1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,520 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,320 Speaker 1: at Bloomberg dot com slash podcast. The Mannheim Index used 7 00:00:22,360 --> 00:00:25,079 Speaker 1: car prices rising and this was one of the big 8 00:00:25,520 --> 00:00:29,040 Speaker 1: upward pressures on inflation over the last year. We thought 9 00:00:29,040 --> 00:00:31,280 Speaker 1: it had subsided, and maybe it has. This could be 10 00:00:31,320 --> 00:00:34,040 Speaker 1: a head fake, of course, but still worth talking about 11 00:00:34,040 --> 00:00:37,320 Speaker 1: with Anna Wong. She's our chief US economists from Bloomberg 12 00:00:37,360 --> 00:00:40,360 Speaker 1: Economics UM, and she joins us ahead of, of course, 13 00:00:40,400 --> 00:00:42,720 Speaker 1: the all important interview with your own Palace afternoon. To 14 00:00:42,720 --> 00:00:45,680 Speaker 1: believe that's a twelve thirty this afternoon. We'll carry it 15 00:00:45,680 --> 00:00:48,720 Speaker 1: on Bloomberg Radio on Bloomberg Television. Anna, thanks for joining us. 16 00:00:49,000 --> 00:00:53,040 Speaker 1: What do you think about this slight revival and used 17 00:00:53,040 --> 00:00:57,320 Speaker 1: car prices? Is its seasonal? Um? Could it be just 18 00:00:57,360 --> 00:00:59,920 Speaker 1: an anomaly in the data, because we've had some pretty 19 00:01:00,480 --> 00:01:06,960 Speaker 1: crazy anomalies thus far with new jobs at it on Friday? Yeah, 20 00:01:07,000 --> 00:01:10,120 Speaker 1: So Um, you know, we we had slags before that. 21 00:01:10,280 --> 00:01:15,680 Speaker 1: The disinflation in particularly cars category might not be a 22 00:01:15,800 --> 00:01:19,240 Speaker 1: very sustainable one because if you look at the inventory 23 00:01:19,280 --> 00:01:23,880 Speaker 1: to sales ratios to cars, it's still substantially below the 24 00:01:23,920 --> 00:01:27,720 Speaker 1: pre pandemic level, which means that the supply, even though 25 00:01:27,760 --> 00:01:31,000 Speaker 1: the supply demand conditions are you know, getting better, it's 26 00:01:31,040 --> 00:01:36,320 Speaker 1: still the very very tight. So I I always thought that, um, 27 00:01:36,640 --> 00:01:40,200 Speaker 1: you know, it's not gonna last. The sharp decline in prices. 28 00:01:40,840 --> 00:01:45,200 Speaker 1: What matters more today? Anna, is it the what Chairman 29 00:01:45,240 --> 00:01:48,160 Speaker 1: Powell may or may not say or deviate from his messaging? 30 00:01:48,360 --> 00:01:50,080 Speaker 1: Where is it the State of the Union speech? I'm 31 00:01:50,080 --> 00:01:55,440 Speaker 1: wondering how much of geopolitics needs to be factored in here? Yeah, 32 00:01:55,480 --> 00:01:59,360 Speaker 1: I think so. Notice that Jerome Power Power that barely 33 00:01:59,480 --> 00:02:03,240 Speaker 1: talked about China and his press conference last week. So 34 00:02:03,520 --> 00:02:05,960 Speaker 1: I think he is not going to talk too much 35 00:02:06,000 --> 00:02:11,000 Speaker 1: about geopolitics or even Ukraine. I mean, um, you know, so, 36 00:02:11,280 --> 00:02:13,840 Speaker 1: I think he's going to focus his message on the 37 00:02:13,960 --> 00:02:17,200 Speaker 1: US labor market because that is the number one driving 38 00:02:17,240 --> 00:02:21,080 Speaker 1: force of inflation in the US right now, and he's 39 00:02:21,120 --> 00:02:25,920 Speaker 1: going to you know, perhaps try to, um, you know, 40 00:02:26,000 --> 00:02:28,640 Speaker 1: be more focused on his message that the FED still 41 00:02:28,680 --> 00:02:30,560 Speaker 1: has a long way to go, But he said that 42 00:02:30,680 --> 00:02:34,200 Speaker 1: last week. It's just that it's the conviction in his tone. 43 00:02:34,240 --> 00:02:37,519 Speaker 1: It's the tone, not the substance that needs to change. 44 00:02:37,960 --> 00:02:40,480 Speaker 1: But I doubt that the tone can be changed that 45 00:02:40,560 --> 00:02:43,560 Speaker 1: much because I think the non farm paywall report last 46 00:02:43,600 --> 00:02:47,960 Speaker 1: Friday really put a lot more confusion in in the 47 00:02:48,000 --> 00:02:51,239 Speaker 1: picture of the economy. And you know, and the market 48 00:02:51,280 --> 00:02:54,040 Speaker 1: is not Verry does not do very well with nulence 49 00:02:54,120 --> 00:02:56,720 Speaker 1: in the message. And right now, what Powell wants to 50 00:02:56,720 --> 00:03:02,240 Speaker 1: convey is the nw olence and uncertainty and the economy. So, um, 51 00:03:02,360 --> 00:03:05,000 Speaker 1: can you convey that without the market thinking is too devish? 52 00:03:05,040 --> 00:03:07,519 Speaker 1: Can you convey that without the market pricing and rate cuts? 53 00:03:07,560 --> 00:03:11,079 Speaker 1: Because you know, he at the last press conference that 54 00:03:11,440 --> 00:03:14,520 Speaker 1: financial conditions are getting tighter, And I guess if you 55 00:03:14,560 --> 00:03:17,880 Speaker 1: pick any point in time with which to compare today 56 00:03:17,919 --> 00:03:21,040 Speaker 1: to uh you could make that argument. But most everyone 57 00:03:21,040 --> 00:03:24,240 Speaker 1: agrees financial conditions are really loose right now. For a 58 00:03:24,280 --> 00:03:26,639 Speaker 1: FED that's trying to fight you know, four or five 59 00:03:26,680 --> 00:03:31,480 Speaker 1: percent inflation, well, you know, the set is looking at 60 00:03:31,480 --> 00:03:36,480 Speaker 1: a different financial conditions, not an index, but certain variables. 61 00:03:36,560 --> 00:03:40,280 Speaker 1: Right if you look at the credit officers survey, it 62 00:03:40,600 --> 00:03:44,080 Speaker 1: shows that the kind of like the landing standards have 63 00:03:44,240 --> 00:03:47,600 Speaker 1: been tightening, and that is something that that really cares about. 