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Crypto, ETFs, and Stocks (Podcast) · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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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. Fund The Bloomberg Markets Podcast
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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
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Speaker 1: at Bloomberg dot com Slash podcast. Looking at Bitcoin up
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Speaker 1: one point five sixteen thousand, six hundreds, still way way
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Speaker 1: below that support level it seemed to be at forever
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Speaker 1: of dollars photographer. It's been a wild ride for the cryptospace,
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Speaker 1: and we want to break it down with some experts
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Speaker 1: here Mike mclogan's senior commodity strategist with Bloomberg Intelligence, and
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Speaker 1: Katie Greifeld, cross Asset reporter or Bloomberg News. They are
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Speaker 1: both in our Bloomberg Interactive Broker studio. Thank goodness, Thank goodness,
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Speaker 1: I have some things I need to get off my check.
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Speaker 1: Do you go all right? First of all, cz guys
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Speaker 1: has suggested some kind of lender of last resort fund right?
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Speaker 1: Is he gonna next suggest some kind of central bank
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Speaker 1: that will print bitcoin whenever they're needed? I mean, does
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Speaker 1: he not understand the idea that the origins of cryptocurrency, Mike,
1:07
Speaker 1: does it not bother you? It does. And I've actually
1:09
Speaker 1: this weekend was so much of that kind of information around.
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Speaker 1: I deliberately try to ignore it because it it gets
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Speaker 1: past what really matters. Now, this is just digging into
1:18
Speaker 1: what person who turned out to be duked us all,
1:20
Speaker 1: including me um And but you didn't have any money
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Speaker 1: on FTX did I didn't, And I'm not allowed to
1:27
Speaker 1: invest a lot in cryptos. I can invest the minimus amounts,
1:29
Speaker 1: so I have a lot of just changes small amounts.
1:32
Speaker 1: I didn't. But the key thing would start with first
1:34
Speaker 1: of all, Bitcoin is actually down on the on the
1:36
Speaker 1: day because what you see in the screen was from yesterday,
1:39
Speaker 1: and that's it's always messes me up on Monday's. So
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Speaker 1: it's actually it's actually down about one or two percent
1:44
Speaker 1: on the week because you have to compare Apple's apps. Okay,
1:47
Speaker 1: you're saying from Friday's Fridays, but that's the thing to
1:50
Speaker 1: remember about. People are realizing this thing never stops trading.
1:53
Speaker 1: So and I'll also point out what so it really
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Speaker 1: might me dig into what's happened so far as cryptos
1:58
Speaker 1: have gone down a lot. But if you look at
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Speaker 1: the Bloomberg Galaxy crypto indic, since this whole thing started
2:03
Speaker 1: end of two thousand nineteen, it's still up two so
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Speaker 1: we can drop, it's still up, so I can drop
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Speaker 1: fifty and still percent it's still be in the nantics.
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Speaker 1: So it's just maximum performance going back down. But what
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Speaker 1: I see coming out of this is more regulation. What
2:18
Speaker 1: more regulation means institutions need that more centralization is what
2:22
Speaker 1: they need. What you're saying right, this is what the
2:24
Speaker 1: decentralized financial world needs, Katie, Uh, your crypto native or
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Speaker 1: at least digitally native digital. When you and your cohort
2:34
Speaker 1: um want to buy trustless currency, um, do you then
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Speaker 1: leave it on someone else's in someone else's wallet? Do
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Speaker 1: you let somebody else have the keys? Why do people
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Speaker 1: not take their crypto immediately, put it in their own
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Speaker 1: walls and take it offline. I will not speak for myself,
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Speaker 1: as I am a journalist and like Mike can't not
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Speaker 1: really invest in cryptocurrency. But when I talk to my appears,
2:57
Speaker 1: for example, I mean a lot of them, the one
3:00
Speaker 1: who are crypto curious. They went through the likes of
3:02
Speaker 1: coin base for example, maybe Robin hood. But what's interesting
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Speaker 1: now is that you're seeing billions of dollars from exchanges
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Speaker 1: because no one really trusts them. I mean, people are
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Speaker 1: going into cold storage they want their keys back. I
3:15
Speaker 1: think f t X is a great example of why
3:18
Speaker 1: if you're a hardcore bitcoin believer, maybe you don't want
3:20
Speaker 1: to be on one of these centralized exchanges. You want
3:23
Speaker 1: your bitcoin, you want to know where it is. So
3:25
Speaker 1: there you go. So I want to get to just
3:28
Speaker 1: want angle with you, Sam Bankman Freed, what what do
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Speaker 1: we know? Was? Is there fraud there? Why is he
3:35
Speaker 1: not in an FBI office somewhere answering questions right now?
3:38
Speaker 1: As opposed to the Bahamas. It's an interesting question that
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Speaker 1: I don't have the answer to. Is why f t
3:44
Speaker 1: X filed for bankruptcy in the US if they're based
3:46
Speaker 1: in the Bahamas. I believe he's in the Bahamas. The
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Speaker 1: reporting would suggest that he is. I mean, we know
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Speaker 1: that Bahamas authorities spoke to him. That would imply physically
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Speaker 1: they're in the Bahamas. I don't el though. I mean
4:00
Speaker 1: there's an ongo I mean, there are million questions that
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Speaker 1: we have. I'm sure Katie has the same questions even
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Speaker 1: if she had a hunch as to an answer. Probably
4:11
Speaker 1: wouldn't want to give it to us on live radio, right,
4:14
Speaker 1: but maybe Mike will um. I mean, how did they
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Speaker 1: have such a big eight nine billion dollar hole? Was
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Speaker 1: their fraud? Also? Who took the four to six hundred
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Speaker 1: million dollars of coins in the last couple of days?
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Speaker 1: Is anybody on the run? What can you tell us?
4:32
Speaker 1: I think the word first world is illegal co mingling?
4:35
Speaker 1: Now how we've heard this in future since I've been
4:38
Speaker 1: in the business, and you've seen firms going there. It's
4:39
Speaker 1: just a different level, different people, different time. And LaMDA
4:44
Speaker 1: was a research arm, which was they say they were
4:46
Speaker 1: channeling of customer funds. Apparently they might have been channeling
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Speaker 1: customer funds into campaign donations to the Binding compaign. Number
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Speaker 1: number two donator to the Binding camp campaign was SPF.
