WEBVTT - Uy:active management can help navigate investors

0:00:03.400 --> 0:00:07.520
<v Speaker 1>This is Bloomberg Surveillance. I would expect the interest rate

0:00:07.640 --> 0:00:11.119
<v Speaker 1>in the Eurozone and it's peripheral will be zero or

0:00:11.240 --> 0:00:14.520
<v Speaker 1>lower for the rest of this decade. Sector selection does

0:00:14.640 --> 0:00:17.400
<v Speaker 1>matter of a lot. You avoided energy last year, probably

0:00:17.760 --> 0:00:20.640
<v Speaker 1>relatively Well, it's half the gliberal economy and it's all slowing.

0:00:20.880 --> 0:00:23.640
<v Speaker 1>My sense is that this year things will start to centerin,

0:00:23.680 --> 0:00:25.599
<v Speaker 1>and I think that turnerin will be lati by China.

0:00:25.640 --> 0:00:29.920
<v Speaker 1>Bloomberg Surveillance your link to the world of economics, finance

0:00:29.960 --> 0:00:34.559
<v Speaker 1>and investment on Bloomberg Radio. Good morning everyone, very rad

0:00:34.600 --> 0:00:38.280
<v Speaker 1>holds in time King Bloomberg Surveillance. Right now though, breaking

0:00:38.479 --> 0:00:41.760
<v Speaker 1>economic data, which means we must we must go to Vinnidale,

0:00:41.800 --> 0:00:45.200
<v Speaker 1>Judas Vinny. What do you see with case Schiller. Well,

0:00:45.280 --> 0:00:47.360
<v Speaker 1>it's up Tom here over yere the S and P

0:00:47.600 --> 0:00:51.680
<v Speaker 1>K Schiller Home price Index tracking twenty cities January five

0:00:51.840 --> 0:00:56.240
<v Speaker 1>point seven percent. That's comparing to five point six percent

0:00:56.560 --> 0:00:59.959
<v Speaker 1>revised in December month over month, up point eight per

0:01:00.120 --> 0:01:04.160
<v Speaker 1>scent in January revision the prior month up point seven

0:01:04.200 --> 0:01:06.720
<v Speaker 1>eight percent, So that's really little changed year over year,

0:01:06.720 --> 0:01:10.160
<v Speaker 1>though we see the trend continuing up five point seven

0:01:10.240 --> 0:01:13.520
<v Speaker 1>five percent January home prices major twenty cities at the

0:01:13.520 --> 0:01:16.440
<v Speaker 1>Bloomberk First Work Desk Company del J. Let's go back

0:01:16.440 --> 0:01:19.240
<v Speaker 1>to New York, tom at Barryvin very good. Of course,

0:01:19.280 --> 0:01:21.320
<v Speaker 1>we break that down and we'll go through that through

0:01:21.360 --> 0:01:24.720
<v Speaker 1>the hour, looking at some negative statistics out there on

0:01:24.760 --> 0:01:29.680
<v Speaker 1>the monthly basis. Negative for Boston, Charlotte, Chicago, Minneapolis, New

0:01:29.760 --> 0:01:34.560
<v Speaker 1>York slightly negative, Phoenix about like New York's performance, Washington

0:01:34.640 --> 0:01:37.600
<v Speaker 1>d C negative that that is a bit surprising, but

0:01:37.680 --> 0:01:40.680
<v Speaker 1>many other positives as well. Los Angeles with a big

0:01:40.720 --> 0:01:45.560
<v Speaker 1>positive gain among others. Will dive into those data points

0:01:45.560 --> 0:01:48.560
<v Speaker 1>through the hour as we are wont to do. The

0:01:48.600 --> 0:01:51.800
<v Speaker 1>four X brief this morning brought to you by Interactive Brokers,

0:01:51.800 --> 0:01:54.800
<v Speaker 1>winner of FX Weeks two thousand and fifteen award for

