WEBVTT - Key Takeaways From The Fed 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.919 at Bloomberg dot com slash podcast. Now, let's talk a 0:00:22.920 --> 0:00:26.880 little bit about the markets and the economy with Katie Nixon. 0:00:26.920 --> 0:00:30.639 She is chief investment officer at Northern Trust Wealth Management, 0:00:30.720 --> 0:00:35.800 joining us out of Rye, New York. And let's get 0:00:35.840 --> 0:00:39.800 first to UM your expectations for the number on Friday 0:00:40.040 --> 0:00:43.879 and how it plays into what we heard from the 0:00:43.920 --> 0:00:48.000 FED at Jackson Hole. Katie, Well, good morning and thanks 0:00:48.000 --> 0:00:49.680 for having me. I mean, I guess would be right 0:00:49.720 --> 0:00:52.440 around the consensus for the Friday number around seven fifty, 0:00:52.479 --> 0:00:55.200 a little bit of a decline from UM from last month. 0:00:55.240 --> 0:00:57.000 But I think the point is this data for the 0:00:57.040 --> 0:01:00.040 next several weeks, I mean maybe months, is going to 0:01:00.200 --> 0:01:03.120 just be really really noisy. As we're seeing UM some 0:01:03.200 --> 0:01:05.720 of this UH this other data command a bit softer 0:01:05.800 --> 0:01:11.720 than expected relative to UH pre delta expectations. So I 0:01:11.720 --> 0:01:13.680 think we're going to be in this period of sort 0:01:13.680 --> 0:01:16.360 of give and take with the with the macro data, 0:01:16.440 --> 0:01:20.319 which I mean again for for investors. It's very consistent 0:01:20.360 --> 0:01:23.200 with what we heard from the Fed on on Friday, 0:01:23.240 --> 0:01:25.000 from Powell on Friday, that you know, he's keeping his 0:01:25.120 --> 0:01:28.160 options open, all right. Well, I think investors need Katie 0:01:28.200 --> 0:01:30.160 to keep their options open as well. I'm looking at 0:01:30.160 --> 0:01:33.880 the tenure here, just stubbornly staying around this one point 0:01:33.959 --> 0:01:37.760 three zero level, seemingly in a trading bound. Tough to 0:01:37.800 --> 0:01:39.560 make a living down there at that kind of rate. 0:01:40.080 --> 0:01:43.120 Where are you kind of as you talk to clients 0:01:43.120 --> 0:01:45.759 here and you and your advisors at Northern Trust, where 0:01:45.760 --> 0:01:48.240 are you telling them to go in terms of asset 0:01:48.240 --> 0:01:51.880 allocation right here? Well, you know, I think this is 0:01:51.920 --> 0:01:55.720 a very very important um discussion to have right now, 0:01:55.720 --> 0:01:58.480 because there is this sort of feeling that we should 0:01:58.480 --> 0:02:01.520 be out of bonds because rates are so low. Um. 0:02:01.640 --> 0:02:04.680 But what we're telling our clients is, you know, fixed 0:02:04.680 --> 0:02:07.760 income plays high quality fixed income plays a really important 0:02:07.840 --> 0:02:10.919 role in your portfolio, even at these levels of yield, 0:02:11.080 --> 0:02:13.320 these low levels of yield, which, by the way, we 0:02:13.400 --> 0:02:15.959 expect you're going to stay low for probably even longer 0:02:16.000 --> 0:02:18.720 than the market expects. So get used to these uh 0:02:18.800 --> 0:02:20.440 these low yields are going to be with us for 0:02:20.440 --> 0:02:22.760 a while. But the role of fixed and the portfolio 0:02:22.840 --> 0:02:25.280 is to provide you that diversification. And what would seem 0:02:25.639 --> 0:02:29.240 time and time again is during stressful times in the market, 0:02:29.480 --> 0:02:32.600 risk assets all sort of performed the same UM. So 0:02:32.680 --> 0:02:34.280 we want to make sure that our clients have the 0:02:34.360 --> 0:02:36.399 right amount of fixed in. You don't want too much 0:02:36.440 --> 0:02:39.120 because the yields are so low, but you want to 0:02:39.200 --> 0:02:41.720 have uh an amount of fixed income that's going to 0:02:41.840 --> 0:02:44.480 help you meet your your goals during times of market 0:02:44.520 --> 0:02:47.560 stress and not force you to sell risk assets. But 0:02:47.680 --> 0:02:50.920 beyond that, within our risk asset portfolio, I'll tell you 0:02:51.240 --> 0:02:53.760 one area that we like right now. Obviously we like 0:02:53.919 --> 0:02:57.400 US equities that's worth you know, we've seen very strong growth. 