Speaker 1: This is Bloomberg Surveillance. I would expect the interest rate
Speaker 1: in the Eurozone and it's peripheral will be zero or
Speaker 1: lower for the rest of this decade. Sector selection does
Speaker 1: matter of a lot. You avoided energy last year, probably
Speaker 1: relatively Well, it's half the gliberal economy and it's all slowing.
Speaker 1: My sense is that this year things will start to centerin,
Speaker 1: and I think that turnerin will be lati by China.
Speaker 1: Bloomberg Surveillance your link to the world of economics, finance
Speaker 1: and investment on Bloomberg Radio. Good morning everyone, very rad
Speaker 1: holds in time King Bloomberg Surveillance. Right now though, breaking
Speaker 1: economic data, which means we must we must go to Vinnidale,
Speaker 1: Judas Vinny. What do you see with case Schiller. Well,
Speaker 1: it's up Tom here over yere the S and P
Speaker 1: K Schiller Home price Index tracking twenty cities January five
Speaker 1: point seven percent. That's comparing to five point six percent
Speaker 1: revised in December month over month, up point eight per
Speaker 1: scent in January revision the prior month up point seven
Speaker 1: eight percent, So that's really little changed year over year,
Speaker 1: though we see the trend continuing up five point seven
Speaker 1: five percent January home prices major twenty cities at the
Speaker 1: Bloomberk First Work Desk Company del J. Let's go back
Speaker 1: to New York, tom at Barryvin very good. Of course,
Speaker 1: we break that down and we'll go through that through
Speaker 1: the hour, looking at some negative statistics out there on
Speaker 1: the monthly basis. Negative for Boston, Charlotte, Chicago, Minneapolis, New
Speaker 1: York slightly negative, Phoenix about like New York's performance, Washington
Speaker 1: d C negative that that is a bit surprising, but
Speaker 1: many other positives as well. Los Angeles with a big
Speaker 1: positive gain among others. Will dive into those data points
Speaker 1: through the hour as we are wont to do. The
Speaker 1: four X brief this morning brought to you by Interactive Brokers,
Speaker 1: winner of FX Weeks two thousand and fifteen award for
Speaker 1: the best in Retail for X trading platforms. Visit ib
Speaker 1: at I b k R com slash four X. I'm
Speaker 1: gonna call it a churn to the market. Dollar weaker,
Speaker 1: not demonstrable, but nevertheless within the range. Dollar a little
Speaker 1: bit weaker. Sterling on one three all one, So a
Speaker 1: couple of days in a row of sterling um strength
Speaker 1: and all of it. The backdrop is a quieter yield
Speaker 1: market US full faith and credit tenure one point eight
Speaker 1: five in a good four basis points. And I've been
Speaker 1: following quietly the German two year sort of as a
Speaker 1: draggy proxy. That's a mouthful negative zero point four nine
Speaker 1: is a lower yield over the last four or five
Speaker 1: six days. That's some of the macro research that ray
Speaker 1: Oi doesn't Invesco where he covers a fixed income market. Ray,
Speaker 1: wonderful day, have you on and and and thank you
Speaker 1: to all of you at Invesco who support the show.
Speaker 1: Um Ray I I look at fixed income and I
Speaker 1: think the general question is is it a time to
Speaker 1: manage for coupon or is there even a hint of
Speaker 1: total return? Hey Tom, thanks for having me on the show. UM. Yeah.
Speaker 1: I think the as it relates to fix income, certainly, UM,
Speaker 1: you know, given the income needs that um, you know,
Speaker 1: most of the market has a desire for. Certainly, UM,
Speaker 1: coupon shouldn't be the primary UM focus. I think given
Speaker 1: where yields are, the you know, total return prospects are
Speaker 1: somewhat more challenging in this type of environment. I like
Speaker 1: how they do that Bear, it's sort of graceful more challenge.
Speaker 1: How do you manage for that? How do you manage
Speaker 1: for that? Right? Well, I think the way we've you know,
Speaker 1: assessed opportunities is really to look across the sectors within
Speaker 1: fix income and I think this is where active management
Speaker 1: really UM can help navigate UM and help you know,
Speaker 1: investors reached their objectives is through you know, affect the rotation.
