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Speaker 1: This is a Bloomberg Business Flash from Doomberg World Headquarters.
Speaker 1: I'm Katherine Cowdery. Financial shares are leading the market higher
Speaker 1: today as worries over the help of European banks ease,
Speaker 1: and report said Deutsche Bank is nearing a less expensive
Speaker 1: settlement with US regulators and investors had feared. Financial shares
Speaker 1: are up the most in eight weeks. The SMP five
Speaker 1: Founders is on the verge of erasing a second straight
Speaker 1: monthly loss, helped by today's gains. We check the markets
Speaker 1: every fifteen minutes throughout the trading day. Del Industrial Average
Speaker 1: is up two hundred eight points, a gain of one
Speaker 1: point one percent, trading at eighteen thousand, three hundred fifty one.
Speaker 1: SMP five Foundered up twenty two points to gain of
Speaker 1: one percent, trading at seventy three. NASTAC higher by fifty
Speaker 1: three points or one percent at fifty three twenty two.
Speaker 1: West Texas intermediate crude oil of twenty cents a barrel,
Speaker 1: four tens of a percent to forty eight oh three
Speaker 1: spot gold down five dollars fifty cents announced for thirty
Speaker 1: and the tenure treasury down twelve thirty seconds with the
Speaker 1: yield of one point six zero percent. And that's a
Speaker 1: Bloomberg business flash. Thank you very much, Catherine Cowdery. Or
Speaker 1: at it's time now if the e t F report.
Speaker 1: It is brought to you by Instinct Options from Bank
Speaker 1: of America, Merrill Lynch capture liquidity in the US equity
Speaker 1: and index options trading by unleashing the in depth market
Speaker 1: insights and adaptive al goo strategies of Instinct options. That's
Speaker 1: the power of global connections. Let's go to Catherine Calgary
Speaker 1: for our Exchange Traded Funds report. OPEC's decision to cut
Speaker 1: production is reverberating throughout the energy industry and will affect
Speaker 1: a t s that focus on master limited partnerships or
Speaker 1: m LPs. That's the word from Jeremy Goff, director of
Speaker 1: Strategic Ventures for Tortoise Capital Advisors. It will reduce global
Speaker 1: oil supplies by about a million barrels a day. That'll
Speaker 1: somebody is going to have to fill that void. I
Speaker 1: think North American assets are going to have to produce
Speaker 1: oil in order to fill that void. And so that's
Speaker 1: going to have a benefit across the energy value chain,
Speaker 1: so these assets will definitely be positively impacted. Goff's firm
Speaker 1: offers a Tortoise North American Pipeline Fund tak her t
Speaker 1: P y P, which contains some MLPs. There are currently
Speaker 1: more than thirty e t s in that category, and
Speaker 1: Goff anticipates for their interest and growth. I would say
Speaker 1: it's always primarily a focus for e t s because
Speaker 1: it is such a big yield provider. Goff says these
Speaker 1: MLP e t s can fit into a portfolio in
Speaker 1: a number of ways, as an allocation to a real
Speaker 1: asset or as yield producers. He emphasizes the importance of
Speaker 1: understanding the underlying index and the funds tax implications. That's
Speaker 1: your Bloomberg ETF report. I'm Katherine Cowlery. This is taking
Speaker 1: stock with pim Box and Kathleen Hays on Bloomberg Radio.
Speaker 1: The stock market and the presidential election cycle. Here to
Speaker 1: tell us more, Matt Maine. He is managing director and
Speaker 1: equity strategist at Miller Tabak and Company. Joining us from
Speaker 1: Boston home to Bloomberg twelve hundred. Are right, Matt Maylie,
Speaker 1: tell us about your history work well, it's funny. I
Speaker 1: initially wanted to look at what happens after a two
Speaker 1: term presidency comes to an end, because the last two
Speaker 1: times had happened there was a dramatic move in the market.
Speaker 1: But as I went back all I went back all
Speaker 1: back to World War Two, almost seventy years and a
Speaker 1: show that it didn't matter how many terms right there
Speaker 1: any time there was a change in the person, uh
Speaker 1: it rose to the to the presidency through an election.
