WEBVTT - Crypto, ETFs, and Stocks (Podcast) 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 0:00:11.520 --> 0:00:15.520 with essential market moving news. Fund The Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.960 at Bloomberg dot com Slash podcast. Looking at Bitcoin up 0:00:23.000 --> 0:00:26.920 one point five sixteen thousand, six hundreds, still way way 0:00:26.960 --> 0:00:29.480 below that support level it seemed to be at forever 0:00:29.520 --> 0:00:33.320 of dollars photographer. It's been a wild ride for the cryptospace, 0:00:33.320 --> 0:00:35.320 and we want to break it down with some experts 0:00:35.360 --> 0:00:38.800 here Mike mclogan's senior commodity strategist with Bloomberg Intelligence, and 0:00:38.840 --> 0:00:41.760 Katie Greifeld, cross Asset reporter or Bloomberg News. They are 0:00:41.800 --> 0:00:45.920 both in our Bloomberg Interactive Broker studio. Thank goodness, Thank goodness, 0:00:46.000 --> 0:00:48.160 I have some things I need to get off my check. 0:00:48.360 --> 0:00:52.640 Do you go all right? First of all, cz guys 0:00:52.760 --> 0:00:56.520 has suggested some kind of lender of last resort fund right? 0:00:56.840 --> 0:00:59.560 Is he gonna next suggest some kind of central bank 0:00:59.680 --> 0:01:02.320 that will print bitcoin whenever they're needed? I mean, does 0:01:02.320 --> 0:01:07.080 he not understand the idea that the origins of cryptocurrency, Mike, 0:01:07.080 --> 0:01:09.679 does it not bother you? It does. And I've actually 0:01:09.800 --> 0:01:12.600 this weekend was so much of that kind of information around. 0:01:12.600 --> 0:01:15.040 I deliberately try to ignore it because it it gets 0:01:15.120 --> 0:01:17.800 past what really matters. Now, this is just digging into 0:01:18.200 --> 0:01:20.560 what person who turned out to be duked us all, 0:01:20.800 --> 0:01:24.800 including me um And but you didn't have any money 0:01:24.840 --> 0:01:27.440 on FTX did I didn't, And I'm not allowed to 0:01:27.480 --> 0:01:29.959 invest a lot in cryptos. I can invest the minimus amounts, 0:01:29.959 --> 0:01:32.319 so I have a lot of just changes small amounts. 0:01:32.560 --> 0:01:34.120 I didn't. But the key thing would start with first 0:01:34.120 --> 0:01:36.480 of all, Bitcoin is actually down on the on the 0:01:36.600 --> 0:01:39.119 day because what you see in the screen was from yesterday, 0:01:39.520 --> 0:01:42.000 and that's it's always messes me up on Monday's. So 0:01:42.000 --> 0:01:44.319 it's actually it's actually down about one or two percent 0:01:44.640 --> 0:01:47.240 on the week because you have to compare Apple's apps. Okay, 0:01:47.280 --> 0:01:50.080 you're saying from Friday's Fridays, but that's the thing to 0:01:50.160 --> 0:01:52.880 remember about. People are realizing this thing never stops trading. 0:01:53.240 --> 0:01:55.480 So and I'll also point out what so it really 0:01:55.560 --> 0:01:58.520 might me dig into what's happened so far as cryptos 0:01:58.520 --> 0:01:59.800 have gone down a lot. But if you look at 0:01:59.800 --> 0:02:03.200 the Bloomberg Galaxy crypto indic, since this whole thing started 0:02:03.440 --> 0:02:05.800 end of two thousand nineteen, it's still up two so 0:02:05.840 --> 0:02:09.480 we can drop, it's still up, so I can drop 0:02:09.520 --> 0:02:12.239 fifty and still percent it's still be in the nantics. 0:02:12.240 --> 0:02:15.160 So it's just maximum performance going back down. But what 0:02:15.280 --> 0:02:18.080 I see coming out of this is more regulation. What 0:02:18.160 --> 0:02:22.840 more regulation means institutions need that more centralization is what 0:02:22.880 --> 0:02:24.680 they need. What you're saying right, this is what the 0:02:24.720 --> 0:02:30.160 decentralized financial world needs, Katie, Uh, your crypto native or 0:02:30.160 --> 0:02:34.360 at least digitally native digital. When you and your cohort 0:02:34.880 --> 0:02:38.679 um want to buy trustless currency, um, do you then 0:02:39.040 --> 0:02:42.000 leave it on someone else's in someone