peter tchir and margie patel as well. this is bloomberg "real yield." ♪ ♪ tom: we welcome all of you worldwide. i am tom keene in for jonathan ferro. bloomberg "real yield," not final thoughts but because of the extraordinary nature of the week, kathy jones, margie patel, peter tchir with us. we are diving into the ramifications of this for the little guy. i don't know whether the little guy is $2000 or $100,000 or even a million dollars. what does the little guy do, pushed around by these institutional realities? kathy: at the end of the day, it has not changed that much. it is all about being diversified, understanding your time horizon, and making sure you have some safe assets. we have been emphasizing more on the safe assets lately because we are getting more defensive in equities and fixed income. but it hasn't really changed. you still need that diversification. tom: this is important, i'm going into the real yield here. ferro stays inside two years but , i'm going off of the actuarial assumption. the actuarial

peter share -- peter tchir. peter: i have not followed that credit in particular. i think on all of these, you have to do your due diligence, understand what you are getting. some of these companies that have been more in the tech space, some of their bonds have not done as well. because they may have a phenomenal equity story, which can rely on the prospects of growth, sometimes that does not necessarily translate into a great story on the other hand -- into a great debt story on the other hand. tom: kathy jones saying, don't ask me about the weed company. my compliance is watching. kathy: it is an interesting story. tom: i like that, very safe. but kathy, what is so important here is the tumult we are in, whether it is uber, lyft, the weed company. it has never been like this. so what does the retail investor to do, looking for nominal coupon that just possibly would be a positive real yield? it is not there, is it? kathy: no, and one of the things i have not been doing enough is taking duration risk. i think if we get a bounce in yield -- tom: can we translate t

peter tchir with us. kathy jones with us and margie patel with us. we are thrilled they could be with us today. i am even more thrilled jonathan ferro is not here. how about high-yield? we will talk to ms. patel about high-yield. arch dissension here. kathy jones saying maybe not, margaret patel saying load the boat. i have no idea what peter tchir is saying about high-yield. stay with us. this is "bloomberg real yield." ? tom: from our world headquarters in new york, i'm tom keene, in for jonathan ferro. people asking where jonathan is, he is on sabbatical. that is all there is to it. "bloomberg real yield" after this historic week. peter tchir is with us, kathy jones, and margie patel as we move through the weekend and drive the conversation into a tumultuous august end. we have to go to margie patel on the yield hog demand for credit. right now we are reaching for yield, we have to get there. the big issue -- goldman sachs had a note on this a couple hours ago -- on energy high-yield. is that another problem for high-yield, or was that market clea

collin martin, peter tchir, john bellows, thank you. this is bloomberg "real yield." ♪ ♪ this is the "best of bloomberg daybreak: middle east." court ruled the killing of jamal khashoggi was not premeditated. shares of saudi aramco slide. in lebanon snoop prime minister is named, tasked with forming a government to lead the country out of one of the biggest crises in decades. ♪ first

jonathan: still with us are peter tchir, iain stealey, noelle corum. we are betting on stimulus, and we are also betting that it will not be enough and will not work, because yields encore government bonds keep heading in the same direction. noelle: still a lot of uncertainty around the details and how they will take these bonds down, what they will dip into. that is one piece of it. on the other side, we have not seen stability that we need in growth yet either. the domestic side has held in quite a bit. of course, trade, trade uncertainty will still weigh on the european economy. until year-end, that is a big part of it. jonathan: the data in europe has been soft for at least 12 months, maybe more so. what has been striking about this week? the bund market always makes the headlines, but the big moves are coming from the italian market. it is not just the core rallying now, it is the whole complex, isn't it? which area of european fixed income are you participating in that rally right now? which area of european fixed income do you want to be present

collin martin, peter tchir, john bellows, thank you. this is bloomberg "real yield." ♪ ♪ >> a landmark deal for green finance. the e.u. comes to an agreement on governmental standards. that was the election and brexit set to happen, we speak to a ceo. she says we need new rules to safeguard the financial system. from money laundering to me fed mifid

