Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Fund The Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com Slash podcast. Looking at Bitcoin up
Speaker 1: one point five sixteen thousand, six hundreds, still way way
Speaker 1: below that support level it seemed to be at forever
Speaker 1: of dollars photographer. It's been a wild ride for the cryptospace,
Speaker 1: and we want to break it down with some experts
Speaker 1: here Mike mclogan's senior commodity strategist with Bloomberg Intelligence, and
Speaker 1: Katie Greifeld, cross Asset reporter or Bloomberg News. They are
Speaker 1: both in our Bloomberg Interactive Broker studio. Thank goodness, Thank goodness,
Speaker 1: I have some things I need to get off my check.
Speaker 1: Do you go all right? First of all, cz guys
Speaker 1: has suggested some kind of lender of last resort fund right?
Speaker 1: Is he gonna next suggest some kind of central bank
Speaker 1: that will print bitcoin whenever they're needed? I mean, does
Speaker 1: he not understand the idea that the origins of cryptocurrency, Mike,
Speaker 1: does it not bother you? It does. And I've actually
Speaker 1: this weekend was so much of that kind of information around.
Speaker 1: I deliberately try to ignore it because it it gets
Speaker 1: past what really matters. Now, this is just digging into
Speaker 1: what person who turned out to be duked us all,
Speaker 1: including me um And but you didn't have any money
Speaker 1: on FTX did I didn't, And I'm not allowed to
Speaker 1: invest a lot in cryptos. I can invest the minimus amounts,
Speaker 1: so I have a lot of just changes small amounts.
Speaker 1: I didn't. But the key thing would start with first
Speaker 1: of all, Bitcoin is actually down on the on the
Speaker 1: day because what you see in the screen was from yesterday,
Speaker 1: and that's it's always messes me up on Monday's. So
Speaker 1: it's actually it's actually down about one or two percent
Speaker 1: on the week because you have to compare Apple's apps. Okay,
Speaker 1: you're saying from Friday's Fridays, but that's the thing to
Speaker 1: remember about. People are realizing this thing never stops trading.
Speaker 1: So and I'll also point out what so it really
Speaker 1: might me dig into what's happened so far as cryptos
Speaker 1: have gone down a lot. But if you look at
Speaker 1: the Bloomberg Galaxy crypto indic, since this whole thing started
Speaker 1: end of two thousand nineteen, it's still up two so
Speaker 1: we can drop, it's still up, so I can drop
Speaker 1: fifty and still percent it's still be in the nantics.
Speaker 1: So it's just maximum performance going back down. But what
Speaker 1: I see coming out of this is more regulation. What
Speaker 1: more regulation means institutions need that more centralization is what
Speaker 1: they need. What you're saying right, this is what the
Speaker 1: decentralized financial world needs, Katie, Uh, your crypto native or
Speaker 1: at least digitally native digital. When you and your cohort
Speaker 1: um want to buy trustless currency, um, do you then
Speaker 1: leave it on someone else's in someone else's wallet? Do
Speaker 1: you let somebody else have the keys? Why do people
Speaker 1: not take their crypto immediately, put it in their own
Speaker 1: walls and take it offline. I will not speak for myself,
Speaker 1: as I am a journalist and like Mike can't not
Speaker 1: really invest in cryptocurrency. But when I talk to my appears,
Speaker 1: for example, I mean a lot of them, the one
Speaker 1: who are crypto curious. They went through the likes of
Speaker 1: coin base for example, maybe Robin hood. But what's interesting
Speaker 1: now is that you're seeing billions of dollars from exchanges
Speaker 1: because no one really trusts them. I mean, people are
Speaker 1: going into cold storage they want their keys back. I
Speaker 1: think f t X is a great example of why
Speaker 1: if you're a hardcore bitcoin believer, maybe you don't want
Speaker 1: to be on one of these centralized exchanges. You want
Speaker 1: your bitcoin, you want to know where it is. So
Speaker 1: there you go. So I want to get to just
Speaker 1: want angle with you, Sam Bankman Freed, what what do
Speaker 1: we know? Was? Is there fraud there? Why is he
Speaker 1: not in an FBI office somewhere answering questions right now?
Speaker 1: As opposed to the Bahamas. It's an interesting question that
Speaker 1: I don't have the answer to. Is why f t
Speaker 1: X filed for bankruptcy in the US if they're based
Speaker 1: in the Bahamas. I believe he's in the Bahamas. The
Speaker 1: reporting would suggest that he is. I mean, we know
Speaker 1: that Bahamas authorities spoke to him. That would imply physically
Speaker 1: they're in the Bahamas. I don't el though. I mean
Speaker 1: there's an ongo I mean, there are million questions that
Speaker 1: we have. I'm sure Katie has the same questions even
Speaker 1: if she had a hunch as to an answer. Probably
Speaker 1: wouldn't want to give it to us on live radio, right,
Speaker 1: but maybe Mike will um. I mean, how did they
Speaker 1: have such a big eight nine billion dollar hole? Was
Speaker 1: their fraud? Also? Who took the four to six hundred
Speaker 1: million dollars of coins in the last couple of days?
Speaker 1: Is anybody on the run? What can you tell us?
Speaker 1: I think the word first world is illegal co mingling?