0:01:54.880 --> 0:01:58.760
<v Speaker 1>the best in Retail for X trading platforms. Visit ib

0:01:58.920 --> 0:02:02.360
<v Speaker 1>at I b k R com slash four X. I'm

0:02:02.360 --> 0:02:05.080
<v Speaker 1>gonna call it a churn to the market. Dollar weaker,

0:02:05.400 --> 0:02:09.720
<v Speaker 1>not demonstrable, but nevertheless within the range. Dollar a little

0:02:09.720 --> 0:02:13.560
<v Speaker 1>bit weaker. Sterling on one three all one, So a

0:02:13.600 --> 0:02:17.000
<v Speaker 1>couple of days in a row of sterling um strength

0:02:17.200 --> 0:02:20.959
<v Speaker 1>and all of it. The backdrop is a quieter yield

0:02:21.000 --> 0:02:24.640
<v Speaker 1>market US full faith and credit tenure one point eight

0:02:24.680 --> 0:02:27.760
<v Speaker 1>five in a good four basis points. And I've been

0:02:27.800 --> 0:02:32.280
<v Speaker 1>following quietly the German two year sort of as a

0:02:32.360 --> 0:02:37.120
<v Speaker 1>draggy proxy. That's a mouthful negative zero point four nine

0:02:37.160 --> 0:02:39.119
<v Speaker 1>is a lower yield over the last four or five

0:02:39.720 --> 0:02:43.800
<v Speaker 1>six days. That's some of the macro research that ray

0:02:43.840 --> 0:02:47.680
<v Speaker 1>Oi doesn't Invesco where he covers a fixed income market. Ray,

0:02:47.720 --> 0:02:50.079
<v Speaker 1>wonderful day, have you on and and and thank you

0:02:50.120 --> 0:02:52.919
<v Speaker 1>to all of you at Invesco who support the show.

0:02:53.560 --> 0:02:56.520
<v Speaker 1>Um Ray I I look at fixed income and I

0:02:56.560 --> 0:02:59.480
<v Speaker 1>think the general question is is it a time to

0:02:59.600 --> 0:03:03.000
<v Speaker 1>manage for coupon or is there even a hint of

0:03:03.080 --> 0:03:08.959
<v Speaker 1>total return? Hey Tom, thanks for having me on the show. UM. Yeah.

0:03:09.000 --> 0:03:12.959
<v Speaker 1>I think the as it relates to fix income, certainly, UM,

0:03:13.040 --> 0:03:16.400
<v Speaker 1>you know, given the income needs that um, you know,

0:03:16.440 --> 0:03:21.760
<v Speaker 1>most of the market has a desire for. Certainly, UM,

0:03:21.960 --> 0:03:26.640
<v Speaker 1>coupon shouldn't be the primary UM focus. I think given

0:03:26.639 --> 0:03:30.040
<v Speaker 1>where yields are, the you know, total return prospects are

0:03:30.160 --> 0:03:35.320
<v Speaker 1>somewhat more challenging in this type of environment. I like

0:03:35.400 --> 0:03:37.840
<v Speaker 1>how they do that Bear, it's sort of graceful more challenge.

0:03:38.440 --> 0:03:40.440
<v Speaker 1>How do you manage for that? How do you manage

0:03:40.440 --> 0:03:43.960
<v Speaker 1>for that? Right? Well, I think the way we've you know,

0:03:44.560 --> 0:03:49.200
<v Speaker 1>assessed opportunities is really to look across the sectors within

0:03:49.320 --> 0:03:53.200
<v Speaker 1>fix income and I think this is where active management

0:03:53.840 --> 0:03:58.960
<v Speaker 1>really UM can help navigate UM and help you know,

0:03:59.360 --> 0:04:03.560
<v Speaker 1>investors reached their objectives is through you know, affect the rotation.

