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

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Speaker 1: this is a Bloomberg Business Flash and I'm tearing Moscow.

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Speaker 1: The Bloomberg Futures Report brought to you by Interactive Brokers

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Speaker 1: CME Group U Stock Index Future is there little change

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Speaker 1: to lower with stock setting for their first monthly gain

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Speaker 1: and four this after a rally that took the SNP

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Speaker 1: five hundred two this year's high. We checked the markets

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Speaker 1: every fifteen minutes throughout the training day on Bloomberg SNP

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Speaker 1: eveny Future is down about two points now, DOWI Mini

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Speaker 1: futures down sixteen NASTACI mini futures down about four the

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Speaker 1: tacks in Germany's down seven tenths percent. Ten your treasury

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Speaker 1: of three thirty seconds, the yield one point one percent,

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Speaker 1: yield on the two year point seven four percent now.

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Speaker 1: I'm max screwed. Oil down one percent or thirty nine

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Speaker 1: cents to thirty seven ninety three a barrel comic schoold

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Speaker 1: is up nine ten or eleven dollar sixty cents at

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Speaker 1: twelve anounced the euro a dollar thirteen ninety six the

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Speaker 1: end one twelve point one four. That's a Bloomberg business flash.

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Speaker 1: Tom and Barry, Karen, thank you so much, greatly appreciate it.

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Speaker 1: What is a good morning to all? Uh, Kathleen, he's

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Speaker 1: coming up with Charles Evans A very important No. Matt

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Speaker 1: Faber is different. He is twisted in looking at investment

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Speaker 1: and that is a good thing. He's always outside the box. Um.

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Speaker 1: One of the books, shareholder yield is more than important.

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Speaker 1: Uh in something that has been uh front and center

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Speaker 1: for the last four or five years has been way

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Speaker 1: too long. MAB good morning, Hey, good morning guys. Thanks

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Speaker 1: for getting up so early on your West coast time.

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Speaker 1: How dumb were you this quarter? It's always a good

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Speaker 1: thing to ask an investment manager. Were you were you

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Speaker 1: smart as we in the first quarter? Or is this

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Speaker 1: one you want to forget? Well, we had a lot

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Speaker 1: of different and et f. So it depends on the

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Speaker 1: one you're talking about. But um, you know the way

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Speaker 1: we see the world and the way that it's looked

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Speaker 1: for the past few years, a lot of the cheap stuff,

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Speaker 1: so we mean the cheap stocks around the world, and

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Speaker 1: a lot of emerging bonds and such haven't been the

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Speaker 1: things that are going up, and so they've continued to

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Speaker 1: go down. And you haven't had what we love to see,

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Speaker 1: which is value and momentum overlap um. And you may

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Speaker 1: be starting to see that this year. A lot of

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Speaker 1: the cheap things are starting to go up around the world.

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Speaker 1: But you know who knows. So the first quarter of

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Speaker 1: the mixed back, but we're starting to see we think

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Speaker 1: a lot of rebounds and and cheapest markets around the world.

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Speaker 1: Hey man, but I know you're a huge fan of

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Speaker 1: shareholder yields, both buybacks and and dividends. And when we

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Speaker 1: look at the SNP dividend group, things are getting a

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Speaker 1: little pricier there, aren't they. And the second half of

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Speaker 1: that question is it doesn't seem us it's student price appreciation.

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Speaker 1: It's due to fall and learnings. What what are we

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Speaker 1: to make of this? Well, everyone in the world is

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Speaker 1: looking for yield, and so dividend stocks have done is

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Speaker 1: fantastic for the past decade or so. As as people

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Speaker 1: are searching for yield. But what happens when flows and

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Speaker 1: billions of dollars chase a certain factor or an investment approach, Well,

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Speaker 1: of course it gets expensive, and so dividend stocks, which

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Speaker 1: historically trade at a discount to the overall market with

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Speaker 1: valuation of around are actually trading at a premium to

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Speaker 1: the overall market. So we often say that dividend stocks

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Speaker 1: or something you want to run away from right now

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Speaker 1: because they're very, very expensive. Um, but what you really

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Speaker 1: want to look for is any stock that has low

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Speaker 1: valuations high free cash flows, and often that's the case.

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Speaker 1: We're returning those cash flows the shareholders through buy backs.

