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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.

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Speaker 2: Every business day we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moving news.

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Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 1: We are live from the World Center Maria in Orlando,

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Speaker 1: Florida at the b NY Melon Pershing Insight Conference. Two

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Speaker 1: thousand members of the financial advice community are gathered here

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Speaker 1: for learning, inspiration, and networking. And we are joined right

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Speaker 1: now by no Tosh, head of Partnerships and Revenue at

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Speaker 1: Pershing X. Noan, thanks so much for joining us here.

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Speaker 1: It's graef you down here in Orlando with you guys

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Speaker 1: talk to us about Pershing X. What are you guys

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Speaker 1: doing there?

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Speaker 3: Absolutely thanks for having me. Pershing X is a startup

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Speaker 3: within Pershing within b and Y Melon focused on working

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Speaker 3: with our advisor community and helping them integrate the various

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Speaker 3: technology platforms that they're using.

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Speaker 4: Today.

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Speaker 3: We're looking to deliver to them interoperability. We're looking to

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Speaker 3: deliver to them a more seamless experience with their technology

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Speaker 3: and essentially provide to them a level of efficiency that

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Speaker 3: gives them time back with their clients so that they

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Speaker 3: can help more people.

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Speaker 1: Is this kind of a you know a sense, a

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Speaker 1: little bit of a client servicing kind of effort here,

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Speaker 1: because again, there's so many financial service folks kind of

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Speaker 1: leaving the big brokerage firms going out on their own,

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Speaker 1: the registired investment advisor business that seems to be a

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Speaker 1: huge wave within retail financial services. That's where you guys

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Speaker 1: kind of fit in to help those folks.

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Speaker 3: So we certainly help those folks, and I would say

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Speaker 3: we're a technology first platform. It's about delivering to them

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Speaker 3: an end to end platform that can help them from

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Speaker 3: everything from their prospecting all the way through account opening

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Speaker 3: into their day in the life, everything that they're trying

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Speaker 3: to do within technology platforms today, we have a stat

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Speaker 3: that we've seen where you know, up to seventy five

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Speaker 3: percent of their time is being spent on administrative work,

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Speaker 3: on technology, on entering data in one platform, and you

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Speaker 3: know what, having this wile their chair and go enter

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Speaker 3: this very same data in the next platform. So we've

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Speaker 3: seen an opportunity to deliver efficiency and to enable them

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Speaker 3: to do that just once and that will give them

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Speaker 3: more time to work with their clients, with their investors.

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Speaker 5: Speaking of those platforms, talk to us about these partnerships

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Speaker 5: that you're going to announce at Insight.

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Speaker 3: Absolutely, so a big part of my role is actually

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Speaker 3: curation and curating the various technologies that exist out there

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Speaker 3: in the ecosystem, finding the best and brightest emerging technologies,

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Speaker 3: working with some of the big tech providers. Not everything

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Speaker 3: needs to be or will be built in house, and

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Speaker 3: so the partnerships are key part of the platform we're delivering.

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Speaker 3: We have a fantastic partnership we announced late last year

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Speaker 3: with a company called Conquest Planning. We're bringing them to

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Speaker 3: the US market alongside us. They essentially are an emerging

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Speaker 3: provider of financial planning that we found to be pretty

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Speaker 3: elite in what they do, and so we're looking for

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Speaker 3: partners like that who can really bolster the capabilities we

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Speaker 3: have on the platform, but essentially drive value. The more

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Speaker 3: value we can give to our clients, and being able

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Speaker 3: to find these types of partners and put them in

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Speaker 3: our client's hands, that's where we want to play a

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Speaker 3: role of curation.

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Speaker 1: So talk to us about kind of this is a

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Speaker 1: role of technology. It seems like if I'm managing money

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Speaker 1: for others, it's not just enough to be the smartest

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Speaker 1: guy in the room. I have to have the technology

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Speaker 1: to kind of service my clients, give them the type

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Speaker 1: of service that they're used to with their Wells Fargo

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Speaker 1: app or something like that. So I mean is that

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Speaker 1: that's a big investment on the part of these folks.

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Speaker 3: It is a big investment, and I think it's why

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Speaker 3: we exist. We recognize that over time, what's ended up

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Speaker 3: happening is technology made a promise that it was going

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Speaker 3: to deliver efficiency and make lives easier for advisors. But

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Speaker 3: what's ended up happening is a lot of point solutions

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Speaker 3: that don't integrate, that don't speak to each other, has

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Speaker 3: actually created a burden on advisors and created a whole

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Speaker 3: other area that they need to learn. With Pershing X

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Speaker 3: in the platform that we're launching in just four hours here,

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Speaker 3: we think we can solve a big chunk of that

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Speaker 3: through that integration and through that curation and give advisors back,

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Speaker 3: you know, take a little bit of that burden off

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Speaker 3: the advisor. Talk to us about your panel that you're

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Speaker 3: hosting coming up later today. It takes a tech village.

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Speaker 1: Is the types of tech village? What are you guys

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Speaker 1: can be focusing on there? That's a lot of that.

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Speaker 3: It's about collaboration, you know, And if we think about fintech,

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Speaker 3: I think just a few years ago, the big story

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Speaker 3: about fintech and banks was disruption and how FinTechs were

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Speaker 3: disrupting what banks were trying to do. But I think

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Speaker 3: we've come full circle on that. We are now at

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Speaker 3: a point where it's not about disruption. It's about collaboration

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Speaker 3: and how can banks and FinTechs work together to deliver

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Speaker 3: that value to our shared clients. And a lot of

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Speaker 3: that boils down to shared values. What are we all

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Speaker 3: trying to do. We're trying to enable an ecosystem where

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Speaker 3: technology serves that we do deliver on that promise of efficiency,

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Speaker 3: where we're simplifying the lives for advisors, and ultimately that

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Speaker 3: results in a market where more people can be helped

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Speaker 3: by financial advisors.

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Speaker 5: You mentioned about partnering up with Conquest Planning. What other

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Speaker 5: big tech providers do you plan to work with or

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Speaker 5: hope to If you can give us any divulge some

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Speaker 5: of that information.

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Speaker 3: So another one I can share that we announced recently

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Speaker 3: with Snowflake. That's a huge partnership for us where we're

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Speaker 3: bringing the capabilities of cloud and data optimization to our clients.

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Speaker 3: We have a handful of other ones, but I know

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Speaker 3: I can't share them until tomorrow morning.

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Speaker 1: I we'll report that tomorrow. Down here from or land out.

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Speaker 6: You're listening to the team Can's are live program Bloomberg

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Speaker 6: Markets weekdays at ten am Eastern.

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Speaker 4: On Bloomberg dot com, the.

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Speaker 6: iHeartRadio app and the Bloomberg Business app, or listen on

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Speaker 6: demand wherever you get your podcasts.

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Speaker 1: Joining us here at live is Tanya Bottoms. She's a

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Speaker 1: managing director and senior managing counsel for BE and My Melon.

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Speaker 1: We want to talk about diversity and inclusion. That is

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Speaker 1: a challenge across society, across the economy, across corporate America,

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Speaker 1: and certainly within the financial services industry. So Tony, thanks

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Speaker 1: so much for joining us. Thanks for having me talk

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Speaker 1: to us about you know, we're surrounded here by all

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Speaker 1: types of financial services people. Talk to us about the

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Speaker 1: financial services industry in terms of diversity inclusion. Where is

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Speaker 1: the industry today versus ten years ago? And where does

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Speaker 1: it need to go?