Speaker 1: I did not count those times when uh there was
Speaker 1: a death or or a resignation because those policies kind
Speaker 1: of remain the same. But when a new person stepped in,
Speaker 1: there's been a dramatic move in the stock market that
Speaker 1: began right after the election. Every single time, about two
Speaker 1: thirds of the time it's been down, but a third
Speaker 1: of the time it's been up. So it's it's hard
Speaker 1: to say exactly which way we'll go, but people have
Speaker 1: to be prepared, I believe, uh, and start thinking about
Speaker 1: in advance, uh the odds that we will break out
Speaker 1: of this range and be prepared for either eventuality. So
Speaker 1: how could you profit from having this information that you
Speaker 1: know that there's going to be a surge or a
Speaker 1: move in one direction or the other, but you don't
Speaker 1: know which direction. Well, I think number one is really
Speaker 1: is going to be key in your planning. Now, there
Speaker 1: are some things you can you know, you know, buy
Speaker 1: you try to invest in a pick up of volatility,
Speaker 1: whether it be you know, the VIX and things like that. However,
Speaker 1: I think more importantly it's just a situation where you
Speaker 1: want to sit back and decide, you know, have a
Speaker 1: plan in advance. Now, don't you know most people go
Speaker 1: to their financial advisor in December or January to talk about,
Speaker 1: you know, the upcoming year. I say do it now,
Speaker 1: because if we do, once you see the market moving,
Speaker 1: if you have a plan for each eventuality, you're not
Speaker 1: going to panic and sell everything if the market starts
Speaker 1: to go down, and you're also not going to even
Speaker 1: if the market goes up. People tend to just, you know,
Speaker 1: well let's buy the you know, the hottest thing, and
Speaker 1: that's not always the best move. So if you have
Speaker 1: a base plan in advance, you can kind of sit
Speaker 1: back and decide you want what you want to do
Speaker 1: once you see the market making making its move. Now
Speaker 1: again I will say this, I'm not doing this for
Speaker 1: self serving purposes. Motorita back that really we really talked
Speaker 1: to institutional investors, not individuals. So, uh, my advice is
Speaker 1: to go see a financial advisor. And I mean that
Speaker 1: in a in a non a self promoting way. I
Speaker 1: guess at my point, no, we I I think I
Speaker 1: think we take that, Matt and and I just want you,
Speaker 1: if you can, to step after just a moment, because
Speaker 1: you know, if you take a look at the money
Speaker 1: that is made in any asset class and you chart it,
Speaker 1: if you put it together and you draw a nice line,
Speaker 1: and you ask people where should you have purchased this asset,
Speaker 1: it's usually at the very bottom. It's at the very
Speaker 1: valley of the line. And as a result, you look
Speaker 1: at what the news was around those events that brought
Speaker 1: it to that conclusion, and you finds a lot of
Speaker 1: negativity that maybe you should buy into exactly. I think
Speaker 1: it's funny because the last why I say that people
Speaker 1: when things turn around, Uh, people tend to chase the winners,
Speaker 1: but they're usually coming to an end of their of
Speaker 1: their cycle. The one thing to know too is, of course,
Speaker 1: what we saw. We had a big sell off that
Speaker 1: began right literally on election day when Obama was elected
Speaker 1: president and it sold off over. However, that March provided
Speaker 1: one of the best flying opportunities of all time. UH.
Speaker 1: So again investors need to be nimble and have their
Speaker 1: plans set up in advance. But I totally agree. You know,
Speaker 1: right now and with the market valuations high and the
Speaker 1: markets near its all time high, uh, the odds that
Speaker 1: this move will be to the downside, but you want
Speaker 1: to be prepared to uh, you know, scoop up. And
Speaker 1: I guess another important point to make is it unlike
Speaker 1: the big moves we've had recently in the last year too,
Speaker 1: when we've had ten to fifteen percent moves, these post
Speaker 1: election moves usually last at least nine ten months or
Speaker 1: even a year year and a half. So I think
Speaker 1: whatever we get, it's going to be a long a
Speaker 1: longer process than we've seen in the past, So we
Speaker 1: want to be prepared for into advance. So with the VIX,
Speaker 1: the volatility index right now down eight and a half percent,
Speaker 1: two days down one point one seven, trading at twelve
Speaker 1: point eight five, would you concur that it is uh
Speaker 1: at a level that indicates complacency. Yes, I definitely think so.
