Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes, Tim Stanibek. We're here every day bringing
Speaker 1: you the latest news from the world of business and finance,
Speaker 1: plus technology, politics, economics, all purtnising the power of Business
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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. Charlie talking about the overall
Speaker 1: market trade, signing out some names Tesla also on our radar.
Speaker 1: It's down about one point eight percent in today's session,
Speaker 1: definitely off. It's loads of the day, and we want
Speaker 1: to get to a story um that is courtesy of
Speaker 1: our own Bloomberg's Ed Ludlow and Dana Hall Bloomberg exclusive
Speaker 1: talking about the company's plans to cut about two hundred
Speaker 1: autopilot workers as it shuts down it's California's site. Let's
Speaker 1: get more. Bloomberg News West Coast correspondent Ed Ludlow. He
Speaker 1: is in our nine sixties studio in San Francisco. Check
Speaker 1: them out on YouTube. As we speak, you can see
Speaker 1: him Hi ed Hey, So tell us about this story.
Speaker 1: You guys broke it? Um, What do we need to know?
Speaker 1: And was it a surprise? Yes and no. There's a
Speaker 1: facility in Samoteo here in the Bay area and it
Speaker 1: was home to the Auto Pilot dates babling team, and
Speaker 1: sources tell us that they were all called into yesterday
Speaker 1: and told that their jobs were gone, that this was
Speaker 1: part of a longer term plans moved this team from
Speaker 1: one facility in Samotheo for one down the road in
Speaker 1: lots of those workers are expecting to be moved, but
Speaker 1: ultimately what happened was they were laid off. And I
Speaker 1: think you're actually at a port and that's a ship
Speaker 1: coming in. Is that what's going on? So? I mean
Speaker 1: when I saw this headline cross yesterday, usually you would
Speaker 1: see the headline like this and be like, oh man,
Speaker 1: the company is in trouble or in some sort of
Speaker 1: stress that we didn't know about. Is that true in
Speaker 1: Tesla's case? So elon must hold Our editor achieve John
Speaker 1: mcauthwaite last week that Tesla would be laying off ten
Speaker 1: percent of salaried workers. Tesla's workforce is split between two
Speaker 1: thirds hourly workers and one third salaried. This is important
Speaker 1: because according to sources, the vast majority of those laid
Speaker 1: off yesterday were hourly, not salaried. So it's kind of
Speaker 1: at odds what happened. Because Elon must told us it
Speaker 1: would cuts would focus on salaried employees, hourly workers would
Speaker 1: be protected. Now. Elon Musk also clarified that a lot
Speaker 1: of the hourly jobs he was talking about growing would
Speaker 1: be on production lines. The people we're talking about data labelers,
Speaker 1: they're working on the auto pilot functionality, but there's still
Speaker 1: hourly workers. So it was a surprise because we were
Speaker 1: led to believe that those types of employment contracts were protected.
Speaker 1: So is this a shift of a mega growth company.
Speaker 1: It feels like um as it's wrapped up and you
Speaker 1: have been spitting out its vehicles. I mean, is that
Speaker 1: a shift from this company maybe not being such a
Speaker 1: big growth player, but still producing a lot. You know,
Speaker 1: autopilot data labing is kind of a manual job and
Speaker 1: a thankless job. You basically take video footage that's generated
Speaker 1: from the cameras on Tesla customer cars, Tesla owner cars,
Speaker 1: and you annotate to help train the neural networks that
Speaker 1: improved the technology. People are doing that here in the
Speaker 1: Bay Area, but they're also doing it in Buffalo, New York.
Speaker 1: And what sources tell us is that actually that team
Speaker 1: is growing in Buffalo, New York. But sources also tell
Speaker 1: us that they are paid less in New York State
Speaker 1: than they are here in the Bay Area. So that's
Speaker 1: one factor to consider. But it's definitely one of these
Speaker 1: areas that Elon Musk has referred to where they grew
Speaker 1: too quickly to two greater size. You know, they're big
Speaker 1: teams in the Bay areas. I said this was part
Speaker 1: of a sort of change of plan to move people
Speaker 1: to different Obviously is they've been winding down the team anyway,
Speaker 1: but it's still interesting. Well that's kind of what I
Speaker 1: was thinking, because it caught my eye in your story
Speaker 1: that you say that the company now based in Austin, Texas.
