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Speaker 1: This is Bloomberg Surveillance. Whoever wins the White House, I

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Speaker 1: just don't have much compass. They get much done anyway.

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Speaker 1: I don't care if it's right or it's left wing.

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Speaker 1: Equities from a Loger tim perspective, are still the place

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Speaker 1: to be. But we're gonna see some volatility heading into

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Speaker 1: the summer and into the fall. What we've got is

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Speaker 1: a economy that is already very dependent on those undocumented

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Speaker 1: immigrants who are here, and many of whom have been

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Speaker 1: here for years. Bloomberg Surveillance your link to the world

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Speaker 1: of economics, finance, and investment on Bloomberg Radio. Good running,

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Speaker 1: I Michael mckaon Tom Keane, Bloomberg Surveillance Worldwide across this

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Speaker 1: Nation series and XM Channel one nine. Good morning in Washington, Bloomberg,

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Speaker 1: Bloomberg twelve hundred, Boston, Bloomberg eleventh three oh in New

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Speaker 1: York on the West Coast. Good early morning in San Francisco,

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Speaker 1: the Bay area particular. Good morning to Philadelphia for those

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Speaker 1: listening on eleven three oh New York and also see

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Speaker 1: or Sex Channel one nineteen. It is always good to

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Speaker 1: speak to Jack Bogel, and we'll dive into that uh

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Speaker 1: in this our futures negative nine doubt futures negative fifty

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Speaker 1: seven uh as we begin a new hour of surveillance.

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Speaker 1: The four X Brief. It's marching by Interactive Broker's winner

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Speaker 1: of f X Week's two thousand and fifteen award for

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Speaker 1: the best Retail for X trading platform, visit ib at

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Speaker 1: I b k R dot com slash four X. I

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Speaker 1: want to get through this quickly, David Wilson. Is a

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Speaker 1: busy agenda today. Yen one twin six, stronger yen a

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Speaker 1: weeker dollar. At the same uh time, hydrocarbon currencies finally

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Speaker 1: give back a little bit of the five six days

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Speaker 1: of glory they've had Canada one thirty three. I might

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Speaker 1: also point out Russian rubles seventy one fifty eight. That's

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Speaker 1: a terror. From eight to seventy one, somebody made money

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Speaker 1: going along ruble. You long ruble, David Wilson. I was

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Speaker 1: not that was not either, right. MS Commodity big debate

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Speaker 1: this morning, Golden Sex saying maybe Protistanzio of Erasing group

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Speaker 1: with some thought on a bid on oil, do you

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Speaker 1: any oil stucks today? Or means Chevron with her kept

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Speaker 1: spending couple, what do you have to do well, we

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Speaker 1: might as well talk about a related industry then. I mean,

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Speaker 1: there's been for some time concerned about sun Edison's plans

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Speaker 1: to buy Vivin Solar for one point nine billion dollars.

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Speaker 1: Sun Edison focusing on utility sized solar plants, Vivian doing

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Speaker 1: roof rooftop solar installation, in fact appollution management. David Tepper

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Speaker 1: came out against the deal, and indeed his view prevailed

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Speaker 1: because UH Vivin backed out of the transaction yesterday. UH

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Speaker 1: said in a statement that sun Edison failed to meet obligations.

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Speaker 1: So you've got Vivian shares down four percentage you might

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Speaker 1: expect Sun Edison that was up twenty and so are

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Speaker 1: two affiliates of sun Edison send their own power plants.

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Speaker 1: There's Terraform Power which is up twelve and a half percent,

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Speaker 1: and Terraform Global up four and a half percent. So

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Speaker 1: this is going overwhelmed. Just to Starber, you've been following

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Speaker 1: this for years with your good work at Bloomberg News.

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Speaker 1: Nobody makes money in this business from what I can tell.

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Speaker 1: I mean, so's not even like the biotexts where they

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Speaker 1: have a hope of selling to a European pharmaceutical dumb

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Speaker 1: enough to buy them. Well, with the power plants, the

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Speaker 1: bigger ones, there's at least some potential. And then there

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Speaker 1: was this whole push terraform both of those companies and

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Speaker 1: what they call yield codes. Uh, sort of equivalent to

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Speaker 1: master limited partnerships. Uh, in the sense that you know

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Speaker 1: that solar companies could sell on their projects. Give me

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Speaker 1: something with cash flow? Oh please, Um, I've got a

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Speaker 1: couple more solar companies to talk about. And our G

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Speaker 1: Energy and Solar City. Uh. They signed contracts to install

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Speaker 1: rooftop systems and a whole foods markets, grocery stores and

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Speaker 1: distribution centers. And our G Energy up three and a

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Speaker 1: half percent. In Solar City up five percent. Royal Caribbean

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Speaker 1: Cruises down two and a half percent. Today is the

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Speaker 1: last day of trading for the cruise line owners shares

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Speaker 1: in Norway. Royal Caribbean has its main listing on the

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Speaker 1: New York Stock Exchange. Jet Blue Airways down five and

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Speaker 1: a half percent to carry a forecast first quarter revenue

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Speaker 1: for every seat and mile flown will fall at least

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Speaker 1: seven percent and possibly as much as eight percent, and

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Speaker 1: on that basis, February, revenue dropped about ten percent, turning

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Speaker 1: to earnings really fast. Dick Sporting goes down three and

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Speaker 1: a half percent. The retailer's fiscal fourth quarter earnings and

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Speaker 1: sales failed to meet analysts average estimate in the Bloomberg survey.

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Speaker 1: Dick's earnings workcast for this year also came up short

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Speaker 1: of projections. Urban Outfitters, though up eight and a half percent.

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Speaker 1: Near Power Retailers earnings for the fiscal fourth quarter beat

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Speaker 1: analyst Hiens testament, and we should not shake Shack down

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Speaker 1: nine percent. The restaurant chain forecasting same store sales were

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Speaker 1: rise three percent this year at best, after climbing last

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Speaker 1: year by thirteen percent. David Wilson, thank you so much.

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Speaker 1: Quickly appreciate it. It is always good to have a

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Speaker 1: number of guests. Michaelm Key. Where the young guy is

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Speaker 1: the eighties seven in May. Uh, that's a that's a

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Speaker 1: good thing. Jack. And yeah, well we had Sherman greenspan

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Speaker 1: On celebrating his ninetieth birthday. So let's go with a

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Speaker 1: young guy, Jack Boglu This Jack, good morning, Good morning, Tom.

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Speaker 1: To hear your voice again. What wonderful to talk to you.

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Speaker 1: I'm just looking at a Bell Weather active manager that

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Speaker 1: will be named nameless. They've got a great five year

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Speaker 1: upper death style track record, and all the track record

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Speaker 1: was made by not losing money in down markets. How

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Speaker 1: does passive investing do in down markets? Well, it does

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Speaker 1: really well. Now we've had a lot of dawn markets

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Speaker 1: in my career, and most recently in this one. I

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Speaker 1: just saw a piece of data from morning Store last

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Speaker 1: evening and I think they said from high to low,

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Speaker 1: and the market was off maybe twelve points and the

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Speaker 1: average mutual fund us off maybe fourteen. So it doesn't

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Speaker 1: you know, that's unusual. Usually when the market goes down

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Speaker 1: to the the index goes down just about as much

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Speaker 1: as the average fund because the cost don't have any

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Speaker 1: chance to come into play. The low cost different big

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Speaker 1: cost differential and when when the market goes down. But

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Speaker 1: this time, this this last decline has been singularly good,

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Speaker 1: with the S and T doing much better than the

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Speaker 1: average manager. There is passive investing in there's automated passive investing.

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Speaker 1: This is a new trend I've been looking at where

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Speaker 1: you can basically just have a direct deposit. Go to

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Speaker 1: one of these companies that does this, and they have

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Speaker 1: a passive investment system and you just stick the money

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Speaker 1: in and it goes in and the computer manages your money.