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Speaker 1: So oh yeah, so it's it's shocking that way. And
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Speaker 1: see ze, by the way, it was an ex Bloomberg employee,
5:01
Speaker 1: so we have had quality from X Bloomberg employees coming
5:04
Speaker 1: from c Z. I did not know that. Wow, all right, Mike,
5:07
Speaker 1: you're in Miami not just because you love the warm
5:10
Speaker 1: weather and you had enough a Connecticut But let's face
5:13
Speaker 1: it in the crypto world. They're trying to establish themselves
5:15
Speaker 1: as a a physical leading space where the smart crypto
5:20
Speaker 1: people go. Given that backdrop, what's the feeling out of
5:23
Speaker 1: Miami over the past three or four or five days.
5:26
Speaker 1: Are people just kind of throwing their hands up, like
5:28
Speaker 1: what do we get ourselves into? Or I'm not sensing
5:30
Speaker 1: that public? Give you one example, MasterCard. A good friend
5:33
Speaker 1: of mine who is a former New York you know
5:35
Speaker 1: Wall Street guy, just moved to Miami to work for
5:37
Speaker 1: MasterCard in cryptos. That's how things are changing. Two years
5:40
Speaker 1: ago that that sentence, what would have been an oxymoron.
5:43
Speaker 1: So I think the big just did and he's getting
5:45
Speaker 1: a pink slip tomorrow. Well that's the problem. But here's
5:47
Speaker 1: the thing that's happening. One thing that's you look at Ethereum.
5:50
Speaker 1: Athereum is up one thousand or ten x since two
5:52
Speaker 1: thousand nineteen. Sure it's dropped a lot, but you know
5:55
Speaker 1: it started a hundred now just over a thousand. What
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Speaker 1: is it doing. It's revelized the revolution is in fintech
6:01
Speaker 1: and like it makes possible the most white Trady cryptos.
6:04
Speaker 1: It's the dollar crypto door. So I think it's gonna
6:06
Speaker 1: bring on US regulation. But the US realizes this is
6:08
Speaker 1: making the base layer for the whole world to be
6:11
Speaker 1: a cryptos. The dollar and Ethereum is doing that, so
6:13
Speaker 1: people get the technology. This is a major sell, but
6:16
Speaker 1: it's just a bump in the road I've seen in
6:18
Speaker 1: terms of what I love that perspective because I don't
6:20
Speaker 1: have that perspective a last week. Right, we gotta get
6:24
Speaker 1: Mike and Cameron cries On together because they disagree like
6:27
Speaker 1: a hundred and I was playing that. Alright, Alright, guys,
6:32
Speaker 1: that's good stuff. We'll gonna keep on top of this story.
6:34
Speaker 1: And we can do that because we got some really
6:36
Speaker 1: smart people that have experience in this space and that
6:38
Speaker 1: is hard to find around there. Mike McLoone, Senior Commodity
6:41
Speaker 1: Strategies with Bloomberg Intelligence. He's been dealing and trading commodities
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Speaker 1: forever and that's what crypto is for a lot of folks.
6:47
Speaker 1: And Katie Gray Felt Cross Asset, Cross Asset Reporter and
6:50
Speaker 1: that now includes a crypto. She does that with Bloomberg News.
6:57
Speaker 1: We take a look at some of the price action
6:58
Speaker 1: of last week, particularly towards the end of the weekend
7:01
Speaker 1: that big Thursday rip kind of brings back that bowl
7:04
Speaker 1: call that's been out there for a while, which is,
7:06
Speaker 1: you know, these risk on assets can work late into
7:09
Speaker 1: the year, maybe rally towards the year because we've seen
7:13
Speaker 1: peak interest rates, we've seen peak inflation. Uh, earnings have
7:17
Speaker 1: come down, they've been reset. Maybe this is kind of
7:20
Speaker 1: sets you for good clothes. Sean O'Hara, President of pac
7:22
Speaker 1: your et S. Sean, what do you think of that
7:25
Speaker 1: calls out a little naive or or do you in
7:27
Speaker 1: fact think that maybe a lot of the headwinds are
7:30
Speaker 1: starting to abate and it might be time to take
7:32
Speaker 1: on some more risk. Wel, good morning, Thanks for having me. Um.
7:37
Speaker 1: I think it's a little premature to to to sort
7:39
Speaker 1: of make that call, you know. I mean, it's just
7:41
Speaker 1: doing some simple math. If you if you think the
7:44
Speaker 1: SMP is gonna earn like, you know, two thirty bucks
7:46
Speaker 1: next year, we're still trading at a level that's probably
7:50
Speaker 1: higher on a pe basis than perhaps the market should be.
7:53
Speaker 1: But that's the whole market. And so I think the big,
7:56
Speaker 1: the big drag on that is potentially going to be tech. Uh,
8:00
Speaker 1: you know, tech is as a sector the last six
8:03
Speaker 1: years have seen their stock prices go up about fifty
8:05
Speaker 1: percent more than their earnings, whereas the rest of the
8:09
Speaker 1: market has sort of adjusted itself in its healthcare as
8:11
Speaker 1: an example, Actually the stocks in the healthcare sector have
8:14
Speaker 1: gone up less than their earnings the last six years.
8:16
Speaker 1: There are pockets of opportunity. I wouldn't be making a
8:20
Speaker 1: broad market call that, you know, things are going to
8:22
Speaker 1: go back to the way they were, and that inflation
8:24
Speaker 1: is not a problem anymore, and inflation is going to
8:27
Speaker 1: continue to be stubborn. You know, we saw a minor
8:30
Speaker 1: decrease in the year over year increase, and I think
8:33
Speaker 1: everybody took that to mean, well, you know, we just
8:35
Speaker 1: have to have a couple more months and this is
8:37
Speaker 1: all over with and we're back to the races. I
8:38
Speaker 1: don't think it's going to play out that way. So,
8:41
Speaker 1: but there are sectors you find attractive, healthcare being one
8:45
Speaker 1: of them, um energy another. These are obviously huge pieces
8:50
Speaker 1: of the inflation picture. I mean healthcare. I guess we
8:53
Speaker 1: see massive inflation there all the time, even when we
8:56
Speaker 1: don't have it in the rest of the economy. But
8:58
Speaker 1: why do you like why do you like them? Well,
9:00
Speaker 1: we we have a large cap fund ceow Z and
9:04
Speaker 1: our et F family. It's cash cow, that's one of
9:06
Speaker 1: our favorites, and it's up here to date. It's up
9:09
Speaker 1: like five percent year to date. So, uh, you know,
9:12
Speaker 1: it's overweight energy, it's overweight healthcare and silver right materials.
