WEBVTT - A Look At Crypto, Markets, The Latest From Washington 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.720 at Bloomberg dot com slash podcast. Ben Slaven joins us 0:00:22.800 --> 0:00:25.319 right now, Global head of e t F speaking of 0:00:25.960 --> 0:00:29.320 UM and Assets Serving Servicing it B n Y Melon 0:00:29.440 --> 0:00:32.040 speaking of out of n y c UM. They've got 0:00:32.400 --> 0:00:35.760 two point three trillion dollars of assets under management. Ben, 0:00:35.760 --> 0:00:39.720 thanks so much for joining us. UM, you know, more 0:00:39.840 --> 0:00:43.440 and more I conflate the world of e t f 0:00:43.560 --> 0:00:46.360 s with the crypto world. I know that's not really fair, 0:00:46.400 --> 0:00:52.320 but UM, we do have uh recently hyped new pro 0:00:52.400 --> 0:00:56.080 shares Bitcoin e t F as well as Greatcoins, Great 0:00:56.120 --> 0:00:59.320 Scales conversion of its Bitcoin trust into an e t F. 0:00:59.680 --> 0:01:03.920 What do you think about the two worlds colliding here? Well, 0:01:04.040 --> 0:01:07.760 we've seen quite a bit of convergence. UM. As you noted, 0:01:07.840 --> 0:01:11.480 Bitcoin ETFs made a dramatic entrance into the e t 0:01:11.640 --> 0:01:15.080 F market, so it was really another milestone for the 0:01:15.120 --> 0:01:19.319 e t F industry, democratizing yet another asset class, and 0:01:19.400 --> 0:01:23.000 so it gives investors a new option for those seeking 0:01:23.240 --> 0:01:28.200 exposure to cryptocurrencies, in this case bitcoin, and clearly there's 0:01:28.240 --> 0:01:31.800 pent up demand um. And you can see this convergence 0:01:31.880 --> 0:01:34.600 starting to happen to some degree here in real time, 0:01:35.120 --> 0:01:38.440 where the product that launched first set the all time 0:01:38.480 --> 0:01:41.520 record of fastest e t F to a billion dollars, 0:01:41.680 --> 0:01:45.399 did it in two days, ironically topping the previous record holder, 0:01:45.440 --> 0:01:48.840 which was Gold Physical Goal g l D back in 0:01:48.920 --> 0:01:52.440 two thousand four, which did it in three And clearly 0:01:52.680 --> 0:01:56.880 investors are not only preferring this access to crypto, but 0:01:57.360 --> 0:02:00.640 certainly doing so in the e t F structure. Um. 0:02:00.720 --> 0:02:02.880 You know, as witnessed by the trading volume and the 0:02:02.960 --> 0:02:06.040 demand we've seen for the products. So ben give us 0:02:06.040 --> 0:02:08.480 a sense of how the Gray Stale as it converts 0:02:08.520 --> 0:02:10.160 from a trust to an e t F, how that 0:02:10.200 --> 0:02:14.639 will differ from the pro shares Bitcoin e TV Well, 0:02:14.680 --> 0:02:18.440 there are two very different things. So you know, Gray 0:02:18.560 --> 0:02:22.480 Scale obviously has been around for a while and they 0:02:22.480 --> 0:02:25.959 announced their intent to convert to an e t F 0:02:26.720 --> 0:02:32.799 and Gray Scales Bitcoin Trust holds the underlying bitcoin UM. 0:02:32.919 --> 0:02:35.560 But in the case of the pro shares product and 0:02:35.600 --> 0:02:38.919 the other future space products, we saw another one UM 0:02:39.000 --> 0:02:41.200 launched by a firm called Valkyrie, and there are more 0:02:41.280 --> 0:02:44.600 behind it. Are investing in futures and there are some 0:02:44.840 --> 0:02:48.560 very important differences that investors need to be aware of 0:02:48.600 --> 0:02:50.480 in terms of how they work and the risks and 0:02:50.480 --> 0:02:53.760 the returns they will receive. But most importantly, the futures 0:02:53.800 --> 0:02:57.400 et s don't hold Bitcoin, they hold a future, and 0:02:57.440 --> 0:03:02.240 there are costs to roll that futures contract, especially when 0:03:02.520 --> 0:03:06.200 like we have now, the futures curves slopes upward and 0:03:06.240 --> 0:03:08.520 there's a cost. So there will be some differences in 0:03:08.600 --> 0:03:12.720 how those products track UM, you know, compared to a 0:03:12.840 --> 0:03:19.040 physical product UM. That's correct, UM, the bitcoin products will 0:03:19.080 --> 0:03:22.800 work very similar to the other