Latest / Bloomberg Intelligence / Markets, Crypto, Porsche, And The Queen (Podcast)

Transcript

Markets, Crypto, Porsche, And The Queen (Podcast) · 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
0:06
Speaker 1: you interviews from CEOS, market pros and Bloomberg experts, along
0:11
Speaker 1: with essential market moving news. Find the Bloomberg markets podcast
0:15
Speaker 1: on Apple podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg Dot com slash podcast. Let's get right to
0:22
Speaker 1: our next guest, William Houston, see io of Bay Street
0:25
Speaker 1: Capital Holdings. So William, you prefer William or bill? How
0:30
Speaker 1: are we going here? Yeah, William, awesome. Great. So William portfolio.
0:36
Speaker 1: I grew up with that. That didn't work for me
0:39
Speaker 1: so well this year. What are you kind of doing
0:42
Speaker 1: their over at bay street in terms of allocating access
0:46
Speaker 1: between equities, fixed income, maybe some commodities, maybe some alternatives.
0:50
Speaker 1: I mean, what do you do in a market environment
0:52
Speaker 1: like this? MM HMM. It's not so much the allocation
0:56
Speaker 1: right now as much as what the marketing anticipating. So,
1:00
Speaker 1: you know, as long as the Fed continues down this
1:03
Speaker 1: course of raising rates, we're going to see more of
1:05
Speaker 1: the same of what we're seeing in the market, you know,
1:07
Speaker 1: until they are able to reverse course once the inflation
1:11
Speaker 1: has slowed down. Regards what someone's allocation is, they're going
1:14
Speaker 1: to be looking at a difficult, a difficult path in
1:17
Speaker 1: the equities market. So, Um, it's not like a binary thing,
1:23
Speaker 1: that Um. I always think about it like that. Either
1:26
Speaker 1: they're raising or they're cutting, but they could. I guess
1:28
Speaker 1: the market expectation is that they plateau at some point
1:31
Speaker 1: and just hold for a while. How do you see
1:34
Speaker 1: that going, and how important is your fed call to
1:35
Speaker 1: your investment strategy? Yes, that's the right process. You know,
1:41
Speaker 1: the the market is pricing in the pace that we're
1:44
Speaker 1: going to see these these rate hikes, as you said,
1:47
Speaker 1: everyone's anticipating the seventy basis points. And yes, as soon
1:50
Speaker 1: as that trend reverse this course, you know, we stopped
1:54
Speaker 1: seeing this inversion in the yield curve where, you know,
1:57
Speaker 1: investors are being actually rewarded at a higher rate on
2:00
Speaker 1: these on these shorter term uh will say like like
2:04
Speaker 1: like like yields as opposed to longer term reels. As
2:07
Speaker 1: long as that's the case, yeah, equities are going to
2:09
Speaker 1: perform poorly, um, and and that's where that's what we're
2:13
Speaker 1: looking at for right now. So what do you do?
2:15
Speaker 1: What do you tell your clients these days again, their
2:18
Speaker 1: their bonds haven't worked for them. Their stocks haven't worked
2:21
Speaker 1: for them. I mean, unless they've got a barrel of oil,
2:24
Speaker 1: you know, sitting in their apartment. What do they do?
2:27
Speaker 1: A lot of investors have also gone to cash in
2:29
Speaker 1: a very strong way. Yeah, what do you do? What
2:34
Speaker 1: are your cash balances and where do you put them
2:36
Speaker 1: to work? If you do so, for a lot of
2:40
Speaker 1: folks that are rebalancing at the end of the year,
2:42
Speaker 1: at the beginning of the year, they would have already,
2:44
Speaker 1: you know, positioned themselves with some sort of cash allocation.
2:48
Speaker 1: We went into the year in January with cash. With that,
2:53
Speaker 1: you know, we've still seen similar performance in in the market.
2:57
Speaker 1: We're still down about or team per sent a year
3:01
Speaker 1: to date. You know, with that cast, it's there that
3:04
Speaker 1: we've been able to be opportunistic with Uh. You know,
3:07
Speaker 1: I would say for the next six months the housing
3:09
Speaker 1: market is going to look uh soft. You know, housing
3:13
Speaker 1: also shot up over the last couple of years. With
3:17
Speaker 1: rates as high as they are, though, you know, there's
3:20
Speaker 1: less offers that are coming in. That means there's going
3:22
Speaker 1: to be lower inventories, which means that prices are going
3:25
Speaker 1: to start coming down. So I would say, for for
3:27
Speaker 1: people who are looking today, the smartest thing to do
3:30
Speaker 1: is to just wait. You know, a lot of things
3:32
Speaker 1: have been announcing layoffs. So just in general, the market
3:36
Speaker 1: is going to see some softness in the next six months,
3:38
Speaker 1: nine months. But that doesn't mean, you know, don't be alert,
3:41
Speaker 1: don't be village and it just means let's look around,
3:44
Speaker 1: you know, prepared for, as these opportunities come up, as
3:47
Speaker 1: we intestipate, these prices to come down. Welleam I want
3:50
Speaker 1: to ask you about Um, your life, your studies and
3:55
Speaker 1: you know what you do out there on the left coast,
3:57
Speaker 1: because I initially, you know, I saw your resume, restruck
4:01
Speaker 1: by how much you studied Um investment management at Wharton,
4:05
Speaker 1: Industrial Systems Engineering at Georgia Tech, mathematics Alabama, and classically
4:11
Speaker 1: trained pianist at Vanderbilt's Blair School of Music, which made
4:14
Speaker 1: me think about the fact that a lot of times
4:16
Speaker 1: musicians are so innovative and Um so successful in the
4:21
Speaker 1: world of business and and on Wall Street. And I
4:24
Speaker 1: just wonder what you think about that and how it's
4:25
Speaker 1: how it's affected you. M Hm. So I think you know,
4:31
Speaker 1: no individual is able it's going to be able to
4:34
Speaker 1: outperform the market. You know, fortunately for me, I've been
4:37
Speaker 1: able to surround myself with other individuals from very diverse
4:41
Speaker 1: backgrounds and, you know, it's that diversity of thought in
4:45
Speaker 1: this concept around idea flow. A friend of mine at