Speaker 1: It's currently about a hundred thousand employees globally. I had
Speaker 1: no idea that Tesla employed that many people. And I
Speaker 1: think about what we've heard from Amazon, and I think
Speaker 1: Walmart too, coming out and saying that they overstaffed. I mean,
Speaker 1: could that potentially be true in Tesla's case. You know,
Speaker 1: I think what we learned with inflation is inflation took
Speaker 1: us by surprise. It's surprise to the upside a lot.
Speaker 1: The macro picture in the supply chain breakdown continues to
Speaker 1: surprise us, and inventories of retailers is a good example
Speaker 1: of that. What I would say is that people have
Speaker 1: short memories when it comes to Tesla, and you have
Speaker 1: to remember that there have been rounds of job cuts before.
Speaker 1: You know, the stock performed astronomically in the in the
Speaker 1: early days of the pandemic, but they did go through
Speaker 1: a round of layoffs when things were tought. So we've
Speaker 1: seen Elon must be prepared to do this in the past,
Speaker 1: and he'd warned us, Hey, you know one thing I
Speaker 1: wanted to ask you, um kady. Now we're just kicking
Speaker 1: around some stories in the solar world, in the alternative
Speaker 1: energy world. There's a story by Tara Patel about Stilantis.
Speaker 1: It's one of Europe's biggest automakers and they are warning
Speaker 1: of a car market collapse if evis don't get cheaper.
Speaker 1: I have to say that's that makes sense to me
Speaker 1: that unless we bring down the price, and I don't
Speaker 1: know how we do it, whether it's just you know,
Speaker 1: being able to mass produce more. I mean, how do
Speaker 1: you see it? And how does kind of tests the
Speaker 1: play into this. Who has been also trying to, I
Speaker 1: feel like, be more aggressive about getting a car for
Speaker 1: the mass market. Yeah, you guys, remember Elon Musk had
Speaker 1: this original goal of a twenty five dollar EV where
Speaker 1: he wanted to make one for the masses. Well that's
Speaker 1: gone out the window, frankly, he's abandoned that idea, and
Speaker 1: not every If we take the United States an example,
Speaker 1: the median household cannot afford a forty fifty sixty seventy
Speaker 1: thousand dollar vehicle, especially a small one like a Tesla
Speaker 1: Model three or Model Why. They look for value. And
Speaker 1: you look across the market and the trend that we're
Speaker 1: seeing all of these EV players, the Rivian's, the Lucids
Speaker 1: on top of tests that and the legacy auto like
Speaker 1: GM and Ford. It's very expensive high end models they're offering.
Speaker 1: We don't yet have a true mass market model that
Speaker 1: is affordable for that media to lower income family household.
Speaker 1: And you know that's the inflection point. You look at
Speaker 1: China where you the adoptions further ahead. They have a
Speaker 1: greater variety of model types and at more affordable prices
Speaker 1: than we have here in the United States and Europe. Again,
Speaker 1: more option, lower price point. All right, to look into
Speaker 1: your crystal ball. What's gonna be the next story on
Speaker 1: a Elon Musk is gonna be tesla twitter wet just
Speaker 1: quickly yet you know Elon Musk has not tweeted since
Speaker 1: June twenty one. I want to know why. I feel
Speaker 1: something's coming. Guys, I feel something's coming. Ellen, are you
Speaker 1: out there? You can just tweet it ad directly Bloomberg
Speaker 1: Air while you're at it. Yeah, exactly, Come join us
Speaker 1: at love Look. Thank you so much as always, great
Speaker 1: Scoop West Coast correspondent Bloomberg News in our nine sixties
Speaker 1: studio in San Francisco. You can hear them Bloomberg Radio
Speaker 1: and see them on YouTube. Katie and I come back
Speaker 1: in just a moment. Right here at Bloomberg Radio. You're
Speaker 1: listening to Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. Well, the Bloomberg
Speaker 1: business Week annual Heist issue. It is out. The cover
Speaker 1: story takes us from the Cambodian Jungles to the Metropolitan
Speaker 1: Museum of Art. It is about an art crime for
Speaker 1: the ages, and earlier I caught up with Matt Campbell,
Speaker 1: Asia editor for Bloomberg business Week from Singapore. Matt wrote
Speaker 1: that story along with Bloomberg Business Week editor Joel reb Webber.
