Global Markets, Fixed Income, Rebuilding Puerto Rico

issues are doing for markets. Who welcome Louis lou portfolio manager, member of the Emerging Markets Investment Committee at Brandi's Investment Partners. It joins us on the phone from San Diego. Louis, thanks so much for joining us. You know, just those headlines from the President, you know, talking about global trade and what's going on with global trade. Clearly the uncertainties created by the uncertainty of global trade really weighing on markets.

How are you kind of factoring that into your investment outlook? Thanks Paul for having me on Good Morning everybody. UM, just to kind of set the stage. You know, we're long term value investors at Brands and our approach is really to focus on the fundamental economic worth of the companies that we invest in. UH, and we call that the intrinsic value of these companies, and our approach is to purchase them at a at an attractive discount of

the intrinsic values. And within that context, UM, a lot of these geopolitical events, trade events that you mentioned, have created numerous opportunities, whether it's UM, the US China trade frictions that we're seeing, or the renegotiation on NAFTA or even Brexit. I mean, these have created opportunities whereas stocks are selling attractive discounts to their long term fair value, can you give us can you give us some examples?

So some of those examples would be UM. You know, the Mexican real estate companies or the fevers that we call them, have been selling a big discounts, large dividend yields. UM. You know, some of those companies that have been affected would be technology companies UM in in China. UM. Those are some of the things that we've looked at. UM. There's also a lot of other examples. But really, UM, Lisa, the key thing to bear in mind is we're not

trying to predict particular outcomes. We don't think that anybody can. I think our approach is really too buy uh when we feel that a worst case scenario has been priced in. UM. Some days, you know, these stocks will trade as if there's never going to be a trade deal. And then on other days the market is euphoric and it's pricing in a very good outcome. And on those occasions we're gonna be lightening up the position or we stopped buying. But if a worst case scenario is priced in, then

we're active in the market. UM using a flexible and nimble approach to investing in these companies. So all of a sudden that you recently took a trip business trip through Asia over the STUMMAC, it's a sense of so you'r key takeaways there because clearly you know that the uncertainties of trade between the US and China, you know,

really key to I think investors psyches now. Yes, UM, I was in seven cities in Asia a couple of months ago, and I think the striking thing to notice that, you know, if you go to mainland China, whether it's Shanghai, Beijing or Shansin, you know, the the admustry is very different. I think there's a feeling of calm, there's a feeling of you know that the economy has the capability to withstand some of these external shocks. UM. So the feeling

that we get from mainland China is very different. But across the border in Hong Kong, UM, my witness firsthand some of the protests that have been taking place and the disruptions to normal business operations um. And just kind of to Lesa's point earlier, this has given way to some opportunities in the retail industry. Uh, some of the banks in Hong Kong, you know, showing very good value. Um. And we're not exactly sure how the protests will end or how it's going to conclude, but if you look

at the history, these protests have been episodic. They come and go. Uh, there's going to be some kind of resolution over you know, the shorter or medium term. And

you know that has created opportunities as well. You know, I'm wondering if there has to be a base case when it comes to some of these geopolitical occurrences when you're making decisions about whether something is undervalued or overvalued, because you know, I mean, at any given point, the the outcome could be completely bifurcated and lead to completely bifurcated market results. So how what what is your sort

of base case for the next twelve months. Yeah, I think the base case is that the US China relationship, you know, whether it's the economic relationship, whether it's the trade relationship, is too important for the global economy for there to be you know, a sustained adverse outcome, right, so you can see that, uh, you know, particularly for the US point of view. You know, the terrorists starting

to have a negative impact. So the trade war has kind of shifted to other areas right looking at UM, you know, American capital going into Chinese capital markets, things like that. So the exact form of these tensions can change, the shape can shift. But then the longer term base case over the next twelve months is that the relationship is too important. There will be some kind of resolution or de escalation, And that is kind of the base case that we use UM to value some of the companies.