Speaker 1: And given the volatility that we've seen, uh, you know,
Speaker 1: a cross markets this year obviously UM, you know, volatility
Speaker 1: of the two sided coin. There's there's obviously pain, but
Speaker 1: also opportunity associated with some of the large shifts that
Speaker 1: we've witnessed thus far this year. So everybody is so
Speaker 1: hyper focused on on the FED and the dot plot
Speaker 1: and will they or won't they? We have we have
Speaker 1: Jerry Yelling's speech to the Economic Club of New York today,
Speaker 1: But even if they do, we're still so far under
Speaker 1: one percent for rates. My question for you is how
Speaker 1: much does the FED really matter for the rest of
Speaker 1: this year? Are we at risk of just over obsessing
Speaker 1: about the difference between twenty five basis points and fifty
Speaker 1: basis points or should we be focusing our attention elsewhere?
Speaker 1: I think you bring up a really good point there.
Speaker 1: I think one of the reasons why the said could
Speaker 1: be UM meaningful even though the you know, the on
Speaker 1: an absolute basis, the policy actions are relatively small, that
Speaker 1: the market is obsessing about it, specifically for that reason
Speaker 1: that the market is obsessed with UM, you know, the
Speaker 1: you know, minutia of of the said dynamic that UM
Speaker 1: you know, these moves could be more impactful than UM
Speaker 1: the you know, nominal amount would imply UM. And I
Speaker 1: think additionally, UM, You're right, I think there are worth
Speaker 1: still focused on some of the other UM risks globally
Speaker 1: that are still prevalent UM you know, within the global
Speaker 1: financial system and naming sort of this de leveraging that's
Speaker 1: occurring UM, you know, that's still in the e M
Speaker 1: and in China. So so where should we be focusing
Speaker 1: our our attention and our investment dollars. I think we
Speaker 1: you know, we should be focused on UM high quality
Speaker 1: UM fixed income assets, and as it relates to X,
Speaker 1: we're focused on you know, continued dollar strength against the
Speaker 1: Asian ex Japan currency region. Right, thanks so much, greatly
Speaker 1: appreciate Railways with Investco. Head of Macro Research Investco Fixed
Speaker 1: Income Barry that really shows this whole idea. And you know,
Speaker 1: I think of Bill gross Uh when made the headlines
Speaker 1: on this show with a financial repression of ten years,
Speaker 1: And it really goes back to what do you do
Speaker 1: if you you know, I just really don't I just
Speaker 1: really don't want to do stocks. It's a major major issue.
Speaker 1: You you run into this all time, much more than
Speaker 1: I do. Of people say I just really don't want
Speaker 1: to own stocks, then what And you know, the institutions
Speaker 1: have learned, we really don't want to do alternative investments
Speaker 1: because there's a ton of fees that have gotten us
Speaker 1: nowhere you go back to bonds, and there's a real mystery.
Speaker 1: So here's the jiu jitsu. Whenever you hear a lot
Speaker 1: of UH clients or a lot of investors saying they
Speaker 1: don't want to do stocks, your your mouth should start
Speaker 1: to water in a Pavlovian response, because that means stocks
Speaker 1: are about to begin their next major leg up when
Speaker 1: the crowd is skittish and risk averse and afraid of
Speaker 1: equities because let's be blunt, they've suffered so many crashes.
Speaker 1: We just had both the two thousand crash, e O
Speaker 1: eight or nine crash they're obsessing about the possibility of
Speaker 1: another crash. That should tell you that there's enough under
Speaker 1: investment and enough fear out there that it could drive
Speaker 1: a substantial cycle in equity. I don't I don't want
Speaker 1: to give my opinion, but I certainly don't disagree with
Speaker 1: your double negative. I don't disagree with your logic. I
Speaker 1: like what I hear. I go back to Apple bonds
Speaker 1: in paper is sort of a of the moment Bellweather
Speaker 1: the Apple a year piece three and a quarter percent
Speaker 1: coupon you're enjoying, uh with a yield of one point
Speaker 1: six three percent. That that's telling you, I have to
Speaker 1: lock up my money for ten years. I'm guaranteed to
Speaker 1: not make money, not make money and possibly if inflation
Speaker 1: ticks up in the outer half of that decade. Yeah. Yeah,
Speaker 1: So that's telling me that risk aversion has reared its head.