else's wallet? Do 0:02:42.040 --> 0:02:44.799 you let somebody else have the keys? Why do people 0:02:44.840 --> 0:02:47.960 not take their crypto immediately, put it in their own 0:02:47.960 --> 0:02:50.760 walls and take it offline. I will not speak for myself, 0:02:50.800 --> 0:02:53.680 as I am a journalist and like Mike can't not 0:02:53.880 --> 0:02:56.919 really invest in cryptocurrency. But when I talk to my appears, 0:02:57.000 --> 0:02:59.920 for example, I mean a lot of them, the one 0:03:00.160 --> 0:03:02.840 who are crypto curious. They went through the likes of 0:03:02.880 --> 0:03:06.160 coin base for example, maybe Robin hood. But what's interesting 0:03:06.240 --> 0:03:09.639 now is that you're seeing billions of dollars from exchanges 0:03:09.720 --> 0:03:12.480 because no one really trusts them. I mean, people are 0:03:12.520 --> 0:03:15.400 going into cold storage they want their keys back. I 0:03:15.440 --> 0:03:17.880 think f t X is a great example of why 0:03:18.000 --> 0:03:20.880 if you're a hardcore bitcoin believer, maybe you don't want 0:03:20.880 --> 0:03:23.400 to be on one of these centralized exchanges. You want 0:03:23.440 --> 0:03:25.639 your bitcoin, you want to know where it is. So 0:03:25.760 --> 0:03:27.960 there you go. So I want to get to just 0:03:28.080 --> 0:03:32.640 want angle with you, Sam Bankman Freed, what what do 0:03:32.720 --> 0:03:35.080 we know? Was? Is there fraud there? Why is he 0:03:35.200 --> 0:03:38.600 not in an FBI office somewhere answering questions right now? 0:03:38.680 --> 0:03:42.440 As opposed to the Bahamas. It's an interesting question that 0:03:42.480 --> 0:03:44.120 I don't have the answer to. Is why f t 0:03:44.360 --> 0:03:46.480 X filed for bankruptcy in the US if they're based 0:03:46.480 --> 0:03:49.920 in the Bahamas. I believe he's in the Bahamas. The 0:03:50.000 --> 0:03:52.680 reporting would suggest that he is. I mean, we know 0:03:52.800 --> 0:03:57.840 that Bahamas authorities spoke to him. That would imply physically 0:03:57.880 --> 0:04:00.600 they're in the Bahamas. I don't el though. I mean 0:04:00.600 --> 0:04:04.000 there's an ongo I mean, there are million questions that 0:04:04.080 --> 0:04:06.880 we have. I'm sure Katie has the same questions even 0:04:06.920 --> 0:04:11.040 if she had a hunch as to an answer. Probably 0:04:11.040 --> 0:04:13.800 wouldn't want to give it to us on live radio, right, 0:04:14.200 --> 0:04:18.560 but maybe Mike will um. I mean, how did they 0:04:18.600 --> 0:04:21.919 have such a big eight nine billion dollar hole? Was 0:04:22.000 --> 0:04:26.880 their fraud? Also? Who took the four to six hundred 0:04:26.920 --> 0:04:29.440 million dollars of coins in the last couple of days? 0:04:29.600 --> 0:04:32.719 Is anybody on the run? What can you tell us? 0:04:32.760 --> 0:04:35.760 I think the word first world is illegal co mingling? 0:04:35.880 --> 0:04:37.960 Now how we've heard this in future since I've been 0:04:38.000 --> 0:04:39.840 in the business, and you've seen firms going there. It's 0:04:39.880 --> 0:04:43.960 just a different level, different people, different time. And LaMDA 0:04:44.040 --> 0:04:46.320 was a research arm, which was they say they were 0:04:46.400 --> 0:04:49.280 channeling of customer funds. Apparently they might have been channeling 0:04:49.279 --> 0:04:53.040 customer funds into campaign donations to the Binding compaign. Number 0:04:53.120 --> 0:04:56.799 number two donator to the Binding camp campaign was SPF. 0:04:57.440 --> 0:04:59.720 So oh yeah, so it's it's shocking that way. And 0:04:59.760 --> 0:05:01.880 see ze, by the way, it was an ex Bloomberg employee, 0:05:01.880 --> 0:05:04.120 so we have had quality from X Bloomberg employees coming 0:05:04.120 --> 0:05:07.560 from c Z. I did not know that. Wow, all right, Mike, 0:05:07.880 --> 0:05:10.560 you're in Miami not just because you love the warm 0:05:10.560 --> 0:05:13.480 weather and you had enough a Connecticut But let's face 0:05:13.480 --> 0:05:15.880 it in the crypto