Speaker 1: Broadcasting live to New York, Bloomberg eleven, Rio to Washington,
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Speaker 1: around the globe the Bloomberg Radio Plus athen Bloomberg dot com.
Speaker 1: This is taking Stock. I'm Kathleen Hayes, my co host
Speaker 1: of pim Fox is on a well deserved vacation. This week.
Speaker 1: We're going to continue FED a reserve in focus now
Speaker 1: taking a look at what we have heard from FED
Speaker 1: officials the last few days, including FED Vice Chair Stanley
Speaker 1: Fisher right here on Bloomberg Radio and television. What does
Speaker 1: it all mean for the bond market? The Fed is
Speaker 1: seriously considering an interest rate increase in September. Our next guest,
Speaker 1: Mark Ran from Hillside. Excuse me how Top Security says
Speaker 1: not so good? Well, he's always so good, and that's
Speaker 1: Charlie Pellett. He is in the newsroom with a Bloomberg
Speaker 1: business class. Thank you very much, Athlete Hayes are way
Speaker 1: too kind to dial the SMP nez Dak not so
Speaker 1: kind today, stocks declining a sell off in oil, sending
Speaker 1: stocks slumping and We are brought to you by national
Speaker 1: Realty providers of one hundred percent satisfaction guaranteed New York
Speaker 1: City realty investments. See them at n r I a
Speaker 1: dot net. The SMP five hundred index has erased its
Speaker 1: monthly gain. Traders are awaiting Friday's jobs data to assess
Speaker 1: the outlook for interest rates in the US economy. Energy
Speaker 1: producers dragging down equities as crude oil trades below forty
Speaker 1: five dollars a barrel after a report showed American stockpiles
Speaker 1: climbed by more than projected. Chris Gersh is director of
Speaker 1: strategy at Bell Curve Capital, and on Bloomberg Television this morning,
Speaker 1: he talked about the bigger picture for oil and oil prices,
Speaker 1: which I ran in Saudi Arabia ramping up production um
Speaker 1: there and also the strong dollar really causing what a
Speaker 1: lot of people perceived to be a slow down in
Speaker 1: the fourth quarter. Uh. We believe that the w t
Speaker 1: I contract and it will you know, correlate to Brent
Speaker 1: and pull that down, will be setting a new range
Speaker 1: here below forty six handle. And right now we do
Speaker 1: have West Texas intermediated at seventy two, down three and
Speaker 1: a half percent. Brent crude is down two point eight percent,
Speaker 1: the tenure the yield there one point five six percent,
Speaker 1: the SMP down eight to sixty seven, a drop of
Speaker 1: four tenths of one percent. Then Stack Composite Index down
Speaker 1: fourteen points, a drop of three tenths of one percent.
Speaker 1: Down Industrials down seventy two, a drop of four tenths
Speaker 1: of one percent, to thirty two on Wall Street. Now,
Speaker 1: let's look at other stories making news from around the world.
Speaker 1: Thank you, Charlie from the Blueberg newsroom. I'm Matt Miller.
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Speaker 1: and thirty first Street. Brazil's Senate has overwhelmingly voted to
Speaker 1: confirm Jill Murroussep's impeachment. Today, Bloomberg's Ana Edgerton is in
Speaker 1: Brazilia with more than unsurprised twist. The chamber decided against
Speaker 1: the harshest possible punishment that would have banned her from
Speaker 1: running for public office for eight years after her Vice president,
Speaker 1: Michelle Timer, is officially sworn in this afternoon to will
Speaker 1: travel to China for the G Twenties Summits Timmer, who
Speaker 1: has been running the country since May when the patent
Speaker 1: process began the Senate. We'll record a pronouncer with broadcast
Speaker 1: on State TV later tonight, Anna Edgerson, Bloomberg Radio. Brazilia.
Speaker 1: Republican presidential nominee Donald Trump is in Mexico today for
Speaker 1: private meeting with Mexico's president. Campaign manager Kelly Ann Conway
Speaker 1: spoke about that during an appearance on With all due
Speaker 1: respect on Bloomberg Television. There are many tenants to his plan.