4:49
Speaker 1: the Stanford d school, he actually just released a book on,
4:52
Speaker 1: you know, how to come up with good ideas, you know,
4:55
Speaker 1: and the truth to that is, when you're looking at
4:58
Speaker 1: an investment opportunity, every one knows that it's art, you know,
5:01
Speaker 1: Part Art, part science, but the best ideas actually come
5:05
Speaker 1: from actually the abundance of ideas, you know. So something
5:08
Speaker 1: that we do internally as a team is speak through
5:12
Speaker 1: the opportunities that we're looking at, speak through what's going
5:15
Speaker 1: on in the market, but also be comfortable to go
5:17
Speaker 1: through as many ideas as possible as a team so
5:20
Speaker 1: that we can so that we can field test these
5:23
Speaker 1: options that are coming up and actually, through trial and error,
5:26
Speaker 1: see well, what is the best option to to to
5:29
Speaker 1: to take in the in the in the in the
5:31
Speaker 1: thing that we're experiencing at that at that moment. So
5:35
Speaker 1: will you what's you know? What do you think you
5:38
Speaker 1: really bring? What do you try to bring to your
5:41
Speaker 1: clients in terms of value, service insight. You know, what
5:45
Speaker 1: do you think is most important that you bring to
5:48
Speaker 1: your clients? Yeah, so something we've always stood behind is
5:53
Speaker 1: investing through the lens of history, right. So we want
5:55
Speaker 1: to be able to look at an opportunity. We want
5:58
Speaker 1: to help investors see around the corner. We want to
6:01
Speaker 1: prevent any emotional decision making. So for us, you know,
6:05
Speaker 1: we want to be able to see what's going on and,
6:08
Speaker 1: when market sentiment is where it is today, be able
6:11
Speaker 1: to explain the position that we're in. Uh, and also,
6:15
Speaker 1: you know, again, even though we were only in cash,
6:18
Speaker 1: instead of going back hindsight and trying to make an
6:21
Speaker 1: impulsive decision, say, okay, this is where we position and
6:25
Speaker 1: over the long term, uh, you know, over time equity
6:29
Speaker 1: markets will pull back up. We can speak investors through
6:32
Speaker 1: this next six to nine months that we see coming
6:35
Speaker 1: so that they're able to have a little rest in
6:37
Speaker 1: peace of mind as we as we step into it. All. Right,
6:40
Speaker 1: good stuff, Hey, William, thanks so much for joining us.
6:41
Speaker 1: Really appreciate you taking some time out of your day
6:44
Speaker 1: to chat with us. William Houston, C I O of
6:47
Speaker 1: Bay Street Capital Holdings and one of investipedia's top one
6:51
Speaker 1: hundred most influential advisors. That's a second year Ro. He's
6:55
Speaker 1: been nominated for that prestigious award. Yeah, we've got a
7:03
Speaker 1: Federal Reserve. They're gonna be chatting with us on Wednesday, Bloomberg.
7:06
Speaker 1: Of course we'll have full coverage of our Federal Reserve
7:10
Speaker 1: and the press conferences and all that good stuff. But
7:12
Speaker 1: the question is, okay, you're raising interest rates. Are you
7:15
Speaker 1: can push this economy into a recession? Let's check in
7:18
Speaker 1: with somebody who thinks about this stuff for a living.
7:20
Speaker 1: Marcus schomer, chief economists at Pine Bridge Investments. Marcus, what's
7:25
Speaker 1: your recession call with a Federal Reserve? That seems pretty
7:29
Speaker 1: you know, hell been on kind of getting its handle
7:31
Speaker 1: on inflation. Uh, it's really hard to to get to
7:37
Speaker 1: get your head around the recession call forecast right now. Um,
7:41
Speaker 1: because it depends a little bit what it's all about,
7:43
Speaker 1: depending what what do you think the Fed will do,
7:46
Speaker 1: as opposed what the feds should do, if you really
7:49
Speaker 1: think that they're hell bend on a recession, if you
7:52
Speaker 1: really think they're so ignorant that they don't see how
7:56
Speaker 1: the inflation environment is turning, and it is changing rapidly
7:59
Speaker 1: over the last couple of months. If they really, if
8:01
Speaker 1: you really believe they're so ignorant that they're not see that,
8:05
Speaker 1: then Um, if we do get a recession next year,
8:07
Speaker 1: it's all about them and it will be the second
8:11
Speaker 1: major policy era after last year getting the inflation story
8:14
Speaker 1: completely wrong. They may get the inflation story completely wrong
8:18
Speaker 1: again and push the economy into recession next year. So, Um,
8:24
Speaker 1: I'm sticking I'm sticking out with the non recession forecast
8:28
Speaker 1: because I, maybe somewhat naively, believe they will get some
8:33
Speaker 1: some sort of economic sense over the next six months
8:37
Speaker 1: or so, realize where we are and stop this kind
8:40
Speaker 1: of ridiculous hawkishness that's coming out of every every remember
8:44
Speaker 1: right now and it's pushing up expectations for rate higher
8:47
Speaker 1: and higher and higher. Marcus, I love your take because, um,
8:51
Speaker 1: of course the Fed is going to play it as
8:55
Speaker 1: hawkish as possible. They want to bring inflation expectations down
8:59
Speaker 1: and the only way to do that is to convince
9:01
Speaker 1: everybody in America or in the world, and that means
9:04
Speaker 1: market participants too, that they will do everything they have
9:09
Speaker 1: to do to crush inflation, that that doesn't mean they're
9:11
Speaker 1: actually going to do it. It doesn't mean they're actually
9:13
Speaker 1: going to ignore a recession, high unemployment, you know, um
9:18
Speaker 1: unrest in the streets, just in order to bring this
9:21
Speaker 1: number that's already coming down down. But they have to
9:24
Speaker 1: put on that Hawk Ish Um uh show. Is that
9:29
Speaker 1: how you think it's gonna work, that they're that they're
9:32
Speaker 1: actually they actually are going to be smart enough or
9:35
Speaker 1: or Um sensitive enough too, if not turn around, at
9:40
Speaker 1: least pause when we start to get unemployment really ticking up.
