WEBVTT - Markets, ETFs, and Commodities 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 --> 0:00:11.480 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.560 --> 0:00:18.479 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.480 at Bloomberg dot com Slash podcast. Geopolitics certainly moving markets 0:00:23.520 --> 0:00:26.000 today and pretty much every day this week as well. 0:00:26.000 --> 0:00:28.080 But let's step back take a look at some of 0:00:28.080 --> 0:00:30.680 these fundamentals. Because we do have inflation, we do have 0:00:30.880 --> 0:00:34.040 rising interest rates, we do have a slowing economy. Howard 0:00:34.120 --> 0:00:37.199 risk assets to perform in that environment. Let's check in 0:00:37.280 --> 0:00:41.080 with Mark yesco CEO, CEE, IO and founder of Morgan 0:00:41.159 --> 0:00:46.480 Creep Capital Management, located in some third rate hamlet called 0:00:46.600 --> 0:00:49.320 Chapel Hill, North Carolina. I mean, I guess you couldn't 0:00:49.320 --> 0:00:52.240 find any office space in Mark. Paul's a duke guy 0:00:52.520 --> 0:00:56.160 in Durham, North Carolina. But we'll check in with Mark anyway, Mark, 0:00:56.560 --> 0:00:59.920 what are you telling your clients here as a kind 0:01:00.200 --> 0:01:03.240 raise all some of these you know, these bricks in 0:01:03.320 --> 0:01:06.720 this wall of worry here. Now it's a great, great 0:01:06.760 --> 0:01:09.920 point and uh, you know, congrats to the boys at 0:01:09.920 --> 0:01:11.959 the University of New Jersey at Durham down the road. 0:01:12.560 --> 0:01:18.280 Very good. Um, but look, we we are cautious in 0:01:18.319 --> 0:01:20.640 the current environment. You know, we were living in a 0:01:20.680 --> 0:01:24.560 world of financial repression. As to me is the biggest problem. 0:01:24.680 --> 0:01:28.480 Savers are just being punished with these low interest rates. 0:01:28.520 --> 0:01:31.720 And although the Feds making noises about raising I actually 0:01:31.760 --> 0:01:35.600 don't think they can. So that'll cause that'll take one 0:01:35.640 --> 0:01:37.840 of the stressors away when they finally do what I'll 0:01:37.840 --> 0:01:40.280 call the Powell pivot and he finally admits that he 0:01:40.319 --> 0:01:43.800 really can't raise rates. You mentioned that economic growth is 0:01:43.880 --> 0:01:47.520 slowing very dramatically. We're just gonna see negative growth in 0:01:47.560 --> 0:01:52.160 Europe in the first quarter, could possibly see little zero 0:01:52.240 --> 0:01:55.600 growth in the US. And then corporate profits are rolling over. 0:01:56.160 --> 0:01:59.240 Earnings estimates are being slashed. So we feel that you 0:01:59.240 --> 0:02:02.840 should be head with a capital duh. And hedge funds 0:02:02.880 --> 0:02:04.960 are are likely to have a much better year this 0:02:05.040 --> 0:02:07.680 year than they did last year. We still do like 0:02:07.880 --> 0:02:12.200 one area, which is oil. We think energy is an 0:02:12.240 --> 0:02:16.040 interesting place to be. Things like MLPs good place to hide. 0:02:16.080 --> 0:02:19.680 They're just very very cheap because even if everybody wants 0:02:19.680 --> 0:02:21.600 an e V. It will take a thirty years to 0:02:21.760 --> 0:02:24.320 everyone to have an EV, so it's going to take 0:02:24.320 --> 0:02:29.919 a while before oil is not necessary. That what's true, 0:02:29.960 --> 0:02:31.239 that's that's the only thing that you know, some of 0:02:31.320 --> 0:02:35.680 us have range anxiety, right, we like to travel long distances. Um. 0:02:35.840 --> 0:02:37.840 But but then I think the last thing we're telling 0:02:37.880 --> 0:02:42.679 people is, uh, don't really stress too much about the 0:02:43.200 --> 0:02:48.359 noise of geopolitics, really focus on the signal, and um, 0:02:48.400 --> 0:02:51.320 you know, we think there's lower risk of some big event. 