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Speaker 1: What do you think of that? Well, and there are

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Speaker 1: a lot of varieties of us, but the big ones

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Speaker 1: I call them probably Betterment and Wealth Front and do

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Speaker 1: a pretty good job. They do it with exchange traded runs,

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Speaker 1: but they don't trade them, and that your money is

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Speaker 1: going to typically go into something like a sixty forty

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Speaker 1: stock bond portfolio with the stock index being a broad

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Speaker 1: index usually the S and P and the bond index

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Speaker 1: being the total bond market index. And so it's it's um,

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Speaker 1: it's it's basically passive passive investment using passive funds. Is

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Speaker 1: it a good idea to to uh have an automatic

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Speaker 1: investment plan like that and basically sort of set it

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Speaker 1: and forget it, uh, not pay any attention to the markets, etcetera. Yes,

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Speaker 1: indeed that I mean that's basically my philosophy written large

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Speaker 1: and don't do something. Just stand there, stay the course,

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Speaker 1: you know, you know all I've been saying over the years, Tom,

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Speaker 1: and they're they're doing this in a little more formal

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Speaker 1: way and they do claim and I believe deliver on

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Speaker 1: the ability to do tax lost harvesting harvesting, which might

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Speaker 1: add a little value for the client. Their overall returns

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Speaker 1: I think are going to pretty much match the market industry.

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Speaker 1: They're not going to outface the market by any material extent.

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Speaker 1: I'd be very surproad if they did. They all looked

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Speaker 1: pretty much the same, the big ones the classic book

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Speaker 1: near twenty years ago, Common Sense on Mutual Funds New

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Speaker 1: imperatives for the intelligent investor? Is dividend growth your new imperative?

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Speaker 1: To get to clarify here, folks, year to date eight

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Speaker 1: seven percentile, one year nine six, I did that's not

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Speaker 1: a type of I just said that percentile five year

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Speaker 1: nine three percentile. Mr. Bogle. Dividend growth seems to be working.

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Speaker 1: Divd end growth does work. And divd end growth let

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Speaker 1: me see if I can broad in a little bit.

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Speaker 1: If you look at the S and P five index, uh,

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Speaker 1: that divon end, the cash divon end has gone up

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Speaker 1: almost well, it's going up for about them forty insecutive years,

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Speaker 1: with a couple of mild, very very mild declines and

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Speaker 1: then a big decline in nine when the bank stocks

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Speaker 1: cut their dividends. And the only thing that I think

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Speaker 1: cut that year in the in the SMP dividend, that's extraordinary,

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Speaker 1: like anything else that could happen again, and like everything

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Speaker 1: else that has happened before, back in the depression. But

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Speaker 1: it's a very steady series, and that's just buying the

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Speaker 1: market yield and not going for any particular growth pattern

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Speaker 1: because dividends grow and it's a powerful force. Uh is

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Speaker 1: the best thing to use E t F s or

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Speaker 1: is the best thing to um use? You know, a

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Speaker 1: fund that will invest for you well. In E t

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Speaker 1: F is an index fund that you can trade all

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Speaker 1: day long in real time, as there early advertisements said.

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Speaker 1: I don't agree that it's a good good thing to

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Speaker 1: trade mutual funds, and I think most responsible commentator agree

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Speaker 1: with me. Warren Buffett certainty, the academics out in the Mountain,

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Speaker 1: California who have done studies of the of the fact

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Speaker 1: that the higher your turnover is and individuals portfolio turnover

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Speaker 1: is the worst their record is. So it's the ets

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Speaker 1: allowed to trade, but if you don't trade them, um,

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Speaker 1: they're fine, and they're actually they actually worked pretty well.

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Speaker 1: I think that part of the E t F market

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Speaker 1: is probably as low as maybe that may be in

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Speaker 1: the high Jack, Let's come back and continue this thought.

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Speaker 1: We are with Jack Bogel, of course for years associated

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Speaker 1: with Van Guard, without question the inventor of passive investors.

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Speaker 1: I'm gonna talk to about leverage. We'll talk to Jack

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Speaker 1: Bogel about leverage here in a moment, futures to Tier

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Speaker 1: A negative eleven. I'll check in with Michael Barr now

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Speaker 1: and get the latest world and national headlines. Mike Tom,

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Speaker 1: thank you very much. Republican Donald Trump and the Democrat

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Speaker 1: Hillary Clinton are the favorites heading into today's presidential primaries.

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Speaker 1: Republicans will vote today in Michigan, Mississippi, Idaho, and Hawaii.

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Speaker 1: Democrats will vote in Michigan and Mississippi. A jury as

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Speaker 1: awarded sportscaster Aaron Andrews fifty five million dollars in her

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Speaker 1: lawsuit against the Nashville hotel Anna Stalker, who secretly recorded

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Speaker 1: a video of her in the nude. Andrews had sued

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Speaker 1: for seventy five million. The mayor of DeBerry, Florida, says

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Speaker 1: he wants to better understand what Cuban migrants go through

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Speaker 1: when crossing the Florida Straits. According to the Daytona Beach

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Speaker 1: News journal Mayor Clint Johnson plans to visit Cuba next

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Speaker 1: month and return home on a makeshift raft that he

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Speaker 1: will build while in Cuba. Global News twenty four hours

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Speaker 1: a day, powered by our two hundred journalists more than

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Speaker 1: a hundred fifty news bureaus from around the world. How

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Speaker 1: Michael Barr to Michael Barr, thanks so much. Fistures to

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Speaker 1: Chier a negative eleven, futures negative seventy seven. I'm gonna

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Speaker 1: call a jumble to the market and you see that

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Speaker 1: typically the few days after the jobs report, Rose Jack Vogel.

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Speaker 1: Stay with us Farker Drivers brought to you by your

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Speaker 1: Mercendes Benz Tri State Dealer. No matter what the weather,

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Speaker 1: Mercedes Benz Formatic all wheel Drive brings peace of mind

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Speaker 1: and driving confidence. Visit your Mercedes Benz Tri State Dealer

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Speaker 1: for a test drive today. Global Business News twenty four

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Speaker 1: hours a day at Bloomberg dot Com, the Radio plus

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Speaker 1: mobile app, and on your radio. This is a Bloomberg

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Speaker 1: Business Flash and I'm Karen Moscow. US Dock Index futures

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Speaker 1: are signaling equities may halt their best winning streak in

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Speaker 1: five months after worsening economic data from Asia reignited concern

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Speaker 1: over the outlook for global growth. We checked the markets

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

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Speaker 1: EVENY futures down eleven points down, EMNY futures down seventy

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Speaker 1: eight and NAS DOCUMENTI futures down twenty six dacks. In

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Speaker 1: Germany's down three tenths per cent. Ten Your treasury up

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

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Speaker 1: yield on the year point eight seven percent. NIMEX fut

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Speaker 1: oil down six tents per cent or twenty two cents

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Speaker 1: at thirty seven six barrel. Comex gold is up eight

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Speaker 1: tens per cent or ten dollars thirty cents to twelve

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Speaker 1: seventy the euro A dollar ten thirty nine, the n

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Speaker 1: one twelve point eight nine. And that's a Bloomberg business flash.

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Speaker 1: Tom and Mike Kara Mosca, thank you very much. We're

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Speaker 1: talking with Jack Bogel. He's of course the founder retired

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Speaker 1: CEO of the Vanguard Group, and we're talking about investing

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Speaker 1: for for the average person out there. I want to

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Speaker 1: ask you, Jack, what do you think of the phenomenon

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Speaker 1: of negative interest rates and how they hit the average person.

