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Speaker 1: Broadcasting live to New York, Bloomberg eleventh LEO to Washington,

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Speaker 1: d C, Bloomberg nine one to Boston, Bloomberg twelve hundreds

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Speaker 1: to San Francisco, Bloomberg nine sixty to the country series

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Speaker 1: XM Channel one ninety and around the globe the Bloomberg

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Speaker 1: Radio Plus Appen Bloomberg dot com. This is Bloomwork Surveillance.

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Speaker 1: Good morning, I'm Karen Moscow, along with Tom Keene and

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Speaker 1: Scarlet Fou and the opening bell. Brought to you by SEI.

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Speaker 1: Imagine when asset management servicing is unconstrained by infrastructure. C

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Speaker 1: s CIS Global Operating platform can be your catalyst for

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Speaker 1: a business expansion at se i C dot com slash

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Speaker 1: imagine socks higher at the open, the S and P

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Speaker 1: five hundred up three tenths per cent or six points

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Speaker 1: in nineteen fifties, seven down Johnes Industrial Average up three

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Speaker 1: tenths per cent or forty three points to sixteen thousand,

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Speaker 1: seven hundred fifty five, and then a stack up seven

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Speaker 1: tenths per cent or thirty two points to fourteen tenure

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Speaker 1: Treasury down fourteen thirty seconds. The yield one point seven

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Speaker 1: six percent. The yield on a two year point seven

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Speaker 1: six percent not in x scrude oil have three point

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Speaker 1: nine percent or a dollar twenty nine to thirty four

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Speaker 1: thirty six of barrel and comex s gold is down

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Speaker 1: nine ten percent or eleven dollars forty cents to twelve

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Speaker 1: thirty ounce the euro a dollar oh nine six eight

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Speaker 1: and again one thirteen point five nine, Tom and Scarlett Karen,

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Speaker 1: thanks so much, Peter Armant of stern Age. You will

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Speaker 1: join us here in about ten minutes fifteen minutes on

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Speaker 1: Honeywell U t X, U t X up us two

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Speaker 1: points hundred point zero three on U t X and

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Speaker 1: we've got a lot to say about that coming up

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Speaker 1: on our next block. Right now. I love talking to

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Speaker 1: Kevin get us. He's with UM with Morgan Keegan uh

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Speaker 1: and and and a part of Raymond James. And it's

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Speaker 1: about fixed income and what I love Kevin, as you're

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Speaker 1: in the trenches. What is the backstory right now to

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Speaker 1: all of our audience that needs to find yield? What's

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Speaker 1: the dumb thing you see going on right now? You

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Speaker 1: know we are being is the ray are that the

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Speaker 1: bond marked? The Bondore likes to think of itself as

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Speaker 1: a leader. Uh and UH and in both movement and prices,

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Speaker 1: and and right now it is following it's following oil

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Speaker 1: prices like every other markets following oil prices. So we

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Speaker 1: so we're kind of getting our cues from what happens

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Speaker 1: overnight on oil prices to see how the equity market

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Speaker 1: goes because that's gonna determine where interest rates are headed.

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Speaker 1: So where the interest rates go of oil breaks down

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Speaker 1: further lower, it's a it's a it's a pretty clean trade.

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Speaker 1: Right now. We're seeing we're seeing interest rates go up

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Speaker 1: when oil goes up overnight, and equity markets have good openings,

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Speaker 1: a good beginnings, and as the day goes on, we're

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Speaker 1: pretty reactionary to that. But the auctions, if you look

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Speaker 1: at the auctions over the last five auctions, tremendous, tremendous

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Speaker 1: interest globally interest UH in the treasury auctions because of

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Speaker 1: a lack of inflation of fect that's now sitting on

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Speaker 1: its hands and um and yields that on comparables against

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Speaker 1: German buns against Japanese bonds, tremendous yield pick up and

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Speaker 1: and that's where the money's flowing in. Kevin connected dots

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Speaker 1: us for why oil is the leading indicator for the

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Speaker 1: bond market. I mean, oil should be trading, and it

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Speaker 1: is trading often on supply concerns, not demand. But why

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Speaker 1: is it the proxy for global demand? What about the

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Speaker 1: transmission mechanism makes it a leading indicator. It's a proxy

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Speaker 1: for inflation primarily and for growth. And so as oil falls, um,

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Speaker 1: global economies suffer. And as those economies suffer, UM we

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Speaker 1: have a double effect of both the lack of inflation

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Speaker 1: and a lack of growth, which puts the Fed in

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Speaker 1: a position that that can't really tighten. So I don't

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Speaker 1: care whether they sing the song of economic growth which

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Speaker 1: is moderate, uh, some inflation around the corner, which it isn't,

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Speaker 1: or that the fact that they're gonna raise the lyrics

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Speaker 1: aren't being heard by the bond market. So to what

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Speaker 1: extent our sovereign wealth funds that have no choice but

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Speaker 1: to sell down some of their holdings to raise cash,

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Speaker 1: how much are they driving some of this panic? Well?

