Saut Discusses Exercising Patience in Investing (Audio)

gain of two tenths of one percent. X on mobile and Chevron gaining more than eight tenths of one percent as crude rose in volatile trading. West Texas Intermediate Crude up six tenths of one percent, now up twenty eight cents of barrel forty six fifty one on West Texas Intermediate Gold down six fifty ounce to twelve sixty nine, a drop there of five tenths of one percent. The tenure Town six thirty seconds had yield one point seven four percent. I'm Charlie Pello. Then that's a bloom Bird

business flash. Thank you very much. Charlie Pelletty is time now for the e t F Report. It is brought to you by van Eck Vector's e t F s. Expect more from your muni's target tax exempt income by maturity and credit quality, all with low cost et F s. Visit vaneck dot com slash Muni Vanek Access the opportunities. That's access the e t F Report with Catherine Cowdery. There's an a t F that's tapped into a value factor in bonds. That's the word from Bloomberg Intelligence analyst

Eric bel Tunis. It's a van k Vector's Fallen Angel high yield bond e t F taker a n g L. It focuses on corporate bonds that were investment grade at the time that were issued and we're later downgraded to below investment grade. This one has six is double b UM and compared to h y G which is six single B and triple C. So it's almost like a

touch above high yield. But it's a kind of a hidden hidden gem, I think, And the reason people haven't really noticed it, I think is people generally just view the world into high yield or investment grade when bonds um, and they don't consider this sort of I called purgatory in between investment grade and high yields, sort of like these bonds are living there and g L has one nine million dollars in total assets and a twelve months dividend yield of five point four is gained eleven point

nine percent since the start of the year. That's your Bloomberg ETF report. I'm Katherine Cowdery. This is taking stock with PIM Box and Kathleen Hayes on Bloomberg Radio. Never say never, never say always, always re evaluate, and never give up. Does that sound like Jeff Saut while at might he's the chief investment strategist of Raymond James, helping to manage about four hundred billion dollars of customer assets based in St. Petersburg, Florida. Jeff Saut, thank you very

much for beating with us. A pleasure to talk with you again. Pim, So, where does this saying fit into an investment strategy? Well, it's more of a it's more of a life statement than it is a stock market strategy. My my model, proprietary model. When the SMP UH five didn't follow its brethren, the SMP total returned to new all time highs about three weeks ago, the model turned negative and was looking for a low sometime this week, and with two with Wednesdays, was a Wednesday Tuesday's rally

of two hundred and twenty two points. You know, it looked to me like the model was was gonna be wrong. And then we got yesterday down two hundred and change, and today we bounced once again off area for the for the fifth time since the April high. So I'm never giving up. You're never giving up, all right, So what do you do? I mean, if you don't give up, you've got to be doing something or are you just waiting for some more information. I'm exercising the rarest commodity

on Wall Street, which is patients. We pushed a lot of chips out into equities. Uh, I think I was on a bloomberg. I think it was on February. I think it was fifth or sixth, and the model said the market was going to bottom next week. So we started buying stocks into that February eleventh low, and we've had pretty good gains since then. So I'm waiting to see if we if we swoon again tomorrow and make a low the first part of next week, or if we've made the bottom this week in the model was

actually looking for a lower low than that. But you take what they give you in this business, clearly, you take what they give you. What are they giving you in terms of where to put fresh money to work? Well, I think you can still look at some of the You know, my UM Fundamental Analysts has a strong by rating on a Ridium, the low satellite orbiting company, and they have a convertible preferred with about a six percent

yield to it. So I think something like that makes makes a lot of sense here, and that is are people looking for income, yeah, but they're also looking as one of my friend Rod Baron's favorite stocks. He's probably the largest shareholder there, and he thinks that when they get the birds all launched over the next eighteen to twenty four months, that the free cash flow yield is going to go through the roof and the stock is going to go up into the high teams of the

low twenties. If that happens, the CONVERTI will Preferred zooms right up with it now. Ridium the symbol is I R d M. The shares trade at about eight dollars and twenty five cents down about two uh percent so far this year. This is the Global Satellite Communications System for low Earth orbit to satellites for a voice for voice and data communications. Correct, Yeah, that's that's correct. But any time I can get a dividend yield out of what looks to be a pretty dynamic situation, I'm going

