WEBVTT - Saut Discusses Exercising Patience in Investing (Audio)

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<v Speaker 1>Global business News twenty four hours a day's Bloomberg dot

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<v Speaker 1>Com the Radio plus mobile lapp and on your radio.

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<v Speaker 1>This is a Bloomberg business flash from Bloomberg World, Handquarters,

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<v Speaker 1>Signed Charlie Pellot. The down SMP trading little change, nez

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<v Speaker 1>stank is lower by four tenths of one percent. Stocks

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<v Speaker 1>have been fluctuating in a whip sage session right now,

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<v Speaker 1>Nez Stack down seventeen SMP five d indecks up a point,

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<v Speaker 1>advancing point one percent. Town Industrials up twenty nine, a

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<v Speaker 1>gain of two tenths of one percent. X on mobile

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<v Speaker 1>and Chevron gaining more than eight tenths of one percent

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<v Speaker 1>as crude rose in volatile trading. West Texas Intermediate Crude

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<v Speaker 1>up six tenths of one percent, now up twenty eight

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<v Speaker 1>cents of barrel forty six fifty one on West Texas

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<v Speaker 1>Intermediate Gold down six fifty ounce to twelve sixty nine,

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<v Speaker 1>a drop there of five tenths of one percent. The

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<v Speaker 1>tenure Town six thirty seconds had yield one point seven

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<v Speaker 1>four percent. I'm Charlie Pello. Then that's a bloom Bird

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<v Speaker 1>business flash. Thank you very much. Charlie Pelletty is time

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<v Speaker 1>now for the e t F Report. It is brought

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<v Speaker 1>to you by van Eck Vector's e t F s.

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<v Speaker 1>Expect more from your muni's target tax exempt income by

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<v Speaker 1>maturity and credit quality, all with low cost et F s.

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<v Speaker 1>Visit vaneck dot com slash Muni Vanek Access the opportunities.

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<v Speaker 1>That's access the e t F Report with Catherine Cowdery.

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<v Speaker 1>There's an a t F that's tapped into a value

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<v Speaker 1>factor in bonds. That's the word from Bloomberg Intelligence analyst

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<v Speaker 1>Eric bel Tunis. It's a van k Vector's Fallen Angel

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<v Speaker 1>high yield bond e t F taker a n g L.

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<v Speaker 1>It focuses on corporate bonds that were investment grade at

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<v Speaker 1>the time that were issued and we're later downgraded to

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<v Speaker 1>below investment grade. This one has six is double b

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<v Speaker 1>UM and compared to h y G which is six

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<v Speaker 1>single B and triple C. So it's almost like a

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<v Speaker 1>touch above high yield. But it's a kind of a

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<v Speaker 1>hidden hidden gem, I think, And the reason people haven't

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<v Speaker 1>really noticed it, I think is people generally just view

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<v Speaker 1>the world into high yield or investment grade when bonds um,

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<v Speaker 1>and they don't consider this sort of I called purgatory

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<v Speaker 1>in between investment grade and high yields, sort of like

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<v Speaker 1>these bonds are living there and g L has one

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<v Speaker 1>nine million dollars in total assets and a twelve months

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<v Speaker 1>dividend yield of five point four is gained eleven point

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<v Speaker 1>nine percent since the start of the year. That's your

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<v Speaker 1>Bloomberg ETF report. I'm Katherine Cowdery. This is taking stock

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<v Speaker 1>with PIM Box and Kathleen Hayes on Bloomberg Radio. Never

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<v Speaker 1>say never, never say always, always re evaluate, and never

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<v Speaker 1>give up. Does that sound like Jeff Saut while at

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<v Speaker 1>might he's the chief investment strategist of Raymond James, helping

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<v Speaker 1>to manage about four hundred billion dollars of customer assets

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<v Speaker 1>based in St. Petersburg, Florida. Jeff Saut, thank you very

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<v Speaker 1>much for beating with us. A pleasure to talk with

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<v Speaker 1>you again. Pim, So, where does this saying fit into

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<v Speaker 1>an investment strategy? Well, it's more of a it's more

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<v Speaker 1>of a life statement than it is a stock market strategy.

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<v Speaker 1>My my model, proprietary model. When the SMP UH five

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<v Speaker 1>didn't follow its brethren, the SMP total returned to new

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<v Speaker 1>all time highs about three weeks ago, the model turned

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<v Speaker 1>negative and was looking for a low sometime this week,

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<v Speaker 1>and with two with Wednesdays, was a Wednesday Tuesday's rally

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<v Speaker 1>of two hundred and twenty two points. You know, it

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<v Speaker 1>looked to me like the model was was gonna be wrong.