0:02:57.720 --> 0:03:00.079 We continue to think we're gonna see from my to 0:03:00.160 --> 0:03:04.160 me into two and perhaps even beyond from an earnings perspective. 0:03:04.720 --> 0:03:07.800 UM the Feds on hold, so you know, the rate 0:03:08.120 --> 0:03:11.200 environment's going to stay very constructive also for the next 0:03:11.200 --> 0:03:15.040 several years. But we also like high yield and we're seeing, 0:03:15.160 --> 0:03:18.480 you know, the credit worthiness of high yield credits improve 0:03:19.360 --> 0:03:21.440 over this cycle, and we expect are going to continue 0:03:21.440 --> 0:03:23.919 to improve and we can see spreads grinds even tighter 0:03:23.960 --> 0:03:26.919 than they are right now. So US equities high yield, 0:03:27.200 --> 0:03:29.400 that's sort of where we're leaning into from a tactical 0:03:29.440 --> 0:03:32.680 perspective and our risk asset portfolio. What kind of taper 0:03:32.720 --> 0:03:36.360 do you want to see? UM? What kind of taper 0:03:36.840 --> 0:03:41.440 you know is helpful to your investors? Right? Well, we 0:03:41.480 --> 0:03:45.680 are expecting the taper to be very slow and very delivered. 0:03:45.720 --> 0:03:49.200 So six and nine months of tapering UM hopefully will 0:03:49.240 --> 0:03:51.320 be sort of back to the future and watching pink 0:03:51.400 --> 0:03:54.160 dry as I think Janet Allen said uh in the 0:03:54.200 --> 0:03:57.200 previous taper. UM, So we don't think it's going to 0:03:57.240 --> 0:03:59.760 be a meaningful event to the market. UM. We only 0:03:59.800 --> 0:04:02.520 have one data point the last time we went through tapering, 0:04:02.560 --> 0:04:05.240 and you know, after the taper tantrum, which is really 0:04:05.240 --> 0:04:08.440 a communication issue, the market really absorbed the taper very 0:04:08.520 --> 0:04:11.200 very well and then starts to focus on the next move, 0:04:11.280 --> 0:04:13.760 which is when are we going to see rates increase 0:04:13.800 --> 0:04:17.280 in For US, we may see a liftop in twenty three, 0:04:17.320 --> 0:04:19.800 but if we do, it's going to be much slower 0:04:19.800 --> 0:04:24.200 and much lower than the market thinks. So given that backdrop, Katie, 0:04:24.760 --> 0:04:27.400 in terms of the equity side of the business, are 0:04:27.560 --> 0:04:30.320 are you suggesting to your representatives and your clients that 0:04:30.360 --> 0:04:33.440 they focus more on maybe the good strong top line 0:04:33.440 --> 0:04:37.080 growth stories maybe in tech and healthcare or um maybe 0:04:37.080 --> 0:04:39.520 go into that lean into that rotation trade which has 0:04:39.560 --> 0:04:43.000 been working so well, which is more cyclical, uh sectors 0:04:43.040 --> 0:04:46.840 maybe like you know, banks or or energy. Where where 0:04:46.839 --> 0:04:49.839 are you on that discussion? Yeah, I mean, I think 0:04:49.839 --> 0:04:52.560 it's important to take a diversified approach. I think investors 0:04:52.560 --> 0:04:56.600 have learned this year especially that having both is kind 0:04:56.640 --> 0:04:58.320 of the way you want to go, because we've seen 0:04:58.320 --> 0:05:00.960 this pivot between growth and you for example, I mean, 0:05:01.400 --> 0:05:03.680 you know, we've had we had a value of performance 0:05:03.720 --> 0:05:07.000 and now sort of hear a date, growth is edging 0:05:07.040 --> 0:05:09.919 out value. They've both had very good absolute performance, but 0:05:09.960 --> 0:05:12.839 we've seen sort of that pivot between growth and value 0:05:12.839 --> 0:05:15.400 happen a lot of time. So we we advise our 0:05:15.440 --> 0:05:18.120 clients to lean into both and not to have to 0:05:18.160 --> 0:05:21.200 pick a side in this um in this race. One 0:05:21.200 --> 0:05:22.640 of the things that we are looking at though a 0:05:22.640 --> 0:05:26.000 lot right now, is helping the quality of our of 0:05:26.000 --> 0:05:29.080 our equity investment. So really looking at