world. They're trying to establish themselves 0:05:15.920 --> 0:05:20.000 as a a physical leading space where the smart crypto 0:05:20.279 --> 0:05:23.839 people go. Given that backdrop, what's the feeling out of 0:05:23.839 --> 0:05:26.040 Miami over the past three or four or five days. 0:05:26.400 --> 0:05:28.240 Are people just kind of throwing their hands up, like 0:05:28.360 --> 0:05:30.520 what do we get ourselves into? Or I'm not sensing 0:05:30.560 --> 0:05:33.320 that public? Give you one example, MasterCard. A good friend 0:05:33.320 --> 0:05:35.000 of mine who is a former New York you know 0:05:35.080 --> 0:05:37.400 Wall Street guy, just moved to Miami to work for 0:05:37.480 --> 0:05:40.440 MasterCard in cryptos. That's how things are changing. Two years 0:05:40.480 --> 0:05:43.040 ago that that sentence, what would have been an oxymoron. 0:05:43.360 --> 0:05:45.440 So I think the big just did and he's getting 0:05:45.440 --> 0:05:47.800 a pink slip tomorrow. Well that's the problem. But here's 0:05:47.839 --> 0:05:50.080 the thing that's happening. One thing that's you look at Ethereum. 0:05:50.080 --> 0:05:52.800 Athereum is up one thousand or ten x since two 0:05:52.800 --> 0:05:55.000 thousand nineteen. Sure it's dropped a lot, but you know 0:05:55.080 --> 0:05:57.680 it started a hundred now just over a thousand. What 0:05:57.920 --> 0:06:00.839 is it doing. It's revelized the revolution is in fintech 0:06:01.320 --> 0:06:04.000 and like it makes possible the most white Trady cryptos. 0:06:04.000 --> 0:06:06.240 It's the dollar crypto door. So I think it's gonna 0:06:06.240 --> 0:06:08.719 bring on US regulation. But the US realizes this is 0:06:08.760 --> 0:06:11.159 making the base layer for the whole world to be 0:06:11.200 --> 0:06:13.479 a cryptos. The dollar and Ethereum is doing that, so 0:06:13.520 --> 0:06:16.560 people get the technology. This is a major sell, but 0:06:16.640 --> 0:06:18.400 it's just a bump in the road I've seen in 0:06:18.480 --> 0:06:20.479 terms of what I love that perspective because I don't 0:06:20.520 --> 0:06:24.520 have that perspective a last week. Right, we gotta get 0:06:24.520 --> 0:06:27.200 Mike and Cameron cries On together because they disagree like 0:06:27.240 --> 0:06:31.960 a hundred and I was playing that. Alright, Alright, guys, 0:06:32.000 --> 0:06:34.240 that's good stuff. We'll gonna keep on top of this story. 0:06:34.240 --> 0:06:36.040 And we can do that because we got some really 0:06:36.040 --> 0:06:38.560 smart people that have experience in this space and that 0:06:38.720 --> 0:06:41.400 is hard to find around there. Mike McLoone, Senior Commodity 0:06:41.440 --> 0:06:45.159 Strategies with Bloomberg Intelligence. He's been dealing and trading commodities 0:06:45.200 --> 0:06:47.840 forever and that's what crypto is for a lot of folks. 0:06:47.880 --> 0:06:50.919 And Katie Gray Felt Cross Asset, Cross Asset Reporter and 0:06:50.920 --> 0:06:53.920 that now includes a crypto. She does that with Bloomberg News. 0:06:57.000 --> 0:06:58.599 We take a look at some of the price action 0:06:58.800 --> 0:07:01.440 of last week, particularly towards the end of the weekend 0:07:01.480 --> 0:07:04.120 that big Thursday rip kind of brings back that bowl 0:07:04.200 --> 0:07:06.640 call that's been out there for a while, which is, 0:07:06.839 --> 0:07:09.880 you know, these risk on assets can work late into 0:07:09.920 --> 0:07:13.400 the year, maybe rally towards the year because we've seen 0:07:13.560 --> 0:07:17.640 peak interest rates, we've seen peak inflation. Uh, earnings have 0:07:17.720 --> 0:07:20.000 come down, they've been reset. Maybe this is kind of 0:07:20.000 --> 0:07:22.920 sets you for good clothes. Sean O'Hara, President of pac 0:07:22.960 --> 0:07:25.000 your et S. Sean, what do you think of that 0:07:25.040 --> 0:07:27.520 calls out a little naive or or do you in 0:07:27.600 --> 0:07:30.240 fact think that maybe a lot of the headwinds are 0:07:30.240 --> 0:07:32.480 starting to abate and it might be time to