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Bonds, Markets, And ETFs (Podcast) · Bloomberg Intelligence

0:00
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. Find the Bloomberg Markets Podcast
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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. Matt was just calling
0:23
Speaker 1: out here in an I end screen the Bloomberg Index
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Speaker 1: browser Bloomberg US corporate total return value year to date
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Speaker 1: minus fourteen points six treasuries to minus fourteen point eight.
0:37
Speaker 1: I mean, what's going on? And that does inlets total
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Speaker 1: return So not that it would have mattered because the
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Speaker 1: coupons are so low. Yes, um, but it's harsh. And look,
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Speaker 1: my mom and dad just retired this like month, and uh,
0:54
Speaker 1: I feel for them. I guess I'm gonna have to
0:56
Speaker 1: step up because they're broke now, you know, all right,
1:01
Speaker 1: Liz McCormick, Global Fixed Income and far In Exchange reporter
1:03
Speaker 1: joins us live here in a Bloomberg and after Broker studio.
1:06
Speaker 1: So Liz, again, these are numbers, these are performance numbers.
1:11
Speaker 1: You know your friends in the fixed income market have
1:13
Speaker 1: ever seen, never seen. Yeah, I mean some of the
1:16
Speaker 1: data how you splice and dice it is like at
1:19
Speaker 1: least the worst first half and kind of modern times
1:22
Speaker 1: call it. I was mentioning to Matt that Deutsche Bank
1:24
Speaker 1: had some great data back to the seventeen hundreds, like
1:26
Speaker 1: how bad it was. I mean, people just aren't Most
1:29
Speaker 1: people aren't used to this kind of beating up in bonds.
1:33
Speaker 1: I mean, do people in fixtion come to they try
1:36
Speaker 1: to call the bottom, like we hear equity trying to
1:40
Speaker 1: call the Yeah. And this is where I feel like
1:43
Speaker 1: I see the same dichotomy going on as you guys
1:46
Speaker 1: are talking all about in stocks. You know, is this
1:49
Speaker 1: like a bear rally? Is it over? The same thing
1:52
Speaker 1: in bonds? People saying, oh, we've seen the peak and yields,
1:55
Speaker 1: you know, all the FED pricing for hikes is in there.
1:59
Speaker 1: The worst is over. And then other people saying, wait
2:03
Speaker 1: a minute. You know, like three point five on the
2:05
Speaker 1: tenure was the highest we've seen. But like listen, you know,
2:08
Speaker 1: I've been around for a while. Like the folks of
2:10
Speaker 1: Bridgewater said to me a few times, we think rates
2:12
Speaker 1: can go a lot higher. Ten years, could go to
2:14
Speaker 1: four percent or more. You know, FED has just got
2:16
Speaker 1: a lot more tightening to do. So there is these battles,
2:18
Speaker 1: I think in both asset classes. You know, we'll see
2:22
Speaker 1: who wins in the end, right, maybe next year or sometime.
2:24
Speaker 1: I met a guy over the weekend, eighty three years old,
2:28
Speaker 1: fascinating guy, and he watches and listens to us every day.
2:32
Speaker 1: He trades bonds every night. So at the end of
2:35
Speaker 1: the day he'll make a trade, put on a position,
2:37
Speaker 1: and then the next day. No one nobody does that, right,
2:42
Speaker 1: nobody does that. My father, who I've been doing this
2:44
Speaker 1: for so long, still says to me, can you explain
2:46
Speaker 1: to me again what a bond is? You know what
2:48
Speaker 1: I mean? All the bond traders I know, all the
2:51
Speaker 1: guys I know who worked in firms on the street
2:53
Speaker 1: have long since retired or quit, right exactly. I remember
2:57
Speaker 1: my old boss, Ward McCarthy saying, years back when there
2:59
Speaker 1: was yield, saying, I bought you know, zero coupons ages
3:03
Speaker 1: ago and that put my kids through college, you know,
3:05
Speaker 1: like it used to be such great rates and those
3:07
Speaker 1: are just gone. Well. Actually, Scott Miner did say he's
3:10
Speaker 1: buying the strips right twenty years, which is um kind
3:15
Speaker 1: of jargony. But I guess that's when you strip out
3:17
Speaker 1: the coupon, you can trade the maturities and then you
3:21
Speaker 1: can also trade the each due date of the coupon.
3:24
Speaker 1: It's like a bullet, you know, it's it's just like
3:26
Speaker 1: a single coupon in a sense, just what you get
3:29
Speaker 1: at the end. But yeah, they're stripping and I saw that,
3:31
Speaker 1: and we'll see. I mean, if we're in this era
3:33
Speaker 1: that we're never going to get rates too high again,
3:35
Speaker 1: which I'm not sure I buy into yet. People who
3:39
Speaker 1: bought strips are locked in tansit over three percent are
3:42
Speaker 1: going to be pretty happy if you know here we are.