0:02:52.040 --> 0:02:56.200 And then I think many in the DC area would 0:02:56.200 --> 0:03:00.679 have us believe, but um, you know, we're we're we're cautious, 0:03:00.960 --> 0:03:03.960 but but not completely out of markets. So why do 0:03:04.000 --> 0:03:06.760 you think we've seen such an outperformance of you know, 0:03:06.840 --> 0:03:11.880 we were just graphing oil. Um, since the pandemic against 0:03:11.960 --> 0:03:15.480 the producers and the underlying commodity has done so much better. 0:03:17.080 --> 0:03:20.200 It's great, great, great point. And I think that the challenges, 0:03:20.360 --> 0:03:22.840 particularly in the US, we had a lot of producers 0:03:23.320 --> 0:03:26.840 that were over levered and a whole bunch of them 0:03:26.919 --> 0:03:31.280 went out of business. So that clearly impacts the indices 0:03:31.360 --> 0:03:34.680 that that you know, the broad baskets of those producers. 0:03:34.960 --> 0:03:38.400 There are some individual companies you know my favorite Diamondback Energy. 0:03:38.400 --> 0:03:43.720 I would say Fang has outperformed Fang, Facebook, Amazon, Netflix, 0:03:43.760 --> 0:03:46.800 Google over the past year. Again this year, we think 0:03:46.800 --> 0:03:49.320 it all out performed for a while. Uh. And then 0:03:49.360 --> 0:03:53.720 there's a other company like ovent Iv and Marathon Oxy 0:03:53.840 --> 0:03:57.200 which has done really really well, outperformed oil. But you're right, 0:03:57.240 --> 0:04:00.680 the basket has underperformed because there's just a lot of 0:04:00.720 --> 0:04:03.880 companies that uh. And this across all industries. You know, 0:04:03.920 --> 0:04:09.560 we we extended credit to not so credit worthy businesses. Um. 0:04:09.640 --> 0:04:12.760 I say we, I mean the economy, and some of 0:04:12.800 --> 0:04:16.800 those went out of business I guess in in the 0:04:16.880 --> 0:04:20.520 lockdowns after the pandemic, and it's it's really been tough. 0:04:20.560 --> 0:04:22.200 And I think that's one of the reasons oil prices 0:04:22.240 --> 0:04:26.840 surged so much, is so much supply came offline. So 0:04:27.000 --> 0:04:29.599 Mark in the fixed income space, do you guys see 0:04:29.600 --> 0:04:32.920 opportunities there? Again, we have a federal reserve that is 0:04:33.160 --> 0:04:36.480 clearly signaled a rising interest rates and if you look 0:04:36.480 --> 0:04:38.839 at the w I r P functional on the Bloomberg terminal, 0:04:38.880 --> 0:04:41.680 could be as many seven hikes two. How do you 0:04:41.680 --> 0:04:45.159 think about that as a rates to fixed income opportunities? Yeah, 0:04:45.320 --> 0:04:48.039 I'm gonna take the under. I'm gonna take the way 0:04:48.240 --> 0:04:51.680 under on that. I don't think there'll be anywhere close 0:04:51.760 --> 0:04:54.120 to seven. I don't even think there'll be, you know, 0:04:54.240 --> 0:04:58.120 three or four. I think they probably will try to 0:04:58.200 --> 0:05:02.320 hike here in March. I think they'll probably whimp out 0:05:02.320 --> 0:05:05.600 and not do fifty basis points. Um. You know, the 0:05:05.680 --> 0:05:09.760 challenges have been behind the curve since two thousand. Uh, 0:05:10.120 --> 0:05:13.640 for a hundred and something years, the average short term 0:05:13.720 --> 0:05:18.640 rate roughly equal nominal GDP growth. And you know that 0:05:18.800 --> 0:05:23.680 hasn't been true for eight years. And I think they 0:05:23.760 --> 0:05:28.960 should get back to a normal functioning interest rate environment. Uh, 0:05:29.000 --> 0:05:31.839 because that's what capitalism is predicated on. That you know, 0:05:31.880 --> 0:05:33.719 you can put your capital at work and get and 0:05:33.720 --> 0:05:37.320 get paid for it. Think about being in Europe or Japan, 0:05:37.560 --> 0:05:40.760 you have to pay banks to keep your money. At 0:05:40.800 --> 0:05:44.599 least here you get zero point five. That's why we 0:05:44.600 --> 0:05:47.640 actually came up with this thing csh new E t 0:05:47.800 --> 0:05:52.360 F that takes advantage of spack arbitrage to give people 0:05:52.600 --> 0:05:55.920 something you know, we think low single digits on their 0:05:55.960 --> 0:05:59.520 their savings. Because we think traditional bonds, high yield bonds 0:05:59.800 --> 0:06:03.400 are very high. Taking credit risk, you're taking duration risk. 0:06:03.880 --> 0:06:06.280 Both of which look kind of dicey in this market. 