64 00:03:47,640 --> 00:03:49,960 Speaker 1: If you know, if it's harder for people to borrow, 65 00:03:50,080 --> 00:03:53,960 Speaker 1: that is clearly, you know, a more hardening of financial conditions. 66 00:03:53,960 --> 00:03:56,200 Speaker 1: That also, the feed is looking at the yield curve, 67 00:03:56,280 --> 00:03:59,640 Speaker 1: the real rates along the yield curve, and with inflation 68 00:03:59,680 --> 00:04:02,360 Speaker 1: falling so fast in the last couple of months, it 69 00:04:02,440 --> 00:04:05,680 Speaker 1: means that the real yields happened staying at kind of 70 00:04:05,720 --> 00:04:07,840 Speaker 1: what that level has been a couple of months ago. 71 00:04:08,280 --> 00:04:10,440 Speaker 1: But are they trying to fight inflation through a housing 72 00:04:10,480 --> 00:04:13,120 Speaker 1: crash or I thought they were trying to affect the 73 00:04:13,200 --> 00:04:16,520 Speaker 1: jobs market and they clearly haven't done that yet. Well, 74 00:04:16,960 --> 00:04:19,440 Speaker 1: you know, most of the economy is driven by consumption, 75 00:04:19,560 --> 00:04:23,200 Speaker 1: and when consumption slows, then job growth is slow and 76 00:04:23,480 --> 00:04:26,640 Speaker 1: consumption if you look at the lending standards, That's why 77 00:04:26,839 --> 00:04:30,919 Speaker 1: I mentioned the lending standards. Uh, it's it's it's hard. 78 00:04:31,120 --> 00:04:34,240 Speaker 1: It's getting harder for people to qualify for auto loans, 79 00:04:34,320 --> 00:04:37,800 Speaker 1: it's hard for people to get harder for people to 80 00:04:37,880 --> 00:04:42,360 Speaker 1: qualify for housing loans or credit cards loans. So so 81 00:04:42,360 --> 00:04:44,839 Speaker 1: so I think that that's that's what the FEAT is 82 00:04:44,880 --> 00:04:48,719 Speaker 1: talking about when they are looking about tightening financial conditions. 83 00:04:49,640 --> 00:04:51,359 Speaker 1: You know, what does that then mean when it comes 84 00:04:51,400 --> 00:04:55,359 Speaker 1: to something like the debt ceiling. I don't quite understand 85 00:04:55,480 --> 00:04:59,000 Speaker 1: how this is even factored in when you're looking at 86 00:04:59,120 --> 00:05:04,200 Speaker 1: a a period of significant tightening from the federal reserve, 87 00:05:04,240 --> 00:05:06,880 Speaker 1: and then you have things like expanded TV credits as well, 88 00:05:07,240 --> 00:05:11,680 Speaker 1: At what points fiscal policy really factor in here? Well, 89 00:05:11,720 --> 00:05:16,839 Speaker 1: there's two types of fiscal policy um UM, the federal 90 00:05:16,920 --> 00:05:20,120 Speaker 1: level and also the state and local level. And at 91 00:05:20,160 --> 00:05:24,760 Speaker 1: the federal level it's UM, it's actually working towards what 92 00:05:24,920 --> 00:05:28,520 Speaker 1: the Fed wants things to write. Of course, the depth 93 00:05:28,560 --> 00:05:34,480 Speaker 1: ceiling default would be catastrophic. However, at the federal level, UM, 94 00:05:34,520 --> 00:05:37,880 Speaker 1: you know, if they got a negotiation for UM fiscal 95 00:05:37,960 --> 00:05:42,400 Speaker 1: cuts as a result of UM, you know, uh, avoiding 96 00:05:42,440 --> 00:05:46,520 Speaker 1: this death feeling default, then it's actually working towards uh 97 00:05:46,839 --> 00:05:51,680 Speaker 1: the fat's inflation takes. But however, the states responsibility, right, 98 00:05:52,160 --> 00:05:54,120 Speaker 1: it would be nice if we just didn't spend willy 99 00:05:54,240 --> 00:05:58,320 Speaker 1: nilly with with no end in sight constantly, you know, yes, 100 00:05:58,520 --> 00:06:02,159 Speaker 1: and and and the infrastruct Sure Bill. The inflationary impact 101 00:06:02,200 --> 00:06:04,480 Speaker 1: of the Infrastructure Bill is going to kick in this 102 00:06:04,560 --> 00:06:07,159 Speaker 1: year as well. So, but at the state on local level, 103 00:06:07,200 --> 00:06:10,240 Speaker 1: and this is something that Powell has said several times already, 104 00:06:10,279 --> 00:06:13,320 Speaker 1: that they're still flushed with cash. We did a study 105 00:06:13,440 --> 00:06:15,359 Speaker 1: last year and found that the state and local government 106 00:06:15,360 --> 00:06:20,040 Speaker 1: have about seven billion in excess net savings UM and 107 00:06:20,080 --> 00:06:22,279 Speaker 1: that's why you saw a whole bunch of states giving 108 00:06:22,279 --> 00:06:25,800 Speaker 1: out the text credit late last year. And that's why 109 00:06:26,279 --> 00:06:30,480 Speaker 1: some households income growth of so robuff heading into late 110 00:06:30,560 --> 00:06:33,719 Speaker 1: last year partly, and I think that could explain why 111 00:06:34,080 --> 00:06:38,760 Speaker 1: consumption could actually be still rather solid in the first quarter, 112 00:06:38,960 --> 00:06:41,800 Speaker 1: just because there was heading to towards the end of 113 00:06:41,839 --> 00:06:44,119 Speaker 1: last year. There's just a lot of fiscal spending income 114 00:06:44,279 --> 00:06:47,680 Speaker 1: coming from the state. Yeah, because I guess the fiscal 115 00:06:47,760 --> 00:06:49,280 Speaker 1: spending that we saw over the last few years had 116 00:06:49,279 --> 00:06:52,320 Speaker 1: long and variable lags as well. Did you hear, by 117 00:06:52,360 --> 00:06:55,760 Speaker 1: the way, did you hear Danny blanche Flower? Uh? He 118 00:06:55,800 --> 00:06:58,120 Speaker 1: was kind of ripping on the Bank of England. But 119 00:06:58,279 --> 00:07:01,159 Speaker 1: his argument makes sense when apply to the Fed as well, 120 00:07:01,200 --> 00:07:06,799 Speaker 1: that these um this monetary tightening doesn't hit the economy 121 00:07:06,880 --> 00:07:10,200 Speaker 1: until I think he's had eighteen months to two years later. 