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Speaker 1: I note that Nika, the Japanese newspaper reporting that all

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Speaker 1: eleven Japanese asset managers who are running money market funds

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Speaker 1: are closing them because they can't make make them work

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Speaker 1: with negative interest rates. There. Yeah, well, let me say this,

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Speaker 1: if this is a pretty much unprecedented it's only right

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Speaker 1: now in Japan, aloon. It could spread a little further

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Speaker 1: around the world. But Japan has always been notable for

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Speaker 1: the very lowest interest rates, and uh, I think it's imponderable. Um,

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Speaker 1: the typical saver in the US, and is certainly including

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Speaker 1: in the US, has really been badly hurt by this

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Speaker 1: drop in interest rates. And you know that it's just

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Speaker 1: the tutology that low interest rates are great for borrowers

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Speaker 1: and terrible for lenders, and there's no way around that

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Speaker 1: that equation. And so there, our our savers in the

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Speaker 1: United States have been taken on the nose for you know,

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Speaker 1: pretty close to a decade now. So I don't look

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Speaker 1: at it as a very good situation. But I think

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Speaker 1: we're in a period of such low inflation that you

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Speaker 1: can't you you aren't going to be able to look

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Speaker 1: for much higher yields of the bond area for as

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Speaker 1: far as the audi, which I quickly add is not

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Speaker 1: very far. Jack Boggle. My grandfather once showed me his

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Speaker 1: bond blood or from another time in place the twenties,

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Speaker 1: and he showed me the day that he made a

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Speaker 1: three percent coupon, and he said that was extraordinary. That

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Speaker 1: if you could get three percent, Mike, and not two

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Speaker 1: point to five or two and eight, that was living large.

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Speaker 1: Is that where we're heading to, Jack, Well, we're we're

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Speaker 1: I'm not sure what instrument that is, but the corporate

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Speaker 1: is at one point eight or one point nine to

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Speaker 1: at one point nine percent, that's very low. But on

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Speaker 1: the other hand, what you have to take into account

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Speaker 1: is we're in a time but very low inflation, and

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Speaker 1: the real yields on bonds and stocks are not all

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Speaker 1: that bad. Believe it or not, Mr Arical standpoint. You know, yes,

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Speaker 1: in since nineteen fifty, uh, the average yield of a

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Speaker 1: stock bond portfolio has been about four and a half

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Speaker 1: percent nominal. But when you take inflation out of that period,

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Speaker 1: the average the average yield of stock in the same

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Speaker 1: stock and bond portfolio fifty we're using here, is nine

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Speaker 1: tenths of one percent um. So there's a big difference

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Speaker 1: between four point five and no point nine. But it

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Speaker 1: seems like it seems like investors almost would rather have

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Speaker 1: this gets to the negative interest rate question too. Almost

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Speaker 1: would rather have an eight percent return with nine percent inflation.

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Speaker 1: Then they would have five percent return and two percent. Well,

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Speaker 1: that's some money illusioning. No, that makes no mathematical sense.

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Speaker 1: But we look at the real returns to the nominal

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Speaker 1: returns first. Yeah, I mean I'll go that, Mike. Let

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Speaker 1: me quote you. This is the Vanguard Total Bond Fund,

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Speaker 1: the legendary v b t i X check Bogel basically

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Speaker 1: invented this industry. Uh. Fun performance three point four eight

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Speaker 1: two point zero nine one point nine three one point

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Speaker 1: six nine percent spread out over the last five years.

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Speaker 1: I mean, Mike, we forget it's single digit world. Uh

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Speaker 1: what do you do? Wouldn't You're in a such a

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Speaker 1: wishing as we've found in the beginning of this year,

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Speaker 1: when nothing when when everything is correlated negatively put it

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Speaker 1: that way, when nothing works, well, I think what you

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Speaker 1: do is stay the course. And I know what you

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Speaker 1: do not do is go out and reach for yield

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Speaker 1: and take a lot of extra risk. I'm a very

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Speaker 1: strong proponent of staying within the returns earned by the

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Speaker 1: bond market and earned by the stock market, and then

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Speaker 1: not trying to think you're smarter than the market. In

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Speaker 1: my very first book, Bogigon Mutual Fund, I said, don't

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Speaker 1: think you were smarter than the market. Nobody is. It's

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Speaker 1: to all these opinions come together, and I think, what's

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Speaker 1: left out of these factors is this this at least consideration,

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Speaker 1: there weren't such a low inflation world that they're the

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Speaker 1: lowest I can ever recall. And I go back a

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Speaker 1: long way, and I guess that I don't remember what

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Speaker 1: they were in the thirties, I confess, But it's see

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Speaker 1: the average return, as I mentioned a minute ago on

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Speaker 1: that treasury was five point seven percent, and that's a

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Speaker 1: that's a pretty that's a pretty healthy number compared to

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Speaker 1: where we are today, to say the least. But it's

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Speaker 1: a nominal number. And once you take out the the inflation,

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Speaker 1: if it comes way to hand less than one percent,

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Speaker 1: and so it's a tough time for investors, but you

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Speaker 1: have to do something. You know, putting your money under

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Speaker 1: the mattress is a good idea and not very safe

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Speaker 1: there putting in the bank savings deposit is going to

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Speaker 1: be having even lower yields about to say, maybe a

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Speaker 1: little higher the money market funds actually because banks aren't

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Speaker 1: been bound to the levels of the market return. But

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Speaker 1: I think it comes down to stay thought, stocks and bounds.

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Speaker 1: And if you don't, if you say I'm through with this,

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Speaker 1: I'm gonna put it all in cash, who's gonna tell

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Speaker 1: you when you get back in. So you've gotta be

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Speaker 1: right twice, right to get out and then right to

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Speaker 1: get back in. That's a that's a that's an Jack.

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Speaker 1: Good to catch up. Jack Bogel with Vanguard, of course,

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Speaker 1: and has good work over many decades to UH the

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Speaker 1: investment UH knowledge in the investment psychology of America. Mr

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Speaker 1: Bogel will celebrate an eighty seventh birthday Mike in May,

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Speaker 1: which is a very question beautiful thing. Yes, uh, negative

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Speaker 1: twelve when need to get to get the markets open

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Speaker 1: here and in five and a half minutes, negative twelve

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Speaker 1: on futures down future is negative eighty nine. I don't

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Speaker 1: see much angst out there, folks. Mostly it's just a

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Speaker 1: jumble to the market looking for guidance. Part of the guidance,

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Speaker 1: of course, is um fed speakers coming up. As we

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Speaker 1: get to March sixte m not really going to quiet period,

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Speaker 1: say the least the meetings for your calendar March sixteenth,

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Speaker 1: April twenty seven out to June fift before we get

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Speaker 1: to the fourth of July. We can say that because

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Speaker 1: it is gorgeous in New York this week Michael McKee

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Speaker 1: and I'm keen. This is Bloomberg Surveyans. We're cutting down

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Speaker 1: to the opening bill, brought you by the Geep Grand Cherokee,

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Speaker 1: the most awarded STV ever. The Grand Cherokee continues to

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Speaker 1: by four capability. Drive what at your local jeep dealer

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Speaker 1: today broadcasting live to New York Groomberg eleventh, to Washington,

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Speaker 1: d C. Bloomberg one, to Boston, Bloomberg Dwellers, to San Francisco,

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00:20:33,000 --> 00:20:36,520
Speaker 1: Bloomberg nine sixty to the Country series at San Genneral

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00:20:36,600 --> 00:20:40,000
Speaker 1: one ninet and around the road the Bloomberg Radio cross

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Speaker 1: SAP and Bloomberg dot Com. This is Bloomberg Surveillance and

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00:20:44,320 --> 00:20:46,919
Speaker 1: the opening bill is brought to you by s EI.

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Speaker 1: In the future of the asset management business will be

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Speaker 1: profoundly different. Find out how sciological lobal operating platform can

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Speaker 1: help you navigate the new operational frontier at se i

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Speaker 1: C dot com slash imagine good morning. I'mkard Moscow along

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Speaker 1: with Tom Keen and Michael McKee, and stocks are lower

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Speaker 1: at the open. The sn P five hundred is down

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Speaker 1: half per cent or nine points to nine two downtowns

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Speaker 1: industrial average down four tenths per cent or sixty one

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Speaker 1: points to seventeen thousand, twelve nastacts down seven tenths percent

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Speaker 1: or thirty three points to forty six seventy five ten.

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Speaker 1: Your treasury up twelve thirty seconds. The yield one point

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Speaker 1: eight two percent yield on the two year point eight

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Speaker 1: six percent. Nim X Screwede oil down nine tenths percent

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Speaker 1: or thirty six cents to thirty seven fifty six of

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Speaker 1: arrol Comax gold is up a tenths per center ten

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Speaker 1: dollars forty cents to twelve seventy four fifty and ounce.

