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Speaker 1: Broadcasting live to New York, Gloomberg eleven, Rio to Washington,

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Speaker 1: d C, Bloomberg to Boston, Bloomberg twelve, D to San Francisco,

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Speaker 1: Bloomberg nine to the Country, Zooeus jam General one ninet

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Speaker 1: and around the globe the Bloomberg Radio plus, DAPD, Boomberg

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Speaker 1: dot Com. This is taking stock the long bond. The

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Speaker 1: US Treasury third year bond continues to rally today even

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Speaker 1: as stocks in the United States come back, rising for

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Speaker 1: the third day in a row. Does this make sensible?

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Speaker 1: According to our next guest, it does. One of the

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Speaker 1: big pieces of fallout from the bregsit vote is we're

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Speaker 1: going to have a slower for longer global economy, keeping

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Speaker 1: a lid on inflation. This is certainly going to support

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Speaker 1: this bond market rally. Kevin Guinness is going to be

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Speaker 1: on with us to shortly from Raymond James here in

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Speaker 1: New York today. He's also going to talk about the

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Speaker 1: bank stress test and why the Fed keeps raising the

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Speaker 1: bar for banks that are probably in better shape and

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Speaker 1: they've been in a long time. Now, let's get to

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Speaker 1: Katherine Cordie. She is in the Bloomberg newsroom with the

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Speaker 1: Bloomberg Business Flash, Thank you Kathleen and Bloomberg Taking Stock

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Speaker 1: brought to you by Sector Spider E t S. Why

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Speaker 1: buy a single stock when you can invest in the

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Speaker 1: entire sector? Visit sector spdrs dot com or call one

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Speaker 1: eight six Sector e t F. This stock market is

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Speaker 1: extending yesterday's games as global markets continue to recover following

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Speaker 1: Britain's vote to make a break with the European Union.

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Speaker 1: There's speculation that policymakers will continue to counter the effects

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Speaker 1: of the withdrawal. Jim Paulson, chief investment strategist at Wells

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Speaker 1: Capital Management, says the market can continue to advance. I

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Speaker 1: really think there's good odds that we're going to set

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Speaker 1: record highs before the year's out. Here in the sp

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Speaker 1: there was some good things going into Brexit. Here we

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Speaker 1: we we've had a very broad based rally off the

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Speaker 1: January February Lowe's, which was unlike the rally we had

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Speaker 1: last August, or or the even the one we had

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Speaker 1: from the almost correction in two fourteen. Those were narrow,

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Speaker 1: narrow based rallies. This is broadbay. Can we check the

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Speaker 1: markets every fifteen minutes throughout the trading day? Down Industrial

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Speaker 1: average is up two hundred sixty five points one and

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Speaker 1: a half percent, trading at seventeen thousand, six hundred seventy three.

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Speaker 1: SMP five fundered up at thirty four points one point

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Speaker 1: six percent, trading at two thousand sixty nine. The nastack

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Speaker 1: is hired by ninety points one point nine percent, trading

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Speaker 1: at eighty one. West Texas Intermediate crude oil up a

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Speaker 1: dollar seventy nine a barrel three point seven percent at

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Speaker 1: forty nine sixty five. Spout gold up ten dollars twenty

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Speaker 1: cents an ounce at thirty eight ten, and the tenure

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Speaker 1: treasury unchanged with the yield of one point four six percent.

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Speaker 1: And now let's get an update and some of the

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Speaker 1: other stories were following today on Bloomberg Radio. Thank you,

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Speaker 1: Catherine from the Bloomberg Newsroom. I'm Julie Hyman. Survivors from

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Speaker 1: Tuesday's terror attack and Turkey are telling their stories. Stephen

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Speaker 1: Nobille was at the airport in Istanbul with his wife

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Speaker 1: when the attacks began. He describes his desperation when he

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Speaker 1: suddenly realized his wife had disappeared. I saw the sea

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Speaker 1: of people flooding towards me, and I was just pushing

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Speaker 1: through the trying and get to to her. I was

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Speaker 1: praying God that she didn't leave the area. As long

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Speaker 1: as I could find her, at least I could take

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Speaker 1: her safety. And then that's when I saw him in

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Speaker 1: the corner and I saw the bullets flying. Now Beale's

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Speaker 1: wife survived the attack. Meanwhile, Sam Spinado's flight had already

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Speaker 1: taken off from the airport in Istanbul when she learned

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Speaker 1: of the attack. She landed safely in Atlanta, thanking God

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Speaker 1: I was in the air and that he was watching

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Speaker 1: over me and that I was. No one is claiming

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Speaker 1: responsibility for that deadly attack at the airport in Istanbul,

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Speaker 1: but Turkish authorities are blaming Islamic State. Forty one people

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Speaker 1: were killed, another two d and thirty nine were wounded.