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Speaker 7: I mean, look, I think what we really talk about

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Speaker 7: is the opportunity in financial services. Even just looking around

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Speaker 7: this conference, seeing all the different people and backgrounds, the

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Speaker 7: opportunity within financial services to bring your individual perspective to your.

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Speaker 8: Work is huge.

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Speaker 7: Representation is definitely growing across the industry. We still have

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Speaker 7: a lot of work to do, but the opportunity to

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Speaker 7: show how diverse thought, diverse perspective, diverse experience can really

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Speaker 7: positively impact how we bring services to the broader community.

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Speaker 7: It creates a big opportunity for people to experience diverse perspectives,

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Speaker 7: to work with someone who may not necessarily look like them,

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Speaker 7: right through that collaboration push for positive community impact and

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Speaker 7: business outcome.

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Speaker 1: All Right, So if I walk into a financial services firm,

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Speaker 1: you know, any town, USA, and there's forty advisors there,

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Speaker 1: how many are going to be you know, maybe non

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Speaker 1: Caucasian mail. Somebody's gonna look like me, a middle aged

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Speaker 1: white guy. I mean, how diverse are we today? And

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Speaker 1: kind of how much more has to be done?

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Speaker 7: Do you think your representation question is the you know,

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Speaker 7: is the seminal one and absolutely as the as the

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Speaker 7: population of financial advisors is aging.

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Speaker 8: There will be some shift in that representation.

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Speaker 7: Financial advisors are actively looking to diversify their practices because

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Speaker 7: they want to be able to serve the communities in

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Speaker 7: which they live and reside. To your point, yes, the

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Speaker 7: numbers are still overwhelmingly non diverse, but there is a

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Speaker 7: lot of effort and actual intention, not just thought, around

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Speaker 7: how we're actually going.

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Speaker 8: To change those numbers.

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Speaker 7: So it's bringing financial services into schools so that students,

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Speaker 7: even at some of the most young ages, understand what

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Speaker 7: they could do in a field like this and seeing people.

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Speaker 8: Who look like them.

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Speaker 7: How we're bringing financial services to the community, whether that's

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Speaker 7: through pro bono financial work or through other mentoring and

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Speaker 7: sponsorship programs where we're you know, bringing the depth and

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Speaker 7: breath of financial services to life. So we have a

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Speaker 7: lot of ground to cover, but I'm optimistic about where

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Speaker 7: we'll end.

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Speaker 5: When you talk about representation growing in the financial industry,

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Speaker 5: what specific corners do you see improvement right now?

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Speaker 7: So I think we've definitely seen the improvement from a

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Speaker 7: gender perspective, where the representation of genders has definitely grown,

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Speaker 7: and you've seen more of a balance. I think we

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Speaker 7: still have opportunity with regard to our LBGTQ population as

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Speaker 7: well as you know with our ethnic representations.

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Speaker 8: Seeing senior.

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Speaker 7: Women, men who are from those various ethnic groups, from

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Speaker 7: those various identities, having more visibility, more senior leadership roles

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Speaker 7: is something that will have to have a lot of

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Speaker 7: more action and attention around in order to see those

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Speaker 7: numbers go up.

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Speaker 1: Are there certain you know, I'm just wondering, are there

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Speaker 1: certain parts of the financial services industry that are doing

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Speaker 1: better than others, maybe some consumer facing versus back office

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Speaker 1: have you? Are there certain areas that are doing better

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Speaker 1: than others?

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Speaker 7: So historically I think more of the operational focused areas

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Speaker 7: have represented more diverse numbers. What we have seen though,

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Speaker 7: is as those numbers climb in increased responsibility or more seniority,

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Speaker 7: then you start to see some of that balance than out.

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Speaker 7: So definitely looking internally where the talent is already there,

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Speaker 7: and looking for ways to create additional career paths and

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Speaker 7: how to take the experience that they've had in one

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Speaker 7: area and where are those transferable skills applicable in another

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Speaker 7: part of the financial services world.

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Speaker 5: When you talk about the management positions, what do you

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Speaker 5: think has been typically the issues that have stood in

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Speaker 5: the way, whether it's females or the LGBTQ community from

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Speaker 5: trying to get more towards those promotions that you were

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Speaker 5: talking about.

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Speaker 7: You know, I think there's a there's a lot of

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Speaker 7: research around this. One of the challenges that we all

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Speaker 7: face is you you know, everyone has a natural affinity

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Speaker 7: to work with, engage with, get to know people who

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Speaker 7: are more like them. So creating the opportunities for engagement,

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Speaker 7: creating the opportunities for you know, senior leaders to get

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Speaker 7: to know the diverse LBGTQ or gender diverse talent in

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Speaker 7: their organizations, more of those opportunities are are being created.

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Speaker 8: So how about is just as important, but.

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Speaker 7: Also understanding and knowing those pathways to leadership is equally important.

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Speaker 1: I've done a lot of college campus recruiting for investment

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Speaker 1: banking firms over my career, and you go down there

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Speaker 1: and you make your pitch and for if going to

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Speaker 1: a historically black or university or college, what's the success

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Speaker 1: rate that a financial services firm has. I mean, they

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Speaker 1: are they having successes that where some of the kids

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Speaker 1: want to go into financial services.

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Speaker 7: Yes, you know, and I know you mentioned HBCUs, but

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Speaker 7: it's true of college campuses right across the country. Having

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Speaker 7: the high school and college students understand the different careers

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Speaker 7: that you can have in financial services.

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Speaker 8: Has to be eye opening. My background is that I'm

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Speaker 8: a lawyer.

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Speaker 7: When I was in law school, I would never have

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Speaker 7: described to you the job that I have today in

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Speaker 7: financial services. So having college students and high school students

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Speaker 7: and others actually see people doing the things that they

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Speaker 7: could potentially do will create, I think one a lot

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Speaker 7: of that interest and take away a lot of that

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Speaker 7: mystique around how do you get into these financial services firms?

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Speaker 8: What can you do if you.

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Speaker 7: Don't necessarily just want to be a financial advisor?

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Speaker 9: Right?

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Speaker 1: Exactly? All right, Tanya, thank you so much for joining us.

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Speaker 1: Tanya Bottoms, she's a managing director and senior managing counsel

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Speaker 1: for BNYML and talking about diversity inclusion. It is a

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Speaker 1: key issue across corporate American, including the financial services industry,

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Speaker 1: and it is front and center here at the Insight conference.

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Speaker 1: We appreciate getting some comments from Tanya. They're looking at

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Speaker 1: the market chare I mean, there's so much you're.

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Speaker 6: Listening to the tape catch are alive Graham Bloomberg Markets

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Speaker 6: weekdays at ten am Eastern on Bloomberg Radio, the tune

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Speaker 6: in app, Bloomberg dot Com.

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Speaker 4: And the Bloomberg Business App.

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Speaker 6: You can also listen live on Amazon Alexa from our

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Speaker 6: flagship New York station, Just say Alexa Play Bloomberg.

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Speaker 4: Eleven thirty.

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Speaker 1: We are live from the World Center Marion in Orlando, Florida,

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Speaker 1: at the B and Y Melon Pershing Insight Conference. Two

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Speaker 1: thousand members of the financial advice community gather here for learning, inspiration,

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Speaker 1: and networking. I want to talk about alternative investing. I mean,

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Speaker 1: it's a big thing for institutional investors, not so much

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Speaker 1: for independent retail investors. Our next guest wants to change that.

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Speaker 1: Matt Brown. He's a founder and CEO of CASE. Matt

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Speaker 1: Dix so much for joining us here at the conference.

