WEBVTT - Geneva's Gimbel: 2017 Will Be Very Good Year for Stocks (Audio) 0:00:03.200 --> 0:00:06.560 Global business news twenty four hours a day. If Bloomberg 0:00:06.640 --> 0:00:09.720 dot Com the Radio plus Global Act and on your radio. 0:00:10.000 --> 0:00:14.360 This is a Bloomberg Business Flash from Bloomberg World Headquarters. 0:00:14.400 --> 0:00:16.960 I'm Katherine Cowdery Will. The stock market is moving higher 0:00:17.160 --> 0:00:20.120 as traders feel less anxious about Britain's vote last week 0:00:20.160 --> 0:00:23.239 to leave the European Union. Mark Kearney signaled the Bank 0:00:23.239 --> 0:00:25.480 of England could cut interest rates within months as a 0:00:25.560 --> 0:00:28.200 central bank tries to shield an economy rattled by the 0:00:28.240 --> 0:00:32.280 shock of Brexit. Now Standard in Pores has just reiterated 0:00:32.280 --> 0:00:36.040 its rating on the United States at double A plus. 0:00:36.200 --> 0:00:39.800 It affirmed its ratings the SMP five hundred on track 0:00:39.880 --> 0:00:42.880 for a third straight quarterly advanced. All ten industry groups 0:00:42.880 --> 0:00:45.360 in the s in the benchmark are gaining, with consumer 0:00:45.400 --> 0:00:48.080 staple shares up the most. We check the markets every 0:00:48.080 --> 0:00:51.159 fifteen minutes throughout the trading dawn. Bloomberg Radio doll Industrial 0:00:51.200 --> 0:00:53.599 average of one hundred eighty seven points one point one 0:00:53.600 --> 0:00:57.120 percent at seventeen thousand, eight hundred eighty one. SMP five 0:00:57.120 --> 0:00:59.400 funded up twenty three points again at one point one 0:00:59.400 --> 0:01:02.840 percent trade at two thousand ninety three. Nazac hier By 0:01:02.880 --> 0:01:05.120 forty nine points, a gain of one percent, trading at 0:01:06.040 --> 0:01:09.000 eight less Texas Intermedia Crude oil down a dollar fifty 0:01:09.040 --> 0:01:11.399 three of barrel, three point one percent of forty eight 0:01:11.400 --> 0:01:14.200 thirty six s about gold down three dollars thirty cents 0:01:14.200 --> 0:01:17.560 announced of thirty three sixty ten. Your treasury up eleven 0:01:17.600 --> 0:01:20.200 thirty seconds with the yield of one point for seven percent. 0:01:20.720 --> 0:01:24.080 And that's a Bloomberg business flash, Catherine Cawnerie, thank you 0:01:24.160 --> 0:01:29.319 so very much. Market volatility, the Brexit vote, so many 0:01:29.360 --> 0:01:32.360 things hanging over investors head. Is it time to look 0:01:32.360 --> 0:01:34.600 at an e t F? And if so, which kind? 0:01:35.240 --> 0:01:38.320 Now it's time for our et F report with Catherine Cowndry. 0:01:38.640 --> 0:01:40.640 It's a tale of two different kinds of e t 0:01:40.800 --> 0:01:43.880 F investors told by flows after the UK vote to 0:01:43.959 --> 0:01:46.560 withdraw from the European Union. We saw a lot of 0:01:46.600 --> 0:01:49.200 the hot money. This is the big institutional money that 0:01:49.280 --> 0:01:51.880 moves very short term. Leave a lot of the risk 0:01:51.960 --> 0:01:54.520 on ETFs like s p Y and the cues. Bloomberg 0:01:54.600 --> 0:01:59.080 Intelligence analyst Eric Deltuna says. In contrast, retail investors seemed 0:01:59.120 --> 0:02:01.360 to shrug off the UK vote. If you look at 0:02:01.360 --> 0:02:03.960 the e t F they like to use Vanguarden, Schwab, 0:02:04.280 --> 0:02:06.480 they all took in money just like normal. You know, 0:02:06.520 --> 0:02:09.400 there's a drip drip aspect to Vanguarden Schwab flows, and 0:02:09.440 --> 0:02:11.840 that drip kept coming right through Friday, right through Monday. 