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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: dot Com, the Radio plus mobile lact and on your radio.

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Speaker 1: This is a Bloomberg Business Flash and I'm Karen Moscow.

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Speaker 1: US dot index Future is moving higher this morning. Let's

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Speaker 1: go to the First Word Breaking news desk for today's

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Speaker 1: morning call. Here's Bill Maloney. Good morning Bill, Good morning Ken.

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Speaker 1: We are seeing modest games in US futures today. Death

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Speaker 1: futures hired by thirty two points has to be futures

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Speaker 1: game five and as a futures rise by fourteen. The

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Speaker 1: US ten niel at one point nine percent and apart

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Speaker 1: from Japan, Asian markets were mostly lower overnight, while most

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Speaker 1: up markets are closed today. On the US Economic Frinday thirty,

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Speaker 1: Trade Balance and personal income at ten o'clock, Penning Home Sales,

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Speaker 1: and at ten thirty Dallas fed after the bell on Thursday,

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Speaker 1: Game stop, qun EPs view trailed estimates shares it down

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Speaker 1: seven percent pre market and regarding earnings this morning, Kalmaine

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Speaker 1: Foods beat in deal news Japan's nt T to acquire

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Speaker 1: del units for three point oh six billion. Finally, some

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Speaker 1: of your early wellshet upgrades and downgrades at Barkley's Qualcom

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Speaker 1: cut to eco weight at what An end Scope cut

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Speaker 1: to underweight at Goldman Sachs kPr raised to neutral, ingosol

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Speaker 1: Ran cut to neutral, and Parker Hanaffin cut to sell. HB.

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Speaker 1: Fuller raised to overweight at JP Morgan see If Industries

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Speaker 1: cut to neutral, A Piper and c I T Group

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Speaker 1: cut to neutral at stern A G Live in the

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Speaker 1: first breaking news desk, gom Bill Maloney, Karen, all right,

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Speaker 1: thanks amilty here live breaking news. Over your Bloomberg type

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Speaker 1: squawk and go on your terminal. Let's sq you a

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Speaker 1: w K go and that's a Bloomberg business flash. Tom

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Speaker 1: and Burry Karen, thanks so much, greatly appreciate Bloomberg Surveillance

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Speaker 1: economics finance, uh economics, uh in in finance. I'll get

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Speaker 1: an investment international relations as well. Bloomberg Surveillance This morning

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Speaker 1: brought you by Investco to the day's headlines. Have you

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Speaker 1: searching for more investment views. Investco's experts can help find

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Speaker 1: the latest thought leadership at the investigal blog. Visit investco

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Speaker 1: dot com slash us to subscribe investco I n v

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Speaker 1: s c O investco dot com slash us to subscribe.

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Speaker 1: She is the keeper of a cool heat map. Kathy

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Speaker 1: Jones joining us right now from Charles Schwamp looking at

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Speaker 1: fixed income. Kathy, I love your asset class heat map

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Speaker 1: because it really shows almost a dartboard approach. There's one, two, three, four,

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Speaker 1: or five, six, seven categories. My basic take is you

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Speaker 1: don't want to figure out which category not to be

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Speaker 1: in instead of trying to guess the perfect category. How

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Speaker 1: do you approach it? Yeah, and well, normally the way

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Speaker 1: we look at it is, you know, they have to

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Speaker 1: have an allocation to all the major asset classes and

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Speaker 1: to to tactically trade, do you want to underweight the

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Speaker 1: things that are going to do the worst And oftentimes

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Speaker 1: you know, what's what's doing well this year, it doesn't

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Speaker 1: do so well next year. But the other way we

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Speaker 1: look at it is what asset classes aren't correlated. So

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Speaker 1: when you look at treasuries, long term treasuries, especially versus

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Speaker 1: A equities, you see, you know, they're pretty far apart

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Speaker 1: on that heat map most of the time, and that's

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Speaker 1: what helps you build a balanced portfolio and avoid some

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Speaker 1: of that volatility. So we were just talking Hi, Cathy,

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Speaker 1: It's Barry Ridholts. We were just talking with somebody from

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Speaker 1: Capital Economics and we were discussing emerging markets and how

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Speaker 1: poorly they've done. What should the average investor be doing

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Speaker 1: about EM exposure and their portfolios. Well, we on the

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Speaker 1: fixth income side are still underweight U e M and

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Speaker 1: uh international developed market bonds as well, so we're still

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Speaker 1: looking for the dollar to be fairly firm. There's a

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Speaker 1: lot in in e M. You know, there's a lot

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Speaker 1: of individual issues there when you look at Brazil, when

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Speaker 1: you look at Russia, etcetera. Uh So we're still underweight.