collin martin, peter tchir, john bellows, thank you. this is bloomberg "real yield." ♪ here, it all starts with a simple... hello! hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! wifi up there? uhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your local xfinity store today. >> i'm taylor riggs in for emily, this is the best of bloomberg technology, this is where we bring you the top interviews from this we contact, coming up, the tesla turnaround, one analyst says it looks credible. we will hear from dan ives of wes bush, who raises the price target on tesla to 370 from 270. and 2020 picks, we are covering the big tech in the new year,

me are collinwith martin, peter tchir, and john bellows. on somei want your take of his comments, that we have pulled a lot of those returns in the ccc space specifically back into 2019. do you see that as being the case? we do to we think it will be difficult to mimic the returns we saw this year in the credit markets, especially high-yield. we have gotten to a point where spreads are low, prices are high, and the returns we saw this year frankly, will be difficult to follow, unless we see spreads go to all-time low levels. our guidance for investors is to be very defensive, suggest underweight in high-yield bonds, especially the junkie is part, like ccc's. yourutlook is to earn coupon. coupon payments will make up most of the return in 2020. taylor: peter, your take on credit in 2020? into december looking for this squeeze across the board. the first step is figuring out which credits benefited unfairly by the squeeze, start selling those. there will be a return to weakness for those weaker credits. we like cyclicals, autos, commodities.

collin martin, peter tchir, john bellows, thank you. this is bloomberg "real yield." ♪ [ dramatic music ] this holiday... ahhhhh!!! -ahhhhh!!! a distant friend returns... elliott. you came back! and while lots of things have changed... wooooah! -woah! it's called the internet. some things haven't. get ready for a reunion 3 million light years in the making. woohoo! -yeah! haslinda: hello, i'm haslinda amin. he is the central bank governor of one of the largest financial hubs in the world, singapore's ravi menon is betting big on fintech, exploring digital currencies, looking to take the lead of what the future of banking will look like at a time of global uncertainty. this is a conversation with the managing director of the monetary authority of singapore. avi menon, thank you so much for your time today. ravi: thank you, haslinda. haslinda: when it comes to singapore's innovation efforts, ne of the key areas is fintech and the monetary authority of singapore plays a huge role in that. in fact, some of the initiatives included revelat

peter tchir of academy securities and diana amoa of jp morgan are staying with me. we want to highlight some breaking news from dow jones. goldman sachs is reportedly set the 1mdb probein and agree to ongoing oversight of its compliance procedures in order to resolve the criminal investigation. our analysts at bloomberg intelligence has pointed out a guilty plea would have negative consequences beyond a fine. it would also need to get waivers from the u.s. labor department to manage pension tc to issuefrom the f securities. we will have more on this as the news comes out. this is bloomberg. ♪ viviana: you're watching "bloomberg daybreak." amazon is getting prepared for brexit. bloomberg has learned the world's largest online retailer is looking for its first warehouse in ireland. it would be used to fulfill orders currently shipped from the u.k.. amazon would have a problem with the u.k. doesn't agree on a trade deal that would ensure the smooth movement of goods across the irish sea. former worldcom ceo bernard ebbers has won early release from prison. part of a

nejra: peter tchir stays with us. turning to hong kong, we started the show with the update on the turmoil. authorities canceling flights after protesters swarmed the terminal building for the biggest disruption yet to the city's economy since demonstrations began in early june. joining us from the hong kong airport is bloomberg's yvonne man. great to have you with us. just give us an update of the latest because this is been an incredibly fast moving story, even today. vyvonne: we just heard that yvonne: we just heard that they will try to resume these flights tomorrow morning. that screen you are seeing here with bright red, most if not all of the flights this evening have been canceled, so the earlier flights were able to fly out. in terms of incoming flights, we are still hearing that some flags are landing here in hong --g come but things c signs have calmed down here. a much different scene from the violence we saw over the weekend. david: it seems to be regular now, every weekend there will have been demonstrat

