Global business news twenty four hours a day at Bloomberg dot Com, the radio, plus Globo laps and on your radio. This is a Bloomberg Business Flash from Bloomberg World Headquarters on Katherine Connery. Stocks are little change, heading for their best week in nine months and gaining for a fourth straight session. There's optimism about the U S economy and about signals from central banks that they'll continue to stave off fallout from Britain's decision to leave the European Union.
We check their markets every fifteen minutes throughout the trading day on Bloomberg Radio. Down Industrial Average is up twenty seven points an eighth of a percent, his rating at seventeen thousand, nine hundred fifty six. SMP five founded up five points a quarter percent at twenty one o three. Then AzaC is up twenty one points at nearly half a percent, trading at forty sixty four. West Texas Intermedia Crude oil at the eighty three cents of barrel, one
point seven percent at forty nine sixteen. Spout gold is up twenty four dollars twenty cents announced at thirteen eighty ten. Year Treasury up seven thirty seconds with the yield of one point four four which has sent and updating one of our top stories. Local authorities say as many as a group of nine gunmen attacked a restaurant popular with
foreigners in a diplomatomatic zone of the Bangladeshi capital. U s State Department spokesman says that all American citizens that are under the authority of the Diplomatic Chief of Mission Nan Dhaka have been accounted for and we're not involved in the incident. The department is still checking on private American citizens who may have been in the area. And that's a bloomberg business flash. Thank you for investing in Europe,
and first of all, thanks to Catherine Cartery. Certainly a lot of people are asking that question after the big Brexit vote. Well, if you are, you're going to want to hear this. Catherine Cartery is back with today's et F report, one of last year's most popular e t F trade has become a disappointment in the first half of sixteen. That's the word from Todd Rosenbooth, director of
et F Research at SMP Global Market Intelligence. Europe has been a very poor place to invest in the first half of them and sixteen, and it was even before the Bridget vote was coming to pass. Rosen Blues takes a look at just how disappointing that trade has been this year. Most European equity ETFs for down uh, you know, mid mid single digits Stephen double digits in the first half of the year because of weakness in the local economy,
because of the strengthening of the euro. Rosenblues says, there are also some industry groups that have underperformed the broader market. His example, financial shares as interest rates have remained low. That financials the like sector spider fund or XLF has fallen four point six percent since the start of the year, as the SMP five hundred has gained two point seven percent.
That's your Bloomberg ETF report. I'm Catherine Colderie. You're listening to Taking Stock with Kathleen Mays and Pim Fox on Bloomberg Ring. A week ago, stocks were plunging in US and around the world after UK voted to leave the European Union. A week later, the stock market capping off four days of gains. No not quite as big as earlier in the week. It seems on a much sounder footing sp getting back around the level. Where do we
go from here? Is this just a temporary bounce back or have stocks weather to storm and are they ready to focus once again on US and global fundamentals and maybe make some gains. Well, let's put that question to our next guest, David Coudla. He is CEO and chief investment strategist at Mainstay Capital Management and he's joining us from Michigan. Dave, Welcome back, Kathleen. So the dust has settled on Brexit? Is it time to just say, well, we'll put that on a on a very back burner
and look at something else. Now for stocks, you know, it may seem that way. Uh. We if you look back over the past week, Uh, we had the big, big draw down on Friday and Monday, and we've recovered about depending on the index. But the real impact of Brexit, which we think is much more severe for Europe and specifically the UK, has months and years to play out.
The impact on the US we always expected to be small, almost negligible anyway, except how it might affect some of our exporters if European economy uh does slow further because of it, and UK potentially even going into recession second part of this year. Well, apart from the stock side of it and how companies are going to do it, seems to me we have to also look at the bond market because the the impact of Brexit on the
bond market potentially is somewhat more lasting. We've had the drop in the third year bond now to the lowest yield ever. We've got, uh, the ECB talking about buying more bonds in a sense, even lesser quality bonds. I guess you'd say Spanish bonds are railing up. This big drop in bond yields around the US and in the world. What does that mean for investors? And again, Davi, is it something that's going to persist long after the dust
settles on the fall up from the stock market. Yeah, we think that yields are low and are going to be low and even lower if we look at what's happening, you know, it's not even as much about the FED when we get out on the intermediate term and long, uh, the long into the curve. We have in Japan their massive quantitative easing program, in Europe their massive quantitative easing program that will probably become more massive with the e C b looking at how do they compensate for the
adverse impact of Brexit on the UK. So we see these yields that went low to zero and even negative twelve trillion in sovereign debt with the negative yield globally. And so when we look at our tenure, our tenure at when it was at one point three four this morning, that record low still looks attractive compared to sovereign debt around the world. That's that's a lot lower or even negative. Now when it comes to the global impact, then is
it mainly focused in the UK? Would you say, you know, don't, don't really bother unless you want to find individual shining stars. OK, just avoid the UK for now. But the rest of the world looks okay to you. I would I would avoid all of Europe for now. I would avoid in the UK. There may be mega cap stocks that do well because of the currency falling in value so much.