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Speaker 1: The euro a dollar ten forty seven, the n one

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Speaker 1: twelve point eight zero. Tommy, Mike Bloomberg Surveillance, Karen, thank

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Speaker 1: you as so much. Mike. We need to speak to

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Speaker 1: a gentleman. His His mother was such an embarrassment. She

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Speaker 1: would open up bank accounts just to get toasters. Mike

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Speaker 1: Reagan grew up with like fort toasters off in the pantry. Uh, Tom,

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Speaker 1: you know it's funny. Mom and her later years, actually

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Speaker 1: got about job at a banking her in her sixties

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Speaker 1: and seventies, but her eyesight was so bad she kept

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Speaker 1: getting twenties and the fifties mixed up, and she lasted

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Speaker 1: about a week. But that tells you something about the

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Speaker 1: financial acumen and our Mike bringing Mike. But this, this

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Speaker 1: article from Michael Reagan is an act of God. It

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Speaker 1: is the first clear short read on what's going away

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Speaker 1: on all five corners of New York City. Well it's

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Speaker 1: not just New York City. I mean, if if there's money,

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Speaker 1: banks will be there. But it's the places Mike you're

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Speaker 1: writing about that with there may not be as much money,

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Speaker 1: but they still need banks right there, right. They refer

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Speaker 1: to them as banking deserts. Uh. And it was I

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Speaker 1: I basically writing about some research that the Federal reserves.

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Speaker 1: Liberty Street blog was was blogging about Yester. If you

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Speaker 1: want to you know, if anyone wants to Google out

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Speaker 1: and find it. And it's a fascinating concept. You think, Okay,

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Speaker 1: banks are aggressively closing branches. Why while everyone's banking online,

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Speaker 1: they're banking on their phones. You know, they just don't

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Speaker 1: need this physical footprint as much as as they used to.

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Speaker 1: And you would think on first clients, well who cares right,

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Speaker 1: doesn't really matter. But there is some concern that they're

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Speaker 1: especially closing them in sort of low income, minority heavy

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Speaker 1: areas UM where there's not as much affluence. UH City

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Speaker 1: Group Tom for example, is closing all its banks in Boston.

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Speaker 1: I don't know what that means. It'sn't under you know,

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Speaker 1: Wellesley Hills isn't under disadvantaged area. So but the idea

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Speaker 1: that they're they're looking into when they they started some

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Speaker 1: research from UH UH some professors at Berkeley UH in

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Speaker 1: California saying that what happens is when you when all

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Speaker 1: of a sudden, neighborhood doesn't have any bank branches, the

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Speaker 1: small business owners a lot of times can be sort

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Speaker 1: of cut out from some you know, bank funding that

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Speaker 1: they normally would have gotten. And they talk about what

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Speaker 1: they call soft information. You know, a community banker gets

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Speaker 1: to know the local business trends, They get to know

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Speaker 1: their customers and it's not just all their credit scores

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Speaker 1: and hard data like that that they look at. They

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Speaker 1: they're able to extend loans that maybe an algorithm and

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Speaker 1: or a purely mathematical look at a business wouldn't extend

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Speaker 1: in a small business. And then that leaves these small

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Speaker 1: businesses sort of having a scrape around to try to

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Speaker 1: find something else, sort of these predatory type of lenders

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Speaker 1: that a lot of people are talking about. So it's

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Speaker 1: an interesting concept and and and to me, I think

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Speaker 1: the banks, really the banks have greatly obviously recovered from

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Speaker 1: the financial crisis. The one area they never recovered from

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Speaker 1: is the PR and and you know, you look at

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Speaker 1: Bernie Sanders and everyone trying to break up the big banks.

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Speaker 1: I think this is a big PR story for them

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Speaker 1: that they might want to get ahead of. And as

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Speaker 1: far as your bar charts, Michael, are just stunning. The

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Speaker 1: credit card growth that comes from digital versus bricks and mortars,

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Speaker 1: the pruning of branches, the rate of change, and what

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Speaker 1: we observe in New York, they're all empty. Yeah, And

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Speaker 1: I assume they're all empty to everyone listening to this

428
00:25:01,840 --> 00:25:04,560
Speaker 1: nationwide right, right, And you know a lot of banks

429
00:25:04,640 --> 00:25:06,399
Speaker 1: talk about their bank of the future, you know, and

430
00:25:06,440 --> 00:25:09,640
Speaker 1: they're trying to sort of make them these glitzy small

431
00:25:09,840 --> 00:25:13,040
Speaker 1: much very much smaller footprint, smaller employees, but sort of

432
00:25:13,200 --> 00:25:15,199
Speaker 1: you know, flashy digital screens and that sort of thing.

433
00:25:15,560 --> 00:25:17,680
Speaker 1: So he cares that no one really cares. Yeah, and

434
00:25:17,720 --> 00:25:19,840
Speaker 1: what about small banks coming in? I mean, like the

435
00:25:20,160 --> 00:25:23,440
Speaker 1: void is always particularly in poor areas. I'm sorry, whether

436
00:25:23,480 --> 00:25:26,280
Speaker 1: it's credit unions or small banks. That's been what we've

437
00:25:26,320 --> 00:25:28,959
Speaker 1: done since you know, pre revolution or a war times, right,

438
00:25:29,000 --> 00:25:30,760
Speaker 1: And that's that's what this research looked at. It. You know,

439
00:25:30,760 --> 00:25:34,879
Speaker 1: a lot obviously banks are rethinking their branch strategy across

440
00:25:34,920 --> 00:25:38,480
Speaker 1: the board, so they are closing branches, not necessarily reopening

441
00:25:38,560 --> 00:25:41,040
Speaker 1: them in the poor areas as much as they would

442
00:25:41,160 --> 00:25:43,920
Speaker 1: in other areas. So it is, you know, it's something

443
00:25:43,960 --> 00:25:45,840
Speaker 1: that FEDS looking at, and it's a it's a pretty

444
00:25:45,840 --> 00:25:49,119
Speaker 1: fascinating topic. We should note that you're writing this from

445
00:25:49,119 --> 00:25:51,920
Speaker 1: Bloomberg Gadfly and the terminal g a d f CO.

446
00:25:52,560 --> 00:25:56,280
Speaker 1: That's right, people can see it there. Bloomberg Surveillance folks.

447
00:25:56,359 --> 00:25:59,520
Speaker 1: This morning brought by Interactive Brokers and CME Group if

448
00:25:59,560 --> 00:26:03,359
Speaker 1: you're looking for global futures contracts with low trading costs,

449
00:26:03,480 --> 00:26:07,360
Speaker 1: look no further. Interactive Brokers is the industry leader. Learned

450
00:26:07,359 --> 00:26:10,840
Speaker 1: more at Interactive brokers dot com slash see I mean group.

451
00:26:10,880 --> 00:26:12,960
Speaker 1: Mikel regan with this with Bloomberg gad Fly. He has

452
00:26:13,080 --> 00:26:15,639
Speaker 1: it's two deaths away from Lisa Bramo wits they're not

453
00:26:15,720 --> 00:26:19,080
Speaker 1: on speaking terms. It's going great, I mean gad flight.

