tv Bloomberg Markets Americas Bloomberg May 17, 2018 1:30pm-2:01pm EDT
aircraft in within 30 countries. net not -- netanyahu spoke in jerusalem today. we have to fight terrorism and fight sponsors of terrorists. we are doing it in the middle east. it encompasses today the entire world. --stand establishing a military presence on its doorstep and iran is fighting alongside the forces of in thatlotte al-assad country'civil war p are foreign minister's are holding an emergency meeting three days after the opening of the u.s. embassy in jerusalem and the violence along the gaza border. the arab league has already condemned the location of the embassy and it is unknown whether it will take any further action after the meeting in cairo today. secretary of state mike pompeo met with their president at the state department today.
the white house meeting with president trump on wednesday, which focused primarily on trade, afghanistan, and security cooperation. afghanistan's's northern border and they supply a crucial supply route for american forces. special counsel robert mueller be turning his attention to president trump'political advisor roger stone. number hit -- of stone's associates have been brought in for questioning in the last weeks. be turning his attention ties to russia and wis founder julian us on he released thousands of stolen democratic riemer emails. global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. questioned about hisi am mark crumpton. this is bloomberg.
shery ahn: live from bloomberg world headquarters in new york, i'm shery ahn. amanda: i am amanda lang. we are joined by our bloomberg audiences. here are top stories we're following from around the world. u.s. stocks are mixed as prices boost energy producers. we speak with president and ceo jason brady on why he thinks we are entering a slowdown in the global economy. the, we hear from investment board ceo mark about the 12% annual returns and where in volatility. greenlight capital down 25% from the end of 2014. a quick check of the major averages. we see u.s. stocks trading within a narrow range. the dow falling 1/10 of 1% and
the s&p 500 holding steady. gainingenergy stocks and we have other sectors such as utilities losing ground. the nasdaq is falling 1/10 of 1%. are looking a little mixed. 10 year yields are reversing losses. past three point 1%, the highest in seven years and it is worth mentioning we are continuing to see treasury volatility. stock selloffst we have seen in early february now. the 10 year yield consolidated well above that level. >> of course, we are also watching a price of oil. it has an effect on energy stocks and also on the u.s. dollar, brent is above 71. it is actually above 80.
happens toout what supply and iran is in the picture and open members have said they have managed their this is a success story. a u.s. dollar still strengthening here. have a look at the bloomberg terminal. you is a look and it shows the extent to which small caps are outperforming the broader market. it is something you would expect typically in a rising rate environment. it is interesting to see the shift and i believe it would be fueled by a rotation to smaller domestic players. chart. a >> higher after brent crude touched $80 per barrel. the president and ceo, thank you for your time. amanda and i were talking about
this rotation that we are seeing a markets. sectors andve other utilities being down. it seems to be cyclical sectors. how long will this last? great question and what we seeing is the effect of higher rates. it is rate sensitive. ise cyclical, that ultimately the higher commodity prices. it will weigh on the global economies. and actually causing a plateauing of any growth we are seeing. that is what is happening now. a time ofntering global slowdown. we are obviously still seeing a lot of enthusiasm in equity markets.
is the key. what you have to position for is thinking about your portfolio and how you might react to volatility. there are things that react positively. growth stocks as an example. growth will be something with significant upside and downside as well. a lot of volatility in the upside. a lot of on sectors and things things we invest in and other parts of portfolios, those will be a little tougher because those react negatively to volatility. it is really about positioning ourselves to understand outcomes are a lot wider than people believe. >> does that mean we should not stick to the equities portfolio allocation? >> yes. that is a really things we invet in and other parts important point. haveiggest problem we will is actually the asset allocation issue.
generally, that home base of the very textbook example, when you have volatility, especially to the downside, bonds will help you and we are now seeing that come from changes we have talked about earlier. that volatility, the thing that was a safe unit was the cause of volatility. been working so far this year. i expect the challenge to continue. it is a week issue for a lot of folks. >> when you go down to specific sectors come what do they bring to the environment given the context you see at the end of the cycle? >> sure. one key piece is what is different? andyone looks back to 08 says financials, we should be scared of them. there are things to look at and are difficult, but banks are very well capitalized and have been benefiting from higher rates. there is a place where, if you
go back to the 2000 recession, banks were a safe haven. it will not always be the same. things that benefit from higher rates i think will always be more successful and things that are more safe havens like staples or utilities, maybe it is not as defensive as people might think you have to change your way of thinking. >> how about cash? half -- cash is a lot more interesting than it has been in some time. it sounds crazy but you're getting a real return on short-term fixed income. in a way you have not seen in almost a decade. that is really changing a lot of asset allocation and the value of the where you want to be in fixed income. we heard a lot of curve inversion. all that means is as the front and were -- rises, you get paid much risk. take as to me, it sounds like a good trade-off. does that leave you on
inflation and fears of inflation pressures? jason: that is part of that piece. you are seeing demand function being significant. in wageinvestments inflation and price inflation come through. as he said at the beginning, it is the cause of a much tougher road ahead. that inflation continues to rise. >> great to have you with us. coming up, my interview with the ceo of the management pension fund, this is bloomberg. ♪
shery ahn: this is bloomberg markets. amanda: the pension plans investment board just reported annual returns of 12%. the question is where will it seek growth with volatile stocks and low yield in bonds? i spoke with the ceo in the bloomberg first interview. >> we look everywhere, all over the world. public and private assets, half is in privateio assets. the remainder is in public assets around the world. ultimately, diversification is incredibly important for us.
is theorth america biggest market we have, in europe, 20% in asia, and a growing amount in latin america, the geography is across all asset classes. we're looking for investment. are balancing that against the need for a long-term safety. you do not have to worry so much could have as, you terrible year at any given time. >> equity exposure is the biggest risk we run. it will be for many years. when you look at the annual report, one year in 10, we lose at least 12.5%. constant. the key for us is to make sure we have been sufficiently compensated for the risk we are taking. what our team is doing globally on every single investment we make.
a fantastic run for five years, --1% and eight point more depressed returns for the next few years. >> investors to find the deals that make sense for you? >> we are working harder to find value. there are record amounts of capital for private assets and private equity and infrastructure and real estate and public markets are generally quite full. we have to work hard and find things that are a little more competition in things that take a little more time to get to the returns that are required. so yes, it is hard.
