1 00:00:03,200 --> 00:00:06,600 Speaker 1: Global business news twenty four hours a day at Bloomberg 2 00:00:06,640 --> 00:00:09,719 Speaker 1: dot Com, the Radio, plus mobile, lapt and on your radio. 3 00:00:09,960 --> 00:00:14,080 Speaker 1: This is a Bloomberg Business flag from Bloomberg World Headquarters. 4 00:00:14,160 --> 00:00:17,320 Speaker 1: I'm Charlie Pellett. Stocks do remain higher. This update brought 5 00:00:17,360 --> 00:00:19,720 Speaker 1: to you by Bank of America Merrill Lynch seeing what 6 00:00:19,840 --> 00:00:24,320 Speaker 1: others have seen, but uncovering what others may not. Global 7 00:00:24,360 --> 00:00:27,320 Speaker 1: research that helps you harness disruption. Vote at top global 8 00:00:27,320 --> 00:00:31,560 Speaker 1: research from five years running Merrill Lynch, Pierce, Fenner and 9 00:00:31,640 --> 00:00:34,440 Speaker 1: Smith Incorporated. Now let's head over to the Bloomberg First 10 00:00:34,440 --> 00:00:38,040 Speaker 1: Word Breaking news desk for today's afternoon call. Here he 11 00:00:38,200 --> 00:00:42,680 Speaker 1: is Bill Maloney. Afternoon Charlie. Stocks are rising today, but 12 00:00:42,760 --> 00:00:45,559 Speaker 1: are off their best levels. Dalla is currently hired by 13 00:00:45,640 --> 00:00:49,960 Speaker 1: forty five points. SAPs Game nine and AzaC rises fifty one. 14 00:00:50,280 --> 00:00:52,839 Speaker 1: The small cap six hundred is up seven points, and 15 00:00:52,920 --> 00:00:56,080 Speaker 1: the US ten yield at one point eight four per cent. 16 00:00:56,520 --> 00:00:58,920 Speaker 1: Seven out of tennis B sectors are higher, led by 17 00:00:58,960 --> 00:01:03,880 Speaker 1: gains in technology, healthcare and consumer discretionary. Consumer staples, Utilities 18 00:01:03,920 --> 00:01:08,160 Speaker 1: and telecom declined down. Transports rise eighty points and as 19 00:01:08,160 --> 00:01:11,080 Speaker 1: a biotechs Game fifty and the vix is lower by 20 00:01:11,120 --> 00:01:13,800 Speaker 1: four and a half percent down Leaders to the upside 21 00:01:13,800 --> 00:01:19,120 Speaker 1: include American Express, Intel and IBM McDonald's, Nike and Exxon Mobile. 22 00:01:19,440 --> 00:01:22,959 Speaker 1: Led to the downside. Campbell, Soup, foot Locker, and Deer 23 00:01:23,080 --> 00:01:26,480 Speaker 1: all fell after their results, while Apply Materials jumped as 24 00:01:26,560 --> 00:01:29,839 Speaker 1: much as four that's in most since two thousands two 25 00:01:30,040 --> 00:01:32,880 Speaker 1: after its earnings live in the first Breaking news desk 26 00:01:32,920 --> 00:01:35,120 Speaker 1: on Bill Maloney, Charlie, all right, thank you very much, 27 00:01:35,120 --> 00:01:38,760 Speaker 1: Bill Maloney, and it is an update on Wall streets. 28 00:01:38,760 --> 00:01:42,039 Speaker 1: Bill mentioned to hear live breaking news over your Bloombird 29 00:01:42,080 --> 00:01:45,920 Speaker 1: time squawk squ a w K on your terminal. I'm 30 00:01:46,000 --> 00:01:52,720 Speaker 1: Charlie Pelton. That's a Bloombird business flash. This is taking 31 00:01:52,840 --> 00:01:56,920 Speaker 1: stock with pim Box and Kathleen Hayes on Bloombird Radio 32 00:01:57,400 --> 00:02:02,200 Speaker 1: as better reserve from its e MC minutes, two big 33 00:02:02,280 --> 00:02:05,040 Speaker 1: high profile speakers. This week's signals that it is looking 34 00:02:05,040 --> 00:02:06,520 Speaker 1: to see if it is going to be able to 35 00:02:06,600 --> 00:02:10,040 Speaker 1: raise that key rate again in June or even July. 36 00:02:10,760 --> 00:02:14,080 Speaker 1: And of course today we've got a meeting of finance 37 00:02:14,160 --> 00:02:18,040 Speaker 1: chiefs G seven finance chiefs warning about risks from sharp 38 00:02:18,160 --> 00:02:20,760 Speaker 1: swings in the yen, at least Japan is as the 39 00:02:20,840 --> 00:02:23,320 Speaker 1: U S is making clear currency markets aren't so bad, 40 00:02:23,360 --> 00:02:25,360 Speaker 1: they look pretty calm. What does this all mean for 41 00:02:25,400 --> 00:02:28,640 Speaker 1: the bond market, global bonds, spreads and more. Got just 42 00:02:28,720 --> 00:02:31,160 Speaker 1: the fellow to answer that question today, and that's Ben Emmons. 43 00:02:31,200 --> 00:02:35,000 Speaker 1: He's managing director and portfolio manager at Leader Capital of 44 00:02:35,080 --> 00:02:38,400 Speaker 1: fixed income mutual fund management firm, and Ben joins us 45 00:02:38,480 --> 00:02:41,560 Speaker 1: from Los Angeles. So Ben, let's start with let's do 46 00:02:41,560 --> 00:02:45,640 Speaker 1: this in chronological order. The f MC minutes, Bill Dudley speaking, 47 00:02:45,639 --> 00:02:49,520 Speaker 1: who's the FED Vice chair? Uh, what is the what 48 00:02:49,600 --> 00:02:51,519 Speaker 1: does this mean if if that's going to raise rates 49 00:02:51,520 --> 00:02:53,680 Speaker 1: as soon as June or July, the markets repricing, what 50 00:02:53,680 --> 00:02:58,240 Speaker 1: does it mean for bonds, particularly corporate bonds? Right afternoon? Kathleena, 51 00:02:58,320 --> 00:03:01,799 Speaker 1: thanks for having me. Um, Well, it wouldn't be necessarily 52 00:03:01,840 --> 00:03:05,320 Speaker 1: good news because, um, what we've seen of the last 53 00:03:05,320 --> 00:03:09,520 Speaker 1: period is that inflation, sorry interesting expectations really low, and 54 00:03:09,560 --> 00:03:12,359 Speaker 1: it had also very low volatility period and I was 55 00:03:12,440 --> 00:03:16,440 Speaker 1: very very favorable for for broad markets. And now these 56 00:03:16,440 --> 00:03:19,320 Speaker 1: minutes have come out and they signal pretty strongly that 57 00:03:19,400 --> 00:03:22,760 Speaker 1: June is very much a possibility. I would almost say 58 00:03:22,760 --> 00:03:25,200 Speaker 1: they have given the market some sort of four guidance 59 00:03:25,240 --> 00:03:29,000 Speaker 1: there that if they hiked then it would cause some volatility. 60 00:03:29,200 --> 00:03:32,639 Speaker 1: Most of all because these guidance that they've given on 61 00:03:32,760 --> 00:03:35,400 Speaker 1: us on Wednesday is going to be determined by the 62 00:03:35,480 --> 00:03:39,200 Speaker 1: data that now comes out between Wednesday until June fifteen, 63 00:03:39,320 --> 00:03:42,600 Speaker 1: and that's inflation data, retails, sales, in jobs numbers. So 64 00:03:43,160 --> 00:03:45,600 Speaker 1: any of the data that comes up better than expected 65 00:03:45,880 --> 00:03:49,000 Speaker 1: or differently than expect, it will cause volatility. So I 66 00:03:49,120 --> 00:03:51,480 Speaker 1: think we're going to enter a period here in where 67 00:03:51,560 --> 00:03:54,839 Speaker 1: markets are not gonna trade really well on the back 68 00:03:54,880 --> 00:03:57,600 Speaker 1: of this this looming rate hag by the better federal reserve. 