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Fed Day, Markets, And Crypto (Radio) · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
0:04
Speaker 1: my co host Matt Miller. Every business day, we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
0:15
Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. Let me bring in
0:24
Speaker 1: Vince Signarelli's global macro UH strategist for Bloomberg News, to
0:30
Speaker 1: talk about. I guess central banks. It's all about central
0:33
Speaker 1: banks today, Vince. And the first question I have is
0:37
Speaker 1: something that Cameron Cries mentioned in his Macroman column. Um.
0:41
Speaker 1: The idea is that there was no vert leak that
0:44
Speaker 1: the FED purposely told the Wall Street Journal We're gonna
0:47
Speaker 1: raise seventy five basis points. And I've heard this from
0:50
Speaker 1: many market participants, some of whom claim to have actual
0:54
Speaker 1: knowledge about it. Is that possible? Do you believe it? Uh? No,
1:00
Speaker 1: aren't really honest? Would you know? UM? I don't think.
1:03
Speaker 1: I don't think the FED is of the mind to
1:06
Speaker 1: single out any one specific news source, UM to suggest
1:11
Speaker 1: that they were going to make something. Is it possible
1:14
Speaker 1: that they could raise seventy five basis points today. Absolutely, Um,
1:18
Speaker 1: but I would argue that they would be making a
1:21
Speaker 1: big mistake. The Fed really needs to explain, well, remind
1:25
Speaker 1: markets of a couple of things. Um that first of all,
1:29
Speaker 1: it takes six months from grodetary policy, that's the theory
1:32
Speaker 1: to wind its way through the economy. We just started
1:34
Speaker 1: hiking rates and expectations, I mean expectations they can affect
1:39
Speaker 1: right away. Yeah, they can, But look at the data
1:41
Speaker 1: so far. Retail sales are dropping, home prices are dropping,
1:45
Speaker 1: Compass and Reds and firing countless employees yesterday because the
1:49
Speaker 1: real estate market is cooling and they have no sales
1:51
Speaker 1: to support it. You know, this is actually if you
1:53
Speaker 1: go back to two thousand and twelve and you see
1:56
Speaker 1: look at CPI and you look at the Fed funds rate,
1:59
Speaker 1: you'll see countless gyrations in the set funds rate beginning
2:03
Speaker 1: at the end of hiking, only to crater those rates
2:08
Speaker 1: all the way back down to zero where they were
2:10
Speaker 1: in twenties fifteen when CPI collapsed, And the three month
2:13
Speaker 1: moving average of CPI across that time is pretty close
2:17
Speaker 1: to unchanged. It's it's a little higher now, but it's
2:19
Speaker 1: higher now. For supply chain reasons, for oil reasons, and
2:24
Speaker 1: for fiscal policy with overly stimulating the economy during the pandemic.
2:29
Speaker 1: Absolutely none of those things had to do with monetary policy.
2:32
Speaker 1: So acute changes in monetary policy, you're gonna make matters worse.
2:35
Speaker 1: Not that, Vince. So I'm gonna call you out of consensus.
2:41
Speaker 1: How typically your career? Are you out of consensus? Uh?
2:45
Speaker 1: About the time went years in a row? So there
2:49
Speaker 1: you go. I've never lost money, absolutely never. I've never
2:52
Speaker 1: lost money in any given years. But we're not betting
2:58
Speaker 1: on this though, right, I mean, I'm just looking at look,
3:01
Speaker 1: I'm I just um, look at this chart. If you
3:04
Speaker 1: want to access it yourself and have a Bloomberg terminal,
3:07
Speaker 1: you can type g hashtag b TV nine six two.
3:12
Speaker 1: I remember that because it's a famous Porsche Lament Porsche.
3:16
Speaker 1: But um, it's University of Michigan inflation expectations five to
3:20
Speaker 1: ten years out and they jump up like the hockey
3:23
Speaker 1: stick in Al Gore's climate change movie. Right, I mean
3:27
Speaker 1: we're expecting now, UM, or at least the University of Michigan. Uh,
3:32
Speaker 1: people were surveyed by UM. The wolverines are looking at
3:35
Speaker 1: three point three percent inflation five to ten years out.
3:38
Speaker 1: That's what the FED needs to break. What we're what?
3:44
Speaker 1: Why why won't the economy do it forth? Why won't
3:48
Speaker 1: the drop in prices do it forth? Why won't those
3:52
Speaker 1: lack of wage growth cool demands as for them? Which
3:57
Speaker 1: is what it always does? All right? So is is
4:01
Speaker 1: a Are we in a stag inflationary environment right now? Vince?
