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Speaker 1: Okna trillions.

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Speaker 2: I'm Joel Webber and I'm Eric belchernis Well, Eric, we

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Speaker 2: live in exciting times.

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Speaker 1: I think we've recorded a couple versions of this episode,

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Speaker 1: and here we are after the market's closed on Wednesday,

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Speaker 1: April ninth. What has happened?

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Speaker 3: I guess the Trump put is real. That's what we

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Speaker 3: found out today. So the Trump Put was this idea

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Speaker 3: that somewhere along the lines of these tariffs there was

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Speaker 3: going to be a point where.

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Speaker 4: The president would back off.

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Speaker 3: A little because he wants to see the stock market

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Speaker 3: do well, and he wouldn't let the whole stock market

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Speaker 3: go into the doghouse.

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Speaker 4: And people thought, well, maybe he will.

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Speaker 3: This is a new Trump, it's not the old one,

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Speaker 3: and people were kind of digging in, and even I was.

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Speaker 3: I had said early on, I just don't think he'll

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Speaker 3: let it get this far. I was wrong, But then

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Speaker 3: again I guess I was right eventually. But he came

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Speaker 3: in said there's a pause on the tariffs, and it's complicated.

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Speaker 3: They're not over, but just the word pause, and it

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Speaker 3: came from his mouth. It wasn't fake news. The markets

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Speaker 3: went absolutely bananas. The algos which were lying in wait

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Speaker 3: like salivating dogs were thrown big chunk of red meat

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Speaker 3: and basically like the QQQ went up twelve percent today, Joel,

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Speaker 3: that's the third best day ever, barely behind the second

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Speaker 3: best day, which was in two thousand and eight during

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Speaker 3: the Great Financial Crisis. And both of those are a

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Speaker 3: bit behind January third, two thousand and one. So this

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Speaker 3: is up there with those eras of those crazy times.

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Speaker 3: You know, there's two thousand and one, two thousand and eight,

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Speaker 3: and now this is going to be historic and memorable

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Speaker 3: for different reasons.

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Speaker 4: That's the kind of thing we just loved through.

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Speaker 1: So we have no guests for this episode. It's Eric

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Speaker 1: and me talking about what just happened and trying to

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Speaker 1: make sense of it and giving you some etf insights

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Speaker 1: in the process, this time on Trillions. What just happened? Eric,

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Speaker 1: welcome back to Trillions, see you and me.

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Speaker 3: Yeah, it's been you know, it's funny there somebody was

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Speaker 3: pointing out the Goldman Sachs had basically predicted a recession

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Speaker 3: at like noon and walked two hours later said, h

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Speaker 3: recession is off. So we did the same thing except podcasts.

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Speaker 1: So it has been a turbulent week. We saw market

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Speaker 1: go way down and and as you've u helped said

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Speaker 1: in the intro, things have come back. What are some

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Speaker 1: of the the stats that jump out at you, Well, just.

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Speaker 3: The inter day moves in some of these ETFs. You know,

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Speaker 3: we just went over the ques. I think that is

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Speaker 3: a massive number. Twelve percent. I mean that's one day now.

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Speaker 3: It's still not back up, you know, to where it

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Speaker 3: was before all this started, but it's went a long

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Speaker 3: way towards that. And but one of the ETFs that

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Speaker 3: stood out to me was SOXEL SOXL. This is the

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Speaker 3: three X semiconductors ETF, which I remember looking at it

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Speaker 3: all week and it just kept taking in tons of

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Speaker 3: money and I was like, man, these degens are crazy.

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Speaker 3: This is like they were just throwing money into this

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Speaker 3: thing was going down and down and down, and honestly,

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Speaker 3: they're looking good today. It went up over fifty percent

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Speaker 3: in one day. Fifty five percent, right, this is the

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Speaker 3: best return it's ever had. It's like fifteen years old.

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Speaker 4: And my god.

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Speaker 3: So if you know, we had looked over the past

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Speaker 3: couple of weeks and we were like, there's really only

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Speaker 3: two people that seems like they're buying this market.

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Speaker 4: The Vanguardians. They always buy the market.

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Speaker 3: But the degens, they were really hanging tough, and I thought,

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Speaker 3: how long can they tell?

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Speaker 4: How much can they take?

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Speaker 3: This is going to embolden them forever. I mean, they're

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Speaker 3: never not going to buy the dip anymore. And this,

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Speaker 3: I got to be honest, is why I have a

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Speaker 3: hard time being anything other than a vanguardian investor myself personally,

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Speaker 3: because market timing is so hard, especially in a world

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Speaker 3: where the Fed or the President can control the market

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Speaker 3: with like one word.