products that investors UM 0:03:22.880 --> 0:03:25.440 and ETF investors know like U s O or U 0:03:25.560 --> 0:03:28.080 n G that are doing the same, but they're holding 0:03:28.080 --> 0:03:30.760 oil and gas in those cases. And the problem is 0:03:30.840 --> 0:03:34.080 you can you know the underlying asset. You can invest 0:03:34.160 --> 0:03:39.640 in both, and the convergence can be huge, like after 0:03:39.720 --> 0:03:44.280 even a year, right, correct, And that is something that's 0:03:44.280 --> 0:03:47.840 hard to predict, driven by markets, and it will directly 0:03:48.000 --> 0:03:52.480 depend on the slope of the futures curve. UM, So 0:03:52.760 --> 0:03:55.680 it is a variable that investors need to be aware of, 0:03:55.720 --> 0:03:58.960 and certainly we've seen that in other markets, um, where 0:03:59.000 --> 0:04:02.760 you know similar Um, you know, similar things have happened. Ben, 0:04:02.760 --> 0:04:04.720 do you think the regulators will get to the point 0:04:04.760 --> 0:04:07.480 where there can be a straight up e t F 0:04:07.880 --> 0:04:12.360 with the underlying coin as opposed to the futures. Well, 0:04:12.680 --> 0:04:17.239 I mean, certainly, the SEC allowed the pro shares product 0:04:17.320 --> 0:04:20.839 to launch, and you know, they got comfortable really for 0:04:20.920 --> 0:04:25.760 a couple of reasons. One was the nine Act regulatory scheme, 0:04:25.800 --> 0:04:29.000 which has common to most mutual funds. And second, they 0:04:29.040 --> 0:04:32.640 were able to get comfortable with exchange listed futures because 0:04:32.680 --> 0:04:35.320 they're regulated. And also it means that the e t 0:04:35.480 --> 0:04:39.440 F itself doesn't hold the underlying bitcoin. So certainly there's 0:04:39.480 --> 0:04:43.320 going to be, um, some work to be done to 0:04:43.640 --> 0:04:47.719 be able to get the SEC comfortable to allow ets 0:04:47.800 --> 0:04:50.680 to hold the bitcoin directly. So we're going to look 0:04:50.720 --> 0:04:54.360 for that evolution to occur to make sure those investor 0:04:54.480 --> 0:04:57.640 protections are in place. Um. You know, again, before the 0:04:57.760 --> 0:05:00.560 SEC would get comfortable with those approvals. By the way, 0:05:00.600 --> 0:05:04.920 what was the pandemic like for E t F investing 0:05:05.040 --> 0:05:06.640 for the world of E t F s. You know, 0:05:06.760 --> 0:05:10.640 before the pandemic, I would sometimes go to these conferences 0:05:11.240 --> 0:05:16.800 UM for big E t F providers like Vanguard for example, 0:05:17.240 --> 0:05:20.080 and noticed that the growth was just amazing. And because 0:05:20.200 --> 0:05:24.560 the kids right invest a lot of times through BTF, 0:05:24.680 --> 0:05:27.080 they prefer passive which is why I think of Vanguard 0:05:27.520 --> 0:05:30.440 UM investing UM or they can do kind of active 0:05:30.480 --> 0:05:35.000 investing with different ets. Is it did Did growth continue 0:05:35.040 --> 0:05:40.560 like that throughout the pandemic? We've seen phenomenal growth, in fact, 0:05:40.800 --> 0:05:43.600 record setting growth for the industry as well as on 0:05:43.680 --> 0:05:47.400 our platform at being Y so right now, UM, we 0:05:47.720 --> 0:05:52.919 just hit one trillion in influence into e tfs globally 0:05:53.440 --> 0:05:56.000 UM a little more than seven billion of that coming 0:05:56.040 --> 0:05:58.880 in the US, which is shattering the all time records. 0:05:59.400 --> 0:06:03.240 We saw record setting and again we're seeing that here 0:06:03.360 --> 0:06:07.920 in one so the flow has been incredible UM. But 0:06:08.040 --> 0:06:12.640 we're also seeing a trend UM with new product development 0:06:13.200 --> 0:06:17.800 UM slowly shift away from passive towards actively managed strategies. 