9:45
Speaker 1: You said, you obviously right in your description there Um,
9:48
Speaker 1: but inflation expectations, I'm not rising inflation next. True, you
9:52
Speaker 1: mission numbers were very were very good. Yet months ago
9:55
Speaker 1: you look at the New York site, has another one
9:57
Speaker 1: with the New York site. Is a three UH inflation
10:00
Speaker 1: outlook number, inflation expectations number there that's been turning. Tips, number, tips,
10:06
Speaker 1: inflation forecast has turned. I mean, I don't see any
10:08
Speaker 1: indicator that suggests inflation expectations are rising. But that's the
10:12
Speaker 1: other problem. Um, I'm kind of very that they have
10:15
Speaker 1: to continue to to talk hawkish, right, otherwise that turns
10:18
Speaker 1: back around. No, it wouldn't. I don't think in face
10:22
Speaker 1: expectation not reven what the Fed says its lasin expectation
10:24
Speaker 1: of driven what people see on the street, and you
10:26
Speaker 1: know what they're seeing. They're seeing falling gas prices and
10:29
Speaker 1: they're seeing certainly a reduction in the upward pressure and
10:33
Speaker 1: prices in other areas. And if you look at look
10:36
Speaker 1: at things like like import prices, import prices, I think,
10:39
Speaker 1: already point to the next deflationary impulse that's coming because
10:43
Speaker 1: the dollars super strong. The rest of the world is
10:45
Speaker 1: slowing much harder than the US. Everything we import right
10:49
Speaker 1: now is going down in prices and I think that
10:51
Speaker 1: that that deflationary impults will only intensify in the next
10:55
Speaker 1: six months Um. So I don't see but thefts still
10:58
Speaker 1: sees the problem. It looks at core CPI, which is
11:01
Speaker 1: a terrible number to look at. We should start looking
11:04
Speaker 1: at CPI without housing, because housing is obscuring the turn
11:08
Speaker 1: right now and it is all about the turn and
11:10
Speaker 1: getting conference in the turn. Once operation turns, it has
11:14
Speaker 1: been my view for a while that then the debate
11:16
Speaker 1: would change from how high to how fast will we
11:19
Speaker 1: get to two percent? And that's a very different kind
11:21
Speaker 1: of discustion. Isn't it hard to leave out rents. That's
11:24
Speaker 1: such a sticky component. We hear of inflation, but and
11:27
Speaker 1: it's been out of control on the upside. So it
11:29
Speaker 1: isn't a sticky component. It isn't. It's only sticky because
11:32
Speaker 1: the way it works right, because the way they do
11:35
Speaker 1: that they include rents and CPI, is by taking the
11:39
Speaker 1: very latest information on rent and only using of that
11:43
Speaker 1: for the rental component of CPI. Because you know what,
11:47
Speaker 1: nobody rents a new home every month, right, and nobody
11:50
Speaker 1: buys a house every month. So housing really shouldn't be
11:53
Speaker 1: in there. But SP and CPI should be things that
11:55
Speaker 1: you basically buy every month or every every other month
11:59
Speaker 1: or so you can notice the price is going up
12:01
Speaker 1: or down. But things that you buy only every five
12:03
Speaker 1: years or every two years should really be in the CPI,
12:06
Speaker 1: or at least we should kind of adjust the CPI
12:08
Speaker 1: for the frequency of transaction of that product. And the
12:11
Speaker 1: only thing that's going still up right now, but it's
12:13
Speaker 1: not exactly two but the one thing that's going up
12:15
Speaker 1: right now making everybody worried is housing. Is that what
12:19
Speaker 1: any going down now? He's collapsing right now. Is I'm
12:23
Speaker 1: not going up anymore and rensom are going up anymore.
12:26
Speaker 1: So I was gonna say that's not the case in
12:29
Speaker 1: New York City. But Housing is, uh, you know, rolling over.
