1 00:00:03,760 --> 00:00:08,080 Speaker 1: Broadcasting live to New York, Gloomberg eleventh, Brio to Washington, 2 00:00:08,160 --> 00:00:13,160 Speaker 1: d C. Bloomber to Boston, Bloomberg twelve hundred to San Francisco, 3 00:00:13,280 --> 00:00:17,720 Speaker 1: Bloomberg nine, to the countries, US Exam General one and 4 00:00:17,840 --> 00:00:21,160 Speaker 1: around the globe the Bloomberg Radio plus Japp and Bloomberg 5 00:00:21,160 --> 00:00:25,040 Speaker 1: got gone. This is taking stock. I'm Kathleen Hayes on 6 00:00:25,200 --> 00:00:28,880 Speaker 1: pim Fox. Time to take a look PM at green bonds. 7 00:00:28,920 --> 00:00:35,040 Speaker 1: What do you think green bonds means socially responsible debtors? 8 00:00:34,640 --> 00:00:37,159 Speaker 1: I guess so. All right, we're gonna be talking to 9 00:00:37,240 --> 00:00:40,440 Speaker 1: Steve Liberta tour. He is managing director and fixed income 10 00:00:40,479 --> 00:00:44,400 Speaker 1: portfolio manager at t I A A Creft Investment Management. 11 00:00:44,440 --> 00:00:47,080 Speaker 1: That's coming up right now. Let's put to Charlie Pellett 12 00:00:47,080 --> 00:00:49,680 Speaker 1: in the Bloomberg news room, Fred Bloomberg Business flat and 13 00:00:49,760 --> 00:00:51,640 Speaker 1: I thank you him, Thank you, Kathleen, the dal the 14 00:00:51,800 --> 00:00:55,960 Speaker 1: SMP NEZ thank all. Surging trading very close to the 15 00:00:56,000 --> 00:00:58,240 Speaker 1: best level of the day. And this update is brought 16 00:00:58,280 --> 00:01:04,320 Speaker 1: to you by b in why Melon introducing Assets Strategy View, 17 00:01:04,600 --> 00:01:07,880 Speaker 1: helping fund managers gain insight into where asset owners are 18 00:01:07,920 --> 00:01:12,360 Speaker 1: investing and how their strategies are changing. Visit the n 19 00:01:12,520 --> 00:01:17,360 Speaker 1: why melon dot com to learn about asset strategy view. 20 00:01:18,400 --> 00:01:22,960 Speaker 1: Toyota is making a strategic investment in Uber Technologies and 21 00:01:23,000 --> 00:01:26,360 Speaker 1: will offer auto leases to the ride hailing companies drivers. 22 00:01:26,760 --> 00:01:30,280 Speaker 1: Uber declined to disclose the size of the investment. The 23 00:01:30,400 --> 00:01:35,200 Speaker 1: Uber will expand its current existing program, which includes enterprise 24 00:01:35,319 --> 00:01:40,320 Speaker 1: holdings by which they will lease Toyota cars. Stocks rising 25 00:01:40,319 --> 00:01:42,480 Speaker 1: the most in more than two months as a surgeon 26 00:01:42,600 --> 00:01:46,679 Speaker 1: home sales fueled speculation the economy can withstand higher rates 27 00:01:46,680 --> 00:01:51,080 Speaker 1: amid rising bets the Federal Reserve will tighten policy this summer. 28 00:01:51,440 --> 00:01:54,840 Speaker 1: David Rosenberg is chief economist at Gluskin Chef and on 29 00:01:54,960 --> 00:01:58,360 Speaker 1: Bloomberg's surveillance this morning, he was asked if the Fed 30 00:01:58,480 --> 00:02:04,080 Speaker 1: has a credibility Well, look, they went into this year uh, 31 00:02:04,360 --> 00:02:06,560 Speaker 1: telling us that they were going to hike four times. 