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 lact and on your radio. 3 00:00:09,240 --> 00:00:13,640 Speaker 1: This is a Bloomberg Business Flash for all Bloomberg World headquarters. 4 00:00:13,680 --> 00:00:16,240 Speaker 1: I'm Charlie Pellett. We have got thirteen minutes to go 5 00:00:16,280 --> 00:00:19,200 Speaker 1: ahead of the close on a Monday, the DAL, the SMP, 6 00:00:19,360 --> 00:00:22,960 Speaker 1: NEZDAC hall rallying by one percent or more. The tenure 7 00:00:22,960 --> 00:00:26,520 Speaker 1: down fourteen thirty seconds. That yield one point seven four percent, 8 00:00:26,960 --> 00:00:29,800 Speaker 1: Gold up three dollars, the ounce to twelve seventy five 9 00:00:29,920 --> 00:00:32,200 Speaker 1: seventy a gain there of two tents of one percent. 10 00:00:32,680 --> 00:00:36,000 Speaker 1: And crude oil forty seven ninety seven a barrel right 11 00:00:36,000 --> 00:00:39,040 Speaker 1: now up three point eight percent on West Texas Intermediate. 12 00:00:39,400 --> 00:00:42,240 Speaker 1: That is a game of the dollars seventy five so again, 13 00:00:42,280 --> 00:00:45,720 Speaker 1: recapping our rally underway for stocks, SMP up twenty a 14 00:00:45,760 --> 00:00:49,320 Speaker 1: gain of one percent down, industrials up eight five also 15 00:00:49,479 --> 00:00:52,960 Speaker 1: up one point one percent. I'm Charlie Pellett, and that's 16 00:00:53,080 --> 00:00:56,480 Speaker 1: a Bloomberg Business Flash. Charlie Pellett, thank you so very much. 17 00:00:56,560 --> 00:00:58,280 Speaker 1: Now it's a sign for the et F Report, brought 18 00:00:58,320 --> 00:01:01,200 Speaker 1: to you by Vanneck Vector's et FS. Expect more from 19 00:01:01,200 --> 00:01:05,120 Speaker 1: your muni's target tax exempt income by maturity and credit quality, 20 00:01:05,319 --> 00:01:07,520 Speaker 1: all with low cost e t f s because van 21 00:01:07,800 --> 00:01:12,279 Speaker 1: dot com slash Muni van eck access the opportunities now 22 00:01:12,280 --> 00:01:14,000 Speaker 1: with the latest on e t F s our own 23 00:01:14,120 --> 00:01:18,120 Speaker 1: Katherine Cowtery, last week was a tough one for retailers 24 00:01:18,200 --> 00:01:22,080 Speaker 1: is disastrous. Reports from Macy's to Nordstrom sent shares tumbling. 25 00:01:22,440 --> 00:01:25,520 Speaker 1: E t S had focused on retail companies had varying results. 26 00:01:25,760 --> 00:01:29,479 Speaker 1: Bloomberg Intelligence analyst Eric Beltuna says it illustrates the importance 27 00:01:29,480 --> 00:01:32,640 Speaker 1: of waiting. His example the spider s and p retail 28 00:01:32,680 --> 00:01:35,200 Speaker 1: e t F taker x RT. Keep in mind this 29 00:01:35,280 --> 00:01:37,520 Speaker 1: is equal weighted, so you're getting a lot of zip 30 00:01:37,520 --> 00:01:39,840 Speaker 1: in here. Small caps cats that destroyed it. X RT 31 00:01:40,000 --> 00:01:42,679 Speaker 1: fell four point six percent last week, and e t 32 00:01:42,800 --> 00:01:45,640 Speaker 1: F with a large allocation to retail shares, declined less 33 00:01:45,640 --> 00:01:48,040 Speaker 1: than other funds in the group. It's the Power Shares 34 00:01:48,120 --> 00:01:52,400 Speaker 1: d W a consumer cyclicals Momentum portfolio ticker p e Z. 35 00:01:52,920 --> 00:01:57,360 Speaker 1: The momentum ETFs basically will look at price movement as 36 00:01:57,360 --> 00:02:00,480 Speaker 1: a screening apparatus, so if the price starts to go 37 00:02:00,520 --> 00:02:03,520 Speaker 1: down relative to other stocks, it kicks it out and 38 00:02:03,560 --> 00:02:05,960 Speaker 1: a lot of times you'll see that technical it's like 39 00:02:06,040 --> 00:02:08,640 Speaker 1: technical analysis. You'll see the price movement go down a 40 00:02:08,680 --> 00:02:10,720 Speaker 1: little before the big one, and so a lot of 41 00:02:10,720 --> 00:02:13,600 Speaker 1: times you can save yourself even though momentum sounds more volatile. 