4:06
Speaker 1: Or we potentially will be? Yeah, we were heading towards.
4:09
Speaker 1: I mean, I'm I'm I'm looking at the chart you
4:12
Speaker 1: just said of inflationary expectations. I go back to December one,
4:16
Speaker 1: interest rate through zero and at the end of the
4:19
Speaker 1: set funds rate is two and a quarter to two
4:22
Speaker 1: point five. And on that chart you're just telling me
4:25
Speaker 1: about which I looked up, Uh, the end off to
4:30
Speaker 1: the end of ten year inflationary cost tenor inflation expectations
4:34
Speaker 1: were dropping. While the spec explain that to me because
4:38
Speaker 1: they don't surprise anybody, because they forecast everything, because they
4:42
Speaker 1: use for guidance to tell us, listen, next month, we're
4:46
Speaker 1: gonna start raising rates and it'll be basis points there
4:49
Speaker 1: it'll be fifty. Like what if they just came out
4:51
Speaker 1: and shocked the market the concern is they would break something.
4:55
Speaker 1: But maybe with eight point six percent headline CPI, something
4:58
Speaker 1: needs to get broke. Well, I mean with but it's
5:02
Speaker 1: it's it's it's it's starting to slowly roll over. I
5:05
Speaker 1: mean it, you know as well as I do. Spending
5:10
Speaker 1: in general is ropping because people the wage growth to
5:13
Speaker 1: go along with the price increases. We saw that in
5:15
Speaker 1: today's retail sales comes. That's not gonna go away because
5:18
Speaker 1: the FED races rates said has not. The fact is
5:20
Speaker 1: absolutely no control of disappointment. It's supply side. What are
5:24
Speaker 1: they gonna do. They're gonna try to raise rates to
5:26
Speaker 1: further curb demare. It's already happened in the housing world.
5:29
Speaker 1: What more, what more do they need to do? Raising
5:32
Speaker 1: rates is not gonna is not gonna lower the price
5:34
Speaker 1: at the stake or or or dinner at a restaurant,
5:37
Speaker 1: or or anything else. It may lower the price of housing,
5:40
Speaker 1: but that's that's just about it. It's not gonna put
5:42
Speaker 1: more money in people's pockets so they can pay for something.
5:45
Speaker 1: You know, the set has been horrible at forecasting both
5:49
Speaker 1: inflation and economic growth since Greenspan. I mean, look a
5:54
Speaker 1: year and a half ago, they were this inflation was transitory.
5:58
Speaker 1: Now they're saying it's permanent. Why is why are these
6:01
Speaker 1: Why am I so confident what they're doing? Good point.
6:04
Speaker 1: That's a good point, alright, Vince. That's why we had
6:07
Speaker 1: you on because we need the non consensus call from
6:10
Speaker 1: time to time, and Vince usually brings that game. Vince Signarella,
6:14
Speaker 1: global macro strategist at Bloomberg News. I want to bring
6:22
Speaker 1: in next guest, Jennifer Lee. She's a senior economist and
6:24
Speaker 1: managing director Demo Capital Markets. Jennifer Obviously, uh, we were
6:28
Speaker 1: focusing on the ECB earlier this morning, on their surprise
6:31
Speaker 1: announcement kind of a nothing burger. I guess, as some
6:33
Speaker 1: people are saying, now all eyes turned to this Federal Reserve,
6:37
Speaker 1: and I would think the consensus feels like seventy five
6:39
Speaker 1: basis points, although we just had Vince Signarella, macro strategist
6:43
Speaker 1: for Bloomberg News saying, you know, they don't really have
6:45
Speaker 1: to do that. Fifty would be Okay, what are you
6:48
Speaker 1: expecting this afternoon? It depends on who you're asking in
6:52
Speaker 1: our group about what we're protecting. But I think I
6:54
Speaker 1: think right now seventy basis points is probably the most
6:58
Speaker 1: likely outcome just give in that. It's almost like they
7:00
Speaker 1: backed themselves into a corner having that story come out.