0:06:18.279 --> 0:06:21.960 And that is something we're seeing pick up UM in 0:06:22.160 --> 0:06:25.920 terms of you know, those products you know, accelerating with 0:06:26.160 --> 0:06:28.840 both the new new that are new products that are 0:06:28.880 --> 0:06:31.320 coming to market as well as the assets, and that's 0:06:31.360 --> 0:06:35.480 something I expect to continue. But certainly the passive ETFs 0:06:35.560 --> 0:06:37.400 have a big lead on active so there's quite a 0:06:37.440 --> 0:06:39.440 bit of ground for for those new products to make 0:06:39.560 --> 0:06:43.440 up given where the markets at today. Hey Man, thanks 0:06:43.480 --> 0:06:46.040 so much for joining us. We really appreciate it. Ben Slaven, 0:06:46.040 --> 0:06:48.680 Global Head of ets and Assets Servicing at b n 0:06:48.880 --> 0:06:51.320 Y Melan. I mean, you have, you know, a couple 0:06:51.320 --> 0:06:54.560 of these, the two fast growing areas that seems of finance, 0:06:54.640 --> 0:06:58.479 which is one e t S and two crypto makes 0:06:58.480 --> 0:07:01.000 sense to pend together. It's like peanut butter and chocolate, right, 0:07:01.120 --> 0:07:03.480 exactly right. So it'll be interesting to see, you know, 0:07:03.520 --> 0:07:05.640 how many more come on the heels of the pro 0:07:05.839 --> 0:07:09.440 shares et F and then now the Gracesdale UH conversion 0:07:09.560 --> 0:07:11.480 from a trust into an ETF. How many more will 0:07:11.480 --> 0:07:14.360 come down the pike. Yeah, and it'll be interesting to 0:07:14.440 --> 0:07:18.240 also see how this affects the price of the underlying 0:07:18.400 --> 0:07:20.920 right if more institutional investors and this is the big 0:07:21.000 --> 0:07:24.080 bet that a lot of his bitcoin and crypto investor making, 0:07:24.120 --> 0:07:27.800 that it'll become more adopted, not only institutionally, but just 0:07:27.880 --> 0:07:30.440 become a part of people's portfolios. Looking at bitcoin here 0:07:32.240 --> 0:07:39.080 up about nine tenths of one. Let's get to the 0:07:39.200 --> 0:07:43.080 big crypto story that seemingly everybody has been reading today 0:07:43.120 --> 0:07:45.040 and talking about at the water cooler. Wall Street is 0:07:45.040 --> 0:07:49.080 a masking a crypto army and paying up for recruits. 0:07:49.560 --> 0:07:52.040 Z Song wrote this with Cat Doherty, and we have 0:07:52.200 --> 0:07:55.840 Cat here in the Interactive Broker studio with us. So Cat, 0:07:55.880 --> 0:07:59.440 I think it's really interesting because I've been covering bitcoin 0:07:59.600 --> 0:08:02.560 since first breached a thousand dollars and it was I 0:08:02.600 --> 0:08:04.560 did it kind of a fun two week piece where 0:08:04.640 --> 0:08:08.040 I only spent bitcoin, I didn't spend any US dollars. 0:08:08.520 --> 0:08:10.360 And then I was a while ago when that wasn't 0:08:10.360 --> 0:08:13.040 a thing right now that nobody else was, well, there 0:08:13.080 --> 0:08:15.200 were there were some like there was a grocery store 0:08:15.240 --> 0:08:17.880 in green Point and there was a bar down in 0:08:18.080 --> 0:08:22.440 Murray Hill and I wore plaid blazers and it was fun, 0:08:22.760 --> 0:08:25.640 you know, but it wasn't that serious, and of course 0:08:25.720 --> 0:08:27.840 all the real Wall Street guys kind of pooh poohed 0:08:28.320 --> 0:08:31.560 the story. Now there, I guess hiring these crypto kids 0:08:31.600 --> 0:08:35.440 who at the time we're like CouchSurfing paper millionaires and uh, 0:08:35.600 --> 0:08:37.080 and now are the only ones to know what they're 0:08:37.080 --> 0:08:40.800 doing that's right. And we're also seeing folks that are 0:08:41.040 --> 0:08:45.120 in these financial like traditional financial roles that are getting 0:08:45.200 --> 0:08:49.559 recruited to exclusively focus on crypto. So you have you 0:08:49.679 --> 0:08:55.199 have both. It's not just the CouchSurfing millennials youngers that 0:08:55.240 --> 0:08:57.920 are getting hired to go to these banks. The banks 0:08:57.960 --> 0:09:00.960 are also acknowledging, hey, look, we have clients that are 0:09:01.000 --> 0:09:04.520 asking us what's going on. We need answers, So they 0:09:04.640 --> 0:09:09.439 are building teams that can bring the knowledge. And I 0:09:09.520 --> 0:09:11.559 think that goes both ways. It's it's not just going 0:09:11.640 --> 0:09:16.360 from the outside. In fact, often you need the institutional background. 