>> you are pivoting toward emerging markets. a third of the large fund will -- 2025.by 25 does that up the risk profile of the fund? -- 2025. >> yes. today, we are on a church at portfoliotrategic which dictates a long-term construction or guides that, it will be a 22% by 2023. we are lifting that up to about one third of the fund and emerging markets in the longer term. we portfolio which dictates will make sure wg the right opportunities. we like underlying drivers of emergency markets. >> tell me what worries you most in the world. the rising yields? what are you watching? >> the rising yield environment, for the moment it is happening for good reason, because
economic growth is robust in the u.s. and it is happening -- having fiscal stimulus, record low employment. when you look at household demand, it is very strong, confidence is strong, consumer confidence is strong, retail sales is strong. the underlying drivers of all of that are good. happening for a good reason right now. spike. see inflation talking about how this could be 1967, and i had to look up what happened. a low inflation for a long time. the other thing we keep an eye on is rising populism in the told and whether that leads the policies that are less friendly to international investment and trade. particular investment that we invented from -- we hope the
policies can continue. we have seente, trade protectionism globally. is that thinking about where to invest? has been a driver of overall economic growth. typically, trade and investment are often closely connected we want maximum opportunities to deploy the long-term capital around the world. we hope the markets stay open for investments and we keep an eye on whether policies will change in a way that is less friendly. ceo, mark. someme now for a look at of the biggest business stories in the news right now. tesla may need $10 billion in
funding by 2020 to pay for the electric carmaker operation and a likely expansion into china. elon musk has been cutting costs to avoid that capital this year. the trump administration released a list of drugmakers he says are gaming the system to keep rises high. rivals say they are blocking attempts to create cheaper and generic versions of the product. a rep. meng: costs more than $100,000 per year. todays launching interest . a shopping fee for customers will be in hobbies and will be theyto personalized what see. byy trying to revise itself moving from mostly older men for their customer base to women and millennials. is your business flash update. coming up, a midlife crisis.
shery ahn: legendary hedge fund or david einhorn has had a rough couple of years. despite his hedge fund experiencing its worst underperformance ever, he continues to stick to his message and keep his investments intact. so far this year, he has handed investors a 15% loss, bringing declined to a staggering 25%, one of the worst showings among peers. joining me now, it is not surprising investors have bolted
here he defends his message. what is he saying? have has been saying i been doing this for a long time and markets will come back to normal. joining mea lot of things have . a lot of his peers have made react, whether it is using more driven strategies or buying into growth stocks. he has stuck to his values method. kathy's great story today lays out his thinking that he will be right in the end. , how long doon is you have to wait for to be right? is this a situation where his strategies will work went equity markets come off the highest level? thing about his underperformance is down 25% in the last few years, that is the market that has done incredibly well. that is really the disconnect there.
theory is in a more muted environment, value could do better, but really, we do not know what the next cycle will look like. you have some of these that continue to do well and the question is, will investors give him the time to show whether he will be proven right or not? he does have kind of a core group of the neither disbelievers who say, it is a smart guy who is not all of a sudden dumb. >> yes. you have mentioned that his .eers adopted a new method maybe technology and machine learning and so on. we know jpmorgan is using advances to bring forward other types of alternativewe know jpmg investments . tell us about the story. >> the idea is using technology
to bring together a lot of smaller investors rather than one rich individual. the minimum used to be for the product that jpmorgan is offering $10 million and now, you can get in for as little as 100,000. it is about bringing together groups of smaller investors and really expanding the investor of these products. they have not been as popular in recent years given that you have the shift to passive. this opens it up to more people who could be interested. the question going forward will be how clearly are the risks involved explained? if you are expanding this to people who have not invested in the past, they tend to be less liquid. the question is can the adoption of this take off? didn't occur to me to
wonder, the alternatives can be very spiky. draw andhis will investors that are may be less sophisticated, -- >> it is a question you have seen in the liquid alternative state and some of the tracking funds. there are a lot of ways that get then brought out to exposure to nontraditional bonds. the interestike, to these products will hang around. >> who is offering the new technology? how are they working with jpmorgan? this particular instance, there are a number of players in this space. i capital has been a popular one. other big financial firms have in either investors or worked with them so this seems to be
something catching on not just the jpmorgan. >> thank you so much for that. at the white house, we will bring you that live on bloomberg. >> this is coming out of time when the president has pulled out of the iran nuclear deal and also when the u.s. and aluminum tariffs in europe are taking effect in the last few weeks. a lot of people are watching for the meeting. any onse, if you missed the program today, g tv is the function on bloomberg. you can access them and save for future reference. live from new york and toronto, this is bloomberg. ♪ is bloomberg. ♪
julia: we are live in bloomberg headquarters over the next hour. here are the top stories we are covering. boardroom battle. cbs and its top shareholder is headed for a showdown is the company meets to decide whether to dilute her power. brent touches $80 a barrel. and mmusks'momentum. the billionaire has big plans but concerns continue to amount about tesla's cash crunch. u.s. markets closing in two hours time. first we have a decision out of mexico. central bankxican keeping its rates unchanged at 7.5%. that is what we expected by bloomberg's economics. the economists are also saying they think there will be a more hawkish tone