take 0:07:32.480 --> 0:07:37.440 on some more risk. Wel, good morning, Thanks for having me. Um. 0:07:37.480 --> 0:07:39.680 I think it's a little premature to to to sort 0:07:39.680 --> 0:07:41.440 of make that call, you know. I mean, it's just 0:07:41.480 --> 0:07:43.840 doing some simple math. If you if you think the 0:07:44.000 --> 0:07:46.640 SMP is gonna earn like, you know, two thirty bucks 0:07:46.680 --> 0:07:49.960 next year, we're still trading at a level that's probably 0:07:50.080 --> 0:07:53.720 higher on a pe basis than perhaps the market should be. 0:07:53.760 --> 0:07:56.720 But that's the whole market. And so I think the big, 0:07:56.760 --> 0:08:00.440 the big drag on that is potentially going to be tech. Uh, 0:08:00.520 --> 0:08:03.240 you know, tech is as a sector the last six 0:08:03.320 --> 0:08:05.880 years have seen their stock prices go up about fifty 0:08:05.960 --> 0:08:09.000 percent more than their earnings, whereas the rest of the 0:08:09.040 --> 0:08:11.440 market has sort of adjusted itself in its healthcare as 0:08:11.480 --> 0:08:14.000 an example, Actually the stocks in the healthcare sector have 0:08:14.080 --> 0:08:16.160 gone up less than their earnings the last six years. 0:08:16.720 --> 0:08:20.160 There are pockets of opportunity. I wouldn't be making a 0:08:20.200 --> 0:08:22.240 broad market call that, you know, things are going to 0:08:22.360 --> 0:08:24.880 go back to the way they were, and that inflation 0:08:24.960 --> 0:08:27.520 is not a problem anymore, and inflation is going to 0:08:27.600 --> 0:08:29.960 continue to be stubborn. You know, we saw a minor 0:08:30.800 --> 0:08:33.160 decrease in the year over year increase, and I think 0:08:33.200 --> 0:08:35.679 everybody took that to mean, well, you know, we just 0:08:35.720 --> 0:08:37.199 have to have a couple more months and this is 0:08:37.240 --> 0:08:38.880 all over with and we're back to the races. I 0:08:38.920 --> 0:08:41.320 don't think it's going to play out that way. So, 0:08:41.520 --> 0:08:45.680 but there are sectors you find attractive, healthcare being one 0:08:45.720 --> 0:08:50.200 of them, um energy another. These are obviously huge pieces 0:08:50.240 --> 0:08:53.760 of the inflation picture. I mean healthcare. I guess we 0:08:53.840 --> 0:08:56.040 see massive inflation there all the time, even when we 0:08:56.080 --> 0:08:57.960 don't have it in the rest of the economy. But 0:08:58.000 --> 0:09:00.760 why do you like why do you like them? Well, 0:09:00.800 --> 0:09:04.000 we we have a large cap fund ceow Z and 0:09:04.040 --> 0:09:06.400 our et F family. It's cash cow, that's one of 0:09:06.400 --> 0:09:09.480 our favorites, and it's up here to date. It's up 0:09:09.520 --> 0:09:12.240 like five percent year to date. So, uh, you know, 0:09:12.280 --> 0:09:15.280 it's overweight energy, it's overweight healthcare and silver right materials. 0:09:15.320 --> 0:09:18.520 It's as underweight as it's ever been consumer discretionary in tech, 0:09:18.600 --> 0:09:20.960 and so you know, the consumer is going to be 0:09:21.160 --> 0:09:24.080 I think in a big, big quandary here. They're gonna 0:09:24.080 --> 0:09:26.920 get squeezed. They're going to have to make decisions. You know, 0:09:27.040 --> 0:09:29.080 this winter, some people are gonna have to decide whether 0:09:29.080 --> 0:09:30.800 they want to eat or heat their house. I mean, 0:09:30.840 --> 0:09:33.240 I think, you know, the Thanksgiving holiday is going to 0:09:33.280 --> 0:09:34.880 be a big shocker to people in terms of how 0:09:34.920 --> 0:09:36.520 much more it's going to cost this year. But when 0:09:36.520 --> 0:09:40.160 you look at detectors like energy or healthcare, they're trading 0:09:40.320 --> 0:09:44.480 in relatively inexpensive levels historically. I think the healthcare trade 0:09:44.520 --> 0:09:47.839 is both in inflation and a demographics play. Um. You know, 0:09:47.880 --> 0:09:51.320 the demographics and healthcare got hidden by COVID, and once 0:09:51.440 --> 0:09:53.280 COVID is out of the way, I think that demographic 0:09:53.320 --> 0:09:55.600 trend will pick back up. You know, as people get older, 0:09:55.600 --> 0:09:57.560 they need more health care of the baby boomers ten 0:09:57.600 --> 0:10:00.120 thousand people a day for the next decade or so 0:10:00.240 --> 0:10:03.920 turning age sixty and energy is you know that they've 0:10:03.960 --> 0:10:06.440 just got so much cash flow in the energy sector. 