0:09:16.440 --> 0:09:19.760 You need someone that knows how to work in a 0:09:20.120 --> 0:09:23.280 corporate job. You can't just go out and and and 0:09:23.480 --> 0:09:26.360 find someone who's never been in an office setting before. 0:09:26.559 --> 0:09:30.280 So you get somebody like um, like a Mike mcgloane 0:09:30.640 --> 0:09:32.959 who was at S and P, who was at a 0:09:33.080 --> 0:09:35.920 B n UM and now is working for US and 0:09:35.960 --> 0:09:39.959 Bloomberg Intelligence and knows everything about crypto exactly um. And 0:09:40.040 --> 0:09:43.760 you also have just folks that have been working I 0:09:43.920 --> 0:09:47.400 I spoke with the lead at Bank of America who's 0:09:47.440 --> 0:09:52.240 building the team, and he has just this this desire 0:09:52.480 --> 0:09:55.080 this this hunger for knowledge, to learn more and more 0:09:55.120 --> 0:09:59.000 about crypto. So he's been in a traditional research role 0:09:59.440 --> 0:10:03.400 and now he's tasked with building a team that is 0:10:03.720 --> 0:10:08.760 exclusively about crypto. But it's it goes beyond just crypto. 0:10:08.920 --> 0:10:12.199 It's how does crypto touch all of these other sectors 0:10:12.320 --> 0:10:15.880 that Bank of America already covers. So his pitch to 0:10:16.040 --> 0:10:20.319 me was that our clients are asking, Okay, maybe I 0:10:20.400 --> 0:10:24.040 don't want to get involved in a cryptocurrency, but I 0:10:24.160 --> 0:10:27.359 do realize that this is starting to touch the industries 0:10:27.400 --> 0:10:30.679 that I invest in, whether it's like energy or or others, 0:10:30.760 --> 0:10:35.520 really anything. UM there's there's no escaping how crypto is 0:10:35.600 --> 0:10:40.200 bleeding into traditional finance. And so these banks are saying, Okay, 0:10:40.559 --> 0:10:43.840 with that acknowledgment, we're going to need to get the experts. 0:10:43.880 --> 0:10:45.920 We're going to need to come up with the answers 0:10:45.960 --> 0:10:48.839 and the research that can serve our client base. And 0:10:48.920 --> 0:10:52.280 I think JP Morgan's one of my favorite examples. They're hiring, 0:10:52.520 --> 0:10:56.200 their gearing up their trading desk, yet their CEO, Jamie Diamond, 0:10:56.679 --> 0:11:00.599 as recently as last month, called bitcoin worthless. It is 0:11:00.720 --> 0:11:04.880 funny to see how the leaders view crypto UM and 0:11:05.000 --> 0:11:09.760 then the the action right, um, because they're not always aligned. 0:11:10.000 --> 0:11:13.439 That's a good example. Um. But I would just say 0:11:13.480 --> 0:11:17.520 that even if there's the belief, um from a CEO 0:11:17.960 --> 0:11:21.800 or even like the leader of the research team at 0:11:21.880 --> 0:11:24.920 these banks that's saying, oh, we don't want to specifically, 0:11:25.160 --> 0:11:28.280 you know, jump into bitcoin, or maybe there's hesitation. Well, 0:11:28.440 --> 0:11:32.840 there's also the acknowledgment of Okay, if you have again clients, 0:11:32.880 --> 0:11:35.840 people that are asking or you're having to answer these questions. 0:11:36.120 --> 0:11:39.800 You can't just say, oh, sorry, we're ignoring this entirely, 0:11:40.000 --> 0:11:42.160 and you can go ask someone else. Well, that's how 0:11:42.240 --> 0:11:45.440 you that's how you lose business. So there's there's that answer. 0:11:45.640 --> 0:11:48.040 I mean, this is really in some ways it demonstrates 0:11:48.559 --> 0:11:51.040 what a good leader Jamie Diamond can be because he 0:11:51.160 --> 0:11:55.120 has his personal opinion and he also runs the bank 0:11:55.559 --> 0:11:57.839 and uh, he's you know, he says that you could say, 0:11:57.880 --> 0:12:00.439 it's not worthless. Takes two people to make a market, right, Um, 0:12:01.160 --> 0:12:05.199 how much cat are people getting to to move right now? 0:12:05.720 --> 0:12:09.400 Because this is tight, This is a tight labor market. 