WEBVTT - S&P's Gunzberg on Commodities Rally, Gold Could See 1800(Audio)

0:00:02.920 --> 0:00:06.320
<v Speaker 1>Global business news twenty four hours a day at Bloomberg

0:00:06.360 --> 0:00:09.440
<v Speaker 1>dot com, the radio plus Globile lapt had on your radio.

0:00:09.720 --> 0:00:14.040
<v Speaker 1>This is a Bloomberg Business Flash from Bloomberg World Headquarters.

0:00:14.040 --> 0:00:19.160
<v Speaker 1>I'm Charlie Public, the SMP NEZDAK are all advancing and

0:00:19.360 --> 0:00:21.959
<v Speaker 1>uh we are looking at an update for stocks. Let's

0:00:21.960 --> 0:00:24.239
<v Speaker 1>head over to the First Word breaking news desk for

0:00:24.680 --> 0:00:28.800
<v Speaker 1>today's afternoon call. There he is Bill Maloney. Good afternoon, Charlie.

0:00:28.800 --> 0:00:31.640
<v Speaker 1>Stocks have been strong from the start, with the Dow

0:00:31.720 --> 0:00:34.240
<v Speaker 1>currently hired by a hundred and twenty six points, SIPs

0:00:34.280 --> 0:00:38.360
<v Speaker 1>game twelve and NAZAC rises thirty two. Yelling seas rates

0:00:38.520 --> 0:00:42.879
<v Speaker 1>rising gradually but avoided precise timing. The small gap six

0:00:42.920 --> 0:00:45.199
<v Speaker 1>hundred is hired by nine points and the US ten

0:00:45.320 --> 0:00:48.400
<v Speaker 1>yield at one point seven to per cent. Eight out

0:00:48.400 --> 0:00:50.560
<v Speaker 1>of tennis to B sectors are higher, led by games

0:00:50.560 --> 0:00:55.520
<v Speaker 1>and energy materials, and the financials, utilities and telecom fell down.

0:00:55.560 --> 0:00:58.920
<v Speaker 1>Transports rise forty seven, as a biotechs game forty nine,

0:00:59.200 --> 0:01:02.160
<v Speaker 1>and the vix is hire by one percent. Dowlutes to

0:01:02.200 --> 0:01:06.280
<v Speaker 1>the upside included Boeing, Nike, and Caterpillar Home Depot led

0:01:06.319 --> 0:01:09.840
<v Speaker 1>to the downside at VFEL four eight percent on low

0:01:09.920 --> 0:01:12.880
<v Speaker 1>survival data for lung cancer drug. We'll see if industry

0:01:12.880 --> 0:01:15.920
<v Speaker 1>has gained eight percent was raised to buy over at

0:01:16.000 --> 0:01:18.600
<v Speaker 1>c ls A live from the first breaking news tasks

0:01:18.640 --> 0:01:20.640
<v Speaker 1>on Bill Maloney. Charlie all right, thank you very much,

0:01:20.640 --> 0:01:23.560
<v Speaker 1>Bill Maloney, and to hear live breaking news over your

0:01:23.600 --> 0:01:28.000
<v Speaker 1>Bloomberg tipe squawk squ a w K on your terminal.

0:01:28.280 --> 0:01:33.760
<v Speaker 1>I'm Charlie. That's a Bloomberg business flash. This is taking

0:01:33.800 --> 0:01:37.360
<v Speaker 1>stock with Gathlee Mays and grim Box on Bloomberg Radio

0:01:38.880 --> 0:01:42.119
<v Speaker 1>weakness and commodities. That was one of the biggest features

0:01:42.160 --> 0:01:46.600
<v Speaker 1>helping to drive markets around the world as went into

0:01:47.760 --> 0:01:50.080
<v Speaker 1>But our next guest says, now it looks like those

0:01:50.120 --> 0:01:55.040
<v Speaker 1>commodities may have definitively bottom. We're very happy to welcome

0:01:55.160 --> 0:01:58.040
<v Speaker 1>back to the show, Jodi Gunnsberg. She's global head of

0:01:58.080 --> 0:02:02.200
<v Speaker 1>Commodities at SMP DOWD Jones in diseased. Jody, welcome back.

0:02:02.640 --> 0:02:04.520
<v Speaker 1>Thank you for having me. Well, I can start with

0:02:04.560 --> 0:02:07.840
<v Speaker 1>oil because that is certainly the commodity on just about

0:02:07.840 --> 0:02:12.200
<v Speaker 1>everybody's radar screen. Is consumers and investors crewed hitting a

0:02:12.360 --> 0:02:15.840
<v Speaker 1>seventh month high in London on signs that the global

0:02:15.880 --> 0:02:17.919
<v Speaker 1>gut that has been such a big downward pressure on

0:02:17.960 --> 0:02:22.320
<v Speaker 1>oil is contracting more quickly than projected. It is, and

0:02:22.360 --> 0:02:25.080
<v Speaker 1>it's coming um, you know, as opposed to many people