3:45
Speaker 1: You know, in a couple of years, the Feds fighting
3:46
Speaker 1: in a recession cutting rates again. Is that, by the way,
3:50
Speaker 1: kind of a consensus that the Fed is gonna raise
3:53
Speaker 1: rates high enough to fight inflation because they now they
3:56
Speaker 1: have to. That's they're locked in. And not only is
4:00
Speaker 1: it one of their actual mandates, but and then we're
4:02
Speaker 1: gonna have a recession in three and they're gonna have
4:05
Speaker 1: to cut right back down again. Well, I would say,
4:07
Speaker 1: like the timing of the recession gets nebulous. A lot
4:09
Speaker 1: of people say late I've heard a few say maybe
4:13
Speaker 1: there's enough cash in the system. Corporations are much better
4:16
Speaker 1: it could be. But I think in general, Matt, you're
4:20
Speaker 1: right that it's fast, up front loaded quick, and then
4:24
Speaker 1: the FED is going to have to eventually not too
4:26
Speaker 1: long be cutting rates again because they're trying to manage.
4:30
Speaker 1: And like Pal said, he's gone from you know, like
4:32
Speaker 1: soft landing soft dish to saying, well, you know, we
4:36
Speaker 1: could have a slowd You know, he's trying, but you know,
4:38
Speaker 1: you raise rates this fast. And I know there's not
4:40
Speaker 1: a lot of floating rate debt out there, but I
4:43
Speaker 1: have a home equity line of credit and I was like, oh,
4:46
Speaker 1: they raised that rate pretty darned fast, you know, to me.
4:48
Speaker 1: So not only that, um Joel Levington wrote a piece
4:53
Speaker 1: about the automakers. Now they're facing a one hundred and
4:56
Speaker 1: forty five billion dollar wall of debt and it's not like, uh,
5:01
Speaker 1: you know, they can just hold it right, They're they're
5:04
Speaker 1: constantly rolling over. So now they're going to look at
5:07
Speaker 1: two d fifty three hundred basis points of increased costs. This,
5:11
Speaker 1: by the way, adds to inflation because they've got to
5:13
Speaker 1: pass that along to the customer. But Uh, it's it's
5:17
Speaker 1: tough for for companies as well. Yeah, I think everyone
5:19
Speaker 1: you're going to feel this very quickly. Now. The Fed said,
5:22
Speaker 1: we're really watching financial conditions, which is kind of nebulous.
5:26
Speaker 1: You know, how tight do they have to get? You know,
5:28
Speaker 1: not just what's the hard rate the Fed funds has
5:30
Speaker 1: to get to, but that's what they're watching. How does
5:32
Speaker 1: this filter through? Look at mortgage rates over six percent?
5:35
Speaker 1: You know, they seem like so low for so long.
5:37
Speaker 1: The housing market hasn't imploded yet, but for once, not
5:40
Speaker 1: that I'm looking to buy, but you see on Zeala
5:42
Speaker 1: finally price reduction. We didn't see that forever, So I
5:46
Speaker 1: think it's gonna sale. I know people who wanted to
5:48
Speaker 1: sell and now they can't, so they got to rent. Yeah, well,
5:51
Speaker 1: you know what, rents are crazy right, going up in price,
5:54
Speaker 1: the you know, leases up. I've heard so many people complaining,
5:57
Speaker 1: oh the language putting up my rent is too damn high.
6:00
Speaker 1: The rent is too damn hon So if you move,
6:02
Speaker 1: is that another reason to move to Austin, Texas? Or
6:05
Speaker 1: I don't think pricing is good in Austin time. I
6:07
Speaker 1: don't think it is either, especially you don't get a
6:09
Speaker 1: special rates because it's Texas. So where do you have
6:11
Speaker 1: to go? What we could go Columbus, Ohio. It's a
6:13
Speaker 1: great place to live in, very affordable and people are
6:16
Speaker 1: just wonderful and no accent, so it's the only place
6:21
Speaker 1: in the country where there's absolutely no regional accents. They
6:24
Speaker 1: use people from the great state of Ohio often for
6:26
Speaker 1: newscasters and Matt Miller case in point. All right, Liz McCormack,
6:31
Speaker 1: thanks so much for joining us. Lis mccormer. She covers
6:33
Speaker 1: all things global fixed income, foreign exchange reporter. She does
6:36
Speaker 1: it all for Bloomberg News, and most important, she is
6:40
Speaker 1: in the Bloomberg Interactor Broker studio today, So we appreciate that.
6:49
Speaker 1: Matt Our next guest is all in the state of Wisconsin.