a quality as 0:05:29.080 --> 0:05:33.040 a factor and sort of adding that into the portfolios 0:05:33.080 --> 0:05:36.320 as we as we can. Katie, thanks so much for 0:05:36.400 --> 0:05:40.880 joining us. Great to get your insight on what is 0:05:40.920 --> 0:05:43.200 actually an exciting time, even though you know yields are 0:05:43.240 --> 0:05:45.720 low and it may be UM difficult. Your job might 0:05:45.760 --> 0:05:48.840 be more difficult than normally would be UM. Certainly from 0:05:48.839 --> 0:05:54.039 a journalistic perspective, it is fascinating to follow, even if J. 0:05:54.200 --> 0:05:57.200 Powell's intonation could be a little bit more exciting. Yes, 0:05:57.279 --> 0:05:59.800 exactly when he's reading a speech, I just want to 0:05:59.800 --> 0:06:02.599 go with him and just go through it once or twice, 0:06:03.000 --> 0:06:06.920 a little coaching. But I mean I found, you know, 0:06:07.040 --> 0:06:12.640 especially his defense of UM the inflation picture and their 0:06:12.680 --> 0:06:16.599 inflation take, I thought was spot on, and I think 0:06:17.040 --> 0:06:19.000 um Katie did too. She's got a great note that 0:06:19.040 --> 0:06:21.920 you can check out on the Northern Trust website and 0:06:22.000 --> 0:06:25.320 highly recommend going to wealth dot Northern Trust dot com 0:06:25.360 --> 0:06:28.760 to check that out. Katie Nixon um joining us the 0:06:28.800 --> 0:06:38.400 c i O of Northern Trust Wealth Management. This is Bloomberg. Now. 0:06:38.440 --> 0:06:40.159 We told you at the top of the show about 0:06:40.200 --> 0:06:45.159 thirty minutes ago that we saw the Consumer Board Consumer sorry, 0:06:45.160 --> 0:06:48.719 the Conference Board Consumer Confidence index coming out at one 0:06:48.839 --> 0:06:52.240 thirteen point eight. We were looking for a reading of 0:06:52.279 --> 0:06:56.360 one three and the prior reading was one twenty nine. 0:06:57.000 --> 0:07:00.080 So it looks a little bit soft here. Let's and 0:07:00.160 --> 0:07:04.159 Lynn Franco, Director of Economic Indicators and Surveys from the 0:07:04.200 --> 0:07:08.880 Conference Board. And Lynn, this actually makes sense considering the 0:07:08.920 --> 0:07:11.360 other high frequency data we've seen. Is just is this 0:07:11.480 --> 0:07:16.000 just an end of summer vacation thing, um, a little 0:07:16.000 --> 0:07:18.720 bit of cloudy vision into the beginning of school year? 0:07:18.800 --> 0:07:22.520 Why is this? I think what we're seeing here is 0:07:22.800 --> 0:07:26.800 rising concerns about the delta variant and to a somewhat 0:07:26.920 --> 0:07:31.440 lesser degree, consumers expressing some concern about rising gas and 0:07:31.520 --> 0:07:34.480 food prices. Uh, so we've seen that not only take 0:07:34.520 --> 0:07:37.960 a bite out of how they assess current economic conditions, 0:07:38.000 --> 0:07:40.600 but also pass somewhat of a cloud over their short 0:07:40.720 --> 0:07:45.680 term prospects. So it's virus and inflation, yes, And I 0:07:45.680 --> 0:07:49.120 mean the good news within this is that the employment 0:07:49.560 --> 0:07:54.080 indicators did not really decline substantially, so you know, we 0:07:54.120 --> 0:07:59.559 do expect the economy and the job market to remain strong. Hopefully, um, 0:07:59.600 --> 0:08:02.600 you know, can get a handle around this recent surge 0:08:02.600 --> 0:08:06.520 and that will help sort of alleviate some of consumers concerns, 0:08:06.560 --> 0:08:09.160 but it could pose a little bit of a you know, 0:08:10.120 --> 0:08:15.560 headwind to UH spending, especially in person spending. So Lynn 0:08:15.600 --> 0:08:16.920 talked to us on a FOP a little bit on 0:08:16.960 --> 0:08:19.440 that on that labor issue there, because we still have 0:08:20.200 --> 0:08:21.880 you know, a lot of folks that are out of work, 0:08:22.040 --> 0:08:24.720 but there's also a lot of openings out there and 0:08:24.760 --> 0:08:27.760 a lot of companies are raising pay How does the 0:08:27.840 --> 0:08:31.280 kind of the labor outlook factor in. I think the 0:08:31.360 --> 0:08:34.440 labor outlook, especially