42 00:02:13,960 --> 00:02:16,440 Speaker 1: I've seen it avoid some of the bigger downfalls with 43 00:02:16,480 --> 00:02:19,760 Speaker 1: the big stocks. The easy declined one point one percent. 44 00:02:20,240 --> 00:02:26,040 Speaker 1: That's your Bloomberg ETF report. I'm Catherine Cowdery. You're listening 45 00:02:26,080 --> 00:02:29,680 Speaker 1: to Taking Stock with Bim Fox and Kathleen Hayes on 46 00:02:29,760 --> 00:02:35,480 Speaker 1: Bloomberg Radio. Scheduled for release tomorrow consumer Prices. What will 47 00:02:35,520 --> 00:02:39,360 Speaker 1: that economic report as well as Manufacturing and Industry also 48 00:02:39,400 --> 00:02:43,000 Speaker 1: scheduled for tomorrow. What will that mean for your portfolio? Well, 49 00:02:43,040 --> 00:02:46,919 Speaker 1: Brad McMillan is the Chief Investment Officer Commonwealth Financial Network, 50 00:02:47,639 --> 00:02:51,720 Speaker 1: helping to manage over a hundred billion dollars in assets, 51 00:02:51,960 --> 00:02:55,320 Speaker 1: and he can be followed on Twitter at Brad McMillan 52 00:02:55,480 --> 00:02:58,680 Speaker 1: c f A. He joins us now, Brad, thanks ver 53 00:02:58,760 --> 00:03:00,799 Speaker 1: much for being with us. Let's start off at the 54 00:03:00,840 --> 00:03:03,800 Speaker 1: Consumer Price Report, the CPI that will be out tomorrow. 55 00:03:04,280 --> 00:03:08,200 Speaker 1: Tell us what you expect and what this means for investors. 56 00:03:09,240 --> 00:03:13,000 Speaker 1: We expect to see an increase in UH in inflation 57 00:03:13,760 --> 00:03:17,600 Speaker 1: at the headline level, particularly, but also at the core level, 58 00:03:17,919 --> 00:03:20,240 Speaker 1: we're gonna see maybe a little bit of fireworks because 59 00:03:20,240 --> 00:03:22,680 Speaker 1: you could see the headline number check up, but it's 60 00:03:22,720 --> 00:03:24,760 Speaker 1: not going to mean anything. The important number is the 61 00:03:24,800 --> 00:03:27,000 Speaker 1: core number and actually just be more of the same, 62 00:03:27,480 --> 00:03:29,480 Speaker 1: more of the same, enough for the FED to reserve 63 00:03:29,520 --> 00:03:31,960 Speaker 1: to get excited about inflation. You know, we live in 64 00:03:32,000 --> 00:03:33,880 Speaker 1: an era that's not like it was thirty years ago, 65 00:03:33,919 --> 00:03:36,119 Speaker 1: twenty years ago, ten years ago. FED wants to see 66 00:03:36,200 --> 00:03:39,000 Speaker 1: more inflation so it can help boost wages for a 67 00:03:39,040 --> 00:03:42,920 Speaker 1: little more lift under the economy sales. The f's in 68 00:03:43,040 --> 00:03:44,800 Speaker 1: kind of a rock and a hard place, and you're 69 00:03:44,800 --> 00:03:48,720 Speaker 1: absolutely right and wants to see inflation. The problem is 70 00:03:48,760 --> 00:03:52,560 Speaker 1: even the core, we're just kicking above the level where 71 00:03:52,640 --> 00:03:55,600 Speaker 1: they want to see. So there's enough to justify and 72 00:03:55,680 --> 00:03:57,640 Speaker 1: increase at some point, but not enough to light a 73 00:03:57,720 --> 00:03:59,880 Speaker 1: fire under them yet. I don't think this is going 74 00:03:59,920 --> 00:04:03,000 Speaker 1: to be enough to move them. In June. Brad McMillan, Uh, 75 00:04:03,240 --> 00:04:05,720 Speaker 1: how about the industrial production data? What will that show? 76 00:04:06,680 --> 00:04:08,720 Speaker 1: We're probably going to see a bit of a recovery. 