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Speaker 1: President Obama offered his condolences to the people of Turkey.

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Speaker 1: Authorities say a terminal at JFK Airport was briefly evacuated

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Speaker 1: this morning after a police dog flagged an unattended bag.

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Speaker 1: A spokesman for airport police says roads in and out

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Speaker 1: of JFK's Terminal five were closed for about an hour.

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Speaker 1: The terminal was reopened after bomb squad officials gave the

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Speaker 1: all clear former Nassau County Executive Thomas Swazi one of

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Speaker 1: five way Democratic primary race in the Long Island district

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Speaker 1: of retiring Democratic Congressman Steve Israel. Swazi will face Republican

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Speaker 1: Jack Martin's in the general election. Swazzi ran unsuccessfully for

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Speaker 1: the two thousand six Democratic gubernatorial nomination, losing to Elliot Spitzer.

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Speaker 1: Global News twenty four hours a day, powered by more

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Speaker 1: than twenty six hundred journalists and analysts in more than

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Speaker 1: one hundred and twenty countries from the Bloomberg Newsroom. I'm

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Speaker 1: Julie Hyman. This is Bloomberg Catherine. Thank you. Now, let's

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Speaker 1: get an updated a bench marks down Industrial Average up

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Speaker 1: two hundred sixty two points, trading at seventeen thousand, six

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Speaker 1: hundred seventy two. Smp F I founded up thirty three

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Speaker 1: points at two thousand sixty nine. NAZAC higher by eighty

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Speaker 1: nine points, trading at forty eight one. And that's a

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Speaker 1: Bloomberg business flash. Is taking stock the Fed in focus

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Speaker 1: on Bloomberg Radio taking a look at the bond market now.

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Speaker 1: Interest rates across the globe are near record lows, many

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Speaker 1: of them now and agative territory, no wonder that investors

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Speaker 1: are finding yields attractive in the longest dated corner of

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Speaker 1: the thirty and have trillion dollar treasury market. The yield

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Speaker 1: on the thirty year, the longest bond of all, touching

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Speaker 1: lowest since February twenty fift Have we hit bottom on yields?

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Speaker 1: Have we hit the highs on price? The more this

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Speaker 1: goes on, the more you think we had. And yet

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Speaker 1: every time someone seems to be sure that's the case

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Speaker 1: and this is going to turn around, the rally just

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Speaker 1: picks up again. Kevin, get us this here had a

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Speaker 1: fixed income at Raymond James joining us in a New

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Speaker 1: York studios today, Kevin, welcome. You know the image I

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Speaker 1: get is, you know lex say, if you're on a

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Speaker 1: boat and it gets takes on water and one and

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Speaker 1: keeps thinking, so everybody keeps trying to get up towards

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Speaker 1: the bow of the boats. That's what the third year

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Speaker 1: bond is now. Now it really is, And I think

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Speaker 1: if you look at it, um in the U s

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Speaker 1: in general and dollar denominated bonds of safety have become

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Speaker 1: the item of interest for the globe um SO and

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Speaker 1: there's very little to fear uh, from an inflationary damn

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Speaker 1: point or the U S economy heating up, which would

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Speaker 1: which would drive yields back up. So there's uh, they're

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Speaker 1: still room to fall an interest rate based on global conditions.

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Speaker 1: But more importantly, we're getting such a mixed bag out

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Speaker 1: of the US economy. It just adds to the appeal

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Speaker 1: of buying longer data securities. And of course the we

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Speaker 1: got stronger consumer spending for two months strongest is two

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Speaker 1: thousand nine. That's nice. On the other hand, the inflation

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Speaker 1: gage of the fet is watching is now down to

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Speaker 1: zero point nine, even farther away from two point oh.

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Speaker 1: How much of that argument that, you know what, there's

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Speaker 1: more growth, you know, you might even get two and

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Speaker 1: a half percent this year on GDP, but the inflation

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Speaker 1: pressures are not there. How much is it that, Kevin?

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Speaker 1: If I'm like you, I'm I'm dealing with investors all

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Speaker 1: of the world, big institutions. How much is it also

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Speaker 1: just because there's been so much of this move towards

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Speaker 1: negative rates. Look at the g g b s, the

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Speaker 1: Japanese government bonds minus zero point two for the German

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Speaker 1: bull that's a tenure minus one point roughly, which is

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Speaker 1: that which is the big driver? Is it both? Well?

