1
00:00:02,440 --> 00:00:05,840
Speaker 1: Global business news twenty four hours a day at Bloomberg

2
00:00:05,880 --> 00:00:08,920
Speaker 1: dot com, the Radio plus mobile app, and on your radio.

3
00:00:09,240 --> 00:00:13,000
Speaker 1: This is a Bloomberg Business Flash. Good morning, I'm John Tucker.

4
00:00:13,039 --> 00:00:16,439
Speaker 1: The Bloomberg futurest Report. Now thing blunted by Interactive Brokers

5
00:00:16,440 --> 00:00:18,799
Speaker 1: and c M A group. If you're looking for global

6
00:00:18,840 --> 00:00:22,759
Speaker 1: futures contracts with low trading costs, look no further Indranted Brokers.

7
00:00:22,760 --> 00:00:25,480
Speaker 1: The industry Leader learned more at the drafted Brokers dot

8
00:00:25,520 --> 00:00:29,040
Speaker 1: com slash. C m E grew up ahead of the

9
00:00:29,320 --> 00:00:33,639
Speaker 1: FED decision today. Getting some readings on the economy right now.

10
00:00:33,680 --> 00:00:37,640
Speaker 1: Industrial production these are month over month numbers down four

11
00:00:37,720 --> 00:00:41,879
Speaker 1: tenths of a percent after the seven tenths of repercent

12
00:00:42,040 --> 00:00:47,560
Speaker 1: rise in the prior month. Right now, also capacity utilization.

13
00:00:47,600 --> 00:00:50,440
Speaker 1: The numbers coming in a little weaker than what the

14
00:00:50,440 --> 00:00:54,320
Speaker 1: analysts expected seventy four point nine percent. The expectation was

15
00:00:54,400 --> 00:00:59,280
Speaker 1: for seventy five point two percent. Futures appeared some earlier

16
00:00:59,280 --> 00:01:02,000
Speaker 1: games has some few futures right now two points higher,

17
00:01:02,280 --> 00:01:04,720
Speaker 1: that's up a tenth of a percent, to down futures

18
00:01:05,040 --> 00:01:07,720
Speaker 1: up thirty three that's up two tents and as they kee,

19
00:01:07,800 --> 00:01:11,240
Speaker 1: mini futures seven points higher. That is up two tents,

20
00:01:11,640 --> 00:01:13,759
Speaker 1: up a percent. We check the markets for you every

21
00:01:13,800 --> 00:01:17,880
Speaker 1: fifteen minutes during the trading day right here on Bloomberg Radio,

22
00:01:18,280 --> 00:01:22,440
Speaker 1: Michael and Tom. All right, John Tucker, thank you very much.

23
00:01:22,480 --> 00:01:25,360
Speaker 1: Taking a look at some of that industrial production numbers, Tom,

24
00:01:26,400 --> 00:01:29,479
Speaker 1: it's banned across the board, and not just a headline number,

25
00:01:29,480 --> 00:01:33,039
Speaker 1: but manufacturing down four tents. You would like to see

26
00:01:33,080 --> 00:01:35,720
Speaker 1: a rebound in that area. This is a May number,

27
00:01:35,760 --> 00:01:39,440
Speaker 1: and we had seen weakness in manufacturing over the last

28
00:01:39,440 --> 00:01:41,600
Speaker 1: couple of months. A lot of that motor vehicles off

29
00:01:41,600 --> 00:01:46,039
Speaker 1: four point two percent. Utilities were down eight percent. Of

30
00:01:46,080 --> 00:01:49,760
Speaker 1: course it was a rainy, yucky May, so not a

31
00:01:49,760 --> 00:01:54,480
Speaker 1: lot of energy generation. Mining here's an interesting one. I

32
00:01:54,480 --> 00:01:56,440
Speaker 1: want to go back and look at this because are

33
00:01:56,800 --> 00:01:58,320
Speaker 1: the chart I have in front of me doesn't go

34
00:01:58,360 --> 00:02:01,960
Speaker 1: back far enough, but it was up two tenths. When

35
00:02:02,040 --> 00:02:06,120
Speaker 1: was the last time mining was up was August of

36
00:02:06,240 --> 00:02:10,760
Speaker 1: last year. I would look at capacity utilization, which is

37
00:02:10,840 --> 00:02:14,640
Speaker 1: maybe the most fossil like chart, most ancient chart that

38
00:02:14,720 --> 00:02:18,400
Speaker 1: we have, and the vector down is getting back near

39
00:02:18,400 --> 00:02:21,440
Speaker 1: the bottom of the two thousand one recession. It is

40
00:02:21,480 --> 00:02:26,080
Speaker 1: an ancient chart, capacity utilization, which means we must speak

41
00:02:26,120 --> 00:02:31,160
Speaker 1: to an ancient gentleman with terrific wisdom and perspective. Who

42
00:02:31,160 --> 00:02:33,640
Speaker 1: would that be, Mike, Well, he's not an ancient gentleman.