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Speaker 1: Are not convinced that the risk reward trade off is

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Speaker 1: all that attractive and a M Across your heat map,

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Speaker 1: the one constant theme I see is the SMP five.

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Speaker 1: Obviously that's the great bull market that we've seen O

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Speaker 1: six and you know not in oh seven. Let's let's

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Speaker 1: be honest about that. But is equities an asset class

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Speaker 1: for someone fixed income oriented? Well, normally, you know, we

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Speaker 1: have mostly retail clients, and our retail clients will have

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Speaker 1: some allocations equities, some to fixed income to the balance

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Speaker 1: really depends on their individual plan. So in this day

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Speaker 1: and age, with bond yields so low, a lot of

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Speaker 1: people do have equities not just for the growth potential,

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Speaker 1: but also for the income from dividend paying stocks. So

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Speaker 1: we just like to, you know, make people aware that

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Speaker 1: dividend paying stocks, although they deliver an income stream that's

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Speaker 1: often comparable to bonds, do have very different properties than bonds.

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Speaker 1: So you need a little bit of both of it.

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Speaker 1: I'm glad you do that, and I know, working with

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Speaker 1: Lausanne as part of the adult nous of Schwab is buried.

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Speaker 1: That's a huge trap. Dividend is yield proxy. Well, it's

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Speaker 1: yield proxy with a lot of volatility, so you end

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Speaker 1: up with some upside of things work out. But if

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Speaker 1: you're on a limited budget and you can't absorb volatility, hey,

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Speaker 1: we we've seen a hundred year flood oh just about

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Speaker 1: every ten years for the past thirty years. So that

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Speaker 1: misnamed problem and equities isn't a good necessarily a good fit,

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Speaker 1: uh for bond investors. My question for Cathy is we've

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Speaker 1: seen TIPS, the Treasury inflation indexed bonds not do especially

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Speaker 1: well over the past couple of years. What are you

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Speaker 1: thinking about TIPS as an asset class for yield hungry

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Speaker 1: investors looking forward? Well, we've warmed up the tips a

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Speaker 1: little bit lately because they break even rates. The rate

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Speaker 1: the difference between a treasury and tips have moved very

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Speaker 1: close to what we consider fair value, or that they're

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Speaker 1: actually very attractive. The reason tips haven't done well, though,

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Speaker 1: it's not just that inflation has been low, but also

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Speaker 1: that you get very little coupon and so in um

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Speaker 1: an environment where everybody's yield hungry, if you're getting something

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Speaker 1: with almost no coupon, and particularly with a long duration,

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Speaker 1: you're just buying volatility. Uh, it's more like an option

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Speaker 1: on higher inflation rather than something is going to produce

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Speaker 1: the income. That's a very good question. Will let you

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Speaker 1: go here. The idea of tips reverting to the mean

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Speaker 1: or five year, five year break evens is the same

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Speaker 1: idea as saying the bond market will get back to

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Speaker 1: some normal of four or five Do you work with

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Speaker 1: that within a three four six year perspective? Now, we

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Speaker 1: really don't think they're returning to quote unquote normal in

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Speaker 1: a short period of time. I mean, but that's a

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Speaker 1: key ideas and Kathy, yeah it is. And we say,

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Speaker 1: if you're looking for that inflation protection here, really concerned

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Speaker 1: add a little bit and tips to the portfolio, but

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Speaker 1: we just don't see them out performing any time. To Kathy,

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Speaker 1: thank you so much, Kethy Jones shrub Uh. That's right, Very,

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Speaker 1: It's just a huge idea. We'll talk about this later,

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Speaker 1: won't get some time together, but this idea of I mean,

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Speaker 1: Bill Gross says financial repression for ten years, and everybody

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Speaker 1: gets upset. Except so far he's been right, you know.

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Speaker 1: I mean, for the average joe out there, Bill Gross

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Speaker 1: has been dead on. Absolutely forget about his portfolio, but

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Speaker 1: in terms of financial repression being there Verry rid Old,

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Speaker 1: Tom Keene, Economic Data, Job's Day Friday. You're listening to

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Speaker 1: Bloomberg Savalance still ahead on Bloomberg, Savellance. Paul Mortimer Lee

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Speaker 1: from BNP Para Bob, the chief economists for North America.

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Speaker 1: We have SMP futures right now three points higher,