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Speaker 1: So it's that holistic yield, dividends and buy backs, but

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Speaker 1: most importantly including some sort of valuation filter to make

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Speaker 1: sure you get in a chief stock, not just a

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Speaker 1: high yielding one. So where are we finding these inexpensive stuffs,

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Speaker 1: what sectors, what part of the world's and what cap size. Well,

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Speaker 1: we think the US is expensive. We don't think it's terrible,

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Speaker 1: but it's on the expensive side. So we're looking for

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Speaker 1: lower single digit returns. But the good news is most

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Speaker 1: of the world is pretty cheap, and some of the

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Speaker 1: world is exceptionally cheap, so long term PE ratio in

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Speaker 1: the US, let's call it around twenty. Most of the

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Speaker 1: world around his team, but there's about a dozen countries

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Speaker 1: that are trading below PE ratio of around ten right now.

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Speaker 1: There's a great tim COO Research affiliate study that just

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Speaker 1: came out says five year future performance when the when

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Speaker 1: a TIN or PE ratio of a country dips below ten,

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Speaker 1: you're looking at about a seventent per year. So you

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Speaker 1: can buy a basket of these countries. Now, you're going

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Speaker 1: to be in a lot of Europe, Brazil, Russia, but

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Speaker 1: we think they have strong returns going forward. And worse

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Speaker 1: than that are the banks. It has been an ugly

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Speaker 1: first quarter for just to pick a theme, European banks.

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Speaker 1: You see that today as they ebbed down as well.

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Speaker 1: How does a guy like you get smart enough to

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Speaker 1: know wind by the dogs of European banking. Well. The

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Speaker 1: challenge with this strategy, of course, is that you're buying

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Speaker 1: into countries evaluation strategy globally macro you're almost always buying

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Speaker 1: where the news flow is terrible. I mean you're talking

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Speaker 1: about European banks right now. In Europe in general, Europe's

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Speaker 1: trading in the cheapest level since oh eight, in the

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Speaker 1: early eighties, and those are pretty good buying opportunities. But

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Speaker 1: if you look at the news flow also in Russia

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Speaker 1: a couple of years ago, Brazil right now total basket case.

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Speaker 1: But you take a step back and look at their

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Speaker 1: stock markets, some of those are really starting to bounce.

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Speaker 1: Brazil this year. I think Russia also up in the teams,

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Speaker 1: or maybe Europe has been a huge lagger. But we

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Speaker 1: think it's a closure eyes, hold you nose type of

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Speaker 1: investment you want to hold for the next certainly three

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Speaker 1: to ten years. Even you know, MAB We look at

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Speaker 1: the European banks and their book value. It's trading at

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Speaker 1: about half of the valuation that the United States banks are,

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Speaker 1: and our banks seem to not be doing all that well. Also,

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Speaker 1: what do you say, what do you say to an

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Speaker 1: investor who says, wait, you want me to buy European banks?

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Speaker 1: They look just so god awful. This looks like a

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Speaker 1: terrible trade. Well, the key with valuation is that you

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Speaker 1: don't want to trade a whole lot. So the minimum

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Speaker 1: or the maximum you should be updating this portfolio, rebouncing

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Speaker 1: let's call it once a year. You could even do

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Speaker 1: it once every two years, so you start to wait

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Speaker 1: into these foreign countries, and you don't want to obviously

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Speaker 1: just pick a particular sector or even one country, because

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Speaker 1: you have a lot of concentration risks there. But there's

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Speaker 1: a great quote we often talk about when we say

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Speaker 1: investing is the only business. When things go on sale,

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Speaker 1: everyone runs out of the store. So nobody wants these assets.

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Speaker 1: If you all do, all callers, we are probably gonna

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Speaker 1: give up to hat mail. Thank you can't believe we're

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Speaker 1: talking about investing in Europe right now. What a terrible idea,

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Speaker 1: But that's usually a good sign. That Favorite where this

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Speaker 1: was some basics Uninvesting co founder and chief investment officer

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Speaker 1: Cambria Investment Management. We will continue with MEMP. Favorite. I

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Speaker 1: love his background U v A Engineering science and biology,

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Speaker 1: which I think is pretty cool. It's sort of like

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Speaker 1: a biomedical engineering. I think that Favorite will continue on

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Speaker 1: investment sensibility. That's what we do with Barry Redholtz on economics, finance, investment,

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Speaker 1: Charles Evans in fifteen minutes, this is Bloomberg's surveillance, counting

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Speaker 1: down to the opening. Veil brought you about a jeep

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Speaker 1: Grand Cherokee that was awarded. As you leave, Ever, the