7:04
Speaker 1: I don't know whether or not leak or not up
7:06
Speaker 1: a purposeful leak, but it's almost like if they don't
7:08
Speaker 1: do seventy five basis points, it won't go over well
7:12
Speaker 1: with the markets. Um, so it probably STUDI five basis
7:15
Speaker 1: points and maybe a lot more hawkish language. By the way,
7:17
Speaker 1: you're not alone out there. I've noticed, Uh sometimes a
7:20
Speaker 1: chief strategists like Marco Kolanovitch doesn't agree with his chief
7:25
Speaker 1: economist or his CEO. So, um, it seems like the
7:29
Speaker 1: people within our group, by the way, well, uh, the
7:34
Speaker 1: problem is obviously inflation, and the FED needs to deal
7:38
Speaker 1: with that. Whether it goes fifty now or seventy five
7:41
Speaker 1: now and then seventy five next week or fifty next
7:44
Speaker 1: week probably probably isn't that important, right Are they going
7:48
Speaker 1: to be able to get prices down? Can they really
7:51
Speaker 1: do anything about it? Vince was saying, you know what,
7:54
Speaker 1: this isn't something that monetary policy can necessarily solve. So
7:58
Speaker 1: monson paulicit being as the class sick blunt instrument. I mean,
8:01
Speaker 1: there's the supply side. Um, of course, all the supply
8:04
Speaker 1: factors energy prices as well from the war, that has
8:07
Speaker 1: been a big contributor to to inflation. But at the
8:09
Speaker 1: same time, on the demand side, all the money that
8:12
Speaker 1: people saved during the pandemic broadly speaking, of course, all
8:15
Speaker 1: the fiscal support that has caused a huge um increase
8:19
Speaker 1: in demand, all that contempt demand. So what the FED
8:22
Speaker 1: was trying to do and what most central bankers are
8:24
Speaker 1: trying to do is basically a collaborative. I can say
8:26
Speaker 1: that claber of the demand side with higher rates, and
8:29
Speaker 1: that will at least go some way to bring inflation lower.
8:33
Speaker 1: Maybe not quickly as quickly as we had expected, but
8:36
Speaker 1: it will go some way towards doing that. So also today, Jennifer,
8:41
Speaker 1: we had some economic data come out this morning. UM,
8:44
Speaker 1: retail sales a little bit weaker than expected. Any read
8:46
Speaker 1: through there for you, It wasn't as I mean, I
8:50
Speaker 1: don't think we should, even though consensus including US had
8:52
Speaker 1: had a small increase expected for May. I don't think
8:56
Speaker 1: some of the details were too too shocky. Um. A
8:59
Speaker 1: lot of it was ours. I think that I was
9:00
Speaker 1: going a half percent or something like that. Gasoline, gasoline
9:03
Speaker 1: and sales are up a lot, but even X autos
9:05
Speaker 1: and X gas, you know, still up mildly. Some of
9:08
Speaker 1: the discretionary stuff was interesting, like sporting goods. I think
9:11
Speaker 1: we're still higher and people were still dining out, so
9:13
Speaker 1: it wasn't all negative. But of course this is just
9:16
Speaker 1: the start, and I think we're gonna start seeing the
9:19
Speaker 1: big slow down cutting from the consumer. So how big
9:22
Speaker 1: is the question right especially considering how much the consumer
9:25
Speaker 1: um contributes to US economy growth. Is it going to
9:29
Speaker 1: be big enough to bring us into a recession? Well,
9:34
Speaker 1: right now, we're thinking more of a growth recession in
9:37
Speaker 1: terms of like just floor grows and starting to bring
9:40
Speaker 1: the unemployment rate a little bit higher. UM, not an
9:43
Speaker 1: outrates recession that we are all accustomed to hearing about.
9:47
Speaker 1: Does everyone in your group expect just that, Jennifer, Yes,
9:50
Speaker 1: that is because that is a very widespread view with
9:54
Speaker 1: an opera on our group. UM. I will continue to
9:57
Speaker 1: lean on the fact that as of right now, the
9:59
Speaker 1: labor mark it continues to be super strong, but that
10:02
Speaker 1: cannot last forever. And I think I mentioned this at
10:04
Speaker 1: least over the last few months, that you know, anyone
10:07
Speaker 1: who has several different job offers out there, you know,
10:10
Speaker 1: I hope that they're taking one of them now because
10:12
Speaker 1: it's not going to be available forever. I mean, you
10:14
Speaker 1: can I'm imagining companies who perhaps have been looking for
10:17
Speaker 1: I don't know, I'm gonna say, like, you know, a
10:19
Speaker 1: dozen people to hire, and if they haven't been able
10:21
Speaker 1: to fill those jobs, mean at this point they were
10:23
Speaker 1: thinking maybe we don't need them, you know, and demands
10:25
Speaker 1: starting to taper off, maybe we won't be needing all
10:28
Speaker 1: those you know, we don't won't be needed to hire
10:29
Speaker 1: all theople of people. So you have to imagine that
10:32
Speaker 1: it's going to start tapering off at some point. So Jennifer,
10:35
Speaker 1: just going back to last Friday with that CPI print,
10:38
Speaker 1: which was such a surprise I think to the marketplace,
10:40
Speaker 1: and we saw it into trading in the markets Friday,
10:44
Speaker 1: Monday and Tuesday. UM, a little bit of hindsight here.