0:02:25.160 --> 0:02:28.680
<v Speaker 1>feeling like there's a slowdown in Chinese demand growth. That's

0:02:28.720 --> 0:02:32.560
<v Speaker 1>really not driving oil UM. What we're watching is the

0:02:32.639 --> 0:02:37.000
<v Speaker 1>key swing factors on the demand side is the strong

0:02:37.040 --> 0:02:40.280
<v Speaker 1>demand um coming from India. In fact, it's taken over

0:02:40.440 --> 0:02:44.160
<v Speaker 1>China's post the biggest demand growth in the world. And

0:02:44.320 --> 0:02:48.240
<v Speaker 1>on the supply side, we're really watching the declines in

0:02:48.280 --> 0:02:51.800
<v Speaker 1>the US inventories, which are starting to happen as the

0:02:51.840 --> 0:02:57.720
<v Speaker 1>producers have begun um cutting back. And more broadly, UH,

0:02:57.800 --> 0:03:01.480
<v Speaker 1>I just want to you know, look at UH commodities,

0:03:01.600 --> 0:03:04.760
<v Speaker 1>you know, losing one percent per day in the first

0:03:04.760 --> 0:03:08.880
<v Speaker 1>twelve trading days of SI. That was a lot because

0:03:08.880 --> 0:03:11.040
<v Speaker 1>of this big focus on China, but they're now up

0:03:11.080 --> 0:03:14.120
<v Speaker 1>almost thirty percent off the bottom you point out in

0:03:14.560 --> 0:03:17.040
<v Speaker 1>a recent report, and they just posted their biggest three

0:03:17.040 --> 0:03:20.800
<v Speaker 1>month gain of eighteen percent, the biggest in July two

0:03:20.800 --> 0:03:25.800
<v Speaker 1>thousand nine. So it's not just oil commodities broadly. Well,

0:03:25.840 --> 0:03:28.200
<v Speaker 1>I would say that this could be considered a year

0:03:28.200 --> 0:03:32.240
<v Speaker 1>of extremes of nothing else because um, as you just mentioned, yes,

0:03:32.320 --> 0:03:35.320
<v Speaker 1>we had the worst start this year to any year,

0:03:35.480 --> 0:03:38.320
<v Speaker 1>losing more than a percent a day in the first

0:03:38.320 --> 0:03:42.760
<v Speaker 1>twelve dating trading days, and then off the bottom, it's

0:03:42.760 --> 0:03:48.000
<v Speaker 1>been the fastest rebound ever. Uh. The index gained almost

0:03:48.040 --> 0:03:51.440
<v Speaker 1>nine percent in just forty days off the bottom in January.

0:03:52.760 --> 0:03:55.400
<v Speaker 1>Now they're up almost thirty percent off the bottom and

0:03:55.520 --> 0:03:58.880
<v Speaker 1>posted their biggest three month gain over eighteen percent since

0:03:58.960 --> 0:04:04.440
<v Speaker 1>July two thousand nine when they returned. And the reason

0:04:04.480 --> 0:04:06.920
<v Speaker 1>that this is so important is because we've only seen

0:04:07.040 --> 0:04:10.320
<v Speaker 1>gains this big happen at other bottoms, and at all

0:04:10.320 --> 0:04:13.640
<v Speaker 1>of the other bottoms we've seen gains this big, Well,

0:04:13.680 --> 0:04:18.560
<v Speaker 1>it's very important. Commodities are now beating stocks, out performing

0:04:18.640 --> 0:04:22.279
<v Speaker 1>stocks for the first year since two thousand seven. Your

0:04:22.360 --> 0:04:27.280
<v Speaker 1>research shows that when this starts happening, this trend can

0:04:27.320 --> 0:04:31.440
<v Speaker 1>go for a while. It can. We saw the longest

0:04:31.560 --> 0:04:38.479
<v Speaker 1>stretch of equity outperformance over commodities ending in that was

0:04:38.560 --> 0:04:43.080
<v Speaker 1>eight years straight. The last time we saw that long

0:04:43.279 --> 0:04:47.240
<v Speaker 1>of a stretch even close with seven years eighty from

0:04:47.279 --> 0:04:52.760
<v Speaker 1>the eighties six. When the cycle switched for the following

0:04:53.000 --> 0:04:59.479
<v Speaker 1>three years, commodities returned almost three outperforming stocks every year

0:04:59.480 --> 0:05:04.240
<v Speaker 1>through ninth nine. So is this a good time to

0:05:04.440 --> 0:05:10.800
<v Speaker 1>invest in commodities? Well? As the uncertainty around stocks continue

0:05:11.000 --> 0:05:15.200
<v Speaker 1>and investors might look for an asset class with potentially

0:05:15.279 --> 0:05:18.919
<v Speaker 1>similar returns and risk profiles over the long term, it

0:05:19.000 --> 0:05:21.960
<v Speaker 1>could be a good time to switch. And and particularly

0:05:22.000 --> 0:05:25.640
<v Speaker 1>from the uncertainty is um around the Brexit vote, the