9:15
Speaker 1: It's as underweight as it's ever been consumer discretionary in tech,
9:18
Speaker 1: and so you know, the consumer is going to be
9:21
Speaker 1: I think in a big, big quandary here. They're gonna
9:24
Speaker 1: get squeezed. They're going to have to make decisions. You know,
9:27
Speaker 1: this winter, some people are gonna have to decide whether
9:29
Speaker 1: they want to eat or heat their house. I mean,
9:30
Speaker 1: I think, you know, the Thanksgiving holiday is going to
9:33
Speaker 1: be a big shocker to people in terms of how
9:34
Speaker 1: much more it's going to cost this year. But when
9:36
Speaker 1: you look at detectors like energy or healthcare, they're trading
9:40
Speaker 1: in relatively inexpensive levels historically. I think the healthcare trade
9:44
Speaker 1: is both in inflation and a demographics play. Um. You know,
9:47
Speaker 1: the demographics and healthcare got hidden by COVID, and once
9:51
Speaker 1: COVID is out of the way, I think that demographic
9:53
Speaker 1: trend will pick back up. You know, as people get older,
9:55
Speaker 1: they need more health care of the baby boomers ten
9:57
Speaker 1: thousand people a day for the next decade or so
10:00
Speaker 1: turning age sixty and energy is you know that they've
10:03
Speaker 1: just got so much cash flow in the energy sector.
10:06
Speaker 1: And I don't think that oil prices are going to
10:08
Speaker 1: go back down. I think they're more likely to continue
10:11
Speaker 1: to hover in this ranger or maybe maybe increase a
10:15
Speaker 1: little as the winter months come on. So there are
10:17
Speaker 1: plenty of places to make money. I just don't think
10:19
Speaker 1: it's going to be the same places that people have
10:21
Speaker 1: made money in the past, and so we accepted adjust
10:23
Speaker 1: our expectations and our views. I don't think you can
10:27
Speaker 1: continue to be a broad market investor. Um. You know,
10:31
Speaker 1: Mike Wilson's a very smart guy, has been very right
10:33
Speaker 1: on a lot of his calls. And if he's saying
10:35
Speaker 1: that next year the SMP is going to be where
10:37
Speaker 1: it is this year, then you just can't buy the SMP.
10:40
Speaker 1: You've got to figure out how to find places within
10:42
Speaker 1: the SMP to make money. So far, that's been you know,
10:45
Speaker 1: the under you underliked or undernoticed sectors like energy, healthcare, materials, industrials,
10:51
Speaker 1: and staples. So Sean we we we had some elections
10:54
Speaker 1: recently and looks like we're gonna have a divided government.
10:56
Speaker 1: A lot of folks saying that's bullish for risk assets.
10:59
Speaker 1: Are you in that camp? I am, um, although I
11:03
Speaker 1: don't know what the it's ultimately gonna wind up that way.
11:06
Speaker 1: I mean I would wait waiting on Georgia. Um. I mean, well, George,
11:11
Speaker 1: the Senate's over there, you know, the Senate, we're not.
11:13
Speaker 1: The Republicans are going to control the sense. All that's
11:16
Speaker 1: left is really that they can squeak out a win
11:17
Speaker 1: in the House, and that would be you know, the
11:20
Speaker 1: most divided of all divided governments, because all spending bills
11:23
Speaker 1: start in the House, and so they won't you know,
11:25
Speaker 1: with the Democrat House, they can at least make their
11:27
Speaker 1: way to the Senate and then the ultimate to the
11:30
Speaker 1: President's desk. I don't think there's going to be any
11:32
Speaker 1: spending bills that will come out of the House if
11:34
Speaker 1: it's controlled by the Republicans, and the market generally likes that.
11:38
Speaker 1: But you have, you know, this over I don't think
11:40
Speaker 1: you can go purely based on historical trends. You know
11:42
Speaker 1: that every time we have you know, divided government, the
11:45
Speaker 1: market goes up or from November to April. The markets
11:48
Speaker 1: always up and these sort of you know, cyclical stories
11:51
Speaker 1: or historical or trend aask trends. I think, you know,
11:54
Speaker 1: you have to take a look at what's really going on,
11:56
Speaker 1: and and what's really going on is that, you know,
11:58
Speaker 1: inflation continues to be a struggle. It would wouldn't surprise
12:02
Speaker 1: me if the FED changed its target for inflation and
12:04
Speaker 1: moved it up a little bit since they're having such
12:07
Speaker 1: a hard time. But they're just committed to raising rates
12:11
Speaker 1: so much so that they are going to damp in
12:14
Speaker 1: quote unquote demand, which means they're going to basically slow
12:16
Speaker 1: down the economy. And the question is going to be
12:19
Speaker 1: are they going to slow it down and have it,
12:21
Speaker 1: you know, come to a soft landing or they have
12:23
Speaker 1: to slow it down things come crashing down. And I think,
12:26
Speaker 1: you know, if you base you know, your judgment on
12:28
Speaker 1: historical you know, anomalies with them, you know, do they
12:31
Speaker 1: ever get it right at the Fed? They very rarely
12:33
Speaker 1: do get it right. So I will hope for better
12:36
Speaker 1: performance coming up here. Shaun O'Hara, he's a president of
12:39
Speaker 1: pacer Ets, hope for it, but we won't invest that. Yeah,
12:43
Speaker 1: I think it's what said that's right. Hope for the best,
12:45
Speaker 1: prepared for the worst. Shawn Ohara, thanks so much for
12:47
Speaker 1: joining us your ETF shows at one End Wall Street
12:53
Speaker 1: time today. Right, that's correct. You talk a lot butts
12:55
Speaker 1: because that's where the money. Well, they've been huge this year,
12:58
