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Speaker 1: I'm Charlie Pellett. Stocks do remain higher. This update brought
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Speaker 1: Word Breaking news desk for today's afternoon call. Here he
Speaker 1: is Bill Maloney. Afternoon Charlie. Stocks are rising today, but
Speaker 1: are off their best levels. Dalla is currently hired by
Speaker 1: forty five points. SAPs Game nine and AzaC rises fifty one.
Speaker 1: The small cap six hundred is up seven points, and
Speaker 1: the US ten yield at one point eight four per cent.
Speaker 1: Seven out of tennis B sectors are higher, led by
Speaker 1: gains in technology, healthcare and consumer discretionary. Consumer staples, Utilities
Speaker 1: and telecom declined down. Transports rise eighty points and as
Speaker 1: a biotechs Game fifty and the vix is lower by
Speaker 1: four and a half percent down Leaders to the upside
Speaker 1: include American Express, Intel and IBM McDonald's, Nike and Exxon Mobile.
Speaker 1: Led to the downside. Campbell, Soup, foot Locker, and Deer
Speaker 1: all fell after their results, while Apply Materials jumped as
Speaker 1: much as four that's in most since two thousands two
Speaker 1: after its earnings live in the first Breaking news desk
Speaker 1: on Bill Maloney, Charlie, all right, thank you very much,
Speaker 1: Bill Maloney, and it is an update on Wall streets.
Speaker 1: Bill mentioned to hear live breaking news over your Bloombird
Speaker 1: time squawk squ a w K on your terminal. I'm
Speaker 1: Charlie Pelton. That's a Bloombird business flash. This is taking
Speaker 1: stock with pim Box and Kathleen Hayes on Bloombird Radio
Speaker 1: as better reserve from its e MC minutes, two big
Speaker 1: high profile speakers. This week's signals that it is looking
Speaker 1: to see if it is going to be able to
Speaker 1: raise that key rate again in June or even July.
Speaker 1: And of course today we've got a meeting of finance
Speaker 1: chiefs G seven finance chiefs warning about risks from sharp
Speaker 1: swings in the yen, at least Japan is as the
Speaker 1: U S is making clear currency markets aren't so bad,
Speaker 1: they look pretty calm. What does this all mean for
Speaker 1: the bond market, global bonds, spreads and more. Got just
Speaker 1: the fellow to answer that question today, and that's Ben Emmons.
Speaker 1: He's managing director and portfolio manager at Leader Capital of
Speaker 1: fixed income mutual fund management firm, and Ben joins us
Speaker 1: from Los Angeles. So Ben, let's start with let's do
Speaker 1: this in chronological order. The f MC minutes, Bill Dudley speaking,
Speaker 1: who's the FED Vice chair? Uh, what is the what
Speaker 1: does this mean if if that's going to raise rates
Speaker 1: as soon as June or July, the markets repricing, what
Speaker 1: does it mean for bonds, particularly corporate bonds? Right afternoon? Kathleena,
Speaker 1: thanks for having me. Um, Well, it wouldn't be necessarily
Speaker 1: good news because, um, what we've seen of the last
Speaker 1: period is that inflation, sorry interesting expectations really low, and
Speaker 1: it had also very low volatility period and I was
Speaker 1: very very favorable for for broad markets. And now these
Speaker 1: minutes have come out and they signal pretty strongly that
Speaker 1: June is very much a possibility. I would almost say
Speaker 1: they have given the market some sort of four guidance
Speaker 1: there that if they hiked then it would cause some volatility.
Speaker 1: Most of all because these guidance that they've given on
Speaker 1: us on Wednesday is going to be determined by the
Speaker 1: data that now comes out between Wednesday until June fifteen,
Speaker 1: and that's inflation data, retails, sales, in jobs numbers. So
Speaker 1: any of the data that comes up better than expected
Speaker 1: or differently than expect, it will cause volatility. So I
Speaker 1: think we're going to enter a period here in where
Speaker 1: markets are not gonna trade really well on the back
Speaker 1: of this this looming rate hag by the better federal reserve.