Speaker 1: I began by asking Joel about how this story perfect
Speaker 1: for the Heist issue came to his attention. Matt actually
Speaker 1: wrote this story and as he'll I think reveal here,
Speaker 1: actually the main character UM is a character named Douglas Latchford,
Speaker 1: and Matt had high hopes to actually talk to him
Speaker 1: at some point, but then obviously COVID happened and he
Speaker 1: passed away. So what is incredible. But the story though,
Speaker 1: is that it really speaks to Cambodia and artifacts at Cambodia,
Speaker 1: but also the sea change within the art world where
Speaker 1: artifacts that UM were looted decades ago are now in
Speaker 1: the crosshairs of investigators who are trying to actually return
Speaker 1: them to their rightful owners. UM. So, so Matt talked
Speaker 1: to us about Douglas Slatchford, who is he exactly? So?
Speaker 1: Dougla Flashford, the late Dougla flash For who died was
Speaker 1: a British businessman who lived virtually his whole adult life
Speaker 1: in Bangkok uh and among other activities, he was for
Speaker 1: a period of about forty years arguably the top dealer
Speaker 1: in the world of statues from Cambodia, the spectacular Khmer
Speaker 1: Empire sculptures and some of them a thousand years old
Speaker 1: or more. And he really built an art dealing empire,
Speaker 1: and there are works in a very fancy private collections
Speaker 1: and huge important museums like the met in the British
Speaker 1: Museum with links to Latchford all over the world. But
Speaker 1: but as has now become a parent, he was a
Speaker 1: part of a looting network and was facilitating essentially the
Speaker 1: looting and laundering of statues that were being ripped from
Speaker 1: temple having their origins of Steward and then trafficked onto
Speaker 1: the international art market. So what did that network really
Speaker 1: look like because he actually really never went into the jungle.
Speaker 1: It was wasn't like he was an Indiana Jones character
Speaker 1: here going into the jungle to get these artifacts, right,
Speaker 1: So what did his network look like that's right, Joel.
Speaker 1: There is there has been a perception of Lashford sometimes
Speaker 1: in the past as as kind of a tomb raider himself,
Speaker 1: and that in fact is not true. He directed this
Speaker 1: operation and he did everything that he did essentially from
Speaker 1: his apartment in Bangkok. But what he did was by
Speaker 1: whatever was coming over the border from this network of
Speaker 1: looters and brokers within Cambodia who do that. Lash was
Speaker 1: a buyer. He helped create a huge market for stolen antiquities, uh,
Speaker 1: and certainly had contact with the brokers who were deciding
Speaker 1: to some extent what got looted and what got out
Speaker 1: of Cambodia. So while he was not himself smashing and
Speaker 1: grabbing statues, he was really the essential node in this operation.
Speaker 1: Without him, and particularly without his very energetic salesmanship which
Speaker 1: made these Cambodian statutes into really big money objects, you know,
Speaker 1: selling for for high six and even seven figure prices, Uh,
Speaker 1: this looting would never have occurred on the scale that
Speaker 1: it did. And what are the artworks themselves? So we
Speaker 1: need to do a little bit of a little bit
Speaker 1: of background history here. Cambodia a thousand or so years
Speaker 1: ago was the center of something called the Khmer Empire,
Speaker 1: which was this Hindu and Buddhist monarchy stretching encompassing all
Speaker 1: of contemporary Cambodia as well as much of Thailand in Vietnam,
Speaker 1: was this very powerful civilization. Ongore was the capital on
Speaker 1: Gore Watt being the site of people are familiar with.
Speaker 1: And these Cambodian kings commissioned massive statues. You know, these
Speaker 1: are four feet tall fig feet tall, you know, six
Speaker 1: hundred pounds stone objects depicting gods and warriors or themselves,
Speaker 1: you know, or or their wives and children. Really beautiful figures.