what we're seeing in our report that 0:08:34.520 --> 0:08:38.480 remained more favorable than the economic outlook, which I think 0:08:38.559 --> 0:08:42.080 is good news, you know, to help support spending. We 0:08:42.160 --> 0:08:44.640 do know that at least in terms of claims and 0:08:44.720 --> 0:08:48.160 other labor data, you know, we're sort of getting back 0:08:48.200 --> 0:08:51.040 to more favorable readings. So we hope that will help 0:08:51.080 --> 0:08:55.120 boost confidence in the coming months. And in fact, if 0:08:55.120 --> 0:08:58.080 we take a look at their spending intentions, um, you 0:08:58.120 --> 0:09:00.080 know here too, we saw a little bit of going 0:09:00.160 --> 0:09:04.160 off endurables and autos and home purchase intentions UH, and 0:09:04.440 --> 0:09:06.800 a shift more towards in person. We saw a little 0:09:06.800 --> 0:09:10.320 bit of a pickup and travel intentions UM. So that 0:09:10.440 --> 0:09:12.400 I think was a sort of good news, there is 0:09:12.400 --> 0:09:16.520 at least some willingness to continue to spend. You know, 0:09:16.679 --> 0:09:20.720 we all um watch LYNN and markets very closely. The 0:09:20.760 --> 0:09:23.000 non farm payrolls number. It's been referred to as the 0:09:23.040 --> 0:09:27.360 Granddaddy of economic indicators. Does the consumer care about this 0:09:27.480 --> 0:09:32.080 kind of data? Well, I think, you know, obviously they do. 0:09:32.320 --> 0:09:35.960 It impacts them. It supports consumer confidence. And we've only 0:09:35.960 --> 0:09:38.719 had a slight uptick in the percent of consumers who 0:09:38.720 --> 0:09:41.679 were telling us jobs are hard to get right, So 0:09:42.280 --> 0:09:46.120 I think that's somewhat favorable news and their outlook. Even 0:09:46.120 --> 0:09:47.840 though we saw a little bit of a decline in 0:09:47.840 --> 0:09:50.760 their outlook regarding where the labor markets headed, it still 0:09:50.800 --> 0:09:54.120 remains very positive overall. So it could be that this 0:09:54.200 --> 0:09:58.200 is sort of more delta driven than jobs driven and 0:09:58.320 --> 0:10:01.720 LYNN work. Some of the sub elemental unemployment benefits are 0:10:01.760 --> 0:10:04.839 set to expire in early September. How do you think 0:10:04.880 --> 0:10:08.679 that's going to be reflected in the data. I think 0:10:08.720 --> 0:10:10.640 what we're seeing here is we saw a little bit 0:10:10.640 --> 0:10:12.640 of a decline in the percent of consumers have said 0:10:12.679 --> 0:10:16.000 they expect their incomes to increase over the coming months. 0:10:16.600 --> 0:10:19.080 But we know right now from not only this survey, 0:10:19.160 --> 0:10:22.120 but other surveys UM that you know, most people are 0:10:22.160 --> 0:10:25.080 sort of stashing away the extra money. We saw an 0:10:25.160 --> 0:10:28.400 uptick in the savings rate, so at least consumers are 0:10:28.480 --> 0:10:31.920 somewhat willing and able to spend. I think just what 0:10:31.920 --> 0:10:34.439 we're seeing here is a little concern about the delta 0:10:34.559 --> 0:10:38.040 variant and that could likely impact in person services over 0:10:38.040 --> 0:10:46.200 the coming months. Is the vaccine rate at all playing 0:10:46.200 --> 0:10:49.200 into this, the fact that you know, certainly from our 0:10:49.240 --> 0:10:53.120 perspective here in Europe, Americans just aren't getting vaccinated as 0:10:53.160 --> 0:10:55.080 fast as we thought they would or as fast as 0:10:55.120 --> 0:10:58.360 we are. Well, I think if we see an uptick 0:10:58.440 --> 0:11:02.679 in vaccination rates which have that may help offset some 0:11:02.760 --> 0:11:06.080 of the concerns about UM, you know, the increase in 0:11:06.120 --> 0:11:09.000 the spread of the delta variant, So that would be 0:11:09.040 --> 0:11:12.360 one way to sort of counter the concern. Heylyn, thanks 0:11:12.360 --> 0:11:14.480 so much for joining us. We really appreciate it. Lin Franco, 0:11:14.559 --> 0:11:17.600 director of Economic Indicators and Surveys at the conference board. 