43
00:02:33,680 --> 00:02:37,359
Speaker 1: He's an investor of a certain age. Yes, and well

44
00:02:37,400 --> 00:02:43,320
Speaker 1: and well preserved. We might Bogle the founder of Vanguard

45
00:02:43,440 --> 00:02:48,480
Speaker 1: UH and things have changed in investing over the years,

46
00:02:48,560 --> 00:02:53,000
Speaker 1: and yet you are arguing, as you always have, that

47
00:02:53,200 --> 00:02:57,040
Speaker 1: passive investing still is the way to go for investors.

48
00:02:57,280 --> 00:03:00,360
Speaker 1: Never mind all this quant stuff, never mind umping in

49
00:03:00,400 --> 00:03:07,120
Speaker 1: and out to arbitrage small price opportunities. By and hold forever,

50
00:03:07,240 --> 00:03:10,840
Speaker 1: basically is your advice, that is my advice. By and

51
00:03:10,840 --> 00:03:15,480
Speaker 1: hold a total stock market forever or equity position, and

52
00:03:15,880 --> 00:03:18,799
Speaker 1: the total bond market for your bond position. I want

53
00:03:18,840 --> 00:03:21,760
Speaker 1: to congratulate you, Mr Bogglan. You know you and I

54
00:03:21,760 --> 00:03:25,400
Speaker 1: have talked many times over the years of your wonderful

55
00:03:25,440 --> 00:03:30,040
Speaker 1: speech in Washington. You're important speech to the Institute of

56
00:03:30,160 --> 00:03:33,840
Speaker 1: Quantitative Finance. Did they throw their crape susette at you

57
00:03:34,440 --> 00:03:38,360
Speaker 1: while you were speaking? How did they greet That's a

58
00:03:39,080 --> 00:03:42,320
Speaker 1: that's a great question, Tom. And then the reality is

59
00:03:42,840 --> 00:03:47,000
Speaker 1: that the audience was very intentive. Attentive gave me a

60
00:03:47,640 --> 00:03:50,000
Speaker 1: not not a standing ovation, but a pretty nice ovation

61
00:03:50,040 --> 00:03:53,120
Speaker 1: at the end. And I talked to those quants down there.

62
00:03:54,040 --> 00:03:57,280
Speaker 1: I'm in the guess the majority of them, and maybe

63
00:03:57,320 --> 00:03:59,720
Speaker 1: the vast majority of them when it comes to their

64
00:03:59,720 --> 00:04:04,200
Speaker 1: own money, are investing in Vanguard index funds. Listen to

65
00:04:04,240 --> 00:04:09,640
Speaker 1: you promoting what's the pragmatic school? Do your pragmatic school?

66
00:04:10,000 --> 00:04:13,200
Speaker 1: What do you do given negative interest rates, new low

67
00:04:13,360 --> 00:04:16,840
Speaker 1: terminal values, and frankly great regimes that a young John

68
00:04:16,920 --> 00:04:21,440
Speaker 1: Vogel knew, Well, yeah, we had that during my career

69
00:04:21,440 --> 00:04:25,040
Speaker 1: in this business. Uh Now, sixty five years or so,

70
00:04:25,720 --> 00:04:28,159
Speaker 1: or soon to be sixty five years, I should say,

71
00:04:28,440 --> 00:04:31,520
Speaker 1: the average return on stocks has been around twelve and

72
00:04:31,560 --> 00:04:34,760
Speaker 1: the average return on bonds has been about five. That

73
00:04:34,920 --> 00:04:37,680
Speaker 1: is not going to be true in the future. You

74
00:04:37,760 --> 00:04:39,520
Speaker 1: may not like the fact that it won't be true

75
00:04:39,520 --> 00:04:42,719
Speaker 1: in the future, but the fact is in best we must.

76
00:04:43,360 --> 00:04:44,760
Speaker 1: You know, what are you gonna do with the money

77
00:04:45,839 --> 00:04:49,920
Speaker 1: that you have your regular investing or your capital your

78
00:04:49,960 --> 00:04:52,279
Speaker 1: capital fund? And do you take it out of the

79
00:04:52,279 --> 00:04:55,960
Speaker 1: markets and sit on it In the long run That

80
00:04:56,040 --> 00:04:58,000
Speaker 1: is a bad idea. In the short run, it may

81
00:04:58,040 --> 00:04:59,880
Speaker 1: be a great idea, but who knows where the long

82
00:05:00,040 --> 00:05:04,240
Speaker 1: the short end. So um, it's uh, it's accept the

83
00:05:04,279 --> 00:05:07,760
Speaker 1: returns over it by the market and don't take risks

84
00:05:07,960 --> 00:05:11,000
Speaker 1: to get higher returns, whether you're talking about bonds or stock.

85
00:05:11,640 --> 00:05:13,480
Speaker 1: And that's not a very palable thing. I mean, I

86
00:05:13,520 --> 00:05:17,799
Speaker 1: think it's reasonable to reasonable think that stocks might return

87
00:05:17,920 --> 00:05:20,960
Speaker 1: four to five percent in the next decade. And it's

88
00:05:21,000 --> 00:05:23,599
Speaker 1: reasonable to think given the very low level of interest

89
00:05:23,640 --> 00:05:26,360
Speaker 1: rates that then your treasury is around one point six

90
00:05:26,360 --> 00:05:28,599
Speaker 1: percent or something. You have to buy that when you

91
00:05:28,600 --> 00:05:31,320
Speaker 1: can go longer. You can on corporates, but Jahn probably

92
00:05:31,320 --> 00:05:34,320
Speaker 1: get around it two and a half percent, you on bonds.

