1 00:00:03,360 --> 00:00:06,760 Speaker 1: Global business news twenty four hours a day at Bloomberg 2 00:00:06,800 --> 00:00:09,840 Speaker 1: dot Com, the radio, plus Globo LA and on your radio. 3 00:00:10,119 --> 00:00:14,280 Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters 4 00:00:14,320 --> 00:00:17,520 Speaker 1: on Katherine Cowdery. This stock market is advancing for a 5 00:00:17,600 --> 00:00:20,560 Speaker 1: fourth session, with the SMP five track for its best 6 00:00:20,560 --> 00:00:24,799 Speaker 1: week since December. Investors are weighing new economic dat Empty 7 00:00:24,840 --> 00:00:28,200 Speaker 1: Institute for Supply Management said that US manufacturing expanded for 8 00:00:28,240 --> 00:00:30,639 Speaker 1: the fourth straight month in June as he outlook for 9 00:00:30,640 --> 00:00:34,360 Speaker 1: new orders and production improved. Separately, the Commerce Department said 10 00:00:34,440 --> 00:00:37,200 Speaker 1: US construction spending fell for a second month in May, 11 00:00:37,479 --> 00:00:40,960 Speaker 1: reflecting weakness in all areas of building. We took the 12 00:00:41,000 --> 00:00:43,800 Speaker 1: markets every fifteen minutes throughout the trading day on Bloomberg Radio. 13 00:00:43,800 --> 00:00:46,560 Speaker 1: Down Industrial average is currently up sixteen points a tenth 14 00:00:46,560 --> 00:00:50,640 Speaker 1: of a percent, trading at seventeen thousand ninety seven. SMP 15 00:00:50,720 --> 00:00:52,760 Speaker 1: five fundered up three points an eighth of a percent 16 00:00:52,800 --> 00:00:56,080 Speaker 1: at one one. The NASTAC is hired by thirteen points 17 00:00:56,160 --> 00:01:00,000 Speaker 1: a quarter percent, trading at fifty five. West Texas Intermediate 18 00:01:00,040 --> 00:01:02,320 Speaker 1: crude oil up forty cents of barrel seven eights of 19 00:01:02,360 --> 00:01:06,360 Speaker 1: a percent at seventy four. Spockled up nineteen dollars twenty 20 00:01:06,400 --> 00:01:10,119 Speaker 1: cents announced at and the tenure Treasury is up seven 21 00:01:10,160 --> 00:01:12,720 Speaker 1: thirty seconds with the yield of one point four four percent. 22 00:01:13,160 --> 00:01:18,680 Speaker 1: And that's a Bloomberg business flash. You're listening to taking 23 00:01:18,720 --> 00:01:22,759 Speaker 1: stock with pim Box and Kathleen Hay's on bloom Bird Radio. 24 00:01:23,640 --> 00:01:27,440 Speaker 1: US manufacturing looked like on the headline anyway, that it 25 00:01:27,560 --> 00:01:30,640 Speaker 1: had a pretty good month in June. In fact, as 26 00:01:30,680 --> 00:01:34,160 Speaker 1: a Bloomberg reports today, the fastest pace of expansion in 27 00:01:34,240 --> 00:01:36,920 Speaker 1: more than a year. When you look at the latest 28 00:01:37,080 --> 00:01:40,840 Speaker 1: survey from the Institute for Supply Management, They're key index 29 00:01:40,959 --> 00:01:44,760 Speaker 1: rose to fifty three point to last month. That's above fifty, 30 00:01:44,840 --> 00:01:48,600 Speaker 1: so it's above the level that signals that manufacturing is expanding. 31 00:01:48,600 --> 00:01:50,800 Speaker 1: It's up from fifty one point three in May, so 32 00:01:50,840 --> 00:01:54,040 Speaker 1: that's all good news. At the same time, the i 33 00:01:54,400 --> 00:01:58,280 Speaker 1: s M had a special survey asking the purchasing managers 34 00:01:58,320 --> 00:02:02,320 Speaker 1: it surveys across the country if they are concerned about Brexit, 35 00:02:02,360 --> 00:02:05,680 Speaker 1: are they seeing any impact on orders for US manufactured 36 00:02:05,760 --> 00:02:08,960 Speaker 1: goods and more? Joining us to dive into this very 37 00:02:08,960 --> 00:02:12,440 Speaker 1: important question now, Brad Holcom, he's chairman of the Manufacturing 38 00:02:12,440 --> 00:02:16,040 Speaker 1: Business Survey Committee at the I S and Brad, welcome back. 39 00:02:17,600 --> 00:02:20,280 Speaker 1: Thank you very much, and happy fourth of July to 40 00:02:20,400 --> 00:02:23,440 Speaker 1: you and everyone. I will I will say thank you 41 00:02:23,480 --> 00:02:25,519 Speaker 1: into you two and of course all our listends of 42 