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

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Speaker 1: dot Com, the radio, plus Globo LAP and on your radio.

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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters

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Speaker 1: on Katherine Colorie. Energy and financial shares are dragging the

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Speaker 1: stock market lower as investors shy away from riskier assets.

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Speaker 1: Thanks are retreating for a second session, with JP, Morgan

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Speaker 1: Chase and Goloman Sacks down at least two point eight percent.

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Speaker 1: Comments from Bank of England at Governor Mark Kearney are

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Speaker 1: rekindling concerns that Britain's exit from the European Union will

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Speaker 1: further away on tepid global growth. Carney warned today of

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Speaker 1: prospects for a material slowing of the economy on the

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Speaker 1: developing risks from Britain's EU decision, which I can markets

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Speaker 1: every fifteen minutes throughout the trading day down. Industrial leverage

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Speaker 1: is down ninety four points, that's the loss of half

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Speaker 1: a percent. Is trading at seventeen thousand, eight hundred fifty

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Speaker 1: five SMP five hundred, narrowing earlier losses currently down thirteen

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Speaker 1: point six tents of a percent at two thousand ninety

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Speaker 1: Then NAZDAC is down thirty six points quarters of a

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Speaker 1: percent at forty six West Texas Centermedia Crude oil down

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Speaker 1: two dollars twenty four cents of barrel four point six

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Speaker 1: percent to forty six seventy five spot gold is of

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Speaker 1: eighteen dollars announced at thirteen fifty seven even ten year

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Speaker 1: treasury seconds with the yield of one point three seven percent.

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Speaker 1: And that's a Bloomberg business flash. Thank you very much,

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Speaker 1: Katherine Cowdery. It's time now for the e t F report.

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Speaker 1: Let's go to Katherine Calgary for more on exchange traded funds.

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Speaker 1: Double lines bond DTF has topped Pimco's in total assets.

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Speaker 1: Jeffrey Gunlock Spider Double line Total Return Tactical e t

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Speaker 1: F now has two point six three billion dollars in

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Speaker 1: total assets, compared with the PIMCO Total Return Active et F,

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Speaker 1: which has two point five nine billion. Bloomberg Intelligence analyst

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Speaker 1: Eric Beltuna says it's quite an achievement for Gunlock. As

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Speaker 1: investors move money from active funds to passive funds. It's just,

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Speaker 1: you know, fascinating to see Gunlock buck the trend and

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Speaker 1: really swim up stream and collect assets in this environment.

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Speaker 1: Baltunas puts gunlocks achievement in perspective. He's gone from six

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Speaker 1: hundred million to two point five billion in his ETF.

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Speaker 1: This is really something because the active ETF space hundred

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Speaker 1: fifty products. You've got X fund managers, hedge fund managers,

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Speaker 1: economist authors, PhDs, all kinds of smart people putting out products.

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Speaker 1: Hasn't really caught on. It's just a trend that's in

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Speaker 1: the wrong direction. Um, everybody's going passive. T O t

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Speaker 1: L has had a total return of three point nine

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Speaker 1: percent since its inception, compared with two point three p

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Speaker 1: for B O n D during the same period. That's

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Speaker 1: your Bloomberg ETF report. I'm Catherine Cowdery. This is taking

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Speaker 1: stock with Jathlee Hayes and grim Box on Bloomberg Radio.

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Speaker 1: Well as the President of the Reserve Bank of New

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Speaker 1: York said it today, William Dudley. The Brexit vote, the

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Speaker 1: preparedness of the UK to leave the European Union is

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Speaker 1: a cloud on the horizon for policymakers, certainly for investors

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Speaker 1: as well. But there are there is, I should say,

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Speaker 1: at least one shining star. According to our our next guest,

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Speaker 1: and that's Rob Hayworthy, Senior investment strategist at US Bank

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Speaker 1: Wealth Management. They have a hundred three billion dollars of

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Speaker 1: assets under management. Joining us from Seattle today, Rob, welcome,

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Speaker 1: Thank you very much for having me. So, as far

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Speaker 1: as you're concerned amidst all this turmoil and cloud singing

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Speaker 1: over all kinds of economies and markets, the US is

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Speaker 1: the place to start. I think. So we're in a

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Speaker 1: fairly solid economic growth trend. We're relatively stable when we

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Speaker 1: look across the political environment around the world, and our