Speaker 1: I think they are incredibly important for everyone to remember.
Speaker 1: Build a wall, which has been the signature of his
Speaker 1: campaign since practically day one. That's that's their amnesty, no legalization,
Speaker 1: No sanctuary cities. UM. Sanctuary cities have become a very
Speaker 1: um inflection, very important inflection point in this campaign. Investigators
Speaker 1: are considering sun glare as a possible factor in an
Speaker 1: accident involving a group of kayakers and a New York
Speaker 1: Waterway ferry on the Hudson River. At least eleven people
Speaker 1: were injured, one critically nearly losing an arm. Golal News
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Speaker 1: analysts and more than one twenty countries. I'm Matt Miller.
Speaker 1: This is Bloomberg, and we thank you and again recapping
Speaker 1: the DAL, the SMP and NESTAK all declining today, the
Speaker 1: SMP five hundred index and now lower by eight points
Speaker 1: to sixty seven, a drop there of four tenths of
Speaker 1: one percent. I'm Charlie Peltz. That's a Bloomberg business flash.
Speaker 1: This is taking stock the FED in focus on Bloombird Radio.
Speaker 1: I'm Kathleen Hayes. My co host Kim Fox is on
Speaker 1: vacation this week, so he's gonna miss a very prific
Speaker 1: conversation now with Mark Grant, chief fixed income strategist Hilltop Securities.
Speaker 1: We know him as the Wizard for all his incifle
Speaker 1: comments on the U S Government bond market and more.
Speaker 1: He has been UH one of the biggest bulls UH
Speaker 1: so far over the last couple of years and continues
Speaker 1: to look for further games and bonds, particularly the FED missteps. Mark,
Speaker 1: welcome back to the show. Thanks and always a pleasure
Speaker 1: to be with you, well, let's start with there's so
Speaker 1: many places, but you know post, Jackson Hole Post and
Speaker 1: Fisher saying negative rates he thinks are working, ETCETERA very
Speaker 1: interesting I think, and maybe a little more nuanced. Charlie Evans,
Speaker 1: President Chicago FED, and Eric rosen Grin, President of Boston FED,
Speaker 1: speaking on a panel. I don't think they're exactly opposed
Speaker 1: to each other. But Charlie Evans focusing on UH rates
Speaker 1: could stay low for a longer time than people thought.
Speaker 1: According to his business contacts, the FED could move slowly.
Speaker 1: Eric rosen gran a little bit worried about accesses that
Speaker 1: could be building up in places like commercial real estate
Speaker 1: as a risk of the FED moving too slow. What
Speaker 1: do you see? Well, I think if the Fed does
Speaker 1: raise rates, it will be a huge mistake on two fronts.
Speaker 1: One Politically, it will be a mistake because whoever might
Speaker 1: win the election is not going to be happy with
Speaker 1: the Fed. If the Fed causes a disruption of the
Speaker 1: American economy too in terms of the um economics of it,
Speaker 1: if you look at what happens when the Fed raises rates,
Speaker 1: it means that commercial real estate, residential real estate, commercial loans,
Speaker 1: personal loans, everything becomes more expensive that are tied to
Speaker 1: the short end and may throw the economy into some
Speaker 1: kind of recession. And that means that you're going to
Speaker 1: get a flatter yield curve than we have now, or
Speaker 1: maybe even go into an inverted yield curve, and I
Speaker 1: think it would just be very negative for the country
Speaker 1: on both counts. Well, Mark, I guess your argument if
Speaker 1: you want to race rates pretty soon as you say, hey,
Speaker 1: wait a minute, you know you kind of look at
Speaker 1: the jobs market. The labor market is growing just fine.