6:53
Speaker 1: PhD in Economics from the University of Wisconsin Milwaukee, j
6:57
Speaker 1: d from Marquette, and an undergrad and finance from the
7:00
Speaker 1: University of Wisconsin and Madison. We're gonna get this guy
7:03
Speaker 1: out of state once in a while. I mean, he's
7:05
Speaker 1: all in. It's also part time instructor at Marquette. Uh
7:08
Speaker 1: DR Brian Jakebison's senior investment strategist Offspring Global investments. So, Brian,
7:12
Speaker 1: you don't mind the winters in Wisconsin, you know what
7:16
Speaker 1: I mean? Life is all about trade off. I guess
7:19
Speaker 1: that's just the tradeoff you have to make for living
7:21
Speaker 1: in the land of milk and honey, or I guess
7:24
Speaker 1: milk and sausage or milk and cheese. I wish this
7:28
Speaker 1: market was all about trade offs. Yes, it seems like
7:31
Speaker 1: no matter what you own, your down I mean, I
7:33
Speaker 1: guess if you if you if you just had oil modity,
7:35
Speaker 1: if you have some commodities, you're okay. So, Brian, you know,
7:39
Speaker 1: one of the things that people start talking about, well,
7:42
Speaker 1: maybe I'm we're just hearing a little bit more of
7:43
Speaker 1: the last few weeks is trying to find a bottom,
7:47
Speaker 1: uh in these markets? Is that an exercise you go through?
7:50
Speaker 1: And if so, kind of what do you look for?
7:52
Speaker 1: How are you trading this market here? Well? You know,
7:56
Speaker 1: sometimes it feels like my workouts, you know, an exercise
7:59
Speaker 1: and utility. Um. And I think that, you know, trying
8:02
Speaker 1: to find the bottom is always going to be difficult
8:04
Speaker 1: because the market seems to be there to frustrate the
8:08
Speaker 1: expectations and ambitions of everybody. Um. But it does feel
8:13
Speaker 1: like we're trying to find a bottom, and since you
8:15
Speaker 1: know we can't pick one, we just have to I think,
8:18
Speaker 1: take a look at the broad thrust of the market,
8:22
Speaker 1: and it seems like some of the indicators are suggesting
8:25
Speaker 1: we're trying to find one here. Now who knows is
8:27
Speaker 1: it is it even lower than that? But all we
8:31
Speaker 1: know is that things look cheaper now than what they
8:34
Speaker 1: did back in u on January three, when we're at
8:37
Speaker 1: the peak. And so I think for longer term investors,
8:39
Speaker 1: for that kind of structural part of your portfolio, the
8:42
Speaker 1: strategic part um, that does suggest to us that there's
8:45
Speaker 1: some long term opportunities even if there could be some
8:47
Speaker 1: short term pain here. It's all about those trade offs, right,
8:50
Speaker 1: that long term gain maybe a little bit more short
8:53
Speaker 1: term pain. Do you go h do you go in
8:56
Speaker 1: for the traditional defensive um? You know, can't imagine you're
9:00
Speaker 1: buying utilities but consumer staples or healthcare? Healthcare? Yeah? You know.
9:09
Speaker 1: So we just published are the all Spring mid year
9:13
Speaker 1: Outlook and the theme was rolling with change, and I
9:16
Speaker 1: think that what is defensive now you need to really
9:19
Speaker 1: kind of change the way you think about it because
9:21
Speaker 1: of that interest rate sensitivity, Right, utilities do tend to
9:24
Speaker 1: be much more interest rate sensitive than say, consumer staples.
9:28
Speaker 1: Both are traditionally viewed as being more defensive. It's just
9:31
Speaker 1: one has a higher loading on rate risk than the other.