0:12:09.480 --> 0:12:12.040 People are already getting big bumps to move jobs. Right, 0:12:12.160 --> 0:12:15.160 So it depends on how senior role we're talking about, Um, 0:12:15.640 --> 0:12:18.800 for for the more senior roles like research trading heads, 0:12:18.960 --> 0:12:22.800 that could be a premium as much as fifty UM, 0:12:22.960 --> 0:12:26.400 but others their salary increases. It ferries as you know 0:12:26.600 --> 0:12:29.960 you you would expect. UM. We we saw some increases 0:12:30.000 --> 0:12:33.000 from the data that we were given UM of about 0:12:33.240 --> 0:12:37.439 nine in new roles versus their previous roles. So I 0:12:37.480 --> 0:12:40.559 think it all depends on the person, their experience level. UM. 0:12:40.720 --> 0:12:46.000 Also how committed these UH institutional firms financial firms are 0:12:46.200 --> 0:12:49.880 to to really spending the money and getting the talent. 0:12:50.600 --> 0:12:54.160 Where are they getting these people from depends. We talked 0:12:54.280 --> 0:12:57.360 to UH a lot of people that were at like 0:12:57.559 --> 0:13:03.000 a black Rock or UM Brookfield, or or at at 0:13:03.040 --> 0:13:07.280 a traditional bank like a JP Morgan Bank of America UM. 0:13:08.640 --> 0:13:10.440 And then we also spoke with a lot of folks 0:13:10.520 --> 0:13:15.480 that have gone over to crypto firms. Some of them 0:13:15.679 --> 0:13:18.400 you could consider startups, some of them are crypto like 0:13:18.520 --> 0:13:22.559 hedge funds UM. So it's going both ways, and I 0:13:22.640 --> 0:13:25.600 think that is the tension that I'm interested in tracking 0:13:25.720 --> 0:13:29.280 next because as Wall Street is looking to to gain 0:13:29.360 --> 0:13:34.160 that talent, they're also losing that talent to the crypto farms. Yeah. Absolutely, UM, 0:13:34.720 --> 0:13:38.400 it's almost like the banks versus fin techs, especially if 0:13:38.960 --> 0:13:41.319 most of the fintech start to dabble in crypto or 0:13:41.320 --> 0:13:44.480 already are doing it. Cat Doorty helped to write that story. 0:13:44.679 --> 0:13:46.679 It's a huge hit on the Bloomberg terminal. Wall Street 0:13:47.000 --> 0:13:51.439 is amassing a crypto army. Now, I want to get 0:13:51.880 --> 0:13:55.880 back to politics, but bring it from Glasgow to Washington 0:13:55.920 --> 0:13:58.440 in the sense and talk about the what do they 0:13:58.480 --> 0:14:03.400 call it? The it was? It was a framework, framework, framework, 0:14:03.800 --> 0:14:08.319 President Biden's framework one point seven five trillion dollar framework, 0:14:08.360 --> 0:14:12.000 although over ten years, is starting to gather some steam. 0:14:12.000 --> 0:14:15.480 Congressional Tax reporter Laura Davidson joins us out of DC 0:14:15.720 --> 0:14:18.240 to talk about UM when we can expect a vote? 0:14:18.280 --> 0:14:21.120 I guess that's what everyone wants to know. When is 0:14:21.160 --> 0:14:25.760 this thing actually gonna happen? Laura, that's a real good question. 0:14:25.880 --> 0:14:28.160 House leaders were hoping that they could do something, you know, 0:14:28.240 --> 0:14:31.040 as soon as this week. That's a super ambitious timeline. 0:14:31.080 --> 0:14:32.680 Over the weekends. They were thinking they might be able 0:14:32.680 --> 0:14:35.640 to vote on Tuesday again tomorrow. UM. The bill is 0:14:35.680 --> 0:14:37.720 not yet written. There's still not agreement on some of 0:14:37.760 --> 0:14:40.560 the big pieces like drug pricing UM as well as 0:14:40.800 --> 0:14:42.280 you know, some of some of the other their pay 0:14:42.360 --> 0:14:45.080 for wars. So it's really unclear when there's going to 0:14:45.160 --> 0:14:46.920 be a vote there. Also, are you know a lot 0:14:46.960 --> 0:14:49.880 of political considerations here. Uh, you need to have both 0:14:49.960 --> 0:14:53.120 the moderates and progressives on board with the entire bill. Uh. 0:14:53.200 --> 0:14:54.840 And this is something that really could be you know, 0:14:55.040 --> 0:14:59.200 weeks if not months away. Unbelievable. So, Laura, I mean, 0:14:59.480 --> 0:15:01.520 what's the and here you think about a one point 0:15:01.600 --> 0:15:04.640 seven five trillion. That's not a lot to the you know, 0:15:04.800 --> 0:15:06.480 the Matt Miller's in the world, but that's a