0:06:06.920 --> 0:06:10.480 So having at least something on your your savings leaving 0:06:10.560 --> 0:06:13.120 makes a lot of sense. All right, Mark, thank you 0:06:13.200 --> 0:06:16.920 so much. We appreciate checking in with you. Mark. Yesco 0:06:17.400 --> 0:06:20.720 uh He is with CEO, c I O and founder 0:06:20.720 --> 0:06:24.760 Morgan Creek Capital Management based in Chapel Hill, North Carolina, 0:06:24.800 --> 0:06:28.839 which is actually a very very beautiful community there, despite 0:06:28.880 --> 0:06:30.960 the University of North Carolina. And you want to see 0:06:31.000 --> 0:06:33.200 such a great school and they have such a great 0:06:33.200 --> 0:06:36.400 basketball history. Yeah, just not quite as great as their 0:06:36.440 --> 0:06:40.240 friends down route fifteen five oh one at the Duke University. 0:06:40.360 --> 0:06:43.520 But yeah, we all respect the u n C. Chapel 0:06:43.560 --> 0:06:46.000 Hill there. You're good, good hoops and we love playing 0:06:46.000 --> 0:06:51.520 against them. We have our E t S. She wants 0:06:51.520 --> 0:06:54.440 to talk ETFs, dying to talk ETFs. I was gonna say, 0:06:54.560 --> 0:06:59.920 Maestro mice Straw maybe has taken there's already an et 0:07:00.040 --> 0:07:02.240 US are here E t F S arena in the 0:07:02.279 --> 0:07:06.880 house right now. And we were talking about an e 0:07:06.960 --> 0:07:10.280 t F fund earlier, weren't we U E s H 0:07:10.400 --> 0:07:12.640 hre we talking about E s H earlier? Which is 0:07:13.360 --> 0:07:18.240 um no, I think those are the sp futures. No, 0:07:18.520 --> 0:07:22.040 it was it was some e t F fund that 0:07:22.680 --> 0:07:27.360 somehow dealt with SPACs in a way to that's leverage 0:07:27.360 --> 0:07:30.920 on leverage there, Katie, What do you got for us? 0:07:31.080 --> 0:07:33.120 We can talk about spack ets, we can talk about 0:07:33.120 --> 0:07:35.920 fix income et s because it doesn't sound exciting, but 0:07:35.960 --> 0:07:39.880 there have been a ton of really interesting launches when 0:07:39.880 --> 0:07:41.800 it comes to fix income e t s this week. 0:07:41.840 --> 0:07:44.880 I mean, just today you had State Street and Blackstone 0:07:45.280 --> 0:07:47.840 launch and e t F that will be half high yield, 0:07:48.240 --> 0:07:51.760 half clos and they're trying to really appeal to the 0:07:51.760 --> 0:07:54.360 retail crowd there, which caught my eye. You also have 0:07:54.560 --> 0:07:59.000 a bunch of black black Rock alumni debuting UH seven 0:07:59.080 --> 0:08:02.520 junk on et just today, and then earlier this week 0:08:02.560 --> 0:08:05.760 you also had a CDs e t F debut. So 0:08:05.880 --> 0:08:09.200 it's been a really fascinating week for just bond ETFs 0:08:09.280 --> 0:08:13.640 in general. Speaking of leverage on leverage, Yeah, who buys 0:08:14.040 --> 0:08:16.920 ETFs these days? Is it retail? Is it institutional? Is 0:08:16.960 --> 0:08:20.400 it hedge funds? These things? It's a really interesting mix 0:08:20.400 --> 0:08:24.160 of both. I mean, institutional and professional traders love et 0:08:24.440 --> 0:08:26.960 s because the liquidity there is so much greater than 0:08:27.000 --> 0:08:29.760 you would get in buying any sort of individual bond. 0:08:29.880 --> 0:08:32.720 So they use them often as liquidity sleeves, but you 0:08:32.760 --> 0:08:37.760 also have a very sleeve liquidity sleeve. I do too. 0:08:38.200 --> 0:08:40.240 I try to put that in stories whenever I can. 0:08:40.320 --> 0:08:43.120 But I mean they do appeal appeal to retail because 0:08:43.160 --> 0:08:45.280 some of the products, or some of the asset classes 0:08:45.320 --> 0:08:47.200 you can get exposure to through an e t F. 0:08:47.280 --> 0:08:49.600 I mean, if you're a retail trader, you're never gonna 0:08:49.679 --> 