speaker 1: a three percent pullback is one of the longest ever,
Speaker 1: something we've heard our Bloomberg stocks Colm the stab Wilson
Speaker 1: Uh point out as well. Let's get more from Ryan
Speaker 1: Dietrich back with us, senior market strategist at LPL Financial
Speaker 1: on the phone in Charlotte, North Carol, Carolina. Ryan, good
Speaker 1: to have you back with us. Tell us a little
Speaker 1: bit about uh about this stretch where we have not
Speaker 1: seen a three percent pull back on a technical basis.
Speaker 1: What's significant about that? Well, that's right, Carol, thanks for
Speaker 1: having me back. First off, so you know what's happened
Speaker 1: in the market since the election, Well, we haven't seen
Speaker 1: a three correction. So we're going on almost ten months now.
Speaker 1: Going back to this, the SMP fire is the second
Speaker 1: longest stretch without so much as a three correction on
Speaker 1: the SMP five hundred. When you consider the fact that
Speaker 1: we're entering into the dreaded month of September and historically
Speaker 1: the worst return since on the s on the SMP fire,
Speaker 1: it's been down the last three years, worst return to
Speaker 1: past twenty years. You know, we've got his long run
Speaker 1: really not a lot of volatility, and September is around
Speaker 1: the table. So to us, it makes sense to maybe
Speaker 1: lighten up a little bit here and kind of look
Speaker 1: for potentially some well deserved volatility, because markets they can't
Speaker 1: be volatile. We haven't seen it in a while, but
Speaker 1: we wouldn't be shocked if that came back to us here, right,
Speaker 1: I get that, Um, but I mean markets don't just
Speaker 1: sell off because it's time to sell off a little checklist.
Speaker 1: So fundamentally, when you look at things and I know, valuations, Uh,
Speaker 1: you know, people talk about how that they you know,
Speaker 1: we see a market that's overvalued generally speaking. Uh, you
Speaker 1: know what else says to you that it's troubling Some
Speaker 1: of the underpinnings of this financial market. Sure, well, when
Speaker 1: you look under the surface a little bit, you know,
Speaker 1: some of those advanced decline lines when we get technical. Honest,
Speaker 1: you know, we haven't quite seen the strong, broad participation
Speaker 1: that we normally see during healthy markets. Now again, this
Speaker 1: is just more near term concerns. I mean, you know, Carol,
Speaker 1: you mentioned valuations. Valuations absolutely are stretched historically, but when
Speaker 1: you factor in the very low inflation that we've been seeing,
Speaker 1: we think valuations are relatively actually um kind of right
Speaker 1: in line where they should be. But in the end,
Speaker 1: it does come down to the economy. You know, we've
Speaker 1: looked at two straight double digit earnings um your your
Speaker 1: earnings growth first time since two thousand eleven, and all
Speaker 1: in all, you know, look at the day's data on
Speaker 1: three percent GDP print. Now that's backward looking. Nonetheless, we
Speaker 1: continue to see your most positive signs in economy. So
Speaker 1: if the economy looks good, it's just the facts and
Speaker 1: little internal weakness going on inside the market. You know,
Speaker 1: small caps and transports specifically have underperformed. Those can be
Speaker 1: a little bit of that canary in the coal mine.
Speaker 1: But again, you know, historically speaking about five three percent
Speaker 1: corrections a year. We haven't had one in ten months.
Speaker 1: We're not calling into the world by any means here
Speaker 1: would still be a buyer of a dip. We just think,
Speaker 1: you know, getting a little long in the tooth and
Speaker 1: maybe being a little patient here makes a lot more sense.
Speaker 1: You know, we have an earlier guest, UH worked at
Speaker 1: the Dallas Federal Reserve. She's a Bloomberg Profit columnist, Danielle
Speaker 1: di Martino Booth, and she said, you know, I could
Speaker 1: pretty much make the case for why we might actually
Speaker 1: get a FED rate cut versus a FED increase UH
Speaker 1: in the near future. And she's talking specifically, like, look
Speaker 1: at some of the auto industry numbers, UH, look at
Speaker 1: some of the housing numbers that we're seeing, UH concerns there, Um,
Speaker 1: how does that factor in potentially? Sure? Well, first off,
Speaker 1: you know, we don't think there's much of a chance
Speaker 1: or rate hike, but I get it. You can make arguments.
Speaker 1: You know what we just did this week, Actually we
Speaker 1: looked at all of the corporate earnings UM notes that
Speaker 1: came out, and we we saw Carol a lot of positives.