Speaker 1: That people, you know, we call it the recency effect.
Speaker 1: People are impacted by whatever was the biggest emotional event
Speaker 1: in recent memory. They've ignored the stock market tripling from
Speaker 1: the March of nine lows. Instead, they've focused on the
Speaker 1: collapse that they experienced and and how negative that was.
Speaker 1: And that leaves psychic scars that they could long time
Speaker 1: to heal. Spider trailing negative one point seven percent. When
Speaker 1: does a guy like you get bold enough to buy?
Speaker 1: We're always invested, you know, we continue to have exposure
Speaker 1: to us. Now are our bias are inherent tilt? We
Speaker 1: like quality, we like value uh and we like a
Speaker 1: smaller cap. And as we've seen and in my conversation
Speaker 1: with Tom Dorsey, he talks about how the big caps
Speaker 1: lead for a long time and then suddenly it shifts
Speaker 1: and it moves to men and small and that just started,
Speaker 1: but then it shifts back eventually. But you could go five, seven,
Speaker 1: nine years of the smaller capt look over long times
Speaker 1: is a longer periods of time. There's a small cap premium.
Speaker 1: There are inefficiencies. What's the inefficiency with General Electric or Apple?
Speaker 1: Everybody knows everything there is to know about that, But
Speaker 1: there are hundreds and hundreds of smaller companies thousands around
Speaker 1: the world that there is an analyst coverage. People don't
Speaker 1: know what their potential upside is. That's why sectors like
Speaker 1: biotech sometimes explode when you're getting billion dollar drugs from
Speaker 1: these small, unhearted and much more than biotech. And we've
Speaker 1: got we gotta run here and come back. But much
Speaker 1: more than biotech are the smaller, less visible, boring stocks
Speaker 1: that aren't the romance of a discovery. That's one product discovered.
Speaker 1: Look good. Investing should be boring. You shouldn't have a
Speaker 1: lot to discuss, Hey, go on a global asset allocation
Speaker 1: of low cost and next is rebalanced once a year.
Speaker 1: Seeing nets fourth of July. There's not a lot to
Speaker 1: chat about with that, Barry Ridholets with us. So I
Speaker 1: really can't say enough about masters in business. And I
Speaker 1: I want to rave about Mr Dorsey, who wins that
Speaker 1: on this weekend. That is on this weekend, and we
Speaker 1: spoke for about two hours. It was fabulous. Tom Dorson
Speaker 1: Berry Ridholets look for that this weekend. Future is negative
Speaker 1: five And now to news in New York. Here's Michael
Speaker 1: barr Tom Barry, thank you very much. The hijacking of
Speaker 1: an egypt airplane is over and an official inside APRIS
Speaker 1: says the suspected hijacker is under arrest. The plane was
Speaker 1: on its way to Cairo from Alexandria, Egypt today when
Speaker 1: the hijacker forced the plane to land in Cyprus. EACHYP
Speaker 1: the air flight one eight one at about fifty five
Speaker 1: passengers on board. The CEO of Brussels Airport says the
Speaker 1: facility won't be back to normal four months. Brussels Airport
Speaker 1: is set to reopen tomorrow, but it could only accommodate
Speaker 1: about of the usual traffic. The check in area is
Speaker 1: completely out of service. Last week obambing attack at the
Speaker 1: Brussels Airport and the city subway system killed dozens. Arctic
Speaker 1: sea ice is at his lowest level ever, according to
Speaker 1: the National Snow and Ice Status Center at the University
Speaker 1: of Colorado. It's because of crazy warm temperatures. Global News
Speaker 1: twenty four hours a day, powered by our journalists. I'm
Speaker 1: Michael Bayern, Tom Barry and Michael. Thanks so much. She's
Speaker 1: just thanking of five down features at negative and ten
Speaker 1: you yield one point five percent Barry Ridholson, Tim Keene
Speaker 1: Coast to Coast Lumberg Surveillance counting down to the opening Bell.
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