0:04:03.560 --> 0:04:06.320
<v Speaker 1>And given the volatility that we've seen, uh, you know,

0:04:06.320 --> 0:04:09.920
<v Speaker 1>a cross markets this year obviously UM, you know, volatility

0:04:09.960 --> 0:04:13.160
<v Speaker 1>of the two sided coin. There's there's obviously pain, but

0:04:13.240 --> 0:04:16.760
<v Speaker 1>also opportunity associated with some of the large shifts that

0:04:16.800 --> 0:04:21.000
<v Speaker 1>we've witnessed thus far this year. So everybody is so

0:04:21.120 --> 0:04:24.640
<v Speaker 1>hyper focused on on the FED and the dot plot

0:04:24.720 --> 0:04:27.240
<v Speaker 1>and will they or won't they? We have we have

0:04:27.520 --> 0:04:32.239
<v Speaker 1>Jerry Yelling's speech to the Economic Club of New York today,

0:04:32.560 --> 0:04:36.320
<v Speaker 1>But even if they do, we're still so far under

0:04:36.360 --> 0:04:39.680
<v Speaker 1>one percent for rates. My question for you is how

0:04:39.800 --> 0:04:43.560
<v Speaker 1>much does the FED really matter for the rest of

0:04:43.600 --> 0:04:48.600
<v Speaker 1>this year? Are we at risk of just over obsessing

0:04:48.760 --> 0:04:51.960
<v Speaker 1>about the difference between twenty five basis points and fifty

0:04:51.960 --> 0:04:55.960
<v Speaker 1>basis points or should we be focusing our attention elsewhere?

0:04:57.520 --> 0:04:59.400
<v Speaker 1>I think you bring up a really good point there.

0:04:59.520 --> 0:05:02.400
<v Speaker 1>I think one of the reasons why the said could

0:05:02.440 --> 0:05:06.440
<v Speaker 1>be UM meaningful even though the you know, the on

0:05:06.480 --> 0:05:10.320
<v Speaker 1>an absolute basis, the policy actions are relatively small, that

0:05:10.360 --> 0:05:13.279
<v Speaker 1>the market is obsessing about it, specifically for that reason

0:05:13.279 --> 0:05:18.800
<v Speaker 1>that the market is obsessed with UM, you know, the

0:05:18.800 --> 0:05:21.960
<v Speaker 1>you know, minutia of of the said dynamic that UM

0:05:22.240 --> 0:05:26.280
<v Speaker 1>you know, these moves could be more impactful than UM

0:05:26.360 --> 0:05:30.000
<v Speaker 1>the you know, nominal amount would imply UM. And I

0:05:30.040 --> 0:05:33.280
<v Speaker 1>think additionally, UM, You're right, I think there are worth

0:05:33.480 --> 0:05:37.159
<v Speaker 1>still focused on some of the other UM risks globally

0:05:37.400 --> 0:05:41.440
<v Speaker 1>that are still prevalent UM you know, within the global

0:05:41.440 --> 0:05:44.360
<v Speaker 1>financial system and naming sort of this de leveraging that's

0:05:44.360 --> 0:05:47.440
<v Speaker 1>occurring UM, you know, that's still in the e M

0:05:47.560 --> 0:05:50.720
<v Speaker 1>and in China. So so where should we be focusing

0:05:50.800 --> 0:05:56.680
<v Speaker 1>our our attention and our investment dollars. I think we

0:05:56.839 --> 0:06:01.200
<v Speaker 1>you know, we should be focused on UM high quality

0:06:01.360 --> 0:06:06.440
<v Speaker 1>UM fixed income assets, and as it relates to X,

0:06:06.560 --> 0:06:11.880
<v Speaker 1>we're focused on you know, continued dollar strength against the

0:06:11.920 --> 0:06:17.119
<v Speaker 1>Asian ex Japan currency region. Right, thanks so much, greatly

0:06:17.120 --> 0:06:21.119
<v Speaker 1>appreciate Railways with Investco. Head of Macro Research Investco Fixed

