Broadcasting live to New York, Bloomberg eleventh, RYO to Washington, d C, Bloomber to Boston, Bluemberg, dwell under It to San Francisco, Bloomberg nine to the countries. Do these exam General one ninet and around the globe the Bloomberg Radio, Los App and Bloomberg got gone. This is taking stock.
I'm Kathleen Hayes along with Pim Fox. Something's been hard to find recently showing up in the money markets, and that's yield rising rates paid by banks and other company's initial commercial commercial paper are learning new new investors to the market. And we have a guest coming up who says investors who choose not to participate in a government forced money market fund migration stand to profit handsomely. Pim Yes. I'm also I'm gonna be talking about some changes to
the rules that govern money market funds. That's all coming up. All right now, let's go to Charlie Pellet in the Bloomberg newsroom for Bloomberg Business Flash, and I thank you very much, Pim Pox. Thank you, Kathleen Hayes. The down the SMP Nez Bank All Advancing final thirty minutes of
trading on a Tuesday. Here we've got the SMP up three now to three again there of two tents of one percent, Nestack now up eighteen points, Hire by four tenths of one percent down, Industrials up twenty nine points again there of two tents of one percent. One of today's catalysts for the move higher a number of companies announcing deals after the Labor Day holiday in global central banks very much in focus this month. David Kelly is
chief global strategist of JP Morgan Funds. Problem has been every time there's any weakness in the the Japanese economy or in the European economy, the knee jerk reaction has Okay, we'll do more in terms of quantitative easing, and it's a um I think that I think they're beginning to learn the lesson that they're there. They really are hurting the banks by doing so. They've got to make it profitable for banks to lend, and so I think that
message is getting through. Right now, the SMP five hundred index is trading higher by three points to three, a gain there of two tents of one percent, down Industrials of twenty nine again, also of two tens of one percent, and as stand up eighteen a gain of four tenths of one percent. Ten year up seventeen thirty seconds yield one point five four percent, and gold of twenty thirty ounce the thirteen forty nine, a gain there of two percent.
New York Attorney General Eric Schneiderman has opened an antitrust probe into Milon Pharmaceuticals, saying a preliminary investigation shows the company may have inserted anti competitive terms into its EpiPen sales contracts with numerous local school systems. Gold again up twenty six thirty, a gain there of two percent. Three thirty two on Wall Street. Now look at the other stories making news. Thank you Charlie from the Bloomberg News Room.
I'm Jill Schneider. This news update is brought to you by Bentley University. What do you developing apps at Facebook and analyzing data at Biogen have in common? An NBA from Bentley University, where you will explore innovation leadership because business is everywhere, prepare here. Donald Trump and Hillary Clinton are in a statistical dead heat, according to a new national poll by CNN. Speaking in Virginia Beach today, Trump noted the new poll numbers. That big pole came out
today that Trump is winning. It's good psychology. I know that for a fact, because people that didn't call me yesterday they're calling me today. So that's that's the way life works. Speaking to reporters on board her plane today, Hillary Clinton also reacted to the latest polling. They're good for me, and there's been a lot of them that have been good for me recently. I don't pay attention when they're you know, not so good. I don't pay attention.
President Obama is the first American president to visit LAOS. Bloomberg's Michael Barr tells us more. President Obama says the US is committing ninety million dollars over the next three years to help LAOS clear unexploded bombs the US dropped on the country during the Vietnam War. That conflict was another reminder that whatever the cause, whatever our intentions, war inflicks a terrible toll, especially on innocent men women shoulder.
President made his announcement while it allows for a summit of Southeast Asian leaders. Michael Barr Bloomberg Radio. A group of advocates is launching a national campaign to press large retailers and restaurant chains to end on call and last minute scheduling. That follows recent deals by several retailers to end the practice. In New York Global News twenty four hours a day, powered by more than journalists and analysts
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I'm Charlie Pellett and that's a Bloomberg business flash. This is you Can Stock with Kathleen Hayes and Prim Fox on Bloomberg Radio. Government forced money market fund my gration. Some who don't participate stand to profit handsomely, and yet there are a lot of people seem to be hitting in that direction. So what is the red light that our next guest is holding up. We're very happy to welcome back to the show Hanley Smith. He's senior vice
president at Vanderbilt. So good afternoon, sir, thank you for having me back. Thank you, well, it's great to have you, great to have you in studio. So, first of all, what is going on with the regulations that are changing set the table for us, No, we'll starting October, the SEC is instituting new rules on what's called money market funds or in the trade to a seven funds, and I won't get too technical, but it's a two point
seven trillion dollar market that's being rewritten. UM. Prime money market funds which use commercial paper repo, those types of things, non government types of holdings, will be to do one of three things. Number one, they'll float their net asset value. Now we've all grown up with the one dollar in one dollar rout. That's changing just for prime money market funds.