10:49
Speaker 1: What's your kind of main takeaway from that. I feel
10:53
Speaker 1: that every country around the world continues to perhaps misread
10:58
Speaker 1: the inflation data or kind of expect some expecting plation
11:02
Speaker 1: to start tapering off, but again it hasn't happened. Jeff Standon,
11:05
Speaker 1: this is why you're seeing all these central banks. You know,
11:08
Speaker 1: doing stepping up to do more, you know, except of
11:10
Speaker 1: course for the bag Japan. But um, you know again
11:12
Speaker 1: because we always it's just it's just continued to surprise
11:16
Speaker 1: on the high side, and I think it's going to
11:17
Speaker 1: continue doing so until it doesn't. By the way, I
11:20
Speaker 1: was thinking today, I was putting together a list of
11:23
Speaker 1: the things I could fund shorting jgbs. I mean, what
11:27
Speaker 1: a cake walk, right? What are jgbs Japanese government bonds.
11:31
Speaker 1: I'm just gonna I'm just gonna borrow Japanese tenure bonds,
11:35
Speaker 1: sell them short and then like instead of a mortgage,
11:38
Speaker 1: or instead of corporate financing, or instead of selling treasuries,
11:42
Speaker 1: the US government could fund operations shorting jgbs. It's a
11:45
Speaker 1: there's no loss, there's no downside of this trade, Jennifer
11:50
Speaker 1: and Governor Caruda could continues to say that, you know
11:52
Speaker 1: that their economy is a lot different and that is
11:55
Speaker 1: not the time to raise rates. There you go, all right,
11:57
Speaker 1: Jennifer Lee. Always appreciate getting a few minutes of your
12:00
Speaker 1: time on this FED days. We wait the FED statement
12:03
Speaker 1: two pm. Wall Street time. I am back here stuck
12:08
Speaker 1: in New York City, UM, with my friend Katie Greifeld,
12:12
Speaker 1: with whom I anchor every Monday, the E T F
12:15
Speaker 1: I Q Show on Bloomberg Television times on Mondays, Wednesdays.
12:18
Speaker 1: Sometimes on Wednesdays we're waiting for a decision from upper upper,
12:23
Speaker 1: upper management on that. But she also focuses big lely
12:28
Speaker 1: on cryptocurrencies and it has been a world of hurt.
12:32
Speaker 1: Katie Gray felt, what with what was it called tara
12:36
Speaker 1: Um Luna and then UM what was the Celsius? And
12:41
Speaker 1: now Three Arrows? What's names? I From what I can
12:47
Speaker 1: tell talking to UM investors to traders, this is just
12:50
Speaker 1: looking like a beautiful liquidation cascade that obviously, with Tera
12:55
Speaker 1: blowing up, we knew that a lot of people, a
12:58
Speaker 1: lot of high profile backers were involved in Tera, and
13:01
Speaker 1: you've sort of seen the slow drip out of that.
13:04
Speaker 1: Slow is a relative term. Everything happens faster in crypto,
13:07
Speaker 1: and now it seems like, uh, this is really happening,
13:11
Speaker 1: uh with a much greater intensity. A lot of leverage
13:14
Speaker 1: is getting flushed out right now. And there's a lot
13:15
Speaker 1: of questions about a lot of those names you just mentioned,
13:18
Speaker 1: such as Three Arrows and some of the other big
13:20
Speaker 1: hedge funds in the space. All right, talk to us
13:22
Speaker 1: about coin Base, because that you know, a lot of
13:25
Speaker 1: folks were leading the financial services industry and saying, oh,
13:28
Speaker 1: this platform, this is the future. Um speaking of Cascade, Yes,
13:34
Speaker 1: and then boy and a lot of folks lost their
13:36
Speaker 1: jobs and so on. So what do we know about
13:37
Speaker 1: these trading platforms? Uh? You know, everybody just focuses on
13:41
Speaker 1: the bitcoin and the price of bitcoin because you can
13:42
Speaker 1: see it on your Bloomberg terminal, But how about some
13:44
Speaker 1: of these exchanges, the kind of the plumbing. It's a
13:46
Speaker 1: great point that it's not just the price of bitcoin.