0:08:52.959 be buying, you know, Russian debt, You're never going to 0:08:53.040 --> 0:08:56.800 be buying oil futures, those types of asset classes that 0:08:56.840 --> 0:08:59.880 you really can't get exposure to, but now you can 0:09:00.040 --> 0:09:01.520 through an e t F. You invite it on any 0:09:01.559 --> 0:09:04.800 sort of brokerage platform. So it's Tony from UBS ever 0:09:04.920 --> 0:09:07.080 calls me and pitches an e t F to me, 0:09:07.160 --> 0:09:09.520 that might be the end of our Oh no, are 0:09:09.520 --> 0:09:12.000 you not in E t F. I don't know, Yeah, 0:09:12.360 --> 0:09:14.640 I guess I can. I mean that the low fees, 0:09:15.679 --> 0:09:18.880 I guess they're targeted, which is pretty cool. I don't know, 0:09:18.960 --> 0:09:21.520 it just feels a little I'd love to see s 0:09:21.720 --> 0:09:27.640 h C s mark Yusco. Right, yes, exactly exactly. So 0:09:27.679 --> 0:09:30.200 we were talking to mark Yusco about and by the way, 0:09:30.200 --> 0:09:32.000 you know how I found that I couldn't remember what 0:09:32.040 --> 0:09:34.240 I had typed in, and I just typed an h 0:09:34.360 --> 0:09:36.680 I S t go and it shows you the history 0:09:37.000 --> 0:09:39.800 of all the commands that you've typed down the Bloombergs. 0:09:39.840 --> 0:09:43.560 You can scroll back. That is a very cool in itself. 0:09:43.679 --> 0:09:45.960 That is a good another function. You know, I was 0:09:46.040 --> 0:09:48.720 reading about this fund and I was so mad that 0:09:48.960 --> 0:09:52.679 I didn't write about it because it's really interesting. Basically that, um, 0:09:53.080 --> 0:09:54.760 it feels like he's pitching this e t F A 0:09:54.760 --> 0:09:56.800 is you can use it almost as a money market fund, 0:09:56.920 --> 0:09:59.040 like just store your cash here. You're probably going to 0:09:59.080 --> 0:10:03.680 get a few basis above treasury is not very exciting, 0:10:03.840 --> 0:10:07.760 but you know it should work all right. So the 0:10:07.800 --> 0:10:10.280 new issue market for e t f s, where are 0:10:10.320 --> 0:10:12.400 we kind of over the last twelve months? Is it 0:10:13.000 --> 0:10:18.600 accelerating and we kind of peaked on fire? They say, yeah, no, 0:10:18.720 --> 0:10:20.840 you saw a record number of e t f s 0:10:21.120 --> 0:10:24.160 launched last year, which is interesting to me because they've 0:10:24.200 --> 0:10:26.480 all been mostly active and thematic. But if you look 0:10:26.480 --> 0:10:28.559 at where the money is going, it's all too pretty 0:10:28.640 --> 0:10:32.079 vanilla funds. It's all SMP five hundred index tracking funds. 0:10:32.120 --> 0:10:35.600 So you're seeing this huge surge in issue once. But 0:10:35.880 --> 0:10:38.360 I mean those new funds are attracting very little of 0:10:38.400 --> 0:10:40.720 the actual money that's flowing into the e t F market, 0:10:40.760 --> 0:10:44.200 which is largely just dominated by Vanguard and black Rock UM. 0:10:44.480 --> 0:10:47.880 And Vanguard has been the boss of e t s 0:10:48.480 --> 0:10:51.480 really since their inceptions. Right, they own, they own this market. 0:10:51.640 --> 0:10:54.880 They well, okay, this is the storyline that you have 0:10:54.960 --> 0:10:58.000 to watch very closely. Black or Vanguard's share of the 0:10:58.000 --> 0:11:00.480 e t F market has grown every since go year, 0:11:00.480 --> 0:11:03.400 for twenty years straight. Black Rock is still your incumbent. 0:11:03.440 --> 0:11:06.320 I think they control about thirty four percent of all 0:11:06.679 --> 0:11:10.080 U S E t F assets, Vanguards at twenty nine 0:11:10.080 --> 0:11:13.240 per cent. So that flippening it's going to happen one day, 0:11:13.280 --> 0:11:15.440 maybe it's not this year. But I also just think 0:11:15.480 --> 0:11:19.160 because of you know, the uh, the legend of Jack 0:11:19.240 --> 0:11:21.600 Bogel and to me, e t F s fits so 0:11:21.720 --> 0:11:25.319 well with that passive investing legend. But of course they 0:11:25.320 --> 0:11:28.240 probably have active investing e t f s there as well. 0:11:28.400 --> 0:11:30.440 They do, and Vanguard will be quick to tell you 0:11:30.480 --> 0:11:32.080 that they do have active ETFs. But if you look 0:11:32.120 --> 0:11:34.400 at their AD two product and they just have a 0:11:34.520 --> 0:11:38.040 D two products, which is also mind blowing. It's mostly passive. 