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Speaker 1: It is both. But I think, um, if you're a

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Speaker 1: big institution UM and you're looking to uh, let's say

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Speaker 1: you're a big bank and you're not making loans that

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Speaker 1: where your marginal lies. UM, you have with a lot

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Speaker 1: of cash still coming in, very little moves in which

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Speaker 1: to make in your portfolio that don't include domestic bonds

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Speaker 1: and specifically U S treasuries if you want to remain

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Speaker 1: safe enough to curve for when this thing does turn,

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Speaker 1: if it ever turns, or we just become Japan's economy.

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Speaker 1: But but mostly it is the return of choice. And

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Speaker 1: if you go outside of the US, returns and risk

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Speaker 1: and liquidity um aren't there. So you see the flood

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Speaker 1: of the money in it, but you also see that

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Speaker 1: money staying here, uh, taking small risk bites along the way,

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Speaker 1: searching for yield that they're not getting from typical ending.

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Speaker 1: So how do you play this? Then you just look

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Speaker 1: at this as the benchmark and say, okay, I know

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Speaker 1: what I'm you know what, I'm gonna build a bond portfolio.

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Speaker 1: One where do you buy bonds if you want to

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Speaker 1: you want to hold them maybe and actually learn the

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Speaker 1: yield seems like an old fashioned thing now because you

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Speaker 1: can't earn my yield on anything now. Well, probably the

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Speaker 1: you know, the oldest good story in the bond book

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Speaker 1: right now continues to be tax free bonds UM and

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Speaker 1: because it not only provides absolute yield UM, it provides

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Speaker 1: and I'm talking about high quality municipal bonds in particular, UM,

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Speaker 1: the yield, the safety liquidity, and then the taxable equivalent

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Speaker 1: returns when you compare it against a corporate bond or

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Speaker 1: a mortgage bond or something that in the taxable space, UH,

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Speaker 1: it's a hundred basis points or better in yield pick up.

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Speaker 1: And so a lot of that money has been flooding

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Speaker 1: into the muni space. The taxable muni space is even

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Speaker 1: better than the corporate space UH defaults or lower yields

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Speaker 1: or higher better advantage. So it's a it's a small

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Speaker 1: game to play, but there's a big enough market to

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Speaker 1: UH to accommodate investors. So last week we got the

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Speaker 1: first let's look at the bank's health in the first

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Speaker 1: round of stress tests. We get the second version of

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Speaker 1: it today. I think can make a really good point

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Speaker 1: in a note recently that the actually the banks are

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Speaker 1: in better shape than ever. But it's if I'm understanding

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Speaker 1: you correctly, it's almost like the FED keeps raising the bar.

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Speaker 1: That doesn't sound good for banks. And why is the

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Speaker 1: FED doing that? Well, there's two things going on. Obviously

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Speaker 1: in these stress tests. The banks want to pass them,

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Speaker 1: so they put you know, a lot of liquidity um

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Speaker 1: uh in capital on their books uh, so that they

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Speaker 1: can repay shareholders. To the FED wants to make sure

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Speaker 1: that the banks can absorb losses, have liquidity, continue to

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Speaker 1: lend if there's uh an O eight style crisis. So

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Speaker 1: what they've done is say, okay, oh eight becomes now

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Speaker 1: the benchmark for what we look at when stressing banks,

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Speaker 1: and let's see if we can't take it a little further.

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Speaker 1: Uh And and how how do they react in these scenarios? So, UM,

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Speaker 1: I think that the FED will continue to do that.

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Speaker 1: They will continue to look for something bigger and more

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Speaker 1: substantial than ten percent unemployment. Half of the equity portfolio

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Speaker 1: is falling apart, fifteen seconds left. Any any when it

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Speaker 1: comes to big banks and corporate bonds, is there anything

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Speaker 1: that you like? Um? The yes, you can just go

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Speaker 1: straight up the curve um and look at at the

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Speaker 1: JP Morgans in the world and the Wells Fargoes and

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Speaker 1: some of the stronger banks, and and get spread off

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Speaker 1: of their corporate debt um. The rest of it, though,

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Speaker 1: becomes more of a safe haven play, all right. Kevin

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Speaker 1: gid us so happy he's joining us in studio today.

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Speaker 1: He's had a fixed income at Raymond James. We're continue

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Speaker 1: to follow the markets today, from stocks to bonds and energy.

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Speaker 1: We're gonna also be looking at Turkey after the terrorist

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Speaker 1: attacks on the airport there. We're going to find out

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Speaker 1: what it means for the president and the economy. On

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Speaker 1: Blood Brig Radio Ben in Focus brought to you by

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Speaker 1: Willoughby since eighteen ninety eight, New York City's boutique camera

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