Speaker 1: right when you haven't seen any I, P O, S,
13:01
Speaker 1: M and A has burned out, but E t F
13:05
Speaker 1: launches just continue to pile in it and investors are
13:08
Speaker 1: loving it. And some real names in terms of the
13:11
Speaker 1: firms no larger global head of E t S at
13:13
Speaker 1: one of those real names, Alliance Bernstein. Uh no, thanks
13:17
Speaker 1: so much for joining us here talk to us about
13:20
Speaker 1: active e t f s and kind of how that
13:23
Speaker 1: plays into kind of what you guys are doing there
13:25
Speaker 1: at Alliance Bernstein. Thanks very much for having me on
13:28
Speaker 1: this morning. Yeah, I think you know, active ETFs are
13:31
Speaker 1: pretty interesting part of the landscape multiple last two years. Uh,
13:35
Speaker 1: you know, we're coming up on thirty years of et
13:37
Speaker 1: F s in the U S. But but the active
13:38
Speaker 1: scene is really While we've had active products in the
13:41
Speaker 1: last fourteen fifty years, it's really popped in the last
13:43
Speaker 1: couple of years, um for us and Alliance Bernstein. You
13:46
Speaker 1: know this was an important step of taking some of
13:49
Speaker 1: our best thinking and figuring out how to put it
13:51
Speaker 1: into a vehicle that's very accessible, UM, easy for clients
13:55
Speaker 1: to get to. Uh, just just really meeting them where
13:58
Speaker 1: they are, and the land escape is shifted. In the
14:01
Speaker 1: last couple of years, the SEC made some some changes
14:04
Speaker 1: to the rule set for issuing ETPs about two and
14:07
Speaker 1: a half years ago, and that's been a driver behind
14:09
Speaker 1: a lot of the firms, you know, Laton like lines
14:11
Speaker 1: Burnstein and others saying it's it's a good time to
14:14
Speaker 1: get into this space. So, I mean, does this completely
14:18
Speaker 1: take over? We've seen a lot of UM mutual funds
14:22
Speaker 1: convert into e t s, which makes sense right because
14:25
Speaker 1: you have a smaller cost basis and they're easier to trade.
14:30
Speaker 1: Is it? Do you think the future do we do
14:32
Speaker 1: we even need mutual funds anymore? Yeah? I think I
14:35
Speaker 1: think there's still a place. I mean, it's very you know,
14:38
Speaker 1: look at the trend is absolutely there that etp s
14:40
Speaker 1: are growing continuing to take a greater and greater share
14:43
Speaker 1: of the flows. But you think of the retirement space
14:46
Speaker 1: where maybe a mutual funder like a collective trust structure
14:49
Speaker 1: UM is still you know, incredibly vibrant, um other other
14:53
Speaker 1: areas of distribution where um, you know, the et F
14:56
Speaker 1: doesn't always fit as neatly. So I don't think. I mean,
14:59
Speaker 1: I think since I've been in I've been doing this
15:00
Speaker 1: for more than uh more years, and I care to
15:03
Speaker 1: say um, and people have been sort of saying, oh,
15:05
Speaker 1: against the end of mutual funds. But but really, you know,
15:08
Speaker 1: we know that from the utility perspective. You know, there's
15:11
Speaker 1: rarely a one size fits all and the space for
15:14
Speaker 1: separate accounts for ets, for mutual funds, um, they're utilized
15:18
Speaker 1: heavily by by investors across the well the past, you know,
15:22
Speaker 1: et s were kind of um stealing Jack Bogel's lunch,
15:26
Speaker 1: so to speak, because they were passive. Now, okay, Vanguard
15:29
Speaker 1: happens to be one of the top two issuers of ets.
15:32
Speaker 1: But um, But but and mutual funds, you know you
15:35
Speaker 1: could have active management there, which is what kind of
15:38
Speaker 1: separated them. Now you've got actively managed e t f s. Yeah,
15:44
Speaker 1: and that's that's again. I think we're we're um, that's
15:47
Speaker 1: going to be an area of growth. I mean, the
15:48
Speaker 1: flows and ets this year we're on track, probably had
15:52
Speaker 1: the second best flows of overall dollars into et F
15:55
Speaker 1: and you know, it's obviously a very confused market period
15:59
Speaker 1: over thirteen and that it's going into active et S
16:01
Speaker 1: with again a lot of the sponsors just coming in.
16:03
Speaker 1: So I think it's as much about putting new strategies
16:06
Speaker 1: into the marketplace. You mentioned the conversions. I think it's
16:08
Speaker 1: still early days for that. There's um pros and cons
16:11
Speaker 1: to that strategy. Uh, But I think overall, if if
16:15
Speaker 1: a manager has the ability to bring ETPs into the marketplace, um, again,
16:19
Speaker 1: because of the the accessibility and some of the cost
16:22
Speaker 1: and tax advantages in the US market, it's a pretty
16:25
Speaker 1: attractive means for active managers to get some of their
16:28
Speaker 1: best thinking out there. Hey, no, give us a sense
16:31
Speaker 1: of you know, retail versus institutional ownership of e t s,
16:35
Speaker 1: how has it evolved in and how do you think
16:37
Speaker 1: it's going to play out over the next you know,
16:39
Speaker 1: several years. Yeah, it's it's actually remarkably steady. I mean,
16:43
Speaker 1: if if you look at at the market as a
16:45
Speaker 1: whole um, it's tended to be almost fifty fifty, which
16:48
Speaker 1: you know, every time I look at that, I always
16:49
Speaker 1: think God that you know, it's kind of shift at
16:51
Speaker 1: some point. But for new ets, the the adopters are
16:54
Speaker 1: often you know R I A S are are a
16:56
Speaker 1: big player that's facing investment advisors because they have that
16:59
Speaker 1: ability to think about what it's best for their clients
17:02
Speaker 1: for loil and what they want to put in there.