32 00:02:07,560 --> 00:02:12,600 Speaker 1: So uh now it's basically once maybe twice. So is 33 00:02:12,639 --> 00:02:16,680 Speaker 1: that a credibility problem um that they set for and 34 00:02:16,800 --> 00:02:19,240 Speaker 1: it's going to be one or two? Uh. Look, if 35 00:02:19,280 --> 00:02:21,840 Speaker 1: you go back, I think go back a few years 36 00:02:21,919 --> 00:02:24,400 Speaker 1: to what the Fed was saying the fund strate was 37 00:02:24,440 --> 00:02:27,880 Speaker 1: going to be today. Just a few years ago, you'd 38 00:02:27,919 --> 00:02:30,120 Speaker 1: be talking about they would have hiked about six or 39 00:02:30,120 --> 00:02:33,440 Speaker 1: eight times. The ten year down eight thirty seconds, zeal 40 00:02:33,560 --> 00:02:38,440 Speaker 1: one gold down twenty three dollars zounds dropping one nine, 41 00:02:39,480 --> 00:02:41,799 Speaker 1: three two on Wall Street. Now, let's take a look 42 00:02:41,840 --> 00:02:46,040 Speaker 1: at other news from around the world. Thank you, Charlie 43 00:02:46,200 --> 00:02:49,600 Speaker 1: from the Bloomberg Newsroom. I'm Alex Steele. This news update 44 00:02:49,680 --> 00:02:51,680 Speaker 1: is brought to you by the jeep Grand Cherokee, the 45 00:02:51,720 --> 00:02:55,280 Speaker 1: most awarded suv ever. The Grand Cherokee continues to raise 46 00:02:55,320 --> 00:02:58,200 Speaker 1: the bar with its luxurious interior and legendary four by 47 00:02:58,200 --> 00:03:01,919 Speaker 1: four capability drive one a local duke dealer. Today, Virginia 48 00:03:01,960 --> 00:03:05,520 Speaker 1: Governor Terry mccaliffe is addressing reports that he's being investigated 49 00:03:05,520 --> 00:03:10,320 Speaker 1: for alleged illegal campaign contributions. Federal investigators are reportedly looking 50 00:03:10,360 --> 00:03:13,880 Speaker 1: into whether Governor mccalliffe accepted a contribution from a Chinese 51 00:03:13,919 --> 00:03:18,840 Speaker 1: businessman Wang when Liang. Federal law forbids foreigners from contributing 52 00:03:18,840 --> 00:03:22,440 Speaker 1: to US campaigns, but mccalliffe says he's confident he's done 53 00:03:22,440 --> 00:03:24,760 Speaker 1: nothing wrong. I'm not sure I've ever even met the gentleman, 54 00:03:25,000 --> 00:03:28,519 Speaker 1: and who went back and checked in our lawyers. The 55 00:03:28,560 --> 00:03:31,880 Speaker 1: campaign said this man had been fully vetted mccalliffe says 56 00:03:31,919 --> 00:03:34,120 Speaker 1: this donor has held a green card for nearly a 57 00:03:34,200 --> 00:03:37,640 Speaker 1: decade and is a legitimate donor. He also says he'll 58 00:03:37,640 --> 00:03:42,360 Speaker 1: fully cooperate with authorities. Nancy Lions, Bloomberg Radio. A judge 59 00:03:42,360 --> 00:03:46,000 Speaker 1: says there's enough evidence to try Bill cosbyond sexual assault charges. 60 00:03:46,320 --> 00:03:48,840 Speaker 1: The criminal case against him hinges on a decade old 61 00:03:48,840 --> 00:03:51,360 Speaker 1: police report in which a woman said the comedian gave 62 00:03:51,400 --> 00:03:53,800 Speaker 1: her three blue pills that put her in a stupor 63 00:03:54,080 --> 00:03:57,720 Speaker 1: and left her unable to stop his advances and engineers 64 00:03:57,760 --> 00:04:01,040 Speaker 1: operating trains on the nation's the third largest commuter railroad 65 00:04:01,280 --> 00:04:04,520 Speaker 1: even though his driver's license has been suspended for ten 66 00:04:04,640 --> 00:04:08,440 