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

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Speaker 1: dot com the radio plus mobile last and on your radio,

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Speaker 1: this is a Bloomberg Business Flash. And I'm Karen Moscow.

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Speaker 1: US Suck Index futures are higher, signaling more gains for

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Speaker 1: equities heading into the eighth year of a bull run

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Speaker 1: as investors away queues from central banks. You check the

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

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Speaker 1: SNP Emni future is up twelve points, Dow Emni futures

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Speaker 1: of a hundred one and NAS doc emedy futures of

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Speaker 1: twenty seven docks in Germany's up one and a half percent.

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Speaker 1: Ten year treasury down fourteen thirty seconds, the yield one

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

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Speaker 1: eight nine percent. NIMEX screwed oil up two point one

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Speaker 1: percent or seventy eight cents to thirty seven twenty eight.

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Speaker 1: A barrel comes called down seven tenths per cent or

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Speaker 1: eight dollars thirty cents to twelve fifty four seventy announced

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Speaker 1: the euro a dollar ohnin seven seven and the N

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Speaker 1: one twelve point four nine. And it's a Bloomberg Business Flash.

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Speaker 1: Tom and Mike Karen, thanks so much. Bloomberg Business Flash

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Speaker 1: brought you by Interactive Brokers, and they offered direct market

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Speaker 1: access to stocks, options, futures, four x bonds at et

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Speaker 1: F s in over one of their market centers in

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Speaker 1: twenty four countries, all of that from a single account.

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Speaker 1: Visit I b k R dot com slash Trade worldwide.

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Speaker 1: I b k R dot Com slash Trade Worldwide. We

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Speaker 1: think Interactive Brokers for their support. Michael Dan Suzuki is

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Speaker 1: senior equity stragist at Bank of American Mary Lynch Global Research.

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Speaker 1: We're talking about the outlook for the markets. UH. Jeff

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Speaker 1: good Luck, who's a very well known bond investor, offering

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Speaker 1: opinions on stocks yesterday. He says the SNP has just

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Speaker 1: a two percent upside a downside, which he says, UH

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Speaker 1: is a big losing proposition. He's calling this a bear

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Speaker 1: market rally. We should note that this week they closed

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Speaker 1: their UH six million dollar equities growth funded UH felt

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Speaker 1: toll percent this year. So maybe he's speaking from anger

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Speaker 1: or frustration. But what do you make of uh, the

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Speaker 1: idea of a bear market rally? Here? I think the

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Speaker 1: fact that so many people are are bearish on stocks

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Speaker 1: and are getting frustrated by by this market is actually

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Speaker 1: is actually a good thing. You know, you look at

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Speaker 1: pretty much every sentiment indicator out there, they're pretty much

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Speaker 1: at either cycle lows or decade long lows, whether you

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Speaker 1: look at. One of the interesting things that comes out

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Speaker 1: of the Fund Managers surveyor from our colleagues is that

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Speaker 1: cash levels at at fund managers of people that are

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Speaker 1: actually paid to put money to work are are at

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Speaker 1: the highest level since two thousand one. It gives you

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Speaker 1: a sense of how much confusion and how much fears

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Speaker 1: out there in the markets. And you know, on top

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Speaker 1: of that, you look at all the other sentiment indicators.

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Speaker 1: People are not enjoying this rally and people are not participating,

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Speaker 1: and I think that that is one of the upsides. Well,

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Speaker 1: this goes to your research and what you do so well,

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Speaker 1: which is the basic idea Given what you just described,

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Speaker 1: people expense their way to good and good operating income.

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Speaker 1: The bottom line is we always in every case underestimate

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Speaker 1: the ability to cut costs. Where are we within that belief? Yeah,

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Speaker 1: I think that the the ability to cut costs here,

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Speaker 1: uh is pre select. I mean one of the ways

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Speaker 1: that we were talking about earliers. You know they can companies.

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Speaker 1: One of the ways that they may start to you

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Speaker 1: may start to see come up more frequently is cutting

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Speaker 1: costs through M and A. I think if you look

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Speaker 1: at the shift in the M and A cycle that

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Speaker 1: you've seen over the past couple of years, is before

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Speaker 1: it was a matter of buying you know, the high

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Speaker 1: growth names. There's been a decisive shift in the past

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Speaker 1: six to twelve months and where the M and A

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Speaker 1: has really been derived from defensive mergers. And part of

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Speaker 1: that comes to this, you know, speaks to that cost

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Speaker 1: cutting desire that you're talking about, you know, cutting out

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Speaker 1: the synergies. I think there there is some room, uh

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Speaker 1: for that. Um what's interesting is everybody's talking about how,

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Speaker 1: you know, margins have peat and they need to meet

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Speaker 1: revert what I think that that's that story is a

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Speaker 1: little bit overdone. I think if you look at the

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Speaker 1: sector level, there's only two sectors that really have stretched

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Speaker 1: margins relative to history. It's only consumer discretionary, which is

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Speaker 1: that record margins, and technology, which is that record margins.

