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Loomis' Fuss Sees Quarter Point Rate Hike in December (Audio) · Bloomberg Intelligence

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  Speaker 1: Global business news twenty four hours a day at Bloomberg
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  Speaker 1: This is a Bloomberg Business Flash and Bloomberg World handquaters.
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  Speaker 1: I'm Charlie Pellett. The Dow, the SMP, NASDAK, they are
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  Speaker 1: all declining and right now we have got the SMP
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  Speaker 1: five hundred index slumping seventeen points, close to the low
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  Speaker 1: of the session at seven down eight tenths of one percent,
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  Speaker 1: thirteen minutes to go ahead of the closed down industrials
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  Speaker 1: down one fifty four points, down nine tenths of one percent.
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  Speaker 1: Nastank is down forty four points, a drop of eight
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  Speaker 1: tenths of one percent. The tenure up at ten thirty seconds,
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  Speaker 1: that yield one point five eight percent. Gold down a
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  Speaker 1: dollar fifty the ounce now to thirteen thirty six, a
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  Speaker 1: drop of one tenth of one percent. I'm Charlie Pellett,
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  Speaker 1: and that's a Bloomberg Business Flash. Charlie Pellett, thank you
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  Speaker 1: so very much. It's time now for the et F Report,
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  Speaker 1: brought you by Bentley University. What's your time of the
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  Speaker 1: finances a Verse and Managing asset allocations at JP Morgan
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  Speaker 1: have in common a business degree from Bentley University. Because
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  Speaker 1: business is everywhere, prepare here. Smart beta? What is it
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  Speaker 1: and what does it do? For this we turned to
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  Speaker 1: Catherine Cowterie. There are nearly eight hundred smart beta e
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  Speaker 1: t s by sun counts, and they vary in complexity
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  Speaker 1: from a simple change in waiting to multi factor products.
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  Speaker 1: Here's Bloomberg intelligence analyist Eric Beltunist on smart beta e
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  Speaker 1: t F s. I think for most people it sounds
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  Speaker 1: like something you get at the g n C store. Um,
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  Speaker 1: but it's not that hard to understand. You just think
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  Speaker 1: of an index like the SMP five right, how does
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  Speaker 1: it wait the stocks by market cap? Smart beta is
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  Speaker 1: anything that doesn't do that. It waits it in different ways.
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  Speaker 1: Maybe it says, hey, let's wait the SMP five hundred
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  Speaker 1: stocks by their dividend output or by their volatility levels.
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  Speaker 1: That's all it is. Beltuna says. Performance chasing is one
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  Speaker 1: of the dangerous it's smart beta e t fs pose.
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  Speaker 1: Do you see the performance like for the past six
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  Speaker 1: months and you think, oh, it's doing well, I'll get in. Well,
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  Speaker 1: that may be the worst time to get in, So
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  Speaker 1: you know, it's really about the same thing with active
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  Speaker 1: funds in terms of people missing the gains and going
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  Speaker 1: in at the exact wrong time. Boutoon. It sounds another
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  Speaker 1: cautionary note about smart y to et s not understanding
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  Speaker 1: the volatility. He says they can be more volatile than
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  Speaker 1: other funds. That's your Bloomberg ETF report. I'm Katherine Cowderie.
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  Speaker 1: This is taking Stock with Kathleen Hayes and Pim Fox
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  Speaker 1: on Bloomberg Radio. We are broadcasting live from midtown Manhattan
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  Speaker 1: from the offices of Eisner Amper. They are all preparing
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  Speaker 1: for their fourth annual real Estate Private Equity Summit. It
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  Speaker 1: will take place at Piers sixty this Wednesday, Piers sixty
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  Speaker 1: at the Chelsea Piers and one of the speakers, the
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  Speaker 1: keynote speaker, indeed, will be Sam Zell of the Equity Group.
