1 00:00:01,440 --> 00:00:05,320 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 2 00:00:05,400 --> 00:00:08,479 Speaker 1: weekdays at ten am Eastern on Apple Car playing Android 3 00:00:08,520 --> 00:00:11,600 Speaker 1: Otto with the Bloomberg Business app. Listen on demand wherever 4 00:00:11,680 --> 00:00:16,000 Speaker 1: you get your podcasts, or watch us live on YouTube. 5 00:00:16,600 --> 00:00:20,280 Speaker 2: Big Big Earnings week This week, we've got Amazon Molly 6 00:00:20,360 --> 00:00:23,400 Speaker 2: after the closed Thursday, So I think it's time to 7 00:00:23,440 --> 00:00:26,240 Speaker 2: get a preview of what we might see from Amazon. 8 00:00:26,280 --> 00:00:28,960 Speaker 2: And when we talk about Amazon these days, it's both 9 00:00:29,040 --> 00:00:34,280 Speaker 2: a retail story etail and a text retailer with its cloud. Yeah, 10 00:00:34,320 --> 00:00:36,320 Speaker 2: with its cloud. So what do you do? 11 00:00:36,360 --> 00:00:37,519 Speaker 3: How do you get an expert on both? 12 00:00:37,560 --> 00:00:40,520 Speaker 2: Well, you go to Bloomberg Intelligence because we have Punham Guoyle. 13 00:00:40,600 --> 00:00:43,320 Speaker 2: She's a Bloomberg Intelligence senior analyst for e commerce and 14 00:00:43,400 --> 00:00:45,720 Speaker 2: all that retail stuff. She joins us here, as does 15 00:00:45,760 --> 00:00:50,400 Speaker 2: an Aragrana, senior analyst on a tech side for Bloomberg Intelligence. 16 00:00:51,159 --> 00:00:52,480 Speaker 3: Pooham, let's start with you here. 17 00:00:52,840 --> 00:00:55,800 Speaker 2: I'm gonna go back to the roots of Amazon as 18 00:00:55,960 --> 00:00:57,280 Speaker 2: a retail story. 19 00:00:57,320 --> 00:00:57,520 Speaker 3: Here. 20 00:00:57,600 --> 00:01:01,160 Speaker 2: What do you expect to see and hear from Amazon 21 00:01:01,440 --> 00:01:04,000 Speaker 2: this quarter about that core retail business. 22 00:01:04,600 --> 00:01:06,959 Speaker 4: I think the retail business will be very strong for 23 00:01:07,000 --> 00:01:09,240 Speaker 4: the fourth quarter. We already saw it in some of 24 00:01:09,280 --> 00:01:12,399 Speaker 4: the industry numbers that were reported back in November and December, 25 00:01:12,760 --> 00:01:16,800 Speaker 4: with really strong online sales, especially in November, and that 26 00:01:16,840 --> 00:01:20,560 Speaker 4: momentum kind of continuing into December. So from the retail side, 27 00:01:20,600 --> 00:01:24,039 Speaker 4: we expect Amazon to report a much stronger four Q 28 00:01:24,680 --> 00:01:28,839 Speaker 4: and they'll still be driven Paul by the third party marketplace. 29 00:01:28,880 --> 00:01:31,720 Speaker 4: So you know, Amazon's business is one P and third 30 00:01:31,840 --> 00:01:34,240 Speaker 4: party where they sell stuff on their own and then 31 00:01:34,240 --> 00:01:37,480 Speaker 4: they have sellers sell on the platform. We think the 32 00:01:37,520 --> 00:01:40,840 Speaker 4: third party business will continue to outpace first party, but 33 00:01:40,920 --> 00:01:42,760 Speaker 4: both will have strong growth rates. 34 00:01:43,400 --> 00:01:45,520 Speaker 5: And that's just you know, that's just one piece of 35 00:01:45,560 --> 00:01:48,160 Speaker 5: Amazon's business. I mean, granted a big piece, but just 36 00:01:48,200 --> 00:01:50,360 Speaker 5: one of them. So An Rag, why don't you tell 37 00:01:50,440 --> 00:01:53,520 Speaker 5: us a bit about the Amazon Web Service component and 38 00:01:53,800 --> 00:01:56,240 Speaker 5: what that is going, what you were expecting out of that. 39 00:01:57,440 --> 00:02:00,480 Speaker 6: Yeah, thank you. So, you know, AW is the biggest 40 00:02:00,680 --> 00:02:03,480 Speaker 6: cloud infrastructure vendor out there, and what we have seen 41 00:02:03,520 --> 00:02:05,680 Speaker 6: over the last two years, it has been a bit 42 00:02:05,720 --> 00:02:08,960 Speaker 6: of slow down in the growth rates of AWS and 43 00:02:09,000 --> 00:02:11,840 Speaker 6: the reason for that is it's a variable pricing model. 44 00:02:11,919 --> 00:02:14,519 Speaker 6: You know, you pay what you use and in this 45 00:02:14,880 --> 00:02:17,120 Speaker 6: economic downturn in the last I would say one and 46 00:02:17,120 --> 00:02:20,000 Speaker 6: a half to two years. Companies are dialing back on 47 00:02:20,040 --> 00:02:22,480 Speaker 6: their cloud usage. It's one way for them to control 48 00:02:22,520 --> 00:02:24,880 Speaker 6: their cost. So that doesn't mean that they are not 49 00:02:25,080 --> 00:02:27,560 Speaker 6: embracing cloud at the same pace. They're not just using 50 00:02:27,600 --> 00:02:30,040 Speaker 6: as much. But we think that takes a u turn 51 00:02:30,080 --> 00:02:32,840 Speaker 6: either in this quarter or the next quarter. We are 52 00:02:32,880 --> 00:02:35,720 Speaker 6: fairly optimistic based on a survey we did. We think, 53 00:02:35,919 --> 00:02:38,320 Speaker 6: you know, we are coming to a point with easy comparisons, 54 00:02:38,639 --> 00:02:41,280 Speaker 6: so we are fairly optimistic that over the next twelve 55 00:02:41,360 --> 00:02:44,880 Speaker 6: months we'll see rebound in growth rates for AWS and 56 00:02:45,160 --> 00:02:47,360 Speaker 6: by default for for Microsoft also. 57 00:02:47,720 --> 00:02:50,959 Speaker 2: So on our what's the I mean if I'm Amazon, 58 00:02:51,080 --> 00:02:54,240 Speaker 2: Amazon Web Web Services, how do I position myself in 59 00:02:54,280 --> 00:02:56,840 Speaker 2: this AI discussion here? 60 00:02:56,919 --> 00:02:59,320 Speaker 3: I mean, if I'm the IR person, what am I telling. 61 00:02:59,000 --> 00:03:02,679 Speaker 2: My executives to say when I get on this conference call? 62 00:03:02,720 --> 00:03:04,320 Speaker 6: You know, one of the most important things. I think 63 00:03:04,320 --> 00:03:06,400 Speaker 6: the message they have been telling people is, you know, 64 00:03:06,440 --> 00:03:08,880 Speaker 6: you don't really need just open AI to go out 65 00:03:08,919 --> 00:03:13,040 Speaker 6: and build your AI. You could say strategy. They work 66 00:03:13,120 --> 00:03:17,600 Speaker 6: with a lot of open source companies or AI vendors 67 00:03:17,639 --> 00:03:20,280 Speaker 6: that have the large language models. They work with Meta 68 00:03:20,320 --> 00:03:23,280 Speaker 6: for example. They really promote a lot of Meta's large 69 00:03:23,360 --> 00:03:25,880 Speaker 6: language model. So if I'm a company, you can go 70 00:03:25,919 --> 00:03:29,680 Speaker 6: out and choose whichever raw material you want, whichever you know, 71 00:03:29,760 --> 00:03:31,959 Speaker 6: large language model that you want, but you can host 72 00:03:32,040 --> 00:03:34,240 Speaker 6: that on AWS. And that's how they're going to make 73 00:03:34,280 --> 00:03:37,920 Speaker 6: money is by giving the building blocks of AI to companies. 74 00:03:38,600 --> 00:03:40,640 Speaker 7: So, pun On, let's come back to the retail side 75 00:03:40,640 --> 00:03:40,840 Speaker 7: of it. 76 00:03:40,880 --> 00:03:43,640 Speaker 5: Obviously, the big news with Amazon today the termination of 77 00:03:43,680 --> 00:03:48,080 Speaker 5: the one point for billion dollar deal with Irobod. I'm 78 00:03:48,080 --> 00:03:51,160 Speaker 5: going to say, again, pretty sure Amazon's going to be okay, 79 00:03:52,040 --> 00:03:53,720 Speaker 5: but maybe you could tell us a little bit more 80 00:03:53,720 --> 00:03:57,040 Speaker 5: about like the you know, is this really material for 81 00:03:57,080 --> 00:03:59,520 Speaker 5: them that this deal didn't go through? And of course, 82 00:03:59,560 --> 00:04:02,360 Speaker 5: you know, we just keep hammering it time and time again, 83 00:04:02,440 --> 00:04:03,360 Speaker 5: this m and A outlook. 84 00:04:03,360 --> 00:04:04,160 Speaker 7: It's really tough. 85 00:04:04,960 --> 00:04:06,920 Speaker 4: Yeah, you know, we talked about this a little earlier 86 00:04:07,000 --> 00:04:09,280 Speaker 4: and it's non material to Amazon just looking at the 87 00:04:09,320 --> 00:04:11,800 Speaker 4: size of it, right, a billion dollars a little more 88 00:04:11,800 --> 00:04:14,640 Speaker 4: than a billion dollars on Amazon scale of over six 89 00:04:14,720 --> 00:04:18,040 Speaker 4: hundred billion dollars in GMB. It doesn't move the needle 90 00:04:18,080 --> 00:04:21,040 Speaker 4: at all. But that said, it just reinforces our view 91 00:04:21,080 --> 00:04:24,120 Speaker 4: that we've had for a long time that acquisitions for 92 00:04:24,200 --> 00:04:27,880 Speaker 4: these companies will be more difficult given the scrutiny that 93 00:04:27,920 --> 00:04:31,120 Speaker 4: they're under. So we do think that organic growth is 94 00:04:31,160 --> 00:04:33,280 Speaker 4: what Amazon is going to have to focus on, and 95 00:04:33,360 --> 00:04:35,760 Speaker 4: we think there's plenty of it on the retail side, 96 00:04:35,760 --> 00:04:38,080 Speaker 4: on the advertising side, and on the cloud side. 97 00:04:38,480 --> 00:04:40,920 Speaker 2: Just a little redhead crossing the Bloomberg truminal bring to 98 00:04:41,000 --> 00:04:43,960 Speaker 2: your attention Renault to cancel and peer. 99 00:04:44,440 --> 00:04:46,760 Speaker 3: Ipo, So not good news for the IPO market. 