00:02:25,840 --> 00:02:28,400 Speaker 1: a lovely holiday we're celebrating this weekend. I actually want 43 00:02:28,400 --> 00:02:30,240 Speaker 1: to start with a special question, Brad, why did you 44 00:02:30,240 --> 00:02:33,680 Speaker 1: decide to issue a special question to the people in 45 00:02:33,720 --> 00:02:39,000 Speaker 1: your survey? Well, we felt that this was potentially monumental 46 00:02:39,160 --> 00:02:43,960 Speaker 1: and deserving of a special look at that question, I 47 00:02:44,000 --> 00:02:47,400 Speaker 1: think it's surprised most and so we went up to 48 00:02:47,520 --> 00:02:51,640 Speaker 1: our two panels, both on the manufacturing and non manufacturing side, 49 00:02:51,680 --> 00:02:56,240 Speaker 1: with a series of questions related to Brexit specifically, what 50 00:02:56,320 --> 00:03:01,240 Speaker 1: did you ask them? We asked them about, uh, their 51 00:03:01,360 --> 00:03:05,679 Speaker 1: their view, initial view of the net financial impact of Brexit, 52 00:03:06,000 --> 00:03:09,400 Speaker 1: and then some details around what might be the areas 53 00:03:09,440 --> 00:03:15,040 Speaker 1: of concerns such as financial market uncertainty, currency movement, global 54 00:03:15,120 --> 00:03:20,000 Speaker 1: growth and so on. Okay, and these are we might 55 00:03:20,040 --> 00:03:23,200 Speaker 1: even think it's early days too for manufacturers to see 56 00:03:23,240 --> 00:03:25,320 Speaker 1: an impact, but I guess after all the volatility that 57 00:03:25,360 --> 00:03:27,800 Speaker 1: we see, maybe they're concerned about that. What did you 58 00:03:27,919 --> 00:03:29,760 Speaker 1: What did they say? What is the majority of view 59 00:03:29,840 --> 00:03:33,400 Speaker 1: or is there one? Well? Half a step back. The 60 00:03:33,520 --> 00:03:38,279 Speaker 1: current monthly report that we'll get to was largely collected 61 00:03:38,360 --> 00:03:43,960 Speaker 1: before the Brexit announcement, and so we'll talk about that later. 62 00:03:44,360 --> 00:03:48,080 Speaker 1: So this special question, the upshot of it is, when 63 00:03:48,200 --> 00:03:54,560 Speaker 1: asked about the net financial impact manufacturing eight percent at 64 00:03:54,560 --> 00:04:00,920 Speaker 1: a negligible impact, a slightly negative impact, seven per cent 65 00:04:01,040 --> 00:04:05,960 Speaker 1: negative on the flip side, set a slightly positive impact, 66 00:04:06,480 --> 00:04:11,560 Speaker 1: so on the whole negative, negligible to slightly negative in 67 00:04:11,680 --> 00:04:13,960 Speaker 1: terms of financial impact. And of course, with the basic 68 00:04:14,040 --> 00:04:16,080 Speaker 1: question of basic worry, I guess would be that there 69 00:04:16,080 --> 00:04:18,880 Speaker 1: will be a drop in export orders because economies overseas 70 00:04:18,960 --> 00:04:22,160 Speaker 1: will be weak, and that will hurt the demand. Now, 71 00:04:22,320 --> 00:04:25,120 Speaker 1: new export orders, one of the sub indexes of the 72 00:04:25,160 --> 00:04:28,760 Speaker 1: I s M index, rose actually fifty three point five 73 00:04:28,800 --> 00:04:31,279 Speaker 1: in June from fifty two point five in May. We 74 00:04:31,360 --> 00:04:37,120 Speaker 1: also saw somewhat higher production, somewhat higher new orders, even employment. 75 00:04:37,160 --> 00:04:40,720 Speaker 1: That number rose above fifty for the first time since 76 00:04:40,880 --> 00:04:45,600 Speaker 1: November of last year. You know, virtually all the indexes 77 00:04:45,680 --> 00:04:49,000 Speaker 1: are pointing in the right direction. New orders you mentioned 78 00:04:49,000 --> 00:04:52,760 Speaker 1: at fifty seven point zero is the highest since December 79 00:04:52,760 --> 00:04:57,360 Speaker 1: of fourteen, and production at fifty four point seven is 80 00:04:57,400 --> 00:05:02,520 Speaker 1: the highest since July fIF So the three indexes, including 81 00:05:02,560 --> 00:05:06,200 Speaker 1: p m I, have reached highs for a year to 82 00:05:06,360 --> 00:05:11,400 Speaker 1: year and a half time frame. What's driving it? I 83 00:05:11,400 --> 00:05:14,039 Speaker 1: think it's building