0:02:11.919 --> 0:02:14.320 No big deal about Tunis takes a closer look at 0:02:14.360 --> 0:02:17.200 those flows. Since the Brexit vote, Spider's et f s 0:02:17.240 --> 0:02:20.639 lost four billion, Vanguard took in a billion, Schwab a 0:02:20.680 --> 0:02:23.600 couple hundred million. That to me shows a difference in 0:02:23.720 --> 0:02:28.080 terms of how scared investor. Mel Juna says. There is 0:02:28.160 --> 0:02:31.000 one e t F that's been popular with both institutional 0:02:31.080 --> 0:02:34.040 and retail investors this year, and that's the Spider Gold 0:02:34.120 --> 0:02:36.840 Chairs Taker d l D is taken in more than 0:02:36.880 --> 0:02:39.800 twelve billion dollars so far this see here. That's your 0:02:39.840 --> 0:02:45.079 Bloomberg ETF report. I'm Katherine Calderie. You're listening to Taking 0:02:45.120 --> 0:02:48.519 Stock with Kathleen Hays and Pim Box on Bloomberg Radio. 0:02:49.600 --> 0:02:53.120 The future more uncertainty than ever, it seems after the 0:02:53.200 --> 0:02:55.960 Brexit Fox. We've been talking about that a lot on 0:02:56.040 --> 0:02:58.760 Bloomberg as you know. Now we want to talk about 0:02:58.840 --> 0:03:00.519 it with someone who has been watching in the markets 0:03:00.600 --> 0:03:03.440 for many years and travels around the world speaking to 0:03:03.560 --> 0:03:06.799 investors looking for companies to invest in. And that's Don Gimbel. 0:03:06.880 --> 0:03:11.240 He's portfolio manager at Geneva Investment Management, which is based 0:03:11.240 --> 0:03:15.000 in Chicago. Don joins us today from Helena, Montana. Don, 0:03:15.040 --> 0:03:19.880 welcome back. It's some good good to have an opportunity 0:03:20.000 --> 0:03:22.160 to discuss what has been beaten to death for the 0:03:22.240 --> 0:03:24.320 last four days. Well, it's kind of hard not to 0:03:24.320 --> 0:03:26.080 beat to death, or isn't it, Because it's a pretty 0:03:26.080 --> 0:03:29.959 big deal. It is a huge deal, and I think 0:03:30.000 --> 0:03:34.600 what is most interesting is how little anybody knows about 0:03:34.600 --> 0:03:39.560 what the future holds, because this is a really monumental 0:03:40.080 --> 0:03:44.800 sort of shift, which is, uh, what what the British 0:03:44.880 --> 0:03:47.520 did is only the tip of the iceberg. I mean, 0:03:47.560 --> 0:03:52.600 we we see people upset about the status quo all 0:03:52.640 --> 0:03:56.240 over the world, and uh, I mean the United States 0:03:56.000 --> 0:04:00.480 is not has not escaped that. Look at people we 0:04:00.560 --> 0:04:04.160 have running for the highest office in the land. These 0:04:04.200 --> 0:04:09.280 are people that the voters are saying, we want change, 0:04:09.400 --> 0:04:12.440 and well that's what happened in England. We want change. 0:04:12.440 --> 0:04:15.200 We're not sure what we want, uh, and we're not 0:04:15.240 --> 0:04:18.080 sure what it means, but we don't like what the 0:04:18.120 --> 0:04:23.640 way it is as as economies change and develop and 0:04:23.720 --> 0:04:29.839 mature around the world, people who were used to the 0:04:29.880 --> 0:04:34.360 status quo somehow feel as though they're being excluded from 0:04:34.400 --> 0:04:39.200 what's going on, and it's a very uncomfortable situation and 0:04:39.240 --> 0:04:44.039 they're they are reacting, some would say irrationally. Uh to 0:04:44.680 --> 0:04:49.760 to what to the normal change in the way governments 0:04:49.839 --> 0:04:55.800 and countries work And this vote last week is simply 0:04:55.960 --> 0:04:59.279 a manifestation of that. But we have to look more 0:04:59.320 --> 0:05:04.040 closely at at how to how it affects politics, how 0:05:04.080 --> 0:05:07.800 it affects government, how it affects markets, and then how 0:05:07.839 --> 0:05:11.599 does it affect individual companies? And I think that's what 0:05:11.680 --> 0:05:15.839 the latter is something that that hasn't we haven't spent 0:05:15.960 --> 0:05:18.920 enough time disgusting. Well, let's do right now, how does 0:05:18.960 --> 0:05:20.920 it gonna and how so, how do you start that 0:05:21.040 --> 0:05:26.200 kind of gauging analysis, how it affects individual companies where 0:05:26.200 --> 0:05:28.640 they're based, the size the industry there, and tell us 0:05:28.640 --> 0:05:32.080 how how you're doing that done? Well, it's as well, 0:05:32.560 --> 0:05:34.760 I'm glad you asked, because that's what I wanted to 0:05:34.800 --> 0:05:38.360 talk about. Um. When when it comes to investing, and 0:05:38.400 --> 0:05:43.520 we're investors, were not speculators, we're not traders were investors. 