big 0:15:06.600 --> 0:15:11.520 number to me. However, it's well down from what the 0:15:11.600 --> 0:15:16.160 Biden administration initially asked, what's the what we need in 0:15:16.320 --> 0:15:19.680 terms of America to invest in infrastructure? You don't, Yeah, 0:15:19.680 --> 0:15:21.400 I'm not sure what the right number is, but it's 0:15:21.400 --> 0:15:25.160 certainly below what I think the administration really wanted. Does 0:15:25.240 --> 0:15:28.400 this suggest that the administration will kind of take whatever 0:15:28.480 --> 0:15:31.040 deal they can get at this point? Yeah, And this 0:15:31.160 --> 0:15:33.440 is really the political reality of only having you know, 0:15:33.560 --> 0:15:35.680 a you know, three four seat majority in the House 0:15:35.760 --> 0:15:37.880 as well as uh, you know, basically having no room 0:15:37.920 --> 0:15:40.160 for air in the Senate. Is they you know, couldn't 0:15:40.280 --> 0:15:42.200 get all the things that the administrator should want it. 0:15:42.240 --> 0:15:43.680 You know, when you look at the plans that Biden 0:15:43.720 --> 0:15:46.000 put out in the spring, you know that was something 0:15:46.080 --> 0:15:48.840 like maybe six trillion, maybe even more of spending that 0:15:48.960 --> 0:15:51.960 he was outlining there. Um, that got curtailed back to 0:15:52.040 --> 0:15:53.960 three point five trillion in the deal that was reached 0:15:53.960 --> 0:15:56.200 earlier this year. And now you know, cut in half 0:15:56.200 --> 0:15:58.920 again one point seven five trillion. There's you know, the 0:15:58.960 --> 0:16:02.480 five and fifty billion dollars worth of infrastructure spending. Uh, 0:16:02.800 --> 0:16:05.000 this is the heart infrastructure, you know, things like roads 0:16:05.040 --> 0:16:07.880 and bridges and airports approved in the Senate earlier this year. 0:16:07.920 --> 0:16:09.720 And now the kind of the second piece that they're 0:16:09.720 --> 0:16:11.240 figuring out is, you know, how much you spent on 0:16:11.400 --> 0:16:14.680 things like education and childcare and health care. And that's 0:16:14.720 --> 0:16:17.080 looking like you know, if it's one point seven five 0:16:17.200 --> 0:16:18.920 is going to be the top number there. And I 0:16:19.000 --> 0:16:23.240 guess this is the important distinction, Laura, because I had 0:16:23.360 --> 0:16:27.920 lunch with the Republican lobbyists last week who was saying, 0:16:28.520 --> 0:16:32.000 we need a lot more than two or three or 0:16:32.120 --> 0:16:34.880 four trillions spent on infrastructure in the US to be competitive. 0:16:35.360 --> 0:16:39.120 But he was thinking of infrastructure as what's in the 0:16:39.200 --> 0:16:43.720 first bill and not appreciating what's in this bill. Um, 0:16:43.840 --> 0:16:46.680 in terms of you know, the label infrastructure, what are 0:16:46.720 --> 0:16:50.480 people in Washington calling this They're really you know, they've 0:16:50.520 --> 0:16:53.400 been calling it the social infrastructure or the human infrastructure bill. 0:16:53.440 --> 0:16:55.600 That's kind of in the branding. You hear Democrats say 0:16:55.600 --> 0:16:57.600 a lot of things, you know, that housing is infrastructure 0:16:57.760 --> 0:17:00.520 or childcare is infrastructure, the idea that these things are 0:17:00.560 --> 0:17:03.840 all you know, key tenants that support the economy. But 0:17:04.000 --> 0:17:06.479 the definition of infrastructure has been sort of running joke 0:17:06.520 --> 0:17:08.400 in Washington this year is that it's really not been 0:17:08.440 --> 0:17:10.200 you know, kind of what has traditionally been thought about 0:17:10.240 --> 0:17:13.680 as infrastructure but really expanded to include a lot of things. Um, 0:17:13.800 --> 0:17:15.280 you know that you kind of do have a you know, 0:17:15.359 --> 0:17:18.439 kind of infrastructure proponent, things like renewable energy and uh, 0:17:18.560 --> 0:17:20.440 you know, job training that sort of thing, as well 0:17:20.560 --> 0:17:24.600 as you know, kind of a whole host of democratic priorities. So, 0:17:25.440 --> 