0:11:20.000 --> 0:11:23.640 I want to bring in Joni right now. He's the 0:11:23.679 --> 0:11:26.319 CEO of e Toro joining us on the phone out 0:11:26.320 --> 0:11:30.280 of Israel, and I am very familiar with the TORO. 0:11:30.440 --> 0:11:33.240 I worked with a number of your analysts had them 0:11:33.240 --> 0:11:36.520 on various programs. You so, I get it. But you 0:11:36.559 --> 0:11:41.439 say you're the world's leading social investment network. That's the tagline. 0:11:41.520 --> 0:11:44.960 What does that mean? Hi, and thank you for having me. 0:11:45.000 --> 0:11:48.240 I'm actually here in New York. Um uh so very 0:11:48.320 --> 0:11:52.360 quickly is the largest social investment network. We have twenty 0:11:52.400 --> 0:11:56.720 two million registered users, mostly outside of the US, who 0:11:56.760 --> 0:11:59.800 registered to our social network where our users can trade 0:11:59.800 --> 0:12:03.480 from and free stock trading as well as cryptocurrencies within 0:12:03.520 --> 0:12:07.200 a social network, So everybody can actually see the most 0:12:07.200 --> 0:12:12.439 successful investors performance over time UH, their monthly UH performance 0:12:12.559 --> 0:12:16.800 as well as their actual portfolio location and communicate and 0:12:16.840 --> 0:12:21.040 collaborate with one another, and then use our patent technology 0:12:21.080 --> 0:12:24.480 to automatically copy the most successful investors. So if you 0:12:24.600 --> 0:12:28.439 see an investor which generated thirty percent returns every year 0:12:28.480 --> 0:12:31.360 for the past five years on average, you just click 0:12:31.520 --> 0:12:34.760 copy with let's say five thousand dollars in it copies 0:12:34.760 --> 0:12:39.000 his entire portfolio into your portfolio for that five thousand dollars, 0:12:39.160 --> 0:12:41.400 and every time he trades, it trades in your account 0:12:41.400 --> 0:12:44.560 at the same time, the same price and the same proportion. 0:12:44.880 --> 0:12:47.920 So he basically brought in the sharing economy into the 0:12:47.960 --> 0:12:51.400 world of trading and investing. So as you think about 0:12:51.440 --> 0:12:55.040 your customer base, JUNI, I mean obviously a big, big 0:12:55.040 --> 0:12:59.040 increase uh since the pandemic. How permanent is that, how 0:12:59.040 --> 0:13:01.280 sticky is that? How do you think about the growth 0:13:01.280 --> 0:13:03.680 of the folks that you know would be interested in 0:13:03.720 --> 0:13:07.960 your platform? First, First of all, we definitely have seen 0:13:08.040 --> 0:13:13.280 explosive growth over the past eighteen months since that I 0:13:13.280 --> 0:13:17.520 would generally say an inflection point that started the rise 0:13:17.800 --> 0:13:22.800 of millennial investors all over the world. In March, we 0:13:22.960 --> 0:13:28.040 just recently announced our Q two earnings this year. Uh, 0:13:28.080 --> 0:13:30.599 and we grew from Q two last year to Q 0:13:30.760 --> 0:13:33.160 two this year between a hundred and twenty and a 0:13:33.280 --> 0:13:38.000 hundred forty percent on various KPIs from registered users, where 0:13:38.000 --> 0:13:40.559 we added more than two and a half million registered 0:13:40.679 --> 0:13:45.480 users just this quarter in Q two. I think we 0:13:45.559 --> 0:13:50.440 are seeing again a very significant secular trend where there's 0:13:50.480 --> 0:13:55.920 a whole generation people who didn't participate in capital markets before, 0:13:55.960 --> 0:13:59.600 both in the US but also all around the world 0:13:59.600 --> 0:14:02.439 in your up in a Asia, who are simply asking 0:14:02.559 --> 0:14:06.200 what to do with our money, where to invest our money? Uh? 0:14:06.240 --> 0:14:10.160 And maybe it starts with a bigger question, which is 0:14:10.160 --> 0:14:12.720 a very big discussion right now all over the world 0:14:13.040 --> 0:14:17.240 what is the value of my money, which again comes 0:14:17.280 --> 0:14:21.120 from a confluence of circumstances of zero interest rates, a 0:14:21.400 --> 0:14:25.280 very big discussion about inflation, UH, and the fact that 0:14:25.360 --> 0:14:28.560 governments