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Speaker 1: Talk to us about what you guys do at CASE.

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Speaker 9: Paul, thanks so much for having me on the show.

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Speaker 10: But this is a very exciting time for financial advisors

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Speaker 10: to be able to get access really at the level

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Speaker 10: of institutions to alternative investments. And when we say alternative investments,

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Speaker 10: we're really talking about institutional quality, private equity, private credit,

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Speaker 10: hedge fund strategies, real estate strategies, the things that and

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Speaker 10: strategy that the institutions have been putting capital behind for decades

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Speaker 10: that have largely been off limits for financial advisors and

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Speaker 10: their clients. And what our platform does as a technology company,

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Speaker 10: we actually have a marketplace platform where financial advisors for

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Speaker 10: the first time can come onto the platform, look at strategies,

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Speaker 10: understand those strategies, and invest in those strategies on behalf

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Speaker 10: of their clients.

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Speaker 1: Can they get financial advisors, regiro investment advisors. Can they

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Speaker 1: get access to or is access provided by a KKR

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Speaker 1: car level? I mean, are any of their funds open

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Speaker 1: to retailers?

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Speaker 9: Now? All of them are?

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Speaker 10: Oh, you've just hit upon probably one of the biggest

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Speaker 10: trends in alternative asset management. From the perspective of the

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Speaker 10: asset manager. You're seeing all the firms you just mentioned,

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Speaker 10: the Blackstones, the Apollos, the Carlisles, the kkrs and so

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Speaker 10: many others that are not those daily household names making

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Speaker 10: sure that wealth management becomes a priority for growing their

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Speaker 10: asset base and diversifying their asset base. And this is

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Speaker 10: actually a good thing because what's happening is they've always

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Speaker 10: thought about wealth as a source of capital of growth,

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Speaker 10: but they never really focused on it to the point

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Speaker 10: where they would necessarily create unique investment vehicles or really

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Speaker 10: cater specifically to that market. Well, that game's over, and

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Speaker 10: it's over because there are trillions of dollars about to

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Speaker 10: come into that market for them, and they want to

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Speaker 10: be able to capture that.

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Speaker 5: Matt, this is Jess flitting in for an area doing well.

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Speaker 5: I wanted to ask you about this rise of the

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Speaker 5: modern three dimensional portfolio. Talk to us about what that is, holloworks.

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Speaker 10: Sure, well, I think we all know the traditional sixty

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Speaker 10: forty portfolio. That term has been around quite a long time,

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Speaker 10: but it was never one that was adopted by institutional investors.

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Speaker 10: There is always that what we're now calling the modern

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Speaker 10: three dimensional portfolio, where it's maybe more of a fifty

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Speaker 10: thirty twenty and twenty being alternative investments. Now institutions have

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Speaker 10: all closer to forty or fifty percent, But we're saying

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Speaker 10: to the RIA or to the advisor on behalf of

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Speaker 10: their client, let's just try to get those allocations up

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Speaker 10: to ten percent, fifteen and twenty percent, and that really

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Speaker 10: gives a more well balanced portfolio that stands a much

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Speaker 10: better chance in uncertain markets like we're in right now

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Speaker 10: to perform for the long term.

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Speaker 5: And when you're talking about uncertain markets, how does this

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Speaker 5: play into Obviously everybody's looking ahead to next week with

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Speaker 5: the Federal Reserve decision, expecting a potential pause but maybe

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Speaker 5: a skip rather we could see potential another hike in July.

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Speaker 5: How does that affect when you're trying to obviously have

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Speaker 5: these allocations in these portfolios.

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Speaker 10: Well, uncertainty overall, whether it's rising or unknown levels of

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Speaker 10: interest rates, or global macro uncertainty or election uncertainty. You know,

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Speaker 10: you can kind of laundry list out the things that

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Speaker 10: are giving and financial advisors of anxiety right now about

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Speaker 10: making sure that their portfolios are performing. But a different

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Speaker 10: alternative investment strategies, whether there are private equity or venture

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Speaker 10: investing or private credit investing, they all have a home

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Speaker 10: and a portfolio based on different market cycles, and they

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Speaker 10: have that impact of dampening volatility and getting access to

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Speaker 10: certain types of investments that are not made available in

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Speaker 10: the traditional public market.

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Speaker 1: So your typical registered investment advisor, to the extent they

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Speaker 1: have been reluctant to put their clients into alternatives, has

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Speaker 1: it been a I don't necessarily understand the asset class

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Speaker 1: or B. It's just not easy to do. The technology

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Speaker 1: is not there, It's not easy for me to do

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Speaker 1: as opposed to just pushing a button and buying a stock.

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Speaker 10: Short answer, yes, okay to both and several other things.

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Speaker 9: The entire alternative.

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Speaker 10: Investment process, from education to execution to management of a

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Speaker 10: portfolio once you own alternatives has really only been designed

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Speaker 10: for large institutional investors. What CASE has done is it's

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Speaker 10: use technology to break down all the pain points along

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Speaker 10: the way to make alternative investing as easy to invest

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Speaker 10: in as say a mutual fund or ETFs. Now, that

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Speaker 10: doesn't address the biggest issue though, what it is. Survey

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Speaker 10: with recently with Mercer, large global consulting firm, and it's

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Speaker 10: nine out of ten financial advisors find that it's a

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Speaker 10: lack of education and understanding of strategies that really prevents

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Speaker 10: them from putting money or more capital to work in alts.

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Speaker 10: So that's why CASE is really, you know, invested in

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Speaker 10: and will continue to invest in modern ways of delivering content,

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Speaker 10: strategy information, implementation information to financial advisors.

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Speaker 5: Now, what are you hearing from clients specifically when it

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Speaker 5: comes to what they're looking for when it comes to

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Speaker 5: alternative investments.

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Speaker 10: Well, our client, and that's a good point distinction. Our

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Speaker 10: client is the financial advisor, and then they have clients,

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Speaker 10: which are the individual investors. So what we're hearing generally

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Speaker 10: bubble up through the financial advisor is that they want

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Speaker 10: strategies right now that will one give them access to

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Speaker 10: huge growth opportunities that are not readily available in the

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Speaker 10: public markets.

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Speaker 9: So that would be private equity.

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Speaker 10: So much of our growth economy is in private equity

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Speaker 10: or private markets, So that's number one.

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Speaker 9: They want to participate in the growth of America.

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Speaker 10: And if they're not investing in private markets or private equity,

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Speaker 10: they're not getting a large swath of that opportunity too.

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Speaker 10: They really want to see income oriented strategies like private

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Speaker 10: credit have an impact on their portfolio and more and

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Speaker 10: more so we're seeing now as a platform again, just

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Speaker 10: to kind of take a half step back, as a platform,

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Speaker 10: we don't tell advisors where to put money. We just

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Speaker 10: observe where money goes. So we're seeing trends in data.

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Speaker 10: More and more capital we're seeing now flowing into what

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Speaker 10: would be traditionally called macro trading strategies, Asset managers that

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Speaker 10: have real flexibility to look at different opportunities and volatility

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Speaker 10: globally and make bets.

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Speaker 1: Matt just met the thirty seconds left. What's a question

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Speaker 1: you're getting most often here on the floor from your customers.

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Speaker 9: You know, it's back to how do I get started?

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Speaker 6: Yea?

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Speaker 10: You know, there is, of course a large community of

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Speaker 10: financial advisors that are fluent in alternative investments, but the

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Speaker 10: vast majority are just getting started. And so we always say,

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Speaker 10: you know, sign up for Case, have the tools that

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Speaker 10: we can deliver and arm you to be competitive in

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Speaker 10: building your client's portfolios, and we can begin to walk

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Speaker 10: you through those beginning steps.