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  Speaker 1: He will be talking about ren estate and his outlook
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  Speaker 1: for real estate. All right, now, we want someone to
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  Speaker 1: tell us their outlook for bonds and interest rates, because
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  Speaker 1: we know that this connected directly to real estate. Dan
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  Speaker 1: Fuss joins us. He is the chairman of Loumas Sales
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  Speaker 1: and a company is based in Boston Homeberg and Dan
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  Speaker 1: manages the firm's Loomis Sales bond f l S b
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  Speaker 1: d X captured a return of eight and a half
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  Speaker 1: percent annually over the past three years, Dan Fust, thank
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  Speaker 1: you for being with us. Well, thanks, Pim. Good to
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  Speaker 1: be here. All right, So what what accounts for your
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  Speaker 1: your success eight and a half percent over the past
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  Speaker 1: three years, beating of your competitors love interest rates? Yeah, um,
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  Speaker 1: fortunately timed withdrawals from the fun Uh. You never liked that,
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  Speaker 1: but once in a they help out. Um. And the
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  Speaker 1: one thing that I think marketing would rather I emphasize
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  Speaker 1: his issue selection, and that's we have a low market
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  Speaker 1: col variants. We don't march exactly in line with the
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  Speaker 1: rest of the bottom bondom market. All here's the same cadence,
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  Speaker 1: contents to march in the same direction. It's and you
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  Speaker 1: get trampled if you go completely the other way. But
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  Speaker 1: there are times to beer away and so it all depends.
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  Speaker 1: And when you stop the clock at same bonds, new
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  Speaker 1: prices and okay, Kathleen, I just have to Okay. So
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  Speaker 1: we've had but four years or five up until this year.
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  Speaker 1: Although so far, so good. I think when the bond
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  Speaker 1: market bet and fed doesn't know what they're doing. They're
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  Speaker 1: not going to raise rates, and bonds rallied and bonds rallied.
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  Speaker 1: Now maybe we're at a turning point now. Obviously your
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  Speaker 1: mean stay is not treasury bonds, but they do kind
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  Speaker 1: of call the tune for the rest of the market. So,
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  Speaker 1: how has been fuss what's the number one thing you've
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  Speaker 1: done to have that trend benefit you? But then you
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  Speaker 1: know had in the direction you've been touting lately, which
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  Speaker 1: is more credit risk list interest rate risk, Well, number one,
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  Speaker 1: I'll be self critical. I've been too cautious too. Conservatives
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  Speaker 1: kept reserves um, you know, short term sitting in short
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  Speaker 1: term governments UM. And that has proved unnecessary insurance and
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  Speaker 1: it's been costly insurance. That have been better off putting
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  Speaker 1: all the reserves in thirty year treasuries and going to
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  Speaker 1: learn how to play golf. UM. The because I think
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  Speaker 1: the setting is there, uh, foreign eventual rise and interest
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  Speaker 1: rates It's been there domestically for a while. Internationally it's not. Internationally.
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  Speaker 1: I think the only major central bank likely to raise
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  Speaker 1: rates is our own, and they'll wait till the election
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  Speaker 1: is over. And the domestic pressures behind that. The international
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  Speaker 1: pressures are not the short wrap up statement is that
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  Speaker 1: our central Bank, and the European Central Bank and the
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  Speaker 1: Japanese Central Bank, and to a lesser degree, much lesser degree,
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  Speaker 1: UK and Swiss in Canada are caught in a mismatch
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  Speaker 1: with their domestic mandates. Their domestic mandates say you look
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  Speaker 1: after your own situation, and not under the formal language
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  Speaker 1: of the mandate are you supposed to go out and
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  Speaker 1: look after the rest of the world. And the problem
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  Speaker 1: is the rest of the world. And if the rest
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  Speaker 1: of the world really goes wrong, the funds goes sailing
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  Speaker 1: out of it. That creates a problem for us. And
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  Speaker 1: that's part one. Part two is there is a mismatch
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  Speaker 1: between fiscal policy and monetary policy, and monetary policies carrying
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  Speaker 1: that load. Now that I think it is about to end,
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  Speaker 1: but the international else not going away all right. Now.
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  Speaker 1: You mentioned that you think this is going to end.