122 00:07:10,320 --> 00:07:11,920 Speaker 1: That's what he was looking at when he was on 123 00:07:11,960 --> 00:07:16,720 Speaker 1: the Bank of England Monetary Policy Committee. So, um, he's 124 00:07:16,720 --> 00:07:19,840 Speaker 1: saying they should already have paused. And I'm sure he 125 00:07:19,880 --> 00:07:23,720 Speaker 1: believes the same thing about the US because his concern 126 00:07:23,800 --> 00:07:26,440 Speaker 1: is that a deep recession is worse than you know, 127 00:07:26,560 --> 00:07:31,680 Speaker 1: the abating inflation picture. Yeah. So um, the eighteen to 128 00:07:31,760 --> 00:07:35,280 Speaker 1: twenty four months monetary lag is kind of the standard 129 00:07:35,400 --> 00:07:39,080 Speaker 1: good old textbook lags, right, but it's estimated based on 130 00:07:39,480 --> 00:07:42,480 Speaker 1: the last one, you know, twenty thirty years of data. 131 00:07:42,920 --> 00:07:45,400 Speaker 1: And I think at the FED right now there's a 132 00:07:45,440 --> 00:07:48,680 Speaker 1: heated debate on how, how, how how much shorter is 133 00:07:48,720 --> 00:07:52,080 Speaker 1: the lack And it's likely because of the the FED 134 00:07:52,240 --> 00:07:56,440 Speaker 1: communication style now with the press conference and you know 135 00:07:56,560 --> 00:08:02,640 Speaker 1: immediately uh doing hand only like using for guidance to 136 00:08:02,680 --> 00:08:05,320 Speaker 1: guide the market and changing the shape of the yield curve. 137 00:08:05,680 --> 00:08:09,720 Speaker 1: That's how that's why the lacks of monetary policy would 138 00:08:09,760 --> 00:08:12,119 Speaker 1: be much shorter than you know, back in the days 139 00:08:12,160 --> 00:08:15,840 Speaker 1: when most of the lending and credit conditions in in 140 00:08:15,960 --> 00:08:19,240 Speaker 1: the in the in the economy is influenced by you 141 00:08:19,320 --> 00:08:25,120 Speaker 1: know actual uh uh, by by the long lags of 142 00:08:25,720 --> 00:08:28,320 Speaker 1: when when interest rate would finally rise. So I think 143 00:08:28,360 --> 00:08:30,920 Speaker 1: I think the lags are much shorter today, and your 144 00:08:30,960 --> 00:08:35,800 Speaker 1: model had previously predicted a chance of recession which is 145 00:08:35,800 --> 00:08:39,360 Speaker 1: pretty high um this year. Do you still see that 146 00:08:39,400 --> 00:08:42,480 Speaker 1: when you look at your model, Well, the model is 147 00:08:42,559 --> 00:08:48,320 Speaker 1: showing slightly lower probability of recessions. But our assessment has 148 00:08:48,360 --> 00:08:53,000 Speaker 1: always been that's not one. But now I would say 149 00:08:53,080 --> 00:08:56,080 Speaker 1: on the whole it's it's you know, if you ask 150 00:08:56,160 --> 00:09:00,600 Speaker 1: me what's the probability of twenty four months ahead probability recession, 151 00:09:00,640 --> 00:09:03,160 Speaker 1: I will still say it's very high, because the SUD 152 00:09:03,400 --> 00:09:06,199 Speaker 1: gets to determine whether there's a recession here. If the 153 00:09:06,240 --> 00:09:09,280 Speaker 1: said think the economy is growing too fast, they will 154 00:09:09,360 --> 00:09:12,079 Speaker 1: raise rates such the economy will have to fall into 155 00:09:12,120 --> 00:09:15,120 Speaker 1: the recession. All right, Anna Wong, thank you so much 156 00:09:15,160 --> 00:09:18,880 Speaker 1: for joining us, Bloomberg's chief US Bloomberg Economics chief US 157 00:09:19,200 --> 00:09:22,880 Speaker 1: Economists talking to us about really what to expect from 158 00:09:22,920 --> 00:09:30,600 Speaker 1: Jerome Powell this afternoon. Let's get back though to the 159 00:09:30,640 --> 00:09:34,080 Speaker 1: equity markets. UH and fixed income focus on the cross 160 00:09:34,120 --> 00:09:38,400 Speaker 1: asset UMU the assets. I guess I should say that 161 00:09:38,400 --> 00:09:41,160 Speaker 1: that we focus on most with Mike Green, he's portfolio 162 00:09:41,200 --> 00:09:45,480 Speaker 1: manager and chief strategists that simplify asset management and they 163 00:09:45,520 --> 00:09:48,320 Speaker 1: have UM a suite of e t F s. Mike 164 00:09:48,320 --> 00:09:50,360 Speaker 1: talked to us about simplify first and tell us about 165 00:09:50,400 --> 00:09:54,840 Speaker 1: your products. Sure, so Simplified was launched in September to 166 00:09:54,840 --> 00:09:57,840 Speaker 1: take advantage of a rule change the facilitated the introduction 167 00:09:57,840 --> 00:10:01,080 Speaker 1: of derivatives within the et F structures. That creates the 168 00:10:01,120 --> 00:10:04,200 Speaker 1: opportunity for us to offer products that would offer a 169 00:10:04,200 --> 00:10:06,920 Speaker 1: core exposure, for example, to a ten year bond or 170 00:10:07,000 --> 00:10:11,360 Speaker 1: to an smp US large cape equities and then modify 171 00:10:11,480 --> 00:10:15,240 Speaker 1: that payout by incorporating a derivative overlay associated with it. 172 00:10:15,400 --> 00:10:18,839 Speaker 1: That was very difficult to do prior to September, and 173 00:10:18,960 --> 00:10:21,960 Speaker 1: since September has become much easier. It's allowed us to 174 00:10:22,120 --> 00:10:24,520 Speaker 1: offer products that we think you're unique and offer benefits 175 00:10:24,520 --> 00:10:27,920 Speaker 1: to into individual investor portfolios, into the r R a 176 00:10:28,160 --> 00:10:31,200 Speaker 1: community that services them. So what you've done in E 177 00:10:31,320 --> 00:10:32,880 Speaker 1: t f s and what others have done over the 178 00:10:32,880 --> 00:10:37,719 Speaker 1: past few years has really changed the investment landscape UM 179 00:10:37,760 --> 00:10:42,760 Speaker 1: in a way that makes I think active management more 180 00:10:42,840 --> 00:10:45,240 Speaker 1: possible with E t s and it ever has been before. 