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Speaker 1: All right, great stuff, Really appreciate it, Matt Brown, He's

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Speaker 1: a founder and CEO of CASE.

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Speaker 4: You're listening to the team.

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Speaker 6: Can's our live program Bloomberg Markets weekdays at ten am

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Speaker 6: Eastern on Bloomberg dot Com, the iHeartRadio app, and the

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Speaker 6: Bloomberg Business App, or listen on demand wherever you get

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Speaker 6: your podcasts.

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Speaker 1: Right now, let's head back. We are back here down

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Speaker 1: in Orlando. We're live from the World Center Marion in

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Speaker 1: Orlando at the BNY melon Pershing Insight Conference. Two thousand

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Speaker 1: members of the financial advice community. You're gathering here for learning,

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Speaker 1: inspiration and a lot of networking, and they network very well.

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Speaker 1: I can tell you that. Joining us here right next

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Speaker 1: to me is Stephanie Pearce. He's the CEO at Dreyfus

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Speaker 1: Melon and Exchange Trade of funds at B and Y Mellon.

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Speaker 1: WHOA wow, there's a lot going on that you do, Stephanie,

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Speaker 1: talk to us about kind of what your what's your

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Speaker 1: focus here at this insight conference today? What do you

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Speaker 1: the message you want to get across?

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Speaker 11: Well, not going to sneak previews some of the announcements

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Speaker 11: we have comedy, you'll hear about those, But right now

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Speaker 11: I would love to talk to you about what's going

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Speaker 11: on at Dreyfus and in the cash markets as well

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Speaker 11: as in our ETF business and in the ETF market.

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Speaker 12: So you pick, all right, let's go.

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Speaker 1: Let's go ETF. That's where the cool kids hang out.

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Speaker 12: Excellent. You want me to start?

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Speaker 4: Sure?

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Speaker 1: What do I mean? What are the key things? I mean?

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Speaker 1: I know that ETF business growing assets going there like crazy. Uh,

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Speaker 1: A couple of big players, but I see lots of

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Speaker 1: smaller players coming in with really unique ETFs leverage. This

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Speaker 1: three times leverage. This I mean you.

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Speaker 12: Want to give me a want me to give you fact?

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Speaker 1: You won't know?

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Speaker 11: Yes, first quarter this year, if you had to guess,

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Speaker 11: it's a loaded question. Who is the fastest growing ETF

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Speaker 11: issuery in the United States in the top forty oh

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Speaker 11: Q one of this year.

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Speaker 1: That's I mean, I'm gonna have to go to you guys.

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Speaker 12: That's right, B and y Melon yep, Okay, So she didn't.

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Speaker 1: Know that I did not, So talk to us about

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Speaker 1: your business. The funds flows, you're seeing what's hot, where

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Speaker 1: are people putting money?

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Speaker 12: So look, you know, flows speak for themselves.

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Speaker 11: Here's another single that you may not know of the

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Speaker 11: one hundred and eight billion dollars of net ETF flows

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Speaker 11: in this country in the United States in the first

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Speaker 11: four months of the year. Wow, thirty percent went into

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Speaker 11: active ETFs. That's the highest number we've seen. Clients are

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Speaker 11: voting with their feet. They like the vehicle. They like

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Speaker 11: it not just for passive, but for active as well.

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Speaker 11: And we've been doing the same thing. We've got about

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Speaker 11: half of our seventeen funds and active, the other half

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Speaker 11: in passive. We launched two new ones in the last

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Speaker 11: couple of weeks here you may have heard about them.

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Speaker 11: One is an innovator's etf BKIV and this is actively

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Speaker 11: managed concentrated portfolio.

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Speaker 12: And the statistic here that I'll.

442
00:23:52,880 --> 00:23:55,520
Speaker 11: Give you is that this is this is a fund

443
00:23:55,560 --> 00:23:58,920
Speaker 11: that's focused on disruption, right, not just technology, but companies

444
00:23:58,920 --> 00:24:01,120
Speaker 11: that are disrupting the way we live, the way we work,

445
00:24:01,119 --> 00:24:03,159
Speaker 11: the way we play, the way our kids will do

446
00:24:03,200 --> 00:24:05,880
Speaker 11: that fifty two percent of the S and P five

447
00:24:05,960 --> 00:24:09,320
Speaker 11: hundred companies have disappeared in the last fifteen years, So

448
00:24:09,400 --> 00:24:11,640
Speaker 11: this is really investing in that next generation of companies

449
00:24:11,640 --> 00:24:12,560
Speaker 11: on that thesis that.

450
00:24:12,640 --> 00:24:14,439
Speaker 12: What you see today is not going to be what

451
00:24:14,440 --> 00:24:15,160
Speaker 12: you see tomorrow.

452
00:24:15,600 --> 00:24:19,400
Speaker 11: The other fund is BKWO bn Y MEL and Women's

453
00:24:19,440 --> 00:24:21,960
Speaker 11: Opportunities Fund. I can tell you as a woman executive

454
00:24:22,000 --> 00:24:24,399
Speaker 11: my company, all fifty thousand people at BNYMEL and are

455
00:24:24,440 --> 00:24:25,520
Speaker 11: very proud that we launched this.

456
00:24:25,880 --> 00:24:27,600
Speaker 12: And the thesis here is that.

457
00:24:27,480 --> 00:24:31,600
Speaker 11: Companies that are doing a better job recruiting, retaining, promoting,

458
00:24:31,840 --> 00:24:34,280
Speaker 11: and supporting women in the workplace and letting them do

459
00:24:34,359 --> 00:24:37,280
Speaker 11: it all actually outperform companies who don't, both in terms

460
00:24:37,280 --> 00:24:40,679
Speaker 11: of stock performance and profitability. And there's real data to

461
00:24:40,720 --> 00:24:43,480
Speaker 11: support that. So really excited like these funds in market.

462
00:24:43,920 --> 00:24:46,880
Speaker 5: Stephanie, this is Jess Mitten in our Interactive Brokers studio

463
00:24:47,040 --> 00:24:49,400
Speaker 5: in New York. Can you talk to us more about

464
00:24:49,880 --> 00:24:53,639
Speaker 5: the direct indexing platform and exactly how it works as

465
00:24:53,680 --> 00:24:55,159
Speaker 5: far as if you're a customer and you want to

466
00:24:55,200 --> 00:24:57,120
Speaker 5: go and do that, how do you get started?

467
00:24:57,800 --> 00:24:58,119
Speaker 12: Sure?

468
00:24:58,440 --> 00:25:00,800
Speaker 11: So direct to next thing and actually called that a

469
00:25:00,840 --> 00:25:02,919
Speaker 11: number of years ago. Right now, it's called direct insect

470
00:25:02,920 --> 00:25:05,000
Speaker 11: if I think of it as a client who can

471
00:25:05,040 --> 00:25:09,040
Speaker 11: own exactly like our institutional clients, a direct position all

472
00:25:09,080 --> 00:25:11,600
Speaker 11: the stocks in the major index. But on top of

473
00:25:11,640 --> 00:25:14,720
Speaker 11: getting that benchmark turn for a very attractive price, we

474
00:25:14,760 --> 00:25:17,119
Speaker 11: can also customize to their preferences and needs.

475
00:25:17,160 --> 00:25:18,639
Speaker 12: They may be values, they may.