Speaker 1: Now how we've heard this in future since I've been
Speaker 1: in the business, and you've seen firms going there. It's
Speaker 1: just a different level, different people, different time. And LaMDA
Speaker 1: was a research arm, which was they say they were
Speaker 1: channeling of customer funds. Apparently they might have been channeling
Speaker 1: customer funds into campaign donations to the Binding compaign. Number
Speaker 1: number two donator to the Binding camp campaign was SPF.
Speaker 1: So oh yeah, so it's it's shocking that way. And
Speaker 1: see ze, by the way, it was an ex Bloomberg employee,
Speaker 1: so we have had quality from X Bloomberg employees coming
Speaker 1: from c Z. I did not know that. Wow, all right, Mike,
Speaker 1: you're in Miami not just because you love the warm
Speaker 1: weather and you had enough a Connecticut But let's face
Speaker 1: it in the crypto world. They're trying to establish themselves
Speaker 1: as a a physical leading space where the smart crypto
Speaker 1: people go. Given that backdrop, what's the feeling out of
Speaker 1: Miami over the past three or four or five days.
Speaker 1: Are people just kind of throwing their hands up, like
Speaker 1: what do we get ourselves into? Or I'm not sensing
Speaker 1: that public? Give you one example, MasterCard. A good friend
Speaker 1: of mine who is a former New York you know
Speaker 1: Wall Street guy, just moved to Miami to work for
Speaker 1: MasterCard in cryptos. That's how things are changing. Two years
Speaker 1: ago that that sentence, what would have been an oxymoron.
Speaker 1: So I think the big just did and he's getting
Speaker 1: a pink slip tomorrow. Well that's the problem. But here's
Speaker 1: the thing that's happening. One thing that's you look at Ethereum.
Speaker 1: Athereum is up one thousand or ten x since two
Speaker 1: thousand nineteen. Sure it's dropped a lot, but you know
Speaker 1: it started a hundred now just over a thousand. What
Speaker 1: is it doing. It's revelized the revolution is in fintech
Speaker 1: and like it makes possible the most white Trady cryptos.
Speaker 1: It's the dollar crypto door. So I think it's gonna
Speaker 1: bring on US regulation. But the US realizes this is
Speaker 1: making the base layer for the whole world to be
Speaker 1: a cryptos. The dollar and Ethereum is doing that, so
Speaker 1: people get the technology. This is a major sell, but
Speaker 1: it's just a bump in the road I've seen in
Speaker 1: terms of what I love that perspective because I don't
Speaker 1: have that perspective a last week. Right, we gotta get
Speaker 1: Mike and Cameron cries On together because they disagree like
Speaker 1: a hundred and I was playing that. Alright, Alright, guys,
Speaker 1: that's good stuff. We'll gonna keep on top of this story.
Speaker 1: And we can do that because we got some really
Speaker 1: smart people that have experience in this space and that
Speaker 1: is hard to find around there. Mike McLoone, Senior Commodity
Speaker 1: Strategies with Bloomberg Intelligence. He's been dealing and trading commodities
Speaker 1: forever and that's what crypto is for a lot of folks.
Speaker 1: And Katie Gray Felt Cross Asset, Cross Asset Reporter and
Speaker 1: that now includes a crypto. She does that with Bloomberg News.
Speaker 1: We take a look at some of the price action
Speaker 1: of last week, particularly towards the end of the weekend
Speaker 1: that big Thursday rip kind of brings back that bowl
Speaker 1: call that's been out there for a while, which is,
Speaker 1: you know, these risk on assets can work late into
Speaker 1: the year, maybe rally towards the year because we've seen
Speaker 1: peak interest rates, we've seen peak inflation. Uh, earnings have
Speaker 1: come down, they've been reset. Maybe this is kind of
Speaker 1: sets you for good clothes. Sean O'Hara, President of pac
Speaker 1: your et S. Sean, what do you think of that
Speaker 1: calls out a little naive or or do you in
Speaker 1: fact think that maybe a lot of the headwinds are
Speaker 1: starting to abate and it might be time to take
Speaker 1: on some more risk. Wel, good morning, Thanks for having me. Um.
Speaker 1: I think it's a little premature to to to sort
Speaker 1: of make that call, you know. I mean, it's just
Speaker 1: doing some simple math. If you if you think the
Speaker 1: SMP is gonna earn like, you know, two thirty bucks
Speaker 1: next year, we're still trading at a level that's probably
Speaker 1: higher on a pe basis than perhaps the market should be.
Speaker 1: But that's the whole market. And so I think the big,
Speaker 1: the big drag on that is potentially going to be tech. Uh,
Speaker 1: you know, tech is as a sector the last six
Speaker 1: years have seen their stock prices go up about fifty
Speaker 1: percent more than their earnings, whereas the rest of the
Speaker 1: market has sort of adjusted itself in its healthcare as
Speaker 1: an example, Actually the stocks in the healthcare sector have
Speaker 1: gone up less than their earnings the last six years.