0:11:38.080 --> 0:11:40.439 That's where all the money is. And I SPACE E 0:11:40.600 --> 0:11:44.120 t F gets all the Bloomberg News written stuff on 0:11:44.920 --> 0:11:46.719 E t F and E t F. E t F 0:11:46.840 --> 0:11:48.800 go is a great et F and b I E 0:11:48.920 --> 0:11:54.800 t F s to get the research there. Alright, let's 0:11:54.840 --> 0:11:59.559 talk global oil Brent crude nine cents. We were on 0:12:00.000 --> 0:12:01.880 I guess we still are on a one watch. I'm 0:12:01.920 --> 0:12:04.240 hearing some hundred dollar numbers coming out of Wall Street. 0:12:04.240 --> 0:12:08.200 But when we want to talk oil or commodities, pork bellies, crypto, 0:12:08.679 --> 0:12:12.200 we go to Mike McLane. He's from Bloomberg Intelligence Commodities. Uh. 0:12:12.320 --> 0:12:16.920 Analysts there. Uh, Mike, you're in a Bloomberg Interactive broker studio. 0:12:17.120 --> 0:12:19.480 He's here, folks. Usually he's down in Miami Beach kicking 0:12:19.520 --> 0:12:22.080 back at the pool with a cocktail with an umbrella 0:12:22.160 --> 0:12:23.720 in it. But he is here in New York working 0:12:24.360 --> 0:12:26.720 this week. Mike, what do you make a crude oil? Here? 0:12:26.720 --> 0:12:29.480 Are we gonna see that one handle? I think it's 0:12:29.559 --> 0:12:31.680 part of the process that it did in two thousand 0:12:31.720 --> 0:12:35.640 and eight. Elevator escalator up, elevator down. So right now 0:12:35.720 --> 0:12:37.599 we're in that upstage today is not so great, but 0:12:37.640 --> 0:12:40.880 it's factoring a pretty significant armed conflict between you know, 0:12:40.960 --> 0:12:44.040 with in Europe with a large exporter of crudel and 0:12:44.080 --> 0:12:47.480 a large exporter of grains. To me, that's otherwise. Once 0:12:47.559 --> 0:12:50.400 we get through this period, it happens, are not crudel 0:12:50.440 --> 0:12:53.280 is going back to fifty and that is are below 0:12:53.520 --> 0:12:56.200 and because two and two thousand and eight it's peaked 0:12:56.240 --> 0:12:59.240 at one and then dropped the forty um the next 0:12:59.320 --> 0:13:01.679 year and then what happened was that we went up 0:13:01.679 --> 0:13:03.319 to a hundred for till two thousand eleven. Then the 0:13:03.400 --> 0:13:06.520 whole U. S. Shelle Revolution happened. Oil sands in Canada. 0:13:06.840 --> 0:13:09.319 That's happening again now. The differences Matt loves is the 0:13:09.440 --> 0:13:12.760 evs are really kicking in. That's it's and our consumption 0:13:12.920 --> 0:13:15.599 in North America peaked in two thousand eighteen, and so 0:13:15.720 --> 0:13:18.360 it's starting to head lower. So also the key thing 0:13:18.480 --> 0:13:21.760 is war. Okay, war keeps it elevated and the shorter term, 0:13:21.800 --> 0:13:24.520 but the big picture is higher prices bringing more supply, 0:13:24.640 --> 0:13:26.920 and it's worse this time. So here's what that part 0:13:27.120 --> 0:13:29.120 at that part, I don't we don't see happening yet, 0:13:29.240 --> 0:13:33.160 right We don't see the shale guys recounts pulling more 0:13:33.280 --> 0:13:35.679 oil out of the ground. We don't see Texas pulling 0:13:35.720 --> 0:13:37.920 the trigger. They just don't seem to be downey at 0:13:37.960 --> 0:13:40.600 Why why lagging? So what are we doing right now? 0:13:40.640 --> 0:13:43.760 We're the reciprocal negative negative prices. We're going to do 0:13:43.800 --> 0:13:46.280 the exact opposite within the next year. Might be three 0:13:46.400 --> 0:13:49.559 months high prices. Now back to the more enduring trends. 0:13:49.600 --> 0:13:51.760 So let's give you this fact. Crude picked at one 0:13:52.280 --> 0:13:55.000 in July m July two thou eight. I think we're 0:13:55.080 --> 0:13:57.200 catch up to p P. I'd be two hundred dollars. 