Speaker 1: You know, there was very little discussion of Trump. There
Speaker 1: was a lot of very little discussion of a recession.
Speaker 1: You know, the US dollar isn't so important, so really
Speaker 1: these companies are looking at more fundamentals. We saw a
Speaker 1: lot more positive notes when it came to earnings and
Speaker 1: than negatives. So again those are all pluses. But you're right,
Speaker 1: you know, the autos and some other areas are you know,
Speaker 1: you could say cracks in the surface. But when we
Speaker 1: see consumer confidence of breaking out against two new highs
Speaker 1: um you know, the earnings continue to be strong, and
Speaker 1: look where the earnings came from. Technology and financials. You know,
Speaker 1: those have kind of brought us to the dance. And
Speaker 1: we still think, you know, those are the two largest
Speaker 1: components the FMP five. As long as the earnings he
Speaker 1: coming from the right areas, we'd still be positive here,
Speaker 1: you know, on markets, and we think there's still a
Speaker 1: good chance of one more rate hike, not at a
Speaker 1: rate hike probably in December. Is still even though I
Speaker 1: think futures are with thirty five percent chance approximately, we've
Speaker 1: gets probably a little bit higher than that and in
Speaker 1: fact likely over the rate hike in December, which I
Speaker 1: was Ryan Dietrich, Senior Markets Judges at LPL Financial on
Speaker 1: the phone from Charlotte, North Carolina. Your own research that
Speaker 1: reminds us that we're getting ready to enter the worst
Speaker 1: two months of the year. Uh. Again, that alone doesn't
Speaker 1: necessarily say we're going to see it this time around again,
Speaker 1: but but we are typically running into the quarter where
Speaker 1: we start to see potentially some selling within the market.
Speaker 1: Uh could we should we see some kind of a pullback? Carroll?
Speaker 1: We do think so, you know, like we said, I mean,
Speaker 1: August historically has been a troublesome month, and the probably
Speaker 1: got one more day in August and probably gonna be down.
Speaker 1: I mean, think about it like this. The SP five
Speaker 1: has been positive on a total return basis. So again
Speaker 1: that includes dividends nine consecutive months, longest Streek since when.
Speaker 1: Of course, all these records are playing in so we've
Speaker 1: got a really nice run. Um. You know, historically you've
Speaker 1: got the troublesome September, and let's be honest, So why
Speaker 1: it's September troublesome? You know, we can get into some
Speaker 1: of those things. What's happened in this September. Well, you've
Speaker 1: got the FED, you've got the ECB, you've got the
Speaker 1: B O J and if you even get into all
Speaker 1: the Washington drama with the budget, budget issues and debt
Speaker 1: ceiling issues. So September a month that's usually voluable, We've
Speaker 1: got a lot of events. We think they can definitely
Speaker 1: make it just that very voulable. What other industries do
Speaker 1: you look at specifically, Like if you take a look
Speaker 1: at the down transports versus let's say the S and
Speaker 1: P five hundred, or if I look at a chart
Speaker 1: of the Dow, the down the SMP certainly mirror one
Speaker 1: another because we've kind of upward momentum. But you look
Speaker 1: at something like transports, that's a whole other charts. We've
Speaker 1: seen a significant pullback from the doubt transport since about
Speaker 1: mid July. I think if you pull up the Russell
Speaker 1: as well, you'll see a similar chart to that Transports.
Speaker 1: You've seen that group pull back as well. Doesn't that
Speaker 1: worry a little bit about the underpinnings of the market
Speaker 1: as well? Sure, Caroline, it absolutely does. I mean, you know,
Speaker 1: let's be honest, those are quote unquote the Trump trades,
Speaker 1: whether you believe it or not, that's what they've kind
Speaker 1: of been lumped as and and no questions small caps
Speaker 1: well yeah, yeah, I mean if you look with small
Speaker 1: caps did initially after the election last year, Clearly they
Speaker 1: did well. And why did they do well with the
Speaker 1: hope of tax reform which clearly has been pushed back,
Speaker 1: And that's obviously we think why small caps have underperformed
Speaker 1: this Year's gonna keep punning back the tax reform. All Right,
Speaker 1: we gotta run, Hey, Ryan, Thanks. Ryan Ditrick, senior market
Speaker 1: strategist at LPL Financial, on the phone from Charlotte, North Carolina.
Speaker 1: We've got just about three and a half minute minutes
Speaker 1: left in today's trading session. We're gonna walk you through
Speaker 1: those numbers and also some of the names on the
Speaker 1: move in a Wednesday trade. This is Bloomberg Radio.