Speaker 1: And actually when you spend a little time with these
Speaker 1: objects as I have, it's very easy to see how
Speaker 1: you can become obsessed with them, as Douglas Flatchford was well,
Speaker 1: and you know, take us there, Matt, you went to
Speaker 1: the Cambodian Jungles. Tell us about what you saw, uh,
Speaker 1: and kind of the massive I mean some of these
Speaker 1: there's some pictures in the magazine. They really are are stunny,
Speaker 1: but they're they're massive. And take us to also where
Speaker 1: you know, who knew that feet would be so key
Speaker 1: in figuring out this heist, if you will? Well, so
Speaker 1: one of the things that strikes you about visiting temples
Speaker 1: in Cambodia is, first of all, they are spectacular and
Speaker 1: they're amazing places and and sort of overwhelming to see
Speaker 1: you in person. But but as you look a little
Speaker 1: more closely, you realize what's not there is that these
Speaker 1: buildings are empty. Because as there were statues, they used
Speaker 1: to be full of statues. But the statues are all gone,
Speaker 1: and we're all taken years and years ago. Some were
Speaker 1: taken under the French, others later, you know, during the
Speaker 1: Cambodian Civil War and the Camara Rouge period and then
Speaker 1: this really big period of looting which I described in
Speaker 1: the story in the nineties, and that was really the
Speaker 1: golden age of Temple Robin in Cambodia. And however, this
Speaker 1: looting was sort of crude and left behind remnants and fragments,
Speaker 1: and actually, as you alluded to, feet uh and and
Speaker 1: one of the key anecdotes and the story relates to
Speaker 1: matching a pair of statues that had made it into
Speaker 1: Western collections to their feet which were still in sits
Speaker 1: you on the ground, broken off. And of course it's possible,
Speaker 1: you know, with with computer technology to three D match
Speaker 1: these objects together and to determine this statue came from
Speaker 1: this place, and then if you can interview witnesses find
Speaker 1: people who remember that being taken, you can actually nail
Speaker 1: down the when as well, when and how did this
Speaker 1: high begin to unravel. So this has been a long
Speaker 1: and kind of interesting, very interesting process where you've had
Speaker 1: a number of private citizens, heridag activists, archaeologists, other people
Speaker 1: involved in antiquities in one way or another who have
Speaker 1: had suspicions about this trafficking network for over a decade now.
Speaker 1: But things really began to unravel in the mid when
Speaker 1: US prosecutors, specifically in the Southern District of New York,
Speaker 1: began to take an interest in antiquities trafficking and antiquities
Speaker 1: trafficking from Cambodia. So there have been a series of
Speaker 1: indictments now of both federally and at the state level
Speaker 1: in New York of people involved in one way or
Speaker 1: another with the lash Ford operation. And in last for
Speaker 1: himself was indicted on fraud and h conspiracy charges by
Speaker 1: SDN Y and that really signaled that there was this
Speaker 1: extremely serious law enforcement effort underway. However, a latch for
Speaker 1: I had about a year after that indictment. He was
Speaker 1: very sick at the time, eighty eight years old and
Speaker 1: never went to trial. I feel like there are three
Speaker 1: key players in your story, and we've covered um Douglas Latchford.
Speaker 1: There's the individual who helped him and digging up and
Speaker 1: you know, finding they aren't getting it out of Cambodia.
Speaker 1: There was also an internationally connected attorney that the U.
Speaker 1: S Department of Justice turned to, Brad Gordon. How important
Speaker 1: was he in kind of helping figure this all out?
Speaker 1: Brad Gordon is a really crucial character in this narrative
Speaker 1: and and is really a remarkable character. He is an
Speaker 1: American lawyer. He's lived in Asia much of his career,
Speaker 1: had lived in Cambodia for over a decade now, and
Speaker 1: he was hired by the d J about ten years
Speaker 1: ago to begin investigating some of these thefts on behalf
Speaker 1: of the US government on the Cambodian side, and Brad
Speaker 1: really became obsessed by it, totally hooked on the challenge
Speaker 1: of figuring out where these objects were taken and uh
Speaker 1: and how they might be returned to Cambodia ultimately. And
Speaker 1: in that effort he found a really crucial witness, a
Speaker 1: Cambodian man named talk Tick, who actually Brad referred to
Speaker 1: with a code name Lion uh and Lion it turned out,
Speaker 1: was a master looter, an extremely prolific looter, and someone
Speaker 1: who helps Brad and measurably put it all together. Alright,
Speaker 1: that last voice Matt Campbell, Asia editor for Bloomberg Business Week.
Speaker 1: He joined us from Singapore Morning, Our time, Night, his time.
Speaker 1: It's his story, he wrote it. It's for the annual
Speaker 1: Heist issue, which comes out every summer. And Katie, it
Speaker 1: is just a great summer read. Just these all these
Speaker 1: kinds of theft stories, intrigue, and Matt tells a tale
Speaker 1: like no other. End. I'm just waiting for this story
Speaker 1: to be on Netflix or Hulu or you know, one
Speaker 1: of the streaming channels, because it's pretty incredible. All Right,
Speaker 1: you're listening to Bloomberg Radio. This is Bloomberg Business Week
Speaker 1: with Carol Masser and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio, July four, Holiday, just around the bend. So
Speaker 1: we're talking hot dogs, hamburgers, we're talking fried chicken, trip
Speaker 1: macaroni salad. That's what my mom used to make when
Speaker 1: we were growing up. In fourth we had Fourth of July. Um,
Speaker 1: we're gonna eat probably some different things, Katie, but safe
Speaker 1: to say that we're all going to probably pay a
Speaker 1: bunch more for it. So let's get to it and
Speaker 1: see what our next guest has to say about that.