476
00:25:18,560 --> 00:25:21,199
Speaker 11: Be exposures they want, and on top of that, we

477
00:25:21,280 --> 00:25:23,639
Speaker 11: give them better tax treatment. So we give them the

478
00:25:23,640 --> 00:25:26,560
Speaker 11: index return, but over the period of a year or

479
00:25:26,600 --> 00:25:28,840
Speaker 11: more than a year, we're actually harvesting losses.

480
00:25:28,880 --> 00:25:29,040
Speaker 12: Now.

481
00:25:29,040 --> 00:25:31,040
Speaker 11: I know it sounds crazy to say losses are good

482
00:25:31,080 --> 00:25:33,160
Speaker 11: for you, but you all know this, right. Muta funds

483
00:25:33,160 --> 00:25:35,600
Speaker 11: are not super efficient, and so if you have gains

484
00:25:35,680 --> 00:25:38,440
Speaker 11: in your muta funds and you have the benchmark urn

485
00:25:38,480 --> 00:25:41,680
Speaker 11: plus some tax loses you can use in your direct account.

486
00:25:41,840 --> 00:25:43,640
Speaker 12: You can wipe away a lot.

487
00:25:43,440 --> 00:25:45,480
Speaker 11: Of the payments that you have to pay to the US.

488
00:25:45,400 --> 00:25:47,840
Speaker 12: Government by parmage and the two in a portfolio.

489
00:25:47,880 --> 00:25:50,640
Speaker 11: So advisors love that because that allows them to add

490
00:25:50,680 --> 00:25:52,639
Speaker 11: in criminal value to investors.

491
00:25:53,080 --> 00:25:54,720
Speaker 1: So one of the things I don't understand or I

492
00:25:54,920 --> 00:25:58,359
Speaker 1: thought I understo about ETFs is low costs because not

493
00:25:58,480 --> 00:26:01,280
Speaker 1: much has happened and there's no portfolio manager and research departments.

494
00:26:01,760 --> 00:26:05,119
Speaker 1: So an active ETF, how do you square that with

495
00:26:05,200 --> 00:26:07,880
Speaker 1: the low fees? Or our fees higher for active.

496
00:26:08,080 --> 00:26:10,800
Speaker 11: So fees are generally higher for active products ETFs or

497
00:26:10,840 --> 00:26:14,640
Speaker 11: any other kind. Having said that, the ETF structure allows

498
00:26:14,680 --> 00:26:18,399
Speaker 11: you to structurally release gains, right, we can actually manage

499
00:26:18,400 --> 00:26:21,000
Speaker 11: by tax slots. So when we have the opportunity to rebalance,

500
00:26:21,240 --> 00:26:24,600
Speaker 11: or we have redemptions and subscriptions into the fund, we

501
00:26:24,640 --> 00:26:28,280
Speaker 11: can actually utilize that to release gains that don't ultimately

502
00:26:28,320 --> 00:26:30,840
Speaker 11: get worn by the investors. So it's structurally a better

503
00:26:30,920 --> 00:26:33,640
Speaker 11: vehicle from a tax perspective, whether it's active or passive.

504
00:26:36,440 --> 00:26:40,320
Speaker 1: So is the is there a snare where the mutual

505
00:26:40,359 --> 00:26:43,440
Speaker 1: fund business does not just go away? I mean ETF

506
00:26:43,520 --> 00:26:46,280
Speaker 1: you talk about the numbers and it's every single quarter.

507
00:26:46,480 --> 00:26:48,840
Speaker 1: And then you've got mutual funds converting from mutual funds

508
00:26:48,880 --> 00:26:51,720
Speaker 1: to ETFs. I mean, do why not need to go

509
00:26:51,800 --> 00:26:53,560
Speaker 1: up to Boston like I did for thirty years just

510
00:26:53,760 --> 00:26:56,920
Speaker 1: to visit Fidelity Wellington and all those people putingam.

511
00:26:56,880 --> 00:26:59,120
Speaker 11: Well, listen, it's not an accident that you see all

512
00:26:59,160 --> 00:27:02,720
Speaker 11: the large mutual f flayers, including ourselves, putting ETFs into

513
00:27:02,720 --> 00:27:05,479
Speaker 11: the marketplace. Right, we're really responding to clients. So it's

514
00:27:05,600 --> 00:27:08,200
Speaker 11: less about just what's inside the wrapper. It's about the

515
00:27:08,320 --> 00:27:10,840
Speaker 11: vehicle itself, right, And if you think about the shift

516
00:27:10,880 --> 00:27:13,600
Speaker 11: of fee based advisors, they love these vehicles. They're less

517
00:27:13,640 --> 00:27:16,000
Speaker 11: expensive for them to buy. Even the active ones are

518
00:27:16,040 --> 00:27:18,760
Speaker 11: generally slightly less expensive just because of the chassis is

519
00:27:18,760 --> 00:27:21,680
Speaker 11: more efficient, right in terms of all the operating functionality

520
00:27:21,680 --> 00:27:24,399
Speaker 11: that you need. So you know, for investors, it's a

521
00:27:24,400 --> 00:27:26,520
Speaker 11: great solution right there. You know, think about it. It's

522
00:27:26,560 --> 00:27:30,119
Speaker 11: the ultimate democratization of finance. There's one price, there's no

523
00:27:30,200 --> 00:27:32,600
Speaker 11: share classes. Everyone gets the same thing, whether you're a

524
00:27:32,680 --> 00:27:35,600
Speaker 11: large investor, small investor. It's fully transparent. You could trade

525
00:27:35,640 --> 00:27:38,800
Speaker 11: it all day every day. Right, it's the ultimate democratization.

526
00:27:38,800 --> 00:27:40,880
Speaker 11: You could buy on any platform. Technically you don't even

527
00:27:40,880 --> 00:27:43,360
Speaker 11: need an advisor, although most clients want to have one

528
00:27:43,400 --> 00:27:46,119
Speaker 11: to guide them through it. So for me, when I

529
00:27:46,119 --> 00:27:48,240
Speaker 11: think about my thirteen year old, right, is she ever

530
00:27:48,240 --> 00:27:50,080
Speaker 11: going to buy a much fund, maybe a money market fund,

531
00:27:50,119 --> 00:27:51,320
Speaker 11: but she'll probably buy ETFs.

532
00:27:51,359 --> 00:27:54,520
Speaker 5: Yeah, Stephanie, what kind of shifts have you been seeing

533
00:27:54,520 --> 00:27:57,720
Speaker 5: in ETFs this year, whether it's particular types of flows

534
00:27:57,800 --> 00:28:00,760
Speaker 5: just given the backdrop of the Federal Reserve and potentially

535
00:28:00,840 --> 00:28:02,840
Speaker 5: maybe they're getting closer to the end of that rate

536
00:28:02,880 --> 00:28:03,600
Speaker 5: hiking cycle.

537
00:28:04,160 --> 00:28:04,360
Speaker 9: Yeah.

538
00:28:04,400 --> 00:28:05,000
Speaker 12: Absolutely.