Speaker 1: years because of a history of driving well intoxicated. W 67 00:04:08,600 --> 00:04:12,840 Speaker 1: ABC TV reports that New Jersey transit engineer Thomas Burchard's 68 00:04:13,120 --> 00:04:16,240 Speaker 1: license was suspended in two thousand seven for a decade, 69 00:04:16,520 --> 00:04:18,560 Speaker 1: and he has someone pick him up from work because 70 00:04:18,600 --> 00:04:21,800 Speaker 1: he can't legally drive a car. Global News twenty four 71 00:04:21,839 --> 00:04:24,480 Speaker 1: hours a day, powered by our two hundred journalists in 72 00:04:24,520 --> 00:04:26,720 Speaker 1: more than a hundred and fifty news bureaus around the world. 73 00:04:27,040 --> 00:04:30,560 Speaker 1: From the Bloomberg Newsroom, I'm Alex Steele, Charlie, and we 74 00:04:30,680 --> 00:04:33,240 Speaker 1: thank you it again, recapping stocks training at our near 75 00:04:33,360 --> 00:04:36,159 Speaker 1: best levels of the day, SMP up twenty nine a 76 00:04:36,200 --> 00:04:39,080 Speaker 1: gain of one point four percent, stack of two percent 77 00:04:39,440 --> 00:04:42,400 Speaker 1: down Industrials up to twenty nine now a gain of 78 00:04:42,520 --> 00:04:46,400 Speaker 1: one point three percent. I'm Charlie Pelton. That's a Bloomberg 79 00:04:46,440 --> 00:04:50,960 Speaker 1: Business flash. You're listening to taking stock with Kathleen Hayes 80 00:04:51,040 --> 00:04:56,080 Speaker 1: and Pim Fox on Bloomberg Radio. Green bonds a green investing. 81 00:04:56,200 --> 00:05:00,200 Speaker 1: More broadly, is it getting much more popular? Is it's 82 00:05:00,240 --> 00:05:02,920 Speaker 1: something that is still a good idea without a lot 83 00:05:02,920 --> 00:05:05,440 Speaker 1: of investor interests. We're gonna ask this question now from 84 00:05:05,520 --> 00:05:09,720 Speaker 1: Steve Libertor. He is managing director and fixed income portfolio 85 00:05:09,920 --> 00:05:14,360 Speaker 1: manager at t I A, a global asset management. He's 86 00:05:14,400 --> 00:05:16,960 Speaker 1: based in Charlotte, but in our New York studio today. Steve, welcome, 87 00:05:17,160 --> 00:05:20,279 Speaker 1: Thanks for having me so green bonds, What do you 88 00:05:20,279 --> 00:05:23,240 Speaker 1: have to do to be a green bond? It's really 89 00:05:23,279 --> 00:05:26,320 Speaker 1: a new concept or when it's really evolved over the past, 90 00:05:26,400 --> 00:05:28,760 Speaker 1: you know, ten years or so to one where it's 91 00:05:28,800 --> 00:05:31,280 Speaker 1: a concept where you're issuing a security that has an 92 00:05:31,360 --> 00:05:35,080 Speaker 1: environmental outcome associated with a positive environmental outcome, and it 93 00:05:35,120 --> 00:05:38,359 Speaker 1: continues to evolve even today. So have the example of 94 00:05:38,360 --> 00:05:41,080 Speaker 1: a popular green bond right now. Sure, UM. Really the 95 00:05:41,080 --> 00:05:43,040 Speaker 1: first green bond that was ever issued really wasn't even 96 00:05:43,040 --> 00:05:45,280 Speaker 1: called a green bond, was called a climate awareness bond 97 00:05:45,320 --> 00:05:48,960 Speaker 1: by the European Investment Bank UM. And we've really, we've 98 00:05:49,000 --> 00:05:51,680 Speaker 1: really evolved since then to include green bonds from corporate 99 00:05:51,680 --> 00:05:56,279 Speaker 