69 00:03:57,720 --> 00:04:00,960 Speaker 1: So I would think of it that way. Um whereby 70 00:04:01,080 --> 00:04:03,840 Speaker 1: corporate bonds, in particular high quality corporate bonds may not 71 00:04:03,920 --> 00:04:07,760 Speaker 1: trade so well either given the correlation with stock markets overall, 72 00:04:08,200 --> 00:04:10,520 Speaker 1: also because there's been a fair amount of these bonds 73 00:04:10,600 --> 00:04:13,920 Speaker 1: issues and the rispringiums on those bonds are quite tight 74 00:04:13,960 --> 00:04:16,719 Speaker 1: at this point. Bet, And what if you could comment 75 00:04:16,800 --> 00:04:21,880 Speaker 1: on the relationship between inexpensive money and the use of 76 00:04:21,920 --> 00:04:24,760 Speaker 1: that money for things that perhaps are never going to 77 00:04:24,839 --> 00:04:28,280 Speaker 1: be paid back. For example, I look at credit card 78 00:04:28,320 --> 00:04:31,159 Speaker 1: balances in the United States and they are on track 79 00:04:31,240 --> 00:04:35,839 Speaker 1: to hit a trillion dollars this year and that rhymes 80 00:04:35,960 --> 00:04:38,800 Speaker 1: with what happened in July of two thousand eight. Are 81 00:04:38,800 --> 00:04:43,560 Speaker 1: you concerned about it? I'm concerned about the degree bim that. Um, 82 00:04:43,960 --> 00:04:48,520 Speaker 1: these credit card balances are are to short term credit, right, 83 00:04:48,560 --> 00:04:51,000 Speaker 1: so people have built this up to try to spend 84 00:04:52,080 --> 00:04:54,960 Speaker 1: are spending more money. So that's reflective of a higher 85 00:04:54,960 --> 00:04:58,720 Speaker 1: consumer spending. But that you would get if we go 86 00:04:58,839 --> 00:05:01,120 Speaker 1: through another stage, whether he come is going to slow 87 00:05:01,160 --> 00:05:03,960 Speaker 1: down significantly, and that may be upon us because the 88 00:05:04,240 --> 00:05:07,080 Speaker 1: signals in the markets that are indicating we may have 89 00:05:07,240 --> 00:05:10,240 Speaker 1: we may have towards that scenario the US economy that 90 00:05:10,320 --> 00:05:12,599 Speaker 1: then you're getting, you know, the faults on those on 91 00:05:12,600 --> 00:05:14,600 Speaker 1: those credit cards where people can't pay it and the 92 00:05:14,680 --> 00:05:18,320 Speaker 1: linquacies rise quickly, which was kind of what happening two 93 00:05:18,320 --> 00:05:22,440 Speaker 1: thousand eight. So that is somewhat alarming, but it's different 94 00:05:22,440 --> 00:05:25,479 Speaker 1: perhaps and at that time where a lot of this 95 00:05:25,600 --> 00:05:28,760 Speaker 1: is also related to just accesses in the housing market, 96 00:05:28,760 --> 00:05:31,279 Speaker 1: which we don't really have today. But we don't have 97 00:05:31,360 --> 00:05:35,400 Speaker 1: that subprime issue as we had at that time. UM, 98 00:05:35,440 --> 00:05:37,240 Speaker 1: but it is it is something to watch outs here. 99 00:05:37,240 --> 00:05:40,720 Speaker 1: I mean, since thing your pointed out, because credit expansion 100 00:05:40,800 --> 00:05:43,359 Speaker 1: has happened. That was very much with the fellow Reserve wanted. 