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Speaker 1: consumer remains quite healthy, having recovered somewhat from from our

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Speaker 1: financial crisis. So we're still in pretty good shape. It's

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Speaker 1: not great good. So Rob, does that mean that you're

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Speaker 1: looking at consumer discretionary stocks? What the what is guiding

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Speaker 1: your stock selection process? Yeah? We we are looking more

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Speaker 1: to UH two cyclicals these days. As we do expect

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Speaker 1: a relatively solid global rebound, consumer discretionary would be a

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Speaker 1: part of it. The US can sumor in the global

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Speaker 1: consumer are in a in a reasonable place. I mean

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Speaker 1: the UK is certainly an exception here with with all

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Speaker 1: the political uncertainty. Um, but debt lows remain low. Income growth,

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Speaker 1: especially in the US is improving, and people in general

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Speaker 1: are seen improving an improving jobs market. So yeah, consumer

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Speaker 1: good discussion, It would be good. We also look towards

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Speaker 1: specific technology companies. We think there's opportunities there. Uh. And lastly,

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Speaker 1: healthcare is an interesting place of innovation. Well, let's if

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Speaker 1: we got h they're not so great job support and

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Speaker 1: there's a more of a view that the economy is

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Speaker 1: actually slowing and that's what some people are looking for

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Speaker 1: right now. Would you still make your argument because you

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Speaker 1: would say other parts of the world are in much

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Speaker 1: worse shape than the United States, and it's still the

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Speaker 1: most promising place to put your money. Yeah. I think

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Speaker 1: that's a great point. That Friday is a really important

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Speaker 1: report for all of us to understand whether last month

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Speaker 1: was last month's thirty eight thousand non farm payroll jobs

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Speaker 1: was was the true direction of the market or a hiccup. Uh.

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Speaker 1: As we look at some of the other data, especially

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Speaker 1: the purchasing manager reports that just came out, UM, retail sales,

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Speaker 1: consumer confidence, we think last month was a little more

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Speaker 1: of an aberration in the data should be good, but

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Speaker 1: if it's not, will certainly need to reevaluate. I want

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Speaker 1: to get your get your details if you can on

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Speaker 1: anything related to healthcare and how their health insurance or biotechnology.

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Speaker 1: What what are you focused on, rob, I don't get

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Speaker 1: very deep in those specifics, but we would we would

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Speaker 1: look more to the to the companies that are benefiting

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Speaker 1: from an aging population and able to sell into a

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Speaker 1: population that looks more for longevity and quality of life.

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Speaker 1: So more medical technology, more medical technology. You mentioned also

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Speaker 1: fixed income as obviously part of the portfolio. What what

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Speaker 1: should you do if you're holding a gain in your

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Speaker 1: in your bond portfolio, should you sell it and try

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Speaker 1: to find something else or or what should you do? Well?

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Speaker 1: I think the important thing there is to have a

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Speaker 1: balance with your stock portfolio. So you need you need

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Speaker 1: to have both sides because if I look over the

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Speaker 1: next six, twelve, eighteen, twenty four months, UM, the Brexit

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Speaker 1: tremors are going to be episodic. They're going to come

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Speaker 1: and go. So you're going to need long term growth

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Speaker 1: in your portfolio to to see your portfolio grow, but

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Speaker 1: you're going to need those bonds to provide a cushion

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Speaker 1: against those tremors. UM. So if you if you've ended

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Speaker 1: up with an overweight position and fixed income, it's certainly

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Speaker 1: a good time at these record lows to start trimming

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Speaker 1: your portfolio of fixed income, especially if you're holding some

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Speaker 1: of the some of the European depth that's trading at

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Speaker 1: negative yields um and and rebalancing into equities which are

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Speaker 1: in general paying you a better deal than yield than

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Speaker 1: you're earning on your on fixed income interest rates. And

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Speaker 1: you have some optionality for global growth. Yes, and especially

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Speaker 1: if you're a patient investor, you have that optionality because

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Speaker 1: I think the bigger fear, it seems in the markets

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Speaker 1: right now is that we could tilt a bit into

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Speaker 1: a global recession, however you define it. Commodities, though commodities

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Speaker 1: were so beaten up going into the Briggsit vote, we've

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Speaker 1: seen a rebound in oil and gold. Certainly gold is

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Speaker 1: where a lot of people want to jump into right

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Speaker 1: now to ride the rally. What do you see there?