0:13:57.760 --> 0:14:00.280 So that's a bear market that's bouncing with an range. 0:14:00.320 --> 0:14:02.599 So yes, it's a lot of fear, but this is 0:14:02.679 --> 0:14:04.599 just the facts of the market. If you can, you 0:14:04.679 --> 0:14:06.640 can create more of it. We use less of it. 0:14:06.800 --> 0:14:08.840 And you know, I came from a corn mail background. 0:14:08.840 --> 0:14:11.079 Twelve percent of our gasoline is from ethanol, which I 0:14:11.160 --> 0:14:14.440 know you love. I'm against that. Well, I'm not against 0:14:14.480 --> 0:14:16.439 it if you don't care about your motor, you know, 0:14:17.200 --> 0:14:19.160 but it's not good. I don't want to put that 0:14:19.240 --> 0:14:22.400 in my I will drive the extra mile to get 0:14:22.560 --> 0:14:28.560 pure gasoline. Really, I don't want, Yes, you do. I 0:14:28.600 --> 0:14:30.600 don't care, do I you don't care? I don't care? 0:14:30.960 --> 0:14:34.680 All right? So alright, So, but supply and demand here 0:14:35.440 --> 0:14:40.080 OPEC has remained pretty disciplined. Is that something you expect 0:14:40.080 --> 0:14:43.200 to continue it does? Does OPEC really have that much 0:14:43.240 --> 0:14:45.400 spare capacity? Well, one of the things we've been hearing 0:14:45.480 --> 0:14:48.240 from the guests we bring on is okay, Saudi does, 0:14:48.360 --> 0:14:50.080 and you can see it with OPEC GO. It's a 0:14:50.120 --> 0:14:54.120 really cool chart for spare capacity. Um. But the guests 0:14:54.200 --> 0:14:57.240 that we have on lately have been doubtful that other 0:14:57.360 --> 0:15:00.480 countries really have that much spare capacity. And actually you 0:15:00.520 --> 0:15:04.080 don't see anything on OPEC GO besides Saudi Arabia and 0:15:04.120 --> 0:15:08.440 the UAE. Don't underestimate how prices bring on supply and commodities. 0:15:09.040 --> 0:15:12.560 I learned what I used to have hair. It's just exactly, 0:15:12.600 --> 0:15:15.200 it's just so entertaining the hair because I remember how 0:15:15.240 --> 0:15:16.880 we were gonna have peak oil ten years ago, what 0:15:16.960 --> 0:15:19.960 really peaked consumption in North America, So that will come. 0:15:20.040 --> 0:15:22.200 The discipline is impressive. Iran could come back and look 0:15:22.200 --> 0:15:24.120 at Venezuela. They have as much oils crude at some 0:15:24.200 --> 0:15:26.200 point that comes back in higher prices, bringing that on. 0:15:26.320 --> 0:15:28.160 But I think what's happening now is more than macro. 0:15:28.640 --> 0:15:31.120 I think we're beginning part of the great reversion of 0:15:31.240 --> 0:15:35.920 this massive period of economic fiscal, monetary stimulus. And so 0:15:36.080 --> 0:15:37.680 if if we don't have the war, we face the 0:15:37.720 --> 0:15:39.920 fet If we do have the war, we have other 0:15:40.040 --> 0:15:43.320 issues of potential recession. But you know, the unique thing 0:15:43.360 --> 0:15:46.200 that's really been happening lately, I was impressed with how 0:15:46.280 --> 0:15:48.280 bitcoin has been a leading indicat If you come in 0:15:48.400 --> 0:15:51.760 the morning like today, bitcoin was heavy the stock markets. Yeah, 0:15:51.920 --> 0:15:53.360 you see, you watch the ticker and then you have 0:15:53.480 --> 0:15:55.880 those days when stock markets down and Bitcoin starts taking 0:15:55.960 --> 0:15:58.280 up the stock market files. It's amazing how this crypto 0:15:58.320 --> 0:16:01.000 has become the leading in the lead the indicator markets. 0:16:01.000 --> 0:16:02.680 But in a big picture, I think that's what comes 0:16:02.720 --> 0:16:05.880 out ahead. So I published a piece recently. As we know, 0:16:06.040 --> 0:16:10.040 lack of supply decline to supply increasing adoptions not not 0:16:10.240 --> 0:16:12.560 part of multiples portfolios. Bitcoin and you look at crude 0:16:12.560 --> 0:16:15.400 oil we're using lesson. You mentioned ethano I driven electric 0:16:15.440 --> 0:16:18.600 and I've had it for eight years now. It's great electric. 