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Speaker 1: I think again, believe it or not, the reach for yield,

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Speaker 1: whether sovereign growth funds or just a global investors in general,

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Speaker 1: is coming back to the the U S treasury market

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Speaker 1: because of the yield pick up and um and the other.

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Speaker 1: As we lay out these scenarios of inflation, it's just

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Speaker 1: a better place to be. So we can have a disconnect,

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Speaker 1: which is why we're seeing a flattening curve. If you

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Speaker 1: have you know, pricing yield, If yields are low, and

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Speaker 1: you suggest they could even go lower, you've got retail

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Speaker 1: small guys. They're just trying to make a coup on

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Speaker 1: whatever whatever category of bond. And if you say, look

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Speaker 1: it's priced at you gotta hold your breath and hope

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Speaker 1: for that's a tenuous strategy for a lot of smaller investors. Yeah,

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Speaker 1: it really is. But I think, um, I think if

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Speaker 1: you how do you hedge that day to day in

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Speaker 1: your portfolio, well, I think you know, you find a

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Speaker 1: middle range. So it's it may be a cop out,

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Speaker 1: but five to seven years gives you enough yield against

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Speaker 1: the curve. It it insulates you a little bit from

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Speaker 1: from any potential fed move. And qualities the key here.

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Speaker 1: So you have to write it out in quality. And

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Speaker 1: so if you have a time in the corporate space,

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Speaker 1: a corporate space, high quality corporate space, Yes, but I

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Speaker 1: would rather go to taxable munis or munis in general.

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Speaker 1: For you still even with this is important, folks, even

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Speaker 1: with the muni pop of last year, you're gonna tell

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Speaker 1: people those value and g os and revenues absolutely uh

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Speaker 1: in quality because taxable equivalent yields are some hundred hundred

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Speaker 1: twenty basis points better. We're still we're still whether it's

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Speaker 1: or versus of of taxables, were there the problems you

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Speaker 1: and I are talking like we've got two more teenis

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Speaker 1: in our hand at the monkey bar at four pm

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Speaker 1: on a Friday. Let me translate that, folks, after tax treatment,

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Speaker 1: you can pick up one to one point two percentage

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Speaker 1: points of yield in tax freeze versus the corporate debacle

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Speaker 1: and taxables. Right now, and this is from a guy

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Speaker 1: with a taxable heritage. Miss food dive in here. What

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Speaker 1: is the number one question that your clients are asking

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Speaker 1: you that they won't let go of that they just

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Speaker 1: keep hammering home on. Yeah, if you remember November December

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Speaker 1: and into the first year, most of our clients, as

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Speaker 1: predicted by the Fed, we're for a higher interest rates.

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Speaker 1: So so they expected savings rates to go up and

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Speaker 1: they expected uh opportunity with their cash to buy into

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Speaker 1: higher yields. The question we're asking now is they're asking

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Speaker 1: us now is when is that gonna happen again? Because

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Speaker 1: all I've seen since the first of the year is

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Speaker 1: a drop of about forty basis points and yield from

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Speaker 1: the tenure. So we started the year at about a

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Speaker 1: two seventeen and here we are at about a one

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Speaker 1: in three quarters. Their main question is why do I

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Speaker 1: keep investing in the bond market and to winter yields

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Speaker 1: gonna go up? Where I can put this cash to work?

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Speaker 1: And how do you give them an answer that that

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Speaker 1: that when we all have no clue what's gonna happen

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Speaker 1: next with oil? Yeah, I don't think anybody has been

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Speaker 1: very good at predicting both economic growth and when the

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Speaker 1: fed uh will raise rates, and even the FED themselves

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Speaker 1: that they almost have to look back at their at

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Speaker 1: their move in December and think, you know, what, was

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Speaker 1: that the right move? Maybe it was, but we're gonna

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Speaker 1: have to see another ten fifteen dollars out of oil up,

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Speaker 1: and we're gonna have to see something other than one

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Speaker 1: and a half percent on a core PC rate for

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Speaker 1: the AD. It's going to have to be really turning

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Speaker 1: that corner towards two percent on inflation before we see

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Speaker 1: these higher yields. When I look at yield and you know,

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Speaker 1: with someone like Bill Gross suggesting financial repression continues, I

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Speaker 1: do believe inflation matters right now, very low. What's our

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Speaker 1: real yield? Do we have financial repression? Until you and

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Speaker 1: I are ancient, I don't. I don't think so. I

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Speaker 1: don't think that we're um and I hope that we're

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Speaker 1: not headed towards you know, Japan's economy and interest rate structure.