77 00:04:08,840 --> 00:04:12,080 Speaker 1: We're going to see We're going to see utilities continue 78 00:04:12,120 --> 00:04:15,280 Speaker 1: to do well, we're going to see manufacturing hopefully picked up. 79 00:04:15,680 --> 00:04:18,560 Speaker 1: But again it's going to be a recovery. It's not 80 00:04:18,600 --> 00:04:21,320 Speaker 1: going to be a jump ahead. So it will probably 81 00:04:21,400 --> 00:04:24,960 Speaker 1: continue stabilization. But nothing to get excited about, nothing to 82 00:04:25,040 --> 00:04:27,839 Speaker 1: drive fed to move. Okay, so we can talk about 83 00:04:27,839 --> 00:04:32,440 Speaker 1: manufacturing industrial production, and you know the inflation numbers. Housing 84 00:04:32,440 --> 00:04:36,200 Speaker 1: starts are also out tomorrow. The Blueberg survey suggests that 85 00:04:36,200 --> 00:04:38,800 Speaker 1: we will have some move up in new home construction. 86 00:04:39,240 --> 00:04:42,880 Speaker 1: So connect the dots force from some of these industry 87 00:04:42,960 --> 00:04:46,600 Speaker 1: to some of the UH stocks you like, the sectors 88 00:04:46,680 --> 00:04:49,039 Speaker 1: you like, and let's start with home builders since they're 89 00:04:49,080 --> 00:04:54,400 Speaker 1: they're directly involved in home construction. Certainly, you saw the 90 00:04:54,720 --> 00:04:57,599 Speaker 1: you saw the Homeme Builders survey come in today. It 91 00:04:57,640 --> 00:05:00,080 Speaker 1: was stable at a very positive level, but it and 92 00:05:00,160 --> 00:05:03,880 Speaker 1: improved like people expected. And most of that decline actually 93 00:05:03,880 --> 00:05:07,640 Speaker 1: came from the Northeast where sentiment went down. Now, the 94 00:05:07,680 --> 00:05:10,279 Speaker 1: problem is we've got a lot of supply issues here. 95 00:05:10,279 --> 00:05:12,120 Speaker 1: We've got a lack of land, we've got a lack 96 00:05:12,160 --> 00:05:15,640 Speaker 1: of labor to build these things. That's what's holding it 97 00:05:15,720 --> 00:05:19,000 Speaker 1: back and that's going to limit the improvement. But at 98 00:05:19,000 --> 00:05:21,920 Speaker 1: the same time. That's going to make the recovery run 99 00:05:22,040 --> 00:05:24,600 Speaker 1: longer because we're not going to be able to over build, 100 00:05:25,080 --> 00:05:27,760 Speaker 1: and we're getting enough demand to help continue to drive 101 00:05:27,880 --> 00:05:30,600 Speaker 1: consumer spending, which is kicked. All right, you talk about 102 00:05:30,680 --> 00:05:34,400 Speaker 1: driving consumer spending, is that going to help corporate profits? 103 00:05:34,400 --> 00:05:37,039 Speaker 1: Didn't we just get through a really well bad quarter. 