And then if there's a significant down draft or deviation that is priced in that we don't think will hold over the next three or five years, then that would be a buying opportunity. Of course, you know, our approach would allow for some of these estimates uh to change,

you know, if if the information and situation changes. Is dynamic, So we're not holding to any one particular scenario, but trying to have a flexible approach and the factor in some of the you know, any lasting developments into our base case. So it's interesting because you say that this sort of base cases is that you know, we do get something. I do wonder though, what we're seeing right now is the lack of certainty itself weighing on economic

growth and activity. How do you factor that in? You know, it's it's really kind of the deviation from uh, you know, the base rate of growth. Right, so China should grow at about six percent maybe that decelleries by twenty five or fifty basis points uh in the next twelve months, and in the US maybe trend growth rate it's kind

of around two percent. So there's certain base case estimates that uh, you know, the markets are looking for, and you know, um, some of these events have a very short term negative impact on some of that, uh, some of the trend growth rates. Right, So the base case hasn't really changed it's just that um there's a lot of short term volatility and geopolitical events that can cause oscillations around that base case, and it's these oscillations that

create market volatility that give rise to opportunity. Louis Loud, thank you so much for being with us. Louis law is protfolio manager and member of the Emerging markets investment community at Brandis Investment Partners in Love San Diego, or I do not think that they are preparing for in our easter like we are here. Let's talk retirement. Let's talk about whether you want to do it and whether you can do it. Ever, let's speak with Josh Jelinski.

He's president of Jelinski Advisory Group, joining us here in our Bloomberg Interactive Broker Studio. You have a new book, Retirement reality Check. I'm just gonna go out on a limb here and assume it's not a reality check that you've got plenty and you're great. Well, it could be both. You could have a lot and not know what to do with it. You could have a significant amount saved and not of a tax plan, not of a strategy

to convert your assets to income when you're retired. So there's the reality check for those who have money, and then there's the reality check for those who have not saved you know, ten to fifteen percent and their four one k or who have come in a lot of money due to maybe a sale of a business, but there is a savings dearth Fidelity came out with a report, you know, the average four one case fifty grand to

their name, which is shocked. It is so Josh, you know, I have my children earning the workforce right now, and the I think the probably hopefully the best piece of advice I gave them was four oh one k started today maximizer contributions. What percentage of people would you say

are really not prepared for retirement financially? I would say about yeah, because I saw that statistic recently that a big percentage of Americans could not come up with a four million sorry four dollar just emergencies or you know, a thousand dollars for emergency, so that I think it was like percent of Americans. Yeah. So what is the most important advice you have for people as they think about retirement, you know, whether they're young or whether they're

may be closer to retirement. Number one, just start save ten to fifteen percent of your paycheck. A lot of people they stop at fifty and they go, well, I have fifty grand. I'll never amount to anything, so I'm not gonna save anything. And if you save, you know, tend to fifteen percent of your pay now. We we we do have a section for millennials, people in their thirties, twenties, forties to start now and then to do it in

a tax smart manner. In the book, we have eleven tax smart tips for how to capitalize on the Trump tax plan and other things. I'd like to be a pain in the neck, So I'm gonna I'm gonna take the other side of this. There are all these people screaming that too many people over in China save. People are talking about the savings rate, and how could be a problem if people aren't actually putting their money into the economy, and if they're not necessarily investing in themselves.

And I'm not talking about incurring more student debt, but making life easier. For example, if you've got children's that you can continue to work even if it means less income in that short period. How do you sort of square those sort of conflicting feelings of sort of the dynamis of the economy in the near term versus being

prudent for the long term. Well that's great. We actually have a macro economic approach to people's money where we treat money less like a personal checkbook and more like a macro economy, and that we have three key focuses. We want to focus on asset protection, savings, and growth. But yeah, there is a conflicting thing where when you're looking at the macro economic data, we want people to be spending their money, but then in reality people have

to avoid buying stupid stuff. I mean, if you think about today, people have Netflix subscriptions and cable bills, they have cell phone bills and they I mean, and they have this subscription and that you know, they got to cut the cord though. I mean, it's good for the macro economy, bad for the micro economy. So what you know, people are are living longer these days, Uh Josh, So do they need they I guess they did. They need

more money. So I mean, is there a sense of kind of what people need today for a decent retirement versus maybe a generation or two ago. I think people a generation or two ago spent a lot less, so they need needed less to retire. They also had pensions. A whole section on the book in my book Retirement Reality Check is on how to convert your assets to income.