0:10:06.480 --> 0:10:08.280 And I don't think that oil prices are going to 0:10:08.360 --> 0:10:11.960 go back down. I think they're more likely to continue 0:10:11.960 --> 0:10:15.160 to hover in this ranger or maybe maybe increase a 0:10:15.200 --> 0:10:17.640 little as the winter months come on. So there are 0:10:17.679 --> 0:10:19.720 plenty of places to make money. I just don't think 0:10:19.760 --> 0:10:21.640 it's going to be the same places that people have 0:10:21.760 --> 0:10:23.840 made money in the past, and so we accepted adjust 0:10:23.840 --> 0:10:27.439 our expectations and our views. I don't think you can 0:10:27.480 --> 0:10:30.720 continue to be a broad market investor. Um. You know, 0:10:31.040 --> 0:10:33.320 Mike Wilson's a very smart guy, has been very right 0:10:33.360 --> 0:10:35.080 on a lot of his calls. And if he's saying 0:10:35.120 --> 0:10:37.040 that next year the SMP is going to be where 0:10:37.040 --> 0:10:40.120 it is this year, then you just can't buy the SMP. 0:10:40.240 --> 0:10:42.160 You've got to figure out how to find places within 0:10:42.200 --> 0:10:45.160 the SMP to make money. So far, that's been you know, 0:10:45.240 --> 0:10:51.160 the under you underliked or undernoticed sectors like energy, healthcare, materials, industrials, 0:10:51.160 --> 0:10:54.480 and staples. So Sean we we we had some elections 0:10:54.480 --> 0:10:56.720 recently and looks like we're gonna have a divided government. 0:10:56.760 --> 0:10:59.720 A lot of folks saying that's bullish for risk assets. 0:10:59.720 --> 0:11:03.679 Are you in that camp? I am, um, although I 0:11:03.720 --> 0:11:06.400 don't know what the it's ultimately gonna wind up that way. 0:11:06.440 --> 0:11:11.640 I mean I would wait waiting on Georgia. Um. I mean, well, George, 0:11:11.679 --> 0:11:13.679 the Senate's over there, you know, the Senate, we're not. 0:11:13.720 --> 0:11:15.920 The Republicans are going to control the sense. All that's 0:11:16.000 --> 0:11:17.679 left is really that they can squeak out a win 0:11:17.760 --> 0:11:20.400 in the House, and that would be you know, the 0:11:20.440 --> 0:11:23.760 most divided of all divided governments, because all spending bills 0:11:23.760 --> 0:11:25.520 start in the House, and so they won't you know, 0:11:25.559 --> 0:11:27.560 with the Democrat House, they can at least make their 0:11:27.559 --> 0:11:30.240 way to the Senate and then the ultimate to the 0:11:30.240 --> 0:11:32.120 President's desk. I don't think there's going to be any 0:11:32.120 --> 0:11:34.360 spending bills that will come out of the House if 0:11:34.360 --> 0:11:37.320 it's controlled by the Republicans, and the market generally likes that. 0:11:38.360 --> 0:11:40.400 But you have, you know, this over I don't think 0:11:40.400 --> 0:11:42.880 you can go purely based on historical trends. You know 0:11:42.920 --> 0:11:45.439 that every time we have you know, divided government, the 0:11:45.520 --> 0:11:48.560 market goes up or from November to April. The markets 0:11:48.600 --> 0:11:51.040 always up and these sort of you know, cyclical stories 0:11:51.120 --> 0:11:54.040 or historical or trend aask trends. I think, you know, 0:11:54.040 --> 0:11:56.000 you have to take a look at what's really going on, 0:11:56.080 --> 0:11:58.480 and and what's really going on is that, you know, 0:11:58.559 --> 0:12:02.160 inflation continues to be a struggle. It would wouldn't surprise 0:12:02.240 --> 0:12:04.679 me if the FED changed its target for inflation and 0:12:04.760 --> 0:12:07.240 moved it up a little bit since they're having such 0:12:07.280 --> 0:12:10.760 a hard time. But they're just committed to raising rates 0:12:11.440 --> 0:12:14.000 so much so that they are going to damp in 0:12:14.080 --> 0:12:16.640 quote unquote demand, which means they're going to basically slow 0:12:16.720 --> 0:12:18.719 down the economy. And the question is going to be 0:12:19.120 --> 0:12:20.960 are they going to slow it down and have it, 0:12:21.040 --> 0:12:23.120 you know, come to a soft landing or they have 0:12:23.160 --> 0:12:26.160 to slow it down things come crashing down. And I think, 0:12:26.200 --> 0:12:28.080 you know, if you base you know, your judgment on 0:12:28.440 --> 0:12:31.480 historical you know, anomalies with them, you know, do they 0:12:31.520 --> 0:12:33.400 ever get it right at the Fed? They very rarely 0:12:33.440 --> 0:12:36.160 do get it right. So I will hope for better 0:12:36.160 --> 0:12:39.079 performance coming up here. Shaun O'Hara, he's a president of 0:12:39.160 --> 0:12:43.640 pacer Ets, hope for it, but we won't invest that. Yeah, 0:12:43.679 --> 0:12:45.600 I think it's what said that's right. Hope for the best, 0:12:45.600 --> 0:12:47.240 prepared for the worst. Shawn Ohara, thanks so much for 0:12:47.280 --> 0:12:53.199 joining us your ETF shows at one End Wall Street 0:12:53.200 --> 0:12:55.800 time today. Right, that's correct. You talk a lot butts 0:12:55.880 --> 0:12:58.320 because that's where the money. Well, they've been huge this year, 0:12:58.440 --> 0:13:01.079 right when you haven't seen any I, P O, S, 0:13:01.400 --> 0:13:05.000 M and A has burned out, but E t F 0:13:05.120 --> 0:13:08.560 launches just continue to pile in it and investors are 0:13:08.559 --> 0:13:11.320 loving it. And some real names in terms of the 0:13:11.360 --> 0:13:13.600 firms no larger global head of E t S at 0:13:13.640 --> 0:13:17.800 one of those real names, Alliance Bernstein. Uh no, thanks 0:13:17.800 --> 0:13:20.160 so much for joining us here talk to us about 0:13:20.440 --> 0:13:23.120 active e t f s and kind of how that 0:13:23.160 --> 0:13:25.120 plays into kind of what you guys are doing there 0:13:25.160 --> 0:13:28.960 at Alliance Bernstein. Thanks very much for having me on 0:13:28.960 --> 0:13:31.080 this morning. Yeah, I think you know, active ETFs are 0:13:31.160 --> 0:13:35.080 pretty interesting part of the landscape multiple last two years. Uh, 0:13:35.120 --> 0:13:36.960 you know, we're coming up on thirty years of et 0:13:37.080 --> 0:13:38.840 F s in the U S. But but the active 0:13:38.880 --> 0:13:41.400 scene is really While we've had active products in the 0:13:41.480 --> 0:13:43.880 last fourteen fifty years, it's really popped in the last 0:13:43.920 --> 0:13:46.880 couple of years, um for us and Alliance Bernstein. You 0:13:46.920 --> 0:13:49.760 know this was an important step of taking some of 0:13:49.760 --> 0:13:51.600 our best thinking and figuring out how to put it 0:13:51.640 --> 0:13:55.040 into a vehicle that's very accessible, UM, easy for clients 0:13:55.040 --> 0:13:58.360 to get to. Uh, just just really meeting them where 0:13:58.400 --> 0:14:01.000 they are, and the land escape is shifted. In the 0:14:01.080 --> 0:14:04.520 last couple of years, the SEC made some some changes 0:14:04.559 --> 0:14:07.079 to the rule set for issuing ETPs about two and 0:14:07.080 --> 0:14:09.720 a half years ago, and that's been a driver behind 0:14:09.720 --> 0:14:11.760 a lot of the firms, you know, Laton like lines 0:14:11.800 --> 0:14:14.520 Burnstein and others saying it's it's a good time to 0:14:14.559 --> 0:14:18.600 get into this space. So, I mean, does this completely 0:14:18.679 --> 0:14:22.440 take over? We've seen a lot of UM mutual funds 0:14:22.840 --> 0:14:25.560 convert into e t s, which makes sense right because 0:14:25.600 --> 0:14:29.640 you have a smaller cost basis and they're easier to trade. 