0:06:21.160 --> 0:06:24.479
<v Speaker 1>Income Barry that really shows this whole idea. And you know,

0:06:24.520 --> 0:06:27.840
<v Speaker 1>I think of Bill gross Uh when made the headlines

0:06:28.320 --> 0:06:31.320
<v Speaker 1>on this show with a financial repression of ten years,

0:06:31.800 --> 0:06:33.800
<v Speaker 1>And it really goes back to what do you do

0:06:34.360 --> 0:06:37.120
<v Speaker 1>if you you know, I just really don't I just

0:06:37.200 --> 0:06:40.640
<v Speaker 1>really don't want to do stocks. It's a major major issue.

0:06:41.080 --> 0:06:43.200
<v Speaker 1>You you run into this all time, much more than

0:06:43.240 --> 0:06:45.880
<v Speaker 1>I do. Of people say I just really don't want

0:06:45.880 --> 0:06:50.479
<v Speaker 1>to own stocks, then what And you know, the institutions

0:06:50.480 --> 0:06:52.839
<v Speaker 1>have learned, we really don't want to do alternative investments

0:06:53.000 --> 0:06:55.440
<v Speaker 1>because there's a ton of fees that have gotten us

0:06:55.440 --> 0:07:01.200
<v Speaker 1>nowhere you go back to bonds, and there's a real mystery.

0:07:01.400 --> 0:07:04.479
<v Speaker 1>So here's the jiu jitsu. Whenever you hear a lot

0:07:04.520 --> 0:07:08.240
<v Speaker 1>of UH clients or a lot of investors saying they

0:07:08.240 --> 0:07:10.800
<v Speaker 1>don't want to do stocks, your your mouth should start

0:07:10.840 --> 0:07:14.720
<v Speaker 1>to water in a Pavlovian response, because that means stocks

0:07:14.720 --> 0:07:17.680
<v Speaker 1>are about to begin their next major leg up when

0:07:17.760 --> 0:07:23.040
<v Speaker 1>the crowd is skittish and risk averse and afraid of

0:07:23.080 --> 0:07:28.120
<v Speaker 1>equities because let's be blunt, they've suffered so many crashes.

0:07:28.200 --> 0:07:30.720
<v Speaker 1>We just had both the two thousand crash, e O

0:07:30.800 --> 0:07:35.600
<v Speaker 1>eight or nine crash they're obsessing about the possibility of

0:07:35.640 --> 0:07:39.320
<v Speaker 1>another crash. That should tell you that there's enough under

0:07:39.360 --> 0:07:42.520
<v Speaker 1>investment and enough fear out there that it could drive

0:07:42.560 --> 0:07:46.040
<v Speaker 1>a substantial cycle in equity. I don't I don't want

0:07:46.040 --> 0:07:49.040
<v Speaker 1>to give my opinion, but I certainly don't disagree with

0:07:49.080 --> 0:07:51.880
<v Speaker 1>your double negative. I don't disagree with your logic. I

0:07:51.920 --> 0:07:55.120
<v Speaker 1>like what I hear. I go back to Apple bonds

0:07:55.160 --> 0:07:58.880
<v Speaker 1>in paper is sort of a of the moment Bellweather

0:07:59.320 --> 0:08:01.760
<v Speaker 1>the Apple a year piece three and a quarter percent

0:08:01.840 --> 0:08:06.119
<v Speaker 1>coupon you're enjoying, uh with a yield of one point

0:08:06.240 --> 0:08:11.040
<v Speaker 1>six three percent. That that's telling you, I have to

0:08:11.120 --> 0:08:14.400
<v Speaker 1>lock up my money for ten years. I'm guaranteed to

0:08:15.320 --> 0:08:19.760
<v Speaker 1>not make money, not make money and possibly if inflation

0:08:20.160 --> 0:08:24.080
<v Speaker 1>ticks up in the outer half of that decade. Yeah. Yeah,

0:08:24.200 --> 0:08:28.800
<v Speaker 1>So that's telling me that risk aversion has reared its head.