0:17:26.680 you know, I'm not really sure who I need to 0:17:26.720 --> 0:17:29.000 be focusing on Laura over these you know, this next 0:17:29.040 --> 0:17:31.800 week or several weeks about like who's going to really 0:17:31.920 --> 0:17:34.720 get this thing done. I'm not sure it's the President, 0:17:34.960 --> 0:17:38.560 is it Pelosi, is it mansioned is mean, who do 0:17:38.640 --> 0:17:40.960 I need to be focusing on here. So there's a 0:17:41.000 --> 0:17:42.800 couple of key players here, and these are really the 0:17:42.840 --> 0:17:45.640 parties that are they're not yet satisfied with the bill. 0:17:46.080 --> 0:17:49.120 One that's Cinema and Mansion, and they have not come out. 0:17:49.160 --> 0:17:52.399 They came out and sort of expressed general, um, you know, 0:17:52.640 --> 0:17:54.800 warmness that there was you know, progress and that a 0:17:54.880 --> 0:17:57.359 deal was being made, but they didn't actually endorse that 0:17:57.480 --> 0:17:59.920 framework that the President put out last week. So that's 0:18:00.000 --> 0:18:01.359 those are two parties to watch if you know what 0:18:01.480 --> 0:18:04.080 do they need to get fully on board. The other 0:18:04.200 --> 0:18:06.160 person here on the other sub spectrum is is Senator 0:18:06.200 --> 0:18:08.520 burn Sanders if he wants to make sure there's something 0:18:08.640 --> 0:18:10.640 done on drug pricing that was not in the bill. 0:18:10.680 --> 0:18:13.200 There were lots of negotiations over the weekend to try 0:18:13.240 --> 0:18:15.280 to come up with some sort of field to lower 0:18:15.320 --> 0:18:18.359 the cost of prescription drugs. We'll see if that can 0:18:18.440 --> 0:18:20.760 make it in. Um. The other big thing, and this 0:18:20.960 --> 0:18:23.359 is you know, sort of on a whole different playing field, 0:18:23.600 --> 0:18:26.919 but it's the state and local tax deduction. A lot 0:18:27.000 --> 0:18:29.760 of members, particularly in the House you know, representing areas 0:18:29.800 --> 0:18:31.800 New York, New Jersey, want to make sure that an 0:18:31.840 --> 0:18:34.480 expansion of that tax credit, that that tax deduction is 0:18:34.520 --> 0:18:36.680 in there if it wasn't in the framework. But House 0:18:36.760 --> 0:18:38.719 leaders have pledged they'll get in and they pretty much 0:18:38.720 --> 0:18:39.879 have to if they want to get that bill out 0:18:39.920 --> 0:18:42.480 of the chamber. And this has to be again something 0:18:42.560 --> 0:18:45.160 that they can agree on in a bipartisan way. Surely 0:18:45.240 --> 0:18:50.320 Republicans UM want that tax deduction to be expanded as well, 0:18:51.520 --> 0:18:54.199 So this bill actually doesn't have to be bipartisan at all. 0:18:54.320 --> 0:18:56.600 Democrats are pushing it through in a way that they 0:18:56.720 --> 0:18:59.880 only need Democratic votes, but they basically need every Democrat 0:19:00.280 --> 0:19:02.520 uh to vote guest for it. The by part the 0:19:02.840 --> 0:19:04.920 infrastructure build that kind of the roads and bridges build, 0:19:05.080 --> 0:19:08.320 that was a bipartisan effort, but the social infrastructure build, 0:19:08.359 --> 0:19:12.119 this is just a partisan Democrats only UM approach. So 0:19:12.240 --> 0:19:14.600 you and you actually you know, so you have It's 0:19:14.600 --> 0:19:16.800 really easy for Republicans right now because they're in the opposition, 0:19:16.960 --> 0:19:18.960 you're in the minority. They can just criticize the build. 0:19:18.960 --> 0:19:21.720 They don't actually have to to vote for anything. All right, Laura, 0:19:21.760 --> 0:19:23.600 thank you so much for joining us. We just appreciate 0:19:23.600 --> 0:19:27.040 getting your updates. Laard Davison, Congressional tax reporter for Bloomberg News. 0:19:30.480 --> 0:19:32.960 Let's get back to the UH. Well, I guess he 0:19:33.040 --> 0:19:34.800 was talking about the markets, but let's focus more in 0:19:35.000 --> 0:19:37.600 on the market. Right now, we have Veronica Willis with 0:19:37.720 --> 0:19:41.800 US Investment Strategy Analysis UH Analysts, I should say, from 