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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 act and on your radio.

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

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Speaker 1: I'm Charlie Pellett. Stocks for Laura resuming a drop that

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Speaker 1: has sent them down in six of the last seven days,

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Speaker 1: and it's selling in healthcare and tech shares that have

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Speaker 1: been the market's weakest all year. SMP five hundred index

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Speaker 1: down seven a drop of four tenths of one percent

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Speaker 1: to two thousand, seventy down. Industrials down fifty two points

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Speaker 1: to seventeen thousand, six hundred eighty a drop there of

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Speaker 1: three tenths of one percent. Nastack down forty five, a

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Speaker 1: decline of nine tenths of one percent. Go little changed,

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Speaker 1: up less than point one percent, now up seventy cents

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Speaker 1: twelve ninety nine ten. The ounce and crude oil of

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Speaker 1: a dollar ninety barrel forty eleven now up by four

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Speaker 1: point one percent. I'm Charlie Pallett, and that's a Bloomberg

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Speaker 1: Business Flash. Thank you very much, Charlie Pellett. It's time

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Speaker 1: now for the et F Report. It's brought to you

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Speaker 1: by Van Eck vectors et f s expect more from

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Speaker 1: your muni's target tax exempt income by maturity and credit quality,

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Speaker 1: all with low cost ETFs. Visit vanek dot com slash

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Speaker 1: muni van eck access the opportunities. Let's go to Katherine

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Speaker 1: Caldary for our e t F report. It's turning into

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Speaker 1: the year of thematic e t f s. That's the

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Speaker 1: word from Bloomberg Intelligence analyst Eric bel Tunis. Some examples,

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Speaker 1: a new e t F that focuses on millennials, one

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Speaker 1: that zeros in on the fight against obesity, and another

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Speaker 1: that targets long term healthcare. Bel Tuna says about one

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Speaker 1: e t s have launched so far this year, and

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Speaker 1: twenty of them have been thematic. The number one with

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Speaker 1: the most assets this year of the new launches is

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Speaker 1: IF Thematic ETF the gender diversity e t F which

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Speaker 1: invest in company companies led by women. The tickers she

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Speaker 1: took in the most money. So I about out of

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Speaker 1: every twenty launch, there's one hit, and that's sort of

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Speaker 1: what we're seeing. So I think it's like throwing spaghetti

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Speaker 1: to wall. You don't know what's gonna hit or what's

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Speaker 1: gonna hit with a customer Valtuna sounds a cautionary note

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Speaker 1: about thematic et s. He says, it's important that investors

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Speaker 1: look at the possible overlap and exposure in their portfolios

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Speaker 1: to make sure they're not duplicating an investment they've already made.

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Speaker 1: That's your Bloomberg ETF report. I'm Katherine Cowdery Jews listening

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Speaker 1: to taking Stock with Boombox and Kathleen Hayes on Bloomberg Radio.

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Speaker 1: The gold rally glittering a little less brightly the last

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Speaker 1: couple of days, as some of the recent polls in

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Speaker 1: the UK show that the bregsit vote, the vote to

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Speaker 1: leave the European Union, has fallen behind the vote to

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Speaker 1: remain the remain vote that will be learning about June

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Speaker 1: next week. Well, but we had to pull this week

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Speaker 1: that showed that traders who were pulled by Bloomberg say

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Speaker 1: that Gold's rally could continue and it could hit one thousand,

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Speaker 1: three and fifty dollars in price if that Leave vote wins.

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Speaker 1: Let's ask a man who knows so much about this

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Speaker 1: what he sees in the gold market and the market

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Speaker 1: more broadly, as we wait for this historic vote. Frank

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Speaker 1: Holmes joins us now he's CEO and Chief Investment Officer

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Speaker 1: of US Global Investors down in San Antonio, Texas. Frank,

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Speaker 1: welcome back to the show. It's great to be back

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Speaker 1: with all. So gold Boy this so there's this seems

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Speaker 1: like every asset class, certainly bond, certainly gold has gotten

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Speaker 1: a boost from the chance that the Brexit vote could win.