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<v Speaker 1>And then we got yesterday down two hundred and change,

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<v Speaker 1>and today we bounced once again off area for the

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<v Speaker 1>for the fifth time since the April high. So I'm

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<v Speaker 1>never giving up. You're never giving up, all right, So

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<v Speaker 1>what do you do? I mean, if you don't give up,

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<v Speaker 1>you've got to be doing something or are you just

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<v Speaker 1>waiting for some more information. I'm exercising the rarest commodity

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<v Speaker 1>on Wall Street, which is patients. We pushed a lot

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<v Speaker 1>of chips out into equities. Uh, I think I was

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<v Speaker 1>on a bloomberg. I think it was on February. I

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<v Speaker 1>think it was fifth or sixth, and the model said

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<v Speaker 1>the market was going to bottom next week. So we

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<v Speaker 1>started buying stocks into that February eleventh low, and we've

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<v Speaker 1>had pretty good gains since then. So I'm waiting to

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<v Speaker 1>see if we if we swoon again tomorrow and make

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<v Speaker 1>a low the first part of next week, or if

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<v Speaker 1>we've made the bottom this week in the model was

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<v Speaker 1>actually looking for a lower low than that. But you

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<v Speaker 1>take what they give you in this business, clearly, you

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<v Speaker 1>take what they give you. What are they giving you

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<v Speaker 1>in terms of where to put fresh money to work? Well,

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<v Speaker 1>I think you can still look at some of the

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<v Speaker 1>You know, my UM Fundamental Analysts has a strong by

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<v Speaker 1>rating on a Ridium, the low satellite orbiting company, and

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<v Speaker 1>they have a convertible preferred with about a six percent

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<v Speaker 1>yield to it. So I think something like that makes

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<v Speaker 1>makes a lot of sense here, and that is are

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<v Speaker 1>people looking for income, yeah, but they're also looking as

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<v Speaker 1>one of my friend Rod Baron's favorite stocks. He's probably

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<v Speaker 1>the largest shareholder there, and he thinks that when they

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<v Speaker 1>get the birds all launched over the next eighteen to

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<v Speaker 1>twenty four months, that the free cash flow yield is

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<v Speaker 1>going to go through the roof and the stock is

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<v Speaker 1>going to go up into the high teams of the

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<v Speaker 1>low twenties. If that happens, the CONVERTI will Preferred zooms

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<v Speaker 1>right up with it now. Ridium the symbol is I

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<v Speaker 1>R d M. The shares trade at about eight dollars

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<v Speaker 1>and twenty five cents down about two uh percent so

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<v Speaker 1>far this year. This is the Global Satellite Communications System

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<v Speaker 1>for low Earth orbit to satellites for a voice for

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<v Speaker 1>voice and data communications. Correct, Yeah, that's that's correct. But

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<v Speaker 1>any time I can get a dividend yield out of

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<v Speaker 1>what looks to be a pretty dynamic situation, I'm going

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<v Speaker 1>to go for the dividend yield. What do you say

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<v Speaker 1>to people that look at the price of energy and

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<v Speaker 1>say that they can trade equities off price of energy. Well,

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<v Speaker 1>we actually were recommending some of the MLPs back in

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<v Speaker 1>the February lows because you could buy a package of

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<v Speaker 1>investment grade master limited partnerships in the midstream and downstream,

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<v Speaker 1>not the upstreams. I think the upstreams business model is broken,

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<v Speaker 1>but you could buy an investment grade package of those

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<v Speaker 1>with a better than seven percent yield, and I think

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<v Speaker 1>that made a lot of sense back then. Now, Jeff,

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<v Speaker 1>you seem to be talking about investments that are not

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<v Speaker 1>necessarily tied to what the consumer is going to do

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<v Speaker 1>or my reading you wrong. Um, I like consumer discretionary stocks. Uh,

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<v Speaker 1>you know. I think the GDP is going to strengthen

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<v Speaker 1>in the back half of this year. I don't think

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<v Speaker 1>we're going uh into a recession. That well, in recently

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<v Speaker 1>driving across country on the back of I won't say

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<v Speaker 1>every eighteen wheeler, but every other eighteen wheeler, it was

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<v Speaker 1>drivers wanted. And at the fast food restaurants we stopped

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<v Speaker 1>at with the grandkids, you know, it was help on

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<v Speaker 1>it in the window. These are not the kind of

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<v Speaker 1>things you see going into a recession. So why do

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<v Speaker 1>we see such a mnemic GDP growth. I think you

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<v Speaker 1>saw the low g DP print the other week at

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<v Speaker 1>plus zero point five tents of a percent, And I

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<v Speaker 1>think the measurement of g d P is not per

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<v Speaker 1>se the right measurement for the overall economic strength. I

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<v Speaker 1>think the economy is a lot stronger than the government's

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<v Speaker 1>official figures, and that that strength showing up in you

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<v Speaker 1>just described in the job market, particularly in the job market.