13:48
Speaker 1: You have an entire industry built around it as well.
13:51
Speaker 1: And if you think about coin Base, obviously, the news
13:54
Speaker 1: from this week was that they're going to lay off
13:55
Speaker 1: eight of their workforce. This, of course, I mean they've
13:58
Speaker 1: hired aggressively just this year, a loan adding. I think people,
14:02
Speaker 1: this isn't entirely just a crypto problem. I mean, we've
14:05
Speaker 1: heard about a lot of crypto layoffs, but if you
14:07
Speaker 1: think about what's happening in the broader economy, we're seeing
14:09
Speaker 1: it with a bunch of other companies as well. I mean,
14:11
Speaker 1: if you think about what we heard about Amazon and Walmart,
14:15
Speaker 1: they overstaffed too. It's just that this is hitting at
14:18
Speaker 1: a very painful time for crypto and you are seeing
14:21
Speaker 1: again some of the biggest names out their coin base
14:23
Speaker 1: having to announce these massive layoffs. We heard from Block
14:26
Speaker 1: five this week as well, laying off of their workforce. Interestingly, though,
14:30
Speaker 1: krack In just today another exchange came out and said
14:32
Speaker 1: that there are launching a global hiring push. So some
14:36
Speaker 1: of these firms are trying to swim against the current here. Yeah.
14:38
Speaker 1: Actually I got to talk to Nick Carter yesterday from
14:42
Speaker 1: Castle Island Ventures. I was very excited about that. Him mustache. Yes,
14:46
Speaker 1: his mustache is awesome, and he says, plus, he also
14:49
Speaker 1: is one of the smartest voices on crypto. He was
14:53
Speaker 1: one of the first UM financial analysts on crypto on
14:56
Speaker 1: the street. And um he says, Look, if you're if
14:59
Speaker 1: you a good smart engineer with good experience, which a
15:04
Speaker 1: lot of those people from coin based are, it's gonna
15:05
Speaker 1: be no problem for you to find another job in
15:09
Speaker 1: crypto or in tech. In in a broader sense. Um,
15:13
Speaker 1: but there is an issue, it seems with steaked ether
15:17
Speaker 1: like this first became apparent UM when when we saw
15:21
Speaker 1: that uh lido one platform was holding thirty one of
15:27
Speaker 1: all steaked ether. It's a custodian right for others. And
15:30
Speaker 1: and now, um, we've heard that the difficulty bomb has
15:33
Speaker 1: been delayed. This was a way to kind of speed
15:36
Speaker 1: up the merger from proof of work ether to proof
15:39
Speaker 1: of steak ether. Now Three Arrows has been liquidating its
15:45
Speaker 1: steaked ether for regular ether. What's what's going on with
15:48
Speaker 1: this with the merge, as they call it, the switch
15:51
Speaker 1: to a more environmentally friendly way of minding crypto. It's
15:54
Speaker 1: a great question. We've been waving on the merged for
15:57
Speaker 1: a while. The latest we know is it's supposed to
15:59
Speaker 1: take place later this year. And like you said, I
16:02
Speaker 1: mean this ties back into the Three Rows capital conversation.
16:06
Speaker 1: One of the most prolific crypto hedge funds out there.