0:05:43.560 --> 0:05:46.000 So the first thing we look at is the quality 0:05:46.040 --> 0:05:48.920 of the management of the companies in which we are investing. 0:05:49.600 --> 0:05:53.000 And if you, if you are invested in companies that 0:05:53.080 --> 0:05:59.240 have great management, have a proven record of of knowing 0:05:59.360 --> 0:06:01.599 what's going on, or at least having a good idea, 0:06:02.160 --> 0:06:09.119 having a a good business plan that that can be modified, you, 0:06:09.120 --> 0:06:11.919 you're a long way down the lane, uh in in 0:06:12.000 --> 0:06:15.839 picking good investments. Now. Are there going to be huge 0:06:15.960 --> 0:06:21.239 changes in in the relationship between the UK in Europe 0:06:21.240 --> 0:06:27.320 and the next five years? Well, definitely. Uh. Until Article fifty, 0:06:27.800 --> 0:06:32.160 though is brought to bear, nothing's going to change in 0:06:32.200 --> 0:06:36.279 the UK. And the Prime Minister is already on record 0:06:36.320 --> 0:06:38.760 is saying he doesn't want to do anything before before 0:06:38.800 --> 0:06:42.640 the fall, and people in Europe are saying that's not 0:06:42.680 --> 0:06:44.240 good enough. You've got to do it now if you're 0:06:44.240 --> 0:06:46.760 going to do it. So I think that there's a 0:06:46.760 --> 0:06:50.920 lot of of indecision going on in the UK as 0:06:50.960 --> 0:06:53.919 to what the time frame is, much less try to 0:06:53.960 --> 0:06:57.880 address what the new relationships are going to be. But 0:06:58.040 --> 0:07:00.719 as an investor, I look at the companies in which 0:07:00.760 --> 0:07:04.119 I'm invested, and I know that the management of those 0:07:04.160 --> 0:07:06.680 companies because I talked to them on a regular basis, 0:07:07.440 --> 0:07:11.160 I know that they are Uh. They have already given 0:07:11.200 --> 0:07:13.040 a lot of thought. They didn't think this was going 0:07:13.120 --> 0:07:14.960 to happen, but it did. But they've been given it 0:07:15.000 --> 0:07:19.320 a lot of thought as to are they positioned to 0:07:19.320 --> 0:07:22.720 to continue to do well. And my answer is, you know, 0:07:23.280 --> 0:07:26.880 in the industries that I particularly like are things like 0:07:27.000 --> 0:07:32.800 pollution abatement, uh, things things like transportation, things like food 0:07:33.440 --> 0:07:36.760 or these are basic industries. And if you've got companies 0:07:36.800 --> 0:07:40.960 in those fields, uh that that have experience and are 0:07:41.040 --> 0:07:46.440 well I have proven track records, these companies will do 0:07:46.560 --> 0:07:51.920 well regardless of whether they're manufacturing operation is in the 0:07:52.080 --> 0:07:55.560 UK or in France, or in the United States, or 0:07:55.600 --> 0:08:00.600 in Brazil or in China. Uh. These are companies that 0:08:00.760 --> 0:08:06.320 anticipate and look at the alternative possibilities and when when 0:08:06.400 --> 0:08:08.880 something like this comes out of the blue or not 0:08:09.000 --> 0:08:12.560 quite out of the blue, but certainly surprises, there is 0:08:12.600 --> 0:08:15.640 a plan. And I think that over what the stock 0:08:15.680 --> 0:08:19.880 market this week has said, as initially, oh my gosh, 0:08:20.200 --> 0:08:24.680 