9:35
Speaker 1: And so actually we are overweight consumer staples as somewhat
9:39
Speaker 1: of uh not necessarily a barish view, but as a
9:44
Speaker 1: bit more of a defensive view on the markets, at
9:47
Speaker 1: least here in the short term. I do have to say, though,
9:49
Speaker 1: we are warming up to areas like financials or home builders,
9:53
Speaker 1: those parts that have sold off pretty substantially here or
9:57
Speaker 1: haven't performed as you would have expected just given the
10:01
Speaker 1: FEDS change and stamps. You know, looking at this upcoming
10:06
Speaker 1: earning season, so I think July fifteen fishes when it
10:09
Speaker 1: kicks off. You know, we look at inflation x food
10:12
Speaker 1: and energy, Well, what's earnings x energy um is possible
10:17
Speaker 1: that it would be a negative three You're a year
10:19
Speaker 1: just excluding that one sector. So you know that it
10:22
Speaker 1: seems like there's a lot of areas that there's some
10:24
Speaker 1: decent opportunities if you focus on looking for maybe the
10:28
Speaker 1: parts that have been beaten down the most but still
10:30
Speaker 1: have decent fundamentals that can pull you through this. Yeah,
10:33
Speaker 1: Bron I'm glad you mentioned earnings because we're going to
10:35
Speaker 1: switch into that earnings mode very soon. Give us a
10:40
Speaker 1: sense of kind of how you're thinking about evaluation for
10:42
Speaker 1: these markets. Some people are suggesting that it's obviously a
10:46
Speaker 1: lot more tracted than it was at the beginning of
10:48
Speaker 1: the year from evaluation perspective, But is it cheap? How
10:51
Speaker 1: do you think about that? And no one's really pulled
10:53
Speaker 1: earnings forecast down, at least not dramatically. Yeah, that's been
10:57
Speaker 1: a puzzling thing as to why we haven't seen the
10:59
Speaker 1: ear and forecasts come down. And I think that's why
11:02
Speaker 1: people can make the argument that, well, just the price decline,
11:05
Speaker 1: it's just that things are cheaper now. The problem is
11:08
Speaker 1: is I think the market is saying that the fundamentals
11:10
Speaker 1: has also declined. Right, So it's yes, things are cheaper
11:14
Speaker 1: based on price, but maybe it's also cheaper based on
11:17
Speaker 1: value if the value has declined in tandem. And when
11:21
Speaker 1: we like interest rate in just some of your typical
11:24
Speaker 1: market multiples, you know, we've seen the pe come down,
11:28
Speaker 1: but at the same time, yields have gone up, and
11:31
Speaker 1: so it's been almost a bit of a wash from
11:34
Speaker 1: the pure market multiple perspective, and as a result, the
11:38
Speaker 1: way that we're trying to position things is be a
11:40
Speaker 1: little bit more just broadly diversified, and then within each
11:43
Speaker 1: one of the sectors, work with some of our tremendous
11:46
Speaker 1: teams like and Miletti. She's the head of our fundamental
11:48
Speaker 1: equity teams. They're the ones who are trying to identify
11:51
Speaker 1: value there. Yeah, and so here it all springs. You know,
11:54
Speaker 1: We're very fortunate to have her and her teams here
11:57
Speaker 1: to try to identify some of those areas within each
12:00
Speaker 1: sector about who might have that quality of earnings to
12:05
Speaker 1: kind of cut through some of these cyclical headwinds that
12:07
Speaker 1: we might be facing. By the way, Uh, Brian just
12:09
Speaker 1: got about thirty seconds here, But I see you like China,
12:13
Speaker 1: and it strikes me that they're kind of going in
12:14
Speaker 1: the other direction or they haven't, you know, been in
12:17
Speaker 1: a situation where inflation is high and they're raising rates.
12:20
Speaker 1: They've still got to come out of lockdown. Is that
12:21
Speaker 1: kind of a reopening play? It really is. Yeah. I
12:25
Speaker 1: think sentiments shifted so much so negatively against them. Who
12:29
Speaker 1: knows how long will hold on to it. But we
12:31
Speaker 1: do like China road to to the US. They got
12:33
Speaker 1: the fiscal impulse, monetary stimulus, and now the reopening. We
12:37
Speaker 1: think that could bode well for them. All right, Brian,
12:40
Speaker 1: great great stuff. I always appreciate getting some of your
12:42
Speaker 1: thoughts here. Dr Brian Jacobson's senior investment strategists off Spring
12:47
Speaker 1: Global Investments. Uh, they are all in Wisconsin. I mean,
12:51
Speaker 1: I'm talking about it, Marquette, that's a Milwaukee is an
12:54
Speaker 1: in Wisconsin is Yeah. They they all started. A lot
12:57
Speaker 1: of them started there at Strong Funds, which is a
13:00
Speaker 1: big was a big mutual fund out there in suburban Milwaukee.
13:04
Speaker 1: It was a must go to visit if you were
13:06
Speaker 1: sell side equity analyst. He had to go out se
13:10
Speaker 1: a million times, a million times. It's a it's a
13:12
Speaker 1: great money town, great money market town. There's lots of
13:15
Speaker 1: good folks. They're managing institutional money. Well. When you think
13:21
Speaker 1: about one of the great success stories in the US
13:25
Speaker 1: in terms of the growth of you know, certain cities,
13:27
Speaker 1: certain metroplexes around the country, Atlanta's got to be at
13:30
Speaker 1: the top of your list. It's just been such a
13:32
Speaker 1: great growth story for so long. So many great companies
13:36
Speaker 1: like Delta Airlines and home Depot and so on, and
13:39
Speaker 1: so forth, they hosted the Olympics. UH, just a great
13:42
Speaker 1: success story. And so of course we need to put
13:44
Speaker 1: some numbers around that. And when you want to do that,
13:46
Speaker 1: you go to Chinpey a Bloomberg News and Matt Winkler,
13:49
Speaker 1: who is editor in chief emeritus and founder of Bloomberg News,
13:53
Speaker 1: to kind of put some numbers around that, put some
13:55
Speaker 1: context around that. And they certainly have Matt include joint
13:58
Speaker 1: us here in our Bloomberg Interactive Brokers studio. So, Matt, Atlanta, Georgia,
14:02
Speaker 1: what's the key one of the key takeaways from your
14:05
Speaker 1: perspectives as you looked at the data as to why
14:08
Speaker 1: Atlanta has been such a good success story. So it
14:11
Speaker 1: goes back to Maynard Jackson became the first black mayor
14:17
Speaker 1: of any city, major city in the South, and he
14:21
Speaker 1: had two very big initiatives that stand the test of time.