12:33
Speaker 1: We get mortgage rates over six per cents. Marcus Scholmer,
12:36
Speaker 1: thanks so much for joining us there. Marcus Scholmer, chief
12:39
Speaker 1: economers for pint bridge investments. I think he's kind of
12:43
Speaker 1: in that Vince Signarella camp, which is hey man, inflation
12:46
Speaker 1: is rolling over. If I'm the Federal Reserve, I can
12:48
Speaker 1: afford the Pauls, if not now, then maybe the next time,
12:52
Speaker 1: but we'll have to see how that plays out. Here
12:57
Speaker 1: in our Bloomberg interactive broker's Radio Studio we got a
13:00
Speaker 1: wall of video screens for all the networks kind of
13:03
Speaker 1: up in front of us and just seeing some video
13:05
Speaker 1: of the Queen's coffin now is arriving at Windsor Castle.
13:09
Speaker 1: This huge, huge procession lined with just throngs of people.
13:13
Speaker 1: Just extraordinary, uh kind of day here. And I was
13:17
Speaker 1: looking at the schedule, man, it starts at six thirty
13:19
Speaker 1: a m this morning the you know, some of these
13:23
Speaker 1: uh rights and events, and doesn't end until seven thirty
13:26
Speaker 1: this evening. So a long day for all involved. And
13:28
Speaker 1: then we'll get a sense of what's going on there
13:30
Speaker 1: on the ground. We bring in Leanne Garan's she's a
13:33
Speaker 1: radio anchor and producer for for Bloomberg News in London. Leanne,
13:36
Speaker 1: thanks so much for taking the time to join us.
13:38
Speaker 1: I'd love to you should get your your view of
13:41
Speaker 1: kind of how the day hasn't folded so far in London,
13:46
Speaker 1: of course. Um. So this morning I was down at
13:49
Speaker 1: Westminster Abbey and you know, the queue that we've seen
13:52
Speaker 1: here in London has been somewhat of a phenomenon. Just
13:56
Speaker 1: hundreds of thousands of people have nine the streets to
14:00
Speaker 1: see the queen lying in states and I spoke to
14:03
Speaker 1: some of the last people to enter that Great Westminster
14:07
Speaker 1: Hall to say their Final Goodbyes today and they've been
14:10
Speaker 1: waiting in the queue for thirteen hours. Shortly after that
14:15
Speaker 1: the queue was closed about six thirty am and then
14:19
Speaker 1: we also saw the queen loaded onto the gun carriage
14:23
Speaker 1: and she was pulled by members and sailors from the
14:28
Speaker 1: military here to Westminster Abbey, which is just eight minutes away,
14:33
Speaker 1: and I witnessed that and it was a moment of
14:37
Speaker 1: raw emotions. We've seen Um pageantry and pomp and ceremony
14:43
Speaker 1: and just a feeling of emotion in London. The gun
14:47
Speaker 1: carriage is so cool. So here's the deal of the
14:50
Speaker 1: gun carriage. Basically, Um, it is an actual carriage for
14:54
Speaker 1: a twelve pound gun. Okay. That was built, I think,
14:57
Speaker 1: in the late eighteen hundreds and when Queen Victoria died
15:02
Speaker 1: um they went to pull it with horses, but the
15:04
Speaker 1: funeral was in February and it was too cold. The
15:06
Speaker 1: horses were freaking out, so they had UM. It was
15:10
Speaker 1: actually Dickie's father, Louis Mount Batten, the original Louis Mount Batton,
15:15
Speaker 1: who said, you know what, we're gonna pull this ourselves,
15:18
Speaker 1: and they had like a hundred guys get out there
15:20
Speaker 1: kidding and pull it. And ever since then it's become
15:22
Speaker 1: an institution in royal funerals. Um So cool. Now they're
15:27
Speaker 1: marching into Windsor Castle. It's gigantic. I never noticed how
15:33
Speaker 1: big it is. I believe it is the biggest royal
15:36
Speaker 1: palace that's still inhabited by kings and Queens in the
15:39
Speaker 1: whole world. Have you been there, Liam? I have been
15:43
Speaker 1: there and I do actually spend a lot of time
15:45
Speaker 1: in one. It's one of my favorite places here in
15:48
Speaker 1: the UK and it was actually one of the Queen's
15:51
Speaker 1: favorite places. She loved it and during the pandemic it
15:55
Speaker 1: was called the Windsor Bubble, where she spent a long
15:58
Speaker 1: time with her former husband and also with the staff
16:02
Speaker 1: of Windsor Castle, and that's because, as we know, the
16:04
Speaker 1: Queen always loved to be outdoors, she loved to walk
16:08
Speaker 1: her Corgis and also have access to the horses, and that's,
16:12
Speaker 1: like you said, Windsor Castle is the place where that happens.
16:16
Speaker 1: And I could not believe just the volume of people
16:19
Speaker 1: that have lined the long walk to see the Queen
16:22
Speaker 1: and as a hearst made away, we saw all the
16:25
Speaker 1: roses that had been thrown onto the front of it.
16:28
Speaker 1: And this, for a lot of the British people, is
16:30
Speaker 1: the last time we will really see her. Majesty. She
16:34
Speaker 1: now will go into a service at four o'clock. That's
16:37
Speaker 1: a committal service, and then later on this evening she'll
16:41
Speaker 1: have a private burial with her family and the cameras
16:45
Speaker 1: will not be watching any of that, you know. You
16:48
Speaker 1: know she mentions the Queen's late husband, the late Queen's
16:52
Speaker 1: late husband, Prince Philip. He was Dickie's nephew, dicky Mount
16:57
Speaker 1: Betton so and I watched a crown. I did a
17:00
Speaker 1: deep dive into this today. Apparently Dickie tried to get
17:02
Speaker 1: Prince Charles to marry his granddaughter. I mean they're all
17:05
Speaker 1: related anyway, but they wanted to get even more interrelated.