still with us is peter tchir. welcome, james. give us a sense of where you think we are in our talks with china. james: it is hard to tell. quite frankly. i've never seen such a huge change in the consensus. in october and november things were very pessimistic. it did not look like a deal could be done in any conceivable time period. now there has been a lot of optimistic comments, including the one you just gave. i would say that consensus is there will be a trade deal. need toa lot of things be tackled first in order to have a comprehensive trade deal that will reassure the market. lisa: that is a good place to go. that would reassure the market -- what does the market need to get in terms of a trade deal in order to rally? peter: we need to get a trade deal in place. when it currency. we'd access to their market. people will downplay that we do not get enough intellectual property protection and that is why we will see a bit of self. -- a bit of sell. we can forget about the bad data and let markets rally. i do not think it is

alix: still with me, peter tchir of academy securities. diva agree that the melt up on mediocre news continues? peter: i actually think we are going to get surprisingly good news. i think we get trade resolution. i think europe is going to kick in with fiscal stimulus. it is going to come down to lagarde getting something accomplished. alix: is that going to be real substantial growth? you seem value start to outperform, but in the u.s., the weak balance sheet sectors are doing better. in europe, we still have a strong balance sheet to rally. how do you parse it? peter: i think you see better growth across the board that is not priced in. in the u.s., i think you see more of this continuing rotation where the laggards and underperformers can do better because not enough is priced in. some of the safety stocks that people are flocking to make you a little bit worse. i think bond yields go slightly higher. i think we see steeper yield curves. the u.s. treasury department is going to issue long dated bonds next year, maybe shift some of our i

still with us is peter tchir. would you buy gilt? gilt.: i would not touch there is too much uncertainty. i would avoid gilt. david: how much of this affects your overall? -- europe overall? peter: i think it affects europe, asia has its issues. the ecb seems to be handcuffed with brexit. is not theing bunds trade. it never works out. peter: i was long italy. italy was taking the right steps. i actually think the italy story is a long way from playing out. i think we will see some convergence. it will be more italian yield coming down. david: you see upside in italian bonds? peter: i do. this whole move away from austerity, austerity has not worked. maybe you spend more. try to get that economy going. as the ecb starts stepping back in, there is a good chance. the banking sector makes me nervous. i think that is going to continue to come down. people have overestimated the problems in italy. there are issues, but we will get through it. david: do we keep overestimating the problems in europe? spain is having a crisis with their budge

ofh us still is peter tchir academy securities. what you do today? peter: you've got to be very careful with risk today. i think the fed is pulling some support. me a littlepushes more risk off. i think equities pullback. alix: can you really go long on treasuries here? you even laughed as i asked that question. [laughter] peter: low rate bonds are not bad here. you don't have to take the interest rate duration risk. you can take a little bit of spread risk. you want to be cautious, though. i think some of what has been lost in the shuffle is all of the percentage of so much money in cash. cash is an asset class, especially when it is paying 2% to 2.5%. david: are there equities that make more sense? what about investment-grade versus high-yield? alix: i feel like investment-grade is better than high yield on the investment side. if equity is pulling back, we are going to see that. what i am not concerned is getting enough attention is the russell 2000 pulling back. i would be watching that. maybe you are supposed to start looking at european equitie

speaking of credit markets, peter tchir of academy securities says it may be harder to find value in the junk space going forward. >> one thing i look at in the high-yield space, for every dollar that comes into the high-yield, it is going disproportionately into bb. they don't want to own ccc and bbb. there are some companies that have benefited too much. it is time to be a credit picker. lighten up on what is risky. the value is not there the way it was a year ago. lisa: still with us is marilyn watson, matt hornbach, subadra rajappa. do you agree it is time to lighten up on high-yield debt? marilyn: going into next year when we have a moderate growth environment, i think it's really important to focus on the underlying fundamentals. i think we will see increasing dispersion between the performance of individual corporate bonds. this year has been very interesting. we have seen a higher number of upgrades than downgrades. a number of corporate focusing on deleveraging a little bit. in this environment, given the supply and demand dynamics, we still have a huge amount of demand comp