100 00:04:46,800 --> 00:04:49,760 Speaker 2: We'll get some reporting on that coming up and pun 101 00:04:49,839 --> 00:04:54,400 Speaker 2: them with the e commerce side of Amazon. What's your sense, 102 00:04:54,600 --> 00:04:56,320 Speaker 2: you know, talking to the Amazons of the world, the 103 00:04:56,320 --> 00:04:59,560 Speaker 2: Walmarts of the world. How's the consumer these days and 104 00:04:59,560 --> 00:05:00,840 Speaker 2: how's this spending out there? 105 00:05:01,600 --> 00:05:04,200 Speaker 4: The spending is pretty good. Surprisingly, you know, we've been 106 00:05:04,240 --> 00:05:08,279 Speaker 4: talking about the consumer possibly falling off and really slowing 107 00:05:08,279 --> 00:05:10,320 Speaker 4: down their spend, but we haven't seen it. The holiday 108 00:05:10,400 --> 00:05:13,160 Speaker 4: numbers suggests that spending is strong. I'd still say, though, 109 00:05:13,160 --> 00:05:15,480 Speaker 4: I think people are picking and choosing where they spend. 110 00:05:15,720 --> 00:05:17,760 Speaker 4: They're deciding where they want to spend their dollars, and 111 00:05:17,800 --> 00:05:20,719 Speaker 4: Amazon has been a place where they're more likely to 112 00:05:20,720 --> 00:05:23,320 Speaker 4: spend it, given the fact that they get speed, convenience, 113 00:05:23,360 --> 00:05:26,520 Speaker 4: and really everything that they want from there. But that said, 114 00:05:26,760 --> 00:05:29,479 Speaker 4: I do think that on the low end you could 115 00:05:29,520 --> 00:05:33,680 Speaker 4: see some issues arise as inflation and other concerns really 116 00:05:33,720 --> 00:05:35,680 Speaker 4: do hamper their spending power. 117 00:05:36,279 --> 00:05:40,159 Speaker 5: So Ana Punam was just saying how the growth story 118 00:05:40,200 --> 00:05:42,880 Speaker 5: for Amazon is really going to come more from organic 119 00:05:42,920 --> 00:05:45,640 Speaker 5: growth rather than acquiring it. So tell us about on 120 00:05:45,680 --> 00:05:48,520 Speaker 5: the cloud side, if you see a lot of organic 121 00:05:48,520 --> 00:05:50,440 Speaker 5: growth opportunities coming from that business. 122 00:05:51,440 --> 00:05:54,159 Speaker 6: Yeah, no, we expect actually growth to pick up. We 123 00:05:54,240 --> 00:05:56,560 Speaker 6: think the growth is going to be closer to twenty 124 00:05:56,560 --> 00:05:58,960 Speaker 6: percent by the end of this year. You know, this 125 00:05:59,040 --> 00:06:02,200 Speaker 6: is a market that has a long, long I would 126 00:06:02,200 --> 00:06:05,800 Speaker 6: say runway overall cloud spending, it's still less than twenty 127 00:06:05,839 --> 00:06:08,520 Speaker 6: percent of total tach spending, somewhere in that twenty to 128 00:06:08,560 --> 00:06:11,560 Speaker 6: twenty five percent range. I think we have a long 129 00:06:11,600 --> 00:06:13,719 Speaker 6: way to go, and Amazon is right in the middle 130 00:06:13,720 --> 00:06:16,600 Speaker 6: of it. They are the biggest cloud infrastructure vendor, as 131 00:06:16,640 --> 00:06:19,240 Speaker 6: I said, with over forty percent of the market share. 132 00:06:19,279 --> 00:06:22,160 Speaker 6: So I feel fairly optimistic that this year we're going 133 00:06:22,160 --> 00:06:23,120 Speaker 6: to see a rebound. 134 00:06:23,279 --> 00:06:25,760 Speaker 2: So in the cloud infrastructure side of it, who do 135 00:06:25,800 --> 00:06:28,880 Speaker 2: they compete against and is that forty percent market share 136 00:06:29,000 --> 00:06:31,880 Speaker 2: something that they have to defend. Is that something they 137 00:06:31,960 --> 00:06:35,680 Speaker 2: can grow. How's the competitive landscape look in the infrastructure space? 138 00:06:36,400 --> 00:06:39,120 Speaker 6: Yeah, in five years if they get able to maintain it, 139 00:06:39,160 --> 00:06:41,440 Speaker 6: I'll be very happy with that. Because what has happened is, 140 00:06:41,760 --> 00:06:44,400 Speaker 6: you know, Microsoft has really gone out big over the 141 00:06:44,480 --> 00:06:47,160 Speaker 6: last you know, seven, eight, ten years, and it is 142 00:06:47,200 --> 00:06:50,480 Speaker 6: now the second biggest vendor. Now, surprisingly enough, this is 143 00:06:50,600 --> 00:06:53,560 Speaker 6: a space where the smaller vendors cannot really make a 144 00:06:53,640 --> 00:06:57,000 Speaker 6: dent because you need a lot of capital expenditures to 145 00:06:57,040 --> 00:06:59,560 Speaker 6: come up with a cloud model. You or infrastructure business 146 00:07:00,080 --> 00:07:01,880 Speaker 6: US can't do it in your garage. You really need 147 00:07:01,920 --> 00:07:05,600 Speaker 6: billions of dollars off data centers in order to you know, 148 00:07:05,720 --> 00:07:07,920 Speaker 6: really be good at this business. So right now there 149 00:07:07,920 --> 00:07:11,480 Speaker 6: are two big vendors. AT's aws and it's Microsoft Azure, 150 00:07:11,760 --> 00:07:13,760 Speaker 6: and then after that we have Google and you know 151 00:07:13,760 --> 00:07:15,520 Speaker 6: the likes of Oracle and IBM after that. 152 00:07:16,160 --> 00:07:17,520 Speaker 7: So last one here for you, poone. 153 00:07:17,520 --> 00:07:19,840 Speaker 5: I'm just quick on the thirty seconds looking at pharmacy 154 00:07:19,880 --> 00:07:21,040 Speaker 5: and grocery for Amazon. 155 00:07:21,080 --> 00:07:22,440 Speaker 7: What are the next developments there? 156 00:07:23,400 --> 00:07:25,200 Speaker 4: There's a long way to go there. We think they're 157 00:07:25,240 --> 00:07:27,600 Speaker 4: still in very early innings and it's a harder market 158 00:07:27,600 --> 00:07:29,960 Speaker 4: for them to crack with grocery, they're trying to build 159 00:07:30,000 --> 00:07:32,840 Speaker 4: out their fresh business, but we really haven't seen that 160 00:07:32,960 --> 00:07:35,760 Speaker 4: much progress there. And on pharmacy they're still very very 161 00:07:35,760 --> 00:07:38,360 Speaker 4: early on. So those are businesses that we haven't even 162 00:07:38,520 --> 00:07:41,040 Speaker 4: factored into our growth scenario for Amazon. 163 00:07:41,520 --> 00:07:41,720 Speaker 1: Wow. 164 00:07:41,800 --> 00:07:43,480 Speaker 2: Yeah, that's it seems like a tough nut for them 165 00:07:43,520 --> 00:07:45,640 Speaker 2: to crack and for a lot of people. All right, 166 00:07:45,640 --> 00:07:48,040 Speaker 2: put them Goyle on a rag rana. Two of our 167 00:07:48,120 --> 00:07:50,840 Speaker 2: best analysts at Bloomberg Intelligence also. 168 00:07:50,960 --> 00:07:53,080 Speaker 3: Absolutely are some of our very first. 169 00:07:52,840 --> 00:07:55,800 Speaker 2: Folks we brought on board to Bloomberg Intelligence many moons ago, 170 00:07:56,360 --> 00:07:57,960 Speaker 2: but they cover it give us a little preview there 171 00:07:57,960 --> 00:08:01,480 Speaker 2: of Amazon because it is the giant retailer and it 172 00:08:01,600 --> 00:08:04,880 Speaker 2: is a significant player in the cloud business. So you 173 00:08:04,960 --> 00:08:08,040 Speaker 2: got to bring the two expert areas together, which we. 174 00:08:08,000 --> 00:08:09,280 Speaker 3: Can do with Bloomberg Intelligence. 175 00:08:09,320 --> 00:08:11,640 Speaker 2: And you can find Punam's and on a Rog's research 176 00:08:11,680 --> 00:08:14,000 Speaker 2: as well as the other four hundred analyst of Bloomberg Intelligence. 177 00:08:14,320 --> 00:08:18,240 Speaker 2: B I go on the Bloomberg terminal, Best Research on 178 00:08:18,240 --> 00:08:18,640 Speaker 2: the Street. 179 00:08:20,240 --> 00:08:24,120 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 180 00:08:24,200 --> 00:08:27,720 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 181 00:08:27,760 --> 00:08:30,559 Speaker 1: Auto with the Bloomberg Business app. You can also listen 182 00:08:30,680 --> 00:08:33,760 Speaker 1: live on Amazon Alexa from our flagship New York station, 183 00:08:34,120 --> 00:08:36,880 Speaker 1: just say Alexa playing Bloomberg eleven thirty. 