14:27
Speaker 1: One was massive public works, which included the renovation of
14:32
Speaker 1: the airport that is the busiest in the world uh
14:36
Speaker 1: and has been renamed with his name on it because
14:39
Speaker 1: of that renovation. UH. He also initiated a rail line
14:43
Speaker 1: that goes from one into the city to the other,
14:45
Speaker 1: so everybody can get from here to there without any difficulty.
14:49
Speaker 1: But the other major thing was he wanted to make
14:52
Speaker 1: sure Atlanta would be forever diverse. And with Atlanta being
14:57
Speaker 1: today uh the second largest black majority UM city in
15:03
Speaker 1: the United States. UM, he initiated a it was persuasion
15:09
Speaker 1: really requirement that everybody hire at least thirty of their
15:15
Speaker 1: workforce from the black local community. And that also stood
15:19
Speaker 1: the test of time. So today when you look at
15:22
Speaker 1: business in Atlanta, it is diverse, UH. And in fact,
15:26
Speaker 1: Atlanta is really more diverse than any other city that way.
15:30
Speaker 1: And so those two things, if you like, UH, infrastructure,
15:34
Speaker 1: public works, and diversity have combined to make Atlanta, UM
15:40
Speaker 1: the best performing city right now in the United States.
15:43
Speaker 1: And we know that because we have these credit measures
15:45
Speaker 1: that show that Atlanta liabilities are falling, personal incomes going up,
15:51
Speaker 1: and UH and so UM are so many other measures
15:58
Speaker 1: of performance for the city. So it's going in the
16:01
Speaker 1: right direction. Is anyone else UM taking note or other
16:06
Speaker 1: mayors looking at this as a template for what they
16:09
Speaker 1: can do in their cities, especially in you know, cities
16:12
Speaker 1: that have historically have had problems like Chicago or Baltimore. Well, UM,
16:17
Speaker 1: I can't say I've done the Grand City tour of
16:20
Speaker 1: late partly because of covid um you know, impediments. But um,
16:27
Speaker 1: you know, I was in Boston last week catching up
16:30
Speaker 1: with another new mayor, uh Michelle wou and mentioned Atlanta,
16:36
Speaker 1: and she got excited and she said, we like what
16:39
Speaker 1: we see down there. So, um it is. It is
16:42
Speaker 1: an exemplar, There's no question about it. It's interesting, Matt,
16:45
Speaker 1: just thinking about the success story of Atlanta, which has
16:47
Speaker 1: been generations into making you think about just in the pandemic,
16:51
Speaker 1: how we've seen, you know, a migration of people in
16:54
Speaker 1: this country to other similar type cities, whether it's a
16:59
Speaker 1: Nashville or or Charlotte or certainly Miami in on a
17:03
Speaker 1: greater scale. How did Atlanta deal with the pandemic That
17:07
Speaker 1: does anything unique there? Or were they hit as well
17:10
Speaker 1: as anybody and they're trying to recover as well as anybody.
17:12
Speaker 1: They had the same issues of every other city. Um,
17:15
Speaker 1: and they also had you know, the if you like
17:20
Speaker 1: the polarized politics, because as you know, Georgia is in
17:26
Speaker 1: fact politically led by Republican legislature and governor. In Atlanta,
17:32
Speaker 1: um is as I said, it's been Democrats since uh well,
17:37
Speaker 1: going all the way back in time. Really, but it's
17:39
Speaker 1: been black Democrat and uh, they don't agree on a
17:43
Speaker 1: lot of big issues. And they certainly had difficulty dealing
17:48
Speaker 1: with the pandemic having to do with things like masking
17:51
Speaker 1: and you know, when businesses were going to be open
17:54
Speaker 1: in schools and everything else. So every city has had
17:57
Speaker 1: those issues. Uh, probably Atlanta I had to contend with
18:01
Speaker 1: a much more difficult political um agenda. But Atlanta being Atlanta,
18:09
Speaker 1: it managed to, you know, deal with these difficulties and
18:13
Speaker 1: deal with them successfully to the extent that you know,
18:16
Speaker 1: it's a uh, a bastion of diversity and will probably
18:22
Speaker 1: continue to be so. I couldn't believe it when, uh
18:25
Speaker 1: they tried to make it illegal to pass out bottles
18:28
Speaker 1: of water to like single mothers and lines to vote.