Speaker 1: Carol Flynn is ag tech analyst at Wells Fargo. She
Speaker 1: joins us on the phone in California, and Carol is
Speaker 1: good to have you here with Katie and myself. So
Speaker 1: tell us a little bit about the pain points that
Speaker 1: we're going to face this Fourth of July when it
Speaker 1: comes to what we eat. Well, thank you so much
Speaker 1: for having me. Look, um, it's it's absolutely a pain point.
Speaker 1: Food price inflation is hitting everybody's wallets. Um, and we
Speaker 1: wrote this uh research just to figure out where that
Speaker 1: pinch of inflation could be potentially solved by finding relative
Speaker 1: value and more palatable price points. And so what welk
Speaker 1: us through some of those relative value plays. Feels like
Speaker 1: I'm talking about stocks here, but when it comes to
Speaker 1: food in particular, I mean, one are the substitutions that
Speaker 1: one could make if they are trying to host a
Speaker 1: party and not you know, pay a fortune for it. Well,
Speaker 1: that's a great question. What you know, it's year over
Speaker 1: year in food price acceloration that we're looking at here,
Speaker 1: and the substitutions are truly going to be um, things
Speaker 1: like what else can we put on our grill? It
Speaker 1: looks like brisket is going to be more affordable than
Speaker 1: try tip this time. Maybe if you're gonna stick with
Speaker 1: the hamburger patties, take a look in the frozen food section,
Speaker 1: anything that's sort of had shelf stay, book stability, or
Speaker 1: frozen foods versus perishable. You're gonna see some specials out
Speaker 1: there and some loss leaders. Um, it's gonna take a
Speaker 1: little more effort to make sure this is um the price,
Speaker 1: the budget is taken care of, all right, Carol Kate
Speaker 1: is already weighed in because I'm not gonna eat shrimp
Speaker 1: and port tacos. I heard that there are so many
Speaker 1: argans in the produce department and you don't have to
Speaker 1: have that. That's I mean, that's the beauty of the
Speaker 1: American food and agricultural system. I mean, we have an incredible,
Speaker 1: incredible glossy of foods available, but are shrimp taco is
Speaker 1: actually cheaper this time around? The reason we brought up
Speaker 1: shrimp is actually shrimp prices have not increased over the
Speaker 1: last five years, but you look at the other proteins
Speaker 1: on the grill and they're looking at twelve or fifteen
Speaker 1: percent year over year increases. So again all about relative value.
Speaker 1: So we'll see the shoppers looking for relative value. If
Speaker 1: shrimp is already on your grill, you may have more
Speaker 1: of it this time. If there's something else that you like, um,
Speaker 1: then you're going to be maybe looking for substitutions in
Speaker 1: the frozen case or some new innovative menu items. Sp Uh, No,
Speaker 1: I don't. I'm gonna say shrimp prices probably haven't gone
Speaker 1: up because it's a weird food. It is that a
Speaker 1: weird food. It's a great food, weird texture. Not a fan,
Speaker 1: but in any case, I also want to talk about alcohol,
Speaker 1: because personally I don't really like beer, more of a
Speaker 1: white wine gal, but a lot of people drink beer
Speaker 1: and other beverages at the fourth of July. What's the
Speaker 1: outlook there. It does look like some of the higher
Speaker 1: priced beverages in the beer case are up, and we're
Speaker 1: already seeing demand flow to the domestic um super premium brand,
Speaker 1: so people are already making a change, and the white
Speaker 1: wine and especially killed white wine is still out there
Speaker 1: and there's some great, amazing brands that are at lower
Speaker 1: price points. If you're still looking to still you know that,
Speaker 1: you know, to prepare with a really nice wine, you're
Speaker 1: gonna be okay, okay, all right, So talk to me
Speaker 1: too about veggies or things like avocados between have been expensive.