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Speaker 4: You know who? Who could have called this right?

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Speaker 3: All the evidence and data pointed to more pain and

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Speaker 3: just reminds me of COVID a little. Remember when the

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Speaker 3: FED stepped in to say they're buying bonds and the

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Speaker 3: market did the same thing. This is why it is

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Speaker 3: just as dangerous to go to cash sometimes, even if

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Speaker 3: everything seems like it going to hell. I imagine this

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Speaker 3: is just going to live with people for a while.

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Speaker 3: If anything, it could make people better disciplined. They might

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Speaker 3: just never mess with their portfolio again.

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Speaker 4: We why bother.

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Speaker 1: So some cracks were forming earlier in the week. Where

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Speaker 1: were some of those cracks and are they still there

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Speaker 1: or have they you know, been just kind of covered up?

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Speaker 1: Up for the time being.

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Speaker 3: The cracks are gone, basically. So one of the stories

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Speaker 3: that Bloomberg News wrote was about the COLO ETF and

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Speaker 3: how it traded at a one percent discount.

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Speaker 1: And this was what's the ticket for this one?

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Speaker 4: Jaws Yeah, jaaa yeah.

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Speaker 3: So it's not a big discount. You know, we saw

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Speaker 3: discounts up to twenty nine percent during COVID in some ETFs.

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Speaker 3: But it was the first sign that there was maybe

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Speaker 3: some illiquidity forming in bonds. And some people even said

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Speaker 3: that the bond market was what pushed Trump to change.

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Speaker 3: I don't know if that's true or not, but the

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Speaker 3: bond market was starting to be.

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Speaker 1: He said as much too, like he has said that now.

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Speaker 3: Yeah, so to confirm then, So the bond market was

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Speaker 3: starting to show some ill liquidity. Treasuries were doing what

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Speaker 3: we didn't think they would do. They were going down

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Speaker 3: even though the stocks were going down. That's a bad

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Speaker 3: sign anyway. There was just the very hint of cracks

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Speaker 3: or illiquidity forming in bonds, and a Jaw was one

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Speaker 3: of the early ones to show that. But it were

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Speaker 3: really light. I mean we're talking like a swell way

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Speaker 3: out yonder you know, not even close to being anything

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Speaker 3: big yet, But these cracks are going to be gone.

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Speaker 3: If anything, what we might see is the opposite role.

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Speaker 3: Instead of seeing discounts, you could see some premiums because

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Speaker 3: so much a wall of money just probably bought the

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Speaker 3: market all day that the you know, arbitragers are just

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Speaker 3: trying to keep up.

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Speaker 4: Probably you could see some premiums.

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Speaker 1: Okay, So what about flows? What how crazy did they

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Speaker 1: look before? And what happened in the afternoon.

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Speaker 4: I gotta be honest.

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Speaker 3: I've always said ETF holders are more diamond hands than

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Speaker 3: people give them credit for. But this year they really

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Speaker 3: showed diamond hands. ETF took in three hundred and three

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Speaker 3: billion through the year, and the last couple of weeks

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Speaker 3: were really good. They were averaging like four or five

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Speaker 3: billion a day. Mostly vous you know again, it was

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Speaker 3: the vanguardians and the degens, and there were some people

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Speaker 3: doing opportunistic buying like there were definitely a lot of

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Speaker 3: flows into cash like ETFs. But the equity ETFs did fine.

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Speaker 3: They had their best quarter in Q one, and you

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Speaker 3: know again, they're reaping the benefits today, at least for today.

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Speaker 3: We'll see where it plays out from here, but they

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Speaker 3: look good. I'd imagine we'll see another pickup and flows,

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Speaker 3: you know, even another little boost. A lot of times

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Speaker 3: you have the trading crowd and the retail crowd. The

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Speaker 3: retail crowd had been buying the whole time. The traders

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Speaker 3: were kind of coming in and out. Normally they're just

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Speaker 3: running for the hills during something like this, but they

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Speaker 3: were kind of in and out. They weren't totally committed

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Speaker 3: to being in or out. And the neutralness let the

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Speaker 3: vanguard flows really power through.

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Speaker 1: So there's flows. What about volume volume?

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Speaker 4: It was fascinating.