104 00:05:38,200 --> 00:05:40,039 Speaker 1: It was a bad quarter, but you have to look 105 00:05:40,080 --> 00:05:43,479 Speaker 1: at everything that happened during the quarter. People were thinking 106 00:05:43,520 --> 00:05:46,360 Speaker 1: the world was going to end well, guess what, it didn't, 107 00:05:46,680 --> 00:05:50,600 Speaker 1: and consumer sentiment, consumer spending was depressed by that. But 108 00:05:50,760 --> 00:05:54,360 Speaker 1: spring is here till on the retail sales report last Friday, 109 00:05:54,640 --> 00:05:57,400 Speaker 1: consumers are starting to spend. It's not that they couldn't spend, 110 00:05:57,800 --> 00:05:59,920 Speaker 1: it's that they chose not to and now they're opening 111 00:06:00,040 --> 00:06:03,760 Speaker 1: the wallets, which is excellent. Hey, is it possible, Brad, 112 00:06:04,000 --> 00:06:06,599 Speaker 1: that over the course of the year we could find 113 00:06:06,680 --> 00:06:08,880 Speaker 1: a bit of a sweep spot for stocks. If you're right, 114 00:06:09,160 --> 00:06:12,920 Speaker 1: you see reasonably positive on the US economy. Consumers will 115 00:06:13,240 --> 00:06:16,719 Speaker 1: spend enough, they'll spend more. But is it also possible 116 00:06:16,800 --> 00:06:19,839 Speaker 1: that they don't spend so much that the fetter reserves 117 00:06:19,880 --> 00:06:23,360 Speaker 1: feels in any hurry to raise interest rates with Is 118 00:06:23,400 --> 00:06:26,279 Speaker 1: that possible. And if that's what occurs, is that good 119 00:06:26,279 --> 00:06:28,520 Speaker 1: for stocks because things have picked up, but the FET 120 00:06:28,560 --> 00:06:33,039 Speaker 1: isn't tightening More on policy, I think the Goldilocks scenario 121 00:06:33,160 --> 00:06:37,240 Speaker 1: is not only possible but becoming increasingly likely. We need 122 00:06:37,240 --> 00:06:40,040 Speaker 1: consumers to start spending that that just there are signs 123 00:06:40,040 --> 00:06:43,600 Speaker 1: that that's exactly what they're doing. We need business to stabilize, 124 00:06:43,600 --> 00:06:45,880 Speaker 1: and we're seeing signs of that in the energy sector 125 00:06:46,279 --> 00:06:49,080 Speaker 1: and in capital investment. But we don't want them going 126 00:06:49,200 --> 00:06:51,919 Speaker 1: nuts right now. The fet is happy with where we 127 00:06:51,960 --> 00:06:54,880 Speaker 1: are where we are, but they're not dying to raise Rachel, 128 00:06:54,960 --> 00:06:57,280 Speaker 1: I could see that continuing for the next quarter or two. 129 00:06:57,720 --> 00:07:00,880 Speaker 1: You mentioned energy, and I'm just wondering where do you 130 00:07:00,920 --> 00:07:03,200 Speaker 1: think that the energy market is headed When we have 131 00:07:03,920 --> 00:07:08,080 Speaker 1: filings for bankruptcy for companies such as Sandridge Energy and 132 00:07:08,240 --> 00:07:11,760 Speaker 1: there's no let up. Well, that's the thing. We've seen 133 00:07:11,880 --> 00:07:16,240 Speaker 1: energy prices come up by about se off the floor. 134 00:07:16,680 --> 00:07:19,160 Speaker 1: What does that mean? That means companies that were just 135 00:07:19,240 --> 00:07:21,440 Speaker 1: trying to make it are now going to get a 136 00:07:21,480 --> 00:07:23,720 Speaker 1: second rease on life. The ones that have been the worst, 137 00:07:23,720 --> 00:07:25,640 Speaker 1: the ones that haven't been able to make it through, 138 00:07:25,960 --> 00:07:28,760 Speaker 1: as you say, are going bankrupt, but that queers the 139 00:07:29,080 --> 00:07:32,160 Speaker 1: clears the deck for the ones that can continue. And actually, 140 00:07:32,280 --> 