181 00:10:45,280 --> 00:10:49,120 Speaker 1: How do you see the passive versus active UM argument 182 00:10:49,200 --> 00:10:55,080 Speaker 1: right now? Well, so that's a really complicated question. But um, well, 183 00:10:55,120 --> 00:10:57,640 Speaker 1: because for a long time, right, you know, after this 184 00:10:57,720 --> 00:11:00,000 Speaker 1: sort of Jack Bogel revolution, and of course that's mute 185 00:11:00,000 --> 00:11:02,880 Speaker 1: tool funds really and not ets, but everybody was looking 186 00:11:02,920 --> 00:11:06,439 Speaker 1: to index and keep costs low. And I think e 187 00:11:06,559 --> 00:11:08,600 Speaker 1: t f s in a way kind of sprang out 188 00:11:08,600 --> 00:11:12,960 Speaker 1: of that in the late eighties early nineties. But um, 189 00:11:13,000 --> 00:11:16,480 Speaker 1: now we've seen a lot more nuanced products that aren't 190 00:11:16,480 --> 00:11:19,120 Speaker 1: as straightforward as those early e t f s, like 191 00:11:19,200 --> 00:11:22,440 Speaker 1: the ones from Simplify. Yeah, I think that's I think 192 00:11:22,480 --> 00:11:24,560 Speaker 1: that's true. And so this is part of the growing 193 00:11:24,679 --> 00:11:28,800 Speaker 1: ranks of active management e t s UM. The challenge 194 00:11:28,880 --> 00:11:30,800 Speaker 1: that the industry really faces this is that it has 195 00:11:30,800 --> 00:11:35,079 Speaker 1: been bifurcated and effectively blackguard, black rock Vanguard and the rest. 196 00:11:35,520 --> 00:11:40,240 Speaker 1: And the real challenge exists in the form of obtaining distribution, 197 00:11:40,440 --> 00:11:45,200 Speaker 1: obtaining shelf space effectively within the retail universe when it 198 00:11:45,320 --> 00:11:48,680 Speaker 1: is so dominated by the players a black rock vanguard, 199 00:11:48,679 --> 00:11:51,840 Speaker 1: who through a combination of scale, a combination of lobbying, etcetera, 200 00:11:51,960 --> 00:11:54,679 Speaker 1: get themselves into a position where any product that they 201 00:11:54,760 --> 00:11:59,720 Speaker 1: launched can immediately go to scale, immediately become a viable product, etcetera. 202 00:12:00,640 --> 00:12:03,200 Speaker 1: That's making it very difficult for everybody else in the 203 00:12:03,240 --> 00:12:06,760 Speaker 1: industry to to to be straightforward. That's the reason why 204 00:12:08,280 --> 00:12:11,520 Speaker 1: in this uh, in this case, really it do apply 205 00:12:11,679 --> 00:12:14,120 Speaker 1: in a sense, right, Well, it's yeah, So it's actually 206 00:12:14,200 --> 00:12:16,840 Speaker 1: important that you recognize that there is that characteristic that 207 00:12:16,880 --> 00:12:20,640 Speaker 1: this is an oligopalistic industry that we've seen increasing concentration 208 00:12:20,720 --> 00:12:23,960 Speaker 1: to the point that candidly, most of my work in 209 00:12:24,000 --> 00:12:26,280 Speaker 1: the space around active passive and if you google my 210 00:12:26,400 --> 00:12:28,400 Speaker 1: name or you google any of my work on this, 211 00:12:28,400 --> 00:12:30,680 Speaker 1: there's plenty of speeches out there talking about this component. 212 00:12:31,160 --> 00:12:33,920 Speaker 1: It is actually tangibly beginning to change the structure of 213 00:12:33,920 --> 00:12:38,520 Speaker 1: the market. Market behavior that we're seeing is increasingly reminiscent 214 00:12:38,640 --> 00:12:41,480 Speaker 1: of the kind of low float, extreme behaviors that we 215 00:12:41,480 --> 00:12:44,160 Speaker 1: saw in the ninety nineties associated with the dot com cycle. 216 00:12:45,040 --> 00:12:47,160 Speaker 1: We largely put that not at the feet of the FED, 217 00:12:47,200 --> 00:12:49,679 Speaker 1: which is a convenient scapeboad for this, but actually the 218 00:12:49,760 --> 00:12:52,600 Speaker 1: changing market structure that's caused by the concentration of assets 219 00:12:52,600 --> 00:12:55,640 Speaker 1: and those two players, Well, can you elaborate on that 220 00:12:55,679 --> 00:13:00,360 Speaker 1: the changing market structure? What exactly is changing here? So 221 00:13:00,480 --> 00:13:03,280 Speaker 1: what's happening is is that you're creating giant pools of 222 00:13:03,320 --> 00:13:06,840 Speaker 1: capital that only face the market when there is a 223 00:13:06,920 --> 00:13:09,760 Speaker 1: net order flow. Right. So, if you're a client of Vanguard, 224 00:13:09,840 --> 00:13:12,840 Speaker 1: and I'm a client of Vanguard within their index mutual funds, 225 00:13:13,360 --> 00:13:16,040 Speaker 1: you buy I sell that actually never hits the market. 226 00:13:16,080 --> 00:13:18,840 Speaker 1: It's simply crossed at N A V at the UM 227 00:13:19,040 --> 00:13:20,760 Speaker 1: at the end of the day, Right, So that's not 228 00:13:20,800 --> 00:13:23,280 Speaker 1: actually liquidity. That is how they demanded or required of 229 00:13:23,360 --> 00:13:27,560 Speaker 1: the market when they are gaining share. It means that 230 00:13:27,679 --> 00:13:30,800 Speaker 1: every order that they're placing effectively shows up as a buy. 231 00:13:30,840 --> 00:13:33,600 Speaker 1: It's very few days in history in which Vanguard has 232 00:13:33,600 --> 00:13:36,240 Speaker 1: been a net seller, for example. That means they're continually 233 00:13:36,280 --> 00:13:40,120 Speaker 1: providing liquidity. They're continually creating demand for securities. That's contributing 234 00:13:40,160 --> 00:13:42,640 Speaker 1: to the general rise and valuation that we've seen over 235 00:13:42,640 --> 00:13:46,880 