454
00:26:19,240 --> 00:26:23,520
Speaker 1: Every day there's things avail you. How how much are

455
00:26:23,600 --> 00:26:25,639
Speaker 1: you getting out of the equity markets? Now? What is

456
00:26:25,680 --> 00:26:29,760
Speaker 1: the theme that you're seeing from strategists, the change that

457
00:26:29,840 --> 00:26:32,440
Speaker 1: you're seeing from strategists. Well, I'm curious, I'm curious what

458
00:26:32,520 --> 00:26:34,639
Speaker 1: do you think about this time? But I'm semi fascinated

459
00:26:34,720 --> 00:26:36,760
Speaker 1: with the idea of round numbers. And we look at

460
00:26:36,800 --> 00:26:40,800
Speaker 1: two thousand and the SMP five hundred and literally on Friday,

461
00:26:40,840 --> 00:26:45,639
Speaker 1: I think it closed at nineteen point nine. Yeah, so

462
00:26:45,760 --> 00:26:48,520
Speaker 1: it's struggling at that level. Right above that two thousand

463
00:26:48,640 --> 00:26:52,760
Speaker 1: level is also about the spire is the two hundred

464
00:26:52,840 --> 00:26:55,879
Speaker 1: day moving average, which is the next big level that

465
00:26:55,920 --> 00:26:58,800
Speaker 1: everyone's looking at. That's a trend line that's been going

466
00:26:58,960 --> 00:27:03,359
Speaker 1: down anward sloping since the turmoil in August, since all

467
00:27:03,400 --> 00:27:06,240
Speaker 1: the folatility in August, so pretty soon in order to

468
00:27:06,520 --> 00:27:09,280
Speaker 1: even just to keep track with the two day moving

469
00:27:09,320 --> 00:27:11,800
Speaker 1: average means it's it's gonna be pushing the market down

470
00:27:12,200 --> 00:27:14,239
Speaker 1: if you believe in that. And you know, a lot

471
00:27:14,320 --> 00:27:16,240
Speaker 1: of people look at the two day it's probably the

472
00:27:16,320 --> 00:27:19,440
Speaker 1: most followed, one of the most followed trend lines. Uh.

473
00:27:19,720 --> 00:27:21,840
Speaker 1: There's a belief that a lot of high frequency trading

474
00:27:22,119 --> 00:27:24,439
Speaker 1: uh you know, looks at it and uses that as

475
00:27:24,480 --> 00:27:27,399
Speaker 1: one of its inputs in it's uh, in their algorithms.

476
00:27:27,440 --> 00:27:29,720
Speaker 1: So it's a it's kind of an interesting level. We

477
00:27:29,800 --> 00:27:32,760
Speaker 1: had this huge almost ten percent rebound in in little

478
00:27:32,800 --> 00:27:35,440
Speaker 1: less than a month, but it really is stalling out

479
00:27:35,600 --> 00:27:38,159
Speaker 1: right at that round number of two thousand and you know,

480
00:27:38,400 --> 00:27:41,399
Speaker 1: a little bit below the two moving average. To review this,

481
00:27:41,880 --> 00:27:46,960
Speaker 1: the modest death cross August two thousand and fifteen, called

482
00:27:46,960 --> 00:27:50,160
Speaker 1: a year ago wait a lovely kiss for the most

483
00:27:50,240 --> 00:27:53,760
Speaker 1: part beginning of the year. And now we've rolled over

484
00:27:53,840 --> 00:27:55,600
Speaker 1: once again and we begin to come up by that

485
00:27:56,160 --> 00:27:59,640
Speaker 1: just sending two hunter day moving average. To me, they're

486
00:27:59,680 --> 00:28:02,400
Speaker 1: just emp and trends. I've never put a lot into

487
00:28:02,480 --> 00:28:06,960
Speaker 1: two series moving averages. I use three moving averages to

488
00:28:07,080 --> 00:28:09,000
Speaker 1: give me some sort of belief in frankly, right now

489
00:28:09,040 --> 00:28:12,280
Speaker 1: they're a little soggy as well. Yeah, And you know,

490
00:28:12,359 --> 00:28:15,040
Speaker 1: I think in any case, when you're in this sort

491
00:28:15,080 --> 00:28:17,520
Speaker 1: of period of time right now where there's not a

492
00:28:17,560 --> 00:28:20,480
Speaker 1: lot of earnings, not a lot of fundamental issues coming

493
00:28:20,480 --> 00:28:22,440
Speaker 1: into the market, Um, you know, a lot of the

494
00:28:22,520 --> 00:28:24,960
Speaker 1: FED next week, but before that, they're all in a

495
00:28:25,040 --> 00:28:26,959
Speaker 1: blackout period where we're not gonna hear much from them.

496
00:28:27,040 --> 00:28:29,680
Speaker 1: So I think people are looking at the charts these

497
00:28:29,760 --> 00:28:32,639
Speaker 1: days a lot more than they would have otherwise. I agree,

498
00:28:32,800 --> 00:28:35,080
Speaker 1: charts when you get into some form of bear market,

499
00:28:35,160 --> 00:28:38,080
Speaker 1: charts come up right now. The fancy stuff I look at, folks,

500
00:28:38,200 --> 00:28:41,800
Speaker 1: is indeterminate off of some mumbo jumbo called a d

501
00:28:42,080 --> 00:28:45,400
Speaker 1: X I, a d X d M I. I should say,

502
00:28:46,080 --> 00:28:48,720
Speaker 1: the more short term moving averages I use have a

503
00:28:49,440 --> 00:28:52,960
Speaker 1: modest uptilt to them. But modest would be the operative.

504
00:28:53,480 --> 00:28:57,000
Speaker 1: We're congratulations on your bank stuff. Thanks, just great. Are

505
00:28:57,000 --> 00:28:59,600
Speaker 1: you enjoying running for Bloomberg? GETFOI? I love it? Yeah,

506
00:29:00,000 --> 00:29:01,800
Speaker 1: it gets a great concept, you know, really trying to

507
00:29:01,840 --> 00:29:05,160
Speaker 1: beat critical and short and they forced you to do

508
00:29:05,280 --> 00:29:08,200
Speaker 1: this like twelve words, right, Hey, al rite short. I'll

509
00:29:08,200 --> 00:29:09,520
Speaker 1: be done in a hundred words. If you need me,

510
00:29:11,360 --> 00:29:15,640
Speaker 1: don't go go to lunch. Yeah, alright. Michael Oregan from

511
00:29:16,760 --> 00:29:20,040
Speaker 1: We're Gonna Do Radio Bloomberg Get Flying Um, Alfred New

512
00:29:20,120 --> 00:29:22,000
Speaker 1: Jersey wanted to call it put a cork in your mouth.

513
00:29:23,880 --> 00:29:28,680
Speaker 1: That's still under consideration, Michael Regan, thank you so much

514
00:29:28,720 --> 00:29:33,040
Speaker 1: to doubt negative any when the vix eighteen point three six.

515
00:29:37,600 --> 00:29:39,200
Speaker 1: I'm now to check in with Michael Barr and get

516
00:29:39,240 --> 00:29:41,880
Speaker 1: the latest world and national headlines. Michael, Mike time, Thank

517
00:29:41,920 --> 00:29:44,480
Speaker 1: you very much. It's primary day today in several states,

518
00:29:44,560 --> 00:29:47,800
Speaker 1: with the biggest one in Michigan for Republican front runner

519
00:29:47,840 --> 00:29:50,960
Speaker 1: Donald Trump. Michigan offers a test of his growing popularity

520
00:29:51,280 --> 00:29:55,320
Speaker 1: among blue collar white voters. Trump tells ABC News today

521
00:29:55,480 --> 00:30:00,240
Speaker 1: the establishment attacks against him are not working. Spending tens

522
00:30:00,280 --> 00:30:03,560
Speaker 1: of millions of dollars on fighting media establishment, and you

523
00:30:03,640 --> 00:30:05,920
Speaker 1: know they would rather not see me in there, obviously.

524
00:30:06,040 --> 00:30:08,640
Speaker 1: You know you had failed, people like Mitt Romney talking's

525
00:30:08,680 --> 00:30:11,280
Speaker 1: have failed. One of the worst campaigns I've ever witnessed

526
00:30:11,320 --> 00:30:15,840
Speaker 1: in my life. Mississippi, Idaho, and Hawaii also hold Republican contest.

527
00:30:16,000 --> 00:30:19,640
Speaker 1: Democrats vote in Michigan and Mississippi. Today, a down tree

528
00:30:19,720 --> 00:30:22,440
Speaker 1: on the tracks reportedly caused the commuter train to derail

529
00:30:22,560 --> 00:30:25,880
Speaker 1: in northern California, sending its lead car plunging into a

530
00:30:26,000 --> 00:30:29,960
Speaker 1: swollen creek. The Alameda County Sheriff's Department says nine people

531
00:30:30,000 --> 00:30:33,680
Speaker 1: were injured, including four seriously. A US air strike has

532
00:30:33,760 --> 00:30:36,680
Speaker 1: killed at least a hundred fifty Al Shabab militants at

533
00:30:36,720 --> 00:30:39,800
Speaker 1: a training camp in Somalia to believe the militants were

534
00:30:39,800 --> 00:30:42,880
Speaker 1: about to launch an attack. Intelligence officials say the air

535
00:30:42,960 --> 00:30:46,320
Speaker 1: strikes targeted a camp run by Islamic extremists in a

536
00:30:46,440 --> 00:30:49,200
Speaker 1: forested area more than a hundred twenty miles north of Mogad.