00:07:36,680 Speaker 1: what's capital? Companies with capital pick up these assets for 141 00:07:36,760 --> 00:07:39,160 Speaker 1: pennies on the dollar, and that's also going to help 142 00:07:39,160 --> 00:07:42,160 Speaker 1: profits going forward. What do you like in technology? What 143 00:07:42,200 --> 00:07:44,360 Speaker 1: are you dislike in technology? It can be you know, 144 00:07:44,720 --> 00:07:46,800 Speaker 1: are you are you interested in social media? Are you 145 00:07:46,960 --> 00:07:49,760 Speaker 1: interested in some of the old line more blue chip 146 00:07:49,880 --> 00:07:54,600 Speaker 1: dividend pairs like Microsoft. It's funny to hear Microsoft described 147 00:07:54,640 --> 00:07:57,040 Speaker 1: as a blue line as a blue chip dividend pair, 148 00:07:57,120 --> 00:07:59,720 Speaker 1: although of course it is, and that is exactly what 149 00:07:59,760 --> 00:08:02,720 Speaker 1: I do white because the real power of technology in 150 00:08:02,880 --> 00:08:05,920 Speaker 1: what's still a fairly difficult business environment is to help 151 00:08:05,960 --> 00:08:10,160 Speaker 1: companies cut costs. I think there's the opportunity social media 152 00:08:10,240 --> 00:08:14,800 Speaker 1: absolutely on a tear, but for sustainable business building, being 153 00:08:14,840 --> 00:08:17,640 Speaker 1: able to help other companies cut costs is exactly where 154 00:08:17,720 --> 00:08:22,000 Speaker 1: companies like Microsoft, for Oracle are making their mark, and 155 00:08:22,080 --> 00:08:24,600 Speaker 1: that's going to continue to be an opportunity going forward. 156 00:08:25,000 --> 00:08:28,200 Speaker 1: But doesn't the idea of cutting your costs fly in 157 00:08:28,280 --> 00:08:31,480 Speaker 1: the face of increasing your revenues. If you're trying to 158 00:08:31,520 --> 00:08:34,240 Speaker 1: cut things to the bone, you're going to improve the 159 00:08:34,320 --> 00:08:36,920 Speaker 1: bottom line. But I thought that the top line, the 160 00:08:37,000 --> 00:08:39,880 Speaker 1: increase in revenue and sales what what is what is 161 00:08:39,920 --> 00:08:45,040 Speaker 1: bedeviling most companies. You're right, the revenue growth is a problem, 162 00:08:45,080 --> 00:08:48,720 Speaker 1: and I would tie that into slow growth overall. But nonetheless, 163 00:08:48,760 --> 00:08:51,600 Speaker 1: why can't you do both? That's the challenge and that's 164 00:08:51,600 --> 00:08:54,400 Speaker 1: actually where I think the opportunity is for companies in 165 00:08:54,400 --> 00:08:57,559 Speaker 1: the market. We've had a difficult business environment. They've had 166 00:08:57,600 --> 00:08:59,800 Speaker 1: to cut costs and they're doing so, but at this 167 00:09:00,280 --> 00:09:03,040 Speaker 1: time they're looking to be more efficient and to grow 168 00:09:03,080 --> 00:09:06,080 Speaker 1: their top wine popline growth has not been easy. But 169 00:09:06,320 --> 00:09:09,680 Speaker 1: as the economy continues to expand and do so more quickly, 170 00:09:09,840 --> 00:09:12,000 Speaker 1: we're going to see companies be able to do both 171 00:09:12,080 --> 00:09:14,480 Speaker 1: and that's going to help on the earning side. So 172 00:09:14,520 --> 00:09:16,319 Speaker 1: what about bonds. We have a bit of a bit 173 00:09:16,320 --> 00:09:17,800 Speaker 1: of a sell off, enough of us all off to 174 00:09:17,800 --> 00:09:20,000 Speaker 1: push the tenure