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Speaker 1: Jeep Grand Cherokee continues to raise the bar with its

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Speaker 1: luxurious interior legendary for by for a capability, drive on

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Speaker 1: at your local jeep dealer Today broadcasting live to New York,

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Speaker 1: Gloomberg eleventh wo to Washington, d C, Bloomberg to Boston,

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Speaker 1: Bloomberg twelve unders to San Francisco, Bloomberg nine to the country,

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Speaker 1: Suities Exam Channel one ninety and around the globe the

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Speaker 1: Bloomberg Radio plus Apen Bloomberg dot Com. This is Bloomberg

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Speaker 1: Surveillance and good morning. I'm Karen Moscow. Along with the

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Speaker 1: Tom Keene and Barry Ridholts in the opening Bell is

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Speaker 1: brought to you by s ei in the future of

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Speaker 1: the st management business will be profoundly different. Find out

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Speaker 1: how SEIS Global Operating Platform can help you navigate the

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Speaker 1: new operational frontier at se i C dot com. Slash Imagine.

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Speaker 1: Stocks are little change at the open. The S and

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Speaker 1: P five hundred is at twenty sixty three, Dow Jones

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Speaker 1: Industrial average up four points to seventeen thousand, seven hundred

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Speaker 1: twenty one, and the Nasdaq is down lesson to point

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Speaker 1: to forty six eight ten year treasury up to thirty seconds.

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Speaker 1: The yield one point eight one percent. They yield on

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Speaker 1: the two year point seven five percent. No, I'm excrude

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Speaker 1: oil down six ten percent or twenty one cents to

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Speaker 1: thirty eight eleven A barrel comic school is up eight

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Speaker 1: ten percent or ten dollars to twelve thirty eight seventy.

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Speaker 1: The Euro at dollar thirty nine, the N one twelve

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Speaker 1: point one six. Tom and Berry, Karen, thanks so much

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Speaker 1: looking out at the Quinnipiac Forum, Kathleen, he's getting ready

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Speaker 1: for an interview with Charles Heavens will do that in fifteen.

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Speaker 1: I mean it's right now. Med favor with us with

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Speaker 1: Cambria Investment, MAB. I want to talk about di worsification,

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Speaker 1: the great word from Peter Lynch. If I own e

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Speaker 1: t F, I'm diversified. And is there a risk of

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Speaker 1: owning so many ETFs that I'm basically indexing my way

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Speaker 1: into oblivion. You know, we did a book called Allcation

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Speaker 1: that looked at a lot of the top guru a

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Speaker 1: cation strategies over time, all the way back to the seventies.

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Speaker 1: We looked at about twenty and what we found was

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Speaker 1: they had vastly different allocations. So some of the top

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Speaker 1: investors in the world, David Twinson Ray Dalio recommended portfolios

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Speaker 1: of individuals, and what we've own was that, you know,

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Speaker 1: some would have fifteen cent in gold, some would have zero,

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Speaker 1: someone have a huge allocation emerging market, someone have very little.

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Speaker 1: And what we found on is the allocation matters very

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Speaker 1: little over time. Um the as long as you had

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Speaker 1: some global stocks, some global bonds, and a smattering of

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Speaker 1: real assets, the portfolios had a rough return within one

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Speaker 1: percentage point of each other over time. So if you're

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Speaker 1: a buy and hold investor, one of the biggest things

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Speaker 1: you could do is simply find a portfolio, stick with it,

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Speaker 1: and not pay a lot in fees, because if you

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Speaker 1: pay the average amount of financial advisor on top of

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Speaker 1: average mutual fund sees, it would have taken the best

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Speaker 1: performing portfolio if you had a crystal ball in ninety

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Speaker 1: two and turned it into worse than the worst. So

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Speaker 1: having a global allocation, you could go out. We have

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Speaker 1: an e t F that zero percent management FETF buys

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Speaker 1: the world. Easy example of something that you could have

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Speaker 1: an allocation as long as you have some foreign exposure, stocks, bonds,

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Speaker 1: real out that you should be Okay, fees matter, diversification matters.

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Speaker 1: Doing less is better than doing more? Is that? Is

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Speaker 1: that what listeners should take away from you, Matt, Yeah,

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Speaker 1: I mean that gets you to the goal line. I

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Speaker 1: get you of the way there. Now there's things you

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Speaker 1: can certainly do after that. You could tilt away from

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Speaker 1: market cap waiting. You could tilt towards value um. One

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Speaker 1: of my favorite things that tended to be fairly atypical

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Speaker 1: as you could add trend and so whether that's managed

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Speaker 1: futures or some sort of trend following momentum approach, that's

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Speaker 1: one of the best diversifiers historically in an O eight environment.