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Speaker 3: I always bring up those two scientists in Silence of

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Speaker 3: the Lambs troll who they brought the butterfly thing to

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Speaker 3: the bugs. Those guys are the thick glasses who are like, oh,

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Speaker 3: this is so interesting. This is what the last three

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Speaker 3: days were like for us. The volume was crazy. On Monday,

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Speaker 3: the spy tradered one hundred and twenty seven billion. That

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Speaker 3: was the biggest day ever on record. A lot of

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Speaker 3: times there's volume explosions in around a capitulation moment, so

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Speaker 3: we were wondering, okay, is this it now? We thought

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Speaker 3: that even before the news, But the volume today was

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Speaker 3: almost as much. And I think a lot of the

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Speaker 3: volume today was buying volume. So I think we're going

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Speaker 3: to see when you look at the month of April,

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Speaker 3: it is going to blow away other month on record

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Speaker 3: for ETFs, most likely at least this week. So a

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Speaker 3: lot of people leaned on ETFs who are traders and

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Speaker 3: everything you know, worked fine, but the volume showed a

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Speaker 3: lot of fear and just craziness in the market.

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Speaker 1: And I know that Athanasios Sera Fegas on your team

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Speaker 1: at Bloomberg Intelligence did a little study. What did he

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Speaker 1: find in that study?

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Speaker 3: He looked at times where the spy volume is over

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Speaker 3: sixty billion. You know, I've always called sixty billion. The

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Speaker 3: freak out zone spy average is twenty five billion.

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Speaker 1: So anything beyond that.

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Speaker 4: Yeah, anything beyond sixty to me.

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Speaker 3: Here's why, because spy is used by so many people

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Speaker 3: on the outskirts of their portfolio, almost like a liquidity sleeve.

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Speaker 3: So if they're like especially bigger investors, if they want

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Speaker 3: to tweak their investments for something bad, they might add

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Speaker 3: a put option from their spy account, which would end

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Speaker 3: up creating volume for spy, or they might just short spy,

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Speaker 3: or they might buy extra spy.

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Speaker 4: The spy is where they move.

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Speaker 3: The knobs on the outside of their portfolio to get

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Speaker 3: the system just right, because they don't want to mess

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Speaker 3: with their picks in the middle. People like to keep

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Speaker 3: the rest, you know, as it is. So spy is

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Speaker 3: an adjustment mechanism. So when people are adjusting, the volume

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Speaker 3: goes up. And he looked at those days over sixty

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Speaker 3: billion and found that in the next month there's a

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Speaker 3: two thirds chance that the market will be positive and

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Speaker 3: the medium return was about one point two percent, so

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Speaker 3: not gangbusters, but positive. And so again this is because

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Speaker 3: a lot of times there's these freakouts where spy volume

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Speaker 3: goes up, VIX goes up, and it is in a

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Speaker 3: way an explosion of negativity, almost like a real explosion,

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Speaker 3: and then the dust kind of settles and people that

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Speaker 3: start looking for some opportunity in the rubble. And I

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Speaker 3: think that's sort of what happened here. It's just that

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Speaker 3: seemingly that rebound got sped up, you know, eight hundred

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Speaker 3: times it was put condensed into about an hour instead

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Speaker 3: of a month.

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Speaker 1: What are you, as an ETF vanalyist watching out for next?

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Speaker 3: Yeah, So one thing we're looking at David Cohne, who

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Speaker 3: covers active funds.

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Speaker 4: Is how active managers dealt with this?

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Speaker 3: You know, did they go to conservative Well, we found

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Speaker 3: but this is before the bounce back. We did find

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Speaker 3: that active equity managers normally only beat the market, like

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Speaker 3: only thirty three percent of them typically beat the market

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Speaker 3: in any given year. Over half were beating the market

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Speaker 3: in the past week. In other words, they had done

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Speaker 3: they were tilted a little more towards value stocks and

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Speaker 3: fundamental less mag seven, they were positioned pretty well. But

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Speaker 3: this rebound, how will this affect that? On the flip side,

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Speaker 3: bond managers did very poorly. They are a benchmark against

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Speaker 3: the AG, and the AAG is full of treasuries and

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Speaker 3: a lot of them they take extra risk, so a

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Speaker 3: lot of them when there's a huge sell off in bonds,

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Speaker 3: they get caught a little naked, and so a very small.

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Speaker 4: Amount of them outperformed during the sell off.