17:08
Speaker 1: I guess King Charles now the Third Leanne. What what's
17:13
Speaker 1: the Um? What's the feeling, because I know there has
17:17
Speaker 1: have been times in the past when people wanted him
17:19
Speaker 1: to abdicate and pass the throne straight onto William. He's
17:24
Speaker 1: been very vocal about certain Um issues like climate change,
17:29
Speaker 1: which made him for for some time unpopular, and now
17:32
Speaker 1: I imagine that the left has to at least given
17:35
Speaker 1: points for that. How is he being seen now that
17:38
Speaker 1: he's sitting on the throne, so to speak? Well, I
17:43
Speaker 1: think first of all he has big shoes to follow.
17:46
Speaker 1: That's undoubted. His mother reigned over this country for seven
17:50
Speaker 1: decades and she's much loved. But one thing that King
17:54
Speaker 1: Charles has done, and it's one the people's hearts, is
17:57
Speaker 1: as soon as he realized that he was to come
18:01
Speaker 1: to the throne, he went to all four corners of
18:05
Speaker 1: the UK and he visited his whole kingdom. He started
18:08
Speaker 1: off in Scotland, he went in to Northern Ireland, he
18:11
Speaker 1: went to Wales and of course we've seen him here
18:14
Speaker 1: in England. He's been out and about shaking people's hand,
18:18
Speaker 1: connecting with everybody who's come out to pay their respects
18:22
Speaker 1: to their mother. We've also seen an emotional speech given
18:25
Speaker 1: by him thanking his mother and saying I'm going to
18:29
Speaker 1: carry on the legacy, I'm going to carry on the service.
18:33
Speaker 1: So really we see Prince King Charles. I always want
18:36
Speaker 1: to say Prince Charles, King Charles the third. I know
18:39
Speaker 1: it's always on the shoe front of my mind. So
18:41
Speaker 1: we see King Charles the third really coming out and
18:45
Speaker 1: giving people that reassurance that we need after seven decades.
18:49
Speaker 1: I can't remember another queen. Most of my friends you know.
18:56
Speaker 1: So he's really gone out and given the reassuring to
19:00
Speaker 1: the whole of the United Kingdom that he's here to
19:03
Speaker 1: carry on his mother's legacy and he has worked nonstop
19:08
Speaker 1: and so many people have recognized that and also felt
19:12
Speaker 1: a real sense for him because he's mourning the loss
19:15
Speaker 1: of a mother. Well, first of all, um, that's terrible.
19:21
Speaker 1: I don't want to make light of that at all.
19:22
Speaker 1: It's a tragedy. Everyone loved her and, of course, her
19:25
Speaker 1: children for for their loss. I am sorry. Having said that,
19:30
Speaker 1: this has to be an incredible PR campaign for the
19:34
Speaker 1: United Kingdom because for ten days we've all followed along,
19:39
Speaker 1: we've all watched. You know, if you haven't been there,
19:42
Speaker 1: you probably want to go and check it out. If
19:44
Speaker 1: you have, you may want to go back. I mean
19:47
Speaker 1: Um in a way, this has to kind of prove
19:51
Speaker 1: how important the world's are too, uh to tourism dollars
19:55
Speaker 1: right Ly, and there must be an influx of people
19:57
Speaker 1: who want to go to the UK to pay their
19:59
Speaker 1: respect and to check it out. I have never seen
20:03
Speaker 1: London so busy. I've almost not known what to do
20:06
Speaker 1: with myself. People have come in from all over the
20:10
Speaker 1: world and I've actually gone and visited the queue a
20:13
Speaker 1: few times and reported from the queue, and many people
20:16
Speaker 1: I met were foreign who had flown into the country,
20:19
Speaker 1: who said the queen had always struck a chord with them,
20:23
Speaker 1: especially people from the US. They said we don't have
20:26
Speaker 1: this pomp and pageantry and it's something that we really
20:29
Speaker 1: wanted to be immersed in and involved in and we
20:32
Speaker 1: loved the Queen From Afar. And you are right. It
20:35
Speaker 1: is something that has just bought the light here to
20:39
Speaker 1: the UK and today I have a feeling, and I'm
20:42
Speaker 1: sure many people would agree with me, everything almost went seamlessly.
20:47
Speaker 1: It has been so well rehearsed, it has been so
20:50
Speaker 1: well practiced. The queen made a lot of those approvals
20:54
Speaker 1: for the service that we saw today and I feel
20:58
Speaker 1: like London and the UK has done themselves justice. Absolutely agree. Lean.
21:03
Speaker 1: We're gonna have you back later in the program that's
21:05
Speaker 1: how important this stuff is and how interesting compelling parents
21:09
Speaker 1: from Bloomberg radio. All right, it's Monday, it's eleven eighteen ish.
21:18
Speaker 1: That means we talk e t F, and when we
21:20
Speaker 1: do that we do with Katie Greifeld, cross asset reporter
21:23
Speaker 1: for a Bloomberg News N A N C K R
21:27
Speaker 1: U Z. What kind of e t F Vance and cruise?