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Speaker 1: And I think outside of that, you know, it's pretty mixed.

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Speaker 1: A lot about happiness. Sectors have below average margins throughout

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Speaker 1: the history, and the fall off and margins that we've

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Speaker 1: seen last year was entirely due to energy. If you

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Speaker 1: take out take out energy and margins. Okay, but where's

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Speaker 1: what you're saying is, if you take out energy, we've

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Speaker 1: already cut a lot of expenses. We have cut a

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Speaker 1: lot of expenses. I mean, that's been you know, one

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Speaker 1: of the drivers for growth. So I think at an

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Speaker 1: individual company level of the ability to cut costs further,

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Speaker 1: I mean, you can do it, but you're starting to

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Speaker 1: cut your your cutting into your livelihood, you know, seeing

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Speaker 1: it in the financial services business where you know you're cutting,

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Speaker 1: you know, so then you merge securitiously. Right back, So

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Speaker 1: what we're talking about this morning, and you're seeing more

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Speaker 1: of that in the past six months. We talked back

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Speaker 1: then to side about this famlacy is the answers the

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Speaker 1: thirties everybody combines combinations. Yeah, it's gonna be interesting to

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Speaker 1: see because companies have gotten really big already. Uh and

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Speaker 1: so you know, we'll see what the political environment is

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Speaker 1: to allow some of these mergers to continue. There is

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Speaker 1: that dollar. You have written that there's a lot of

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Speaker 1: concern about what the strong dollar will mean, uh, right now,

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Speaker 1: it's losing ground significantly. The Federal Reserves trade weighted Dollar

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Speaker 1: index is down more than three percent since it's January high.

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Speaker 1: Is that going to fade as an issue? I think

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Speaker 1: from here it's probably gonna return as an issue. But

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Speaker 1: you know, I think that's part of the reason that

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Speaker 1: the markets rallied. I mean, you look at this dollar,

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Speaker 1: you know, hitting new highs, and I think that that

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Speaker 1: was one of the concerns for the market. Now that

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Speaker 1: that's come off, I think that's given a little bit

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Speaker 1: of confidence, maybe maybe overdone. And then one of the

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Speaker 1: reasons that we're still concerning here is that we think

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Speaker 1: the dollar is going to regain momentum later this year.

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Speaker 1: But I think the bottom line is that the head

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Speaker 1: wind from the dollar is gonna be way less. So

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Speaker 1: if you think about the head wind from the dollar

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Speaker 1: that you saw last year, I think it's roughly four

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Speaker 1: or five percentage points of headwind that you saw last year.

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Speaker 1: I think this year is going to be more like

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Speaker 1: half of that. And so when you get that type

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Speaker 1: of change along with you know, an improvement or stabilization

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Speaker 1: and commandity prices, I think in the back half of

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Speaker 1: the year, you can't see growth. Pick up this Ki,

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Speaker 1: thank you so much. He is with Bank of American

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Speaker 1: Mary Lynch with inequity strategy. Is Well, Mike, what'd you

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Speaker 1: take of the politics last night? You know, I got

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Speaker 1: up early and I looked at the headline. He said, really,

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Speaker 1: uh something, Well, the polls were clearly wrong on the

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Speaker 1: Democratic side. I'm much more interested in the exit polls.

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Speaker 1: Our friend Gary Langer, who does uh, does the Bloomberg

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Speaker 1: Consumer comforting next, does the exit polling for ABC News,

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Speaker 1: And in both Michigan and Mississippi in the Republican primary,

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Speaker 1: and extraordinary number of people told the exit polars they

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Speaker 1: were voting for Donald Trump because they think the economy

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Speaker 1: is lousy, and I find that really interesting. I want

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Speaker 1: to ask Megan Murphy about that. We'll like to her

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Speaker 1: at eight thirty this morning, because you know, we talked

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Speaker 1: to people like Dan Suzuki and Okay, it's not great,

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Speaker 1: but we're not going into recession. But that's not how

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Speaker 1: the American people seem. Well, that's the exit polls rhyme.

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Speaker 1: With the mail I get. I will tell you that

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Speaker 1: we get a lot of mail when people tell us

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Speaker 1: things are good for whatever reason. That may be Michael

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Speaker 1: McKee and Tom Keane. We're here in New York opening

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Speaker 1: our mail. Thanks for sending it Bloomberg Surveillance. Bloomberg Surveillance

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