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Speaker 1: It's done great over the past year or two, but

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Speaker 1: it's uncomfortable for a lot of investors. But yes, sensible,

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Speaker 1: don't pay too much in fees. That's created advice. Okay,

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Speaker 1: So on trend basis and commodities and looking at the

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Speaker 1: acclaimed turtle trading from decades ago, that's all great commodities

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Speaker 1: have blown up. When does map favorite clim on aboard

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Speaker 1: a new trend for moodities? What do you need to see?

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Speaker 1: We we love commodities from both the strategic and tactical investments.

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Speaker 1: So we think commodities have a great role to play

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Speaker 1: in a portfolio, even even a long only approach as

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Speaker 1: a percentage of portfolio UM. Going a step further, we

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Speaker 1: think that managed futures, which is simply a long short

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Speaker 1: approach to world assets but very heavy in commodities based

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Speaker 1: on trends, is an even better approach. And so for

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Speaker 1: the past year or two or three, you would have

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Speaker 1: been short a lot of these commodities, and so managed

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Speaker 1: futures does a great job, in particular in deflationary type

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Speaker 1: of environments or environments where UH and inflationary but where

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Speaker 1: this extreme market moves to hedge a traditional portfolio, So

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Speaker 1: we allocate to both. We have a strategic long only

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Speaker 1: exposure to commodities UH and also a exposure to managed futures.

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Speaker 1: Commodities one of the most hated asset classes along with

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Speaker 1: emerging markets and UH European stocks. But yeah, we're we're

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Speaker 1: big fans of both. I want to go back to

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Speaker 1: something you mentioned earlier about the zero fee e T s.

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Speaker 1: Talk to us about that, what does that hold and

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Speaker 1: how can you essentially give that away for nothing? Well,

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Speaker 1: we manage seven e T s to charge normal e

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Speaker 1: t f d s around the point five percent range

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Speaker 1: point six percent range. But we've never done buy and

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Speaker 1: hold because we've always said, look, you know, we don't

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Speaker 1: think people should be charging much for this because by definition,

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Speaker 1: you're not doing anything. You're buying and holding. So we

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Speaker 1: said we could launch a and it's currently the only

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Speaker 1: one with a permanent zero percent management fee. That's simply

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Speaker 1: a rapper. It holds twenty nine et f s around

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Speaker 1: the world from all sorts of various providers. Uh. The

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Speaker 1: total all n F is zero point two nine percent,

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Speaker 1: but it gives you access to over thirty thousand securities

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Speaker 1: around the world. It's got tilts towards value, it's got

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Speaker 1: tilts towards momentum. It owns some commodities. But with one

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Speaker 1: click it's called it's a GLOBALOS allocation. You can get

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Speaker 1: exposure to the to the road core universe. Uh. And

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Speaker 1: so we think it's we think it's a great holding.

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Speaker 1: G A A. MAB. I've been in the double leverage

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Speaker 1: all cash fund. I hear you're coming out with a

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Speaker 1: triple leveraged all cash fund. Tell me about leverage. Um, Well,

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Speaker 1: you know what, what's what's the famous warm buffet quote

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Speaker 1: has said that, um, you know, dumb people should never

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Speaker 1: use it and smart people don't need it. Uh, you know, leverage,

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Speaker 1: Leverage is a double edged sword. You get plenty of

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Speaker 1: leverage already with a lot of the non leverage funds.

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Speaker 1: There's there's plenty of action on those. So there's a

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Speaker 1: lot of crazy ideas coming out in the at F space,

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Speaker 1: But there's been crazy ideas as long as markets have existed.

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Speaker 1: So a lot of the lot of the plane vanilla,

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Speaker 1: we think is certainly a little more sensible. Very riddles

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Speaker 1: jump in here, but I would just say there was

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Speaker 1: a white paper years ago it basically said if you

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Speaker 1: get out over one point three eight to one leverage,

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Speaker 1: that's when dampening functions undampened in bad things happen. Listen,

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Speaker 1: Leverage just basically takes good things that are temporary and

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Speaker 1: makes them a little better on a temporary basis, and

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Speaker 1: when bad things hit, that makes it bad on a

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Speaker 1: permanent basis. But what it really think, what it really

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Speaker 1: does is accentuate. If you are right seven times and

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Speaker 1: you're wrong ones, you're done. If you're leverage that wrong once,

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Speaker 1: and that's you're talking about. You know one point three percent.