21:33
Speaker 1: The world has been waiting for these filings. So, if
21:36
Speaker 1: you haven't guessed so, these are filings. They haven't been
21:40
Speaker 1: launched at the filings for e t f s that
21:41
Speaker 1: would track the personal portfolios of members of Congress and
21:45
Speaker 1: their families and their dependent children, because, because members of
21:50
Speaker 1: Congress tend to beat the S and P by a mile,
21:53
Speaker 1: who knows where they get that kind of investing edge,
21:56
Speaker 1: but it's it's the acumen that you need to become
21:59
Speaker 1: a good politicians just being great at investing. We have
22:03
Speaker 1: aric cultures. He actually crunched the numbers for Bloomberg Intelligence,
22:07
Speaker 1: which did prove that point that these portfolios do tend
22:10
Speaker 1: to outperform. Whether or not it's going to be like
22:14
Speaker 1: a great portfolio, something you would actually want to invest in,
22:17
Speaker 1: it's almost guaranteed to generate buzz because obviously there's been
22:20
Speaker 1: a lot of controversy when you're talking. Okay, so people
22:24
Speaker 1: of our age here, the things we want to invest in,
22:27
Speaker 1: our things that make the most money. Yeah, for sure,
22:29
Speaker 1: it's different with people in your generations. Yeah, what over,
22:35
Speaker 1: General Generalization, Um, but let me tell you about the methodology.
22:41
Speaker 1: The financial world, and financial twitter especially, has been waiting
22:44
Speaker 1: for someone to try to do this. The fact that
22:47
Speaker 1: these filings finally landed uh, sort of went viral, but
22:50
Speaker 1: in any case. So they're going to look at disclosures.
22:55
Speaker 1: Members of Congress have to disclose any transactions they make
22:58
Speaker 1: valued more than a thou and dollars within forty five days.
23:01
Speaker 1: So you do run the risk of missing those short
23:05
Speaker 1: term trades, but you can see what their long term
23:08
Speaker 1: holdings are and you can construct a portfolio around five hundred,
23:14
Speaker 1: six hundred names, and that's what this issue is trying
23:16
Speaker 1: to do. What's give me just a sense of how
23:20
Speaker 1: many e t f s come to market on a
23:22
Speaker 1: weekly basis. It seems like every time you come you've
23:25
Speaker 1: got more new crazy names. It's a cost of launching
23:31
Speaker 1: the TF like next to nothing. It would appear that way.
23:34
Speaker 1: The cost to file and E T F certainly doesn't
23:37
Speaker 1: cost very much. We see so many interesting filings. The
23:41
Speaker 1: reality is that if you look at the e t
23:43
Speaker 1: f market at this point, you have three thousand e
23:46
Speaker 1: t f s in the US, just the US. Um
23:50
Speaker 1: there's not a lot of weights. Nine trillion dollar market
23:53
Speaker 1: exactly a TV show about it. You have a TV
23:56
Speaker 1: show about it. Issuers have to get creative to find
23:59
Speaker 1: any sort of white space, any area of that nine
24:02
Speaker 1: trillion dollar industry that isn't saturated. And if these actually
24:06
Speaker 1: come to pass, they will be the only existing e
24:08
Speaker 1: t f s on the market that are trying to
24:10
Speaker 1: do this well. But these to me make the most
24:13
Speaker 1: sense of all of everything because, Um, if you a
24:17
Speaker 1: lot of people get angry about the fact that members
24:21
Speaker 1: of Congress are investing and very cynical people think, hey,
24:24
Speaker 1: they're using their position of power to make a profit. Um,
24:29
Speaker 1: you know, and now you can do it along with them.
24:32
Speaker 1: That makes sense. So the only problem I have is
24:34
Speaker 1: with the disclosures. As a member of Congress you only
24:37
Speaker 1: have to disclose your investments within a, I think a
24:39
Speaker 1: forty five day period. Exactly are those laws gonna Change?
24:43
Speaker 1: Is this gonna stay legal? Well, it's interesting. There was
24:47
Speaker 1: this big bipartisan push last year to basically change the
24:52
Speaker 1: laws require more disclosures or maybe make it so that
24:56
Speaker 1: lawmakers would only be able to invest in SMP five
24:59
Speaker 1: dred tracking funds, are indextracting funds which a lot of
25:01
Speaker 1: corporate employees. Those are the restrictions were under. We're on
25:05
Speaker 1: our show going to hear from Emily Wilkins, she's a
25:07
Speaker 1: congressional and government reporter at Bloomberg News, about those efforts
25:11
Speaker 1: because again it was a big bipartisan sort of unity moment.
25:15
Speaker 1: But it seems like that pushes largely stalled. I don't
25:18
Speaker 1: think there's been any action on the legislatives front. Funds flow.
25:23
Speaker 1: People still putting the money in. Oh, here's the thing.
25:25
Speaker 1: I want to talk converting mutual funds. Like Matt and
25:28
Speaker 1: I grew up with mutual funds. You put the fidelity,
25:32
Speaker 1: you know, Contra Fund, the fidelity. Think about how revolutionary
25:36
Speaker 1: they were at the time. Vogel is man a myth,
25:40
Speaker 1: a legend who changed the way we invest. But now
25:44
Speaker 1: mutual funds are converting to e t S. right. It
25:47
Speaker 1: is a growing trend. The first happened about two years ago. Honestly,
25:52
Speaker 1: I think it's slowed down a little bit. Uh. Some
25:55
Speaker 1: proponents in the et f industry would tell you that
25:57
Speaker 1: it's still growing, but we did have new Burger Berman.
26:01
Speaker 1: They did convert earlier this month, uh, some of their
26:05
Speaker 1: mutual funds into an e t f. This trend, it's
26:08
Speaker 1: expected to grow to basically a one trillion dollar wave.