539
00:28:05,040 --> 00:28:08,359
Speaker 11: One of the conversations that intersects really between my money

540
00:28:08,400 --> 00:28:11,600
Speaker 11: market business at Dreyfus and the ETF business that I

541
00:28:11,680 --> 00:28:14,240
Speaker 11: run is exactly what you just said. It's fixed income

542
00:28:14,240 --> 00:28:16,080
Speaker 11: and right now what we're seeing if you look at

543
00:28:16,119 --> 00:28:18,600
Speaker 11: your to date is fix income ETFs have seen this

544
00:28:18,960 --> 00:28:21,840
Speaker 11: kind of barbell in flows right where a long government

545
00:28:22,040 --> 00:28:25,160
Speaker 11: intermedia core bond, you've seen a lot of flows there,

546
00:28:25,200 --> 00:28:29,000
Speaker 11: but also in ultrashortytfs. We actually have an ultra ETF

547
00:28:29,080 --> 00:28:32,399
Speaker 11: managed by our Dreyfus money market market team BKUI, and

548
00:28:32,480 --> 00:28:35,000
Speaker 11: what we're seeing is clients are barbelling between kind of

549
00:28:35,040 --> 00:28:36,840
Speaker 11: the long and the shorter end of the curve. But

550
00:28:36,840 --> 00:28:39,440
Speaker 11: we're also seeing in the ultrashort space clients starting to

551
00:28:39,480 --> 00:28:42,440
Speaker 11: extend duration now that the FED is approaching what appears

552
00:28:42,480 --> 00:28:45,080
Speaker 11: to be the peak and terminal rates and starting to

553
00:28:45,160 --> 00:28:48,240
Speaker 11: exten duration and looking to diversify from just the money

554
00:28:48,240 --> 00:28:52,480
Speaker 11: market allocation into ultrashortytfs. And that's really the cash segmentation

555
00:28:52,560 --> 00:28:54,880
Speaker 11: conversation that we're having with clients is where do you

556
00:28:54,920 --> 00:28:55,440
Speaker 11: put your cash?

557
00:28:55,440 --> 00:28:57,160
Speaker 12: Clients are very focused on not only where.

558
00:28:57,080 --> 00:28:59,320
Speaker 11: They put it, but who's managing it and how they're

559
00:28:59,320 --> 00:29:02,760
Speaker 11: managing it and the combination of debt sealing, net failures

560
00:29:03,000 --> 00:29:03,800
Speaker 11: and terminal rates.

561
00:29:04,160 --> 00:29:07,440
Speaker 1: What's the key topic that you're finding yourself having here

562
00:29:07,520 --> 00:29:08,720
Speaker 1: at this insight conference.

563
00:29:09,040 --> 00:29:11,520
Speaker 11: Well, I would say cash is sexy again, yep, right,

564
00:29:11,560 --> 00:29:13,920
Speaker 11: we're at five percent yields gives no pun intended but

565
00:29:14,000 --> 00:29:15,360
Speaker 11: it gives you a run for your money and any

566
00:29:15,360 --> 00:29:16,000
Speaker 11: assea class.

567
00:29:16,280 --> 00:29:17,280
Speaker 12: So that's clearly one.

568
00:29:17,440 --> 00:29:19,640
Speaker 11: And again, how you segment it now that we're beyond

569
00:29:19,680 --> 00:29:22,920
Speaker 11: the debt sealing debate? And then I think absolutely this

570
00:29:23,080 --> 00:29:28,800
Speaker 11: combination of tax efficient and reasonably financially attractive you know,

571
00:29:28,920 --> 00:29:31,640
Speaker 11: returns that you can get through ETFs and direct in

572
00:29:31,680 --> 00:29:34,080
Speaker 11: mixing type vehicles. If you look at the advisors out

573
00:29:34,080 --> 00:29:35,800
Speaker 11: on the floor here, Paul, these are the things that

574
00:29:35,800 --> 00:29:38,400
Speaker 11: they're focused on, is how do I deliver extra value

575
00:29:38,400 --> 00:29:40,920
Speaker 11: from my client in terms of you know, reasonable fee,

576
00:29:41,000 --> 00:29:45,280
Speaker 11: is alpha generation tax, alpha asset location, as well as

577
00:29:45,280 --> 00:29:46,000
Speaker 11: acid allocation.

578
00:29:46,040 --> 00:29:47,240
Speaker 12: And these are the vehicles that do that.

579
00:29:47,400 --> 00:29:49,520
Speaker 1: They're not just buying and selling bonds and stocks anymore.

580
00:29:49,600 --> 00:29:51,160
Speaker 12: It's a different world, different.

581
00:29:51,760 --> 00:29:55,600
Speaker 1: Exactly, all right, Stephanie, we really appreciate it talking about

582
00:29:56,400 --> 00:29:58,360
Speaker 1: all that ETF stuff, and it is a story that

583
00:29:58,400 --> 00:30:02,160
Speaker 1: just keeps on giving. Stephanie Pierce, CEO at Dreyfus, Melon

584
00:30:02,280 --> 00:30:04,640
Speaker 1: and Exchange Trade of Funds at BNY Melling.

585
00:30:04,960 --> 00:30:08,040
Speaker 6: You're listening to the tape. Cats are live program Bloomberg

586
00:30:08,080 --> 00:30:11,680
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the

587
00:30:11,760 --> 00:30:13,840
Speaker 6: tune in app, Bloomberg dot Com.

588
00:30:13,560 --> 00:30:14,960
Speaker 4: And the Bloomberg Business App.

589
00:30:15,000 --> 00:30:17,840
Speaker 6: You can also listen live on Amazon Alexa from our

590
00:30:17,840 --> 00:30:22,880
Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

591
00:30:24,160 --> 00:30:27,120
Speaker 1: We are live from the World Center Mario in Orlando, Florida,

592
00:30:27,160 --> 00:30:30,480
Speaker 1: at the B and Y Mellon Vergon Insight Conference. Two

593
00:30:30,520 --> 00:30:33,040
Speaker 1: thousand members of the financial advice community gathered for learning,

594
00:30:33,640 --> 00:30:37,080
Speaker 1: inspiration and some network and I see some networking going

595
00:30:37,120 --> 00:30:38,960
Speaker 1: on right now at the lunch tables as people break

596
00:30:38,960 --> 00:30:41,800
Speaker 1: between the various sessions. Let's talk markets here, let's get

597
00:30:41,840 --> 00:30:43,160
Speaker 1: a broad view of the markets. We like to do

598
00:30:43,240 --> 00:30:46,560
Speaker 1: that with the Fill, Orlando, chief equity strategist at Federator Hermes.

599
00:30:46,600 --> 00:30:49,000
Speaker 1: He joins me here down in Orlando, Phil, Good to

600
00:30:49,000 --> 00:30:53,000
Speaker 1: see you again. Here. We were talking off air about

601
00:30:53,160 --> 00:30:55,240
Speaker 1: the lack of breath in this market. If you take

602
00:30:55,240 --> 00:31:01,280
Speaker 1: the SPX up ten eleven percent and sp thew is

603
00:31:01,320 --> 00:31:03,600
Speaker 1: basically flat. That's a problem.

604
00:31:04,120 --> 00:31:06,800
Speaker 13: It's a huge problem, and it's been growing all year.

605
00:31:07,720 --> 00:31:09,920
Speaker 13: The S and P five hundred from the beginning of

606
00:31:09,920 --> 00:31:12,080
Speaker 13: the year now is up about ten or eleven percent.

607
00:31:12,640 --> 00:31:14,480
Speaker 13: But if you look at what they refer to as

608
00:31:14,520 --> 00:31:18,800
Speaker 13: the Magnificent seven in the technology industry, the seven big

609
00:31:18,840 --> 00:31:27,880
Speaker 13: tech names Microsoft, Apple, In, Nvidia, Google, Facebook, Tesla, and Amazon,

610
00:31:28,000 --> 00:31:31,520
Speaker 13: now I got them. All those stocks collectively are up

611
00:31:31,600 --> 00:31:35,360
Speaker 13: fifty percent five zero percent. The other four hundred and

612
00:31:35,480 --> 00:31:38,520
Speaker 13: ninety three stocks in the SMP five hundred are essentially

613
00:31:38,600 --> 00:31:43,360
Speaker 13: break even, and those seven tech names are dramatically overbought.