0:16:19.200 --> 0:16:21.240 You know what, if any beach, I'll drive it all 0:16:21.240 --> 0:16:24.920 the way. It's I lawed you wait, a Shaddy Vault 0:16:25.000 --> 0:16:27.280 or a bolt A Vault, so they don't make them anymore, 0:16:27.320 --> 0:16:30.000 but it's a hybrid. Yeah, So basically I love that 0:16:30.120 --> 0:16:32.920 car exactly. Um I test drove that when they first 0:16:32.960 --> 0:16:35.400 came out. So my thing is, as I've been telling 0:16:35.480 --> 0:16:38.560 Paul and anyone who listened, I love the idea of 0:16:38.640 --> 0:16:42.080 electric cars. I love the acceleration of electric cars. I 0:16:42.200 --> 0:16:45.200 missed the vibrations and the sound of an internal combustion 0:16:45.240 --> 0:16:50.840 engine and shifting gears obviously as well. I love a 0:16:50.960 --> 0:16:53.520 good hybrid, so I loved the Chevy Vault when that 0:16:53.640 --> 0:16:55.760 came out, and I don't know why they don't make 0:16:55.800 --> 0:17:00.240 it anymore. I love the BMW now has um An 0:17:00.400 --> 0:17:04.840 X five that has an in line six, so fantastic 0:17:04.960 --> 0:17:07.159 power plant. That's the power plant that made them famous, 0:17:07.320 --> 0:17:12.600 and a huge like thirty kilowatt battery. So you can 0:17:12.720 --> 0:17:16.240 drive miles without a motor, but when you need it, 0:17:16.640 --> 0:17:20.040 you kick it on. It's your enthusiasm is to me, 0:17:20.200 --> 0:17:22.879 that's profound because that's where it's going, and it's happening 0:17:22.960 --> 0:17:25.400 more in the wealthier companies. But I heard last year 0:17:25.480 --> 0:17:29.119 in China of new auto sales were e vs. Now. 0:17:29.160 --> 0:17:31.280 You mentioned hybrids. My mine gets ninety miles for the 0:17:31.320 --> 0:17:33.440 getting per Gillan and my brother's a mechanics. Is a 0:17:33.520 --> 0:17:36.479 cool thing about these is they the engine doesn't work, 0:17:36.520 --> 0:17:39.120 card they last forever because we use electric for stop 0:17:39.200 --> 0:17:40.760 and go and the engine only works for the long 0:17:40.840 --> 0:17:42.919 distances it works. It's a good system. I wish they 0:17:42.920 --> 0:17:44.960 would make cars where you could easily swap out the 0:17:45.000 --> 0:17:47.200 batteries because my concern is I buy one now or 0:17:47.240 --> 0:17:49.840 the thirty kilowatt battery, and in ten years from now 0:17:49.960 --> 0:17:53.840 there's a five kilowatt battery and the same size. Mike McLoone, 0:17:54.119 --> 0:17:55.880 thank you so much. We appreciate it. We didn't get 0:17:55.880 --> 0:17:58.560 to talk pork bellies. We got tripped up by cryptos 0:17:58.800 --> 0:18:01.720 and concentrated orange. You will do or bellies next time, 0:18:01.800 --> 0:18:09.199 I guarantee it. This Federal Reserve is looking clearly at 0:18:09.240 --> 0:18:11.040 some of the economic data coming up, and we want 0:18:11.040 --> 0:18:13.480 to check in with Michael McKee covers all things economics 0:18:13.640 --> 0:18:17.960 for us. Here, Michael, as you think about this Federal Reserve, 0:18:18.160 --> 0:18:22.320 we're talking about hiking rates. W I r P is 0:18:22.680 --> 0:18:26.160 saying seven rate hikes this year. What do you think 0:18:26.280 --> 0:18:29.160 the federal reserve is really looking at in terms of data. 0:18:29.320 --> 0:18:31.439 Can I also say the word function looks better than 0:18:31.520 --> 0:18:35.680 ever you. I know we're on radio you can't see it, 0:18:35.760 --> 0:18:40.159 but it's so improved to the old word functions. So 0:18:40.200 --> 0:18:42.120 I highly recommend people check it out. The thing that's 0:18:42.160 --> 0:18:45.280 interesting is that we consider one rate hike to be 0:18:45.359 --> 0:18:47.720 twenty five basis points. That always is that just the 0:18:47.840 --> 0:18:51.920 standard rate hike measurement. Well, it became that under Alan 0:18:51.960 --> 0:18:55.280 Greenspan the years before they used to announce what was 0:18:55.359 --> 0:18:58.360 going on, they would raise it by all kinds of numbers, 0:18:58.400 --> 0:19:01.720 fifteen or ten or thirty five five, whatever they thought 0:19:01.800 --> 0:19:03.919 was necessary, particularly in the Vulcar years when they were 0:19:03.960 --> 0:19:07.480 doing UH monetary aggregates as a guide, so they were 0:19:07.520 --> 0:19:09.600 trying to figure out how much money they'd be creating. 