And more to the point, which I think is what's getting people concerned, is if the money fund gets in any kind of distress, which is unusual, but it did happen in two thousand and eight. As we know that the fund can institute redemption fees or can actually gate the redemptions. So a lot of corporate treasures and CFOs that typically use. Prime money market funds are migrating out of those types of funds into government only funds, which will continue to have the one dollar rena V without
the requirements of gating or redemption fees. So that's where you're seeing this migration. So I think it was maybe the spring or probably earlier the summer, where prime funds were always much higher in terms of assets. Now that's switched, so you're starting to see that great migration. And what it's happening and what's it's causing is that the types of assets that's usually invest in prime money funds are
getting cheaper because people are selling them. So I think that there's an opportunity for those investors that want to remain in those types of assets to to benefit. And you're starting to see that three month library one month labrary has popped up. You're starting to see prime money market funds as well as those that you separately managed accounts, starting to see much greater yields than you've seen over
the last couple of years because of this migration. Let's say you're an individual that has a money market account as part of your brokerage account, your overall portfolio. I know that it's not a bank account. But many people you and I were just talking about this before you came on. Many people treat it like a bank account because you can write checks against it. You can also
use a credit or debit card against it. What are some of the questions that if you have a money market fund, what kind of detailed answers do you need in order to understand whether any of this is going to affect you. Well, first of all, you're right, they've been sold for so many years as as dollar good, so it's a savings account to many people, and that's the way it's been sold for forty years. Uh. In two thousand and eight where we had the hiccup so
to speak, that those all those rules changed. But people have to remember it's not a saving as account. It's actually an investment portfolio with investments underneath that actually fluctuate. Now they might be short term three months, nine months, so the fluctuations are minimal, but still they do. And I think where the real concern is because of the cost of running some of these funds. Due to the
extra regulations. UH, some of these money funds have stretched into areas where they haven't normally have been to get some yield into the portfolio. So first and foremost you'll get a statement, or you'll get our perspectives, or you'll get a quarterly report on the money fund. Take a look at it. Um. We do a lot of investing at Vanderbilt Avenue for family offices and high net worth individuals, and if you do what We've looked at some of these portfolios, and I saw one recently where I looked
at the portfolio. Half of the assets I didn't understand what they were and the other half I wouldn't own if I would. So it's important, um, for those in the industry as well as in the retail sector, just to take a look at the portfolio. Are you comfortable with those those assets? Okay? So who's to blame or who's causing this? Because it seems that people are yield hungry right understandably. Uh, the Federal Reserve keeping the key
rate just off zero, that's one side of it. The other side, though, is all the regulation that the Dodd Frank legislation piled onto just about any kind of entity
doing business in the financial services industry. Yeah, check one, end two, Because again I think we've been in an artificial environment because of the low rates, because of all the uh QEI and the things that we've talked about for so many years keeping these rates down, and so there's a lot of unintended consequences that could arise from coming back off of you know, normalization policy or whatever might But you're right, there's been a lot of regulations
to camp clamp down on these particular types of funds, and so we're we're just concerned as a firm that again people treated as a bank account when it truly isn't. And the thing that I would just be cautious of is because of all the uncertainty and the volatility we've seen in the markets over the last couple of years, people have been holding on to a lot more cash
just to feel comfortable. So pre two thousand and eight, where cash was a couple of percentages points of my portfolio and it was on a money market fund and it was okay, and I didn't have to worry about it. Post two thousand eight, that's changed with a lot of investors. We're seeing cash could be anywhere from twenty of the portfolio, and uh, what that's forcing them to do is go places where they wouldn't normally be, and that's where the problem comes up. Thank you very much. Henley Smith is
senior vice president Vanderbilt Avenue Asset Management. They're based in New York. You're listening to taking stock and this is Bloomberg. No such thing as a free lunch inflows to et F, laying the seeds for heightened volatility and value destruction in the future because of ill liquid assets they hold us. Our next guest argument coming up right here on taking stock,