614
00:31:43,440 --> 00:31:46,600
Speaker 13: So someone that studies the market the way we have

615
00:31:46,800 --> 00:31:49,560
Speaker 13: over the course of history, suggests that that maybe these

616
00:31:49,560 --> 00:31:53,120
Speaker 13: stocks have gotten ahead of themselves. Maybe the AI hype

617
00:31:53,360 --> 00:31:58,360
Speaker 13: is a little too frothy, and at some point over

618
00:31:58,400 --> 00:32:00,640
Speaker 13: the course of the next couple of months, next cup quarters,

619
00:32:01,080 --> 00:32:03,760
Speaker 13: there may be a bit of a reversion to the met.

620
00:32:03,520 --> 00:32:06,240
Speaker 5: Phil This is Jess in New York. I wanted to

621
00:32:06,280 --> 00:32:09,120
Speaker 5: jump in here and get your thoughts on You were

622
00:32:09,160 --> 00:32:11,760
Speaker 5: just talking about this potentially being frothy when it comes

623
00:32:11,800 --> 00:32:14,080
Speaker 5: to technology and growth shares. I know you're not a

624
00:32:14,080 --> 00:32:17,320
Speaker 5: portfolio manager, you're an equity market strategist, But how exactly

625
00:32:17,600 --> 00:32:21,400
Speaker 5: are you advising clients to potentially position or your thoughts

626
00:32:21,440 --> 00:32:23,880
Speaker 5: as far as how the market could move moving forward

627
00:32:23,920 --> 00:32:26,200
Speaker 5: obviously going into the second half of the year soon.

628
00:32:26,960 --> 00:32:28,840
Speaker 9: So, Jess, that's a great question.

629
00:32:28,960 --> 00:32:32,360
Speaker 13: And the way we've looked at the year is that

630
00:32:32,440 --> 00:32:36,320
Speaker 13: we thought we would have a barbell shape performance year

631
00:32:36,360 --> 00:32:38,600
Speaker 13: in the s and P. Five hundred, We thought we

632
00:32:38,720 --> 00:32:42,400
Speaker 13: would start the year in great shape. The first quarter

633
00:32:42,560 --> 00:32:45,920
Speaker 13: or two we have, we felt that there would potentially

634
00:32:45,960 --> 00:32:47,880
Speaker 13: be some chop here in the middle of the year,

635
00:32:48,200 --> 00:32:52,800
Speaker 13: and certainly the dichotomy between these seven technology stocks, and

636
00:32:52,840 --> 00:32:56,720
Speaker 13: the rest of the market potentially is sowing those seeds.

637
00:32:56,920 --> 00:32:58,920
Speaker 13: We think we end the year in pretty good shape.

638
00:32:59,040 --> 00:33:02,520
Speaker 13: So if we're right that we potentially hit an air

639
00:33:02,520 --> 00:33:05,000
Speaker 13: pocket here for any number of reasons, we can talk

640
00:33:05,040 --> 00:33:10,120
Speaker 13: about the fundamentals that would suggest playing defense. That if

641
00:33:10,160 --> 00:33:12,640
Speaker 13: growth has gotten ahead of itself, and we believe that

642
00:33:12,720 --> 00:33:18,760
Speaker 13: they have value stocks are extraordinarily cheap. They're underperformed growth

643
00:33:18,840 --> 00:33:21,360
Speaker 13: by about forty or forty five percent right now in

644
00:33:21,440 --> 00:33:25,720
Speaker 13: terms of valuation. So we like domestic large cap and

645
00:33:25,760 --> 00:33:31,440
Speaker 13: small cap value stocks. We like international both emerging markets

646
00:33:31,520 --> 00:33:33,040
Speaker 13: as well as developed markets.

647
00:33:33,160 --> 00:33:34,120
Speaker 9: We like cash.

648
00:33:34,320 --> 00:33:37,640
Speaker 13: We like bonds as a potential flight to quality as

649
00:33:37,640 --> 00:33:41,120
Speaker 13: the economy slows later in the year. So the plan

650
00:33:41,280 --> 00:33:46,560
Speaker 13: is play defense. There may be some rockiness to the

651
00:33:46,560 --> 00:33:48,720
Speaker 13: market here over the next couple of months, next couple

652
00:33:48,760 --> 00:33:51,320
Speaker 13: of quarters, and the idea is, let's try to preserve

653
00:33:51,360 --> 00:33:55,680
Speaker 13: some capital and look for an opportunity to re enter

654
00:33:56,360 --> 00:33:58,800
Speaker 13: some of these stocks at better price points later.

655
00:33:58,640 --> 00:33:59,000
Speaker 9: In the year.

656
00:34:00,160 --> 00:34:02,480
Speaker 1: How about bad valuation here? I mean, I guess we

657
00:34:02,560 --> 00:34:04,880
Speaker 1: have to adjust for those seven names, but just broadly

658
00:34:04,960 --> 00:34:07,960
Speaker 1: defined valuation are we I guess when you back out

659
00:34:07,960 --> 00:34:09,719
Speaker 1: those seven big names that have just kind of ripped

660
00:34:09,719 --> 00:34:11,720
Speaker 1: this year. Is how's the market looking in terms of valuation?

661
00:34:11,880 --> 00:34:14,800
Speaker 13: Well, overall, you're probably looking at about a twenty multiple,

662
00:34:14,960 --> 00:34:17,200
Speaker 13: and you know we'd be a lot more comfortable in

663
00:34:17,200 --> 00:34:19,839
Speaker 13: the mid teams. Ye, But some of these, you know,

664
00:34:19,880 --> 00:34:22,640
Speaker 13: the big high flying tech names that we talked about

665
00:34:23,560 --> 00:34:27,080
Speaker 13: in video, what are they selling thirty forty times forward revenues?

666
00:34:27,360 --> 00:34:31,400
Speaker 13: You know, the the numbers, the nosebleed numbers are just

667
00:34:31,480 --> 00:34:35,680
Speaker 13: making us nervous. Now for older guys like me and you, Paul,

668
00:34:35,880 --> 00:34:38,759
Speaker 13: a lot of gray hair here. You know, I remember

669
00:34:38,960 --> 00:34:41,480
Speaker 13: the cryptos, not a but a couple of years ago.

670
00:34:41,600 --> 00:34:46,080
Speaker 13: I remember the Y two K build up in you know,

671
00:34:46,200 --> 00:34:51,480
Speaker 13: nineteen ninety nine, early two thousand and I had a

672
00:34:51,520 --> 00:34:55,920
Speaker 13: young colleague sent me a text the other day telling me, Phil,

673
00:34:55,960 --> 00:35:01,320
Speaker 13: you don't understand these seven technology stocks, these the defensive stocks.

674
00:35:01,320 --> 00:35:03,960
Speaker 13: Now it's a new error, it's a new economy. And

675
00:35:04,000 --> 00:35:06,240
Speaker 13: that was exactly what they were telling us in nineteen

676
00:35:06,320 --> 00:35:09,200
Speaker 13: ninety nine and early two thousand and we remember how

677
00:35:09,239 --> 00:35:09,719
Speaker 13: that ended.