on the momentum that we've seen for 84 00:05:14,120 --> 00:05:16,919 Speaker 1: the last four to four to six months. In the 85 00:05:16,960 --> 00:05:20,880 Speaker 1: case of the p m I, it's been growing consecutively 86 00:05:21,080 --> 00:05:24,839 Speaker 1: for four consecutive months, new orders and production for six 87 00:05:24,880 --> 00:05:30,039 Speaker 1: consecutive months each. And that follows a five month period 88 00:05:30,080 --> 00:05:32,240 Speaker 1: of a down draft where the p m I was 89 00:05:32,400 --> 00:05:36,839 Speaker 1: below fifty. So we turned the corner and moving forward, 90 00:05:36,920 --> 00:05:40,000 Speaker 1: and it looks like we've got some some momentum here. 91 00:05:40,320 --> 00:05:43,920 Speaker 1: So Brad Stanley Fisher, who's Vice chair of the Federal Reserve, 92 00:05:44,560 --> 00:05:49,680 Speaker 1: spoke today and he indicated that the FED probably needs 93 00:05:49,680 --> 00:05:53,000 Speaker 1: to wait and see what the impact of briggs it 94 00:05:53,240 --> 00:05:56,000 Speaker 1: is on the global economy on the US economy for 95 00:05:56,160 --> 00:05:58,640 Speaker 1: it starts making any move on rates. Uh. Do you 96 00:05:58,640 --> 00:06:00,840 Speaker 1: agree with that? Do you think the Fed should actually, 97 00:06:00,880 --> 00:06:04,040 Speaker 1: if manufacturing is doing reasonably well, should the Fed be 98 00:06:04,160 --> 00:06:09,080 Speaker 1: considering another interest rate increase this summer or this fall? Well? 99 00:06:09,160 --> 00:06:11,480 Speaker 1: I agree that we all need to kind of wait 100 00:06:11,520 --> 00:06:20,480 Speaker 1: and see. Even even our special report and questionnaire gathers 101 00:06:20,600 --> 00:06:24,640 Speaker 1: their initial view really in the in the early days 102 00:06:24,720 --> 00:06:29,480 Speaker 1: of this situation, and we've already seen the stock market recover, 103 00:06:30,120 --> 00:06:33,080 Speaker 1: so we might get a slightly different answer if we 104 00:06:33,080 --> 00:06:36,640 Speaker 1: were to pull today. So the real answer is we 105 00:06:36,680 --> 00:06:39,560 Speaker 1: don't know. But it could go up down our sideways 106 00:06:39,640 --> 00:06:42,640 Speaker 1: in the short term. In the long term it certainly 107 00:06:42,640 --> 00:06:47,839 Speaker 1: could mean, uh, you know, greater competitiveness in the UK, 108 00:06:48,120 --> 00:06:53,080 Speaker 1: throughout Europe and globally as well. So um, in terms 109 00:06:53,160 --> 00:06:56,080 Speaker 1: of growth, what kind of growth does this signal your 110 00:06:56,200 --> 00:06:58,400 Speaker 1: your index of manufacturing? And next, because a lot of 111 00:06:58,400 --> 00:07:00,560 Speaker 1: people been wondering if there aren't some signs of recession 112 00:07:00,640 --> 00:07:04,919 Speaker 1: right now in the US economy, Well, let's let's first 113 00:07:04,960 --> 00:07:08,919 Speaker 1: say that the economy has been growing for eighty five 114 00:07:09,040 --> 00:07:15,400 Speaker 1: consecutive months according to our statistics and our correlations, and 115 00:07:16,080 --> 00:07:19,280 Speaker 1: this year the average p m I has been fifty 116 00:07:19,320 --> 00:07:23,520 Speaker 1: point eight with corresponds to two point increase in real GDP, 117 00:07:24,280 --> 00:07:28,160 Speaker 1: and this month annualized at fifty two point three point 118 00:07:28,200 --> 00:07:31,000 Speaker 1: two would correspond to a three point two So we're 119 00:07:31,000 --> 00:07:34,680 Speaker 1: in the two to three percent area, uh, in terms 120 00:07:34,680 --> 00:07:37,160 Speaker 1: of the g d P. Brad Holcombe, thank you so 121 00:07:37,320 --> 00:07:40,720 Speaker 1: very much. From the Institute for Supply Management, This is 122 00:07:40,760 --> 00:07:48,280 Speaker 1: taking stock and this is Bloomberg. Puerto Rico, Yes, they 123 00:07:48,320 --> 00:07:52,360 Speaker 1: are going to default. What does it mean for investors 124 00:07:52,360 --> 00:07:55,400 Speaker 1: who have continued to hold Puerto Rican paper? We're going 125 00:07:55,440 --> 00:07:58,200 Speaker 1: to find out coming up. This is Bloomberg.