0:05:25.680 --> 0:05:29.600
<v Speaker 1>week unemployment numbers, the flow GDP growth, these are all

0:05:29.640 --> 0:05:32.920
<v Speaker 1>concerning points that may continue to hurt stocks. But from

0:05:32.960 --> 0:05:36.960
<v Speaker 1>the commodities perspective, there's still a minimum floor for the

0:05:37.000 --> 0:05:41.320
<v Speaker 1>basic natural resources and seasonally as we enter the summer,

0:05:41.720 --> 0:05:45.120
<v Speaker 1>the commodities tend to perform well from the increased consumption

0:05:45.200 --> 0:05:49.440
<v Speaker 1>across the board, from food to construction to gasoline. And

0:05:49.880 --> 0:05:52.520
<v Speaker 1>now we've got an extra added benefit from the post

0:05:52.520 --> 0:05:56.120
<v Speaker 1>Almeno period. And Jennie the Faid Janet Ellen sounds like

0:05:56.160 --> 0:05:58.640
<v Speaker 1>she's in no hurry to raise the key rate. Ward

0:05:58.720 --> 0:06:01.880
<v Speaker 1>McCarthy from Jeffreys on the show today saying that that

0:06:01.880 --> 0:06:04.320
<v Speaker 1>that next rate increase doesn't come till September at the earliest.

0:06:04.720 --> 0:06:08.239
<v Speaker 1>Does that help commodities says, to help this rally? Uh,

0:06:08.279 --> 0:06:11.000
<v Speaker 1>what are the rates increase or not? Is mixed for

0:06:11.080 --> 0:06:13.800
<v Speaker 1>commodities at this point. I don't think that it's a

0:06:13.839 --> 0:06:18.960
<v Speaker 1>major factor driving commodities because it's been so well telegraphed um.

0:06:19.440 --> 0:06:24.200
<v Speaker 1>But historically, rising a rate or high interest rate environments

0:06:24.240 --> 0:06:29.760
<v Speaker 1>are good for commodities because they increase the expected inflation

0:06:29.880 --> 0:06:32.839
<v Speaker 1>plus the real rate of return, and they also add

0:06:32.880 --> 0:06:36.560
<v Speaker 1>on to the collateral return from the commodities investments gold.

0:06:36.720 --> 0:06:39.400
<v Speaker 1>What's gold going to do? Is gold going to hit

0:06:39.440 --> 0:06:43.279
<v Speaker 1>the previous highs? Well, investors love to feel the safety

0:06:43.720 --> 0:06:47.640
<v Speaker 1>of gold in in the volatile times, and um not

0:06:47.680 --> 0:06:49.920
<v Speaker 1>only for the factors that I had just mentioned, but

0:06:50.120 --> 0:06:54.240
<v Speaker 1>um also the extra uncertainty and volatility coming around the

0:06:54.279 --> 0:06:58.000
<v Speaker 1>election year is making the demand for gold pick up.

0:06:58.200 --> 0:07:00.920
<v Speaker 1>And based on the history three again, if I look

0:07:00.960 --> 0:07:04.560
<v Speaker 1>at the path index performance, it looks like gold could

0:07:04.560 --> 0:07:08.520
<v Speaker 1>go well into the eighteen hundreds. Wow, and gold training

0:07:08.520 --> 0:07:13.160
<v Speaker 1>today's spot golds at twelve forty eight and change. So

0:07:13.240 --> 0:07:17.160
<v Speaker 1>there's still a ways to potentially go if gold continue

0:07:17.200 --> 0:07:20.800
<v Speaker 1>this pattern in the volatile time. Jodi Gunsberg, thank you

0:07:20.840 --> 0:07:24.440
<v Speaker 1>so very much. Commodities are in rally mold, They're beating stocks,

0:07:24.440 --> 0:07:27.440
<v Speaker 1>and this trend could continue for a while. She's Global

0:07:27.480 --> 0:07:31.440
<v Speaker 1>head of Commodities at SMP Dow Jones in disease. Great

0:07:31.440 --> 0:07:34.800
<v Speaker 1>show today, in a great couple of shows coming up Orlando, Florida,

0:07:35.360 --> 0:07:40.400
<v Speaker 1>Pershing Insight sixteen. More than two thousand investment professionals around

0:07:40.400 --> 0:07:43.000
<v Speaker 1>the world taking stock Bloomberg advantage as well. This is

0:07:43.000 --> 0:07:47.560
<v Speaker 1>Bloomberg Radio. Bloomberg Taking Stock is brought to you by

0:07:47.600 --> 0:07:50.640
<v Speaker 1>the accountants and advisors at Eisener Amper. Cyber securities on

0:07:50.680 --> 0:07:53.200
<v Speaker 1>the mind of every business leader managing cyber risk should

0:07:53.200 --> 0:07:55.800
<v Speaker 1>be to get started with cyber risk assessment. Learn more

0:07:55.800 --> 0:07:58.440
<v Speaker 1>eisenerapper dot com slash cyber risk