Speaker 1: There are pockets of opportunity. I wouldn't be making a
Speaker 1: broad market call that, you know, things are going to
Speaker 1: go back to the way they were, and that inflation
Speaker 1: is not a problem anymore, and inflation is going to
Speaker 1: continue to be stubborn. You know, we saw a minor
Speaker 1: decrease in the year over year increase, and I think
Speaker 1: everybody took that to mean, well, you know, we just
Speaker 1: have to have a couple more months and this is
Speaker 1: all over with and we're back to the races. I
Speaker 1: don't think it's going to play out that way. So,
Speaker 1: but there are sectors you find attractive, healthcare being one
Speaker 1: of them, um energy another. These are obviously huge pieces
Speaker 1: of the inflation picture. I mean healthcare. I guess we
Speaker 1: see massive inflation there all the time, even when we
Speaker 1: don't have it in the rest of the economy. But
Speaker 1: why do you like why do you like them? Well,
Speaker 1: we we have a large cap fund ceow Z and
Speaker 1: our et F family. It's cash cow, that's one of
Speaker 1: our favorites, and it's up here to date. It's up
Speaker 1: like five percent year to date. So, uh, you know,
Speaker 1: it's overweight energy, it's overweight healthcare and silver right materials.
Speaker 1: It's as underweight as it's ever been consumer discretionary in tech,
Speaker 1: and so you know, the consumer is going to be
Speaker 1: I think in a big, big quandary here. They're gonna
Speaker 1: get squeezed. They're going to have to make decisions. You know,
Speaker 1: this winter, some people are gonna have to decide whether
Speaker 1: they want to eat or heat their house. I mean,
Speaker 1: I think, you know, the Thanksgiving holiday is going to
Speaker 1: be a big shocker to people in terms of how
Speaker 1: much more it's going to cost this year. But when
Speaker 1: you look at detectors like energy or healthcare, they're trading
Speaker 1: in relatively inexpensive levels historically. I think the healthcare trade
Speaker 1: is both in inflation and a demographics play. Um. You know,
Speaker 1: the demographics and healthcare got hidden by COVID, and once
Speaker 1: COVID is out of the way, I think that demographic
Speaker 1: trend will pick back up. You know, as people get older,
Speaker 1: they need more health care of the baby boomers ten
Speaker 1: thousand people a day for the next decade or so
Speaker 1: turning age sixty and energy is you know that they've
Speaker 1: just got so much cash flow in the energy sector.
Speaker 1: And I don't think that oil prices are going to
Speaker 1: go back down. I think they're more likely to continue
Speaker 1: to hover in this ranger or maybe maybe increase a
Speaker 1: little as the winter months come on. So there are
Speaker 1: plenty of places to make money. I just don't think
Speaker 1: it's going to be the same places that people have
Speaker 1: made money in the past, and so we accepted adjust
Speaker 1: our expectations and our views. I don't think you can
Speaker 1: continue to be a broad market investor. Um. You know,
Speaker 1: Mike Wilson's a very smart guy, has been very right
Speaker 1: on a lot of his calls. And if he's saying
Speaker 1: that next year the SMP is going to be where
Speaker 1: it is this year, then you just can't buy the SMP.
Speaker 1: You've got to figure out how to find places within
Speaker 1: the SMP to make money. So far, that's been you know,
Speaker 1: the under you underliked or undernoticed sectors like energy, healthcare, materials, industrials,
Speaker 1: and staples. So Sean we we we had some elections
Speaker 1: recently and looks like we're gonna have a divided government.
Speaker 1: A lot of folks saying that's bullish for risk assets.
Speaker 1: Are you in that camp? I am, um, although I
Speaker 1: don't know what the it's ultimately gonna wind up that way.
Speaker 1: I mean I would wait waiting on Georgia. Um. I mean, well, George,
Speaker 1: the Senate's over there, you know, the Senate, we're not.
Speaker 1: The Republicans are going to control the sense. All that's
Speaker 1: left is really that they can squeak out a win
Speaker 1: in the House, and that would be you know, the
Speaker 1: most divided of all divided governments, because all spending bills
Speaker 1: start in the House, and so they won't you know,
Speaker 1: with the Democrat House, they can at least make their
Speaker 1: way to the Senate and then the ultimate to the
Speaker 1: President's desk. I don't think there's going to be any
Speaker 1: spending bills that will come out of the House if
Speaker 1: it's controlled by the Republicans, and the market generally likes that.