the world is ending, then the realization that it's not 0:08:24.960 --> 0:08:31.280 ending and we we need to uh sit down and 0:08:31.400 --> 0:08:36.920 decide what what companies are going to do well, not 0:08:36.920 --> 0:08:39.520 not just because of the industry they're in, but the 0:08:39.559 --> 0:08:42.520 companies that have the management that are smart enough to 0:08:42.559 --> 0:08:44.800 figure out where we're going. Okay, I want to turn 0:08:44.880 --> 0:08:47.800 to China. Because you invest in Chinese companies, you travel 0:08:47.880 --> 0:08:51.520 to China. The yuan touched its lowest levels since January. 0:08:51.520 --> 0:08:53.880 Earlier today, there was a report that the PBOC, the 0:08:53.920 --> 0:08:57.240 People's Bank of China, is ready to let the uan 0:08:57.600 --> 0:09:00.520 its currency weekend. Now, it's not bad. For a while, 0:09:00.559 --> 0:09:03.280 traders were wondering if they really had shifted their stance. 0:09:03.360 --> 0:09:06.000 What do you make of this this speculation, what do 0:09:06.040 --> 0:09:09.400 you make of what the PDOC may do done? Uh? Well, 0:09:09.480 --> 0:09:13.640 the first the first comment is that the PBOC is 0:09:13.679 --> 0:09:18.480 a very bright group of people, and they've they've been 0:09:18.480 --> 0:09:22.199 working on what the real value of the yuan is 0:09:22.520 --> 0:09:25.319 and what what its value should be against the US 0:09:25.440 --> 0:09:27.880 dollar as well as against the yen and the euro. 0:09:28.520 --> 0:09:32.920 And uh, there is there is an economic change going 0:09:32.960 --> 0:09:36.439 on in the People's Republic, which a few years ago 0:09:36.720 --> 0:09:42.600 was almost completely dedicated uh to their the exports of 0:09:42.200 --> 0:09:47.760 of of goods from the People's Republic and the juan. 0:09:48.320 --> 0:09:53.160 The Hue government um AS has changed that and we're 0:09:53.160 --> 0:09:56.480 seeing lots of change in China, which over a long 0:09:56.520 --> 0:09:59.360 period of time is going to be very beneficial. I 0:09:59.400 --> 0:10:02.480 would I would suggest that the yuan could weaken a 0:10:02.520 --> 0:10:05.480 little bit from here, but not very much, because it's 0:10:05.480 --> 0:10:08.560 it's not really in the in the in the interests 0:10:08.559 --> 0:10:12.040 of the pr of the People's Republic. They have two 0:10:12.120 --> 0:10:16.240 weak currency because they are now major importers of a 0:10:16.240 --> 0:10:20.560 lot of things goods and services, and uh, a much 0:10:20.600 --> 0:10:24.920 weaker you want would be a negative for the People's Republic. 0:10:25.200 --> 0:10:28.400 Just quick, very quick, final question. Uh the sp five hundred? 0:10:28.600 --> 0:10:31.000 Uh are we is it gonna we't gonna stee this 0:10:31.120 --> 0:10:35.440 range two by the end of the year, Higher lord, 0:10:35.520 --> 0:10:38.199 Just quickly, what do you think done? I would say, 0:10:38.960 --> 0:10:41.959 we're in a trading range. It might if it breaks out, 0:10:41.960 --> 0:10:44.040 it will break out on the upside and out the downside, 0:10:44.040 --> 0:10:46.240 because I think two thousand seventeen is going to be 0:10:46.280 --> 0:10:48.200 a very good year for stock markets around the world. 0:10:48.679 --> 0:10:51.719 All Right, Don Gimble just creating the pathway to his 0:10:51.840 --> 0:10:54.280 next interview on taking stuff. We're gonna have to find 0:10:54.280 --> 0:10:57.280 out why seventeen is going to be so good. Portfolio 0:10:57.440 --> 0:11:01.760 manager Geneva Investment Management of Chicago. Don joined us today 0:11:01.840 --> 0:11:05.959 from Helena, Montana. I'm Kathleen Hayes. My co host, Pim 0:11:06.040 --> 0:11:10.080 Fox is on vacation this week. And this is taking Stock, 0:11:10.160 --> 0:11:11.960 and this is Bloomberg.