184 00:08:38,559 --> 00:08:41,880 Speaker 2: Big big news is several weeks ago in the crypto 185 00:08:41,960 --> 00:08:44,560 Speaker 2: space because we finally they finally got approval from the 186 00:08:44,640 --> 00:08:50,040 Speaker 2: SEC for a spot Bitcoin ETF and that was huge 187 00:08:50,040 --> 00:08:52,400 Speaker 2: for the crypto space and big, big news for the 188 00:08:52,440 --> 00:08:54,400 Speaker 2: ETF space as well. So let's dig in see how 189 00:08:54,400 --> 00:08:56,880 Speaker 2: things are progressing there. Austin re joins us. He's global 190 00:08:56,880 --> 00:08:59,600 Speaker 2: head of revenue and business at falcon X. What is 191 00:08:59,640 --> 00:09:05,000 Speaker 2: falcons the largest institutional crypto prime brokeridge in the world. Austin, 192 00:09:05,040 --> 00:09:07,760 Speaker 2: thanks so much for joining us here. Where are you based? 193 00:09:07,760 --> 00:09:09,520 Speaker 2: Where is the falcon X? 194 00:09:09,600 --> 00:09:09,760 Speaker 8: Yeah? 195 00:09:09,800 --> 00:09:11,400 Speaker 9: First of all, thank you guys for having me so 196 00:09:11,440 --> 00:09:14,680 Speaker 9: excited for the conversation. I'm actually based in San Francisco. 197 00:09:15,000 --> 00:09:17,320 Speaker 9: The team has spread globally. We have an office in 198 00:09:17,360 --> 00:09:21,320 Speaker 9: Silicon Valley, New York, Chicago, Singapore, Hong Kong, and London, 199 00:09:21,400 --> 00:09:22,760 Speaker 9: so a little bit of everywhere. 200 00:09:22,880 --> 00:09:25,040 Speaker 3: Who trades on your platform and what did they trade? 201 00:09:25,160 --> 00:09:27,880 Speaker 9: Yeah, so we trade with a wide variety of institutional 202 00:09:27,880 --> 00:09:31,400 Speaker 9: market participants, so that's everyone from today and topically ETF 203 00:09:31,480 --> 00:09:35,400 Speaker 9: issuers who are active within the cryptocurrency space, to hedge funds, 204 00:09:35,440 --> 00:09:39,080 Speaker 9: asset managers, venture capital firms, really anyone that's looking to 205 00:09:39,120 --> 00:09:42,400 Speaker 9: access liquidity on the spot markets or in the derivative 206 00:09:42,480 --> 00:09:45,439 Speaker 9: side of the cryptocurrency space. Our options business, it's the 207 00:09:45,679 --> 00:09:48,880 Speaker 9: substantial growth over the past couple of quarters as well. 208 00:09:49,000 --> 00:09:51,120 Speaker 9: So basically, if you're looking to get access to the 209 00:09:51,160 --> 00:09:54,640 Speaker 9: asset class headge or exposure either in spot or derivatives markets, 210 00:09:54,720 --> 00:09:56,520 Speaker 9: we work with a lot of those market participants. 211 00:09:56,720 --> 00:09:59,520 Speaker 5: Yeah, tell us Austin, like, why that recent news from 212 00:09:59,559 --> 00:10:02,520 Speaker 5: the SEC regarding the coinets was so important and what's 213 00:10:02,559 --> 00:10:04,160 Speaker 5: that what that's meant for your business? 214 00:10:04,480 --> 00:10:07,080 Speaker 9: Yeah, for sure. Look, I think if you look at 215 00:10:07,120 --> 00:10:10,200 Speaker 9: what the ETF means in the mid to long term, 216 00:10:10,400 --> 00:10:13,320 Speaker 9: really the unlock with the ETF is net new pools 217 00:10:13,320 --> 00:10:16,280 Speaker 9: of capital that historically haven't had access to the cryptocurrency 218 00:10:16,320 --> 00:10:20,680 Speaker 9: or digital asset market, specifically rias and financial advisors within 219 00:10:20,720 --> 00:10:24,160 Speaker 9: the US so thirty trillion dollar markets roughly forty percent 220 00:10:24,320 --> 00:10:28,080 Speaker 9: of US capital markets, and within that they haven't had 221 00:10:28,080 --> 00:10:31,000 Speaker 9: an instrument to access this asset class yet. And so 222 00:10:31,040 --> 00:10:34,480 Speaker 9: the thought is the ETF provides a regulated instrument through 223 00:10:34,520 --> 00:10:37,920 Speaker 9: which these different market participants can get access and that 224 00:10:37,960 --> 00:10:41,200 Speaker 9: will increase overall adoption over time. So in relation to 225 00:10:41,240 --> 00:10:44,720 Speaker 9: our business there where we service where Spot liquidity provider 226 00:10:44,800 --> 00:10:48,520 Speaker 9: to number the etf issuers within that we've partnered. We've 227 00:10:48,520 --> 00:10:51,000 Speaker 9: partnered to provide liquidity and we did about thirty percent 228 00:10:51,000 --> 00:10:54,439 Speaker 9: of the day one issuances. From a trading perspective itself. 229 00:10:54,760 --> 00:10:55,920 Speaker 3: Interesting, Oh okay, very good. 230 00:10:55,920 --> 00:10:56,079 Speaker 7: Ask. 231 00:10:56,160 --> 00:10:58,439 Speaker 3: I wanted to know, like, how has that impacted your business? 232 00:10:58,480 --> 00:11:00,920 Speaker 3: So you saw day one, we saw day one. 233 00:11:00,960 --> 00:11:03,200 Speaker 9: Look, this is something we've been preparing for for years 234 00:11:03,200 --> 00:11:05,640 Speaker 9: at this point, right in terms of building out the 235 00:11:05,760 --> 00:11:10,360 Speaker 9: liquidity at scale ability to transact significant size within this market. 236 00:11:10,600 --> 00:11:13,080 Speaker 9: And so we've been working with different issuers, larger asset 237 00:11:13,120 --> 00:11:16,160 Speaker 9: managers that they've been preparing their crypto strategies and I 238 00:11:16,200 --> 00:11:18,880 Speaker 9: think Day one saw significant amount of flows and we 239 00:11:18,960 --> 00:11:22,319 Speaker 9: continue to basically see consistent trading activity from those issues. 240 00:11:22,480 --> 00:11:24,920 Speaker 2: Right, So, just for our listeners and for me, you're 241 00:11:24,960 --> 00:11:29,600 Speaker 2: a prime brokerage. You're not in exchange like FTX, correct? 242 00:11:29,640 --> 00:11:30,040 Speaker 10: Correct? 243 00:11:31,160 --> 00:11:33,760 Speaker 3: Now you traded on FTX at some. 244 00:11:33,800 --> 00:11:36,839 Speaker 9: Point, yeah, correct, So we're a prime brokerage. What that 245 00:11:36,920 --> 00:11:39,600 Speaker 9: means is we aggregate liquidity from a number of different 246 00:11:39,640 --> 00:11:44,200 Speaker 9: liquidity pools globally, exchanges, proprietary trading firms, market makers, and 247 00:11:44,240 --> 00:11:46,559 Speaker 9: so we trade with all major venues around the world, 248 00:11:46,640 --> 00:11:48,760 Speaker 9: depending on the structure where the client is in some 249 00:11:49,160 --> 00:11:51,960 Speaker 9: uh in the regulatory jurisdiction, and our goal is to 250 00:11:52,280 --> 00:11:56,040 Speaker 9: basically provide our clients the most seamless trading experience possible 251 00:11:56,040 --> 00:11:58,480 Speaker 9: and an aggregation of that global liquidity within. 252 00:11:58,400 --> 00:12:02,240 Speaker 5: You want to get and your clients mostly institutional. 253 00:12:01,559 --> 00:12:03,520 Speaker 7: Money, correct, all institutions. 254 00:12:03,520 --> 00:12:06,680 Speaker 5: Okay, So tell me then about like where the retail 255 00:12:07,559 --> 00:12:11,120 Speaker 5: bitcoin trader stands right now and like their access to ETFs. 256 00:12:11,520 --> 00:12:14,720 Speaker 9: Yeah, so it's an interesting question, right, and I think 257 00:12:14,840 --> 00:12:17,960 Speaker 9: with the initial ETF rollout, the perspective would be that 258 00:12:18,000 --> 00:12:20,719 Speaker 9: this would give broader access to the retail side of 259 00:12:20,760 --> 00:12:23,520 Speaker 9: the market as well as segments of the institutional side 260 00:12:23,520 --> 00:12:25,480 Speaker 9: of the market. What I would say is we're still 261 00:12:25,480 --> 00:12:28,240 Speaker 9: early in this ETF cycle though right it was approved 262 00:12:28,280 --> 00:12:31,120 Speaker 9: earlier this month, and within that you're still seeing some 263 00:12:31,200 --> 00:12:35,000 Speaker 9: platforms not actually allow their end clients to trade this asset. 264 00:12:35,120 --> 00:12:35,280 Speaker 1: Right. 265 00:12:35,600 --> 00:12:39,480 Speaker 9: Vanguard is an example, seven trillion dollars of assets that 266 00:12:40,400 --> 00:12:44,200 Speaker 9: are invested there. You're not seeing them basically allow access 267 00:12:44,240 --> 00:12:46,640 Speaker 9: to Bitcoin ETF vehicles. You've seen some of the other 268 00:12:46,679 --> 00:12:49,600 Speaker 9: brokerages still working through that cycle, and so from a 269 00:12:49,640 --> 00:12:52,960 Speaker 9: retail investor perspective, it should open up access. But I 270 00:12:52,960 --> 00:12:57,640 Speaker 9: think it's also a longer term cycle as to know 271 00:12:57,679 --> 00:12:59,280 Speaker 9: how these really open up over time. 272 00:13:00,040 --> 00:13:04,480 Speaker 2: We had Bitcoin ETF, do you expect other crypto spot 273 00:13:04,600 --> 00:13:06,200 Speaker 2: ETFs to get approved? 