18:31
Speaker 1: What what a mean spirited thing to do. Uh, they
18:35
Speaker 1: generate I think you said two thirds of the GDP
18:38
Speaker 1: for Georgia. Is it possible that Atlantic could pick two
18:41
Speaker 1: thirds of the congressional representatives. No, we're not there yet.
18:46
Speaker 1: We're not there yet. But look, Atlanta was the reason
18:49
Speaker 1: that Georgia for the first time in thirty years went
18:53
Speaker 1: for a Democrat in the White House. Um, that's Faulton
18:57
Speaker 1: and Dekalp County, those two counties to account for Atlanta,
19:01
Speaker 1: and uh, you know, it's the reason that the senators
19:05
Speaker 1: from Georgia are also Democrat and it's the reason that
19:10
Speaker 1: you know, we see all these stories of companies leaving
19:12
Speaker 1: Illinois to go, um to Texas and other states. But
19:17
Speaker 1: companies headquartered in Atlanta are very happy. I know from um,
19:21
Speaker 1: you know the companies I cover. Porscha absolutely loves being there.
19:25
Speaker 1: But then they have much bigger, famous corporations that are
19:29
Speaker 1: happy and not leaving, right correct. Um. You know, In
19:32
Speaker 1: fact you mentioned at the outset Delta and home Depot,
19:36
Speaker 1: those are the two. Those two companies are the best
19:39
Speaker 1: performing in their global industries. You know, if you look
19:43
Speaker 1: at Delta every which way you look at it, Delta
19:47
Speaker 1: is the best airline from a market perspective or investment
19:52
Speaker 1: perspective in the world. And if you look at home Depot, uh,
19:56
Speaker 1: you know, look at their sales performance, it's it's really
19:58
Speaker 1: the same thing. Home Depot does better than any other company.
20:02
Speaker 1: So yes, they're very happy. Where they are happy is
20:07
Speaker 1: a relative term, but um, yeah, where they're situated is
20:11
Speaker 1: is uh is good for them, particularly because the airport. Um.
20:16
Speaker 1: And that's really probably the best part of this is
20:20
Speaker 1: that the Atlanta Airport has come out of COVID nineteen
20:24
Speaker 1: UM performing better than any other airport in the world.
20:29
Speaker 1: It's and the biggest airport in the world. I didn't
20:31
Speaker 1: know that before I read this. I figured in terms
20:33
Speaker 1: of traffic. Yeah, oh, hair or Charles de gaul Um,
20:38
Speaker 1: I just want to quickly get your take on or
20:40
Speaker 1: point out that Georgia Shirley must be one of the
20:44
Speaker 1: trigger states, right, and we had this the uh, you know,
20:49
Speaker 1: to really emotional days I think for the whole country
20:52
Speaker 1: on Thursday and Friday because of the Supreme Court. Um.
20:56
Speaker 1: What are we hearing from companies about how they're going
20:58
Speaker 1: to deal deal with this? Well, what you've heard so far,
21:01
Speaker 1: and we've reported this at Bloomberg pretty extensively, which is that, uh,
21:07
Speaker 1: while companies have not for the most part, been explicit
21:11
Speaker 1: in condemning the Supreme Court decision, what they have done
21:15
Speaker 1: instead is say publicly that they will do whatever it
21:19
Speaker 1: takes to pay for the reproductive care of their employees.
21:24
Speaker 1: In other words, they will do whatever it takes to
21:27
Speaker 1: enable employees wherever they are in any of these states
21:30
Speaker 1: where um, you know, abortion is suddenly impossible or legal
21:35
Speaker 1: or both. Yep, they'll take care of it all right, Matt,
21:38
Speaker 1: thanks so much. We appreciate Matt Winkler, Bloomberg News. Here's
21:45
Speaker 1: some data for you. Since the US alone has sustained
21:49
Speaker 1: three weather and climate disasters, and by the end of
21:53
Speaker 1: this century, the US government predicts two trillion dollars per
21:56
Speaker 1: year in damages from hurricanes, wildfire's, flood, drought, severe storms,
22:01
Speaker 1: or earthquakes. Question is is there a way to take
22:04
Speaker 1: advantage of the disaster recovery efforts out there where you
22:08
Speaker 1: guessed it? There's an e t F for that. Andrew
22:10
Speaker 1: Chain and CEO of procure A m joins us UH.
22:14
Speaker 1: Andrew talked to us about an e t F that
22:16
Speaker 1: may benefit from, you know, recovery efforts for our disasters.
22:21
Speaker 1: First of all, thanks for having me. It's great to
22:23
Speaker 1: be back. And yeah, we're thrilled to talk about FEMA.
