Latest / Bloomberg Intelligence / Geneva's Gimbel: 2017 Will Be Very Good Year for Stocks (Audio)

Transcript

Geneva's Gimbel: 2017 Will Be Very Good Year for Stocks (Audio) · Bloomberg Intelligence

• 0:03
  Speaker 1: Global business news twenty four hours a day. If Bloomberg
• 0:06
  Speaker 1: dot Com the Radio plus Global Act and on your radio.
• 0:10
  Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.
• 0:14
  Speaker 1: I'm Katherine Cowdery Will. The stock market is moving higher
• 0:17
  Speaker 1: as traders feel less anxious about Britain's vote last week
• 0:20
  Speaker 1: to leave the European Union. Mark Kearney signaled the Bank
• 0:23
  Speaker 1: of England could cut interest rates within months as a
• 0:25
  Speaker 1: central bank tries to shield an economy rattled by the
• 0:28
  Speaker 1: shock of Brexit. Now Standard in Pores has just reiterated
• 0:32
  Speaker 1: its rating on the United States at double A plus.
• 0:36
  Speaker 1: It affirmed its ratings the SMP five hundred on track
• 0:39
  Speaker 1: for a third straight quarterly advanced. All ten industry groups
• 0:42
  Speaker 1: in the s in the benchmark are gaining, with consumer
• 0:45
  Speaker 1: staple shares up the most. We check the markets every
• 0:48
  Speaker 1: fifteen minutes throughout the trading dawn. Bloomberg Radio doll Industrial
• 0:51
  Speaker 1: average of one hundred eighty seven points one point one
• 0:53
  Speaker 1: percent at seventeen thousand, eight hundred eighty one. SMP five
• 0:57
  Speaker 1: funded up twenty three points again at one point one
• 0:59
  Speaker 1: percent trade at two thousand ninety three. Nazac hier By
• 1:02
  Speaker 1: forty nine points, a gain of one percent, trading at
• 1:06
  Speaker 1: eight less Texas Intermedia Crude oil down a dollar fifty
• 1:09
  Speaker 1: three of barrel, three point one percent of forty eight
• 1:11
  Speaker 1: thirty six s about gold down three dollars thirty cents
• 1:14
  Speaker 1: announced of thirty three sixty ten. Your treasury up eleven
• 1:17
  Speaker 1: thirty seconds with the yield of one point for seven percent.
• 1:20
  Speaker 1: And that's a Bloomberg business flash, Catherine Cawnerie, thank you
• 1:24
  Speaker 1: so very much. Market volatility, the Brexit vote, so many
• 1:29
  Speaker 1: things hanging over investors head. Is it time to look
• 1:32
  Speaker 1: at an e t F? And if so, which kind?
• 1:35
  Speaker 1: Now it's time for our et F report with Catherine Cowndry.
• 1:38
  Speaker 1: It's a tale of two different kinds of e t
• 1:40
  Speaker 1: F investors told by flows after the UK vote to
• 1:43
  Speaker 1: withdraw from the European Union. We saw a lot of
• 1:46
  Speaker 1: the hot money. This is the big institutional money that
• 1:49
  Speaker 1: moves very short term. Leave a lot of the risk
• 1:51
  Speaker 1: on ETFs like s p Y and the cues. Bloomberg
• 1:54
  Speaker 1: Intelligence analyst Eric Deltuna says. In contrast, retail investors seemed
• 1:59
  Speaker 1: to shrug off the UK vote. If you look at
• 2:01
  Speaker 1: the e t F they like to use Vanguarden, Schwab,
• 2:04
  Speaker 1: they all took in money just like normal. You know,
• 2:06
  Speaker 1: there's a drip drip aspect to Vanguarden Schwab flows, and
• 2:09
  Speaker 1: that drip kept coming right through Friday, right through Monday.
• 2:11
  Speaker 1: No big deal about Tunis takes a closer look at
• 2:14
  Speaker 1: those flows. Since the Brexit vote, Spider's et f s
• 2:17
  Speaker 1: lost four billion, Vanguard took in a billion, Schwab a
• 2:20
  Speaker 1: couple hundred million. That to me shows a difference in
• 2:23
  Speaker 1: terms of how scared investor. Mel Juna says. There is
• 2:28
  Speaker 1: one e t F that's been popular with both institutional
• 2:31
  Speaker 1: and retail investors this year, and that's the Spider Gold
• 2:34
  Speaker 1: Chairs Taker d l D is taken in more than
• 2:36
  Speaker 1: twelve billion dollars so far this see here. That's your
• 2:39
  Speaker 1: Bloomberg ETF report. I'm Katherine Calderie. You're listening to Taking
• 2:45
  Speaker 1: Stock with Kathleen Hays and Pim Box on Bloomberg Radio.