1: issuers like Apple, Regency Centers, Bank of America, UM, Georgia Power, 100 00:05:56,320 --> 00:05:59,599 Speaker 1: Southern Power Company, to a B S issuers UM Solar 101 00:05:59,640 --> 00:06:03,040 Speaker 1: City has transactions UM in that space as well, so 102 00:06:03,080 --> 00:06:05,720 Speaker 1: you really see municipal issuers as well have really started 103 00:06:06,000 --> 00:06:09,279 Speaker 1: issuing more securities in this space. I was looking at 104 00:06:09,320 --> 00:06:12,640 Speaker 1: the fund and the symbol there is t s b 105 00:06:13,000 --> 00:06:15,359 Speaker 1: I X yere. To date, you've got a gain of 106 00:06:15,440 --> 00:06:18,320 Speaker 1: three and a quarter percent. Congratulations, thank you. But I 107 00:06:18,360 --> 00:06:22,080 Speaker 1: was looking at the holdings of the fund bond fund 108 00:06:22,360 --> 00:06:24,960 Speaker 1: and I noticed you've got a lot of treasury, you 109 00:06:25,120 --> 00:06:30,839 Speaker 1: have a lot of bonds from the Federal Home Loan Bank. 110 00:06:31,440 --> 00:06:36,120 Speaker 1: You've also got into America Development Bank plus the National 111 00:06:36,480 --> 00:06:41,600 Speaker 1: Credit Union. Are these investments really better than other bonds 112 00:06:41,800 --> 00:06:46,719 Speaker 1: because intrinsically there's something about these entities that are is better. 113 00:06:46,880 --> 00:06:49,640 Speaker 1: Or is it really that this is just getting more popular, 114 00:06:50,080 --> 00:06:53,760 Speaker 1: so you've got to have an offering that satisfies the 115 00:06:53,800 --> 00:06:57,479 Speaker 1: psychological predisposition we want to do good with our money, 116 00:06:57,600 --> 00:06:59,680 Speaker 1: so we're going to buy something like this. So as 117 00:06:59,680 --> 00:07:02,560 Speaker 1: it was all the value increases well. Our strategy in 118 00:07:02,560 --> 00:07:04,280 Speaker 1: the way that we manage our fund is really as 119 00:07:04,279 --> 00:07:07,800 Speaker 1: a core actively managed strategy benchmark to the Barquays aggregate. 120 00:07:07,839 --> 00:07:12,280 Speaker 1: We just happened to employ um social criteria to our funds. 121 00:07:12,320 --> 00:07:14,040 Speaker 1: So what we're trying to do is really deliver a 122 00:07:14,040 --> 00:07:17,600 Speaker 1: double bottom line of excess financial return, but also delivering 123 00:07:17,640 --> 00:07:20,440 Speaker 1: a return for the environment and social issues as well, 124 00:07:20,480 --> 00:07:23,320 Speaker 1: more of a positive impact type of strategy. So the 125 00:07:23,320 --> 00:07:26,440 Speaker 1: securities that you mentioned, UM, those are all ones that 126 00:07:26,480 --> 00:07:29,440 Speaker 1: fit into the concept of investing in leaders within their 127 00:07:29,480 --> 00:07:32,880 Speaker 1: respective spaces. And in core fixed income there's a real 128 00:07:32,920 --> 00:07:37,200 Speaker 1: advantage we think in using environmental, social and governance criteria 129 00:07:37,240 --> 00:07:39,560 Speaker 1: in managing a core fixed income fund because at the 130 00:07:39,640 --> 00:07:42,440 Speaker 1: end of the day, you will get paid for UM 131 00:07:42,440 --> 00:07:45,520 Speaker 1: not picking winners, but by avoiding the losers. So when 132 00:07:45,560 --> 00:07:48,440 Speaker 