Speaker 1: But you have, you know, this over I don't think
Speaker 1: you can go purely based on historical trends. You know
Speaker 1: that every time we have you know, divided government, the
Speaker 1: market goes up or from November to April. The markets
Speaker 1: always up and these sort of you know, cyclical stories
Speaker 1: or historical or trend aask trends. I think, you know,
Speaker 1: you have to take a look at what's really going on,
Speaker 1: and and what's really going on is that, you know,
Speaker 1: inflation continues to be a struggle. It would wouldn't surprise
Speaker 1: me if the FED changed its target for inflation and
Speaker 1: moved it up a little bit since they're having such
Speaker 1: a hard time. But they're just committed to raising rates
Speaker 1: so much so that they are going to damp in
Speaker 1: quote unquote demand, which means they're going to basically slow
Speaker 1: down the economy. And the question is going to be
Speaker 1: are they going to slow it down and have it,
Speaker 1: you know, come to a soft landing or they have
Speaker 1: to slow it down things come crashing down. And I think,
Speaker 1: you know, if you base you know, your judgment on
Speaker 1: historical you know, anomalies with them, you know, do they
Speaker 1: ever get it right at the Fed? They very rarely
Speaker 1: do get it right. So I will hope for better
Speaker 1: performance coming up here. Shaun O'Hara, he's a president of
Speaker 1: pacer Ets, hope for it, but we won't invest that. Yeah,
Speaker 1: I think it's what said that's right. Hope for the best,
Speaker 1: prepared for the worst. Shawn Ohara, thanks so much for
Speaker 1: joining us your ETF shows at one End Wall Street
Speaker 1: time today. Right, that's correct. You talk a lot butts
Speaker 1: because that's where the money. Well, they've been huge this year,
Speaker 1: right when you haven't seen any I, P O, S,
Speaker 1: M and A has burned out, but E t F
Speaker 1: launches just continue to pile in it and investors are
Speaker 1: loving it. And some real names in terms of the
Speaker 1: firms no larger global head of E t S at
Speaker 1: one of those real names, Alliance Bernstein. Uh no, thanks
Speaker 1: so much for joining us here talk to us about
Speaker 1: active e t f s and kind of how that
Speaker 1: plays into kind of what you guys are doing there
Speaker 1: at Alliance Bernstein. Thanks very much for having me on
Speaker 1: this morning. Yeah, I think you know, active ETFs are
Speaker 1: pretty interesting part of the landscape multiple last two years. Uh,
Speaker 1: you know, we're coming up on thirty years of et
Speaker 1: F s in the U S. But but the active
Speaker 1: scene is really While we've had active products in the
Speaker 1: last fourteen fifty years, it's really popped in the last
Speaker 1: couple of years, um for us and Alliance Bernstein. You
Speaker 1: know this was an important step of taking some of
Speaker 1: our best thinking and figuring out how to put it
Speaker 1: into a vehicle that's very accessible, UM, easy for clients
Speaker 1: to get to. Uh, just just really meeting them where
Speaker 1: they are, and the land escape is shifted. In the
Speaker 1: last couple of years, the SEC made some some changes
Speaker 1: to the rule set for issuing ETPs about two and
Speaker 1: a half years ago, and that's been a driver behind
Speaker 1: a lot of the firms, you know, Laton like lines
Speaker 1: Burnstein and others saying it's it's a good time to
Speaker 1: get into this space. So, I mean, does this completely
Speaker 1: take over? We've seen a lot of UM mutual funds
Speaker 1: convert into e t s, which makes sense right because
Speaker 1: you have a smaller cost basis and they're easier to trade.
Speaker 1: Is it? Do you think the future do we do
Speaker 1: we even need mutual funds anymore? Yeah? I think I
Speaker 1: think there's still a place. I mean, it's very you know,
Speaker 1: look at the trend is absolutely there that etp s
Speaker 1: are growing continuing to take a greater and greater share
Speaker 1: of the flows. But you think of the retirement space
Speaker 1: where maybe a mutual funder like a collective trust structure
Speaker 1: UM is still you know, incredibly vibrant, um other other
Speaker 1: areas of distribution where um, you know, the et F
Speaker 1: doesn't always fit as neatly. So I don't think. I mean,
Speaker 1: I think since I've been in I've been doing this
Speaker 1: for more than uh more years, and I care to
Speaker 1: say um, and people have been sort of saying, oh,
Speaker 1: against the end of mutual funds. But but really, you know,
Speaker 1: we know that from the utility perspective. You know, there's
Speaker 1: rarely a one size fits all and the space for
Speaker 1: separate accounts for ets, for mutual funds, um, they're utilized
Speaker 1: heavily by by investors across the well the past, you know,
Speaker 1: et s were kind of um stealing Jack Bogel's lunch,
Speaker 1: so to speak, because they were passive. Now, okay, Vanguard
Speaker 1: happens to be one of the top two issuers of ets.
Speaker 1: But um, But but and mutual funds, you know you
Speaker 1: could have active management there, which is what kind of
Speaker 1: separated them. Now you've got actively managed e t f s. Yeah,
Speaker 1: and that's that's again. I think we're we're um, that's
Speaker 1: going to be an area of growth. I mean, the
Speaker 1: flows and ets this year we're on track, probably had
Speaker 1: the second best flows of overall dollars into et F
Speaker 1: and you know, it's obviously a very confused market period
Speaker 1: over thirteen and that it's going into active et S
Speaker 1: with again a lot of the sponsors just coming in.
Speaker 1: So I think it's as much about putting new strategies
Speaker 1: into the marketplace. You mentioned the conversions. I think it's
Speaker 1: still early days for that. There's um pros and cons
Speaker 1: to that strategy. Uh, But I think overall, if if
Speaker 1: a manager has the ability to bring ETPs into the marketplace, um, again,
Speaker 1: because of the the accessibility and some of the cost
Speaker 1: and tax advantages in the US market, it's a pretty
Speaker 1: attractive means for active managers to get some of their
Speaker 1: best thinking out there. Hey, no, give us a sense
Speaker 1: of you know, retail versus institutional ownership of e t s,
Speaker 1: how has it evolved in and how do you think
Speaker 1: it's going to play out over the next you know,
Speaker 1: several years. Yeah, it's it's actually remarkably steady. I mean,
Speaker 1: if if you look at at the market as a
Speaker 1: whole um, it's tended to be almost fifty fifty, which
Speaker 1: you know, every time I look at that, I always
Speaker 1: think God that you know, it's kind of shift at
Speaker 1: some point. But for new ets, the the adopters are
Speaker 1: often you know R I A S are are a
Speaker 1: big player that's facing investment advisors because they have that
Speaker 1: ability to think about what it's best for their clients
Speaker 1: for loil and what they want to put in there.