101 00:05:43,839 --> 00:05:46,279 Speaker 1: You know, they have more of the happening. Consumer spending 102 00:05:46,279 --> 00:05:49,000 Speaker 1: would pick up as a result. But if it gets 103 00:05:49,000 --> 00:05:51,679 Speaker 1: too excessive, then as that miske if he comes slows 104 00:05:51,720 --> 00:05:55,320 Speaker 1: down that consumers will fall behind their pains. Then then 105 00:05:55,360 --> 00:05:57,120 Speaker 1: is it a mistake for the Fed to consider a 106 00:05:57,200 --> 00:06:00,200 Speaker 1: rate hike in June? It could strengthen the doll or 107 00:06:00,320 --> 00:06:03,560 Speaker 1: that might weaken the year the you know, the Japanese 108 00:06:03,600 --> 00:06:05,720 Speaker 1: mn't like that. But is there a risk of the 109 00:06:05,920 --> 00:06:10,120 Speaker 1: destabilizing economy that's got some accesses in it now? Right, 110 00:06:10,160 --> 00:06:14,320 Speaker 1: because we've already had this because before the hike took 111 00:06:14,320 --> 00:06:18,000 Speaker 1: place in December, the dollar has strength of those by 112 00:06:18,600 --> 00:06:21,919 Speaker 1: pulatively and that did very much has slowed down the 113 00:06:22,000 --> 00:06:26,040 Speaker 1: US economy and has now had or hash and had 114 00:06:26,040 --> 00:06:29,080 Speaker 1: an impact on the on the energy sector, and that 115 00:06:29,200 --> 00:06:31,160 Speaker 1: has been spreading out a little bit. And it's been 116 00:06:31,160 --> 00:06:33,680 Speaker 1: noted I've I've seen it in five minutes before and 117 00:06:33,720 --> 00:06:35,839 Speaker 1: there was even this minister where they noted that the 118 00:06:36,160 --> 00:06:39,200 Speaker 1: job losses were appearing in in the energy sector. That 119 00:06:39,279 --> 00:06:42,280 Speaker 1: may be spreading. So, so yes, if you were to 120 00:06:42,360 --> 00:06:45,960 Speaker 1: hike again, and you would invertly strengthen the dollar too much, 121 00:06:46,600 --> 00:06:49,159 Speaker 1: then then that would that would continue that you wrote 122 00:06:49,560 --> 00:06:52,320 Speaker 1: the economy for that matter, whether it goes to trade 123 00:06:52,360 --> 00:06:55,160 Speaker 1: or the energy sector, and that could impact a certain sector. Yes, 124 00:06:55,200 --> 00:06:57,960 Speaker 1: it is a delicate timing. It feels to me the 125 00:06:58,040 --> 00:07:01,120 Speaker 1: fact wants to do this because it sees signs of 126 00:07:01,200 --> 00:07:03,359 Speaker 1: inflation for the picking up in it and it is 127 00:07:03,400 --> 00:07:05,680 Speaker 1: a full employment in their in their view pretty much, 128 00:07:05,800 --> 00:07:08,880 Speaker 1: and so they feel they can do this, but markets 129 00:07:08,880 --> 00:07:11,840 Speaker 1: continue to signal the opposite view of that. I think 130 00:07:12,040 --> 00:07:15,440 Speaker 1: more about, yeah, you can hike, but then you know, 131 00:07:15,600 --> 00:07:18,480 Speaker 1: long administrate our falling really because you know you could 132 00:07:18,520 --> 00:07:21,440 Speaker 1: damn sheet going. Thank you very much for spending time 133 00:07:21,480 --> 00:07:25,960 Speaker 1: with us. Ben Emmons is managing director and portfolio manager 134 00:07:26,360 --> 00:07:30,680 Speaker 1: of Leader Capital. Joining us from Los Angeles. You're listening 135 00:07:30,680 --> 00:07:34,200 Speaker 1: to Taking Stockheim pim Fox my co host Kathleen Hayes, 136 00:07:34,520 --> 00:07:47,760 Speaker 1: and this is Bloomberg Radio coming up, Taking Stock of Luxury, 137 00:07:47,880 --> 00:07:50,760 Speaker 1: brought to you by your Try State BMW centers. Visit 138 00:07:50,800 --> 00:07:54,680 Speaker 1: them online at try State BMW dot com at BMW. 139 00:07:54,760 --> 00:07:57,880 Speaker 1: They make only one thing, the ultimate driving machine.