274 00:13:06,720 --> 00:13:10,120 Speaker 9: Yeah? So I think the next ETF that the market 275 00:13:10,160 --> 00:13:13,920 Speaker 9: is looking at right now is the Ethereum ETF, and 276 00:13:14,000 --> 00:13:17,439 Speaker 9: specifically within that, there's a perspective from some market participants 277 00:13:17,480 --> 00:13:20,120 Speaker 9: that you could see in eth ETF approved later this year. 278 00:13:20,480 --> 00:13:23,199 Speaker 9: What I would say is, in contrast to the Bitcoin 279 00:13:23,280 --> 00:13:26,280 Speaker 9: ETF that realistically through Q three and Q four the 280 00:13:26,280 --> 00:13:30,160 Speaker 9: market consensus was this was likely to happen the eth ETF, 281 00:13:30,160 --> 00:13:32,560 Speaker 9: there's not the same level of consensus right now. So 282 00:13:32,600 --> 00:13:34,480 Speaker 9: I think what we'll see right now we have different 283 00:13:34,480 --> 00:13:37,959 Speaker 9: Some clients that anticipate this happening later this year, others 284 00:13:38,120 --> 00:13:40,040 Speaker 9: think it's a longer road ahead. I think that the 285 00:13:40,040 --> 00:13:43,120 Speaker 9: market is still waiting to determine what ultimately happens here. 286 00:13:43,240 --> 00:13:46,360 Speaker 5: It looks like another catalyst potentially that the SEC is 287 00:13:46,360 --> 00:13:49,280 Speaker 5: seeking comments on a proposal to allow options trading on 288 00:13:49,360 --> 00:13:50,760 Speaker 5: blackrocks ETF. 289 00:13:50,880 --> 00:13:52,360 Speaker 7: So how do you see that one unfolding? 290 00:13:52,679 --> 00:13:57,080 Speaker 9: Yeah, So, I think one of the interesting elements in 291 00:13:57,120 --> 00:14:00,240 Speaker 9: relation to the ETF approval itself is the potential to 292 00:14:00,280 --> 00:14:04,920 Speaker 9: catalyze greater options market activity domestically in the United States. 293 00:14:05,120 --> 00:14:07,920 Speaker 9: We've actually seen substantial options growth in our own business 294 00:14:08,000 --> 00:14:10,680 Speaker 9: just for context, Q three to Q four falcon X's 295 00:14:10,679 --> 00:14:13,640 Speaker 9: options business group ten x quarter over quarter, and so 296 00:14:14,000 --> 00:14:16,760 Speaker 9: currently one of the largest options market participants on the 297 00:14:16,800 --> 00:14:19,560 Speaker 9: institutional side of the market. And if I look at 298 00:14:19,600 --> 00:14:23,280 Speaker 9: why that matters, right, people are looking for different ways 299 00:14:23,280 --> 00:14:26,760 Speaker 9: to express their views within this market as well as 300 00:14:26,800 --> 00:14:29,720 Speaker 9: to hedge their exposure. And over time, what you see 301 00:14:29,800 --> 00:14:33,760 Speaker 9: as these options markets evolve around ETFs is actually greater 302 00:14:33,840 --> 00:14:37,240 Speaker 9: liquidity going into those ETF instruments itself and in the 303 00:14:37,280 --> 00:14:40,480 Speaker 9: future potentially a lowering of volatility. 304 00:14:40,600 --> 00:14:40,720 Speaker 1: Right. 305 00:14:40,760 --> 00:14:43,040 Speaker 9: So, if you look at gold as an analogy, gold 306 00:14:43,120 --> 00:14:46,040 Speaker 9: ETF options markets around those ETFs, what you saw is 307 00:14:46,080 --> 00:14:49,480 Speaker 9: over time that's a more liquid market, lower volatility within 308 00:14:49,520 --> 00:14:52,720 Speaker 9: that market itself, and that actually attracts more capital over 309 00:14:52,800 --> 00:14:56,360 Speaker 9: time because it's a more investable asset that is less volatile. 310 00:14:56,480 --> 00:14:59,360 Speaker 2: Largest institutional crypto prime brokers in the world. 311 00:14:59,360 --> 00:14:59,960 Speaker 3: How do you define that? 312 00:15:00,560 --> 00:15:02,160 Speaker 10: How do I define largest? 313 00:15:02,320 --> 00:15:02,400 Speaker 4: Like? 314 00:15:02,880 --> 00:15:05,080 Speaker 3: Is it five volume transaction volume? 315 00:15:06,160 --> 00:15:06,360 Speaker 1: Yeah? 316 00:15:06,400 --> 00:15:09,040 Speaker 9: So defined from a volume perspective there, Right, So, like 317 00:15:09,480 --> 00:15:13,800 Speaker 9: I mentioned, we're active both on spot markets, derivatives markets, 318 00:15:13,840 --> 00:15:16,280 Speaker 9: and partnering with clients both in the US and globally. 319 00:15:16,360 --> 00:15:18,280 Speaker 3: So what are other Like who do you compete with 320 00:15:18,320 --> 00:15:19,200 Speaker 3: for that market share? 321 00:15:19,440 --> 00:15:22,520 Speaker 9: Yeah? So Look, if I look at the crypto market 322 00:15:22,680 --> 00:15:27,320 Speaker 9: and where prime brokers sits within this ecosystem, you have 323 00:15:27,360 --> 00:15:30,520 Speaker 9: different players that are providing different products and services across 324 00:15:30,520 --> 00:15:30,880 Speaker 9: the board. 325 00:15:30,960 --> 00:15:31,080 Speaker 1: Right. 326 00:15:31,120 --> 00:15:33,280 Speaker 9: It's not like traditional financial services where you can go 327 00:15:33,280 --> 00:15:35,920 Speaker 9: to Gold Midzas or JP Morgan and get basically most 328 00:15:35,920 --> 00:15:39,600 Speaker 9: things that you need from an institutional market participation perspective, 329 00:15:39,920 --> 00:15:43,120 Speaker 9: So where we're focused is trading spot and derivatives markets, 330 00:15:43,200 --> 00:15:46,320 Speaker 9: the extension of credit and solving capital efficiency for our customers, 331 00:15:46,480 --> 00:15:50,240 Speaker 9: and providing technology to facilitate risk management. As it relates 332 00:15:50,240 --> 00:15:52,760 Speaker 9: to competition, what you see is we compete with different 333 00:15:52,800 --> 00:15:55,920 Speaker 9: players in each of those different segments. Those could be 334 00:15:55,960 --> 00:15:58,480 Speaker 9: some of the proprietary trading firms in one, it could 335 00:15:58,480 --> 00:16:01,960 Speaker 9: be other trading market part participants in the other. But 336 00:16:02,040 --> 00:16:05,040 Speaker 9: from my perspective, look, there's a huge market opportunity here. 337 00:16:05,160 --> 00:16:07,520 Speaker 9: The question is how we grow this over time. I think, Uh, 338 00:16:07,760 --> 00:16:10,400 Speaker 9: the ETF is a great catalyst, and we're excited to 339 00:16:10,440 --> 00:16:12,680 Speaker 9: continue with partner with you know, wide write and market 340 00:16:12,680 --> 00:16:14,000 Speaker 9: participants to grow the pie. 341 00:16:14,080 --> 00:16:16,480 Speaker 5: So I know that you're working with institutional clients, but 342 00:16:16,520 --> 00:16:19,080 Speaker 5: I got to ask on behalf of myself and maybe 343 00:16:19,120 --> 00:16:21,480 Speaker 5: other you know, retail participants who are maybe a little 344 00:16:21,480 --> 00:16:24,600 Speaker 5: bit hesitant to get into crypto. There's obviously, I think 345 00:16:24,720 --> 00:16:27,320 Speaker 5: since it began, just been a lot of skepticism around 346 00:16:27,360 --> 00:16:31,400 Speaker 5: the asset and obviously with FTX imploding, like a lot 347 00:16:31,400 --> 00:16:32,720 Speaker 5: of concerns about. 348 00:16:32,480 --> 00:16:33,360 Speaker 7: The viability of it. 349 00:16:33,480 --> 00:16:35,760 Speaker 5: So what's your pitch to somebody who's like, you know, 350 00:16:35,840 --> 00:16:37,560 Speaker 5: not involved in crypto why they should? 351 00:16:38,040 --> 00:16:38,320 Speaker 8: Yeah. 352 00:16:38,560 --> 00:16:41,440 Speaker 9: So I don't spend much time actually convincing people to 353 00:16:41,480 --> 00:16:43,240 Speaker 9: be active within the crypto's base. 354 00:16:43,120 --> 00:16:45,280 Speaker 7: Probably because they already are with the people. 355 00:16:45,120 --> 00:16:48,640 Speaker 9: You people come to me, right, they're actually active already, Yes, 356 00:16:49,080 --> 00:16:51,720 Speaker 9: But like look within that, if I think, what's the 357 00:16:51,880 --> 00:16:54,840 Speaker 9: value within crypto? Right, and where's the value within bitcoin? 358 00:16:54,880 --> 00:16:57,160 Speaker 9: And why are people excited about the ETF as an 359 00:16:57,200 --> 00:16:59,880 Speaker 9: example here, what you're looking at as a non soft 360 00:17:00,080 --> 00:17:04,120 Speaker 9: and stored a value that's digitally scarce and solving what 361 00:17:04,200 --> 00:17:07,040 Speaker 9: many refer to as a digital goal. Right, why does 362 00:17:07,080 --> 00:17:08,000 Speaker 9: that matter today? 363 00:17:08,320 --> 00:17:08,480 Speaker 1: Right? 