Speaker 1: So I would think of it that way. Um whereby
Speaker 1: corporate bonds, in particular high quality corporate bonds may not
Speaker 1: trade so well either given the correlation with stock markets overall,
Speaker 1: also because there's been a fair amount of these bonds
Speaker 1: issues and the rispringiums on those bonds are quite tight
Speaker 1: at this point. Bet, And what if you could comment
Speaker 1: on the relationship between inexpensive money and the use of
Speaker 1: that money for things that perhaps are never going to
Speaker 1: be paid back. For example, I look at credit card
Speaker 1: balances in the United States and they are on track
Speaker 1: to hit a trillion dollars this year and that rhymes
Speaker 1: with what happened in July of two thousand eight. Are
Speaker 1: you concerned about it? I'm concerned about the degree bim that. Um,
Speaker 1: these credit card balances are are to short term credit, right,
Speaker 1: so people have built this up to try to spend
Speaker 1: are spending more money. So that's reflective of a higher
Speaker 1: consumer spending. But that you would get if we go
Speaker 1: through another stage, whether he come is going to slow
Speaker 1: down significantly, and that may be upon us because the
Speaker 1: signals in the markets that are indicating we may have
Speaker 1: we may have towards that scenario the US economy that
Speaker 1: then you're getting, you know, the faults on those on
Speaker 1: those credit cards where people can't pay it and the
Speaker 1: linquacies rise quickly, which was kind of what happening two
Speaker 1: thousand eight. So that is somewhat alarming, but it's different
Speaker 1: perhaps and at that time where a lot of this
Speaker 1: is also related to just accesses in the housing market,
Speaker 1: which we don't really have today. But we don't have
Speaker 1: that subprime issue as we had at that time. UM,
Speaker 1: but it is it is something to watch outs here.
Speaker 1: I mean, since thing your pointed out, because credit expansion
Speaker 1: has happened. That was very much with the fellow Reserve wanted.
Speaker 1: You know, they have more of the happening. Consumer spending
Speaker 1: would pick up as a result. But if it gets
Speaker 1: too excessive, then as that miske if he comes slows
Speaker 1: down that consumers will fall behind their pains. Then then
Speaker 1: is it a mistake for the Fed to consider a
Speaker 1: rate hike in June? It could strengthen the doll or
Speaker 1: that might weaken the year the you know, the Japanese
Speaker 1: mn't like that. But is there a risk of the
Speaker 1: destabilizing economy that's got some accesses in it now? Right,
Speaker 1: because we've already had this because before the hike took
Speaker 1: place in December, the dollar has strength of those by
Speaker 1: pulatively and that did very much has slowed down the
Speaker 1: US economy and has now had or hash and had
Speaker 1: an impact on the on the energy sector, and that
Speaker 1: has been spreading out a little bit. And it's been
Speaker 1: noted I've I've seen it in five minutes before and
Speaker 1: there was even this minister where they noted that the
Speaker 1: job losses were appearing in in the energy sector. That
Speaker 1: may be spreading. So, so yes, if you were to
Speaker 1: hike again, and you would invertly strengthen the dollar too much,
Speaker 1: then then that would that would continue that you wrote
Speaker 1: the economy for that matter, whether it goes to trade
Speaker 1: or the energy sector, and that could impact a certain sector. Yes,
Speaker 1: it is a delicate timing. It feels to me the
Speaker 1: fact wants to do this because it sees signs of
Speaker 1: inflation for the picking up in it and it is
Speaker 1: a full employment in their in their view pretty much,
Speaker 1: and so they feel they can do this, but markets
Speaker 1: continue to signal the opposite view of that. I think
Speaker 1: more about, yeah, you can hike, but then you know,
Speaker 1: long administrate our falling really because you know you could
Speaker 1: damn sheet going. Thank you very much for spending time
Speaker 1: with us. Ben Emmons is managing director and portfolio manager
Speaker 1: of Leader Capital. Joining us from Los Angeles. You're listening
Speaker 1: to Taking Stockheim pim Fox my co host Kathleen Hayes,
Speaker 1: and this is Bloomberg Radio coming up, Taking Stock of Luxury,
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