And we have a lot of people who don't have a pension, so they need greater assets because they have to convert their four one case too, to a pension like stream of investment income when they retire. Definitely, what age do you think people really ought to retire at this point or expect to retire barring some boon from a wonderful period in their business life. Maybe, uh, I don't know, sixties, seven, seventy. But more and more people

are working longer. I mean, you know, you know, more and more people are practicing the phrase welcome to Walmart. They're finding joy a lot of people. I mean, if you look philosophically, even back in Biblical days, you know, the Bible mentions no mention of the concept retirement. That's because everybody was dead at seventy so and social Security came out when the average life expectancy was I think like fifty two, and so you were typically like in

today's age, it would be eighty. If we went back to the original concept of the social safety net. So the social safety net, I mean, what percentage of the US population you think relies on that? Probably too much. I think more and more retirees are solely I'm I'm I'm hearing people you know, called my radio show because we have a show, and they I mean, there's like I would say, are reliant on social security. Boomers did

a very poor job saving for retirement. And and that's the importance of a retirement reality check, so you can spend all your money without going broke in retirement. Interesting. Josh Jelinski, thanks so much for joining us. Josh's President Jelinski Advisory Group, joining us here in our Bloomberg Interactor Broker studio talking about his new book, Retirement Reality Check. And look, it's so important to save earlier. I think

that I'm coming at this. I always was, you know, putting stuff aside and preparing for the future, and I think it's important to do it. I think there needs to be a balance though too right, I mean, but I don't I guess that most people don't, do you know everybody. I'm sure everybody has their their different financial position.

But I think that again, as I tried to you know, impart to my children is nder the workforce is the importance of saving for retirement four win k H. And how it's such a powerful savings tool that a lot of corporations corporate America in the absence of a defined pension plan. Uh, it's really the way you have to go. So very interesting, Josh, thanks so much for joining us well here at our Bloomberg World headquarters in New York City.

Today we are hosting the Bloomberg Canadian Fixed Income Conference, bringing together leaders and financiers looking at the Canadian market. Joining us today is Rod Phillips, the Finance miss Minister for Ontario, Canada, joining us here on a Bloomberg in Active broker studio. Rod, thanks so much for being with us. Give us a sense of you know, our financial you know our economy here in the US. You know it's chugging along pretty well to two and a half percent,

but slowing. Give us a sense kind of the economic backdrop facing Canada these days. Paul Lisa, thanks for having me. It's great to be on Bloomberg. You know, Ontario and Canada generally are our significant connection in terms of economically used the United States. So so as your economy goes that, that certainly supports growth. For for Ontario. A lot of people don't realize, but nineteen States were the number one

trading partner. So so when we see the kind of hot economy having the United States, we're seeing that replicated. Uh in Ontario. We have, you know, our unemployment rate that just the last month was fivete which by our standards is fairly low. We have two thirty thousand jobs since last June year ago June that we're created. So so you're seeing a growing economy, particularly um hot from a development point of view. Uh. You know, we were

four cranes across North America. The construction cranes are in the g t A. So a lot of that kind of growth and development comes a lot from a lot of very positive immigration statistics we have. So g t A. I'm going to just infer is the general Toronto area? Is that correct? The great there we go? Not in general the Greater Toronto area. I'm wondering about Toronto at the housing market in particular, because there's been a lot written about how high prices had gotten and how people

were getting priced out of the region. Can you tell us a little bit about where we are. We have seen a little bit of a resurgence there with respect to some of your measures to discourage foreigners from just buying for investment. You know, there's no question affordability had

become an issue in the Greater Toronto area. We've brought in some policies to to free up the capacity to develop, obviously being sensitive about environmental concerns and otherwise, uh, some of the some of the measures that both the federal government had taken in the previous government to to uh, you know, to limit that kind of growth. Some of some of them been helpful, some have gotten in the way of greater supply. We really see this as a supply issue, and so so you know, we've been trying

to to encourage about somewhere around. Of all the immigrants that come to UH, to Canada, come to Ontario, and the biggest portion of those come to the Greater Toronto area. UM So that's fantastic from an economic point of view in terms of giving us a great base to grow the economy from. But but you know, keeping housing affordable is one of the things that we're really focused on.