Speaker 1: We've talked about shortages. I feel like over the last
Speaker 1: year or so, where are we on that? Well, Avocado
Speaker 1: shortages is another story altogether. You know, most sleep supply chain,
Speaker 1: there's always a perishability issue and weather driven issues. Um,
Speaker 1: but California avocados are just about to come into season,
Speaker 1: into the peak of the season. To look for your
Speaker 1: in your protest department again, seasonality is going to drive
Speaker 1: a lot when their tired supply. You're going to see
Speaker 1: prices get moderated and things move quickly. It's very dynamic
Speaker 1: space in the in the protest section. So, um, talk
Speaker 1: about sort of weird textures. People talk about that with avocados,
Speaker 1: but once you are a fan, it's usually a lifetime issue.
Speaker 1: So are you saying they're expensive but they're around No?
Speaker 1: I actually think that prices are going to come down
Speaker 1: because we're gonna better supplies because we're coming into the California.
Speaker 1: See this avocados. Actually, I am not in avocado every
Speaker 1: single morning, half of all, not an entire avocado left
Speaker 1: the record. Should it's so healthy for you, so healthy.
Speaker 1: I'm glad to hear it, Carol. We only have about
Speaker 1: thirty seconds left, but we've covered the main course, We've
Speaker 1: covered beverages. What about dessert. What's the outlook there? Well,
Speaker 1: I think he might want to look at some of
Speaker 1: the non dairy alternatives. I'm a big fan of the
Speaker 1: real milk people, so don't forget the real live cream.
Speaker 1: But it does look like those are those price futures
Speaker 1: gonna be up substantially. I like a hot fudge Sunday
Speaker 1: on my July four I'm just gonna say it, and
Speaker 1: a little bit of watermelon as well. All Right, we're
Speaker 1: gonna run um. Have a great holiday. Esay holiday, Carol
Speaker 1: Flinch's ag tech analyist over at Wells Fargo joining us
Speaker 1: on the phone in California. I'm robbing journal. Yeah, but
Speaker 1: you let me drive? Oh no, no, no, no, who's right? Please?
Speaker 1: I'll ravels. I want to drive. It's a good question
Speaker 1: that drives in the drive to the globe. Well up,
Speaker 1: jog down on Bluebird Radio. All right, just about eleven
Speaker 1: minutes left in today's trading session. We have been bouncing around.
Speaker 1: Slight gain on the Dow, as you just heard from Charlie,
Speaker 1: a little bit lower on both the NAZAC and the SNP.
Speaker 1: So off our highs and lows of the session. Talk
Speaker 1: about searching forward directions, So let's get to it. Uh.
Speaker 1: Delighted to have with us Stephanie Pierre. She see of
Speaker 1: Dry Fus Melon and E t S for B and
Speaker 1: Y Melon Investment Management. She is in our Bloomberg Interactive
Speaker 1: Broker Studio with Katie, and she and I were in
Speaker 1: Dallas at B and Y Melon Purging Insight two. We
Speaker 1: talked about a lot of things, including the future of money,
Speaker 1: which we'll get to in just a moment. But Stephanie,
Speaker 1: so great to have you. How are you great to
Speaker 1: see you. It feels like it was just a week
Speaker 1: or two ago that we're on stage together. Yeah, it
Speaker 1: was just so I felt like it was so forward
Speaker 1: thinking about you know, kind of our discussions. But let's
Speaker 1: be present right now and as we look at this market,
Speaker 1: we talked about volatility in that panel. Uh, we continue
Speaker 1: to see it here in the market environment. What are
Speaker 1: you seeing in terms of fun flows? That tells you
Speaker 1: about what investors are thinking about right now, you know, Carol,
Speaker 1: it's really powerful to see the fun flows ETFs this year.
Speaker 1: You know what I think it tells you is markets
Speaker 1: go opper down. But ETFs are still the vehicle of
Speaker 1: choice for investors. As of the kind of May kind
Speaker 1: of month end, we were almost two hundred sixty billion
Speaker 1: in e t F net inflows here to date, and
Speaker 1: that just tells you that that's only going in one direction.
Speaker 1: And I mean beyond that, beyond the inflows you're to
Speaker 1: date inflows that you are seeing, I mean, what are
Speaker 1: the trends within that those flows, because it feels like
Speaker 1: it's pretty broken apart. Well, it's interesting, surprisingly, with all
Speaker 1: the volatility and equities that Carol mentioned, we're still seeing
Speaker 1: very significant flows into equity e t f s. That
Speaker 1: was about billion of the two D sixty billion, And
Speaker 1: within that there's definitely some more defensive um trends. Right
Speaker 1: So you're seeing healthcare ETFs take a lot of the
Speaker 1: flows they're relative to some of the more cyclical areas
Speaker 1: like financials and technology that have been in outflow. Um.