Speaker 1: We might get a strong jobs report on Friday. In
Speaker 1: a situation like that, we can afford to pay a
Speaker 1: little bit more for the money they borrow because they're
Speaker 1: making more money and they'd rather have more demand and
Speaker 1: more business and making more money than than they would
Speaker 1: care about keeping the rate little. See what I mean? Well,
Speaker 1: there are two parts of that argument. One is you
Speaker 1: have to look at the quality of jobs until you
Speaker 1: have to look at the product productivity in the job markets,
Speaker 1: and both are not very good. We've had some more
Speaker 1: jobs added, there's no question about that. But when you
Speaker 1: look at what kind of jobs they are, and then
Speaker 1: you look at the productivity in the labor force, it
Speaker 1: certainly looks less optimistic. And then again also I think
Speaker 1: you have to look at the inflation rate, and with
Speaker 1: oil now plunging down again, which has a big impact
Speaker 1: on inflation, means the freads are going to be nowhere
Speaker 1: near their desired goal two percent. So I think those
Speaker 1: are the offsetting parts and the and the third big
Speaker 1: part of it is what the other central banks in
Speaker 1: the world are doing. So we now, according to Fitch,
Speaker 1: have thirteen points in trillion and negative yielding bonds across
Speaker 1: the world. Bonds in Europe and Japan are substantially less
Speaker 1: yield than we have in the United States. So all
Speaker 1: you're gonna do is drag in more foreign money into
Speaker 1: the US market, which is what one of the major
Speaker 1: reasons I think yields even here going down because we're
Speaker 1: the last man standing with the positive yield. Hey, but
Speaker 1: the Japanese banking Japan might say thank you very much
Speaker 1: for to reserve. We've been trying like crazy the week
Speaker 1: in our end. If we have divergence, if the Fed hikes,
Speaker 1: the dollar rises, and the bo J goes the other way,
Speaker 1: it's more stimulus than the end weekends. They'd be very happy.
Speaker 1: This is their big bugaboo. Well, I think the FED
Speaker 1: is you may recall, is I'm not only recalls I
Speaker 1: know you know, is the central Bank of the United States.
Speaker 1: It's not the central Bank of Japan. And consequently, the
Speaker 1: FEED should be doing what it can for our country.
Speaker 1: Plus whoever is elected president, they're both are talking about
Speaker 1: very uh uh. You know, a huge growth in infrastructure
Speaker 1: coming at it from different patterns, but it's going to
Speaker 1: be even more debt for the Treasury, and the should
Speaker 1: be trying to hold rates down to accommodate that. In
Speaker 1: my opinion. Now, let's s the FED races rates and
Speaker 1: you're right, and it's the wrong thing to do, and
Speaker 1: the economy really slows down. That would just would that
Speaker 1: just opened the door to another big leg of a
Speaker 1: bond rally that pushes yields even lower, in prices even higher. Absolutely, Kathleen,
Speaker 1: You've got to add exactly right. So we're bond going work. Well,
Speaker 1: I think we're going to one at a quarter on
Speaker 1: the tenure by year end. I've said that since around
Speaker 1: February when the tenure was at a one seventy seven.
Speaker 1: Were the one fifty six today, But I think we're
Speaker 1: going to go back lower just because we have the
Speaker 1: only place in the world, as I said, with positive yields.
Speaker 1: I mean, it's like we're the last man standing. And
Speaker 1: then whoever is elected president wants to do more and
Speaker 1: terms of government infrastructure and growth, and the only way
Speaker 1: to really pay for that without causing even more massive
Speaker 1: problems is the lower interest rate. So the Fed may
Speaker 1: in fact at some point reverse course and add more
Speaker 1: to their balance sheets than the four chilion they already
Speaker 1: have about ten seconds. You're still a fan of closed
Speaker 1: end bond funds. I think closed in bond funds where
Speaker 1: if you pick the right ones, you can get about
Speaker 1: ten or the best option, especially for any person right now. Well,
Speaker 1: Mark ran, Mr Wizard the Wizard, we thank you so
Speaker 1: much for joining us. He's cheap fixed income strategists at
Speaker 1: Hilltop Securities based in Fort Lauderdale. What a lovely place
Speaker 1: to be, he said. It would be a huge mistake
Speaker 1: for the FED to raise rates. Now it's election year.
Speaker 1: You're gonna stir up a hornet's nest, and you're gonna
Speaker 1: make money cost more, and that's gonna hurt commercial real
Speaker 1: estate and residential real estate and more. I'm Kathleen Hayes.
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