93
00:05:34,400 --> 00:05:38,000
Speaker 1: So balanced portfolio is going to produce you know, maybe

94
00:05:38,040 --> 00:05:41,720
Speaker 1: a three percent return something in that range. That's the fact.

95
00:05:42,560 --> 00:05:45,600
Speaker 1: And there's another fact that time it's even worse. And

96
00:05:45,640 --> 00:05:50,560
Speaker 1: that's before the cost of investing. And if the return

97
00:05:50,680 --> 00:05:53,080
Speaker 1: turns out in the balanced portfolio, you know, I could

98
00:05:53,080 --> 00:05:54,480
Speaker 1: be a little on the low side. I don't think

99
00:05:54,480 --> 00:06:00,440
Speaker 1: I'm gonna be um on the high side very much. Um.

100
00:06:00,440 --> 00:06:02,240
Speaker 1: When you take a couple of percentwich points, which is

101
00:06:02,279 --> 00:06:05,080
Speaker 1: what it course you to all mutual funds, you take

102
00:06:05,120 --> 00:06:08,120
Speaker 1: that three down to one, I won't come in on

103
00:06:08,240 --> 00:06:11,080
Speaker 1: tax in effie of most mutual funds, but it's every

104
00:06:11,080 --> 00:06:16,480
Speaker 1: bit of one. So it's you just do the best

105
00:06:16,520 --> 00:06:20,719
Speaker 1: you can in the environment as it exists today. Take

106
00:06:20,800 --> 00:06:26,000
Speaker 1: what's there and don't reach. Don't if somebody reserved once. Um,

107
00:06:26,040 --> 00:06:28,880
Speaker 1: if you've lost in the first seven races, don't take

108
00:06:28,920 --> 00:06:31,559
Speaker 1: all your money in any any anything you have left

109
00:06:32,080 --> 00:06:33,839
Speaker 1: and bet in the favorite in the eight. It's not

110
00:06:33,880 --> 00:06:37,760
Speaker 1: a good it's not it's not gonna be. Yeah, but

111
00:06:38,160 --> 00:06:42,960
Speaker 1: any time period, you know, you could still catch a

112
00:06:43,800 --> 00:06:47,040
Speaker 1: rising knife. I know what's you know, a star treker.

113
00:06:47,080 --> 00:06:49,120
Speaker 1: You could find something that will make you a lot

114
00:06:49,160 --> 00:06:51,520
Speaker 1: of money. And that's the always the kind of the

115
00:06:52,200 --> 00:06:55,599
Speaker 1: grail for people. Well sure that's the grail for people.

116
00:06:55,640 --> 00:06:58,440
Speaker 1: But the reality is for every stock that beats the

117
00:06:58,480 --> 00:07:02,279
Speaker 1: total stock market, there is essentially not quite this simple,

118
00:07:02,279 --> 00:07:05,080
Speaker 1: but almost there's a stock that loses to it. So

119
00:07:05,120 --> 00:07:08,159
Speaker 1: if you're sure you can always buy the winners, please

120
00:07:08,240 --> 00:07:12,200
Speaker 1: be my guests. But I've never been anybody check Bogle. Well,

121
00:07:12,240 --> 00:07:14,080
Speaker 1: have to leave it there today, shorter day because of

122
00:07:14,120 --> 00:07:16,600
Speaker 1: FED day. Thank you so much, greatly appreciate it, and

123
00:07:17,280 --> 00:07:20,360
Speaker 1: folks that really commend to you. Mr Bogel's speech to

124
00:07:20,400 --> 00:07:24,640
Speaker 1: the Institute for Quantitative Finance at Washington, uh here a

125
00:07:24,680 --> 00:07:29,360
Speaker 1: few weeks ago, Mr Bogel, I believe is with vanguard

126
00:07:29,400 --> 00:07:33,160
Speaker 1: in shape and forms futures of four down features of

127
00:07:33,320 --> 00:07:36,200
Speaker 1: thirty nine. I haven't mentioned oil today week or Brent

128
00:07:36,320 --> 00:07:40,880
Speaker 1: down of dollars seven seventy six. We begin our coverage

129
00:07:40,880 --> 00:07:46,600
Speaker 1: of FED Day at one pm this afternoon, counting down

130
00:07:46,600 --> 00:07:49,560
Speaker 1: to the opening bell, brought to you by Jeep Grand Cherokee,

131
00:07:49,560 --> 00:07:52,520
Speaker 1: the most awarded suv ever. The Grand Cherry Kinky continues

132
00:07:52,600 --> 00:07:55,120
Speaker 1: to raise the bar with its luxurious interior and legendary

133
00:07:55,120 --> 00:07:57,760
Speaker 1: four by four capability. Dry on at your local Jeep

134
00:07:57,760 --> 00:07:59,640
Speaker 1: dealer today