Speaker 1: The other piece that I would mention though, is the
Speaker 1: continued growth in fixed income in cash like e t
Speaker 1: F product, which was another fifty billion inflows, and of
Speaker 1: that about twenty five or half of it billion of
Speaker 1: it was an ultra short ETF. So I guess the
Speaker 1: short version of that is that you know, cash and
Speaker 1: fixed incomes sort of plain vanilla yield oriented product are
Speaker 1: really going to start to give more esoteric yield vehicles
Speaker 1: a run for their money as you continue to see
Speaker 1: rates creep up. Well, that's actually what I started to
Speaker 1: jump in. But that's something that I've been thinking about
Speaker 1: a lot because I was looking at some of the
Speaker 1: ultra short duration cash like e t s and they're
Speaker 1: actually starting to pay dividends, pennies, but something they are.
Speaker 1: And if you look at where we are today, right,
Speaker 1: so we're coming up on another FIT meeting in you know,
Speaker 1: the end of July, markets are pricing in a seventy
Speaker 1: percent probability of seventy five basis points, and then if
Speaker 1: you fast forward to the end of the year based
Speaker 1: on what you know is being priced in in terms
Speaker 1: of fat action. We could be at three three and
Speaker 1: a half percent just in a cash like product, and
Speaker 1: then you go out the curve a little bit you
Speaker 1: get more than that. Right, that's pretty interesting. I would
Speaker 1: go as far as to say it's pretty sexy relative
Speaker 1: to you know, the liquid alts and the other esoteric
Speaker 1: products that people have been using to get yield. You
Speaker 1: may not need to do that actually get an in
Speaker 1: vanilla fixed income. So sexy because you know, at this
Speaker 1: point we talk a lot about capital preservation, Stephanie, and
Speaker 1: that's really kind of what investors need to be thinking about.
Speaker 1: That's exactly right. I think investors not only cyclically, Carrol,
Speaker 1: but also demographically. Right, the search for yield is not
Speaker 1: just because we haven't seen three percent on money markets
Speaker 1: or cash product in ten years. It's also because we
Speaker 1: have an aging demographic in this country that need that
Speaker 1: more structurally for their lifestyles. So giving an idea in
Speaker 1: terms of Stephanie and market cycles, like you know, we've
Speaker 1: talked about that it's typically about eight months between when
Speaker 1: the Fed stops raising rates to when it starts to
Speaker 1: cut rates, which is a short period of time. Markets
Speaker 1: are forward looking, right, I mean, how what are you
Speaker 1: looking for when you get an idea that this maybe
Speaker 1: down market cycle is on the equity side of things
Speaker 1: is coming to an end. Yeah, look, I mean you know,
Speaker 1: sometimes we joke about the perspective any of us how
Speaker 1: on markets is probably worth the price of a cup
Speaker 1: of coffee. That being said, um, I think you know
Speaker 1: our view is that you know, the real question is
Speaker 1: around inflation, Carol, and that's really what the markets are
Speaker 1: focused on. That's what people are looking at in terms
Speaker 1: of earnings and multiples and what's really going to impack
Speaker 1: the equity markets as well as psychology as well as
Speaker 1: whether people are employed and continue to spend right. So,
Speaker 1: if the Fed strikes the right balance where we know
Speaker 1: the FED is behind the curve on inflation, if the
Speaker 1: Fed can strike the right balance, then I think you'll
Speaker 1: see market stabilized. J Powell thinks he can, Wright, Katie,
Speaker 1: we heard this from him today, but he's not he
Speaker 1: thinks he can. So Stephanie, how how comfortable do you
Speaker 1: feel in an environment that we're coming off of that
Speaker 1: we've never lived through before, that you think the FED
Speaker 1: can get it right because they are going to be aggressive.
Speaker 1: We know that they're definitely going to be aggressive. You know,
Speaker 1: it's interesting. You may be familiar with our chief economists,
Speaker 1: Vincent Ryan Hart was a former FED official, FED watcher
Speaker 1: par excellence, and certainly I think Vincent is talking about
Speaker 1: a fine balance here in terms of not turning this
Speaker 1: into a recession. But it's a very tricky balance given
Speaker 1: how behind the feed has been on a relation. So look,
Speaker 1: they have to get it right for us to continue
Speaker 1: the upward trend that we've seen over many, many years
Speaker 1: in equity markets. Um. But um, you know it's gonna
Speaker 1: be It's gonna be a really interesting market to watch
Speaker 1: her for the next few months. And I'd love to
Speaker 1: broaden this conversation a little bit and talk about crypto.