Speaker 1: the last forty years. Um. The problem, of course, emerges 236 00:13:47,320 --> 00:13:50,439 Speaker 1: as they become larger and larger. Those net flows when 237 00:13:50,440 --> 00:13:54,400 Speaker 1: there's an imbalance have becomes so large now that that 238 00:13:54,440 --> 00:13:58,679 Speaker 1: can meaningfully impact market behavior. One of the most terrifying 239 00:13:58,720 --> 00:14:03,120 Speaker 1: statistics that came out of COVID pandemic was Vanguard quite 240 00:14:03,120 --> 00:14:06,160 Speaker 1: proudly announcing that less than one percent of their clients 241 00:14:06,160 --> 00:14:10,280 Speaker 1: had tried to transact in that environment. My reaction to 242 00:14:10,320 --> 00:14:12,040 Speaker 1: that is, oh, my god, what if it had been 243 00:14:12,080 --> 00:14:17,600 Speaker 1: too because that would be such a huge number. It's 244 00:14:17,640 --> 00:14:20,440 Speaker 1: such a huge number. It's an unfathomably large number for 245 00:14:20,480 --> 00:14:23,120 Speaker 1: a market that is really incapable of meeting some very 246 00:14:23,120 --> 00:14:25,920 Speaker 1: basic liquidity needs already. Mike, you've been talking about this 247 00:14:26,000 --> 00:14:29,680 Speaker 1: for some time. As you said, Um, is there any 248 00:14:30,120 --> 00:14:33,520 Speaker 1: possibility that regulators take action as we start to see 249 00:14:33,560 --> 00:14:36,560 Speaker 1: that kind of thing come back? Right? Um, the d 250 00:14:36,680 --> 00:14:38,720 Speaker 1: o J trying to break up a big company in 251 00:14:38,800 --> 00:14:42,080 Speaker 1: Google for the first time since mob el Um has 252 00:14:42,080 --> 00:14:47,360 Speaker 1: has anybody at the sec UM or um in any 253 00:14:47,400 --> 00:14:53,880 Speaker 1: other part of the regulatory environment stated concerns about the 254 00:14:53,920 --> 00:14:57,520 Speaker 1: bigness if I can trumpify it of of Vanguard and 255 00:14:57,560 --> 00:15:01,240 Speaker 1: black Rock. So I think you're facing similar characteristics and 256 00:15:01,280 --> 00:15:03,880 Speaker 1: similar challenges that you see in the companies like Google. Right. 257 00:15:03,920 --> 00:15:06,480 Speaker 1: So Google would argue that they don't have particularly high 258 00:15:06,560 --> 00:15:09,040 Speaker 1: market share, that they actually compete, you know, with all 259 00:15:09,200 --> 00:15:12,880 Speaker 1: forms of information gathering, right, whether it's newspapers, etcetera, or 260 00:15:12,920 --> 00:15:17,280 Speaker 1: all forms of advertising. Those are really disingenuous arguments, as 261 00:15:17,280 --> 00:15:19,560 Speaker 1: we all kind of know. Um. You know, Peter Thiel 262 00:15:19,600 --> 00:15:22,080 Speaker 1: has a book called Zero to One, in which he 263 00:15:22,160 --> 00:15:24,560 Speaker 1: makes a very clear statement that monopolies lie in order 264 00:15:24,560 --> 00:15:27,440 Speaker 1: to protect their monopoly. I'd argue the same thing is 265 00:15:27,520 --> 00:15:30,480 Speaker 1: true within the Vanguard black Rock framework, where you know, 266 00:15:30,520 --> 00:15:34,200 Speaker 1: ostensibly the market share of Vanguard of black Rock combined 267 00:15:34,280 --> 00:15:37,240 Speaker 1: is hovering somewhere in the fifteen percent range. That doesn't 268 00:15:37,240 --> 00:15:41,760 Speaker 1: appear to trigger the traditional dynamics of antitrust. But within 269 00:15:41,880 --> 00:15:44,760 Speaker 1: segments of the industry, particularly within things like four oh 270 00:15:44,760 --> 00:15:48,120 Speaker 1: one case for example, or within target dat funds, which 271 00:15:48,120 --> 00:15:52,240 Speaker 1: are the fastest growing form of retirement vehicle, those market 272 00:15:52,240 --> 00:15:55,240 Speaker 1: shairs are dramatically higher. So, for example, most evidence which 273 00:15:55,240 --> 00:15:58,160 Speaker 1: suggests that Vanguard's marginal market share in other words, the 274 00:15:58,200 --> 00:16:02,720 Speaker 1: percentage of each incremental retirement aller is now approaching. Those 275 00:16:02,760 --> 00:16:06,360 Speaker 1: are just astonishingly large numbers and financial markets and candidly 276 00:16:06,560 --> 00:16:09,160 Speaker 1: numbers that should be pursued by the FCC in the 277 00:16:09,160 --> 00:16:11,600 Speaker 1: same way that they're going after Google. Well, speaking of 278 00:16:11,600 --> 00:16:14,040 Speaker 1: the financial markets, let's talk about today's trade. Specifically, you 279 00:16:14,080 --> 00:16:16,800 Speaker 1: are seeing equities off by about two tons of one percent. 280 00:16:16,920 --> 00:16:20,600 Speaker 1: The bond market again um yields only lower well flat 281 00:16:20,640 --> 00:16:22,480 Speaker 1: actually right now, when you're looking at the ten uere 282 00:16:22,520 --> 00:16:26,040 Speaker 1: Yield talk to us a little bit about what the 283 00:16:26,120 --> 00:16:29,960 Speaker 1: trade is today when we hear from Chairman Powell at twelve, 284 00:16:30,000 --> 00:16:34,760 Speaker 1: I believe so the real question is how much he's 285 00:16:34,760 --> 00:16:38,000 Speaker 1: going to push back against the pricing that was correct 286 00:16:38,040 --> 00:16:41,680 Speaker 1: in large part yesterday, right. So, Um, there's generally been 287 00:16:42,000 --> 00:16:45,320 Speaker 1: a perception that the bond market is trying to price 288 00:16:45,360 --> 00:16:48,520 Speaker 1: in a FED pivot in three, that the Fed will 289 00:16:48,520 --> 00:16:51,360 Speaker 1: be forced to cut interest rates. I think there's some 290 00:16:51,480 --> 00:16:54,440 Speaker 1: problems with the math behind that, but the general observation 291 00:16:54,640 --> 00:16:57,520 Speaker 1: was that the Fed