Speaker 1: I mean, you look at what's going on with with
Speaker 1: with Deutsche Bank. And I'm sure you guys have been
Speaker 1: talking about all day long, and and I've been hearing
Speaker 1: you talk about it when I can be when I've
Speaker 1: been able to listen in. And the thing is is
Speaker 1: that I don't think Deutsche Bank has got to go
Speaker 1: under Stocker go the way of leaving brothers. However, um,
Speaker 1: look at what's happened the markets. That stock is down
Speaker 1: over and the stock markets done nothing that that we
Speaker 1: are way too complacent because people kind of think that, well,
Speaker 1: it's not going to go out of business, so therefore
Speaker 1: everything's fine. Deutsche Bank still has issues. I mean the
Speaker 1: whole banking I don't want to say the whole banking system,
Speaker 1: but banks in general, with these you know, low ultra
Speaker 1: low registrates, negative interest rates, zero indust rates, it's gonna
Speaker 1: be hard for them to make money. And so therefore,
Speaker 1: I think the markets, the complacency in the marketplace is
Speaker 1: higher than most people realize because and even in our
Speaker 1: own stocks in the US, they have badly lie the
Speaker 1: S and P. And I think it shows that maybe
Speaker 1: people are a little too complacent with the way the
Speaker 1: banking system. We've gotten too much into this situation where,
Speaker 1: oh my gosh, if it's gonna be negative, it's going
Speaker 1: to be a disaster. Well, that doesn't always happen. It's
Speaker 1: just it has. It has happened the last two times
Speaker 1: for us, but usually it doesn't. And my point is
Speaker 1: that that the chances of the of this next move
Speaker 1: being a down tent or is not out of the question.
Speaker 1: It's not the end of the world, and let's take
Speaker 1: advantage of it. But just because it's not going to
Speaker 1: be two thousand eight all over again, doesn't mean it
Speaker 1: still can't be a painful one. This idea of taking
Speaker 1: advantage of a market move. When someone sells there's another
Speaker 1: buyer that may step in, you've got to have that
Speaker 1: ready cash in order to make that kind of trade exactly.
Speaker 1: You know, it's just the people get too too much
Speaker 1: caught up in what's going on at the moment. You know,
Speaker 1: everybody kind of says, don't panic, don't panic on the
Speaker 1: way down, but people can panic on the way up too.
Speaker 1: So when you've got that plan in advantage, you sit
Speaker 1: down and talk to your financial advisor. Have you know,
Speaker 1: you've you've got your your your your plan. You've always
Speaker 1: had a plan set up, Do you want to tweak it?
Speaker 1: How do you want to take advantage of it? But
Speaker 1: when you have the plan at least some sort of
Speaker 1: a base plan and based in both, there you know
Speaker 1: two plans for both eventuality and so that when it
Speaker 1: comes to it, you can sit back and make an
Speaker 1: intelligent one and not one where you're where you're panicked
Speaker 1: in either direction. Do you believe that institutional investors panic
Speaker 1: or are they just so powerful that they're able to
Speaker 1: battle against each other and whip saw the market in
Speaker 1: a way that we perhaps have not seen before. Well,
Speaker 1: that's certainly the case. And when the one thing is
Speaker 1: that for for panic for them, um is they tend
Speaker 1: to be because because they're in the markets every single
Speaker 1: day and looking at them, looking individual companies, looking at
Speaker 1: trends for individual industries. So so the panic isn't not
Speaker 1: the so of situation. But what they do have to
Speaker 1: deal with sometimes is on the downside is forced selling,
Speaker 1: where it doesn't matter what they think, you know that
Speaker 1: even though they know things are are are are overdone
Speaker 1: to the downside, that there are assets that have value exactly,
Speaker 1: but they have to sell because they're getting the mutual
Speaker 1: from redeptions or a margin call because they've got too
Speaker 1: much leverage. But the other thing happens to the in
Speaker 1: the other direction, where sometimes they get what I call
Speaker 1: performance fear or the markets going up. And I got,
Speaker 1: you know, especially at the end of the year, when
Speaker 1: the market's going up. At the end of the year,
Speaker 1: you might think the world's gonna end next year, but
Speaker 1: you still got to be in there in December, because
Speaker 1: you all your measure two is the end two towards
Speaker 1: the end of the year. So now the institutions are
Speaker 1: definitely a different animal, but they can still have these
Speaker 1: fear greed situations crop prop up for them. Matt, just
Speaker 1: really briefly, because we're going to the clothes here. For
Speaker 1: the quarter, for the month, s and P five hundred
Speaker 1: is up more than twenty two points, the Dow is
Speaker 1: up more than a hundred and seventy eight points. Give
Speaker 1: me about ten seconds. What do you think of this?
Speaker 1: I think it's a short squeeze on shadow that Deutsche
Speaker 1: Bank is going to be fine. I think it will
Speaker 1: take a little bit longer for it to play out,
Speaker 1: so I would not be chasing this market right here.
Speaker 1: I want to thank you very much as always Matt Mainlee,
Speaker 1: equity strategist mill Our take Back, joining us from Boston
Speaker 1: home to Bloomberg Dred. This is taking Stock. I'm pim Fox.
Speaker 1: We're gonna take you through to the close on Wall Street. Next,
Speaker 1: this is Bloomberg. Yeah,