• 2:49
  Speaker 1: The future more uncertainty than ever, it seems after the
• 2:53
  Speaker 1: Brexit Fox. We've been talking about that a lot on
• 2:56
  Speaker 1: Bloomberg as you know. Now we want to talk about
• 2:58
  Speaker 1: it with someone who has been watching in the markets
• 3:00
  Speaker 1: for many years and travels around the world speaking to
• 3:03
  Speaker 1: investors looking for companies to invest in. And that's Don Gimbel.
• 3:06
  Speaker 1: He's portfolio manager at Geneva Investment Management, which is based
• 3:11
  Speaker 1: in Chicago. Don joins us today from Helena, Montana. Don,
• 3:15
  Speaker 1: welcome back. It's some good good to have an opportunity
• 3:20
  Speaker 1: to discuss what has been beaten to death for the
• 3:22
  Speaker 1: last four days. Well, it's kind of hard not to
• 3:24
  Speaker 1: beat to death, or isn't it, Because it's a pretty
• 3:26
  Speaker 1: big deal. It is a huge deal, and I think
• 3:30
  Speaker 1: what is most interesting is how little anybody knows about
• 3:34
  Speaker 1: what the future holds, because this is a really monumental
• 3:40
  Speaker 1: sort of shift, which is, uh, what what the British
• 3:44
  Speaker 1: did is only the tip of the iceberg. I mean,
• 3:47
  Speaker 1: we we see people upset about the status quo all
• 3:52
  Speaker 1: over the world, and uh, I mean the United States
• 3:56
  Speaker 1: is not has not escaped that. Look at people we
• 4:00
  Speaker 1: have running for the highest office in the land. These
• 4:04
  Speaker 1: are people that the voters are saying, we want change,
• 4:09
  Speaker 1: and well that's what happened in England. We want change.
• 4:12
  Speaker 1: We're not sure what we want, uh, and we're not
• 4:15
  Speaker 1: sure what it means, but we don't like what the
• 4:18
  Speaker 1: way it is as as economies change and develop and
• 4:23
  Speaker 1: mature around the world, people who were used to the
• 4:29
  Speaker 1: status quo somehow feel as though they're being excluded from
• 4:34
  Speaker 1: what's going on, and it's a very uncomfortable situation and
• 4:39
  Speaker 1: they're they are reacting, some would say irrationally. Uh to
• 4:44
  Speaker 1: to what to the normal change in the way governments
• 4:49
  Speaker 1: and countries work And this vote last week is simply
• 4:55
  Speaker 1: a manifestation of that. But we have to look more
• 4:59
  Speaker 1: closely at at how to how it affects politics, how
• 5:04
  Speaker 1: it affects government, how it affects markets, and then how
• 5:07
  Speaker 1: does it affect individual companies? And I think that's what
• 5:11
  Speaker 1: the latter is something that that hasn't we haven't spent
• 5:15
  Speaker 1: enough time disgusting. Well, let's do right now, how does
• 5:18
  Speaker 1: it gonna and how so, how do you start that
• 5:21
  Speaker 1: kind of gauging analysis, how it affects individual companies where
• 5:26
  Speaker 1: they're based, the size the industry there, and tell us
• 5:28
  Speaker 1: how how you're doing that done? Well, it's as well,
• 5:32
  Speaker 1: I'm glad you asked, because that's what I wanted to
• 5:34
  Speaker 1: talk about. Um. When when it comes to investing, and
• 5:38
  Speaker 1: we're investors, were not speculators, we're not traders were investors.
• 5:43
  Speaker 1: So the first thing we look at is the quality
• 5:46
  Speaker 1: of the management of the companies in which we are investing.
• 5:49
  Speaker 1: And if you, if you are invested in companies that
• 5:53
  Speaker 1: have great management, have a proven record of of knowing
• 5:59
  Speaker 1: what's going on, or at least having a good idea,
• 6:02
  Speaker 1: having a a good business plan that that can be modified, you,
• 6:09
  Speaker 1: you're a long way down the lane, uh in in
• 6:12
  Speaker 1: picking good investments. Now. Are there going to be huge
• 6:15
  Speaker 1: changes in in the relationship between the UK in Europe
• 6:21
  Speaker 1: and the next five years? Well, definitely. Uh. Until Article fifty,
• 6:27
  Speaker 1: though is brought to bear, nothing's going to change in
• 6:32
  Speaker 1: the UK. And the Prime Minister is already on record
• 6:36
  Speaker 1: is saying he doesn't want to do anything before before
• 6:38
  Speaker 1: the fall, and people in Europe are saying that's not
• 6:42
  Speaker 1: good enough. You've got to do it now if you're
• 6:44
  Speaker 1: going to do it. So I think that there's a
• 6:46
  Speaker 1: lot of of indecision going on in the UK as
• 6:50
  Speaker 1: to what the time frame is, much less try to
• 6:53
  Speaker 1: address what the new relationships are going to be. But
• 6:58
  Speaker 1: as an investor, I look at the companies in which
• 7:00
  Speaker 1: I'm invested, and I know that the management of those
• 7:04