0:08:28.840 --> 0:08:31.880
<v Speaker 1>That people, you know, we call it the recency effect.

0:08:32.520 --> 0:08:37.360
<v Speaker 1>People are impacted by whatever was the biggest emotional event

0:08:37.400 --> 0:08:41.800
<v Speaker 1>in recent memory. They've ignored the stock market tripling from

0:08:41.800 --> 0:08:45.839
<v Speaker 1>the March of nine lows. Instead, they've focused on the

0:08:45.880 --> 0:08:48.800
<v Speaker 1>collapse that they experienced and and how negative that was.

0:08:49.280 --> 0:08:52.560
<v Speaker 1>And that leaves psychic scars that they could long time

0:08:52.559 --> 0:08:57.240
<v Speaker 1>to heal. Spider trailing negative one point seven percent. When

0:08:57.240 --> 0:08:59.200
<v Speaker 1>does a guy like you get bold enough to buy?

0:09:00.000 --> 0:09:02.920
<v Speaker 1>We're always invested, you know, we continue to have exposure

0:09:02.960 --> 0:09:07.680
<v Speaker 1>to us. Now are our bias are inherent tilt? We

0:09:07.800 --> 0:09:12.080
<v Speaker 1>like quality, we like value uh and we like a

0:09:12.200 --> 0:09:15.600
<v Speaker 1>smaller cap. And as we've seen and in my conversation

0:09:15.600 --> 0:09:18.960
<v Speaker 1>with Tom Dorsey, he talks about how the big caps

0:09:19.040 --> 0:09:22.160
<v Speaker 1>lead for a long time and then suddenly it shifts

0:09:22.160 --> 0:09:26.080
<v Speaker 1>and it moves to men and small and that just started,

0:09:26.360 --> 0:09:30.480
<v Speaker 1>but then it shifts back eventually. But you could go five, seven,

0:09:30.600 --> 0:09:34.800
<v Speaker 1>nine years of the smaller capt look over long times

0:09:34.960 --> 0:09:38.760
<v Speaker 1>is a longer periods of time. There's a small cap premium.

0:09:39.080 --> 0:09:42.840
<v Speaker 1>There are inefficiencies. What's the inefficiency with General Electric or Apple?

0:09:42.880 --> 0:09:45.960
<v Speaker 1>Everybody knows everything there is to know about that, But

0:09:46.120 --> 0:09:49.760
<v Speaker 1>there are hundreds and hundreds of smaller companies thousands around

0:09:49.760 --> 0:09:52.600
<v Speaker 1>the world that there is an analyst coverage. People don't

0:09:52.640 --> 0:09:55.840
<v Speaker 1>know what their potential upside is. That's why sectors like

0:09:56.000 --> 0:10:00.800
<v Speaker 1>biotech sometimes explode when you're getting billion dollar drugs from

0:10:00.840 --> 0:10:04.240
<v Speaker 1>these small, unhearted and much more than biotech. And we've

0:10:04.240 --> 0:10:06.920
<v Speaker 1>got we gotta run here and come back. But much

0:10:07.040 --> 0:10:12.319
<v Speaker 1>more than biotech are the smaller, less visible, boring stocks

0:10:12.360 --> 0:10:16.160
<v Speaker 1>that aren't the romance of a discovery. That's one product discovered.

0:10:16.200 --> 0:10:19.080
<v Speaker 1>Look good. Investing should be boring. You shouldn't have a

0:10:19.080 --> 0:10:23.199
<v Speaker 1>lot to discuss, Hey, go on a global asset allocation

0:10:23.240 --> 0:10:26.120
<v Speaker 1>of low cost and next is rebalanced once a year.