How much pushback have you gotten from residents in Toronto with the development, because this is always the push pull in cities, right, don't over develop us, don't crowd our schools, and yet housing is unaffordable, so what are you gonna do? Yeah, it is always that tension. Everybody always wants to have

the last new house in a particular neighborhood. And and uh, but but I think this is a This is an area of our country that has has grown dramatically because we've been fairly effective at at integrating newcomers into into into the economy and otherwise. Um again that you know, as long as there's jobs and economic opportunity, UM it is, it's it's just net positive for most people. But listen, we are We've got ninety billion dollars for spending on

transit and transportation infrastructure. You know, that's specifically focused on dealing with the congestion that inevitably comes with this. UM. We have has had an aggressive policy around making sure there's more housing supply. You know, it was an urgent need of those things happening. And then when it comes to things like education and healthcare, big investments there in the tens of billions of dollars to make sure that

the infrastructures in place. So those immigration statistics quote are very interesting to me. How is immigration into Ontario and kind of a broadly changed over the last several years with the Trump administration and kind of the changing policies here in USA. You know, it has UH has definitely caused a couple of effects on the in terms of the side of terms of refugees. We we had through Quebec and through Ontario an increase in people leaving because

of some of the Trump policies. UM. But I'll say also on the side of some of the most skilled and valuable immigrants we've we've seen an uptick in terms of interest whether it comes to our universities or high tech firms. We have quite an AI hub in in Toronto.

In fact, tomorrow I'm hosting an AI round table with a number of local companies here in New York UH that that are looking because of our education system, because of the number of data scientists we have expanding UH the operations they have in Ontario and UH and that I think that's about the quality of life that we have as well as you know, as having capital markets. I mean, as you guys would know Toronto is the number two capital market in North America, so there's access

to capital for a lot of entrepreneurs. Rod Phillips, thank you so much for joining usable that I want to be called the Honora Police. I think at that of life, right, I love that. You love that? Yes? Do you make your your family call you the honorable? Only on weekends? Do people really call you? Do they call you honorable Phillips or honorable Rock? Usually just rot? But but but it's you know, it's one of the you know, there's

there's so many benefits to being in politics. Definitely one of them is the title the honorable, the honorable Paul Sweeney think it works better than the Honorable Lisa Broadways. That does not roll off the tongue at all. Rod Fellows, Finance Minister, Ontario, Canada, joining us here in a Bloomberg and Act Up broker studio, thank you so much for

joining us. Let's talk Puerto Rico since this has been a hotbed of activity on the investment side over the past couple of years as people try to figure out now after the hurricane, how rebuilding the island will affect its finances. Remember, it did have to file for bankruptcy restructuring. Joining us now Ricardo Alvarez Diaz. He is founder and principle of Alvarez Diaz and vill Alone. He is based in San Juan, Puerto Rico, but he is joining us

here in our bloom Brignner Active Progress Studios. Ricardo, you focus a lot on the rebuilding effort. Just when we start with how is it going, Well, it's going a lot better than what a lot of people are hearing. I mean. The challenge we have, of course is the uncertainty of what's going to happen with the funding itself.

I mean, because we we have been assigned a certain amount of funding for the island federal funding sere funding specifically, which is a community development block grounds from hot and Fema um Um from the hot side. The first trench of money has come in and and things are starting to move a little fast. But at the same time, the reality is that that's one point five billion dollars out of out forty two billion dollar promise. So there's

a lot to we learned. So give us a sense of, you know, how far back the island has recovered since the hurricanes. Is there's a percentage which just give us a sense of how far back it's come and how far left it has to go. Well, I would say that, uh, eighty five percent has has come back up to where we were before the hurricane. And let's not say much because we were a challenge before the hurricane when it comes to infrastructure. So just because we're there doesn't mean

that we're great. It just means that we're back to where we were. Where we need to focus now is where we're going to want to be, and that's where, uh, the infrastructure investments on how we planned the next fifteen and thirty years of Puerto Rico are going to matter. There's a big question mark about who's going to live there, and one thing that we kept reading articles about was the exodus of people from the island after the hurricane.