Speaker 1: I know that you were on really riveting peril with
Speaker 1: panel with Carol in Dallas. I wasn't there, you guys,
Speaker 1: but you should have been because it was really smart. Um.
Speaker 1: And so let's talk about you know, Stephanie. I loved
Speaker 1: it because we talked specifically about you know, what's what's
Speaker 1: the future of money UH? And we had Matt Walsh UH,
Speaker 1: founder of UH, finding partner at Castle Island Ventures. We
Speaker 1: had Matt Hogan as CEIO at bit Wise. I mean
Speaker 1: you guys really came in it from different perspectives. They
Speaker 1: are in on the crypto world, but said, we were
Speaker 1: very early in. How do you guys at your company
Speaker 1: think about where you need to be in this space? Sure, well,
Speaker 1: from a broad perspective, bing Y Melon seeks to be
Speaker 1: a leader in the digital assets space. As you know,
Speaker 1: we're a leading custody bank. We're really in all parts
Speaker 1: of the cash ecosystem, and as our clients look to
Speaker 1: us for digital assets solutions as a place to keep
Speaker 1: their money, or trade their money, or manage their money,
Speaker 1: we want to be a leader there. So that's kind
Speaker 1: of the short answer. Now, what does that really look like?
Speaker 1: It's going to go? In different stages? Right, the regulators
Speaker 1: have a key role to play, and I think what
Speaker 1: we saw Carroll after you know, some of the crypto
Speaker 1: events and the dislocation that happened a few weeks ago,
Speaker 1: is that the regulators are going to come in and
Speaker 1: provide some standards, particularly as relates to you know, the
Speaker 1: reserve management underneath um some of these cryptocurrencies and stable coins,
Speaker 1: which I feel like you guys all welcome that idea
Speaker 1: that we would get some regulatory over. So it has
Speaker 1: to happen. There was too much white space here and
Speaker 1: I think that plus, as the guys on the panel
Speaker 1: pointed out, there was a lot of leverage as well
Speaker 1: as just not a lot of regulation, and that created
Speaker 1: some of the outcomes that we have. I mean, the
Speaker 1: reality is the recent people have confidence in traditional currencies
Speaker 1: is because there is a fully transparent, fully liquid hard
Speaker 1: currency backing in reserve management in every single central bank
Speaker 1: around the world. And that wasn't the case in table coin,
Speaker 1: and it needs to be well, talking about crypto, talking
Speaker 1: about regulation, talking about e t F. So let's wrap
Speaker 1: it all together, because there's a very important SEC decision
Speaker 1: coming on a gray scale application to convert their bitcoin
Speaker 1: trust into an e t F. I gotta ask, I mean,
Speaker 1: is a spot physically backed bitcoin e t F going
Speaker 1: to become a reality sometime soon? Well, if you hadn't
Speaker 1: said soon, I probably would have said likely. I think
Speaker 1: the question is when right, clearly investors love the rapper
Speaker 1: that they're comfortable with the liquidity, the transparency, the way
Speaker 1: it works in the pipes of every advisor and recail
Speaker 1: investor in this country. That's why this is so attractive.
Speaker 1: Having said that, as we just talked about. It remains
Speaker 1: to be seen how the regulators will UM really standardize
Speaker 1: some of the components I mentioned right, whether that's transparency, liquidity,
Speaker 1: reserve management. And until that's in place, I think you'll
Speaker 1: see this UM probably take a little bit of time,
Speaker 1: doesn't mean it won't happen. I think the direction of
Speaker 1: travel is clear that, even be on the underlying of
Speaker 1: that specific instance, the idea of blockchain and digital ledger
Speaker 1: is here to stay. It's just a question of what
Speaker 1: not if. All right, Stephanie, I'm so jealous and not
Speaker 1: in studio with you. You have to promise to come
Speaker 1: back when I am COVID clear. I mean, I'm negative everybody,
Speaker 1: but they're just still quarantining me. UM. Because I loved
Speaker 1: our conversation and I want to continue with you, Stephanie Pierce.
Speaker 1: She's chief executive officer of Dreyfus Melon H and E.
Speaker 1: T f s over at B and Y Melon Investment Management,
Speaker 1: joining us in our interactive broker studio. I highly recommend
Speaker 1: you go back to the Insight twenty two conversations and
Speaker 1: check out our panel, which was all about reimagining the
Speaker 1: future of money. Thanks for listening to Bloomberg Business Week.
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