16:08
Speaker 1: They have a lot of exposure to steaked ether and
16:11
Speaker 1: they had ten billion dollars under management. That's a lot
16:15
Speaker 1: of money. That is a lot of money. They were
16:18
Speaker 1: one of the investors in Terra. We know that they
16:20
Speaker 1: have exposures to state ether. All of the things that
16:23
Speaker 1: are kind of going wrong right now, so with steaked ether,
16:25
Speaker 1: so it's supposed to be redeemable for one ether after
16:29
Speaker 1: the merge takes place, but we don't know when exactly
16:32
Speaker 1: that's going to happen. And what's happening now is you're
16:34
Speaker 1: seeing this big dislocation between the price of staked ether
16:38
Speaker 1: and ether itself, and that is really painful for funds
16:43
Speaker 1: such as Three Rows Capital. By the way, we're seeing
16:45
Speaker 1: on Bloomberg Television, I see Michael Sunnenshine from Gray Scale
16:49
Speaker 1: Capital is talking to Guy and Alex and Three Arrows
16:53
Speaker 1: reportedly had a more than five percent stake in the
16:56
Speaker 1: Gray Scale e T F. Right, Yes, not an e
16:59
Speaker 1: T F Are you sorry? Yes? So they this is
17:04
Speaker 1: data is as of December that they had that five
17:07
Speaker 1: percent stake in uh Grace Scales Bitcoin Trust. Unclear whether
17:12
Speaker 1: they still do, unclear whether they're selling that right now
17:15
Speaker 1: in the secondary market. But I mean, if you think
17:18
Speaker 1: about hedge funds, they would sell their most liquid things first,
17:23
Speaker 1: and I don't know. I would imagine g v D
17:24
Speaker 1: two shares are a little bit more liquid than steaked ether,
17:27
Speaker 1: but it's hard to know at this point as we
17:29
Speaker 1: again just see leverage get wiped out across the industry.
17:33
Speaker 1: And you know, with that, Katie, a lot of folks
17:35
Speaker 1: are saying I told you so. Even Bill Gates kind
17:37
Speaker 1: of jumped onto that bandwagon here, who are the true believers?
17:42
Speaker 1: Where are they? Who are they in crypto? Because uh,
17:46
Speaker 1: it was obviously it is still a very big story.
17:50
Speaker 1: It was never Bill Gates, Yes, you can start with that.
17:53
Speaker 1: He was never believer, Jamie Diamond, Warren Buffett, especially really
17:58
Speaker 1: old people. Yeah, not not true believers. Well, I mean
18:02
Speaker 1: it's funny if you think about people, if you just
18:05
Speaker 1: think about what's different between now this moment and the first.
18:10
Speaker 1: It just feels like traditional Wall Street has too many
18:13
Speaker 1: arms into crypto to completely withdrawal. So we'll see if
18:17
Speaker 1: that's a layer that's involved with this crash. But it's
18:21
Speaker 1: funny to talk about sun and Shine. So he is
18:23
Speaker 1: at Gray Skill, he's the CEO. There a song to
18:25
Speaker 1: him rate before his BTV interview. He's a true believer.
18:29
Speaker 1: He's a true believer. He made the point that you
18:31
Speaker 1: see periods like this, you get a lot of leverage
18:34
Speaker 1: flushed out, and basically it leads out the players who
18:37
Speaker 1: were maybe playing it a little too fast with the
18:41
Speaker 1: leverage too cute, too cute. It tends to be a
18:44
Speaker 1: healthy period. But that's what you would expect to hear
18:46
Speaker 1: from some of those true believers. Michael sn and Shine.
18:49
Speaker 1: Absolutely right. But the bottom line, um, even though we're
18:52
Speaker 1: seeing a lot of unwinding of leverage, this isn't going away.
18:56
Speaker 1: I mean, even though we've seen a crash in the price,
18:58
Speaker 1: it's not sound like a man your anchors a weekly
19:01
Speaker 1: crypto show. Also, because I just heard David Rubinstein say
19:04
Speaker 1: that yesterday. I mean, if you think about our world,
19:07
Speaker 1: and again I'm a journalist, I have no opinions are
19:10
Speaker 1: increasingly digital world kind of makes sense that digital money
19:13
Speaker 1: would be a part of it, that our lives would
19:16
Speaker 1: move increasingly online. I mean, I think about the true
19:18
Speaker 1: directory of my own life. All right, Katy gray Felt,
19:21
Speaker 1: thank you so much for joining us as always talking
19:23
Speaker 1: about the crypto, all things crypto. She's a Cross Asset
19:27
Speaker 1: reporter Bloomberg Quick Take co anchor. We are in Dallas, Texas.
19:35
Speaker 1: We bring in Matthew Forster, c I O and Managing
19:37
Speaker 1: director b n Y Melon Lockwood Advisors. Matt, it's a
19:41
Speaker 1: fed day today. I'd love you know, this is kind
19:43
Speaker 1: of all we've been talking about here on radio, on television.