0:19:10.200 --> 0:19:14.439 But um, at this point the Fed is UH looking 0:19:14.680 --> 0:19:19.520 at to answer your question, inflation and unemployment. Unemployment, they 0:19:19.600 --> 0:19:22.560 noted in the Minutes yesterday had pretty much gotten to 0:19:22.600 --> 0:19:25.440 where they wanted it to be. It's inflation they're worried about. 0:19:25.800 --> 0:19:30.560 So the Fed is at this point planning on moving 0:19:30.640 --> 0:19:33.120 in March. By the way, has employment changed that much 0:19:33.200 --> 0:19:34.880 or did they just start to get worried enough about 0:19:34.880 --> 0:19:39.520 inflation that they felt like it was changed a huge amount. 0:19:39.720 --> 0:19:43.760 I mean, it's it's already down basically to almost where 0:19:43.920 --> 0:19:47.800 it was before the pandemic. We were at three point 0:19:47.880 --> 0:19:50.120 five three point six, and now we're at three, while 0:19:50.119 --> 0:19:52.240 we're at four, but we were at three point nine. 0:19:52.800 --> 0:19:55.800 As more people come back, so pretty much at full employment, 0:19:56.240 --> 0:19:58.000 we're not going to get the same statistics that we 0:19:58.119 --> 0:20:02.239 got before the pandemic because people have not come back 0:20:02.280 --> 0:20:04.920 into the labor force. So that great resignation starts. Yeah, 0:20:05.040 --> 0:20:07.240 well we're all working, so I don't I don't see 0:20:07.240 --> 0:20:11.600 any of it's not in this room. But but you're right, man, 0:20:11.720 --> 0:20:14.680 it's basis points become the standard. And now they don't 0:20:14.680 --> 0:20:17.440 even do it by basis points. They're doing it by 0:20:18.119 --> 0:20:24.119 range of now and then it will be fifty. And 0:20:24.240 --> 0:20:27.200 what the market is doing, and this is your w I. R. P. 0:20:27.400 --> 0:20:30.720 Lesson is looking at what the effective Fed funds rate 0:20:30.920 --> 0:20:33.800 is likely to be, which is right now around seven 0:20:33.960 --> 0:20:36.360 basis points. So if you look at the next move 0:20:36.400 --> 0:20:38.480 and you see that the implied rate is thirty two 0:20:38.520 --> 0:20:41.000 basis points, then that's a twenty five basis point move. 0:20:41.560 --> 0:20:44.639 So uh, it's it's a little complicated, but once you 0:20:44.680 --> 0:20:48.720 get used to it. YouTube you know, in terms of 0:20:48.840 --> 0:20:57.920 that um uh measured policy behavior and the transparency that 0:20:58.040 --> 0:21:00.280 the FED wants to I mean, are we gonna stick 0:21:00.400 --> 0:21:02.520 with that throughout the pal FED? Will we ever get 0:21:02.560 --> 0:21:04.760 back to them saying, you know what, let's have an 0:21:04.760 --> 0:21:06.760 emergency meeting and you know what, we'll raise my fifty 0:21:06.760 --> 0:21:10.320 basis points now or forty five. Well, they've had emergency meetings. 0:21:10.400 --> 0:21:12.800 They had an emergency meeting, but they can only do 0:21:12.840 --> 0:21:15.680 an emergency meeting to cut right, Because the could do 0:21:15.720 --> 0:21:19.200 an emergency meeting to raise if they felt it was necessary. 0:21:19.920 --> 0:21:24.320 It's it's hard to do because I'm doubtful you're legally 0:21:24.400 --> 0:21:27.240 they can do it, but you're right, it's it would 0:21:27.240 --> 0:21:29.840 be a shock to markets. Uh. And it was pretty 0:21:29.920 --> 0:21:33.199 obvious when we hit the pandemic and markets seized up 0:21:33.200 --> 0:21:35.119 and weren't working that they had to cut rate. So 0:21:35.600 --> 0:21:39.720 the meeting, the emergency meeting they held was not a 0:21:39.800 --> 0:21:41.959