678
00:35:12,320 --> 00:35:14,600
Speaker 5: Phil, I have to ask and follow up because you

679
00:35:14,640 --> 00:35:17,720
Speaker 5: had talked about when it comes to value stocks, liking

680
00:35:17,800 --> 00:35:19,960
Speaker 5: those bonds. But then you brought up cash, and I

681
00:35:20,000 --> 00:35:22,239
Speaker 5: noticed that money market mutual funds, you've actually seen the

682
00:35:22,280 --> 00:35:25,440
Speaker 5: fastest piece of flow since July twenty twenty, over the

683
00:35:25,480 --> 00:35:27,880
Speaker 5: past thirteen weeks. And you were talking about how to

684
00:35:28,000 --> 00:35:30,799
Speaker 5: preserve capital and re enter later in the year. What

685
00:35:30,800 --> 00:35:33,960
Speaker 5: do you need to see in order to potentially use

686
00:35:34,040 --> 00:35:35,800
Speaker 5: that cash and put it back to work in the

687
00:35:35,840 --> 00:35:36,640
Speaker 5: equity market.

688
00:35:37,000 --> 00:35:40,279
Speaker 13: Well, right now, we like cash. Cash is a real

689
00:35:40,320 --> 00:35:43,280
Speaker 13: asset class. Again, it's yielding five percent, so why wouldn't

690
00:35:43,320 --> 00:35:48,359
Speaker 13: you like cash? But if the market over the course

691
00:35:48,400 --> 00:35:51,000
Speaker 13: of the next couple of quarters were to hit an

692
00:35:51,040 --> 00:35:55,120
Speaker 13: air pocket of you know, ten fifteen percent, and we

693
00:35:55,239 --> 00:35:59,440
Speaker 13: felt better about the fundamental outlook from an inflation standpoint,

694
00:35:59,520 --> 00:36:02,720
Speaker 13: from a or a reserve standpoint, from an economic growth

695
00:36:02,719 --> 00:36:08,319
Speaker 13: incorporate uring standpoint, then you've utilized that cash as one

696
00:36:08,320 --> 00:36:11,279
Speaker 13: of your defensive tools to preserve capital, and then you

697
00:36:11,320 --> 00:36:14,200
Speaker 13: can get more offensive later this year or the beginning

698
00:36:14,280 --> 00:36:17,200
Speaker 13: of next year when the fundamentals look better and when

699
00:36:17,200 --> 00:36:21,800
Speaker 13: the valuations look more attractive. So I'm not suggesting that

700
00:36:21,800 --> 00:36:25,239
Speaker 13: that cash at five percent is an offensive tool, but

701
00:36:25,280 --> 00:36:27,640
Speaker 13: certainly in this kind of an environment, if you think

702
00:36:27,680 --> 00:36:31,160
Speaker 13: that that growth stocks are ahead of themselves. Then cash

703
00:36:31,560 --> 00:36:34,800
Speaker 13: potentially could be one of the vehicles you we utilized

704
00:36:34,840 --> 00:36:36,080
Speaker 13: to try to preserve capital.

705
00:36:36,440 --> 00:36:39,080
Speaker 5: And I'm glad you brought up a yield, especially when

706
00:36:39,120 --> 00:36:42,200
Speaker 5: you're talking about being around five percent, very different dynamic,

707
00:36:42,280 --> 00:36:45,319
Speaker 5: right than compared to what investors had seen over the

708
00:36:45,360 --> 00:36:48,480
Speaker 5: past decade or so. So then would we need to

709
00:36:48,520 --> 00:36:51,080
Speaker 5: see a shift with what we're seeing in yield in

710
00:36:51,280 --> 00:36:54,320
Speaker 5: order for investors to move away from either cash, money

711
00:36:54,320 --> 00:36:56,640
Speaker 5: market funds and things of that nature and to move

712
00:36:56,760 --> 00:36:58,719
Speaker 5: more aggressively back into equities.

713
00:36:59,320 --> 00:37:01,960
Speaker 13: Well, so now you get into the question of the

714
00:37:02,040 --> 00:37:06,640
Speaker 13: underlying fundamentals in terms of inflation, and our view is

715
00:37:06,680 --> 00:37:08,719
Speaker 13: peaked and it is starting to come down, but it's

716
00:37:08,760 --> 00:37:13,279
Speaker 13: coming down at a very very gradual pace. And then

717
00:37:13,320 --> 00:37:15,719
Speaker 13: that raises the question, what's the Federal Reserve going to do.

718
00:37:15,719 --> 00:37:18,880
Speaker 13: We've got a big meeting coming up next Wednesday. You know,

719
00:37:18,960 --> 00:37:21,400
Speaker 13: our best guess right now is that the Fed goes

720
00:37:21,400 --> 00:37:25,720
Speaker 13: on pause at you know, next week's meeting. But given

721
00:37:25,760 --> 00:37:29,680
Speaker 13: the fact that the Core Personal Consumption Expenditure Index and

722
00:37:29,719 --> 00:37:33,479
Speaker 13: the last set of data actually ticked up. We saw

723
00:37:33,880 --> 00:37:37,240
Speaker 13: very hot jobs report, non farm payrolls just last Friday.

724
00:37:37,239 --> 00:37:41,000
Speaker 13: We've got another big CPI report coming out next Tuesday.

725
00:37:41,200 --> 00:37:44,320
Speaker 13: If the data continues to run hot, the Federal Reserve's

726
00:37:44,400 --> 00:37:47,600
Speaker 13: bias has got to be that they need to maintain

727
00:37:47,760 --> 00:37:52,920
Speaker 13: an elevated level of interest rates. That the immaculate pivot

728
00:37:53,000 --> 00:37:56,640
Speaker 13: thesis is one that we do not subscribe to. The

729
00:37:56,920 --> 00:37:59,759
Speaker 13: Federal Reserve has told us and their last sep Yeah,

730
00:38:00,000 --> 00:38:01,880
Speaker 13: I think we're going to get core inflation back to

731
00:38:01,920 --> 00:38:04,040
Speaker 13: two percent, and they put a date on it. We

732
00:38:04,120 --> 00:38:06,640
Speaker 13: think that by the end of calendar twenty twenty five

733
00:38:07,040 --> 00:38:08,799
Speaker 13: will be there. If that's two and a half years

734
00:38:08,840 --> 00:38:11,879
Speaker 13: from now. The Federal Reserve is not cutting interest rates

735
00:38:12,000 --> 00:38:13,920
Speaker 13: next week if they think it's going to be two

736
00:38:13,960 --> 00:38:16,600
Speaker 13: and a half years before they get inflation back to

737
00:38:16,640 --> 00:38:17,960
Speaker 13: the level that they're comfortable with.

738
00:38:18,280 --> 00:38:20,120
Speaker 1: All right, Phil, as always great to hear from you,

739
00:38:20,440 --> 00:38:22,680
Speaker 1: great to get your opinions. Lots of conviction there as

740
00:38:22,680 --> 00:38:26,920
Speaker 1: always Phil Orlando, chief equity strategists at Federator Atturnemies, joining

741
00:38:26,920 --> 00:38:33,359
Speaker 1: me live here in the Insight conference from Orlando, Florida.

742
00:38:33,920 --> 00:38:37,040
Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can

743
00:38:37,040 --> 00:38:40,840
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

744
00:38:40,920 --> 00:38:44,640
Speaker 2: podcast platform you prefer I'm Matt Miller. I'm on Twitter

745
00:38:44,840 --> 00:38:47,880
Speaker 2: at Matt Miller nineteen seventy three and on Fall.

746
00:38:47,760 --> 00:38:50,640
Speaker 1: Sweeney I'm on Twitter at pt Sweeney. Before the podcast.

747
00:38:50,680 --> 00:38:53,240
Speaker 1: You can always catch us worldwide at Bloomberg Radiot