17:04
Speaker 1: And then institutions UM love the ETFs. It's you know,
17:07
Speaker 1: you think it's counterintuitive. A big institution could probably get
17:10
Speaker 1: something for even lower cost or or greater um flexibility,
17:14
Speaker 1: but they love the ETF structure for the same reasons
17:17
Speaker 1: that the retail audience does, which is they can buy
17:19
Speaker 1: as much or as little as they want, they can
17:21
Speaker 1: hold it for as longer as little as they want,
17:23
Speaker 1: and there's not sort of the gating process there to
17:26
Speaker 1: keep them in or out of the marketplace. And so
17:28
Speaker 1: we still see really heavy participation newer issues. Sometimes it
17:32
Speaker 1: takes a little while for an institutional to engage, but
17:34
Speaker 1: that's not always the case. Sometimes you'll have institutions coming
17:38
Speaker 1: right out of the gate because it's a it's an
17:40
Speaker 1: exposure that it's their portfolio needs. Yeah, I mean, costs
17:43
Speaker 1: can't get much lower, right, We're talking just a handful
17:46
Speaker 1: of basis points UM to to own a lot of
17:49
Speaker 1: e t F s. What do you think the um
17:53
Speaker 1: the next wave of issuance is and we we saw conversions.
17:57
Speaker 1: There's an e t F for everything. So we've seen
17:59
Speaker 1: it grow into um different spaces. We've even seen them
18:04
Speaker 1: UM chop up uh you know debt levels. If so,
18:08
Speaker 1: if you want you know, uh C minus debt exposure,
18:11
Speaker 1: you can get that. What's what's on the horizon? Yeah,
18:15
Speaker 1: I think that it would the entrance of of you know,
18:18
Speaker 1: more active managers and certainly you know a aligns Furnstey
18:21
Speaker 1: in the way we're looking at this is UM BTF
18:23
Speaker 1: does let you get very granular if you want to
18:26
Speaker 1: your point, you can you can go really deep in
18:28
Speaker 1: one area or you can look at at broad market teams.
18:32
Speaker 1: And that's pretty important. UM. If you think about, you know,
18:34
Speaker 1: the evolution the most investors in the US, you know,
18:37
Speaker 1: over the span of decades, it's like, well, you know,
18:39
Speaker 1: if you like the individual security, that's great, but there's
18:41
Speaker 1: risk theirs. So maybe by the industry, if you like industry,
18:44
Speaker 1: by the sector. UM, you just sort of diversify your
18:47
Speaker 1: best thinking. And I think we continue to see thematic
18:51
Speaker 1: you know, global thematic trends playing out in portfolios, and
18:55
Speaker 1: I think that's one of the areas of growth that
18:57
Speaker 1: you're going to see where people think about some of
18:58
Speaker 1: these cross sector aspects. We saw over the last couple
19:02
Speaker 1: of years some of the concerns around supply chain and
19:05
Speaker 1: where um, some of the great strength of the global
19:08
Speaker 1: economy stumbled a little bit, and so what companies are
19:11
Speaker 1: set up to take advantage of the fact that there
19:14
Speaker 1: might be a retrench you of some of those systems
19:16
Speaker 1: are a different way of thinking about how to move
19:18
Speaker 1: goods and services around the globe. And I think that
19:20
Speaker 1: type of thematic thinking is going to continue to play out,
19:23
Speaker 1: especially in the in the active ETF space. So in
19:26
Speaker 1: an active et F, I mean Matt was just mentioning
19:28
Speaker 1: the low fees, But in an active et F, don't
19:31
Speaker 1: I have to I guess, utilize an active management team,
19:36
Speaker 1: and don't I have to pay them? How do I
19:38
Speaker 1: keep the cost of Yeah, so I think, yeah, there's
19:40
Speaker 1: I mean the range of costs and in et F
19:42
Speaker 1: are you know, it's it's pretty extreme. I mean you
19:45
Speaker 1: go from you know, three or four basis points for
19:48
Speaker 1: some of the largest broadest equity index products you know,
19:52
Speaker 1: up into basis points for some active constructs where you've
19:57
Speaker 1: got you know, unique UM, you know i P being
20:00
Speaker 1: brought into play. And and you know what we've seen
20:02
Speaker 1: over time is that, UM, the low cost beta story
20:07
Speaker 1: you know, remains interesting and relevant for for some some
20:10
Speaker 1: aspects of the core portfolio. But investors are very much
20:14
Speaker 1: willing to engage at different price points if they feel
20:17
Speaker 1: like from a performance perspective or from a risk perspective,
20:21
Speaker 1: or just trying to attain some goal in the portfolio,
20:24
Speaker 1: whether that's income or some type of you know, a
20:27
Speaker 1: buffer type strategy. UM, they're still willing to pay for it.
20:30
Speaker 1: And we certainly saw that over the last couple of years.
20:33
Speaker 1: UM since you know, since spring of twenty UM price
20:36
Speaker 1: wasn't the only factor. Ye alright, no, great stuff. Appreciate
20:40
Speaker 1: checking in with us. No Archer, Global head of ets
20:43
Speaker 1: at Alliance Bernstein, and those are two of the bluest
20:46
Speaker 1: chip names in asset management, Alliance and Bernstein, and now
20:50
Speaker 1: they're together and they are in the et F space
20:53
Speaker 1: in a big way. All Right, Amazon Matt ten employees
21:00
Speaker 1: that are laying off. Okay, that's kind of news, but
21:02
Speaker 1: context they have over one point five million employees, so
21:06
Speaker 1: less than one percent, but true. Still the story, the
21:08
Speaker 1: theme is big tech, who's done nothing but higher for
21:13
Speaker 1: literally a generation, nothing but in the hiring mode. This
21:16
Speaker 1: is the first time I can remember. I know that
21:18
Speaker 1: we had a little bit and obviously the dot com area,
21:20
Speaker 1: but um that you know, kind of there's a theme there.
21:23
Speaker 1: They're starting to pair back a little bit. Remember the
21:25
Speaker 1: fact that the new generation of reporters that comes into
21:27
Speaker 1: the studio to talk to us does not remember the
21:29
Speaker 1: dot com bust. They were born front center, on the
21:32
Speaker 1: front line. And so yeah, I think the interesting thing
21:35
Speaker 1: is you're seeing a lot of these companies, especially the
21:37
Speaker 1: ones who did big hiring last year, start to do
21:40
Speaker 1: layoffs beyond Elon Musk just firing half of Twitter. You've
21:45
Speaker 1: got Facebook, You've got Microsoft, You've got uh now now Amazon.