364 00:17:08,760 --> 00:17:13,480 Speaker 9: We're looking at a macroeconomic landscape of seventy plus elections globally, 365 00:17:13,640 --> 00:17:16,360 Speaker 9: not just in the US. Within that, we didn't anticipate 366 00:17:16,400 --> 00:17:20,040 Speaker 9: loose in monetary policy that could lead to inflation. Do 367 00:17:20,080 --> 00:17:22,639 Speaker 9: you want to protect your assets against that? And then 368 00:17:22,680 --> 00:17:26,119 Speaker 9: the other area that we see, you know, our clients 369 00:17:26,160 --> 00:17:28,919 Speaker 9: investing within crypto is some believe it could be a 370 00:17:28,920 --> 00:17:33,360 Speaker 9: good geopolitical hedge over time and increasingly uncertain geopolitical landscape. 371 00:17:33,400 --> 00:17:35,760 Speaker 9: As you guys know, question is is a portion of 372 00:17:35,840 --> 00:17:38,840 Speaker 9: your portfolio makes sense to act to allocate to this 373 00:17:38,960 --> 00:17:43,600 Speaker 9: asset class. But obviously, you know, always recommend people look 374 00:17:43,600 --> 00:17:45,840 Speaker 9: at all the risks and of course body volatility is. 375 00:17:45,840 --> 00:17:47,720 Speaker 7: So read the fine print. I'm sure. 376 00:17:47,960 --> 00:17:49,439 Speaker 3: Austin Reid, thanks so much for joining us. 377 00:17:49,480 --> 00:17:52,440 Speaker 2: Really appreciate Austin Reid, Global Head of Revenues and Business 378 00:17:52,440 --> 00:17:56,400 Speaker 2: at falcon X. Falcon X is the largest institutional crypto 379 00:17:56,920 --> 00:17:59,600 Speaker 2: prime brokerage in the world, and we again all getting 380 00:17:59,600 --> 00:18:02,840 Speaker 2: a lot small arder on crypto. 381 00:18:02,760 --> 00:18:06,639 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 382 00:18:06,720 --> 00:18:09,440 Speaker 1: weekdays at ten am Eastern on Apple car Playing and 383 00:18:09,560 --> 00:18:12,439 Speaker 1: broud Otto with the Bloomberg Business App. Listen on demand 384 00:18:12,480 --> 00:18:16,800 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 385 00:18:18,080 --> 00:18:21,840 Speaker 2: Adam Coons joins us from Winthrop Capital here. We talked 386 00:18:21,880 --> 00:18:25,560 Speaker 2: at him about the markets and so forth going forward. Adam, 387 00:18:25,920 --> 00:18:29,639 Speaker 2: you know, we had that big, big September, I mean 388 00:18:29,720 --> 00:18:33,760 Speaker 2: really kind of November December last year that just ripped equities, 389 00:18:34,760 --> 00:18:38,879 Speaker 2: just went through the roof bods actually turned in positive performance. 390 00:18:38,400 --> 00:18:38,920 Speaker 11: For the year. 391 00:18:39,080 --> 00:18:41,520 Speaker 2: You know, what do you tell your clients here as 392 00:18:41,600 --> 00:18:44,119 Speaker 2: we kind of start off another year, do we just 393 00:18:44,200 --> 00:18:46,760 Speaker 2: kind of start from zero and try to find some 394 00:18:46,800 --> 00:18:47,440 Speaker 2: winners out there? 395 00:18:47,560 --> 00:18:48,760 Speaker 3: What's the theme for you this year? 396 00:18:49,000 --> 00:18:49,200 Speaker 10: Yeah? 397 00:18:49,200 --> 00:18:50,680 Speaker 8: I mean I think this year is going to definitely 398 00:18:50,720 --> 00:18:53,640 Speaker 8: be a stock pickers year. I think fixed income will 399 00:18:53,640 --> 00:18:58,040 Speaker 8: continue to be a primary story for returns and that's 400 00:18:58,080 --> 00:19:00,560 Speaker 8: going to come despite what the FED does, Even if 401 00:19:00,600 --> 00:19:03,679 Speaker 8: the FED doesn't lower rates as quickly as. 402 00:19:03,520 --> 00:19:05,720 Speaker 10: Some are saying, and we do believe that. 403 00:19:05,760 --> 00:19:08,400 Speaker 8: What we're thinking really fourth quarter before they make any 404 00:19:08,440 --> 00:19:12,320 Speaker 8: cuts at all. Yeah, So we're we're a little bit 405 00:19:12,320 --> 00:19:16,200 Speaker 8: divergent from the consensus, and that's really driven by if 406 00:19:16,200 --> 00:19:18,080 Speaker 8: you look at what the Fed has done through this cycle. 407 00:19:18,119 --> 00:19:21,320 Speaker 8: They obviously got it wrong with the transitory nonsense, and 408 00:19:21,600 --> 00:19:23,919 Speaker 8: we think they're going to act slow to do the 409 00:19:23,960 --> 00:19:27,120 Speaker 8: same thing. Right, they were slow to raise rates, suddenly 410 00:19:27,119 --> 00:19:29,119 Speaker 8: did it. We think they're going to be slow to 411 00:19:29,800 --> 00:19:32,439 Speaker 8: decrease interest rates because they don't want to be wrong again, right, 412 00:19:32,440 --> 00:19:34,880 Speaker 8: They don't want to lower rates and then see another 413 00:19:34,920 --> 00:19:37,879 Speaker 8: flash of inflation. So I think that's really going to 414 00:19:37,920 --> 00:19:41,680 Speaker 8: squeeze the economy, and so that's going to be good 415 00:19:41,720 --> 00:19:43,720 Speaker 8: for long term bonds. I think it's going to be 416 00:19:44,320 --> 00:19:48,200 Speaker 8: somewhat of a difficult year for stocks, and that's driven 417 00:19:48,240 --> 00:19:50,240 Speaker 8: by two things. One is what I just highlight is 418 00:19:50,280 --> 00:19:52,600 Speaker 8: you're going to start to see economic weakness. But secondly, 419 00:19:52,640 --> 00:19:54,639 Speaker 8: I mean, coming to this year, you nailed it is 420 00:19:55,000 --> 00:19:56,960 Speaker 8: we had that rally coming into the end of the 421 00:19:57,040 --> 00:20:01,160 Speaker 8: year that that really drove valuations to some somewhat unsustainable 422 00:20:01,240 --> 00:20:04,520 Speaker 8: levels for specific companies. And I'm highlighting your Teslas or 423 00:20:04,520 --> 00:20:07,159 Speaker 8: in the videos, and obviously you're seeing the result of 424 00:20:07,160 --> 00:20:09,360 Speaker 8: that with Tesla missing and dropping quite a bit. 425 00:20:09,680 --> 00:20:11,320 Speaker 5: So you're saying it's going to be good year for 426 00:20:11,480 --> 00:20:14,040 Speaker 5: long term bonds. I'm looking at the thirty year right now. 427 00:20:14,320 --> 00:20:17,480 Speaker 5: Yield peaks a little bit above five percent in October. 428 00:20:17,520 --> 00:20:19,480 Speaker 5: That's when the pivot story started to become a bit 429 00:20:19,520 --> 00:20:22,280 Speaker 5: more clear, and now we're at four thirty five. 430 00:20:22,760 --> 00:20:24,520 Speaker 7: I think that's still attractive to get get you. 431 00:20:24,880 --> 00:20:27,920 Speaker 8: I mean, look, it's really asymmetric right now in bonds, 432 00:20:27,960 --> 00:20:30,560 Speaker 8: which is the attractive part of it. The worst case 433 00:20:30,560 --> 00:20:33,840 Speaker 8: scenario is you get a fairly high yield to carry 434 00:20:34,240 --> 00:20:37,440 Speaker 8: until we'd start to see that. You know, this secular 435 00:20:37,520 --> 00:20:40,600 Speaker 8: trend in rates is not changed. Rates are going to 436 00:20:40,680 --> 00:20:43,320 Speaker 8: go back down. Demographics and all those things are pushing that. 437 00:20:43,400 --> 00:20:45,560 Speaker 8: So worst case scenarios, I get to hold bonds and 438 00:20:45,600 --> 00:20:47,600 Speaker 8: a pretty high yield, you know, corporate bonds. I'm getting 439 00:20:47,600 --> 00:20:50,280 Speaker 8: five percent, So I get to hold that until and 440 00:20:50,320 --> 00:20:53,560 Speaker 8: wait until I'm right. And so ultimately I think that's 441 00:20:53,600 --> 00:20:57,400 Speaker 8: the easiest, Like I said, from a wrist standpoint, asymmetric trade. 442 00:20:57,560 --> 00:20:59,159 Speaker 2: You know, I was surprised, you know, looking at the 443 00:20:59,160 --> 00:21:01,880 Speaker 2: performance and can come last year in twenty twenty three 444 00:21:01,960 --> 00:21:03,680 Speaker 2: that the best performing sector was high yield. 445 00:21:04,040 --> 00:21:05,000 Speaker 3: And that's in a world. 446 00:21:04,800 --> 00:21:07,000 Speaker 2: Where everybody kept talking about our recession. I would have 447 00:21:07,119 --> 00:21:09,280 Speaker 2: would have thought going into the year that maybe high 448 00:21:09,320 --> 00:21:11,440 Speaker 2: yield would not be the place to be, but it 449 00:21:11,600 --> 00:21:13,240 Speaker 2: really outperformed it did. 450 00:21:13,280 --> 00:21:15,280 Speaker 8: I mean, and I think that goes hand in hand 451 00:21:15,320 --> 00:21:17,520 Speaker 8: with what the equity markets did, right. They tend to 452 00:21:17,520 --> 00:21:20,919 Speaker 8: correlate in certain pockets of the market, and so I 453 00:21:20,920 --> 00:21:23,200 Speaker 8: think when we saw that rally that that helped tighten 454 00:21:23,280 --> 00:21:26,840 Speaker 8: credit spreads. I mean, we really aren't seeing big increases 455 00:21:26,880 --> 00:21:30,239 Speaker 8: in delinquencies. Yes they're going up a little bit, but 456 00:21:30,320 --> 00:21:33,320 Speaker 8: recovery rates are stable. So it's just, yeah, it was 457 00:21:33,480 --> 00:21:36,000 Speaker 8: it was a place to be because credit markets still 458 00:21:36,040 --> 00:21:37,080 Speaker 8: look pretty solid. 