Speaker 1: And then institutions UM love the ETFs. It's you know,
Speaker 1: you think it's counterintuitive. A big institution could probably get
Speaker 1: something for even lower cost or or greater um flexibility,
Speaker 1: but they love the ETF structure for the same reasons
Speaker 1: that the retail audience does, which is they can buy
Speaker 1: as much or as little as they want, they can
Speaker 1: hold it for as longer as little as they want,
Speaker 1: and there's not sort of the gating process there to
Speaker 1: keep them in or out of the marketplace. And so
Speaker 1: we still see really heavy participation newer issues. Sometimes it
Speaker 1: takes a little while for an institutional to engage, but
Speaker 1: that's not always the case. Sometimes you'll have institutions coming
Speaker 1: right out of the gate because it's a it's an
Speaker 1: exposure that it's their portfolio needs. Yeah, I mean, costs
Speaker 1: can't get much lower, right, We're talking just a handful
Speaker 1: of basis points UM to to own a lot of
Speaker 1: e t F s. What do you think the um
Speaker 1: the next wave of issuance is and we we saw conversions.
Speaker 1: There's an e t F for everything. So we've seen
Speaker 1: it grow into um different spaces. We've even seen them
Speaker 1: UM chop up uh you know debt levels. If so,
Speaker 1: if you want you know, uh C minus debt exposure,
Speaker 1: you can get that. What's what's on the horizon? Yeah,
Speaker 1: I think that it would the entrance of of you know,
Speaker 1: more active managers and certainly you know a aligns Furnstey
Speaker 1: in the way we're looking at this is UM BTF
Speaker 1: does let you get very granular if you want to
Speaker 1: your point, you can you can go really deep in
Speaker 1: one area or you can look at at broad market teams.
Speaker 1: And that's pretty important. UM. If you think about, you know,
Speaker 1: the evolution the most investors in the US, you know,
Speaker 1: over the span of decades, it's like, well, you know,
Speaker 1: if you like the individual security, that's great, but there's
Speaker 1: risk theirs. So maybe by the industry, if you like industry,
Speaker 1: by the sector. UM, you just sort of diversify your
Speaker 1: best thinking. And I think we continue to see thematic
Speaker 1: you know, global thematic trends playing out in portfolios, and
Speaker 1: I think that's one of the areas of growth that
Speaker 1: you're going to see where people think about some of
Speaker 1: these cross sector aspects. We saw over the last couple
Speaker 1: of years some of the concerns around supply chain and
Speaker 1: where um, some of the great strength of the global
Speaker 1: economy stumbled a little bit, and so what companies are
Speaker 1: set up to take advantage of the fact that there
Speaker 1: might be a retrench you of some of those systems
Speaker 1: are a different way of thinking about how to move
Speaker 1: goods and services around the globe. And I think that
Speaker 1: type of thematic thinking is going to continue to play out,
Speaker 1: especially in the in the active ETF space. So in
Speaker 1: an active et F, I mean Matt was just mentioning
Speaker 1: the low fees, But in an active et F, don't
Speaker 1: I have to I guess, utilize an active management team,
Speaker 1: and don't I have to pay them? How do I
Speaker 1: keep the cost of Yeah, so I think, yeah, there's
Speaker 1: I mean the range of costs and in et F
Speaker 1: are you know, it's it's pretty extreme. I mean you
Speaker 1: go from you know, three or four basis points for
Speaker 1: some of the largest broadest equity index products you know,
Speaker 1: up into basis points for some active constructs where you've
Speaker 1: got you know, unique UM, you know i P being
Speaker 1: brought into play. And and you know what we've seen
Speaker 1: over time is that, UM, the low cost beta story
Speaker 1: you know, remains interesting and relevant for for some some
Speaker 1: aspects of the core portfolio. But investors are very much
Speaker 1: willing to engage at different price points if they feel
Speaker 1: like from a performance perspective or from a risk perspective,
Speaker 1: or just trying to attain some goal in the portfolio,
Speaker 1: whether that's income or some type of you know, a
Speaker 1: buffer type strategy. UM, they're still willing to pay for it.
Speaker 1: And we certainly saw that over the last couple of years.
Speaker 1: UM since you know, since spring of twenty UM price
Speaker 1: wasn't the only factor. Ye alright, no, great stuff. Appreciate
Speaker 1: checking in with us. No Archer, Global head of ets
Speaker 1: at Alliance Bernstein, and those are two of the bluest
Speaker 1: chip names in asset management, Alliance and Bernstein, and now
Speaker 1: they're together and they are in the et F space
Speaker 1: in a big way. All Right, Amazon Matt ten employees
Speaker 1: that are laying off. Okay, that's kind of news, but
Speaker 1: context they have over one point five million employees, so
Speaker 1: less than one percent, but true. Still the story, the
Speaker 1: theme is big tech, who's done nothing but higher for
Speaker 1: literally a generation, nothing but in the hiring mode. This
Speaker 1: is the first time I can remember. I know that
Speaker 1: we had a little bit and obviously the dot com area,
Speaker 1: but um that you know, kind of there's a theme there.
Speaker 1: They're starting to pair back a little bit. Remember the
Speaker 1: fact that the new generation of reporters that comes into
Speaker 1: the studio to talk to us does not remember the
Speaker 1: dot com bust. They were born front center, on the
Speaker 1: front line. And so yeah, I think the interesting thing
Speaker 1: is you're seeing a lot of these companies, especially the
Speaker 1: ones who did big hiring last year, start to do
Speaker 1: layoffs beyond Elon Musk just firing half of Twitter. You've
Speaker 1: got Facebook, You've got Microsoft, You've got uh now now Amazon.