26:11
Speaker 1: We're not close to that point yet, but if you
26:15
Speaker 1: look at the flow of funds, new money or money
26:18
Speaker 1: coming into the ecosystem, it's all it's like a zero
26:21
Speaker 1: sum sort of flow picture. But in terms of issuers
26:25
Speaker 1: actually converting their mutual fund into E T F S,
26:28
Speaker 1: people think there's a lot more runway. But you have
26:30
Speaker 1: to consider the fact that mutual funds are the preferred
26:33
Speaker 1: structure for retirement plans for four oh one case. So
26:37
Speaker 1: there's incentive to convert, but there's also plenty of reasons
26:40
Speaker 1: to stay in that specific structure. One PM Wall Street time.
26:44
Speaker 1: What are you and that gonna be up to? We're
26:46
Speaker 1: going to talk, I think, a lot about the congressional
26:49
Speaker 1: trading e t f s, again, just filings. They haven't
26:52
Speaker 1: launched yet. That would probably take until November. So we're
26:55
Speaker 1: also going to talk to invest goes, head of thematic
26:58
Speaker 1: research theme the E T S. it's been a little
27:01
Speaker 1: bit of a struggle to attract the same magnitude of
27:03
Speaker 1: flows that we saw in some of the years past.
27:06
Speaker 1: I don't know if you've guys heard, but we've keep
27:07
Speaker 1: toggling in and out of the bear market. That tends
27:10
Speaker 1: to be PAT news for themes, but they do have
27:12
Speaker 1: some winners. They're including the P B J e t f.
27:16
Speaker 1: it's a food and beverage GTF. I'm excited to dig in.
27:18
Speaker 1: Themes are different than factors. They are they are now.
27:23
Speaker 1: I don't know, momentum quality, those are factors inflation, robotics.
27:29
Speaker 1: Thank you's all right, she's smart. I'm ready that's why
27:33
Speaker 1: we have around the program Harford College. That's a really
27:35
Speaker 1: good college, by the way. On the mainline, yes, the mainline,
27:39
Speaker 1: Katie Graydfeld, cross asset reporter for Bloomberg News. I want
27:45
Speaker 1: to bring in now Christopher Ralph. He is the Frankfurt
27:47
Speaker 1: Bureau chief and he is my go to source on
27:51
Speaker 1: anything V W related. And then, because he's my go
27:55
Speaker 1: to source on Folkswagon, that means he's automatically my go
27:58
Speaker 1: to source on Porsche, Bentley, Audi, Bugatti, Scoda is the
28:07
Speaker 1: one right. Ducatti is my own thing, but yeah, Bugatti
28:10
Speaker 1: is a great, cool company. Anyway, Christoph, thanks so much
28:13
Speaker 1: for joining us. Paul and I um both noticed the
28:16
Speaker 1: same thing when we saw the initial stories coming out
28:18
Speaker 1: over the weekend. Porsche is going now for a much
28:22
Speaker 1: lower valuation than we thought. I mean ten billion dollars
28:25
Speaker 1: lopped off the valuation. Now Seventies, seventy five rather than
28:29
Speaker 1: eighty five. Why is that? Yeah, I'm Matt. I think.
28:34
Speaker 1: I think the IT basically bolts down to the fact
28:36
Speaker 1: that actually they have been looking at a very broad
28:39
Speaker 1: range of different valuations. When you like, like, uh, sort
28:43
Speaker 1: of like look a few weeks back, we've had like
28:46
Speaker 1: the number of like eighty five billions floating around. Some
28:48
Speaker 1: some analytis actually speculating might be as worth as much
28:51
Speaker 1: as one dred billion. Uh. And then our last Thursday
28:54
Speaker 1: or Friday was we saw an HSS. No doubt it
28:57
Speaker 1: basically said, oh no, it's like gonna it's gonna be
28:59
Speaker 1: worth much. Basically they were looking at about forty five
29:02
Speaker 1: to fifty billion. So I think they sit pretty much
29:06
Speaker 1: right in the middle of the valuation which has been
29:08
Speaker 1: basically discussed through a pretty broad range. So I do
29:12
Speaker 1: think they try really hard to not not push it
29:15
Speaker 1: too hard from a pricing perspective and, yeah, aim for
29:19
Speaker 1: something that sits pretty much right in the middle of them.
29:22
Speaker 1: To get this is my first thought is Um, you know,
29:27
Speaker 1: were I too, if I were allowed to invest in this,
29:30
Speaker 1: obviously I would back up the truck and buy as
29:32
Speaker 1: many shares as I could. I'd have to call every
29:35
Speaker 1: broker I know to try and get some syndicate. How
29:38
Speaker 1: are they gonna deal with that kind of demand? Yeah,
29:42
Speaker 1: they basically have like a group of banks that is
29:45
Speaker 1: targeting specifically institutional investors. Four of the big anchor investors
29:48
Speaker 1: have been out there already, have been announced and we
29:52
Speaker 1: reported them before. But they also aligned up a number
29:54
Speaker 1: of banks, torture bank being one of them, who are
29:57
Speaker 1: specifically targeting, targeting retail customers, because they who have a
30:00
Speaker 1: pretty sort of affluent group of customers that are very
30:03
Speaker 1: like loyal to the brand. I've been driving posts for
30:05
Speaker 1: a couple of years or decades maybe, are members of
30:07
Speaker 1: like the Porsche Club. So that's definitely a group of
30:10
Speaker 1: potentially invested as well. Alright, so the the anchor investors,
30:13
Speaker 1: by the way, are like the Saudi right, Um, Norwayway,
30:17
Speaker 1: nor just. They have the biggest. Who? Who? Who else
30:20
Speaker 1: are the big anchor investors? Remind us? UH, yeah, it was.