to go for the dividend yield. What do you say to people that look at the price of energy and say that they can trade equities off price of energy. Well, we actually were recommending some of the MLPs back in the February lows because you could buy a package of investment grade master limited partnerships in the midstream and downstream,

not the upstreams. I think the upstreams business model is broken, but you could buy an investment grade package of those with a better than seven percent yield, and I think that made a lot of sense back then. Now, Jeff, you seem to be talking about investments that are not necessarily tied to what the consumer is going to do or my reading you wrong. Um, I like consumer discretionary stocks. Uh, you know. I think the GDP is going to strengthen in the back half of this year. I don't think

we're going uh into a recession. That well, in recently driving across country on the back of I won't say every eighteen wheeler, but every other eighteen wheeler, it was drivers wanted. And at the fast food restaurants we stopped at with the grandkids, you know, it was help on it in the window. These are not the kind of things you see going into a recession. So why do

we see such a mnemic GDP growth. I think you saw the low g DP print the other week at plus zero point five tents of a percent, And I think the measurement of g d P is not per se the right measurement for the overall economic strength. I think the economy is a lot stronger than the government's official figures, and that that strength showing up in you just described in the job market, particularly in the job market. I mean, you know how much I travel. I'm fine

in full planes, I'm eating in full restaurants. Um. I just I just don't. I don't see where where the economy is any sign of going into a recession. Having said that, with the ten year treasury at one point seven five right now, a lot of people might get hurt if they don't do something about that bond. Well, I think the bond is being anchored by the negative rates in place, is like Germany and Japan, and by

capital flows. If you look on the Bloomberg terminal, you saw a story this morning about nine billion or nine it was, I think it was trillion looking to come into the US. Because if you're getting negative rates in Germany and Japan, if you can get just even twenty basis point positive return here, um, that's you know, that's capital flows. And that's one of the reasons that ted spread has widened out here in the past few weeks. What will that do to the dollar? If anything, I

think the dollar is peaked. I look at the dollar, the Dixie Index. I've been saying for a year, it looks like a great, big rounded top. I get club by some of the economists by saying, but the trade weighted dollars still going up, and go down to your bank and try and buy some trade weighted dollars. You have never seen a trade weighted dollar. I haven't never seen a trade weighted dollar. So the dollar index, the

d x Y, looks to me like it's peaked. Well, you bring up an interesting point, Chefs thought that you know, many of the indicators that are used by professional investment managers are not necessarily applicable to making investment decisions. Is that correct? I think that's absolutely correct. Why is that developed in such a way? I think, I think to large degree. And you can look at the energy e I a look at the wide variants in in the

government statistics and the private market statistics. And this guy named Rothman that used to run the energy desk at that Merrill Lynch, who does his own independent channel checks, and he, to my knowledge, is the only person that got yesterday's draw down in in the grude oil inventories. Right when you travel around the country, and I want to connect the energy theme, you see people driving and using gasoline. The cost of gasoline may have increased marginally recently,

but where is all the savings going? Is that for for low gasoline prices, that going into as you say, restaurants and consumer discretionary purchases. Well, it's that's been that's been a conundrum here because the way the price of gasoline has come down, you would have thought, uh that there would be more purchasing by the individual consumer, and

it hasn't showed up yet. I think they're still stunned from what happened back in oh eight o nine, But I think they were going to loosen their pocket books as we get into the back half of this year. And Jeff Sawt this last point, You I haven't heard just talk about the election, the political season. Does that matter for investors? Uh? There will be winners and losers depending on who's who's going to be elected. But I have I have a real problem with the you know,

I don't like any of the candidates. I think you've got a lot of company there. All right, Thank you very much. Jeff Sawt is the chief investment strategist for Raymond and James. He's based in St. Petersburg, Florida, but as he said, he spends a lot of time traveling an own the country, helping to manage four hundred billion dollars of customer assets. Thank you very much for joining us. You're listening to taking Stock. I'm pim Fox will take you through to the close of trading next