speaking of credit markets, peter tchir of academy securities says it may be harder to find value in the junk space going forward. >> one thing i look at in the high-yield space, for every dollar that comes into the high-yield, it is going disproportionately into bb. they don't want to own ccc and bbb. there are some companies that have benefited too much. it is time to be a credit picker. lighten up on what is risky. the value is not there the way it was a year ago. lisa: still with us is marilyn watson, matt hornbach, subadra rajappa. do you agree it is time to lighten up on high-yield debt? marilyn: going into next year when we have a moderate growth environment, i think it's really important to focus on the underlying fundamentals. i think we will see increasing dispersion between the performance of individual corporate bonds. this year has been very interesting. we have seen a higher number of upgrades than downgrades. a number of corporate focusing on deleveraging a little bit. in this environment, given the supply and demand dynamics, we still have a huge amount of demand comp

still with us is peter tchir of academic securities. s, treasuries,nd dollar-yen, gold. is this a trade for this week? peter: i think so. i think we will see some sort of extension. we will talk about negotiating. i don't think we are close to a deal, but i thing it will be enough to calm the markets. i don't think any disappointment is really going to push hard on markets, but i don't think we will have a big rally. david: it is interesting geopolitics are negotiating down the price in the markets. maybe they won't put on the full 25%. we've really discounted the expectations already. peter: right. i think expectations are very low. if we get something really positive, i think we see equities rally. i just don't know that we can see treasuries selloff a lot given how dovish the fed was last week. alix: do you think what happens friday determines what happens at the fed in july? peter: possibly. how negative it comes away. , is it us is key is versus china or the world versus china? i would like to see a global effort to say we are going to work together. that would be h

coming up, peter tchir, academy securities head of macro strategy on this risk on rally kind of day where it is a weaker dollar story, a cell phone story and a buy equities and sell bonds story. this is bloomberg. ♪ jonathan: from new york city for our viewers worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪ jonathan: coming up, global equity markets rising. hopes high as u.s. china trade talks resume. services data offsetting the gloom in manufacturing. lyrical tension hanging over the fed. the fed reportedly telling jay powell "i guess i'm stuck with you. " you are stuck with me. futures positive, the euro firmer. euro-dollar 1.1234. treasury yields up for basis points to 2.52. we begin with our top story. one thing on the mind of the market and the president. >> china. china. >> the story is mainly about china. >> the china story. >> the u.s. china trade. >>

coming up on the open, he will hit on all of this with peter tchir and we look at a market sent open as yields continue to grind their way lower. this is bloomberg. ♪ jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪ jonathan: coming up, the federal reserve meeting high expectations, setting the stage for rate cuts. the everything rally continues. stocks nearing a record. 10 year treasury yields reaching 2%, leaving the dollar on offer. the greenback weakening against every single g10 currency. good morning. here's your thursday morning price action. we are about to reclaim all-time highs of the cash open with futures up 28 and positive around one percentage point. treasuries with a bit of a bid again, yields coming into basis points. 2% is your yield. let's begin with the big issue. the era of patients is over. >> they set up the stage to be able to move in july. >> july. >> action at the july meeting. >>

smart conversation after a historic week, margaret patel on the high yield and peter tchir on the state of the market. ♪ dd ♪ francine: this is "bloomberg surveillance." president trump has a phone call with president xi coming soon. the chinese officials saying the u.s. plan for additional tariffs has pushed the two off track in resolving their dispute. yesterday beijing vowed to retaliate saying u.s. levies are a violation of the trade truce. james, when you look at the trade concerns, is this the sell-off and further inverted yield curve a product of trade concerns or is it something else deeper? james: i think the market is right to have concerns over trade. that the ticipate deal will get cut is looking unlikely on the basis that china believes they'll get a softer time negotiating with the democrats were they successful with trump. francine: what is this about, i keep hearing this is u.s. versus china supremacy? james: absolutely. francine: if this is it will last 125 years. james: and continue to bubble along and surface in various ways. but it's correct to say china has not

collin martin, peter tchir, john bellows, thank you. this is bloomberg "real yield." ♪ eÑ scarlet: i'm scarlet fu. this is "etf iq," where we focus on the assets, risks and rewards offered by exchange traded funds. ♪ scarlet: tale of two years. etf flows show caution reigned for most of the year until risk took over in november. how does that set us up for 2020? we get passive aggressive with the big three. blackrock, vanguard, and state street sound off on what is fueling the fire of etf adoption. and the holiday season calls for an etf whose motto may as we