30:24
Speaker 1: It was in August, the the the sovereign wealthfront from uh,
30:27
Speaker 1: from Norway, then Qatar was was was one. was another investor.
30:32
Speaker 1: T ro always on board, a D Q, I think. So. Yeah,
30:35
Speaker 1: a number of like pretty pretty established names out there.
30:38
Speaker 1: Now I understand there's some weird family dynamics going on
30:41
Speaker 1: here in this. I P O will dress some of it.
30:43
Speaker 1: I'm not sure if you can do this in a
30:45
Speaker 1: simplified version, but family. That in a book. Yeah, the
30:49
Speaker 1: Porsche family and the peach. Is it peach, Peach Peach.
30:52
Speaker 1: I can't even pronounce it correctly. Christoph, can you give
30:55
Speaker 1: it a shot? Yeah, the name is is it pronounced Pah?
30:59
Speaker 1: And yes, I'll do my best at the night's challenge.
31:02
Speaker 1: You wrapped it up in a few seconds and I'll
31:04
Speaker 1: write that book and send it to you, Matt, right
31:06
Speaker 1: after this show wraps up. The thing is, basically they
31:09
Speaker 1: lost direct control over what used to be their family
31:13
Speaker 1: business just over a decade ago, back in the day's
31:15
Speaker 1: Porsche's previous management is tried to to take over the
31:19
Speaker 1: much larger Folkswagen group. The whole thing basically like ran
31:22
Speaker 1: out of funding during the dead crisis and as part
31:25
Speaker 1: of like a pretty complex deal for Porsche a g,
31:28
Speaker 1: the Sports Cup business was folded into Folkswagen, and now
31:32
Speaker 1: this idea allows the family to regain some direct influence.
31:35
Speaker 1: They don't go at Porsche at the at the sports cooperation.
31:38
Speaker 1: They don't get like full control, but they will receive
31:40
Speaker 1: a blocking minority of twenty five percent of the voting
31:43
Speaker 1: stock in that Sports Cup business. When is this still
31:47
Speaker 1: going to happen? Is this this week? This month? What's
31:49
Speaker 1: the timing? We've just heard that the German financial market
31:55
Speaker 1: regulator Baffin has signed off on the on the prospective,
32:00
Speaker 1: on the on the ibe of Prospectus, so that should
32:02
Speaker 1: land at some point later this this afternoon, at the
32:06
Speaker 1: coming hours. And Yeah, basically then it then the preparation.
32:10
Speaker 1: The preparations are going to continue and the goal is
32:12
Speaker 1: that the first day of trading will be September twenty nine.
32:15
Speaker 1: It's pretty exciting. Um. The only thing that is kind
32:19
Speaker 1: of a bummer for me, and probably cool for Kristoff,
32:22
Speaker 1: is that they're doing it on the Frankfurt Bersia, which is,
32:27
Speaker 1: I mean, so lame. No offense, Christoff, but there's nobody
32:31
Speaker 1: that even works there. Like, why not doing on the
32:33
Speaker 1: New York Stock Exchange where there's real pomp and UH
32:39
Speaker 1: and and and celebration? Yeah, I think I'm I'm I
32:43
Speaker 1: guess I'm totally biased that because like the Frankfort stock
32:45
Speaker 1: ex changes to stock a walk from our office. So
32:48
Speaker 1: I'm all for it, Matt Uh and, yeah, I guess
32:50
Speaker 1: we have to bring you back to Germany, guess, Christopher.
32:52
Speaker 1: Are they going to do like a road show, like
32:54
Speaker 1: go to New York, go to London, did that kind
32:57
Speaker 1: of thing? Well, that they have been on a pretty
33:00
Speaker 1: sent the FROAD trow over the past few, uh, well
33:03
Speaker 1: months really, they've been to to Boston, to New York,
33:05
Speaker 1: to London, they've been touring Asia, so they've really like
33:09
Speaker 1: travel the globe, basically. But they decided, yeah, it's it's
33:12
Speaker 1: it's a Germany, it's a German company. They want to
33:14
Speaker 1: be what they wanted to be listed in Germany. So
33:16
Speaker 1: that's basically why they picked Frankfurt. Alright, good stuff now,
33:19
Speaker 1: you know, maybe maybe we'll send Matt over there for that.
33:21
Speaker 1: That can be a good little uh police boot markets. Yeah,
33:24
Speaker 1: we'll send we'll send him your away, Christoph Rovald, bureau
33:27
Speaker 1: chief Frankfort Munich, pretty much all of Germany for Bloomberg News.
33:31
Speaker 1: He kind of keeps us on top of what's happening
33:33
Speaker 1: in Germany. And again this I P O of Porsche
33:36
Speaker 1: looking to raise as much as nine point four billion euros.
33:43
Speaker 1: Thanks for listening to the Bloomberg markets podcast. You can
33:46
Speaker 1: subscribe and listen to interviews with apple podcasts or whatever
33:50
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on twitter
33:54
Speaker 1: at Matt Miller. Three pet on Boll Sweeney, I'm on
33:57
Speaker 1: twitter at PT Sweeney. Before the podcast you can always
34:00
Speaker 1: catch US worldwide at Bloomberg Radio M