would be done. And that's obviously 292 00:16:57,720 --> 00:17:00,760 Speaker 1: contrast to the message that the Federal Reserves trying to send. 293 00:17:00,840 --> 00:17:02,960 Speaker 1: They want to indicate that they want the economy to 294 00:17:03,000 --> 00:17:06,159 Speaker 1: slow more than it has. It's been complicated, and that's 295 00:17:06,160 --> 00:17:09,760 Speaker 1: obviously a bad choice of words. It's been complicated by 296 00:17:09,760 --> 00:17:12,879 Speaker 1: things like falling oil prices or gasoline prices, which have 297 00:17:12,920 --> 00:17:15,840 Speaker 1: put additional dollars into the pockets that the American consumer 298 00:17:15,880 --> 00:17:18,240 Speaker 1: allowed the economy to re accelerate a little bit in 299 00:17:18,240 --> 00:17:21,400 Speaker 1: the second half of last year. You know, we're now 300 00:17:21,440 --> 00:17:24,760 Speaker 1: hearing a lot of languages as things like easing financial conditions. 301 00:17:24,880 --> 00:17:27,600 Speaker 1: I just think it's important for listeners to understand that 302 00:17:27,640 --> 00:17:31,080 Speaker 1: easing financial conditions just means markets are going up. Mark, Mike, 303 00:17:31,200 --> 00:17:33,080 Speaker 1: thanks so much. Love to have you back on. Mike 304 00:17:33,119 --> 00:17:39,920 Speaker 1: Green there from Simplify Asset Management. So it's a real vodeshift, 305 00:17:40,560 --> 00:17:44,359 Speaker 1: all right, the vibe shift. I think if you added 306 00:17:44,440 --> 00:17:45,840 Speaker 1: up the ages of all three of you, it still 307 00:17:45,840 --> 00:17:48,399 Speaker 1: wouldn't equal me. But it's a pleasure talking to you 308 00:17:48,440 --> 00:17:54,480 Speaker 1: know the less. Uh. Just so the listeners know, we 309 00:17:54,520 --> 00:17:56,720 Speaker 1: don't get to a hundred adding up the ages of 310 00:17:56,760 --> 00:18:00,080 Speaker 1: all three of you. Pretty close. Uh, Jess Meant and 311 00:18:00,240 --> 00:18:03,480 Speaker 1: Katie Greifeld, thank you so much for joining us. Crety Goute, 312 00:18:03,520 --> 00:18:05,359 Speaker 1: You're gonna stick with me. I want to get to 313 00:18:05,560 --> 00:18:08,640 Speaker 1: Alison Williams right now from Bloomberg Intelligence, because we had 314 00:18:09,200 --> 00:18:11,760 Speaker 1: if you work at Credit Sweets and you, I mean, 315 00:18:12,000 --> 00:18:15,919 Speaker 1: like anyone in the whole world are planning, uh, you know, 316 00:18:16,440 --> 00:18:19,280 Speaker 1: all of your spending on your bonus season and you 317 00:18:19,400 --> 00:18:22,400 Speaker 1: got the meeting today. Last night you get a message, Oops, 318 00:18:22,560 --> 00:18:25,879 Speaker 1: meeting canceled. That's got to make you feel like, you know, 319 00:18:26,920 --> 00:18:29,760 Speaker 1: like you work at Deutsche Bank, Allison. Are they gonna 320 00:18:29,840 --> 00:18:35,000 Speaker 1: lose every single person who can find a job anywhere 321 00:18:35,000 --> 00:18:40,480 Speaker 1: else in banking? Well, my guess is that the delay 322 00:18:41,080 --> 00:18:45,400 Speaker 1: might only be a matter of days. Uh. You may 323 00:18:45,400 --> 00:18:49,040 Speaker 1: have also seen the headline that Apollos and talks um 324 00:18:49,080 --> 00:18:52,080 Speaker 1: to take a spake and steak in the spinoff. Um, 325 00:18:52,160 --> 00:18:55,520 Speaker 1: so there is a question, you know, does sort of 326 00:18:55,520 --> 00:18:58,520 Speaker 1: the delay in paying out the bankers have something to 327 00:18:58,640 --> 00:19:01,680 Speaker 1: do with what might be in the works in terms 328 00:19:01,680 --> 00:19:06,640 Speaker 1: of the structure the future structure of the first Boston spinoff. Now, um, 329 00:19:06,760 --> 00:19:10,520 Speaker 1: we we have seen from the other global of US 330 00:19:10,520 --> 00:19:13,119 Speaker 1: and banks that it is a competitive war for talent 331 00:19:13,280 --> 00:19:16,720 Speaker 1: even you know, when things for the bank are going well. Um, 332 00:19:16,760 --> 00:19:18,760 Speaker 1: so we expect that plays out of credit suite, and 333 00:19:18,760 --> 00:19:21,880 Speaker 1: we expect that if this is a venture that's that's 334 00:19:21,920 --> 00:19:24,120 Speaker 1: going forward, that's that's going to be top of mind. 335 00:19:24,200 --> 00:19:26,800 Speaker 1: But you know, perhaps there could be something in terms 336 00:19:26,800 --> 00:19:32,639 Speaker 1: of the future incentives or the structuring of those payments, um, 337 00:19:32,680 --> 00:19:37,240 Speaker 1: related to someone who is going to take a size 338 00:19:37,240 --> 00:19:41,240 Speaker 1: of mistake. Is I guess my my best guests, Well, Alison, 339 00:19:41,320 --> 00:19:44,040 Speaker 1: this is something that we've kind of seen having across 340 00:19:44,080 --> 00:19:45,879 Speaker 1: Wall Street as well, and I want to say across 341 00:19:45,880 --> 00:19:48,560 Speaker 1: some of the European banks. What is the timeline where 342 00:19:48,560 --> 00:19:51,080 Speaker 1: we get back to some sort of normal when it 343 00:19:51,119 --> 00:19:53,800 Speaker 1: comes to kind of the big bank bonuses that were 344 00:19:53,840 --> 00:19:59,560 Speaker 1: used to so define normal, well, we were not worried 345 00:19:59,560 --> 00:20:03,160 Speaker 1: about salary cuts and a lot of talent. I think 346 00:20:03,160 --> 00:20:07,520 Speaker 1: that UM, you know, if we're talking about Credit Suite specifically, 347 00:20:07,560 --> 00:20:09,920 Speaker 1: I think it's you know, when a bank is going 348 00:20:09,920 --> 00:20:14,160 Speaker 1: through a tougher time, they're obviously going to have to UM, 349 00:20:14,400 --> 00:20:18,919 Speaker 1: be creative and you know, a lot a bank always 350 00:20:19,000 --> 00:20:25,200 Speaker 1: wants to align the incentives UM with long term success. 