Has that sort of stabilized, you're starting to see population growth even well not growth, but after the hurricane, we lost around four hundred thousand people. Um, now that's typical. If if you look at what happened in Katrina, that was it was around two fifty thou people and it's it's a it's similar to what happened in put Rico. Because of the fact that schools were not open and families needed to but that that was a significant proportion

of the entire islands population. And it's somewhat like or something. Well, no, there's three point two million people in Puerto Rico. So but but by now around three has returned now, so we are down maybe seventy five thousand from the people that left originally after a hurricane. But this matters a lot because the island has more than seventy billion dollars of debt. It needs a certain level of economic activities

that right, Yeah, it matters enormously. That's why one of the challenges we've seen with the Fiscal Board itself is that they have been focused rightly on trying to, you know, manage the fiscal situation Puto Rico. But at the same time, there's um A Title five out of the promiss a law that is focused on economic development. And part of the problem is that they have we have not been focused enough when it comes to that with a common

economic development from the side of the federal government. Now private center is a little different, and that's something we need to talk about because I I find myself I'm always talking about the bond situation and what happened to Puerto Rico before the hurricane UM, and that was basically

the local government. I mean, there's a lot of robust private sector businesses, but one of the challenges we we we've dealt with is you know, and by the way, I say this all the time, we should get every single private sector company like myself, our company that has thrived in the last thirteen years of puer Rico should get an award, because after thirteen years of recession is

a big thank you. I just got an award. UM. But at the same time, what I want to focus in that the private sector is looking at something that maybe UM, people should be should be listening to before the hurricane. Uh. Companies were losing trust and faith in the island after the hurricane, even though let's remember that over three thousand people died and that's more people than

nine eleven UM. But what that did is that a lot of company, we we got a lot of attention worldwide that wasn't only about the fact that we were, you know, bankrupt, and people were interested in, well, what's Puerto Rico, what's happening in Puerto Rico? And people are doubling down some companies that have invested in assets are really reinvesting in the island, especially in hospitality and real state.

UM of course knowing that there's gonna be some serious federal funding coming in to reinvest in long term infrastructure. So give us a sense of that federal funding. I think you mentioned forty two billion dollars. It's been out a couple of years since the hurricane. What's what's the timing and what has to happen for that money to

be released? Well, a couple of things. When if we focus on Hodd specifically, UM, almost twenty billion dollars have been assigned to Puerto Rico, but out of those twenty billion dollars, only one point five billion has been disbursed another one point five billion, around two hundred million dollars have been actually utilized. What that tells you is that, UM, there's a lot of money that needs to be brought in and a lot of investments that need to be

focused in. Now, what are the next steps HODD needs to UM. Dr Carson on the team at HARD needs to They need to sign UM what's called it grant agree meant for the next eight point two billion dollars, and that hasn't been done. Uh, and you know there's many reasons why now we have a monitor that was imposed on Puerto Rico. UM. And as an investor, I believe that having a monitor gives a certain degree of confidence to the investors. But at the same time, it

has been very slow. UM. I believe that it will get a lot better first and second quarter next year, but the the the process has been sadly, like a turtle, very slow. So I want to talk about from your side. You work on development, correct, yes, okay, So how much interest do you get from international investors given the government track record? I feel an incredible amount of defensiveness. Guys were different were the private sector. We're going to manage

it differently. We're not bankrupt. I mean, do you still have to make that pitch every single time you talk to anyone of course, listen, it's like everything. I mean, I think one of the biggest successes we've had. And I'm not only the president of Alvers alone, we I also was appointed by the governor as as a member

of invest Puerto Rico. So my job is to get out there and try to bring investments to the island, and and and the thing I get all the time is that when we get people down there there in shock in a positive way, their surprise, they had no idea. I mean, listen, only thirty five percent of the people in the mainland New Puerto Ricans were your citizens before the hurricane, So there there's a lot of misconception and

lack of knowledge about a line. And if by the way, it doesn't help when you have situations within government either number one being bankrupt I'm number two when this summer we've had a governor stepping down. Uh, so you know, we're dealing with some of those issues. But I I think that that's okay because it's just the beginning of what we're gonna see in the next couple of years. Uh, that you're gonna see a Puerto Rico that's gonna start

to come out a lot better. And I don't know how you how you guys feel about this, but in general, I'm almost more excited about the private sector that the public sector. So when you see the private sectors starting to win, did it's a good thing. Ricardo Avis Diaz, founder and principle of Avarez DS and Ville Loan from San Juan, Puerto Rico, joining us here on our Bloomberg Interactive Broker Studio, giving us the latest on Puerto Rico.

What is going on there in the rebuilding process that continues after Hurricanes Irma and Maria devastated the island several years ago. Getting an update there. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa Bramloy. It's I'm on Twitter at Lisa bram woits one before the podcast. You can always catch us worldwide on Bloomberg Radio