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Speaker 1: How important is this to gold Well. I think it's

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Speaker 1: a key component for short term for instability in the

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Speaker 1: global economies. And it's also a reflection of more countries

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Speaker 1: want to become isolationists. Not just the conversations happening in

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Speaker 1: debate in America, it's also happening in other countries. And

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Speaker 1: within the EU you had Poland to a surprise reversal. Uh,

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Speaker 1: they were supposed to take seventy five d Syrians and

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Speaker 1: their new leader that was ushered in so he was

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Speaker 1: going to take nothing, and they felt that it was

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Speaker 1: just being jammed down their throats by the EU by

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Speaker 1: elected officials. And then for other reasons the bridge field

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Speaker 1: for different things. So I do think immigration, Um, the

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Speaker 1: British believed that they had a process to bring in

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Speaker 1: thirty thousand people a year for immigrants, and they're bringing

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Speaker 1: in a hundred and seventy thousand and there just don't

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Speaker 1: have the infrastructure for free healthcare and other in free

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Speaker 1: education for this this absorption. So I think all these

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Speaker 1: things really do create a global They're not just said

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Speaker 1: one country, it's a it's a global phenomena taking place.

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Speaker 1: But I think the biggest thing is we look back

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Speaker 1: GDP around the world is sloppy, lower and looking forward

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Speaker 1: with p m I prisoning Manufacturer's Index, which has a

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Speaker 1: very high court relation to demand for commodities. Global p

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Speaker 1: m I is one month is below three months, so

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Speaker 1: that is not comfortable for global econom activity. So we're

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Speaker 1: seeing rates fall all around the world. And this week

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Speaker 1: Germany went to tenure, government bond went to zero frank coins.

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Speaker 1: I've been taken a look at some of work that

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Speaker 1: various investment banks have been doing about gold. HSBC says

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Speaker 1: the longer the Federal Reserve is seen as delaying a

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Speaker 1: rate hike, the better it is for gold. Was also

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Speaker 1: looking at the performance of one of the companies I

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Speaker 1: know you track, Franco Nevada. This is a royalty, a

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Speaker 1: gold royalty, a company. The shares are up more than

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Speaker 1: fifty four percent year to date. And if you take

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Speaker 1: a look at just the price of gold, we're talking

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Speaker 1: about increase in the price so far this year. Do

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Speaker 1: you believe that gold should be added to if you

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Speaker 1: already own it, and if you don't already own it,

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Speaker 1: should just start buying it now. It's a great question, Tim,

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Speaker 1: and and I've always been an advocate of five percent

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Speaker 1: into gold billion coins or four carrot gold jewelry, and

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Speaker 1: another five percent into gold stocks high quality, and you

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Speaker 1: rebalance every quarter. So I think that coming into July

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Speaker 1: that we have not established a position, you should start

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Speaker 1: establishing a position and then make sure that you're rebalancing.

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Speaker 1: I'm not a world coming to an end, but it

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Speaker 1: does help your portfolio when you get these incredible sprints

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Speaker 1: this year, like our gold fund him is up a

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Speaker 1: hundred percent. Well, we wish we were in your fund.

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Speaker 1: Frank Holmes, Let's look at crude oil because it's up

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Speaker 1: the most in two months. Weeker dollar. Janet Yellen helped

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Speaker 1: weaken the dollars some more. FED likes it right in

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Speaker 1: terms of the impact on the economy, Uh, manufacturers, auto

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Speaker 1: manufacturers probably like a two people. Anybody who exports oil.

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Speaker 1: Where is it now? Where is it's heading, Frank, And

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Speaker 1: what about it from an investment angle, Well, I think

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Speaker 1: um over the the correlation to global p M is

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Speaker 1: very high, and we came off with there's a there's

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Speaker 1: a uh, well, suggest that oil is going to go

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Speaker 1: sideways here um in the next little while. Except for

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Speaker 1: what's taking place sort of supply side restrictions and what

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Speaker 1: took place in the Fort McMurray and that disaster in Canada,

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Speaker 1: we've not seen the drop off in the apply. Remember

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Speaker 1: this oil goes at three miles an hour and has

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Speaker 1: to go down two thousand miles too, and so they

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Speaker 1: it takes several weeks before all of a sudden that

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Speaker 1: supply coming from Canada bove eight hundred thousand barrels a

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Speaker 1: day starts hitting the system. And there's concerned of Nigeria

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Speaker 1: on supply restrictions and issues. So anything is temperamental and

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Speaker 1: supply side can quickly hold oil prices between forty and