351 00:20:25,280 --> 00:20:28,080 Speaker 1: But that might be UM you know, perhaps even more 352 00:20:28,119 --> 00:20:31,560 Speaker 1: important UM at credit suite in terms of the fact 353 00:20:31,600 --> 00:20:36,119 Speaker 1: that you know, when revenue is down significantly, shareholders and 354 00:20:36,400 --> 00:20:40,439 Speaker 1: other stakeholders such as regulators are going to expect that 355 00:20:40,520 --> 00:20:44,880 Speaker 1: the expenses reflect that UM. But when there is such 356 00:20:44,920 --> 00:20:48,600 Speaker 1: a significant decline due to you know, perhaps top of 357 00:20:48,600 --> 00:20:51,919 Speaker 1: the house and not individual performance, the bank has to 358 00:20:51,960 --> 00:20:57,479 Speaker 1: find a way to reward those individuals UM. And I 359 00:20:57,560 --> 00:20:59,720 Speaker 1: think in fact that that is one of the reasons 360 00:20:59,720 --> 00:21:04,920 Speaker 1: why they are perhaps looking to ju This s been 361 00:21:04,960 --> 00:21:09,080 Speaker 1: out because some of the top bankers may be frustrated 362 00:21:09,520 --> 00:21:13,680 Speaker 1: with UM, you know, paying for some of the UH 363 00:21:13,760 --> 00:21:17,919 Speaker 1: it's called the missteps, bad risk management, UM, what have you. 364 00:21:18,000 --> 00:21:20,879 Speaker 1: But some of the bigger costs incurred in other areas 365 00:21:20,920 --> 00:21:22,840 Speaker 1: of the firms, such as the trading death. Well, but 366 00:21:22,920 --> 00:21:27,040 Speaker 1: I mean my initial question still stands, Allison, has anyone 367 00:21:28,119 --> 00:21:34,199 Speaker 1: who has a decent resume and good credentials, um, you know, 368 00:21:34,280 --> 00:21:37,520 Speaker 1: and any mobility at all remained at the bank or 369 00:21:37,560 --> 00:21:40,280 Speaker 1: have they already lost all of the best talent because 370 00:21:40,960 --> 00:21:46,399 Speaker 1: starting with green Sill and Archagos and through COVID missteps 371 00:21:46,440 --> 00:21:50,959 Speaker 1: and management reshuffles and you know, all of these different 372 00:21:50,960 --> 00:21:55,320 Speaker 1: controversies that they've had in Zurich, hasn't everyone already looked 373 00:21:55,359 --> 00:21:57,240 Speaker 1: somewhere else and tried to get a job. I mean 374 00:21:57,240 --> 00:22:00,119 Speaker 1: it's like musical chairs. The music has stopped and is 375 00:22:00,160 --> 00:22:03,600 Speaker 1: no more chair. Right. Well, you could have said the 376 00:22:03,640 --> 00:22:06,560 Speaker 1: same thing, I suppose about Deutsche Bank a few years ago. 377 00:22:07,200 --> 00:22:12,600 Speaker 1: Definitely that I think in general, UM, you know, obviously 378 00:22:12,640 --> 00:22:17,520 Speaker 1: there the recruiting benefit, if you will, UM, you know, 379 00:22:17,760 --> 00:22:21,960 Speaker 1: goes to those outside of the firm. But um, you know, 380 00:22:22,040 --> 00:22:26,560 Speaker 1: to to the extent that the bank can you know, 381 00:22:27,040 --> 00:22:29,600 Speaker 1: key in on sort of what they're key talent, and 382 00:22:30,440 --> 00:22:35,840 Speaker 1: UM seek to at least reward those that they believe 383 00:22:35,920 --> 00:22:39,439 Speaker 1: will stay with the firm for the long term. UM. 384 00:22:39,480 --> 00:22:42,800 Speaker 1: People like all different kinds of challenges in their positions, 385 00:22:42,920 --> 00:22:47,119 Speaker 1: And I think there's also the question of UM, you know, 386 00:22:48,320 --> 00:22:52,000 Speaker 1: compensation to reflect that just both of both the current 387 00:22:52,080 --> 00:22:56,800 Speaker 1: challenges and the future opportunities. To the extent that this 388 00:22:57,280 --> 00:23:00,680 Speaker 1: UM you know, bankers are looking ahead and looking forward 389 00:23:00,720 --> 00:23:03,560 Speaker 1: to this potential entity. You know, could you join an 390 00:23:03,680 --> 00:23:06,719 Speaker 1: entity that gives you award like something like a Molus 391 00:23:06,840 --> 00:23:10,000 Speaker 1: or lots of these other little spinouts UM that we've 392 00:23:10,040 --> 00:23:12,199 Speaker 1: had over the years. Could you go to work for 393 00:23:12,240 --> 00:23:15,720 Speaker 1: an entity where you could be UM rewarded, tied more 394 00:23:15,760 --> 00:23:17,720 Speaker 1: directly to your deals, but have the backing of a 395 00:23:17,760 --> 00:23:20,720 Speaker 1: big bang. I think that that's that's something that one 396 00:23:20,800 --> 00:23:23,600 Speaker 1: could argue as a unique value proposition for some of 397 00:23:23,640 --> 00:23:27,440 Speaker 1: these bankers. Alison, there's a story from the Wall Street 398 00:23:27,480 --> 00:23:31,800 Speaker 1: Journal that Apollo is in talks for Credit Suite First Boston, 399 00:23:32,800 --> 00:23:36,919 Speaker 1: which we have just been discussing UM. As you mentioned, 400 00:23:36,920 --> 00:23:38,480 Speaker 1: I gotta admit I did you zone out for a 401 00:23:38,520 --> 00:23:42,000 Speaker 1: second to deal with something else. But Alison, I want 402 00:23:42,040 --> 00:23:43,720 Speaker 1: to ask what kind of precedent that sends for a 403 00:23:43,760 --> 00:23:47,080 Speaker 1: lot of these larger asset management PE companies to kind 404 00:23:47,080 --> 00:23:50,160 Speaker 1: of acquire some of these spun off assets. I think, 405 00:23:50,400 --> 00:23:53,000 Speaker 1: you know, we're gonna have to see exactly, you know, 406 00:23:53,040 --> 00:23:55,280 Speaker 1: what type of the investment is and what type of 407 00:23:55,359 --> 00:23:59,280 Speaker 1: role they're going UM to play. UM you know, in 408 00:23:59,400 --> 00:24:04,320 