note yield up to one point seven five. 175 00:09:20,000 --> 00:09:22,920 Speaker 1: It have been one point seven four, one point seven three. Interesting, 176 00:09:23,000 --> 00:09:26,440 Speaker 1: fabulous story actually on the terminal today, the mixed view 177 00:09:26,559 --> 00:09:29,079 Speaker 1: on Wall Street of where bond deals are heading. Standard 178 00:09:29,160 --> 00:09:32,120 Speaker 1: Charter is looking for a rally in the tenure treasury 179 00:09:32,160 --> 00:09:34,920 Speaker 1: down to one point six in terms of yield, What 180 00:09:35,000 --> 00:09:37,160 Speaker 1: do you see and is there any play that you 181 00:09:37,160 --> 00:09:40,960 Speaker 1: would recommend in fixed income right now? Right now? I 182 00:09:41,000 --> 00:09:43,679 Speaker 1: think if you're looking at rates, is largely driven by 183 00:09:43,720 --> 00:09:47,319 Speaker 1: international news. You're looking at you're looking at Brexit, You're 184 00:09:47,320 --> 00:09:50,839 Speaker 1: looking at Europe, you're looking at China. That's what's driving 185 00:09:50,920 --> 00:09:55,120 Speaker 1: pricing when US treasuries rather than domestic factors. I don't 186 00:09:55,120 --> 00:09:57,440 Speaker 1: think you see the FED moving at all. You know, 187 00:09:57,480 --> 00:10:00,360 Speaker 1: it's probably not in June, maybe not until STI number, 188 00:10:00,679 --> 00:10:02,880 Speaker 1: So I think that's what's going on. In terms of 189 00:10:02,920 --> 00:10:05,840 Speaker 1: where to go. I think credit still remains attractive. We 190 00:10:05,840 --> 00:10:09,200 Speaker 1: saw a real rally in high yield and so, but 191 00:10:09,240 --> 00:10:12,000 Speaker 1: there still maybe some juice in the apple there. But 192 00:10:12,240 --> 00:10:15,000 Speaker 1: I would still be in credit rather than in sovereign 193 00:10:15,120 --> 00:10:19,160 Speaker 1: simply because there is incremental return in RBO at commonwealth. 194 00:10:19,679 --> 00:10:22,720 Speaker 1: So you don't see a major slowdown. What about a 195 00:10:22,720 --> 00:10:28,000 Speaker 1: major correction in the stock market, That's certainly possible, But 196 00:10:28,200 --> 00:10:30,320 Speaker 1: if you look at what we saw earlier in the year, 197 00:10:30,400 --> 00:10:34,120 Speaker 1: we saw a pullback, A lot of the selling has 198 00:10:34,160 --> 00:10:36,840 Speaker 1: been done. Where is the bad news that would force 199 00:10:36,880 --> 00:10:39,440 Speaker 1: the correction in the near term. I just don't say 200 00:10:39,440 --> 00:10:43,320 Speaker 1: it all right, Brad McMillan, Thank you so very much 201 00:10:43,320 --> 00:10:47,240 Speaker 1: for joining us today. Thank you, Chief Investment Officer for 202 00:10:47,400 --> 00:10:52,959 Speaker 1: Commonwealth Financial Network. He sees, uh, not too much move 203 00:10:53,040 --> 00:10:55,200 Speaker 1: up in inflation, but a consumer that's going to keep 204 00:10:55,520 --> 00:10:58,400 Speaker 1: spending and driving the economy and forward, but not so much. 205 00:10:58,440 --> 00:11:00,840 Speaker 1: The FED will move right away, maybe on September, and 206 00:11:00,960 --> 00:11:04,800 Speaker 1: that's a potential sweet spot for US stock investors. I'm 207 00:11:04,880 --> 00:11:08,320 Speaker 1: Kathleen Hayes. Along with pim Fox coming up Dave Wilson 208 00:11:08,320 --> 00:11:12,120 Speaker 1: are stocks editor, movers and shakers on Bloomberg Radio.