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Speaker 1: UM but um uh, but we are seeing a pretty

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Speaker 1: significant move towards a flatter curve. And that probably concerns

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Speaker 1: me more than anything right now. Is that, um, we've

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Speaker 1: gone from about a hundred and forty basis points to

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Speaker 1: a hundred basis points between the two two's the tens right,

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Speaker 1: so huh yeah yeah. What's it means? Well, it means

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Speaker 1: that's right now. That means it's a disconnect. But between

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Speaker 1: what short rates uh are the perception of short rates

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Speaker 1: are currently versus where where a long raige and investors

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Speaker 1: are putting their money. Um, And it is the difference

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Speaker 1: between economic growth and inflation right now. This has been great,

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Speaker 1: Kevin Geotis, thank you so much, Thank you, I really

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Speaker 1: really appreciated with Raymond James and Morgan A. Kegan, Peter

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Speaker 1: Armand coming up with stern ag formula with Bleacher and

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Speaker 1: this is on something that all of a sudden has

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Speaker 1: become interesting. I'm sort of like, yeah, honeywell ut X,

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Speaker 1: I get it, and back and forth with Scarlett with

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Speaker 1: a one oh way. All of a sudden, we go

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Speaker 1: into the weekend with another interesting transaction. Absolutely and in fact,

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Speaker 1: Peter Armott had written a note today that had set

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Speaker 1: a one dollar eight share offer clearly not enough for

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Speaker 1: management and shareholders and at least one dollars share quote

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Speaker 1: could be enough. He sees a lengthy process that could

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Speaker 1: extend before being resolved, and I I this will be

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Speaker 1: my chart for Monday on Bloomberg Television. You get a

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Speaker 1: first look on Bloomberg Radio. I put it out on

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Speaker 1: Bloomberg Radio. Plus the twenty year trend on U t X.

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Speaker 1: The center tendency is a hundred and twenty five dollars

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Speaker 1: per share. When she gets you right to where Scarlett

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Speaker 1: was talking about, the dollops six, the vix lower eighteen

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Speaker 1: a bullmark at eighteen point four six. This hour of

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Speaker 1: Surveillance is brought to you by Maza White Planes visit

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Speaker 1: Maza white Planes dot com. Let's go to John Tucker

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Speaker 1: Now for news headlines, John Well, Scarlett and Tom The

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Speaker 1: final GOP debate before Superhot Tuesday was a knockdown, drag

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Speaker 1: out affair all in Houston, and among the highlights Marco

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Speaker 1: Rubio getting at her front runner Donald Trump. Scan for Rubio,

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Speaker 1: it was a moment of political turnamoun since it was

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Speaker 1: Rubio who got flustered during a New Hampshire debate when

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Speaker 1: then Canada Chris Christie accused him of repeating himself. Authorities

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Speaker 1: say it wasn't terrorism yesterday evening, but another workplace mash

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Speaker 1: shooting near Wichita, Kansas. An employee of Xcel Industry is

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Speaker 1: open fired the plant to at least four people are dead,

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Speaker 1: including the gunmen. Nevada Governor Brian Santiville, a Republican, has

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Speaker 1: bowed out of consideration for the U Supreme Court as

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Speaker 1: the partisan divisions hardened over filling the vacancy left by

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Speaker 1: the death of Justice Anthony Scalia and German beer brewers,

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Speaker 1: who of course pride themselves on using nothing but pure water, hops, malt,

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Speaker 1: and yeast to deliver a level of purity enshrined in

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Speaker 1: a five hundred year old law, are now rejecting a

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Speaker 1: study that found traces of a weed killer in all

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Speaker 1: fourteen beer brands that were put under the microscope. The

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Speaker 1: group responding to a study by the Munich Environmental Institute.

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Speaker 1: Global News. Yeah, powered by a twenty four hundred journalist

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Speaker 1: and more than one hundred fifty news bureaus around the world.

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Speaker 1: I'm tech A. I'll just stick with the wine. Yeah.

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Speaker 1: The Clydesdales. You can go to the Clydesdale's. John Tucker,

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Speaker 1: thank you so much. Bullmarket very attract sixteen thou the

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Speaker 1: VIS nineteen point zero one. Next Honeywell United Technologies, Bloomberg Surveillance.

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