1: you look at utilizing that kind of criteria puts you 133 00:07:48,480 --> 00:07:50,760 Speaker 1: a competitive advantage. I think and fixed income over the 134 00:07:50,800 --> 00:07:54,720 Speaker 1: long run broadly and fixed income in bonds right now? 135 00:07:54,880 --> 00:07:58,320 Speaker 1: Where are you placing your bet in terms of maturity 136 00:07:58,480 --> 00:08:01,680 Speaker 1: right A two your note probably not versus a thirty 137 00:08:01,720 --> 00:08:03,640 Speaker 1: year bond. I don't know about that one either. And 138 00:08:03,720 --> 00:08:08,360 Speaker 1: also in terms of like safe safe US government bonds 139 00:08:08,480 --> 00:08:11,400 Speaker 1: versus credit you know, other large corporations or you know 140 00:08:11,600 --> 00:08:14,000 Speaker 1: even unis. I guess yeah. We're of the view at 141 00:08:14,040 --> 00:08:17,720 Speaker 1: the moment that we are in a lower for longer cycle. UM. 142 00:08:17,840 --> 00:08:19,480 Speaker 1: I have been a little more I've been a little 143 00:08:19,560 --> 00:08:22,040 Speaker 1: less sanguine on the state of the economy. I think 144 00:08:22,080 --> 00:08:24,800 Speaker 1: that we wanted to be longer duration flat around the 145 00:08:24,840 --> 00:08:28,120 Speaker 1: yield curve UM as we think that in this lower 146 00:08:28,120 --> 00:08:31,040 Speaker 1: for longer period of time, low growth, low inflation, that's 147 00:08:31,040 --> 00:08:33,439 Speaker 1: really the second best environment to be in spread products. 148 00:08:33,520 --> 00:08:36,160 Speaker 1: So we're generally gonna be overweight and spread product. And 149 00:08:36,200 --> 00:08:39,000 Speaker 1: that's also works to our strengths as a credit shop. 150 00:08:39,040 --> 00:08:41,640 Speaker 1: Where we have fifty analysts at average about eleven years 151 00:08:41,679 --> 00:08:44,760 Speaker 1: of experience, we have twelve traders at also oddly average 152 00:08:44,760 --> 00:08:47,760 Speaker 1: about eleven years of experience UM. So it allows us 153 00:08:47,760 --> 00:08:50,800 Speaker 1: to utilize our skill and expertise and evaluating securities and 154 00:08:50,840 --> 00:08:53,320 Speaker 1: really digging down and getting the real valuation out of 155 00:08:53,360 --> 00:08:55,720 Speaker 1: them relative to looking to say, a pure treasury in 156 00:08:55,720 --> 00:08:59,120 Speaker 1: this environment, Well, you do have a lot of pure treasuries, right, 157 00:08:59,160 --> 00:09:00,800 Speaker 1: I mean, it's the largest holding in the fund by 158 00:09:00,840 --> 00:09:03,440 Speaker 1: about two percent. Uh. And I noticed that this goes 159 00:09:03,440 --> 00:09:08,880 Speaker 1: out to what what do you make of the current 160 00:09:09,000 --> 00:09:13,600 Speaker 1: yield environment in terms of taking on that kind of debt, 161 00:09:13,679 --> 00:09:16,600 Speaker 1: that kind of credit for such a long period of time. Yeah, 162 00:09:16,600 --> 00:09:18,760 Speaker 1: I think at this point in time where we are 163 00:09:18,880 --> 00:09:21,600 Speaker 1: is I'm anticipating the FED. And I've thought this at 164 00:09:21,600 --> 00:09:23,160 Speaker 1: the beginning of the year as well, when the FED 165 00:09:23,240 --> 00:09:25,960 Speaker 1: was originally talking about raising four times, I thought then 166 