Speaker 1: But the thing to me is, um, they usually need
Speaker 1: to add employees this time of year. Right, that's amazing.
Speaker 1: All right, let's talk cars. You want to do that? Yes? Please?
Speaker 1: All right, why don't you bring in Kevin Tynan because
Speaker 1: I think he does that stuff right. Kevin Tynan joins
Speaker 1: a senior automotive analysts Bloomberg Intelligence and Kevin let's talk
Speaker 1: about UM. Well, first of all, rivan Um putting some
Speaker 1: price hikes, uh, putting putting some price hikes out there,
Speaker 1: and they're already expensive enough. I built one, I think
Speaker 1: pretty conservatively and already got to dollars. Is that going
Speaker 1: to hit demand? Well? Sure, yeah, I mean but look
Speaker 1: at the stage we're in. You know, if one fifty
Speaker 1: lightnings are transacting above eight tho. Yeah, well I'm saying
Speaker 1: the average, and we get those numbers every month, it's
Speaker 1: still well into the eighties on average, but yeah, you
Speaker 1: can get them up into six figures UM. And that's
Speaker 1: just the point we're at. And it's even intensifying now
Speaker 1: because of material costs UM. Where to sell something at
Speaker 1: even break even, We're talking about sixty thou plus, so
Speaker 1: you're not gonna you know, and there's gonna be very
Speaker 1: few automakers that will sell something unprofitably. Right. This is
Speaker 1: what I've been talking about forever UM and now that
Speaker 1: point is just getting higher and higher, which is why
Speaker 1: you're seeing price increases. So, Kevin, here's why this whole
Speaker 1: ev thing is can be a lot bumpier than I
Speaker 1: think the bulls think. I mean, don't you have to
Speaker 1: replace almost every gas station out there with a charging station.
Speaker 1: And some of these trucks require, like, you know, enough
Speaker 1: power to power small talent. There's a Bluemark article out
Speaker 1: today with that kind of analysis. Yeah, and and it's interesting.
Speaker 1: I was just in UH speaking with the greater Cincinnati
Speaker 1: auto dealers who doesn't do that luncheon last weekend. And
Speaker 1: this is what Kevin does. He goes to speaks to
Speaker 1: auto dealers in Cincinnati. That's what you're gonna do. You
Speaker 1: want to cover this business, and you have to talk
Speaker 1: to the dealership owners. Yeah, yeah, and and and we
Speaker 1: had dinner the night before with the UH some Ford
Speaker 1: dealers and one of the things that you know, we've
Speaker 1: heard about Ford requesting from their dealerships and investment of
Speaker 1: a million US dollars to update to be able to
Speaker 1: sell evs um. And was talking to some dealers and
Speaker 1: they were saying, we were fine with all that, changing
Speaker 1: the store, new tile, new entryways, charge points. And when
Speaker 1: they went to the local utility, they said, yeah, you're
Speaker 1: talking three years before we can get that kind of
Speaker 1: power from the street to your store. So even even
Speaker 1: these dealers who want to go along with Ford sort
Speaker 1: of you know, internal combustion side and e V side
Speaker 1: still have to wait because the infrastructure is just not
Speaker 1: there yet. And imagine what it would be, Um, if
Speaker 1: we were talking e V or or more as we're
Speaker 1: saying it's gonna be this, is gonna be this. I'm
Speaker 1: not sure we're ready for that. But they're still gonna
Speaker 1: I mean, someone who's gonna buy an e V uh today, Um,
Speaker 1: they're still gonna buy it, right, Yeah, they're still gonna
Speaker 1: sell as many. These companies are still gonna sell as
Speaker 1: many as they can make. That's not a constraint. Yeah,
Speaker 1: that the issue is they won't make that many. Uh,
Speaker 1: that's because they don't get the kind of margins that
Speaker 1: they'd like to. They still get the margins from the
Speaker 1: big trucks from the six point to leader V eight
Speaker 1: and not from right. Well. So, so the concept we
Speaker 1: hear all the time is, oh, when there's price parity
Speaker 1: between internal combustion and e V, the consumer will adopt
Speaker 1: and will That's where the tipping point in EV adoption comes.
Speaker 1: And I'm saying it has nothing to do with price parity,
Speaker 1: has everything to do with profit parity, because the whole
Speaker 1: adoption thing is determined by the automaker, not by the consumer,
Speaker 1: because the automaker is the is the entity that decides
Speaker 1: am I going to build and sell something unprofitably? Probably not?
Speaker 1: Or am I going to sell the profitable thing? And
Speaker 1: that's kind of where we are. So you know, if
Speaker 1: if internal combustion and e V are both thirty five
Speaker 1: thousand dollars, well how much how much margin is each
Speaker 1: of those will determine which one gets adopted, because that's
Speaker 1: what the manufacturer is going to market and push and
Speaker 1: and that's what the consumer will end up buying. I
Speaker 1: mean you you know, if there if there's a twenty
Speaker 1: thousand dollar difference on a thirty thousand and thirty five
Speaker 1: dollar vehicle in terms of profitability, well you know, you're
Speaker 1: just not gonna purposely sell things unprofitably for very long.
Speaker 1: What's the deal with riv and kevin Um. The stock
Speaker 1: has been up to one seventy two, it's down to
Speaker 1: thirty three right now, even with the massive rally the
Speaker 1: last couple of days. Are they gonna make it? Yeah?