22:26
Speaker 1: It's our latest ETF from procure We launched this just
22:30
Speaker 1: on June one, and realizing the various trends and climate
22:34
Speaker 1: change and the devastating and financial devastation that many of
22:39
Speaker 1: these natural disasters and even man made and man enhanced
22:44
Speaker 1: disasters can cause. To us, it made sense to create
22:47
Speaker 1: a fund that focused on these companies that are helping
22:50
Speaker 1: us with recovery, mitigation, prevention, and the companies that help
22:54
Speaker 1: us in our in our times when we need them
22:56
Speaker 1: the most. It's one of those ideas where when you
22:59
Speaker 1: hear you're like, yeah, yeah, of course about time. Why
23:02
Speaker 1: did it take so long? So talk to us about
23:05
Speaker 1: the holdings that are in it. Yeah. So it's it's
23:08
Speaker 1: a wide range, it's a global basket. We have currently
23:11
Speaker 1: sixty two companies from around the world. And the SPUND
23:14
Speaker 1: So you look back at the Texas UH freeze that
23:18
Speaker 1: we had a little over a year ago, and when
23:21
Speaker 1: the system went down, people were scrambling for generators. So
23:24
Speaker 1: a company like Jenerac is where respund and they help
23:27
Speaker 1: with you know, remote power generation absolutely. And you look
23:31
Speaker 1: at UH. You know, when you have Hurricane Sandy or
23:35
Speaker 1: events like the Horizon oil spill down on the Gulf,
23:39
Speaker 1: and you know, typically dredging or the rebuilding of dunes
23:42
Speaker 1: and protective barriers are extremely important. You have a company
23:46
Speaker 1: like Great Lake Dredging DOC that you know, repaired I
23:49
Speaker 1: believe twelve or more miles of the New Jersey coastline
23:53
Speaker 1: UM and helped build up sand level sands heights in
23:56
Speaker 1: the Gulf during the oil spill. So you have companies
23:59
Speaker 1: to help with that. You have construction of engineering firms,
24:02
Speaker 1: you have waste management treatment, water management, water treatment, UM
24:07
Speaker 1: and so many other influential companies that help us in
24:10
Speaker 1: events like wildfires, floods, earthquakes, even droughts. And this is
24:15
Speaker 1: something that is a global phenomenon. You mentioned that two
24:17
Speaker 1: trillion dollar figure that the US government expects by the
24:21
Speaker 1: end of this century to the US budget alone. That's
24:25
Speaker 1: probably five and a half billion dollars per day from
24:28
Speaker 1: the US budget alone. That doesn't include what global efforts
24:31
Speaker 1: are occurring overseas. That doesn't include what companies and individuals
24:36
Speaker 1: will have to pay to protect and recover. So this
24:38
Speaker 1: is truly a remarkable industry and one that we believe
24:41
Speaker 1: we helped quantify by developing FEMA. But by the way,
24:45
Speaker 1: I don't want to take us too far off base.
24:47
Speaker 1: But when you see like Generac is one of those
24:50
Speaker 1: products when when a guy like looks over the fence
24:52
Speaker 1: and sees that has never got one, you're like super jealous.
24:55
Speaker 1: And the new GENERAC I think are these bi directional
24:58
Speaker 1: e V s. You just test of the four F
25:00
Speaker 1: one which will essentially do the same thing. Right, it's
25:03
Speaker 1: gonna power your house if and when the power goes down.
25:06
Speaker 1: We got our generact three weeks before Superstar Sandy Horse.
25:11
Speaker 1: We had people in our house. I didn't even know
25:13
Speaker 1: they were staying with us for days. I found myself
25:15
Speaker 1: walking a crying baby at like three o'clock in the
25:18
Speaker 1: morning around my house and try to comment. I'm like,
25:19
Speaker 1: I don't even know who this who this kid is,
25:21
Speaker 1: But they work those generat work. Andrew, Uh, talk to
25:24
Speaker 1: me quickly about the E t F business At a
25:27
Speaker 1: broader level, you offer other products obviously. I I usually
25:31
Speaker 1: talk to you about space and stuff like that. Um,
25:34
Speaker 1: as we see this market downturn, it has been brutal, Um,
25:38
Speaker 1: how does that affect E t F trading? Yeah? You know,
25:42
Speaker 1: you know sometimes volatility, you know, brings a lot of
25:45
Speaker 1: volume to the market. Sometimes people are in a wait
25:48
Speaker 1: and see position and aren't ready to allocate new capital
25:51
Speaker 1: to either new ideas or existing ideas, and they're trying
25:54
Speaker 1: to figure out, Um, you're where the next trade maybe
25:57
Speaker 1: or where they want to be overweighted and so UM.
26:01
Speaker 1: You know, we've had some pretty violent moves in the
26:03
Speaker 1: market over these last you know, many weeks, and you know,
26:06
Speaker 1: for for the bulk of UM. You know, sometimes you
26:09
Speaker 1: see those big moves and people use those as times
26:11
Speaker 1: to reposition or reallocate, and you see volumes you know,
26:14
Speaker 1: really surge. Sometimes people say, you know what, I'm gonna
26:17
Speaker 1: take a step back, and certainly in the summer the
26:19
Speaker 1: old adage and sell them ay and go away. UM.