00:09:26,000 --> 00:09:27,600 Speaker 1: and still think now that maybe it would be two 167 00:09:27,600 --> 00:09:31,400 Speaker 1: times at the most with downside to only once. And 168 00:09:31,400 --> 00:09:34,680 Speaker 1: and with that type of environment, you look globally and 169 00:09:34,800 --> 00:09:37,920 Speaker 1: the you're being capped. Domestic yields are being capped just 170 00:09:38,000 --> 00:09:42,520 Speaker 1: purely by the relative valuation versus other foreign um treasure 171 00:09:42,600 --> 00:09:46,920 Speaker 1: foreign government securities really makes treasuries look more relatively attractive. 172 00:09:47,320 --> 00:09:49,679 Speaker 1: So for us, you know, looking at the way that 173 00:09:49,960 --> 00:09:52,680 Speaker 1: the market is evolving in this lower go lower inflation 174 00:09:52,720 --> 00:09:56,080 Speaker 1: type environment, taking some credit risk and looking further out 175 00:09:56,080 --> 00:10:00,199 Speaker 1: the curve makes sense. And that's especially the case If 176 00:10:00,200 --> 00:10:02,560 Speaker 1: the FED does insist on raising rates in here, that 177 00:10:02,600 --> 00:10:04,920 Speaker 1: really should damp and off and choke off future inflation 178 00:10:04,920 --> 00:10:08,440 Speaker 1: concerns when we already have very low inflation expectations. Quick 179 00:10:08,440 --> 00:10:11,320 Speaker 1: final question, Just give me an example of one green 180 00:10:11,400 --> 00:10:13,640 Speaker 1: bond issue that people could look at to study what 181 00:10:13,720 --> 00:10:16,240 Speaker 1: it's done, who issued it, and why it informs him 182 00:10:16,240 --> 00:10:18,959 Speaker 1: about the space. Sure, A great example would be um 183 00:10:18,960 --> 00:10:22,800 Speaker 1: Georgia Power Company. Georgia Power is a subsidiary of Southern Company, 184 00:10:23,200 --> 00:10:26,120 Speaker 1: and they recently issued a green bond, the second US 185 00:10:26,240 --> 00:10:28,880 Speaker 1: utility green bond, and they actually was very unique in 186 00:10:28,880 --> 00:10:31,800 Speaker 1: that they partnered with the U S Defense Department to 187 00:10:32,040 --> 00:10:37,000 Speaker 1: take on unused space on at five defense bases in Georgia, 188 00:10:37,280 --> 00:10:40,360 Speaker 1: put up solar panels and solar power to generate solar 189 00:10:40,360 --> 00:10:44,120 Speaker 1: power there to generate enough for about forty thou homes, 190 00:10:44,200 --> 00:10:46,440 Speaker 1: which is going to take out you know, roughly forty 191 00:10:46,440 --> 00:10:49,280 Speaker 1: tho cars. Thank you very much for spending time with us, 192 00:10:49,320 --> 00:10:53,640 Speaker 1: as Steve LiBeratur is Managing Director, Fixing Income Portfolio Manager 193 00:10:53,760 --> 00:10:57,360 Speaker 1: t I A a global asset management This this Bloomberg 194 00:10:57,480 --> 00:11:04,040 Speaker 1: Radio homebuilder's doing better today, banks doing better as well. 195 00:11:04,080 --> 00:11:06,679 Speaker 1: A lot of this is riding on a more positive 196 00:11:06,800 --> 00:11:09,280 Speaker 1: view of the US economy after a big jump in 197 00:11:09,320 --> 00:11:11,560 Speaker 1: new home sales. We're gonna find out what this means 198 00:11:11,559 --> 00:11:13,480 Speaker 1: for stocks down the road on Broomberg Radio.