21:50
Speaker 1: But the thing to me is, um, they usually need
21:53
Speaker 1: to add employees this time of year. Right, that's amazing.
21:56
Speaker 1: All right, let's talk cars. You want to do that? Yes? Please?
21:59
Speaker 1: All right, why don't you bring in Kevin Tynan because
22:00
Speaker 1: I think he does that stuff right. Kevin Tynan joins
22:02
Speaker 1: a senior automotive analysts Bloomberg Intelligence and Kevin let's talk
22:07
Speaker 1: about UM. Well, first of all, rivan Um putting some
22:11
Speaker 1: price hikes, uh, putting putting some price hikes out there,
22:15
Speaker 1: and they're already expensive enough. I built one, I think
22:18
Speaker 1: pretty conservatively and already got to dollars. Is that going
22:23
Speaker 1: to hit demand? Well? Sure, yeah, I mean but look
22:26
Speaker 1: at the stage we're in. You know, if one fifty
22:30
Speaker 1: lightnings are transacting above eight tho. Yeah, well I'm saying
22:35
Speaker 1: the average, and we get those numbers every month, it's
22:38
Speaker 1: still well into the eighties on average, but yeah, you
22:40
Speaker 1: can get them up into six figures UM. And that's
22:43
Speaker 1: just the point we're at. And it's even intensifying now
22:46
Speaker 1: because of material costs UM. Where to sell something at
22:52
Speaker 1: even break even, We're talking about sixty thou plus, so
22:55
Speaker 1: you're not gonna you know, and there's gonna be very
22:58
Speaker 1: few automakers that will sell something unprofitably. Right. This is
23:02
Speaker 1: what I've been talking about forever UM and now that
23:05
Speaker 1: point is just getting higher and higher, which is why
23:08
Speaker 1: you're seeing price increases. So, Kevin, here's why this whole
23:12
Speaker 1: ev thing is can be a lot bumpier than I
23:14
Speaker 1: think the bulls think. I mean, don't you have to
23:17
Speaker 1: replace almost every gas station out there with a charging station.
23:21
Speaker 1: And some of these trucks require, like, you know, enough
23:24
Speaker 1: power to power small talent. There's a Bluemark article out
23:27
Speaker 1: today with that kind of analysis. Yeah, and and it's interesting.
23:31
Speaker 1: I was just in UH speaking with the greater Cincinnati
23:35
Speaker 1: auto dealers who doesn't do that luncheon last weekend. And
23:39
Speaker 1: this is what Kevin does. He goes to speaks to
23:41
Speaker 1: auto dealers in Cincinnati. That's what you're gonna do. You
23:44
Speaker 1: want to cover this business, and you have to talk
23:45
Speaker 1: to the dealership owners. Yeah, yeah, and and and we
23:48
Speaker 1: had dinner the night before with the UH some Ford
23:51
Speaker 1: dealers and one of the things that you know, we've
23:54
Speaker 1: heard about Ford requesting from their dealerships and investment of
23:58
Speaker 1: a million US dollars to update to be able to
24:02
Speaker 1: sell evs um. And was talking to some dealers and
24:05
Speaker 1: they were saying, we were fine with all that, changing
24:08
Speaker 1: the store, new tile, new entryways, charge points. And when
24:12
Speaker 1: they went to the local utility, they said, yeah, you're
24:14
Speaker 1: talking three years before we can get that kind of
24:16
Speaker 1: power from the street to your store. So even even
24:20
Speaker 1: these dealers who want to go along with Ford sort
24:23
Speaker 1: of you know, internal combustion side and e V side
24:27
Speaker 1: still have to wait because the infrastructure is just not
24:29
Speaker 1: there yet. And imagine what it would be, Um, if
24:33
Speaker 1: we were talking e V or or more as we're
24:38
Speaker 1: saying it's gonna be this, is gonna be this. I'm
24:42
Speaker 1: not sure we're ready for that. But they're still gonna
24:44
Speaker 1: I mean, someone who's gonna buy an e V uh today, Um,
24:49
Speaker 1: they're still gonna buy it, right, Yeah, they're still gonna
24:52
Speaker 1: sell as many. These companies are still gonna sell as
24:54
Speaker 1: many as they can make. That's not a constraint. Yeah,
24:57
Speaker 1: that the issue is they won't make that many. Uh,
25:01
Speaker 1: that's because they don't get the kind of margins that
25:04
Speaker 1: they'd like to. They still get the margins from the
25:06
Speaker 1: big trucks from the six point to leader V eight
25:08
Speaker 1: and not from right. Well. So, so the concept we
25:13
Speaker 1: hear all the time is, oh, when there's price parity
25:15
Speaker 1: between internal combustion and e V, the consumer will adopt
25:20
Speaker 1: and will That's where the tipping point in EV adoption comes.
25:23
Speaker 1: And I'm saying it has nothing to do with price parity,
25:26
Speaker 1: has everything to do with profit parity, because the whole
25:30
Speaker 1: adoption thing is determined by the automaker, not by the consumer,
25:34
Speaker 1: because the automaker is the is the entity that decides
25:38
Speaker 1: am I going to build and sell something unprofitably? Probably not?
25:42
Speaker 1: Or am I going to sell the profitable thing? And
25:44
Speaker 1: that's kind of where we are. So you know, if
25:48
Speaker 1: if internal combustion and e V are both thirty five
25:51
Speaker 1: thousand dollars, well how much how much margin is each
25:54
Speaker 1: of those will determine which one gets adopted, because that's
25:56
Speaker 1: what the manufacturer is going to market and push and
26:00
Speaker 1: and that's what the consumer will end up buying. I
26:03
Speaker 1: mean you you know, if there if there's a twenty
26:05
Speaker 1: thousand dollar difference on a thirty thousand and thirty five
26:09
Speaker 1: dollar vehicle in terms of profitability, well you know, you're
26:12
Speaker 1: just not gonna purposely sell things unprofitably for very long.