Speaker 1: I mean, you just it's this push for scale now, right,
Speaker 1: which is interesting because you guys are talking about tech
Speaker 1: companies and that was this sort of veil that everybody
Speaker 1: hit under. We're not an automaker, We're a tech company.
Speaker 1: And now that's right, Like that's not Maybe it's such
Speaker 1: a great thing, um, but but at the end of
Speaker 1: the day, the auto industry has if there's one word,
Speaker 1: it's scale. You just need to be able to build
Speaker 1: a lot of things. Margins aren't great. Uh, you need
Speaker 1: to do it all over the world, and you need
Speaker 1: to just keep cranking them out. And these these companies
Speaker 1: that were wildly valued were on this potential or total
Speaker 1: addressable market, not on the reality of where they were
Speaker 1: scales scale wise. Kevin, just real quick, what are you
Speaker 1: driving right now? I actually have the Ionic five from
Speaker 1: Hyundai their e v We get four hour blocks to
Speaker 1: charge them here in Princeton. So I just ran out
Speaker 1: there to UM to update my charging and froze my
Speaker 1: butt off, and I'm thinking, how is this better than
Speaker 1: me sitting in my car while somebody put that vehicle
Speaker 1: that's one that consumers love. Alright, good stuff, Kevin Tyne.
Speaker 1: And he's our auto analysts, quasi tech analysts now covering
Speaker 1: the auto industry from Cold Prince, New Jersey. Here's the story,
Speaker 1: Matt that really got my attention on the Bloomberg terminal.
Speaker 1: Today London loses crown of biggest European stock market to Paris.
Speaker 1: I didn't even think that was an issue. I didn't
Speaker 1: even think that was on the table. So I said,
Speaker 1: all right, let's get somebody smarting here to kind of
Speaker 1: tell us how this happened, what it means going forward,
Speaker 1: because I guess this is a Brexit situation ration here
Speaker 1: or fallout from Brexit. So we've found a great guest,
Speaker 1: Marianne Scordell. She is the founder of a Bourgeville consulting
Speaker 1: Actually like that pronunciation solid perfect Mary, and so this again,
Speaker 1: it is just amazing to me. Tell me how this
Speaker 1: came about because we used to think, and I guess
Speaker 1: we still do those that along with New York, London
Speaker 1: is like the global financial hub. But I guess this
Speaker 1: is a victim of Brexit. Well, you know, since the
Speaker 1: referendum was voted, which was a few years ago now
Speaker 1: it was in there's been a trend. So for a
Speaker 1: long time people were wondering, or where shall we go
Speaker 1: from London, because in order to operate on the continent,
Speaker 1: you now you have to be on the continent. You
Speaker 1: could do it from London, but you can't do it
Speaker 1: from London anymore. You don't have what they call the
Speaker 1: European passport from London anymore. So the question always was
Speaker 1: where shall we go? Where shall we go? And for
Speaker 1: the last like since a lot of financial services companies
Speaker 1: have opened small offices in continental Europe, sometimes with just
Speaker 1: one person, very small kind of to hedge their beds
Speaker 1: at the beginning, and now they're just beefing them up.
Speaker 1: And that's what's happening. So we still have huge asset classes,
Speaker 1: you know, dominated by London. For example f X right is.
Speaker 1: I don't even know how many trillions of dollars f
Speaker 1: X trades a day in London, but it's giant. How
Speaker 1: big is the stock market, the European stock market trading
Speaker 1: in Paris versus what it is in London, Well, I
Speaker 1: don't know. But the choice of Paris really is to
Speaker 1: have like people in one city to exchange because a
Speaker 1: lot of what happens happens like physically. I know in
Speaker 1: the last two years we were all like not in
Speaker 1: the office, but it's really important to be all in
Speaker 1: the same place, in the same office. So that's one
Speaker 1: of the reasons why you know, people, companies, business managers
Speaker 1: were looking for one location to have everybody. I guess
Speaker 1: that's kind of what I'm what I'm really asking is
Speaker 1: where are all the people because um I remember when
Speaker 1: I'm not sure if there's still the case, but it
Speaker 1: used to be that you had the trade equity is
Speaker 1: in Osaka, actually physically enter your orders in Osaka. But
Speaker 1: everybody in the equities industry wanted to live in Tokyo.
Speaker 1: So what they would do is, you know, the top
Speaker 1: guys would pick some kid and and send him to
Speaker 1: Osaka and whenever they want to make trazy, just call
Speaker 1: him up. Right, Is this same thing happening? Are the
Speaker 1: important managers still living in uh, you know, Mayfair or
Speaker 1: Chelsea and just calling in their orders to Paris? Sometimes?
Speaker 1: I mean I know people who actually commute, you know,
Speaker 1: with the Eurostar it's about two hours to go from
Speaker 1: London to Paris, maybe three hours door to door, so
Speaker 1: so you know it's a lot of people still have
Speaker 1: the kids at school in London and they go they
Speaker 1: spend the week in Paris. It was the case, to
Speaker 1: be fair before before Brexit, some people did that the
Speaker 1: other way around. Actually, the Flamilies were more on the continents,
Speaker 1: people worked in London and they spend the weekend on
Speaker 1: the continent and the week in London. Now they do
Speaker 1: the other way around. It's not a big deal at all.
Speaker 1: So Mary and you spent a lot of time of
Speaker 1: your professional career in London and no more, no Mura, Barclays.