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Speaker 1: Remember during the financial crisis a lot of large institutions

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Speaker 1: were leveraged thirty and forty two one, they had a

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Speaker 1: two percent met favorite. Thank you so much for getting

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Speaker 1: up early. He's out on the West Coast. We really

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Speaker 1: appreciated Cambria Investment Management get a huge response when he's on.

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Speaker 1: Thanks for the social media support there from Mr um

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Speaker 1: favorite um Barry. What will you listen for? From Charles

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Speaker 1: Evans of Chicago. So I want to get into the

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Speaker 1: nuance of exactly how dovish the FETE is gonna be,

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Speaker 1: what he thinks they should be looking at it in

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Speaker 1: order to continue lift off, and whether they're as data

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Speaker 1: dependent as chair Yelling says they. I want to listen

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Speaker 1: to them on inflation in particularly where Cleveland CPI and

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Speaker 1: Course c P are at two wish level in in

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Speaker 1: the migration there if Evans with a new terminal value

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Speaker 1: and with a lack of productivity like before from many

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Speaker 1: of our guests, is one point eight the new two?

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Speaker 1: Or is one point seven the new two? I don't

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Speaker 1: know if Kathleen will get there, but really looking forward

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Speaker 1: to this. Kathleen Hayes with Charles Evans all that coming up.

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Speaker 1: But you look at equities, bonds, currencies, commodities, markets open,

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Speaker 1: the vix pretty much on thirteen point five eight red

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Speaker 1: and green on the screen, Dow up, SMB down, fractionally,

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Speaker 1: yields are in. This is still the yelling effect. It

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Speaker 1: has been profound. We've shown that chart any number of times,

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Speaker 1: the two year yield point seven four eight seven in

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Speaker 1: a basis point that's very important. I noticed also a

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Speaker 1: European bank stocks continue to row. That that's been off

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Speaker 1: the radar this week, and I really can't tell why,

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Speaker 1: because it's been a really profound move again. Kathleen Hayes

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Speaker 1: with Charles Evans of Chicago. All that coming up next

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Speaker 1: this hour. Bloomberg Surveillance brought you by Mazda White Plains.

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Speaker 1: Visit Masda White Plains dot com with our news in

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Speaker 1: New York. Who's Michael Barr, Tom Berry, Thank you very much.

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Speaker 1: Donald Trump has been criticized by presidential candidates on both

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Speaker 1: sides of the aisle. After initially saying yesterday that if

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Speaker 1: abortion has ever banned, a woman getting one should face

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Speaker 1: some form of punishment, Trump later said in a statement

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Speaker 1: that abortion providers, not women, should be the ones punished.

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Speaker 1: Democratic presidential candidate Hillary Clinton told MSNBC Trump's initial comments

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Speaker 1: were outrageous and dangerous. I'm constantly just taken aback at

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Speaker 1: the kinds of things that he advocates for. Uh. You know,

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Speaker 1: my Angelou said, when some and shows you who they are,

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Speaker 1: believe them. And once again he has showed us who

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Speaker 1: he is. The death toll is at least fifteen now

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Speaker 1: on the partial collapse of an overpass under construction in

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Speaker 1: eastern India. The chunks of concrete struck people traveling in

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Speaker 1: their vehicles in Colcutta. Scientists say sea levels could rise

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Speaker 1: as much as three feet as the West Antarctic ice

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Speaker 1: sheet could melt rapidly. The ice sheet is larger than Mexico.

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Speaker 1: For now, researchers has said it would take hundreds, if

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Speaker 1: not thousands of years for it to disintegrate, but researchers

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Speaker 1: suggest that could happen much sooner. The studies in the

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Speaker 1: journal Nature Global News twenty four hours a day, powered

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Speaker 1: by our twenty four hundred journalists more than a hundred

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Speaker 1: fifty news bureaus from around the world. On Michael Barr,

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Speaker 1: Tom Berry Very Good on the fed derby Michael bar

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Speaker 1: Thank you so much. On the fed Derby, we'll get

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Speaker 1: an update, some intelligence and Charles Evans of Chicago, Kathleen

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Speaker 1: Days in conversation with President Evans. We will do that

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Speaker 1: next worldwide Bloomberg Radio. Bloomberg Surveillance being brought to you

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