0:19:42.000 --> 0:19:46.560 Wells Fargo Investment Institute out of St. Louis. And in 0:19:46.760 --> 0:19:49.760 terms of what's important, Veronica in good morning, thanks for 0:19:49.840 --> 0:19:53.600 joining us for markets today. It seems like tech is 0:19:53.680 --> 0:19:56.119 really showing how much power. Big tech is showing how 0:19:56.200 --> 0:19:59.000 much power it has. How do you feel about the 0:19:59.280 --> 0:20:04.680 UH mega cap names? Good morning, and thank you for 0:20:04.760 --> 0:20:09.080 having me on. You know, with tech, we've seen that 0:20:09.240 --> 0:20:12.879 they're you know, overshooting their earnings expectations and the earning 0:20:12.920 --> 0:20:15.560 season has been really good for those tech companies so far, 0:20:16.160 --> 0:20:19.720 and that's really helped to bolster the markets over the 0:20:19.840 --> 0:20:23.280 last week or so, with those big tech names really 0:20:23.359 --> 0:20:27.240 doing well and really helping with market performance. There's such 0:20:27.280 --> 0:20:29.440 a heavy weighting and a lot of these US market 0:20:29.560 --> 0:20:34.360 u US equity indexes, big moves in those particular companies 0:20:34.440 --> 0:20:38.240 tend to move the market as well. Veronica, were you 0:20:38.280 --> 0:20:42.320 know a good ways through this third quarter earning season? Um, 0:20:42.800 --> 0:20:47.400 what do you takeaways. Um, the takeaways are that even 0:20:47.480 --> 0:20:51.040 though some consumer competence type of data that came out 0:20:51.080 --> 0:20:53.359 over the last quarter started to weaken a little bit 0:20:53.480 --> 0:20:57.199 from the recovery that we saw from that, consumers are 0:20:57.240 --> 0:21:00.560 still spending. And so it's always always got to be 0:21:00.600 --> 0:21:03.639 careful about that confidence measure. While consumers might not be 0:21:04.000 --> 0:21:10.120 so confident they're spending patterns are somewhat indicating otherwise, where 0:21:10.359 --> 0:21:12.760 a lot of these companies are able to report these 0:21:12.840 --> 0:21:15.400 earnings that have beat expectations or earnings that are doing 0:21:15.480 --> 0:21:19.399 well because consumers are still comfortable and spending money. And 0:21:19.560 --> 0:21:21.760 so I think that that's the biggest takeaway from the 0:21:21.800 --> 0:21:25.760 earning season here, where a lot of these companies in 0:21:26.080 --> 0:21:29.760 the entertainment and sort of the discretionary types of companies 0:21:29.800 --> 0:21:34.080 are still doing well because consumers are still really comfortable spending. Yeah, 0:21:34.160 --> 0:21:37.800 we saw also savings rates sore for a second during 0:21:37.840 --> 0:21:41.239 the lockdown. Of course, you can't really spend money very 0:21:41.359 --> 0:21:46.439 well for a while, but there's still above historical estimates 0:21:46.440 --> 0:21:49.480 in the US, I think about nine percent historically at 0:21:49.560 --> 0:21:52.320 least in recent you know, in recent decades we've seen 0:21:52.359 --> 0:21:55.639 about seven and change. Do you expect consumers to spend 0:21:55.800 --> 0:21:57.920 off the rest of that or are we in a 0:21:58.000 --> 0:22:03.000 new paradigm. I think that as we kind of entered 0:22:03.000 --> 0:22:05.320 the holiday shopping season, we can start to see some 0:22:05.440 --> 0:22:08.040 of that coming down. But it might be that we've 0:22:08.080 --> 0:22:12.920 seen a shift in how people view saving. What they've 0:22:13.000 --> 0:22:18.240 experienced might have changed how they view making sure that 0:22:18.280 --> 0:22:20.400 they've got that safety net, and so we could see 0:22:20.520 --> 0:22:23.720 some kind of elevated levels of savings. But the holiday 0:22:23.760 --> 0:22:28.160 season will be um really crucial in determining whether that's 0:22:28.160 --> 0:22:32.000 a short term or a long term type of shift. Hey, Ronica, 0:22:32.080 --> 0:22:35.040 we just had the big tech names report earnings last week. 0:22:35.080 --> 0:22:38.080 Generally good, good numbers, all the relatives. You know, some 0:22:38.160 --> 0:22:40.200