26:16
Speaker 1: What's the deal with riv and kevin Um. The stock
26:18
Speaker 1: has been up to one seventy two, it's down to
26:20
Speaker 1: thirty three right now, even with the massive rally the
26:22
Speaker 1: last couple of days. Are they gonna make it? Yeah?
26:25
Speaker 1: I mean, you just it's this push for scale now, right,
26:29
Speaker 1: which is interesting because you guys are talking about tech
26:32
Speaker 1: companies and that was this sort of veil that everybody
26:34
Speaker 1: hit under. We're not an automaker, We're a tech company.
26:37
Speaker 1: And now that's right, Like that's not Maybe it's such
26:39
Speaker 1: a great thing, um, but but at the end of
26:42
Speaker 1: the day, the auto industry has if there's one word,
26:45
Speaker 1: it's scale. You just need to be able to build
26:49
Speaker 1: a lot of things. Margins aren't great. Uh, you need
26:52
Speaker 1: to do it all over the world, and you need
26:54
Speaker 1: to just keep cranking them out. And these these companies
26:56
Speaker 1: that were wildly valued were on this potential or total
27:01
Speaker 1: addressable market, not on the reality of where they were
27:04
Speaker 1: scales scale wise. Kevin, just real quick, what are you
27:07
Speaker 1: driving right now? I actually have the Ionic five from
27:10
Speaker 1: Hyundai their e v We get four hour blocks to
27:14
Speaker 1: charge them here in Princeton. So I just ran out
27:16
Speaker 1: there to UM to update my charging and froze my
27:20
Speaker 1: butt off, and I'm thinking, how is this better than
27:22
Speaker 1: me sitting in my car while somebody put that vehicle
27:27
Speaker 1: that's one that consumers love. Alright, good stuff, Kevin Tyne.
27:30
Speaker 1: And he's our auto analysts, quasi tech analysts now covering
27:34
Speaker 1: the auto industry from Cold Prince, New Jersey. Here's the story,
27:40
Speaker 1: Matt that really got my attention on the Bloomberg terminal.
27:44
Speaker 1: Today London loses crown of biggest European stock market to Paris.
27:48
Speaker 1: I didn't even think that was an issue. I didn't
27:50
Speaker 1: even think that was on the table. So I said,
27:52
Speaker 1: all right, let's get somebody smarting here to kind of
27:54
Speaker 1: tell us how this happened, what it means going forward,
27:57
Speaker 1: because I guess this is a Brexit situation ration here
28:00
Speaker 1: or fallout from Brexit. So we've found a great guest,
28:04
Speaker 1: Marianne Scordell. She is the founder of a Bourgeville consulting
28:08
Speaker 1: Actually like that pronunciation solid perfect Mary, and so this again,
28:14
Speaker 1: it is just amazing to me. Tell me how this
28:16
Speaker 1: came about because we used to think, and I guess
28:18
Speaker 1: we still do those that along with New York, London
28:21
Speaker 1: is like the global financial hub. But I guess this
28:24
Speaker 1: is a victim of Brexit. Well, you know, since the
28:27
Speaker 1: referendum was voted, which was a few years ago now
28:30
Speaker 1: it was in there's been a trend. So for a
28:33
Speaker 1: long time people were wondering, or where shall we go
28:35
Speaker 1: from London, because in order to operate on the continent,
28:38
Speaker 1: you now you have to be on the continent. You
28:40
Speaker 1: could do it from London, but you can't do it
28:42
Speaker 1: from London anymore. You don't have what they call the
28:45
Speaker 1: European passport from London anymore. So the question always was
28:48
Speaker 1: where shall we go? Where shall we go? And for
28:51
Speaker 1: the last like since a lot of financial services companies
28:55
Speaker 1: have opened small offices in continental Europe, sometimes with just
28:59
Speaker 1: one person, very small kind of to hedge their beds
29:02
Speaker 1: at the beginning, and now they're just beefing them up.
29:04
Speaker 1: And that's what's happening. So we still have huge asset classes,
29:11
Speaker 1: you know, dominated by London. For example f X right is.
29:16
Speaker 1: I don't even know how many trillions of dollars f
29:18
Speaker 1: X trades a day in London, but it's giant. How
29:21
Speaker 1: big is the stock market, the European stock market trading
29:27
Speaker 1: in Paris versus what it is in London, Well, I
29:30
Speaker 1: don't know. But the choice of Paris really is to
29:33
Speaker 1: have like people in one city to exchange because a
29:35
Speaker 1: lot of what happens happens like physically. I know in
29:37
Speaker 1: the last two years we were all like not in
29:40
Speaker 1: the office, but it's really important to be all in
29:42
Speaker 1: the same place, in the same office. So that's one
29:45
Speaker 1: of the reasons why you know, people, companies, business managers
29:48
Speaker 1: were looking for one location to have everybody. I guess
29:51
Speaker 1: that's kind of what I'm what I'm really asking is
29:52
Speaker 1: where are all the people because um I remember when
29:56
Speaker 1: I'm not sure if there's still the case, but it
29:58
Speaker 1: used to be that you had the trade equity is
30:00
Speaker 1: in Osaka, actually physically enter your orders in Osaka. But
30:04
Speaker 1: everybody in the equities industry wanted to live in Tokyo.
30:07
Speaker 1: So what they would do is, you know, the top
30:09
Speaker 1: guys would pick some kid and and send him to
30:13
Speaker 1: Osaka and whenever they want to make trazy, just call
30:15
Speaker 1: him up. Right, Is this same thing happening? Are the
30:17
Speaker 1: important managers still living in uh, you know, Mayfair or
30:22
Speaker 1: Chelsea and just calling in their orders to Paris? Sometimes?
30:25
Speaker 1: I mean I know people who actually commute, you know,
30:27
Speaker 1: with the Eurostar it's about two hours to go from
30:29
Speaker 1: London to Paris, maybe three hours door to door, so
30:33
Speaker 1: so you know it's a lot of people still have
30:35
Speaker 1: the kids at school in London and they go they
30:38
Speaker 1: spend the week in Paris. It was the case, to
30:40
Speaker 1: be fair before before Brexit, some people did that the
30:42
Speaker 1: other way around. Actually, the Flamilies were more on the continents,
30:46
Speaker 1: people worked in London and they spend the weekend on
30:48
Speaker 1: the continent and the week in London. Now they do
30:50
Speaker 1: the other way around. It's not a big deal at all.