19:45
Speaker 1: What do you guys at bing and Y melon thinking
19:48
Speaker 1: about your feather reserve. Well, some of them that might
19:52
Speaker 1: be sci fi fans might like to have read um
19:55
Speaker 1: Douglas Adams Hitchhiker's Guide to the Galaxy. And if you remember,
19:58
Speaker 1: that book comes with two bright bold words on the
20:01
Speaker 1: back that says, don't panic, right, And uh, you know,
20:05
Speaker 1: I think if you look at what has occurred around
20:07
Speaker 1: the world today with central banks, there's just a little
20:10
Speaker 1: tinge of panic. We have Ben Brunankee with an op ed, uh,
20:14
Speaker 1: you know, talking about the FED credibility and that this
20:17
Speaker 1: isn't the seventies. We have the e c B with
20:20
Speaker 1: this unusual communicate which talks about how they're gonna be
20:23
Speaker 1: flexible around anti fragmentation. Uh. These kinds of unusual terms
20:29
Speaker 1: and literally vague wording I think doesn't maybe help. Uh.
20:33
Speaker 1: And we also, of course have the FED decision today,
20:35
Speaker 1: where you know, there's some discussion about how far they
20:37
Speaker 1: could go and whether or not a move with just
20:39
Speaker 1: a couple of days ago, we were thinking that fifty
20:42
Speaker 1: basis points was baked into the cake. Um and here
20:46
Speaker 1: we have seventy five, then possibly even a hundred, and
20:49
Speaker 1: it looks like the market is completely shifted to having
20:52
Speaker 1: seventy five basis today points today, and usually the FED
20:56
Speaker 1: does not disappoint the markets when they've already built into
20:59
Speaker 1: that pricing, right. So I would have said fifty a
21:01
Speaker 1: few days ago, and now I think it's maybe likely
21:04
Speaker 1: that they got exactly and that's kind of what I
21:07
Speaker 1: would think consensus might be. Hey, man, as we look
21:09
Speaker 1: around here, I see a lot of your you know,
21:14
Speaker 1: the firms you do, your partners. I looking at Janie Henderson,
21:16
Speaker 1: I'm looking at you know, Eating Vance and all these folks,
21:19
Speaker 1: and they're here, which is good because it's been a
21:21
Speaker 1: couple of years. What are you hearing from your partners,
21:23
Speaker 1: the folks that you would be in my melandue business with,
21:26
Speaker 1: because it's been a crazy two and a half years
21:29
Speaker 1: and has sent and uh. Yeah. The important point for
21:31
Speaker 1: us to remember is that we work with all of
21:33
Speaker 1: these large firms here. We're there are suppliers to us
21:36
Speaker 1: on a third party asset manager. We've managed some of
21:39
Speaker 1: our own, uh, and so we work with all of
21:42
Speaker 1: them and we hear from them around products. So yesterday
21:44
Speaker 1: we did a little survey about how their product mix
21:48
Speaker 1: might be changing, and there's a lot of what's happened,
21:51
Speaker 1: you know, so far a year to date, and what
21:53
Speaker 1: we see is that our main partners are much more
21:58
Speaker 1: concerned about the current capital market environment. It they were
22:00
Speaker 1: just a couple of months ago. So you know, a
22:02
Speaker 1: few months ago at the end of last year, of
22:03
Speaker 1: course markets were roiling um and all of these other pieces, uh,
22:08
Speaker 1: you know for all kinds of more esoteric products, maybe
22:11
Speaker 1: niche year products were highlighting what they wanted to think about,
22:15
Speaker 1: you know, direct indexing, e s g. All kinds of
22:17
Speaker 1: other things. Now you know, they're back to focusing on
22:19
Speaker 1: the basics and protecting their clients against no really challenging
22:23
Speaker 1: capital markets that we've seen so far this year. Yeah,
22:24
Speaker 1: I like so it being why Melon talked to us
22:27
Speaker 1: about your business. I mean, again, the two and a
22:29
Speaker 1: half years of this crazy market we've been going through.
22:32
Speaker 1: Now we've got this inflation like we've never really seen
22:35
Speaker 1: and we're gonna have what they're saying is a couple
22:37
Speaker 1: more months of bad prints on the inflation front. How
22:40
Speaker 1: does that affect your business? How does that affect your clients? Well, Uh,
22:44
Speaker 1: we're we've come through this fairly well. Uh and um,
22:47
Speaker 1: that's because we've had some hedges inflaces, whether that's direct
22:50
Speaker 1: equity hedges or hedges to say around a strong dollar
22:54
Speaker 1: with reguards of our international currency, uh, exposure from international
22:58
Speaker 1: equities that may not be ever. Remember, we have we
23:01
Speaker 1: manage many different, hundreds of different portfolios for various clients.