459 00:21:37,359 --> 00:21:39,679 Speaker 5: So in a year when rates are broadly going to 460 00:21:39,720 --> 00:21:43,720 Speaker 5: be coming down, you think that's pretty accommodative for everybody. 461 00:21:43,760 --> 00:21:45,600 Speaker 5: Is there really a place that you would say like 462 00:21:45,680 --> 00:21:48,600 Speaker 5: you would not benefit from that and to avoid. 463 00:21:49,359 --> 00:21:52,600 Speaker 10: Well, I think it really comes down to commodities. 464 00:21:52,640 --> 00:21:54,720 Speaker 8: I'd stay probably away from that in the in the 465 00:21:54,760 --> 00:21:59,679 Speaker 8: short term, especially kind of the oil commodities. But if 466 00:21:59,720 --> 00:22:01,800 Speaker 8: you look at stocks, I think, once again, I think 467 00:22:01,800 --> 00:22:04,000 Speaker 8: you want to stay away from the narrative based companies, 468 00:22:04,640 --> 00:22:07,959 Speaker 8: like I said in Navidio or where the AI narrative 469 00:22:08,000 --> 00:22:11,080 Speaker 8: has really gotten over it yeah, I've been over there 470 00:22:11,119 --> 00:22:11,639 Speaker 8: for a while, but. 471 00:22:11,840 --> 00:22:13,080 Speaker 7: I feel like it's just starting. 472 00:22:13,480 --> 00:22:15,080 Speaker 8: I think there's going to be a pause, right and 473 00:22:15,119 --> 00:22:17,480 Speaker 8: then because everyone's going to figure out, well, there's no 474 00:22:17,600 --> 00:22:20,399 Speaker 8: monetization of the story of AI right. 475 00:22:20,240 --> 00:22:21,760 Speaker 10: Now, so I think there will be a little bit 476 00:22:21,800 --> 00:22:22,600 Speaker 10: of a pause with that. 477 00:22:23,080 --> 00:22:25,720 Speaker 8: You'll still see the companies like Microsoft and alphabet that 478 00:22:26,000 --> 00:22:29,560 Speaker 8: have an AI component but have a real business model, those. 479 00:22:29,400 --> 00:22:30,640 Speaker 10: Will still do it, still do well. 480 00:22:30,800 --> 00:22:33,240 Speaker 8: But the companies that really just kind of got over 481 00:22:33,280 --> 00:22:35,320 Speaker 8: their skis last year, that's where I would stay away 482 00:22:35,320 --> 00:22:36,280 Speaker 8: from right right now. 483 00:22:36,480 --> 00:22:38,919 Speaker 2: So big earnings week this week from a lot of 484 00:22:38,960 --> 00:22:43,840 Speaker 2: the high profile names, including Meta and Alphabetters. I call 485 00:22:43,920 --> 00:22:48,160 Speaker 2: them Facebook and Google. Why change a good thing? I don't, right, 486 00:22:48,240 --> 00:22:51,000 Speaker 2: But in any case, I know there are names that 487 00:22:51,200 --> 00:22:52,119 Speaker 2: you guys have an interest in. 488 00:22:52,160 --> 00:22:53,800 Speaker 3: How do you think about Facebook. 489 00:22:53,440 --> 00:22:56,240 Speaker 2: Google that whole I guess digital advertising space. 490 00:22:56,680 --> 00:22:59,760 Speaker 8: Well, I think it comes down to you know, once again, 491 00:22:59,800 --> 00:23:01,920 Speaker 8: these or business models that have been able to adapt. 492 00:23:02,400 --> 00:23:05,160 Speaker 8: Meta has gone through a little bit of an identity crisis, 493 00:23:05,200 --> 00:23:06,800 Speaker 8: but I think they're back on the right track where 494 00:23:06,920 --> 00:23:10,240 Speaker 8: they're able to adapt to what the consumer behavior and 495 00:23:10,280 --> 00:23:12,800 Speaker 8: those shifts are. We still think the consumer can kind 496 00:23:12,800 --> 00:23:14,480 Speaker 8: of push this cycle out and that's what's going to 497 00:23:14,600 --> 00:23:17,280 Speaker 8: drive stocks like that, where advertising is really you know, 498 00:23:17,320 --> 00:23:18,880 Speaker 8: at the end of the day, that the revenue driver. 499 00:23:19,040 --> 00:23:22,520 Speaker 8: So that's why we think those companies can outperform relative 500 00:23:22,520 --> 00:23:24,360 Speaker 8: to some of the hardware type companies. 501 00:23:24,400 --> 00:23:28,120 Speaker 5: All right, so those ones are the communication slash tech sector. 502 00:23:28,160 --> 00:23:30,200 Speaker 5: How about healthcare looks like that's one that you've got 503 00:23:30,200 --> 00:23:30,840 Speaker 5: your eyes on too. 504 00:23:31,080 --> 00:23:32,760 Speaker 8: It is, I mean, if you look at valuations, and 505 00:23:32,800 --> 00:23:35,080 Speaker 8: I keep saying that word, it's obviously something that matters 506 00:23:35,119 --> 00:23:38,560 Speaker 8: to this year a company like merk where you know 507 00:23:39,040 --> 00:23:43,280 Speaker 8: it is trading very attractively relative to other companies in healthcare, 508 00:23:43,320 --> 00:23:45,080 Speaker 8: and then also just in the S and P five hundred, 509 00:23:45,119 --> 00:23:48,080 Speaker 8: but you know, it ran up significantly through covid obviously 510 00:23:48,160 --> 00:23:51,640 Speaker 8: with with their vaccine, and then basically has given away 511 00:23:51,680 --> 00:23:54,080 Speaker 8: all those gains. So what we see here as a 512 00:23:54,080 --> 00:23:57,640 Speaker 8: company that has a nice amount of cash flow. Yes, 513 00:23:57,680 --> 00:23:59,720 Speaker 8: the pipeline and the short term is a little bit questionable, 514 00:23:59,760 --> 00:24:01,760 Speaker 8: but we think that they can pull off an M 515 00:24:01,800 --> 00:24:03,800 Speaker 8: and a strategy that will kind of help prop up 516 00:24:04,160 --> 00:24:05,240 Speaker 8: their pipeline in the future. 517 00:24:05,280 --> 00:24:06,800 Speaker 5: I don't know, I mean, we just had our anti 518 00:24:06,840 --> 00:24:08,960 Speaker 5: trust expert in here, I wouldn't be trying to get 519 00:24:08,840 --> 00:24:10,120 Speaker 5: at the mn A right, that's. 520 00:24:10,000 --> 00:24:11,280 Speaker 3: Fair, that is fair. It's hard. 521 00:24:11,440 --> 00:24:13,680 Speaker 2: Yeah, it still seems like you can get healthcare deals 522 00:24:13,680 --> 00:24:15,280 Speaker 2: done because usually what it is is like a big 523 00:24:15,320 --> 00:24:18,480 Speaker 2: pharma company buying a little guy who got some cool 524 00:24:18,680 --> 00:24:20,359 Speaker 2: yeah new thing coming. 525 00:24:20,440 --> 00:24:23,000 Speaker 5: So maybe just not in like healthcare as far as 526 00:24:23,040 --> 00:24:25,800 Speaker 5: like insurance, you know, obviously like the humanist sigma that 527 00:24:25,800 --> 00:24:26,680 Speaker 5: didn't go so well. 528 00:24:26,920 --> 00:24:29,400 Speaker 2: I mean, does Mark have It seems like if I'm 529 00:24:29,400 --> 00:24:31,800 Speaker 2: going to have exposure to healthcare, it's got to have 530 00:24:31,880 --> 00:24:33,800 Speaker 2: a g l P one angle, a. 531 00:24:33,920 --> 00:24:34,680 Speaker 3: B CD drug. 532 00:24:34,800 --> 00:24:37,600 Speaker 2: I was going to say they need, because does MERK have? 533 00:24:37,760 --> 00:24:40,639 Speaker 8: Then they don't, and I think that Lily would be 534 00:24:41,480 --> 00:24:45,560 Speaker 8: behind that. The valuation is really what's giving me pause there. 535 00:24:45,640 --> 00:24:47,880 Speaker 8: But I would still own Lily. I probably wouldn't add 536 00:24:47,920 --> 00:24:51,080 Speaker 8: to it or you know, particularly an Indianapolis. Yeah, I 537 00:24:51,160 --> 00:24:54,000 Speaker 8: get Yeah, I love Indianapolis because I know that because 538 00:24:54,240 --> 00:24:56,040 Speaker 8: a lot of my friends from business school went to 539 00:24:56,080 --> 00:24:58,760 Speaker 8: indian Aples and begrudgingly, but they went there because it's. 540 00:24:58,600 --> 00:25:00,440 Speaker 10: Ei Lily, Yep, you know that's the place. 541 00:25:00,520 --> 00:25:05,000 Speaker 2: Yeah, exactly so so, but so your highest conviction trade 542 00:25:05,040 --> 00:25:09,159 Speaker 2: is that high grade long duration zond so so boring. 543 00:25:09,359 --> 00:25:09,600 Speaker 3: I know. 544 00:25:09,640 --> 00:25:11,959 Speaker 2: So what's like, like, what's a piece of paper that 545 00:25:12,040 --> 00:25:13,760 Speaker 2: you guys hold that you feel really comfortable with? 546 00:25:14,480 --> 00:25:17,040 Speaker 8: I mean, I look, I really do like tech TMT. 547 00:25:17,240 --> 00:25:20,280 Speaker 8: When you're looking at corporate bonds, you can go out 548 00:25:20,320 --> 00:25:20,920 Speaker 8: there and are. 549 00:25:20,800 --> 00:25:24,560 Speaker 2: You buying like on the Comcast and yes, absolutely Comcast Charter. 