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  Speaker 1: This uh, this monetary and fiscal imbounds. You think that
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  Speaker 1: there will be a lot of spending on the part
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  Speaker 1: of whoever's running the Showcomba November. We'll have to see
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  Speaker 1: who whoever is and oftentimes missed in the understandable interest
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  Speaker 1: for the chief executive of the president is how the
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  Speaker 1: Congress is going to shake out, and they you know,
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  Speaker 1: here you have a spectrum of views as to what
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  Speaker 1: ought to be done on fiscal policy side. It can
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  Speaker 1: be very hard to do anything new matter who the
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  Speaker 1: president is unless you get some sort of agreement within
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  Speaker 1: the Congress, which seems to be at a very very
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  Speaker 1: very low app uh. So uh, all you can do
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  Speaker 1: is make your guess is it would greatly help, greatly
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  Speaker 1: help from my point of view, the Central Bank, the
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  Speaker 1: FED deal with its side of the domestica equation. If
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  Speaker 1: you could get more opened to the economy to spending.
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  Speaker 1: But also in these are contradictory, Um, a little more
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  Speaker 1: revenue gathering by the federal government. Now those two things
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  Speaker 1: are contradictory. You say, well, they ought to spend more money,
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  Speaker 1: but they ought to have more revenue to pay for it.
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  Speaker 1: What are your odds politically getting that thing through. Everybody's
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  Speaker 1: saying that we need more physical spending. The US federal
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  Speaker 1: Service saying Mario Draggy pround of the table again today
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  Speaker 1: in front of the EU Parliament, inside of the ECB,
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  Speaker 1: Governor Cororoda, you know, Fuster plus he's also pounding the table.
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  Speaker 1: But I particularly want to ask you about Governor Corota
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  Speaker 1: Bank of Japan. There are hell bat now on twisting
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  Speaker 1: their yield curve right. They want those long term meals up.
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  Speaker 1: They don't want to run out of bonds to buy
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  Speaker 1: the big big switch. They were targeting money supply. Now
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  Speaker 1: they've got the yield curve. Is this going to work?
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  Speaker 1: And what does it mean for a bond investor? Well,
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  Speaker 1: it means confusion. Um. The basic problem is sort of
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  Speaker 1: none of the above. The basic problem is a people problem.
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  Speaker 1: Lack of the population in total numbers I look at
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  Speaker 1: is is shrinking, the work age, the traditional whatever to
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  Speaker 1: age six population is shrinking. The populations are is increasingly
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  Speaker 1: coming together in the major cities the countrysides being left.
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  Speaker 1: I mean it's a very very very civilized, uh you know,
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  Speaker 1: good place and every aspect to life you can think of,
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  Speaker 1: except there are less and less people. And it because
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  Speaker 1: of the water and the policy, you don't have other
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  Speaker 1: people moving in to fill that vacancy. So, how in
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  Speaker 1: God's earth are you gonna get two percent real growth
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  Speaker 1: in total gene you know, gross whatever with less and
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  Speaker 1: less people? Yes, how are you going to do it?
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  Speaker 1: What do you think the federal serve. Is gonna do
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  Speaker 1: with December? Raise rates a quarter? How many times? Next year? Two?
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  Speaker 1: Two times? Yeah, that's gets work. Pim okay, is that
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  Speaker 1: just quick, quick, quick finance? You got five seconds? Is
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  Speaker 1: that going to get the ball market's way and will
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  Speaker 1: help they'll help? All right? Well, Dan Fust, you're gonna
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  Speaker 1: help us. You gotta come back soon. I'll do that,
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  Speaker 1: all right. Dan Fust as chairman Lomas Sales and Code
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  Speaker 1: based in Boston. He's in New York City today and
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  Speaker 1: that's why he joined us here at the Eisner Amper
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  Speaker 1: real Estate UH event ahead of their private equity summit
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  Speaker 1: this week. We're having a very special live broadcast with
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  Speaker 1: Eisner Amper. This is taking Stock and this is Bloomberg.