0:10:26.480 --> 0:10:29.080
<v Speaker 1>Seeing nets fourth of July. There's not a lot to

0:10:29.120 --> 0:10:31.400
<v Speaker 1>chat about with that, Barry Ridholets with us. So I

0:10:31.480 --> 0:10:36.160
<v Speaker 1>really can't say enough about masters in business. And I

0:10:36.160 --> 0:10:39.040
<v Speaker 1>I want to rave about Mr Dorsey, who wins that

0:10:39.160 --> 0:10:41.080
<v Speaker 1>on this weekend. That is on this weekend, and we

0:10:41.200 --> 0:10:44.440
<v Speaker 1>spoke for about two hours. It was fabulous. Tom Dorson

0:10:44.520 --> 0:10:47.920
<v Speaker 1>Berry Ridholets look for that this weekend. Future is negative

0:10:48.080 --> 0:10:53.439
<v Speaker 1>five And now to news in New York. Here's Michael

0:10:53.440 --> 0:10:56.160
<v Speaker 1>barr Tom Barry, thank you very much. The hijacking of

0:10:56.240 --> 0:11:00.360
<v Speaker 1>an egypt airplane is over and an official inside APRIS

0:11:00.360 --> 0:11:03.440
<v Speaker 1>says the suspected hijacker is under arrest. The plane was

0:11:03.480 --> 0:11:06.360
<v Speaker 1>on its way to Cairo from Alexandria, Egypt today when

0:11:06.360 --> 0:11:09.520
<v Speaker 1>the hijacker forced the plane to land in Cyprus. EACHYP

0:11:09.520 --> 0:11:11.439
<v Speaker 1>the air flight one eight one at about fifty five

0:11:11.440 --> 0:11:15.120
<v Speaker 1>passengers on board. The CEO of Brussels Airport says the

0:11:15.160 --> 0:11:19.800
<v Speaker 1>facility won't be back to normal four months. Brussels Airport

0:11:19.880 --> 0:11:22.760
<v Speaker 1>is set to reopen tomorrow, but it could only accommodate

0:11:22.800 --> 0:11:26.400
<v Speaker 1>about of the usual traffic. The check in area is

0:11:26.440 --> 0:11:29.959
<v Speaker 1>completely out of service. Last week obambing attack at the

0:11:29.960 --> 0:11:34.760
<v Speaker 1>Brussels Airport and the city subway system killed dozens. Arctic

0:11:34.840 --> 0:11:38.080
<v Speaker 1>sea ice is at his lowest level ever, according to

0:11:38.160 --> 0:11:41.000
<v Speaker 1>the National Snow and Ice Status Center at the University

0:11:41.000 --> 0:11:45.160
<v Speaker 1>of Colorado. It's because of crazy warm temperatures. Global News

0:11:45.200 --> 0:11:48.920
<v Speaker 1>twenty four hours a day, powered by our journalists. I'm

0:11:48.920 --> 0:11:51.480
<v Speaker 1>Michael Bayern, Tom Barry and Michael. Thanks so much. She's

0:11:51.520 --> 0:11:55.080
<v Speaker 1>just thanking of five down features at negative and ten

0:11:55.120 --> 0:11:58.200
<v Speaker 1>you yield one point five percent Barry Ridholson, Tim Keene

0:11:58.720 --> 0:12:07.160
<v Speaker 1>Coast to Coast Lumberg Surveillance counting down to the opening Bell.

0:12:07.200 --> 0:12:09.000
<v Speaker 1>Brought to you by the Jeep Grand Cherokee, the most

0:12:09.000 --> 0:12:12.320
<v Speaker 1>awarded the suv ever, the Grand Cherokee continues to raise

0:12:12.360 --> 0:12:15.880
<v Speaker 1>the bar with its luxurious interior, legendary four by four capability.

0:12:16.120 --> 0:12:18.280
<v Speaker 1>Try and plant at your local Jeep dealer Today,