550 00:25:25,000 --> 00:25:25,800 Speaker 10: I like Cox. 551 00:25:25,560 --> 00:25:27,480 Speaker 3: Communication, Yeah, I like Coxy Communications. 552 00:25:27,520 --> 00:25:32,280 Speaker 8: Yeah, yeah, I mean Oracle. Oracle is honestly, honestly one 553 00:25:32,280 --> 00:25:35,000 Speaker 8: of the cheapest. It's triple bu but you're getting a 554 00:25:35,000 --> 00:25:36,679 Speaker 8: lot of spread, Like so you're getting well north of 555 00:25:36,720 --> 00:25:39,600 Speaker 8: five percent for you know, a well cash flowed company. 556 00:25:39,600 --> 00:25:42,600 Speaker 10: I just it's a no brainer for Cox Communications. 557 00:25:42,720 --> 00:25:44,280 Speaker 2: Man, I made a lot of fees off of those 558 00:25:44,359 --> 00:25:46,760 Speaker 2: good people, smart people. They made your work for it, 559 00:25:46,800 --> 00:25:48,920 Speaker 2: but they paid and they paid on time. Adam Coons 560 00:25:48,920 --> 00:25:51,160 Speaker 2: thanks so much for joining us. Adam Kuons is Cheap 561 00:25:51,440 --> 00:25:55,760 Speaker 2: portfolio manager for Winthrop Capital Management located in Indianapolis. 562 00:25:57,359 --> 00:26:01,240 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 563 00:26:01,320 --> 00:26:04,399 Speaker 1: weekdays at ten am Eastern on applecar Play and and 564 00:26:04,640 --> 00:26:07,639 Speaker 1: royd Otto with The Bloomberg Business. You can also listen 565 00:26:07,760 --> 00:26:10,879 Speaker 1: live on Amazon Alexa from our flagship New York station. 566 00:26:11,240 --> 00:26:15,200 Speaker 1: Just say Alexa playing Bloomberg eleven thirty. 567 00:26:15,560 --> 00:26:17,840 Speaker 2: You kind of think about, you know, twenty twenty three 568 00:26:17,840 --> 00:26:19,680 Speaker 2: and the rip we had there at the end of 569 00:26:19,720 --> 00:26:22,400 Speaker 2: the year. It's like almost he's coming to twenty twenty four. 570 00:26:22,400 --> 00:26:23,040 Speaker 3: Now what do I do? 571 00:26:23,200 --> 00:26:25,040 Speaker 2: It seems like I might have gotten all my performance 572 00:26:25,280 --> 00:26:28,240 Speaker 2: at the end of twenty three. Let's check with Katerina Simonendi. 573 00:26:28,320 --> 00:26:30,480 Speaker 2: She probably has some good views here. She's the senior 574 00:26:30,560 --> 00:26:34,120 Speaker 2: vice president Morgan Stanley Private Wealth Management. So, Katerina, what's 575 00:26:34,160 --> 00:26:37,080 Speaker 2: kind of the message you started off you know, twenty 576 00:26:37,119 --> 00:26:40,840 Speaker 2: twenty four with with your clients here after you know, 577 00:26:40,840 --> 00:26:42,360 Speaker 2: a pretty good twenty twenty three. 578 00:26:43,960 --> 00:26:46,160 Speaker 12: Paul and Molly, thank you for having me on the show. 579 00:26:47,000 --> 00:26:51,640 Speaker 11: Yes, you know, surprisingly good and off twenty twenty three 580 00:26:52,520 --> 00:26:56,600 Speaker 11: where we investors seem to be so excited about the 581 00:26:56,640 --> 00:26:58,679 Speaker 11: potential for the raid cuts. 582 00:26:58,800 --> 00:27:00,440 Speaker 12: You know, we saw this, you. 583 00:27:00,320 --> 00:27:04,359 Speaker 11: Know, pretty remarkable year end. And also, you know, somewhat 584 00:27:04,400 --> 00:27:09,320 Speaker 11: unusual was the fact that the seven large stocks essentially 585 00:27:09,359 --> 00:27:11,600 Speaker 11: carried the market. So if you look at the performance 586 00:27:11,960 --> 00:27:15,520 Speaker 11: that investors experienced in the some of the broad indexes 587 00:27:15,640 --> 00:27:17,960 Speaker 11: like S and P five hundred for example. You know, 588 00:27:18,000 --> 00:27:20,040 Speaker 11: there were two stories of the index. There was a 589 00:27:20,080 --> 00:27:23,280 Speaker 11: story of this magnificent seven stocks and then the rest 590 00:27:23,280 --> 00:27:26,160 Speaker 11: of the market. So when we look at twenty four, 591 00:27:26,840 --> 00:27:29,639 Speaker 11: it definitely continues being the story of the FED and 592 00:27:29,720 --> 00:27:33,000 Speaker 11: it is really the timeline of the rate cuts that 593 00:27:33,040 --> 00:27:36,040 Speaker 11: we're looking at, you know, first, and then of course 594 00:27:36,240 --> 00:27:39,960 Speaker 11: the earnings, because to some degree it is a little 595 00:27:39,960 --> 00:27:42,840 Speaker 11: bit confusing for investors to figure out what they're hoping for. 596 00:27:42,960 --> 00:27:45,560 Speaker 11: Are they hoping that rates are going to start coming 597 00:27:45,600 --> 00:27:48,960 Speaker 11: down soon and we have significant doubts that that is 598 00:27:49,000 --> 00:27:51,960 Speaker 11: going to start cutting in March, or are they hoping 599 00:27:52,040 --> 00:27:54,960 Speaker 11: for good earnings for the stocks that they have in 600 00:27:55,000 --> 00:27:55,720 Speaker 11: their portfolio. 601 00:27:55,840 --> 00:27:57,160 Speaker 12: We think it's a little bit of both. 602 00:27:57,440 --> 00:28:00,280 Speaker 5: Well, let's solve into that timeline for the FED cuts, 603 00:28:00,280 --> 00:28:01,680 Speaker 5: because I feel like, you know, you can ask five 604 00:28:01,680 --> 00:28:03,720 Speaker 5: people and get ten different answers on this of when 605 00:28:04,000 --> 00:28:06,280 Speaker 5: the FED cuts are going to start. We hear March 606 00:28:06,359 --> 00:28:09,480 Speaker 5: the earliest. Our previous guest said, you know, fourth. 607 00:28:09,280 --> 00:28:11,679 Speaker 7: Quarter the earliest. So where do you stand in all 608 00:28:11,680 --> 00:28:12,880 Speaker 7: that categorina? What do you think? 609 00:28:13,720 --> 00:28:19,080 Speaker 12: Well, we think that March is a bit aggressive, and 610 00:28:19,560 --> 00:28:22,280 Speaker 12: in our view, we expect that the rates cuts are 611 00:28:22,320 --> 00:28:25,240 Speaker 12: going to start in June, and of course economic data 612 00:28:25,680 --> 00:28:28,080 Speaker 12: will be something that will have to support it. So 613 00:28:28,119 --> 00:28:31,879 Speaker 12: we're going to have to see some weakness because after all, 614 00:28:32,040 --> 00:28:34,119 Speaker 12: well we can't forget that the rate cuts, you know, 615 00:28:34,359 --> 00:28:36,840 Speaker 12: is it's economic stimulus, you know, this is what we 616 00:28:36,880 --> 00:28:40,040 Speaker 12: do to stimulate the economy. But the question of course 617 00:28:40,080 --> 00:28:43,480 Speaker 12: also is would FED be willing to do something preemptively? 618 00:28:43,800 --> 00:28:46,000 Speaker 11: You know, if this week is a huge week, we 619 00:28:46,040 --> 00:28:49,160 Speaker 11: have earnings, we have job data, we have the FED 620 00:28:50,040 --> 00:28:52,040 Speaker 11: meeting that is coming up, and perhaps they give us 621 00:28:52,120 --> 00:28:54,640 Speaker 11: some guidance as far as what they think on the timeline, 622 00:28:54,840 --> 00:28:58,040 Speaker 11: you know, because if economy remains strong, you know, is 623 00:28:58,080 --> 00:28:59,800 Speaker 11: it something that they're going to be willing to do. 624 00:29:00,160 --> 00:29:04,040 Speaker 11: In our view, we expect less rate cuts that market 625 00:29:04,120 --> 00:29:04,680 Speaker 11: is pricing in. 626 00:29:05,200 --> 00:29:07,080 Speaker 2: All right, Katerina, what are you telling your clients here 627 00:29:07,080 --> 00:29:11,400 Speaker 2: in twenty twenty four in terms of maybe stocks versus bonds? 628 00:29:12,040 --> 00:29:14,000 Speaker 2: Is a client specific or do you have a kind 629 00:29:14,000 --> 00:29:15,720 Speaker 2: of a balanced approach you like to take? 630 00:29:17,240 --> 00:29:20,840 Speaker 12: Our message to clients right now is get out of cash. 631 00:29:21,400 --> 00:29:23,200 Speaker 11: We have we tend to have a little bit of 632 00:29:23,280 --> 00:29:25,200 Speaker 11: get out of cash because we tend to have a 633 00:29:25,240 --> 00:29:27,920 Speaker 11: little bit of a short term memory. And you know, 634 00:29:27,960 --> 00:29:29,840 Speaker 11: when we think about it, it seems like we've been 635 00:29:29,880 --> 00:29:33,480 Speaker 11: earning five percent on cash forever, but reality is that 636 00:29:33,600 --> 00:29:37,440 Speaker 11: it hasn't been a year. And our biggest conversations right 637 00:29:37,480 --> 00:29:42,400 Speaker 11: now is extending the duration of fixed income portfolios, getting 638 00:29:42,440 --> 00:29:46,920 Speaker 11: out of cash, positioning both in high quality equity, not 639 00:29:47,120 --> 00:29:50,040 Speaker 11: necessarily the stocks that have done so well in the 640 00:29:50,040 --> 00:29:53,720 Speaker 11: previous year, but maybe taking some profits there, but making 641 00:29:53,760 --> 00:29:57,000 Speaker 11: sure that we have a nice, high quality, well balanced portfolios. 