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Speaker 1: We're a little more cautious this year on commodities. I

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Speaker 1: think we've seen a tremendous rebound to start this year,

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Speaker 1: but the fundamentals haven't quite caught up with the speculative

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Speaker 1: price action um and and really that's probably a little

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Speaker 1: more of the cyclicals than we've seen with gold. I

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Speaker 1: think The hardest part for me with gold is UH,

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Speaker 1: you're discounting much lower odds of a FED at reading

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Speaker 1: increase this year than we would see. We think the

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Speaker 1: FED probably is able to raise rates at least once

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Speaker 1: this year in two or three times next year. In

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Speaker 1: the market's really not pricing in any rate increases into

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Speaker 1: well into next year. So we think some of the

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Speaker 1: support for a gold market just just won't be around

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Speaker 1: for this whole year once once you start to price

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Speaker 1: in more FED rate increases. On the on the cyclical

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Speaker 1: side of the world, rebalancing is occurring, but I think

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Speaker 1: high prices have led to a new risk and that

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Speaker 1: and that new risk is you get restarts in US

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Speaker 1: oil production and we don't get nearly enough to climb

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Speaker 1: in US oil production um to to get to complete

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Speaker 1: balance in the market. And you have UH non US

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Speaker 1: producers looking to come back online. Canada's ramping up after

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Speaker 1: their wildfires, and you have a lot of Middle Eastern

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Speaker 1: producers looking to bring oil back into the market and

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Speaker 1: grow their production as well. So we may have a

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Speaker 1: little more volatility over the rest of this year in

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Speaker 1: oil and UH and not get the same gains on

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Speaker 1: the back half of the year that we've had so

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Speaker 1: far in the first half. Real estate is that worthy

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Speaker 1: of attention? Absolutely? I you know, this real estate has

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Speaker 1: UH solid yields UM I think some interesting characteristics. The

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Speaker 1: struggle is the direct markets probably a little fully priced,

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Speaker 1: especially given where interest rates are right now. When you

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Speaker 1: say direct market, what do you mean own owning individual

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Speaker 1: properties outright is as opposed to three through real estate

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Speaker 1: investment trust. I just have to come back to the

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Speaker 1: point you made about one rate increase this year by

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Speaker 1: the Federal Reserve and two or three next year, because

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Speaker 1: that's really going against the predominant view in the Fed

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Speaker 1: funds futures market now, and I'm looking at the move

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Speaker 1: in yields in bond yields lower. What is the logic

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Speaker 1: for one this year and two or three next year.

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Speaker 1: We think ultimately the Fed wants to normalize and UH

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Speaker 1: economic If if our shining tarnished star story is correct,

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Speaker 1: that gives the Fed enough room to to normalize rates

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Speaker 1: a little bit. This year will be will be past

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Speaker 1: some of the Brexit turmoil. December will be pasted. Our

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Speaker 1: own election. We should have new leadership in the United Kingdom,

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Speaker 1: and if economic data plays out in a solid which

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Speaker 1: means higher inflation and still improving employment. Um that gives

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Speaker 1: us that a little breathing room at your end to

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Speaker 1: to continue on their glacial path to normalization. Rob, just

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Speaker 1: quickly tell us what's the most prevalent question that is

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Speaker 1: being asked by your salesforce or indeed by your customer base.

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Speaker 1: I think the biggest question we're getting is what next

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Speaker 1: and what do I do about it? I think there's

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Speaker 1: there's real concern about what this means for for the

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Speaker 1: world economy, and kind of the work we're doing is

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Speaker 1: to educate them on current valuations and how do they

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Speaker 1: how do they adhere to their long term investment plan

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Speaker 1: given this short term market turmoil. All right, thanks very

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Speaker 1: much for joining us. Rob Hayworth is the senior investment

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Speaker 1: strategist for US Bank Wealth Management, helping to manage over

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Speaker 1: a hundred and thirty three billion dollars, giving us his

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Speaker 1: views on investing in stocks, bonds, as well as commodities,

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Speaker 1: his point being that you can enjoy a dividend deal

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Speaker 1: the greater in stocks than you can in most sovereign debt.

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Speaker 1: You're listening to taking stock. I'm pim Fox, my co

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Speaker 1: host Kathleen Hayes, This is Bloomberg,