  Speaker 1: companies because I talked to them on a regular basis,
• 7:07
  Speaker 1: I know that they are Uh. They have already given
• 7:11
  Speaker 1: a lot of thought. They didn't think this was going
• 7:13
  Speaker 1: to happen, but it did. But they've been given it
• 7:15
  Speaker 1: a lot of thought as to are they positioned to
• 7:19
  Speaker 1: to continue to do well. And my answer is, you know,
• 7:23
  Speaker 1: in the industries that I particularly like are things like
• 7:27
  Speaker 1: pollution abatement, uh, things things like transportation, things like food
• 7:33
  Speaker 1: or these are basic industries. And if you've got companies
• 7:36
  Speaker 1: in those fields, uh that that have experience and are
• 7:41
  Speaker 1: well I have proven track records, these companies will do
• 7:46
  Speaker 1: well regardless of whether they're manufacturing operation is in the
• 7:52
  Speaker 1: UK or in France, or in the United States, or
• 7:55
  Speaker 1: in Brazil or in China. Uh. These are companies that
• 8:00
  Speaker 1: anticipate and look at the alternative possibilities and when when
• 8:06
  Speaker 1: something like this comes out of the blue or not
• 8:09
  Speaker 1: quite out of the blue, but certainly surprises, there is
• 8:12
  Speaker 1: a plan. And I think that over what the stock
• 8:15
  Speaker 1: market this week has said, as initially, oh my gosh,
• 8:20
  Speaker 1: the world is ending, then the realization that it's not
• 8:24
  Speaker 1: ending and we we need to uh sit down and
• 8:31
  Speaker 1: decide what what companies are going to do well, not
• 8:36
  Speaker 1: not just because of the industry they're in, but the
• 8:39
  Speaker 1: companies that have the management that are smart enough to
• 8:42
  Speaker 1: figure out where we're going. Okay, I want to turn
• 8:44
  Speaker 1: to China. Because you invest in Chinese companies, you travel
• 8:47
  Speaker 1: to China. The yuan touched its lowest levels since January.
• 8:51
  Speaker 1: Earlier today, there was a report that the PBOC, the
• 8:53
  Speaker 1: People's Bank of China, is ready to let the uan
• 8:57
  Speaker 1: its currency weekend. Now, it's not bad. For a while,
• 9:00
  Speaker 1: traders were wondering if they really had shifted their stance.
• 9:03
  Speaker 1: What do you make of this this speculation, what do
• 9:06
  Speaker 1: you make of what the PDOC may do done? Uh? Well,
• 9:09
  Speaker 1: the first the first comment is that the PBOC is
• 9:13
  Speaker 1: a very bright group of people, and they've they've been
• 9:18
  Speaker 1: working on what the real value of the yuan is
• 9:22
  Speaker 1: and what what its value should be against the US
• 9:25
  Speaker 1: dollar as well as against the yen and the euro.
• 9:28
  Speaker 1: And uh, there is there is an economic change going
• 9:32
  Speaker 1: on in the People's Republic, which a few years ago
• 9:36
  Speaker 1: was almost completely dedicated uh to their the exports of
• 9:42
  Speaker 1: of of goods from the People's Republic and the juan.
• 9:48
  Speaker 1: The Hue government um AS has changed that and we're
• 9:53
  Speaker 1: seeing lots of change in China, which over a long
• 9:56
  Speaker 1: period of time is going to be very beneficial. I
• 9:59
  Speaker 1: would I would suggest that the yuan could weaken a
• 10:02
  Speaker 1: little bit from here, but not very much, because it's
• 10:05
  Speaker 1: it's not really in the in the in the interests
• 10:08
  Speaker 1: of the pr of the People's Republic. They have two
• 10:12
  Speaker 1: weak currency because they are now major importers of a
• 10:16
  Speaker 1: lot of things goods and services, and uh, a much
• 10:20
  Speaker 1: weaker you want would be a negative for the People's Republic.
• 10:25
  Speaker 1: Just quick, very quick, final question. Uh the sp five hundred?
• 10:28
  Speaker 1: Uh are we is it gonna we't gonna stee this
• 10:31
  Speaker 1: range two by the end of the year, Higher lord,
• 10:35
  Speaker 1: Just quickly, what do you think done? I would say,
• 10:38
  Speaker 1: we're in a trading range. It might if it breaks out,
• 10:41
  Speaker 1: it will break out on the upside and out the downside,
• 10:44
  Speaker 1: because I think two thousand seventeen is going to be
• 10:46
  Speaker 1: a very good year for stock markets around the world.
• 10:48
  Speaker 1: All Right, Don Gimble just creating the pathway to his
• 10:51
  Speaker 1: next interview on taking stuff. We're gonna have to find
• 10:54
  Speaker 1: out why seventeen is going to be so good. Portfolio
• 10:57
  Speaker 1: manager Geneva Investment Management of Chicago. Don joined us today
• 11:01
  Speaker 1: from Helena, Montana. I'm Kathleen Hayes. My co host, Pim
• 11:06
  Speaker 1: Fox is on vacation this week. And this is taking Stock,
• 11:10
  Speaker 1: and this is Bloomberg.