537
00:30:49,240 --> 00:30:52,360
Speaker 1: Issue Global News twenty four hours a day, powered by

538
00:30:52,720 --> 00:30:55,400
Speaker 1: our twenty four hundred journalists and more than a hundred

539
00:30:55,440 --> 00:30:57,880
Speaker 1: fifty news bureaus from around the world. Now Michael Barr

540
00:30:58,280 --> 00:31:00,960
Speaker 1: to Michael Barr, thanks so much. Negative one on five

541
00:31:01,040 --> 00:31:03,680
Speaker 1: in the first quiet day, we get below seventeen thousand,

542
00:31:03,800 --> 00:31:08,840
Speaker 1: sixteen one on the dull Sight six down a full

543
00:31:08,960 --> 00:31:12,920
Speaker 1: fifteen points. Michael McKee and Tom Keene on economics, finance, investment,

544
00:31:13,000 --> 00:31:22,240
Speaker 1: on international relations, Bloomberg Surveillance, bloombergs afilance party by T

545
00:31:22,320 --> 00:31:24,360
Speaker 1: two Computing, a new kind of I T solutions company

546
00:31:24,400 --> 00:31:26,920
Speaker 1: for workflow, mobility and infrastructure. Let them explain how their

547
00:31:26,960 --> 00:31:29,280
Speaker 1: expertise can help you gain greater business value. Visit t

548
00:31:29,360 --> 00:31:38,920
Speaker 1: to computing dot com for more information. Global business news

549
00:31:39,040 --> 00:31:42,360
Speaker 1: twenty four hours a day at Bloomberg dot com, the radio,

550
00:31:42,440 --> 00:31:45,880
Speaker 1: plus mobile and on your radio. This is a Bloomberg

551
00:31:46,000 --> 00:31:49,719
Speaker 1: Business Flash and I'm Karen Moscow stocks are retreating from

552
00:31:49,800 --> 00:31:52,840
Speaker 1: nine week highs following the SNP five hundred longest winning

553
00:31:52,880 --> 00:31:56,160
Speaker 1: streak in five months, after worsening economic data from Asia,

554
00:31:56,240 --> 00:31:59,480
Speaker 1: reigniting concern over the outlook for global growth. We checked

555
00:31:59,520 --> 00:32:02,040
Speaker 1: the markets every fifteen minutes throughout the trading day. On

556
00:32:02,120 --> 00:32:05,120
Speaker 1: Bloomberg SNP five hundred down eight tenths per cent or

557
00:32:05,160 --> 00:32:08,840
Speaker 1: fifteen points in ninety five down, Johnes Industrial Average down

558
00:32:08,880 --> 00:32:11,520
Speaker 1: six tenths percent or a hundred eight points to sixteen thousand,

559
00:32:11,640 --> 00:32:14,560
Speaker 1: nine hundred sixty five, and the navstacks down seven tenths

560
00:32:14,600 --> 00:32:17,240
Speaker 1: percent or thirty four points to forty six seventy four.

561
00:32:17,640 --> 00:32:20,040
Speaker 1: Ten year treasury of twenty three thirty seconds the yield

562
00:32:20,080 --> 00:32:22,360
Speaker 1: one point eight two percent yield on the two year

563
00:32:22,440 --> 00:32:25,320
Speaker 1: point eight six percent. Nimax screwed Oil down two point

564
00:32:25,360 --> 00:32:27,600
Speaker 1: one percent or seventy nine cents to thirty seven on

565
00:32:27,640 --> 00:32:30,400
Speaker 1: eleven a barrel Comacs Gold up three ten percent or

566
00:32:30,440 --> 00:32:33,400
Speaker 1: four dollars to twelve and sixty eight. Announced the euro

567
00:32:33,480 --> 00:32:36,160
Speaker 1: a dollar ten forty one again one twelve point seven

568
00:32:36,280 --> 00:32:40,680
Speaker 1: zero to United Continental Holding shareholders will nominate airline turnaround

569
00:32:40,760 --> 00:32:43,840
Speaker 1: artists Gordon Bethune to lead a slate of new directors

570
00:32:44,080 --> 00:32:47,600
Speaker 1: in an effort to overhaul the airline's management. We're in Buffetsbergshire.

571
00:32:47,680 --> 00:32:50,080
Speaker 1: Hathaway said it will sell bonds and part to repay

572
00:32:50,120 --> 00:32:52,520
Speaker 1: a ten billion dollar loan used to finance its purchase

573
00:32:52,600 --> 00:32:55,440
Speaker 1: of precision cast parts and Senna. Fie and Mark planned

574
00:32:55,440 --> 00:32:57,440
Speaker 1: to end a two decade long joint venture to sell

575
00:32:57,520 --> 00:33:00,720
Speaker 1: vaccines in Europe as revenue from the price next windows.

576
00:33:01,040 --> 00:33:03,800
Speaker 1: And that's a Bloomberg business flash, Tom and Nike, Karen,

577
00:33:04,160 --> 00:33:07,480
Speaker 1: thanks so much, Bloomberg. Surveillance is Tuesday, but you by

578
00:33:07,600 --> 00:33:11,720
Speaker 1: marks Paneth l LP, ranked among the top three forensic

579
00:33:11,800 --> 00:33:14,320
Speaker 1: accounting firms in New York by the New York Law

580
00:33:14,440 --> 00:33:17,800
Speaker 1: Journal for the sixth year in a row. Visit marks

581
00:33:17,840 --> 00:33:21,240
Speaker 1: Paneth dot com. M A r K. S pan of P.

582
00:33:21,520 --> 00:33:25,400
Speaker 1: A N. E. T. H marks paneth dot com and

583
00:33:25,480 --> 00:33:27,520
Speaker 1: we thank the I'm looking forward to the seventh year

584
00:33:28,200 --> 00:33:29,600
Speaker 1: in a row, the sixth year in a row that

585
00:33:29,720 --> 00:33:35,480
Speaker 1: they work in this difficult area forensic accounting. Brian Jacobson

586
00:33:36,680 --> 00:33:39,880
Speaker 1: is a brave soul. He's with Wells Fargo and he

587
00:33:40,280 --> 00:33:42,680
Speaker 1: thinks about what to do with money, particularly in a

588
00:33:42,800 --> 00:33:48,960
Speaker 1: single digit world. Brian, you beautifully revisit dollar cost averaging,

589
00:33:49,600 --> 00:33:54,000
Speaker 1: which by definition works within greater volatility and a double

590
00:33:54,080 --> 00:33:58,600
Speaker 1: digit world. Can dollar cost averaging work in a lethargic,

591
00:33:58,840 --> 00:34:02,920
Speaker 1: low return world? Well, thanks for having me on, and uh,

592
00:34:03,080 --> 00:34:05,320
Speaker 1: you know it's not that brave to say, let's go

593
00:34:05,480 --> 00:34:07,960
Speaker 1: with the tried and true method of saving early and

594
00:34:08,080 --> 00:34:12,560
Speaker 1: saving often, which entails dollar cost averaging. The problems I

595
00:34:12,640 --> 00:34:15,000
Speaker 1: think everybody's trying to pick a top or pick a

596
00:34:15,080 --> 00:34:17,560
Speaker 1: bottom as far as when they're doing their allocations and

597
00:34:18,040 --> 00:34:21,279
Speaker 1: living in a binary world like that can create a

598
00:34:21,320 --> 00:34:24,080
Speaker 1: lot of volatility with your portfolio. And in fact, if

599
00:34:24,200 --> 00:34:27,440
Speaker 1: you have a volatile market, the dollar cost averaging can

600
00:34:27,520 --> 00:34:31,720
Speaker 1: really help you sort of smooth out the cost basis

601
00:34:32,000 --> 00:34:35,160
Speaker 1: of your portfolio. Yes, ideally we'd like to pick the

602
00:34:35,200 --> 00:34:38,040
Speaker 1: bottom for getting in. But that's somewhat of a fool's

603
00:34:38,120 --> 00:34:42,080
Speaker 1: errand yeah, but within that is the new regime we're in.

