Bloomboog Business News twenty four hours a day at Bloomberg dot com, the Radio, plus Globo lap and on your radio. This He's a Bloomberg Business Flash from Bloomberg World Headquarters on Catherine Cowdery and Bloomberg. Taking Stock is brought to you by National Realty thirty percent returns on cash and rented real estate. Find them at m r i A dot net. The SMP five hundred is headed for its worst two day drops in February amid lackluster earnings and
few signs of a pickup and economic growth. Apple is declining for a seventh session, a day after Carl Icon said he cashed out his stake in the company. Amazon is rallying up as much as he loved point three percent after a ported quarterly results that were better than analysts anticipated. WHI chack the markets every fifteen minutes throughout the trading day on Bloomberg Radio. DAL Industrial average is down one hundred fifty seven points nine tenths of a percent,
trading at seventeen thousand, six hundred seventy four. SMP five under down twenty three points one point one percent to two thousand fifty three. The nastac is down fifty five points one point one percent to forty seven fifty West Texas Intermedia Crude oil down fifty three cents of barrel one point one percent of spot gold is up twenty seven dollars an ounce at twelve ten year treasury down to thirty seconds with the yield of one point eight
three percent. And that's a Bloomberg business flash. You're listening to taking Stoff with Kathleen Hayes and Pim Fox on Bloomberg Radio. Today. The president of the Federal Bank of Dallas, Robert Kaplan, said he supports the FED moving at a gradual place. Depending on the economy, that pace could be
faster or slower towards more interest rate increases. Well, the currency market is betting that after the government reported a first quarter GDP growth rate of just zero point five percent, that interest rates are a long way off, and that's one of the reasons that the Fed continues a three month drop. Joining us now to sort this all out for the currency market. Kitch you Global Strategistics Society General
in London, Kit, welcome back. Hi. Well, you know, the Fed keeps saying one thing, although I think in fairness to Rob Kaplan. He didn't say that there was going to raise raids in June or you know, any time, except that they will at some point. But the dollar seems to me is it responding as much to the just the weakness in the economy and the power of
that message. Um, I think it's reacting partly to a sluggage economy for sure, but possibly even mortally the FEDS emphasis at the moment on giving the economy a chance. I'm turning around and saying that even as market measures of inflation expectations have been edging a little bit higher, as wage growth has even picked up a little bit, and you know recently, um, that they're really not bothered. I think that was one of them, you know. So there were two messages from the Fed in the middle
of the week. One is, yeah, you know, we're not ready. The economy is just trundling along. And the second was we think we think in patient rely measures pressures a very absent and that means we're not in a hurry. So you have you have a market that's pricing forward expectations of inflation higher, a central bank that doesn't care, and a dollar that's going down. Kit chukes. Can you tell us who are the people who are the big players in the foreign exchange market. The foreign exchange market
doesn't move by itself. It's got people behind it. Who are they? I think that there's been a there's been a mad rush of all sorts of people to benefit from the strong dollar in the last I guess the last eighteen months or so, so European investors who have been buying US as that European investors who have been going short of the short of the of the urosay and long of the dollar when the European Central Band
moves negative reds. There have been certainly an enormous number of the kind of leverage trading community, the edge one community, who have had a long dollar that as part of the gloomy assessment of the global economy and a trade on a trade on monetary policy diversions. You've had a lot of hedging from the corporate sector, for whom a
strong dollar is certainly a concern. If you're an American corporate selling products overseas, you have been hedging pretty much having you can in the currency in case the dollar rises. So it's it's companies, it's hedge funds, it's traders and it's people managing pension funds all over the world, but too many of them with one trade the same way
around for sure. When we look back at the last few months, So kit uh, the bigger Japan did not cut its negative rates even more negative the bigger Japan. Mr Krona wants to give the recent moves a chance to work. How has that played out in the currency market? What does it mean moving ahead? Because one of surprises, of course, has been the strength in the end. Even with Japan, we've been to a negative rate policy. Yeah, I mean, I think they botched their move to negative
rates at the end of January. The the negative rate policies intended to encourage people to invest overseas. Japanese investors were invested overseas over enthusiastic be already and in January when markets were melting down, they couldn't do much more
and that that started this off. Um, you know, either they've made a policy mistake and they just need to wait for the for the dust to settle, or they've they've made a policy to negative rates and they want to wait and see how it does, how it works, and their more adult calm and grown up and fools like me and my like in the market. That's that's possible too. But either way they may well get dolly yen a lot closer to a hundred pliant of time
they're done. Um, the yen is strengthening. There's a resistance at the moment of reluctance to intervene in the foreign exchange markets. Um. That that's that's not something that people are keen to do at the moment, sort of fuel the talk of currency wars. Um. And I think they're just they're just sitting it out for a bit. But that the danger is, you know that buying the yen is the new big thing, just as I don't know, buying all sorts of other things has been in time.
So we're going to overshoot. I don't know how to cope with an overshoot to you know, to a hundred dollar yen, which is another seven per cent or so from here. You know, do I buy the yen or do I wait to tell the end there? Or do I just go and have a long weekend, which I'm getting here now. And maybe maybe it's got a t or is something more that starts with than m possibly kit speak if you can about the investors that may be trapped in a long dollar trade now unwinding to
go to a long Japanese yen trade. Will they get trapped there too? Um? Some of them, I think. I think the rush into the yen at the moment has been um. Short term traders. I think you've got some. I think if you've had a balance of people in the world, you have some long term investors who are still shortly en um, and you have some short term investors who are along the n and the short term investors are moving us right now. I think some of
them may be fact. I mean, you know, not a lot of people have been gods of trading in this market in the last three months. It's been a very difficult start of the year with with with trends breaking up and moving quite violent the other way. So I would expect several people, you know, plenty of people, more people than I can count, will well, we'll find that they can't manage the full in doll again and then the subsequent bands and um, and you know, I don't
think we could. We could easily trade down near a hundred and up near a hundred and twenty old before. I don't know if you're like the fourth of this right. Thank you very much at Kit Juke's Global strategy Associate General. The end right now trading at one oh six to the dollar, Eurospot one fifty, and the British pound at one forty six. Japanese yends gained eleven percent against the US dollars since the beginning of the year. You're listening
to taking stock on Bloomberg Radio China's economy. What do you really need to know and how much can we trust the economic statistics out of China. Coming up on Bloomberg Radio, we're going to tackle that question and more.