all around the world are printing money and at 0:14:28.680 --> 0:14:33.520 unprecedented rates are leading a whole generation to ask, what 0:14:33.720 --> 0:14:36.920 is the value of my dollars or euros or pounds 0:14:36.960 --> 0:14:39.520 and where can I invest my money so it will 0:14:39.560 --> 0:14:42.800 grow over time. I'm not sure if you saw the 0:14:43.080 --> 0:14:47.280 John Paulson interview UM with David Rubinstein we had on 0:14:47.280 --> 0:14:51.000 the area yesterday, but essentially the investor so famous for 0:14:51.080 --> 0:14:55.160 his big short during the crash of the housing market, 0:14:55.800 --> 0:15:00.600 said he doesn't recommend buying crypto at all. He thinks 0:15:00.800 --> 0:15:07.080 it's just worthless UM asset that is speculated on because 0:15:07.120 --> 0:15:09.480 of you know, I think what was the line, paul 0:15:09.560 --> 0:15:15.320 limited availability, limited supply of nothing. UM. Do you think 0:15:15.360 --> 0:15:20.640 it matters to UM young investors today? What the hedge 0:15:20.640 --> 0:15:26.960 fund titans of yesteryear think about crypto? I think not 0:15:27.280 --> 0:15:31.680 everybody has to love every asset in order for that 0:15:31.880 --> 0:15:37.960 asset to be successful over time. Not everybody loves Facebook. 0:15:38.240 --> 0:15:40.480 But Facebook is a successful company and a lot of 0:15:40.520 --> 0:15:46.360 investors in a Facebook stock have a scene appreciation over time. 0:15:46.360 --> 0:15:49.360 I can definitely say the same about Tesla stock and 0:15:49.440 --> 0:15:53.040 Amazon stock, who have had a lot of uh negative 0:15:53.800 --> 0:15:56.680 sort of people talk about it in sort of in 0:15:56.760 --> 0:16:00.400 past years, right when when Amazon in the only two 0:16:00.480 --> 0:16:03.400 thousands in Tesla just three, four or five years ago. 0:16:03.960 --> 0:16:07.440 I think, you know, every investor has his own right 0:16:07.560 --> 0:16:12.360 to analyze and to evaluate different markets. There's no doubt 0:16:12.880 --> 0:16:16.400 that the crypto markets one are super interesting and second 0:16:16.440 --> 0:16:20.720 are a sort of a generational asset class. The majority 0:16:20.720 --> 0:16:25.560 of investors any toro are under forty uh and uh. 0:16:25.720 --> 0:16:29.480 The majority of investors a toro hold both equities, so 0:16:29.720 --> 0:16:33.840 both stock markets as well as crypto assets. So I 0:16:34.120 --> 0:16:38.000 would generally say it's great when we have super smart 0:16:38.080 --> 0:16:41.520 people like Elon Musk, Casey wood and and and Jack 0:16:41.560 --> 0:16:45.640 Dorsey talk about crypto and and believe in in bitcoin 0:16:45.880 --> 0:16:50.960 and support it. But you don't need necessarily every investor 0:16:51.000 --> 0:16:54.160 in the world to believe in bitcoin in order for 0:16:54.240 --> 0:16:58.240 it to be successful over time. So generally you should 0:16:58.240 --> 0:17:02.680 always expect some people naysayers, otherwise the price would already moon. 0:17:03.480 --> 0:17:05.800 So you only I guess probably one of the next 0:17:05.800 --> 0:17:08.040 steps that a lot of people are are looking at 0:17:08.160 --> 0:17:10.840 in terms of the development of the crypto market. Writ 0:17:10.920 --> 0:17:14.560 large is some type of regulation. UH. What is your 0:17:14.640 --> 0:17:17.680 view of regulating the crypto market? How do you think 0:17:17.720 --> 0:17:20.480 it should play out? UM? What are your thoughts there? 