30:52
Speaker 1: So Mary and you spent a lot of time of
30:55
Speaker 1: your professional career in London and no more, no Mura, Barclays.
31:00
Speaker 1: When you talk to your clients over there, do they
31:02
Speaker 1: feel like that the time of London as a global
31:06
Speaker 1: financial hub, that that is in fact in the rear
31:09
Speaker 1: view mirror, that's in the past where we've kind of
31:11
Speaker 1: lost that position. I think it's not a done deal yet.
31:14
Speaker 1: People are still kind of in two minds. It's been
31:16
Speaker 1: really progressive since the referendum. So now they are adding people,
31:20
Speaker 1: even like banks such as Golden Sacks, Morgan Standing, they're
31:22
Speaker 1: adding stuff to their Paris office Paris offices and so
31:27
Speaker 1: it's but but it's not a done deal yet. I mean,
31:29
Speaker 1: you can't say now Paris is bigger than London in
31:31
Speaker 1: terms of being the financial center. It's working progress and
31:35
Speaker 1: things can still change a little bit. You know, it's
31:37
Speaker 1: not um it was, It's not yet black or white.
31:41
Speaker 1: I think we have to bear that in mind. The
31:43
Speaker 1: elephant in the room when you're talking about France or
31:47
Speaker 1: the same is true. I guess another sort of social
31:49
Speaker 1: democracies as tax right and the Wall Street crowd or um,
31:56
Speaker 1: you know, the London finance crowd doesn't want to move there,
32:00
Speaker 1: um and then find out that all of a sudden
32:02
Speaker 1: the Parisian left has brought out the guillotine again. Well,
32:07
Speaker 1: I hope they never will do that anyway, but it's
32:10
Speaker 1: very true that that's one of the big questions, together
32:12
Speaker 1: with the labor law and tax However, the French want
32:15
Speaker 1: to refer like the French government has done a big
32:17
Speaker 1: marketing pushed towards the financial community, so they for example,
32:21
Speaker 1: they come to New York fairly, you know, fairly often
32:23
Speaker 1: to meet fund managers to say how Paris has become,
32:26
Speaker 1: you as a business friendly in financial services but in
32:30
Speaker 1: business overall. And it's true that they're trying to reform,
32:32
Speaker 1: but that's very obviously very slow. That's normal. Um. So
32:36
Speaker 1: it's it's basically taking time, but hopefully hopefully they'll get there.
32:40
Speaker 1: From experience, what I can say is that it's a
32:43
Speaker 1: lot easier now than it used to be to access regulators,
32:46
Speaker 1: to access even like the government, when you need to
32:49
Speaker 1: ask questions they have like they're more open for business
32:52
Speaker 1: now than they were maybe ten years ago, and I
32:54
Speaker 1: know that from experience doing that for my clients have
32:57
Speaker 1: been moving a few hege funds too to continent Continental Europe,
33:01
Speaker 1: um Portugal, also Paris. So it's interesting. But is Germany
33:06
Speaker 1: an option here? Because when I think of just I
33:08
Speaker 1: mean when I was on the south side, might stop
33:10
Speaker 1: in Germany was always Frankfort that was a major European
33:14
Speaker 1: financial hub. Is that still the case and are they
33:16
Speaker 1: trying to get are they successfully taking some of that
33:19
Speaker 1: talent from London? So I do a lot of less
33:22
Speaker 1: business in Germany. One reason is very simple. I don't
33:24
Speaker 1: speak German. I speak a lot of other languages, but
33:27
Speaker 1: not German. So you know, usually clients who come to
33:30
Speaker 1: me are clients who are more interested in the continents.
33:33
Speaker 1: A lot of people are saying that Germany is I'm sorry,
33:36
Speaker 1: I maybe it's not true, but they are saying it's
33:38
Speaker 1: a bit dull. So that's why, you know, that's why
33:41
Speaker 1: traders and salespeople prefer to live in Paris and Germany.
33:44
Speaker 1: That maybe one of the reasons. It's deadly, deadly boring
33:48
Speaker 1: living in Frankfort and the best Thingstchester I've lived. I've lived.
33:52
Speaker 1: I've spent years living in Frankfort and the I mean,
33:55
Speaker 1: it's really fantastic to have the airport so close and
33:58
Speaker 1: easy to get out of Frankfort. But otherwise there's not
34:01
Speaker 1: a lot to do. They're compared to Paris. Dublin was
34:03
Speaker 1: also an option that a lot of people were interested in.
34:06
Speaker 1: Madrid is one that I think would be great. Um,
34:09
Speaker 1: you mentioned Portugal. What are some of the alternatives? Where
34:12
Speaker 1: else are people looking at? Yeah, there's also Amsterdam. Several
34:14
Speaker 1: clients have asked me to enquire about the regulatory regime
34:17
Speaker 1: in Amsterdam, and you know, everything around it, because if
34:21
Speaker 1: you go somewhere and you live there, it's not just
34:23
Speaker 1: wherek it's you know, how how is it going? What
34:25
Speaker 1: is it going to be like for the schools for kids? Schools?
34:28
Speaker 1: They have a lot of international schools in Amsterdam. Everybody
34:31
Speaker 1: speaks English as well, which is not necessarily the case
34:34
Speaker 1: in Um, for example, in Spain. Right, UM, definitely is
34:38
Speaker 1: not the case in I know that exactly because you flounder.
34:41
Speaker 1: My wife is Spanish and none of her family knows
34:44
Speaker 1: how to speak English, and I don't know how. Maybe
34:45
Speaker 1: they just don't want to speak to you. That's all right, Maryanne,
34:49
Speaker 1: thank you so much for joining us. Really appreciate getting
34:51
Speaker 1: uh your perspective. You're on a story that I think
34:53
Speaker 1: it's just really fascinating. Uh. London Loser's Crown the biggest
34:56
Speaker 1: European stock market to Paris. Marianne Scordell found her of
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