26:23
Speaker 1: You know, not always the case, but you know, some
26:26
Speaker 1: volumes have been have been depressed, but there's always some
26:29
Speaker 1: interest in certain areas in the market where you'll see
26:31
Speaker 1: those volumes pick up. So typically those could be good
26:34
Speaker 1: indicators for for what people are looking at. So is
26:36
Speaker 1: this Uh? Is this the second e t F you're launching?
26:39
Speaker 1: You have UFO right? UM? Is FEMA the second one
26:44
Speaker 1: under the procure brand? Exactly what's next? You know, it's
26:48
Speaker 1: it's a question we we always receive, UM. You know,
26:51
Speaker 1: lots of times it's industries or themes that are near
26:54
Speaker 1: and dear to me. UM. You know, I I was
26:56
Speaker 1: down in New Orleans at University during Hurricane Katrina. Uh.
27:00
Speaker 1: How is uh? You know in New York city during
27:02
Speaker 1: sandy and the storms that we just had last year. Um,
27:05
Speaker 1: you know a lot of ideas that I bring out
27:07
Speaker 1: are things that you've played to some of my own
27:08
Speaker 1: fears and looking for exposures and ways to potentially protect myself.
27:12
Speaker 1: So we're always looking for first to market concepts. Typically
27:15
Speaker 1: thematic global equity is how we how we bring the
27:18
Speaker 1: strategies out and FEMA was, uh, you know, an area
27:21
Speaker 1: that seemed completely underserved and one that you know could
27:24
Speaker 1: give interest to many investors. Totally makes sense. Net look
27:27
Speaker 1: for innovation. Now, UFO, you've been I assume you've been
27:32
Speaker 1: hit by the whole um. Well, the FED raising rates
27:35
Speaker 1: take some frothiness out of the market. Everybody looks at
27:38
Speaker 1: ARC and they're like, why did we ever buy that?
27:39
Speaker 1: You know, Um, but but you're investing in space and
27:44
Speaker 1: the things that we're gonna need to use in space,
27:47
Speaker 1: make in space, get from space. I have to assume
27:50
Speaker 1: that is not going away just because the FED starts
27:53
Speaker 1: raising rates. Well, you can even look at just in
27:56
Speaker 1: the last few weeks various government contracts that have been
27:59
Speaker 1: a ordered to numerous space companies and you know, historically
28:04
Speaker 1: in the early days, space is almost entirely funded by
28:07
Speaker 1: governments and government agencies. That numbers dropped to roughly twenty
28:10
Speaker 1: percent in recent years, with commercial space really being the driver.
28:15
Speaker 1: So we're seeing a ton of demand with the Ukraine invasion,
28:18
Speaker 1: we're learning how important space is and to be able
28:20
Speaker 1: to have redundancies, capabilities, defensive and offensive capabilities from a
28:25
Speaker 1: government from a military standpoint, And these are things that
28:28
Speaker 1: are in real time driving the space industry. So while
28:31
Speaker 1: maybe people not as many people can afford space tourism,
28:34
Speaker 1: that's a really small part of the space economy. The
28:37
Speaker 1: other parts, the main drivers like communications, draw band, internet, connectivity, um,
28:43
Speaker 1: you know, the things that benefit our lives here on
28:45
Speaker 1: Earth are things that are still seeing some tremendous demands.
28:49
Speaker 1: So it's an unaccompanied by company basis. Not necessarily every
28:52
Speaker 1: company is going to be a winner, but using diversification
28:54
Speaker 1: can hopefully provide you to too many of those companies
28:57
Speaker 1: that are generating space revenues from around the world. All right, Andrew,
29:00
Speaker 1: good stuff as always entertained and CEO of procure a M.
29:04
Speaker 1: They've got a new e T f out f e
29:07
Speaker 1: M a FEMA. It's uh to try to invest to
29:11
Speaker 1: take advantage of some opportunities in the disaster recovery effort.
29:14
Speaker 1: That's their second e t F after the first one
29:17
Speaker 1: was u f O as Andrews just explaining kind of
29:20
Speaker 1: take advantage of all the investment that is going on
29:22
Speaker 1: in space of some cool thematic e t f s
29:25
Speaker 1: out there. Thanks for listening to the Bloomberg Markets podcast.
29:31
Speaker 1: You can subscribe and listen to interviews with Apple Podcasts
29:34
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
29:38
Speaker 1: on Twitter at Matt Miller three. Put on false Sweeney.
29:42
Speaker 1: I'm on Twitter at pt Sweeney before the podcast. You
29:45
Speaker 1: can always catch us worldwide at Bloomberg Radio