0:14:30.640 --> 0:14:32.400 Is it? Do you think the future do we do 0:14:32.440 --> 0:14:35.840 we even need mutual funds anymore? Yeah? I think I 0:14:35.880 --> 0:14:37.960 think there's still a place. I mean, it's very you know, 0:14:38.000 --> 0:14:40.480 look at the trend is absolutely there that etp s 0:14:40.520 --> 0:14:43.960 are growing continuing to take a greater and greater share 0:14:43.960 --> 0:14:46.600 of the flows. But you think of the retirement space 0:14:46.640 --> 0:14:49.400 where maybe a mutual funder like a collective trust structure 0:14:49.600 --> 0:14:52.960 UM is still you know, incredibly vibrant, um other other 0:14:53.040 --> 0:14:56.160 areas of distribution where um, you know, the et F 0:14:56.280 --> 0:14:59.000 doesn't always fit as neatly. So I don't think. I mean, 0:14:59.040 --> 0:15:00.680 I think since I've been in I've been doing this 0:15:00.720 --> 0:15:03.160 for more than uh more years, and I care to 0:15:03.200 --> 0:15:05.840 say um, and people have been sort of saying, oh, 0:15:05.880 --> 0:15:08.360 against the end of mutual funds. But but really, you know, 0:15:08.760 --> 0:15:11.680 we know that from the utility perspective. You know, there's 0:15:11.760 --> 0:15:14.680 rarely a one size fits all and the space for 0:15:14.720 --> 0:15:18.840 separate accounts for ets, for mutual funds, um, they're utilized 0:15:18.840 --> 0:15:21.960 heavily by by investors across the well the past, you know, 0:15:22.040 --> 0:15:26.200 et s were kind of um stealing Jack Bogel's lunch, 0:15:26.440 --> 0:15:29.720 so to speak, because they were passive. Now, okay, Vanguard 0:15:29.800 --> 0:15:32.440 happens to be one of the top two issuers of ets. 0:15:32.520 --> 0:15:35.280 But um, But but and mutual funds, you know you 0:15:35.280 --> 0:15:38.120 could have active management there, which is what kind of 0:15:38.160 --> 0:15:44.200 separated them. Now you've got actively managed e t f s. Yeah, 0:15:44.280 --> 0:15:47.240 and that's that's again. I think we're we're um, that's 0:15:47.400 --> 0:15:48.840 going to be an area of growth. I mean, the 0:15:48.880 --> 0:15:52.320 flows and ets this year we're on track, probably had 0:15:52.520 --> 0:15:55.400 the second best flows of overall dollars into et F 0:15:55.520 --> 0:15:58.400 and you know, it's obviously a very confused market period 0:15:59.080 --> 0:16:01.600 over thirteen and that it's going into active et S 0:16:01.640 --> 0:16:03.560 with again a lot of the sponsors just coming in. 0:16:03.640 --> 0:16:06.520 So I think it's as much about putting new strategies 0:16:06.560 --> 0:16:08.760 into the marketplace. You mentioned the conversions. I think it's 0:16:08.760 --> 0:16:11.920 still early days for that. There's um pros and cons 0:16:11.960 --> 0:16:15.600 to that strategy. Uh, But I think overall, if if 0:16:15.600 --> 0:16:19.640 a manager has the ability to bring ETPs into the marketplace, um, again, 0:16:19.680 --> 0:16:22.280 because of the the accessibility and some of the cost 0:16:22.360 --> 0:16:25.040 and tax advantages in the US market, it's a pretty 0:16:25.040 --> 0:16:28.520 attractive means for active managers to get some of their 0:16:28.520 --> 0:16:31.600 best thinking out there. Hey, no, give us a sense 0:16:31.640 --> 0:16:35.520 of you know, retail versus institutional ownership of e t s, 0:16:35.880 --> 0:16:37.720 how has it evolved in and how do you think 0:16:37.720 --> 0:16:39.200 it's going to play out over the next you know, 0:16:39.320 --> 0:16:43.360 several years. Yeah, it's it's actually remarkably steady. I mean, 0:16:43.360 --> 0:16:45.360 if if you look at at the market as a 0:16:45.360 --> 0:16:48.440 whole um, it's tended to be almost fifty fifty, which 0:16:48.520 --> 0:16:49.800 you know, every time I look at that, I always 0:16:49.800 --> 0:16:51.240 think God that you know, it's kind of shift at 0:16:51.240 --> 0:16:54.640 some point. But for new ets, the the adopters are 0:16:54.680 --> 0:16:56.920 often you know R I A S are are a 0:16:56.920 --> 0:16:59.480 big player that's facing investment advisors because they have that 0:16:59.600 --> 0:17:02.840 ability to think about what it's best for their clients 0:17:02.600 --> 0:17:04.600 for loil and what they want to put in there. 