642 00:29:57,200 --> 00:29:59,600 Speaker 11: On the equity side, you know, we like healthcare, we 643 00:29:59,720 --> 00:30:02,720 Speaker 11: like in austrials, so we see opportunities in financials. But 644 00:30:02,880 --> 00:30:06,200 Speaker 11: on the fixed income side, even more importantly, we're looking 645 00:30:06,200 --> 00:30:09,200 Speaker 11: at extending the duration and the quality because this is 646 00:30:09,240 --> 00:30:12,520 Speaker 11: this remarkable opportunity of picking up some of these high 647 00:30:12,600 --> 00:30:16,200 Speaker 11: quality bonds and enjoying that five percent yield for longer. 648 00:30:16,360 --> 00:30:17,560 Speaker 7: Is there a lot of that out there? 649 00:30:17,560 --> 00:30:20,600 Speaker 5: I mean, especially looking at corporate issuance, like you're seeing 650 00:30:20,680 --> 00:30:22,800 Speaker 5: much in that longer duration tenor. 651 00:30:23,800 --> 00:30:27,440 Speaker 11: Well, moly, there is longer duration, but there's also intermediate 652 00:30:27,520 --> 00:30:30,360 Speaker 11: and when we're looking really about you know, that message 653 00:30:30,360 --> 00:30:32,400 Speaker 11: of getting out of cash, you know, even getting a 654 00:30:32,480 --> 00:30:35,400 Speaker 11: CD that is few years out, you know, looking at 655 00:30:35,480 --> 00:30:39,040 Speaker 11: some corporate bonds, investment grade corporate bonds, you know, just 656 00:30:39,120 --> 00:30:41,080 Speaker 11: kind of trying to get as much of that yield 657 00:30:41,120 --> 00:30:43,400 Speaker 11: as possible. We might not be able to get that 658 00:30:43,480 --> 00:30:46,320 Speaker 11: yield going out fifteen twenty years, but we when we 659 00:30:46,400 --> 00:30:49,120 Speaker 11: look five years out, have seven years out. You know, 660 00:30:49,200 --> 00:30:51,000 Speaker 11: this is really something that is still out there. 661 00:30:51,000 --> 00:30:54,640 Speaker 2: Absolutely so on the equity side of the equation, here 662 00:30:55,040 --> 00:30:58,360 Speaker 2: are there some sectors that you and your team like 663 00:30:58,480 --> 00:31:00,880 Speaker 2: right here that you're trying to conveyed your clients. 664 00:31:02,080 --> 00:31:04,040 Speaker 11: Well, well, the first message is, of course, you know, 665 00:31:04,120 --> 00:31:07,880 Speaker 11: trying to again you know, getting away from the the 666 00:31:08,400 --> 00:31:12,280 Speaker 11: tech names that did so well, right, and it's the 667 00:31:12,360 --> 00:31:14,400 Speaker 11: hardest thing to do to know when to take a 668 00:31:14,440 --> 00:31:17,320 Speaker 11: profit and to reallocate, you know, to the areas that 669 00:31:17,440 --> 00:31:19,920 Speaker 11: maybe have not done well, but our positions in our 670 00:31:19,960 --> 00:31:23,560 Speaker 11: opinion better. And when we look historically, usually you know, 671 00:31:23,640 --> 00:31:27,160 Speaker 11: after the rate cuts, large cap is this sector you 672 00:31:27,200 --> 00:31:31,760 Speaker 11: know that usually just performs better immediately, but small and 673 00:31:31,840 --> 00:31:35,040 Speaker 11: mid cap stocks you know, are not that far after. 674 00:31:35,600 --> 00:31:39,280 Speaker 11: And in our review, with the potential for rate cuts, 675 00:31:39,280 --> 00:31:42,160 Speaker 11: but also with some of the geopolitical concerns that we 676 00:31:42,200 --> 00:31:44,760 Speaker 11: are dealing with, especially you know, some of the news 677 00:31:44,760 --> 00:31:47,040 Speaker 11: that came out over the weekend as example, you know, 678 00:31:47,120 --> 00:31:50,600 Speaker 11: we really are our return expectations for this year, the 679 00:31:50,720 --> 00:31:52,520 Speaker 11: risk reward are kind of low. 680 00:31:52,840 --> 00:31:54,560 Speaker 12: You know, we are setting. 681 00:31:54,200 --> 00:31:56,560 Speaker 11: Expectations to the clients that this is going to be 682 00:31:56,600 --> 00:31:59,960 Speaker 11: the year will reposition where we get those quality position 683 00:32:00,200 --> 00:32:03,080 Speaker 11: sort of make sure that our portfolios are well diversified. 684 00:32:03,360 --> 00:32:07,320 Speaker 11: We do like healthcare, we like industrials, we like financials, 685 00:32:07,520 --> 00:32:10,400 Speaker 11: you know, they we like just generally dividend being stocks 686 00:32:10,400 --> 00:32:13,080 Speaker 11: as this poor building block of the portfolios. 687 00:32:13,280 --> 00:32:14,440 Speaker 12: But we're also. 688 00:32:14,240 --> 00:32:18,000 Speaker 11: Setting timeline expectations that this is the positioning that is 689 00:32:18,040 --> 00:32:20,920 Speaker 11: going to be more for twenty five and even twenty 690 00:32:21,040 --> 00:32:24,720 Speaker 11: six after the raid cuts, after that stimulus hits the market, 691 00:32:24,880 --> 00:32:27,160 Speaker 11: you know, when there is another wave of growth that 692 00:32:27,240 --> 00:32:28,520 Speaker 11: clients will be able to enjoy. 693 00:32:28,920 --> 00:32:32,160 Speaker 5: So Paul is a huge fan of the Russell two thousand, 694 00:32:32,240 --> 00:32:34,840 Speaker 5: and I know it is a burning question for him. 695 00:32:35,400 --> 00:32:38,440 Speaker 5: Is there a magnificent seven of the Russell two thousand? 696 00:32:40,440 --> 00:32:40,600 Speaker 12: Ah? 697 00:32:40,880 --> 00:32:43,240 Speaker 11: That's you know, how many sevens would it take to 698 00:32:43,320 --> 00:32:45,520 Speaker 11: really make an impact, you know, in the index that 699 00:32:45,560 --> 00:32:46,960 Speaker 11: has two thousand stocks. 700 00:32:47,000 --> 00:32:48,640 Speaker 12: You know, that's that's the question. 701 00:32:49,160 --> 00:32:52,840 Speaker 11: So I think that the answer, there is just broad 702 00:32:52,960 --> 00:32:57,640 Speaker 11: index versus stock picking. In in our view, this is 703 00:32:57,880 --> 00:33:03,120 Speaker 11: very much the year for this where valuations and earnings 704 00:33:03,160 --> 00:33:06,680 Speaker 11: and competitive positioning of these individual names, that the individual 705 00:33:06,720 --> 00:33:09,640 Speaker 11: stocks will make all the difference in the world for 706 00:33:10,120 --> 00:33:15,080 Speaker 11: the investment portfolios for that alpha that access return above 707 00:33:15,120 --> 00:33:18,440 Speaker 11: the market, and we actually would encourage investors to, you know, 708 00:33:18,520 --> 00:33:21,360 Speaker 11: some would take profits and decrease their positions in the 709 00:33:21,400 --> 00:33:25,640 Speaker 11: broad indexes that benefited from some of the stocks that 710 00:33:26,640 --> 00:33:28,120 Speaker 11: you know performed well last year. 711 00:33:28,880 --> 00:33:31,320 Speaker 2: Katerina, one last question about thirty seconds. What do you 712 00:33:31,320 --> 00:33:34,000 Speaker 2: do with alternative investments? How do you kind of position 713 00:33:34,080 --> 00:33:34,880 Speaker 2: them for your clients. 714 00:33:36,280 --> 00:33:39,560 Speaker 11: We think alternative investments, you know, as far as diversifier 715 00:33:39,760 --> 00:33:44,280 Speaker 11: or even return amplifier play essential role in the portfolio 716 00:33:44,680 --> 00:33:47,400 Speaker 11: where appropriate. You know, it just really takes time to 717 00:33:47,440 --> 00:33:51,280 Speaker 11: get educated in that space, but we think that at 718 00:33:51,360 --> 00:33:53,800 Speaker 11: least ten to fifteen percent of the portfolio, you know, 719 00:33:53,840 --> 00:33:56,280 Speaker 11: could really benefit from some alternative exposure. 720 00:33:56,960 --> 00:33:59,920 Speaker 2: Katerina, thanks so much for joining us. As always, Katerina siminating. 721 00:34:00,160 --> 00:34:02,920 Speaker 2: She is a senior vice president of Morgan Stanley Private 722 00:34:02,920 --> 00:34:05,640 Speaker 2: Wealth Management, joining us to give us her thoughts on 723 00:34:05,920 --> 00:34:07,320 Speaker 2: these markets. 724 00:34:07,360 --> 00:34:11,880 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apples, Spotify, 725 00:34:12,080 --> 00:34:15,720 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 726 00:34:15,880 --> 00:34:18,800 Speaker 1: ten am to noon Eastern on Bloomberg dot Com, the 727 00:34:18,960 --> 00:34:22,400 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You 728 00:34:22,440 --> 00:34:25,600 Speaker 1: can also watch us live every weekday on YouTube and 729 00:34:25,760 --> 00:34:27,360 Speaker 1: always on the Bloomberg journaal