0:17:21.640 --> 0:17:26.120 So we've we've founded ed Toro before crypto was out there, 0:17:26.560 --> 0:17:30.159 and we are a regulated financial institution. Were regulated in Europe, 0:17:30.200 --> 0:17:34.520 in the UK and Australia here in the US as 0:17:34.520 --> 0:17:39.119 well as expanding our our regulatory licenses both in Asia 0:17:39.160 --> 0:17:42.520 and the Middle East. So there's no doubt that when 0:17:42.560 --> 0:17:47.280 you think about consumers, when you think about retail investors, U, 0:17:48.119 --> 0:17:53.840 regulators are there to protect customers interest. That is the 0:17:54.000 --> 0:17:58.040 role and that is why a significant part of retail 0:17:58.080 --> 0:18:03.520 investors will eventually work with regulated financial institutions. I think 0:18:03.600 --> 0:18:06.879 regulators are definitely catching up. They see a lot of 0:18:06.920 --> 0:18:12.000 the benefits of blockchain technology UH and its value actually 0:18:12.040 --> 0:18:18.120 to eventually provide both innovation and protection to customers interests UH. 0:18:18.160 --> 0:18:20.320 And I think what we're seeing now, as we see 0:18:20.320 --> 0:18:24.919 in any innovation in any market that's regulated, regulators are 0:18:25.119 --> 0:18:28.439 learning and are putting in the rules in place to 0:18:28.520 --> 0:18:32.280 be able from one hand, to promote innovation and to 0:18:32.280 --> 0:18:35.680 to enable efficient markets and the growth of those markets, 0:18:35.680 --> 0:18:39.080 and in the same time protect customer interests. And we 0:18:39.160 --> 0:18:42.840 see that with with regulators all around the world. I 0:18:42.880 --> 0:18:47.240 think as in any market that's growing fast and striving 0:18:47.600 --> 0:18:50.920 on limitless innovation, it's it's very important to balance between 0:18:51.000 --> 0:18:53.080 fantastic joy Thank you so much for joining us. We 0:18:53.080 --> 0:18:56.280 really appreciated getting an update their Yuning I see CEO 0:18:56.480 --> 0:19:04.439 of El Toro. Home price gains set another record, fueled 0:19:04.440 --> 0:19:08.040 by bidding wars. Now for some of us, that's good news, 0:19:08.440 --> 0:19:12.080 for others not so much. Let's get the latest. We 0:19:12.119 --> 0:19:14.320 can do that with Sam Dunlop. He's a Chief Investment 0:19:14.320 --> 0:19:17.840 Officer of Public Strategies at angel O Capital Advisors about 0:19:17.840 --> 0:19:21.040 thirteen billion dollars in assets under management. Joining us on 0:19:21.080 --> 0:19:24.960 the phone from Atlanta, Sam, We're seeing these amazing surges 0:19:25.040 --> 0:19:29.119 in residential real estate. UM My question is is this 0:19:29.200 --> 0:19:34.920 a COVID fueled short term anomaly or is this something different? 0:19:36.840 --> 0:19:41.560 You know, it's definitely got some COVID um effects, clearly, 0:19:41.600 --> 0:19:44.560 but I think the real key, uh, you know, really 0:19:44.560 --> 0:19:47.200 going into the pandemic was that we were dealing with 0:19:47.240 --> 0:19:52.560 a pretty significant supply and demand mismatch of single family housing. UM. 0:19:52.600 --> 0:19:55.680 You know, prior to COVID, we were very optimistic on 0:19:55.720 --> 0:19:59.359 the housing market going into COVID. UH. Clearly COVID was 0:19:59.400 --> 0:20:02.720 a huge disruption, but coming out of COVID, UH, it 0:20:02.800 --> 0:20:06.960 really exacerbated the extraordinary supply to mean mismatch that we 0:20:07.040 --> 0:20:10.840 currently have. Just the the rise of the millennial as 0:20:10.880 --> 0:20:13.960 well as just the lack of investment in housing after 0:20:13.960 --> 0:20:17.600 the global financial crisis, you know, coupled with the pandemic 0:20:17.600 --> 0:20:20.520 and all time low mortgage rates just has home prices surging. 0:20:20.800 --> 0:20:23.879 I said, So, those are the two key issues then, Sam, right, 0:20:24.000 --> 0:20:27.560 the UM first one the idea that millennials weren't going 0:20:27.600 --> 0:20:31.800 to buy homes. As a result, I guess, uh, we 0:20:31.800 --> 0:20:33.840 weren't building as many as we should have. And the 0:20:33.920 --> 0:20:38.920 second is people weren't investing in homes as UM financial 0:20:39.240 --> 0:20:43.399 as a financial asset as well as a residential you 0:20:43.400 --> 0:20:48.720 know solution. And that changed during during the pandemic. Yeah. Absolutely, 0:20:48.840 --> 0:20:51.800 just just not seeing enough units come online, you know, 0:20:52.080 --> 0:20:56.280 to keep pace with uh, the already extraordinary supply shortage. 