The multinational conglomerates are exporters from the UK. But overall, uh, you know, we we heard Carney come out the Bank of England governor and talk about uh really reversing course, you know six months ago, ten months ago. Uh, England, like the U s we're looking at when they would tighten monetary policy, they're now going to reverse course to to UH try to abate the negative impacts of Brexit. The UK in general is going to be dealing with
the impact of Brexit. Japan we've we've stayed away from for a while. We really think that in general for international diversification, for investors, avoid developed markets, Avoid Europe, avoid Japan, look to emerging markets. That's where we believe the opportunity is now. Auto companies a Big three reported and you have a lot of clients, of course who worked in
the auto industry over the years. Um the question, of course, have auto sales peaked after a very strong would you invest any in any of the Big three or any of the big global auto companies. We're neutral on the automakers at this point. We think that in this sales cycle, sales will remain strong. We're on track for seventeen million vehicles still in in the US plus units, but sales of plateaued, and we're neutral on the automakers at this point.
Ford had a had a good June sales month. GM had a great first half, their best first half of five percent sales growth, best in a decade. But we're at that peak in a cycle sales of plateau, so we're neutral on the automakers from here. So Dave, let's look at some things that you are positive on, and let's start with a Fidelity New Markets income fund. What is it and why do you like it? Okay? So
Fidelity New Markets Income. Uh. This is a Fidelity fund that's been managed by John Carlson for more than twenty years and he's done a great job with it. Essentially invest in the emerging market debt and as we talked about with low yields around the world, with the concern about the same concerns about the economy in Europe, the economy here. So we have those concerns about junk bonds, distressed debt, typical high yield debt, we can go to emerging markets debt as a place to get that high
yield New markets income. Fidelity New Markets Income yields about six percent. With all this easy money policy driving rates down, people seeking yield are going to a fund like this. The other thing that's interesting this fund is available in a lot of four one K plans. We just talked about general motors. Uh, it's our top holding in our
growth portfolios. Opportunistically, the fund is up twelve percent this year, certainly out performing a lot of the equity funds and doing it with about two thirds of the level of volatility of those funds over time. Now you're getting increasingly positive on emerging market equities. I think there's a lot of people are wondering if they could jump on that bandwagon, if they want to do that. First of all, why
and what do you recommend buying? Well? With the easy money policy, we know that emerging markets, a lot of emerging market countries, especially those with current account deficits, live and diet for capital flows. UH money will get even easier in Europe, it will continue to be so in Japan. We now think the FED is on hold probably through the end of this year, which is a lot different outlook than many people had at the beginning of the year.
But we're facing the reality of these global worries. So that makes that's good for emerging market equities, and we expect that emerging market equities to be top performers this year. Gold what do you like there? Well? With the again, the the uncertainty we have in the markets, and if you take last Friday when we had the US market depending on the index down three and a half to five, Japan down eight percent, Europe down more than eight percent. That day gold gold boy in g l D was
up four and a half percent. And so we get that low correlation with stocks and bonds and even a negative correlation at time, so we can help diversifier portfolio and again with yields so low. You we know gold is as a speculative investment. It has no dividend yield, it has no pe ratio, but we considered a store of value and a diversifier in our portfolio. When bonds aren't providing much of a yield, it doesn't feel is bad.
It doesn't hurt as much to hold gold that has no yield, except I have metal in my hand rather than a piece of paper. Dove Coola, thanks so much. Have a great Fourth of July weekend. To thank you. Kathleen, founder, CEO and chief investment Strategies at Mainstay Capital Management in Freud, Michigan, with some two billion dollars of assets under management. I'm Kathleen Hayes, my co host PIM Fox on vacation this week.
We'll be greeting him back on Tuesday. This is taking Stock, this is Bloomberg.