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Speaker 1: sixty dollars a barrel, Frank. Just to continue a little

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Speaker 1: bit more on the precious metal on goal because just

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Speaker 1: looking at the price today or of about three tents

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Speaker 1: of a percent on the COMEX thirteen hundred dollars an

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Speaker 1: ounce without talking about specific price levels. Do you want

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Speaker 1: mining stocks, you want royalty companies, or do you want

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Speaker 1: as you mentioned earlier, bullion coins and jewelry or a

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Speaker 1: little of everything. I think it's five and five and

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Speaker 1: you could have a little of everything. The salty companies

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Speaker 1: are just a safer way to play gold stocks. They

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Speaker 1: have high operating margins, they have a high operating cashul

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Speaker 1: enterprise value. If you take the basket of which I've

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Speaker 1: mentioned many times on your program is Franko Nevada, Royal

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Speaker 1: gold and silver Wheaton, and they also have a different race,

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Speaker 1: but they're the three amigos that dominate the space around

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Speaker 1: the world. So when companies like Glencore couldn't raise money

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Speaker 1: six months ago, Franko Nevada could quickly raise a billion

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Speaker 1: dollars and then by the the stream from Glencore and

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Speaker 1: then Glencore stock starts to balance, it improves in stock doubles.

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Speaker 1: So I think that they're important companies. But what's also important,

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Speaker 1: PIM is that when you have the Australian dollar falling

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Speaker 1: ruts the US and Canada and South Africa, the place

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Speaker 1: of goal going up, so they're paying the local labor

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Speaker 1: in Canadian or Australia or South African ran but they're

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Speaker 1: getting higher margins on their gold production. So many of

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Speaker 1: these stocks in these countries have more than double and

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Speaker 1: some of them in all destroy up five in the

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Speaker 1: past year. I want to ask you about the airlines

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Speaker 1: because there's been a lot of developments. You know, lore

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Speaker 1: all prices and higher all prices raising fears, are not

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Speaker 1: raising fears. And of course you have your jet CTF,

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Speaker 1: so you follow the airlines, among other things, very closely.

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Speaker 1: How do they look to you? You know, the airline

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Speaker 1: industry is the least expensive industry. When you look at

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Speaker 1: cash flow, growth and castle returns on investment capitol, you

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Speaker 1: look at payouts and dividends. You have a very unusual

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Speaker 1: industry now with new leadership that is not underpricing. They

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Speaker 1: just don't have the ability to underprice like they did before.

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Speaker 1: So with the surplus cash flow, they're increasing their dividends

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Speaker 1: that are clipped rate over nine a year, and they're

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Speaker 1: buying back billions and billions of dollars of stock while

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Speaker 1: they're upgrading their airlines. Boeing is has has over a

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Speaker 1: tenure backlog of delivering those planes so they just can't

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Speaker 1: quickly spend the money getting new judts tomorrow. But I

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Speaker 1: think the industry is v very inexpenses, a classic GARB,

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Speaker 1: but it trades off of two things. What is the

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Speaker 1: global the sort of domestic economy and if the stock

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Speaker 1: market is up, these are stronger if especially if we

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Speaker 1: have GDP numbers. But then the headwind is always rising oil.

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Speaker 1: And for the past three months we've seen oil prices rise,

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Speaker 1: and this has always perceived as a big negative to

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Speaker 1: their cash flow. Frank, you know, one of the things

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Speaker 1: I always want to check in with you about is

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Speaker 1: what are you hearing from the client base? What questions

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Speaker 1: are you being asked? Is it about how can I

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Speaker 1: get income in a very low interest great world? There's

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Speaker 1: no doubt income is very important. This is the first rally.

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Speaker 1: Like I mention earlier, goal fund is done exceptionally well.

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Speaker 1: And uh, but we've not had these inflows, tim like

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Speaker 1: you've had in previous cycles. Uh. So we've seen their

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Speaker 1: money going into our short term tax free uh. And

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Speaker 1: so that's where we see the strongest closed. We are

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Speaker 1: getting flows into the goal funds um but nothing like

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Speaker 1: the previous cycles where we would see five million, ten

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Speaker 1: million a day. Thanks very much, Frank Holmes, Chief executive,

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Speaker 1: Chief Investment Officer US Global Investors. This is Bloomberg Radio