0:20:56.280 --> 0:20:58.840 I mean, just to give you some context, the National 0:20:58.920 --> 0:21:01.800 Social Association of Realtors, you know, they recently put out 0:21:01.840 --> 0:21:05.480 the single family supply demand gap was approximately six million 0:21:05.560 --> 0:21:09.480 units currently and when you couple the millennials as they 0:21:09.520 --> 0:21:12.199 as they come online in the housing market, there's you know, 0:21:12.440 --> 0:21:16.080 expected to be an additional three million units that will 0:21:16.119 --> 0:21:20.280 need over the next five years potentially to meet that demand. So, uh, 0:21:20.320 --> 0:21:22.560 you know, when you had the housing market really at 0:21:22.560 --> 0:21:25.320 the center of the of the last global financial crisis, 0:21:25.359 --> 0:21:27.480 you just had a lack of construction and lack of 0:21:27.640 --> 0:21:32.119 investment to meet those uh, pretty extraordinary macro conditions. So 0:21:32.160 --> 0:21:34.520 this has been a long time coming, but COVID has 0:21:34.600 --> 0:21:39.240 certainly exaggerated the effects. Especially uh, you know that Powell 0:21:39.280 --> 0:21:41.439 has taken us not only to the zero bound, but 0:21:41.840 --> 0:21:44.840 you know, continues to buy agency mortgages and treasuries and earnest. 0:21:45.280 --> 0:21:47.879 So talk to us about the mortgage market here is 0:21:47.960 --> 0:21:50.000 I know, there's you know, back in two thousand eight 0:21:50.040 --> 0:21:51.840 with the financial crisis, you know, a lot of it 0:21:51.880 --> 0:21:55.879 was just very poor credit standards, which led to you know, 0:21:56.440 --> 0:21:59.000 people who were barring that probably should not have been barring, 0:21:59.000 --> 0:22:00.600 and so on and so forth. Give us a sense 0:22:00.640 --> 0:22:04.640 of how you view the mortgage market here. Yeah, it's 0:22:04.640 --> 0:22:06.800 a great question, you know, we really look at and 0:22:06.800 --> 0:22:09.840 and and other market participants do as well. Uh, you know, 0:22:10.000 --> 0:22:12.919 shameless plug form Bloomberg. There there's a mortgage credit availability 0:22:13.000 --> 0:22:16.920 index that the Mortgage Bankers Association puts out that that 0:22:17.080 --> 0:22:19.840 you view on your terminal there. But uh, you know, 0:22:20.320 --> 0:22:23.399 it's the higher that score, the more available credit is. 0:22:23.480 --> 0:22:26.479 And if you look back to the preglobal financial crisis period, 0:22:26.480 --> 0:22:30.080 that index got as high as, uh the mid eight hundreds. Uh. 0:22:30.119 --> 0:22:32.439 And just to give you some context today, you know 0:22:32.480 --> 0:22:35.920 we're in the low one hundreds area. Uh. And you've 0:22:35.960 --> 0:22:39.440 just seen very little credit expansion uh in the post 0:22:39.440 --> 0:22:42.720 global financial crisis period, but you also saw a pretty 0:22:42.720 --> 0:22:47.080 significant amount of tightening uh and residential mortgage credit abilbility 0:22:47.160 --> 0:22:50.520 after the COVID crisis. So uh, that index got as 0:22:50.560 --> 0:22:53.240 high as one eighty pre COVID and now it's collapsed 0:22:53.240 --> 0:22:56.159 down to the one twenties today. So uh. You know, 0:22:56.200 --> 0:23:00.040 as far as looking at mortgages as an investment for 0:23:00.040 --> 0:23:03.120 for healthy credit quality, UH, it's certainly an area we've 0:23:03.160 --> 0:23:06.199 been focused on, just because you haven't seen credit credit 0:23:06.440 --> 0:23:10.600 standards really expand, especially from from some of the peak 0:23:10.680 --> 0:23:13.280 that we saw in the pre global financial crisis period, 0:23:13.720 --> 0:23:16.359 Is there any concern that we're looking at a bubble 0:23:16.400 --> 0:23:20.320 that could pop? You know? The good news is, I 0:23:20.359 --> 0:23:22.879 would say from a from a bubble perspective, and what 0:23:22.920 --> 0:23:25.320 we've been focused on is not only the credit standards 0:23:25.320 --> 0:23:28.040 that we talked about, but just the reduced amount of 0:23:28.200 --> 0:23:31.280 leverage UH and just the reduced amount of fraud in 0:23:31.280 --> 0:23:34.239 our view that that drove that bubble. And the pre 0:23:34.400 --> 0:23:37.399