0:17:04.640 --> 0:17:07.879 And then institutions UM love the ETFs. It's you know, 0:17:07.920 --> 0:17:10.680 you think it's counterintuitive. A big institution could probably get 0:17:10.680 --> 0:17:14.640 something for even lower cost or or greater um flexibility, 0:17:14.720 --> 0:17:17.000 but they love the ETF structure for the same reasons 0:17:17.000 --> 0:17:19.240 that the retail audience does, which is they can buy 0:17:19.280 --> 0:17:21.360 as much or as little as they want, they can 0:17:21.359 --> 0:17:23.280 hold it for as longer as little as they want, 0:17:23.359 --> 0:17:26.600 and there's not sort of the gating process there to 0:17:26.680 --> 0:17:28.760 keep them in or out of the marketplace. And so 0:17:28.880 --> 0:17:32.480 we still see really heavy participation newer issues. Sometimes it 0:17:32.520 --> 0:17:34.879 takes a little while for an institutional to engage, but 0:17:34.920 --> 0:17:38.160 that's not always the case. Sometimes you'll have institutions coming 0:17:38.240 --> 0:17:40.359 right out of the gate because it's a it's an 0:17:40.400 --> 0:17:43.959 exposure that it's their portfolio needs. Yeah, I mean, costs 0:17:43.960 --> 0:17:46.520 can't get much lower, right, We're talking just a handful 0:17:46.520 --> 0:17:49.280 of basis points UM to to own a lot of 0:17:49.280 --> 0:17:52.720 e t F s. What do you think the um 0:17:53.280 --> 0:17:57.000 the next wave of issuance is and we we saw conversions. 0:17:57.040 --> 0:17:59.720 There's an e t F for everything. So we've seen 0:17:59.800 --> 0:18:04.040 it grow into um different spaces. We've even seen them 0:18:04.160 --> 0:18:08.239 UM chop up uh you know debt levels. If so, 0:18:08.280 --> 0:18:11.520 if you want you know, uh C minus debt exposure, 0:18:11.520 --> 0:18:15.640 you can get that. What's what's on the horizon? Yeah, 0:18:15.680 --> 0:18:18.159 I think that it would the entrance of of you know, 0:18:18.200 --> 0:18:21.119 more active managers and certainly you know a aligns Furnstey 0:18:21.119 --> 0:18:23.720 in the way we're looking at this is UM BTF 0:18:23.840 --> 0:18:26.639 does let you get very granular if you want to 0:18:26.680 --> 0:18:28.640 your point, you can you can go really deep in 0:18:28.800 --> 0:18:32.240 one area or you can look at at broad market teams. 0:18:32.240 --> 0:18:34.679 And that's pretty important. UM. If you think about, you know, 0:18:34.720 --> 0:18:36.720 the evolution the most investors in the US, you know, 0:18:37.040 --> 0:18:39.480 over the span of decades, it's like, well, you know, 0:18:39.480 --> 0:18:41.880 if you like the individual security, that's great, but there's 0:18:41.960 --> 0:18:44.600 risk theirs. So maybe by the industry, if you like industry, 0:18:44.600 --> 0:18:47.720 by the sector. UM, you just sort of diversify your 0:18:47.760 --> 0:18:50.800 best thinking. And I think we continue to see thematic 0:18:51.000 --> 0:18:54.960 you know, global thematic trends playing out in portfolios, and 0:18:55.160 --> 0:18:57.040 I think that's one of the areas of growth that 0:18:57.040 --> 0:18:58.840 you're going to see where people think about some of 0:18:58.840 --> 0:19:02.800 these cross sector aspects. We saw over the last couple 0:19:02.800 --> 0:19:05.399 of years some of the concerns around supply chain and 0:19:05.440 --> 0:19:08.080 where um, some of the great strength of the global 0:19:08.119 --> 0:19:11.440 economy stumbled a little bit, and so what companies are 0:19:11.480 --> 0:19:14.040 set up to take advantage of the fact that there 0:19:14.119 --> 0:19:16.000 might be a retrench you of some of those systems 0:19:16.000 --> 0:19:17.760 are a different way of thinking about how to move 0:19:18.320 --> 0:19:20.840 goods and services around the globe. And I think that 0:19:20.880 --> 0:19:23.359 type of thematic thinking is going to continue to play out, 0:19:23.440 --> 0:19:26.280 especially in the in the active ETF space. So in 0:19:26.320 --> 0:19:28.560