604
00:34:43,040 --> 00:34:45,040
Speaker 1: I mean, if we can all agree we've moved from

605
00:34:45,080 --> 00:34:48,080
Speaker 1: twenty percent a year to twelve percent a year. Too.

606
00:34:48,120 --> 00:34:51,920
Speaker 1: Somewhere's self the major metric I see as we just

607
00:34:52,000 --> 00:34:54,239
Speaker 1: have to put aside more money. I mean, that's what

608
00:34:54,320 --> 00:34:58,640
Speaker 1: we've heard interview after interview, when there's that desperation to

609
00:34:58,719 --> 00:35:02,360
Speaker 1: put aside more money. Is the first order condition to

610
00:35:02,520 --> 00:35:06,920
Speaker 1: just put it aside? Or does d A really work well?

611
00:35:06,960 --> 00:35:08,600
Speaker 1: I think that the first thing you need to do

612
00:35:09,080 --> 00:35:11,920
Speaker 1: is to increase the amount that you are saving to

613
00:35:12,200 --> 00:35:15,439
Speaker 1: reach those long term financial goals because in a low

614
00:35:15,520 --> 00:35:18,640
Speaker 1: interest rate environment, if you think about it's not just

615
00:35:18,760 --> 00:35:22,000
Speaker 1: a low interest rate environment, but we all face the prospect, thankfully,

616
00:35:22,200 --> 00:35:25,480
Speaker 1: of having longer life expectancies when we're in retirement, and

617
00:35:25,560 --> 00:35:29,880
Speaker 1: that increases that that liability effectively that you're trying to fund.

618
00:35:30,160 --> 00:35:33,000
Speaker 1: So you have that longer time frame and you have

619
00:35:33,200 --> 00:35:36,239
Speaker 1: lower interest rates, and that means that now you need

620
00:35:36,320 --> 00:35:38,080
Speaker 1: to save a little bit more, which is I think

621
00:35:38,120 --> 00:35:41,320
Speaker 1: behaviorally what people have been doing. We've seen an uptick

622
00:35:41,760 --> 00:35:44,920
Speaker 1: in the savings rate in the United States, So that's encouraging.

623
00:35:45,280 --> 00:35:48,560
Speaker 1: But for investors who are looking at how then to

624
00:35:48,840 --> 00:35:51,640
Speaker 1: enter the market, I think that dollar cost averaging where

625
00:35:51,680 --> 00:35:54,200
Speaker 1: you're doing it every single month or maybe even every

626
00:35:54,239 --> 00:35:57,360
Speaker 1: single week. Uh, if you can increase the frequency with

627
00:35:57,520 --> 00:36:00,160
Speaker 1: which you do it, that can really help. So even

628
00:36:00,200 --> 00:36:03,120
Speaker 1: if you don't have a directional market where it's moving up,

629
00:36:03,160 --> 00:36:06,399
Speaker 1: boards moving down, even if there's just that volatility where

630
00:36:06,400 --> 00:36:09,000
Speaker 1: you've got lots of ups and lots of downs. Uh,

631
00:36:09,080 --> 00:36:12,719
Speaker 1: the dollar cock averaging can cover over a multitude of

632
00:36:12,880 --> 00:36:17,480
Speaker 1: market timing sins. You mentioned save early, save often. Let

633
00:36:17,520 --> 00:36:19,560
Speaker 1: me bring up something I was talking about with Jack

634
00:36:19,600 --> 00:36:22,160
Speaker 1: Vogel a little while ago, and that's these firms. Now

635
00:36:22,600 --> 00:36:26,719
Speaker 1: I realize you're at wells, but firms that suggest you

636
00:36:27,640 --> 00:36:32,160
Speaker 1: direct deposits some of your paycheck into stock funds that

637
00:36:32,280 --> 00:36:37,120
Speaker 1: they manage, you know, passively. UM, is the market the

638
00:36:37,200 --> 00:36:42,680
Speaker 1: best place to save for many people, it might not

639
00:36:42,920 --> 00:36:46,200
Speaker 1: be the best place to save if you aren't necessarily

640
00:36:46,440 --> 00:36:49,480
Speaker 1: fully funded with what I refer to as your your

641
00:36:49,560 --> 00:36:52,759
Speaker 1: liquidity bucket or your precautionary balance bucket. You might want

642
00:36:52,800 --> 00:36:55,960
Speaker 1: to fill those up first before you look at some

643
00:36:56,080 --> 00:36:59,120
Speaker 1: of those, uh, you know, perhaps riskier parts of the market.

644
00:36:59,200 --> 00:37:01,400
Speaker 1: I think that for a lot of people it's somewhat

645
00:37:01,520 --> 00:37:04,920
Speaker 1: uncomfortable to see the volatility in their portfolio if they

646
00:37:05,000 --> 00:37:09,000
Speaker 1: don't first build up that base level of savings that

647
00:37:09,120 --> 00:37:13,239
Speaker 1: they need to weather certain market storms. One of the

648
00:37:13,800 --> 00:37:18,359
Speaker 1: old classics in financial economics is almost if you think

649
00:37:18,400 --> 00:37:20,800
Speaker 1: about it as building a pyramid, if you will, you know,

650
00:37:20,920 --> 00:37:24,279
Speaker 1: everybody's probably heard of Maslow's hierarchy of needs. You've got

651
00:37:24,360 --> 00:37:26,160
Speaker 1: to take care of that base level first, and I

652
00:37:26,200 --> 00:37:28,120
Speaker 1: think for a lot of people you have to have

653
00:37:28,280 --> 00:37:31,200
Speaker 1: that safety first principle, which is make sure you have

654
00:37:31,400 --> 00:37:35,120
Speaker 1: enough cash balances and precautionary balances that you don't have

655
00:37:35,320 --> 00:37:38,000
Speaker 1: to fixate on the daily ups and downs of the market.

656
00:37:38,320 --> 00:37:41,320
Speaker 1: Brian Jacobson with Wells Fargo Brian um I turned to

657
00:37:41,360 --> 00:37:44,960
Speaker 1: the Center for Retirement Research, Boston College. Alicia Minel and

658
00:37:45,040 --> 00:37:49,759
Speaker 1: the people up there are doing absolutely brilliant, acutely mathematical

659
00:37:49,880 --> 00:37:53,120
Speaker 1: work on what we're doing actually with our money. And

660
00:37:53,239 --> 00:37:56,439
Speaker 1: one of their great studies of the autumn of last

661
00:37:56,560 --> 00:37:59,439
Speaker 1: year is a basic idea as the kids leave home,

662
00:38:00,040 --> 00:38:05,239
Speaker 1: and it's it's laughable how minimal people increase their four

663
00:38:05,280 --> 00:38:08,680
Speaker 1: oh one k is their retirement plans. When supposedly the

664
00:38:08,760 --> 00:38:13,640
Speaker 1: tuition bills are done. What is your prescription to change

665
00:38:13,760 --> 00:38:17,400
Speaker 1: retirement savings behavior. Does a government have to step in

666
00:38:17,560 --> 00:38:21,520
Speaker 1: and and just massively increase the incentives to go to

667
00:38:21,600 --> 00:38:25,480
Speaker 1: four oh one k? You know, that's a real tricky

668
00:38:25,600 --> 00:38:28,239
Speaker 1: question because they have increased the incentives to go to

669
00:38:28,760 --> 00:38:31,239
Speaker 1: the four one k, but that doesn't really seem to

670
00:38:31,320 --> 00:38:34,160
Speaker 1: be doing it for a lot exactly exactly. I think

671
00:38:34,320 --> 00:38:36,799
Speaker 1: changing the rules as far as you know, they took

672
00:38:36,840 --> 00:38:40,520
Speaker 1: a big step forward by having a default enrollment as

673
00:38:40,560 --> 00:38:43,840
Speaker 1: being an option, effectively taking care of taking advantage of

674
00:38:43,880 --> 00:38:46,319
Speaker 1: our laziness. I think that might be a good way

675
00:38:46,440 --> 00:38:50,960
Speaker 1: to perhaps nudge people into saving more prudently for their retirement.