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<v Speaker 1>I mean, you know how much I travel. I'm fine

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<v Speaker 1>in full planes, I'm eating in full restaurants. Um. I

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<v Speaker 1>just I just don't. I don't see where where the

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<v Speaker 1>economy is any sign of going into a recession. Having

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<v Speaker 1>said that, with the ten year treasury at one point

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<v Speaker 1>seven five right now, a lot of people might get

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<v Speaker 1>hurt if they don't do something about that bond. Well,

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<v Speaker 1>I think the bond is being anchored by the negative

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<v Speaker 1>rates in place, is like Germany and Japan, and by

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<v Speaker 1>capital flows. If you look on the Bloomberg terminal, you

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<v Speaker 1>saw a story this morning about nine billion or nine

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<v Speaker 1>it was, I think it was trillion looking to come

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<v Speaker 1>into the US. Because if you're getting negative rates in

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<v Speaker 1>Germany and Japan, if you can get just even twenty

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<v Speaker 1>basis point positive return here, um, that's you know, that's

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<v Speaker 1>capital flows. And that's one of the reasons that ted

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<v Speaker 1>spread has widened out here in the past few weeks.

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<v Speaker 1>What will that do to the dollar? If anything, I

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<v Speaker 1>think the dollar is peaked. I look at the dollar,

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<v Speaker 1>the Dixie Index. I've been saying for a year, it

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<v Speaker 1>looks like a great, big rounded top. I get club

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<v Speaker 1>by some of the economists by saying, but the trade

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<v Speaker 1>weighted dollars still going up, and go down to your

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<v Speaker 1>bank and try and buy some trade weighted dollars. You

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<v Speaker 1>have never seen a trade weighted dollar. I haven't never

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<v Speaker 1>seen a trade weighted dollar. So the dollar index, the

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<v Speaker 1>d x Y, looks to me like it's peaked. Well,

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<v Speaker 1>you bring up an interesting point, Chefs thought that you know,

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<v Speaker 1>many of the indicators that are used by professional investment

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<v Speaker 1>managers are not necessarily applicable to making investment decisions. Is

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<v Speaker 1>that correct? I think that's absolutely correct. Why is that

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<v Speaker 1>developed in such a way? I think, I think to

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<v Speaker 1>large degree. And you can look at the energy e

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<v Speaker 1>I a look at the wide variants in in the

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<v Speaker 1>government statistics and the private market statistics. And this guy

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<v Speaker 1>named Rothman that used to run the energy desk at

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<v Speaker 1>that Merrill Lynch, who does his own independent channel checks,

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<v Speaker 1>and he, to my knowledge, is the only person that

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<v Speaker 1>got yesterday's draw down in in the grude oil inventories.

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<v Speaker 1>Right when you travel around the country, and I want

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<v Speaker 1>to connect the energy theme, you see people driving and

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<v Speaker 1>using gasoline. The cost of gasoline may have increased marginally recently,

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<v Speaker 1>but where is all the savings going? Is that for

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<v Speaker 1>for low gasoline prices, that going into as you say,

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<v Speaker 1>restaurants and consumer discretionary purchases. Well, it's that's been that's

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<v Speaker 1>been a conundrum here because the way the price of

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<v Speaker 1>gasoline has come down, you would have thought, uh that

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<v Speaker 1>there would be more purchasing by the individual consumer, and

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<v Speaker 1>it hasn't showed up yet. I think they're still stunned

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<v Speaker 1>from what happened back in oh eight o nine, But

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<v Speaker 1>I think they were going to loosen their pocket books

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<v Speaker 1>as we get into the back half of this year.

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<v Speaker 1>And Jeff Sawt this last point, You I haven't heard

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<v Speaker 1>just talk about the election, the political season. Does that

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<v Speaker 1>matter for investors? Uh? There will be winners and losers

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<v Speaker 1>depending on who's who's going to be elected. But I

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<v Speaker 1>have I have a real problem with the you know,

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<v Speaker 1>I don't like any of the candidates. I think you've

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<v Speaker 1>got a lot of company there. All right, Thank you

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<v Speaker 1>very much. Jeff Sawt is the chief investment strategist for

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<v Speaker 1>Raymond and James. He's based in St. Petersburg, Florida, but

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<v Speaker 1>as he said, he spends a lot of time traveling

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<v Speaker 1>an own the country, helping to manage four hundred billion

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<v Speaker 1>dollars of customer assets. Thank you very much for joining us.

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<v Speaker 1>You're listening to taking Stock. I'm pim Fox will take

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<v Speaker 1>you through to the close of trading next