23:04
Speaker 1: Some of those are custom builds, some of those are
23:06
Speaker 1: partners with the firms that you see here today. So
23:09
Speaker 1: we provide a large group of of investments around to
23:12
Speaker 1: our platforms and um, you know, all of those are
23:16
Speaker 1: they're doing different things here. So hopefully we can find
23:18
Speaker 1: something investors can find a way to find something that
23:20
Speaker 1: they feel comfortable within this particular mark environment. Yeah, it's crazy.
23:24
Speaker 1: I mean, anywhere you look this year, equities down plus stuff.
23:27
Speaker 1: You know, the corporate bond index of Bloomberg Corporate bought
23:30
Speaker 1: index totally turned down twelve thirteen percent. There's really been
23:33
Speaker 1: no place to hide other than maybe, you know, commodities,
23:36
Speaker 1: you know, you maybe oil in your partner. Commodities and
23:40
Speaker 1: energy have been the place to hide out. Even then,
23:43
Speaker 1: you've seen a lot of volatility, but clearly they're they're
23:45
Speaker 1: continue to be up, and I still think there's plenty
23:47
Speaker 1: of opportunities there to continue to add to some of
23:50
Speaker 1: your positions, because it doesn't look like any of these
23:53
Speaker 1: uh trends that we've seen resolution in the current Ukraine.
23:56
Speaker 1: Other things are going to happen soon enough to affect
24:00
Speaker 1: some of those market prices. Uh. You know, we'll have
24:02
Speaker 1: to see how FED tightening continues to affect those prices.
24:05
Speaker 1: I think that's likely that it will in time. But
24:08
Speaker 1: you know, from the moment, we've got these big supply
24:09
Speaker 1: and balances, uh, you know around agricultural commodities or or
24:14
Speaker 1: or energy and to tricial commodity basket. So I think
24:17
Speaker 1: there's still opportunities there. But uh, there are still places
24:20
Speaker 1: to hedge, you know, with the FED tightening so much. Again,
24:24
Speaker 1: you know, people don't a lot of American advisors don't
24:27
Speaker 1: think about this so much, but there's effects effects, you
24:30
Speaker 1: know anything, you know, and all commodities are priced in dollars,
24:33
Speaker 1: so you know, while the dollars rising, you're getting kind
24:35
Speaker 1: of a double kicker there. But your international effects exposure
24:39
Speaker 1: is not hedged in many cases. So those are the
24:41
Speaker 1: kind of things that I think you might want to
24:42
Speaker 1: think about to try to take the sting out of
24:45
Speaker 1: the equity price and clients that we've seen. All right, Matthew,
24:48
Speaker 1: thanks for coming with us. I mean again, it looks
24:50
Speaker 1: like you guys having a great conference, great turnout. We're
24:52
Speaker 1: glad to be a part of it. Uh. For nothing else,
24:55
Speaker 1: it's just good to see you know, folks at getting
24:58
Speaker 1: back together again face to face. I've seen people you know,
25:00
Speaker 1: huddling corners, you know, talking and that's kind of what
25:02
Speaker 1: it's all about. Yeah, we haven't seen because some of
25:04
Speaker 1: these colleagues I haven't met before because they're relative new hires,
25:07
Speaker 1: and that's like just great to actually get a chance
25:09
Speaker 1: to meet them. So we're all back in person and
25:10
Speaker 1: live here and have a lot of network and going on.
25:12
Speaker 1: All right, it's good stuff. Matthew Farster, c I O
25:15
Speaker 1: and Managing Director B. N Y Melon Lockwood Advisorshare joining
25:19
Speaker 1: us here at this conference here at the Gay Lord,
25:22
Speaker 1: uh Texan resort. Great facility here, huge uh and it's
25:26
Speaker 1: doing a good job taking care of all the folks here.
25:28
Speaker 1: Looking at the markets here. We still got some green
25:31
Speaker 1: on the screen. Ahead of that FED meeting two pm
25:34
Speaker 1: Wall Street times when we will get the statement and
25:36
Speaker 1: then of course to thirty or so Wall Street time
25:39
Speaker 1: PM we will get the conference with FED chairman Pal
25:43
Speaker 1: we'll face some questions. Thanks for listening to the Bloomberg
25:47
Speaker 1: Markets podcast. You can subscribe and listen to interviews with
25:51
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.
25:56
Speaker 1: I'm on Twitter at Matt Miller. An Impulse Sweeney I'm
26:00
Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can
26:03
Speaker 1: always catch us worldwide at Bloomberg Radio