676
00:38:51,200 --> 00:38:53,840
Speaker 1: You can put things more on autopilot in terms of

677
00:38:53,960 --> 00:38:58,160
Speaker 1: having automatic escalations of your contributions to your four one K.

678
00:38:58,480 --> 00:39:01,520
Speaker 1: So I think that just allowed owing plan sponsors to

679
00:39:01,760 --> 00:39:07,880
Speaker 1: design plans that better fit the behavior of planned participant

680
00:39:08,160 --> 00:39:11,279
Speaker 1: will really go a long way to helping people fund

681
00:39:11,360 --> 00:39:14,520
Speaker 1: their retirements. Otherwise you get into a situation where like

682
00:39:14,680 --> 00:39:17,160
Speaker 1: it or not, will just all have to work a

683
00:39:17,239 --> 00:39:20,400
Speaker 1: little bit longer in retirement, Like My headline on this,

684
00:39:20,560 --> 00:39:22,640
Speaker 1: and this comes from a lot of work. A major

685
00:39:22,680 --> 00:39:25,240
Speaker 1: shout out to Peter Orzag and his time at Brookings

686
00:39:26,040 --> 00:39:28,520
Speaker 1: is the bottom half, bottom two thirds of the country

687
00:39:29,080 --> 00:39:33,439
Speaker 1: have to be massively incentivized to get going on this. Well,

688
00:39:34,080 --> 00:39:37,760
Speaker 1: now we've talked about people putting their money in the markets,

689
00:39:37,800 --> 00:39:39,640
Speaker 1: what are you expecting from the market. You had a

690
00:39:39,719 --> 00:39:44,879
Speaker 1: fairly aggressive call for the SNPI this year and we've

691
00:39:44,920 --> 00:39:48,279
Speaker 1: had a fairly lousy first couple of months. Are you

692
00:39:48,400 --> 00:39:51,800
Speaker 1: still sticking with that? I am? And actually there was

693
00:39:51,800 --> 00:39:54,759
Speaker 1: a Bloomberg briefa that just came out this morning where

694
00:39:54,800 --> 00:39:57,160
Speaker 1: they did a little interview, a Q and A with me,

695
00:39:57,239 --> 00:39:58,640
Speaker 1: and that was a lot of fun to discuss. And

696
00:39:58,920 --> 00:40:00,840
Speaker 1: unlike a lot of people, I haven't really lowered my

697
00:40:01,200 --> 00:40:04,680
Speaker 1: targets for the SMP five hundred for the balance of

698
00:40:04,760 --> 00:40:08,360
Speaker 1: the year. I still think we could see the SMP

699
00:40:08,560 --> 00:40:10,719
Speaker 1: five hundred. I'm not saying we're going to end the

700
00:40:10,800 --> 00:40:12,839
Speaker 1: year at those levels. I think that you know, trying

701
00:40:12,880 --> 00:40:15,800
Speaker 1: to pick what's the level of the SMP at, you know,

702
00:40:15,920 --> 00:40:18,000
Speaker 1: the last day of the years, why not just ask

703
00:40:18,080 --> 00:40:19,600
Speaker 1: me what it's going to be on you know, June

704
00:40:19,680 --> 00:40:22,200
Speaker 1: three or some other random date. I think that I

705
00:40:22,400 --> 00:40:24,760
Speaker 1: usually think of these things in terms of trading ranges,

706
00:40:25,080 --> 00:40:27,799
Speaker 1: and I think that we could move up to if

707
00:40:27,880 --> 00:40:30,960
Speaker 1: we get UH. There's three key things that we need

708
00:40:31,040 --> 00:40:33,760
Speaker 1: to see. I think we need to see additional policy

709
00:40:33,880 --> 00:40:37,360
Speaker 1: moves out of China to stabilize their economy and their currency.

710
00:40:37,640 --> 00:40:39,719
Speaker 1: I think we need to see the ECB instead of

711
00:40:39,760 --> 00:40:42,480
Speaker 1: having a draggy disappointment like we had in December. I

712
00:40:42,560 --> 00:40:45,200
Speaker 1: think he needs to beat expectations when they meet on

713
00:40:45,320 --> 00:40:47,440
Speaker 1: March tenth. And we need to see the Said be

714
00:40:47,640 --> 00:40:50,480
Speaker 1: very patient when it comes to hiking rates. I think

715
00:40:50,560 --> 00:40:53,000
Speaker 1: that Leo Brainard, when she was speaking yesterday, she did

716
00:40:53,040 --> 00:40:55,919
Speaker 1: a very good job of outlining the reasons for why

717
00:40:56,000 --> 00:40:58,000
Speaker 1: the Said should be very cautious when it comes to

718
00:40:58,120 --> 00:41:01,480
Speaker 1: hiking rates. Brian, thank you so much. Brian Jacobson with

719
00:41:01,560 --> 00:41:04,960
Speaker 1: Wells Fargo with something we don't spend enough time on,

720
00:41:05,080 --> 00:41:09,120
Speaker 1: which is the shaky retirement structure of the nation. Mike,

721
00:41:09,160 --> 00:41:12,040
Speaker 1: I can't say enough about Alicia Minnell's work at Boston

722
00:41:12,160 --> 00:41:16,399
Speaker 1: College at the Star Leader on that and it's it's

723
00:41:16,480 --> 00:41:20,720
Speaker 1: just it's just jaw dropping. I will mince no words.

724
00:41:21,480 --> 00:41:25,800
Speaker 1: The failure of Arissa of nine seventy four is just

725
00:41:26,520 --> 00:41:29,880
Speaker 1: stark as can be. And you know we can't do

726
00:41:30,040 --> 00:41:32,560
Speaker 1: enough discussion of that should bring her on and she

727
00:41:32,640 --> 00:41:35,239
Speaker 1: can give us advice for people who have children who

728
00:41:35,280 --> 00:41:38,960
Speaker 1: will need to be educated and therefore cannot retire. But

729
00:41:40,680 --> 00:41:42,759
Speaker 1: you know, we came out of this, folks, with Eisenhower

730
00:41:42,840 --> 00:41:46,320
Speaker 1: and then Jimmy Carter and and and President Reagan and

731
00:41:46,400 --> 00:41:50,480
Speaker 1: others jump starting ourselves in an organized retirement. It was

732
00:41:50,520 --> 00:41:53,640
Speaker 1: all based on choice and freedom. And remember you got

733
00:41:53,719 --> 00:41:59,400
Speaker 1: toasters and free flags and bagels were served. And for

734
00:41:59,640 --> 00:42:03,319
Speaker 1: I even the working number Alicia has is for Americans

735
00:42:03,960 --> 00:42:06,920
Speaker 1: eight out of ten. It hasn't worked, and it's just

736
00:42:07,040 --> 00:42:09,759
Speaker 1: all there is to it will be somehow, I think

737
00:42:09,800 --> 00:42:11,319
Speaker 1: we'll be doing more of that as we go through

738
00:42:11,360 --> 00:42:14,600
Speaker 1: two thousand sixteen. Right now and pausing the market has

739
00:42:14,640 --> 00:42:20,000
Speaker 1: been really a good number of days negative on the

740
00:42:20,080 --> 00:42:24,960
Speaker 1: down then down thirteen points in the s the Doubt

741
00:42:25,040 --> 00:42:30,399
Speaker 1: under seventeen thousand, the vics eighteen point four zero, one

742
00:42:30,480 --> 00:42:35,080
Speaker 1: year trailing return SMP five hundred negative, the Doubt negative

743
00:42:35,120 --> 00:42:39,960
Speaker 1: five looking back twelve months. We are produced by Yu

744
00:42:40,440 --> 00:42:44,960
Speaker 1: Yen ken Felio, our global technical director, as Bloomberg surveillance,