Speaker 1: When you talk to your clients over there, do they
Speaker 1: feel like that the time of London as a global
Speaker 1: financial hub, that that is in fact in the rear
Speaker 1: view mirror, that's in the past where we've kind of
Speaker 1: lost that position. I think it's not a done deal yet.
Speaker 1: People are still kind of in two minds. It's been
Speaker 1: really progressive since the referendum. So now they are adding people,
Speaker 1: even like banks such as Golden Sacks, Morgan Standing, they're
Speaker 1: adding stuff to their Paris office Paris offices and so
Speaker 1: it's but but it's not a done deal yet. I mean,
Speaker 1: you can't say now Paris is bigger than London in
Speaker 1: terms of being the financial center. It's working progress and
Speaker 1: things can still change a little bit. You know, it's
Speaker 1: not um it was, It's not yet black or white.
Speaker 1: I think we have to bear that in mind. The
Speaker 1: elephant in the room when you're talking about France or
Speaker 1: the same is true. I guess another sort of social
Speaker 1: democracies as tax right and the Wall Street crowd or um,
Speaker 1: you know, the London finance crowd doesn't want to move there,
Speaker 1: um and then find out that all of a sudden
Speaker 1: the Parisian left has brought out the guillotine again. Well,
Speaker 1: I hope they never will do that anyway, but it's
Speaker 1: very true that that's one of the big questions, together
Speaker 1: with the labor law and tax However, the French want
Speaker 1: to refer like the French government has done a big
Speaker 1: marketing pushed towards the financial community, so they for example,
Speaker 1: they come to New York fairly, you know, fairly often
Speaker 1: to meet fund managers to say how Paris has become,
Speaker 1: you as a business friendly in financial services but in
Speaker 1: business overall. And it's true that they're trying to reform,
Speaker 1: but that's very obviously very slow. That's normal. Um. So
Speaker 1: it's it's basically taking time, but hopefully hopefully they'll get there.
Speaker 1: From experience, what I can say is that it's a
Speaker 1: lot easier now than it used to be to access regulators,
Speaker 1: to access even like the government, when you need to
Speaker 1: ask questions they have like they're more open for business
Speaker 1: now than they were maybe ten years ago, and I
Speaker 1: know that from experience doing that for my clients have
Speaker 1: been moving a few hege funds too to continent Continental Europe,
Speaker 1: um Portugal, also Paris. So it's interesting. But is Germany
Speaker 1: an option here? Because when I think of just I
Speaker 1: mean when I was on the south side, might stop
Speaker 1: in Germany was always Frankfort that was a major European
Speaker 1: financial hub. Is that still the case and are they
Speaker 1: trying to get are they successfully taking some of that
Speaker 1: talent from London? So I do a lot of less
Speaker 1: business in Germany. One reason is very simple. I don't
Speaker 1: speak German. I speak a lot of other languages, but
Speaker 1: not German. So you know, usually clients who come to
Speaker 1: me are clients who are more interested in the continents.
Speaker 1: A lot of people are saying that Germany is I'm sorry,
Speaker 1: I maybe it's not true, but they are saying it's
Speaker 1: a bit dull. So that's why, you know, that's why
Speaker 1: traders and salespeople prefer to live in Paris and Germany.
Speaker 1: That maybe one of the reasons. It's deadly, deadly boring
Speaker 1: living in Frankfort and the best Thingstchester I've lived. I've lived.
Speaker 1: I've spent years living in Frankfort and the I mean,
Speaker 1: it's really fantastic to have the airport so close and
Speaker 1: easy to get out of Frankfort. But otherwise there's not
Speaker 1: a lot to do. They're compared to Paris. Dublin was
Speaker 1: also an option that a lot of people were interested in.
Speaker 1: Madrid is one that I think would be great. Um,
Speaker 1: you mentioned Portugal. What are some of the alternatives? Where
Speaker 1: else are people looking at? Yeah, there's also Amsterdam. Several
Speaker 1: clients have asked me to enquire about the regulatory regime
Speaker 1: in Amsterdam, and you know, everything around it, because if
Speaker 1: you go somewhere and you live there, it's not just
Speaker 1: wherek it's you know, how how is it going? What
Speaker 1: is it going to be like for the schools for kids? Schools?
Speaker 1: They have a lot of international schools in Amsterdam. Everybody
Speaker 1: speaks English as well, which is not necessarily the case
Speaker 1: in Um, for example, in Spain. Right, UM, definitely is
Speaker 1: not the case in I know that exactly because you flounder.
Speaker 1: My wife is Spanish and none of her family knows
Speaker 1: how to speak English, and I don't know how. Maybe
Speaker 1: they just don't want to speak to you. That's all right, Maryanne,
Speaker 1: thank you so much for joining us. Really appreciate getting
Speaker 1: uh your perspective. You're on a story that I think
Speaker 1: it's just really fascinating. Uh. London Loser's Crown the biggest
Speaker 1: European stock market to Paris. Marianne Scordell found her of
Speaker 1: a Bougeviilt Consulting. I appreciate you being in the Bloomberg
Speaker 1: Interactive Broker's studio. Thanks for listening to the Bloomberg Markets podcast.
Speaker 1: You can subscribe and listen to interviews with Apple Podcasts
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
Speaker 1: on Twitter at Matt Miller. Yet on Fall Sweeney I'm
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Speaker 1: always catch us worldwide at Bloomberg Radio