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Speaker 3: The you know, when the tariff was the worst. They're

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Speaker 3: probably happy because risk is back on. So it's interesting, how,

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Speaker 3: you know, what are you supposed to do as an

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Speaker 3: active manager? I mean, this is something we'll be exploring

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Speaker 3: for the next couple of days. We felt that people

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Speaker 3: had the same dilemma for the past two years. You're

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Speaker 3: an active manager, these mag seven stocks are like extremely

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Speaker 3: high valuations. What do you do do you do you

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Speaker 3: underweight them and miss out on the next leg up,

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Speaker 3: or do you overweight them or neutral weight them. It's

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Speaker 3: it's really hard right now to be an active manager,

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Speaker 3: and especially on the macro side, because these macro winds

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Speaker 3: can just decimate anything it had going. If anything, it

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Speaker 3: probably bodes well to just be a classic stockpicker because

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Speaker 3: these macrowinds come and go, but at the end of

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Speaker 3: the day, over time, the good companies rise to the top.

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Speaker 1: Okay, last question, Eric Trump paused many tariffs, but he's

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Speaker 1: holding firm on China. So what does the prospect look

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Speaker 1: for world X China and ETFs.

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Speaker 3: That had been a very popular trade for a little while.

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Speaker 3: And it's interesting since you know the TEARFF pause was announced,

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Speaker 3: China had a good day. I kind of thought it

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Speaker 3: would be a little worse for them. But right now,

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Speaker 3: like if you look at.

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Speaker 1: Year to date returns, what's the ticket for this.

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Speaker 3: Emx C is Emerging markets X China and FXI is China.

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Speaker 3: So EMXC was down nine percent year to date, FXI

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Speaker 3: only down two percent, So China had been outperforming its

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Speaker 3: emerging market peers, and if anything, this.

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Speaker 4: May reverse that a little.

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Speaker 3: Right, if China is sort of put into a special

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Speaker 3: place and trade is full of friction with the US,

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Speaker 3: it's possible that that goes the other way. So I

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Speaker 3: would look for EMXC to maybe have a good couple

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Speaker 3: days in lieu of you know, after this that said,

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Speaker 3: what we found in China, and Rebecca and Jack on

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Speaker 3: my team covered this is the national team bought ETFs

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Speaker 3: uh for the past couple of days. So just like

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Speaker 3: the FED bought bond ETFs in twenty twenty, China's national

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Speaker 3: team went in and bought equity ETFs and helped prop

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Speaker 3: the market up.

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Speaker 1: So almost like they knew the Trump was coming.

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Speaker 3: I know, right, it was a it was a good bet. Well,

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Speaker 3: let's say they are ostracized and they take a hit

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Speaker 3: from like the trade of the US. Just it's hard

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Speaker 3: to bet against a country where the government's going to.

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Speaker 4: Buy you know, ETFs or stocks.

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Speaker 3: I mean that's like again, don't fight the Fed, don't

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Speaker 3: fight the Central Bank. So the China versus em is

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Speaker 3: going to be tricky. There's I guess you could say

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Speaker 3: there's reasons to do or don't boo, do both. But

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Speaker 3: you know, I will say this, I think so many

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Speaker 3: people are just very happy that it's paused. I think

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Speaker 3: most investors really believe in the US. They wanted a

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Speaker 3: reason to believe. They didn't want to think it was

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Speaker 3: over a lot of investors here, I'll be honest. They

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Speaker 3: have a hard time buying European stocks. They have a

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Speaker 3: hard time buying China, like they don't think China numbers

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Speaker 3: are real. They think Europe isn't that motivated, the not

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Speaker 3: much innovation. They'd rather have their money put to work here.

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Speaker 3: So this past couple of weeks was just really painful

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Speaker 3: for most average investors, and so I think most people

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Speaker 3: are just so relieved.

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Speaker 4: What does the.

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Speaker 3: Future hold, I don't know, But what we do know

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Speaker 3: now is that if the tariffs kick in, or if

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Speaker 3: there's more tariff talk, we know they can be undone

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Speaker 3: with literally one word. And I'd imagine this makes other assets.

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Speaker 3: It makes it harder to attract assets because people know

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Speaker 3: that at some point, you know, the president might capitulate

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Speaker 3: if the market's that bad. So it's interesting spot we're

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Speaker 3: in now. It does feel like the Trump played the

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Speaker 3: role of the Fed in a way done Eric.

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Speaker 4: Always a pleasure, Always a pleasure.

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Speaker 1: Drop.

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Speaker 5: Thanks for listening to Trillions until next time. You can

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Speaker 5: find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify.

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Speaker 1: Or wherever else you'd like to listen. We'd love to

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Speaker 1: hear from you. We're on Twitter.

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Speaker 5: I'm at Joel Webber Show. He's at Eric Valcunos. This

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Speaker 5: episode of Trillions was produced by Magnus Hendrickson.

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Speaker 1: Bye,