Speaker 1: terms of the prior SPG structure, product groups spent out 409 00:24:04,320 --> 00:24:06,560 Speaker 1: where they were spending out UM some of the assets 410 00:24:06,600 --> 00:24:09,000 Speaker 1: and operations. I think that's that's a little bit different 411 00:24:09,040 --> 00:24:11,840 Speaker 1: than what we're looking at here. And so there's there's 412 00:24:11,880 --> 00:24:15,840 Speaker 1: a few questions in terms of is this unit going 413 00:24:15,960 --> 00:24:20,480 Speaker 1: to absorb part of the you know, private investment unit 414 00:24:20,600 --> 00:24:24,040 Speaker 1: that is part of currently part of asset management and 415 00:24:24,080 --> 00:24:29,680 Speaker 1: will Apollo UM be somehow involved in that? Seems uh, 416 00:24:29,720 --> 00:24:34,040 Speaker 1: you know, not totally likely unless um Apollo is going 417 00:24:34,080 --> 00:24:36,280 Speaker 1: to come in and sort of take over those operations. 418 00:24:36,320 --> 00:24:38,840 Speaker 1: But certainly they have their their own business, their own 419 00:24:39,440 --> 00:24:44,720 Speaker 1: UM fundraising efforts. They don't necessarily need uh credit squeez 420 00:24:44,800 --> 00:24:48,840 Speaker 1: from that respect. UM. So I think I think it's 421 00:24:48,880 --> 00:24:52,600 Speaker 1: gonna it'll just be interesting to see what exactly the 422 00:24:52,720 --> 00:24:56,720 Speaker 1: role Apollo is going to play in terms of will 423 00:24:56,800 --> 00:24:59,680 Speaker 1: they be sourcing any business from this venture? Is it 424 00:24:59,800 --> 00:25:04,080 Speaker 1: just a private investment? All right? Allison, thanks very much. 425 00:25:04,080 --> 00:25:08,440 Speaker 1: Alison Williams there Bloomberg Intelligence head of bank research. He's 426 00:25:08,440 --> 00:25:11,560 Speaker 1: on top of our bank research globally as well as 427 00:25:11,600 --> 00:25:14,040 Speaker 1: b I. You can type BI dot com to get 428 00:25:14,040 --> 00:25:18,720 Speaker 1: all their elephant UH launch pads from your Bloomberg terminal. 429 00:25:22,480 --> 00:25:24,399 Speaker 1: A lot of our markets talk has been derailed over 430 00:25:24,440 --> 00:25:27,159 Speaker 1: the last few days by a balloon. UM. If you 431 00:25:27,160 --> 00:25:29,919 Speaker 1: don't live in a cave, then you will have noticed 432 00:25:30,040 --> 00:25:33,040 Speaker 1: last week when we started to see UM what is 433 00:25:33,040 --> 00:25:37,480 Speaker 1: alleged to be a surveillance balloon floating over Montana. Eventually 434 00:25:37,600 --> 00:25:41,160 Speaker 1: it got to the coast of South Carolina, where an 435 00:25:41,240 --> 00:25:44,280 Speaker 1: F twenty two raptor shot it down. The Chinese have 436 00:25:44,400 --> 00:25:48,120 Speaker 1: said it's a weather balloon from a private company went astray. 437 00:25:48,280 --> 00:25:50,520 Speaker 1: The US says it's a spy balloon that was trying 438 00:25:50,560 --> 00:25:53,439 Speaker 1: to look at our stuff, especially the nuclear silos that 439 00:25:53,520 --> 00:25:57,880 Speaker 1: are all housed around UH there in Montana. Let's bring 440 00:25:57,880 --> 00:25:59,560 Speaker 1: in McK mulroy right now is the co founder of 441 00:25:59,600 --> 00:26:01,600 Speaker 1: the Lobo Institute. He's a senior fellow at the Middle 442 00:26:01,600 --> 00:26:05,400 Speaker 1: East Institute. But he's also the former Deputy Assistant Secretary 443 00:26:05,560 --> 00:26:08,840 Speaker 1: for Defense for the Middle East and a former paramilitary 444 00:26:08,920 --> 00:26:13,440 Speaker 1: operations officer at the CIA. Mick, this is I think 445 00:26:13,920 --> 00:26:17,520 Speaker 1: such an interesting story. Because it's so weird, like who 446 00:26:17,600 --> 00:26:21,560 Speaker 1: sends up a spy balloon when they already have satellites 447 00:26:21,640 --> 00:26:25,080 Speaker 1: staring at the exact same stuff, And why should we care? 448 00:26:25,320 --> 00:26:28,720 Speaker 1: I mean, the Department of Defense UM itself said it's 449 00:26:28,760 --> 00:26:31,000 Speaker 1: not a threat to our physical infrastructure, and they're not 450 00:26:31,040 --> 00:26:34,480 Speaker 1: getting any super top secret intelligence they wouldn't already have gotten, 451 00:26:34,520 --> 00:26:38,359 Speaker 1: So what's the deal. So that's something that is in 452 00:26:38,400 --> 00:26:42,760 Speaker 1: my mind to be determined. Yes, they have satellites all 453 00:26:42,800 --> 00:26:45,760 Speaker 1: over the world over actually, and probably most of them 454 00:26:45,760 --> 00:26:48,160 Speaker 1: focused on the United States. But there's a reason why 455 00:26:48,200 --> 00:26:50,560 Speaker 1: the Chinese were doing this, and it probably is that 456 00:26:50,640 --> 00:26:54,280 Speaker 1: this can collect uh and stay in areas longer than 457 00:26:54,359 --> 00:26:57,640 Speaker 1: satellites can. So I think we really need to exploit 458 00:26:57,680 --> 00:26:59,560 Speaker 1: the debris that we're getting out of the ocean right 459 00:26:59,600 --> 00:27:02,199 Speaker 1: now and find out if that's in fact true. And 460 00:27:02,240 --> 00:27:04,200 Speaker 1: we really need to figure out how we can detect 461 00:27:04,240 --> 00:27:07,119 Speaker 1: these things earlier so that we can interdict them before 462 00:27:07,119 --> 00:27:09,320 Speaker 1: they're hovering over you know our I C B M 463 00:27:09,400 --> 00:27:12,479 Speaker 1: silos in Montana. But wasn't the reporting. I believe that 464 00:27:12,520 --> 00:27:16,480 Speaker 1: this has been in play for years now, and internationally 465 00:27:16,520 --> 00:27:18,879 Speaker 1: as well. I believe there's been balloons detected in Latin America. 466 00:27:18,920 --> 00:27:22,359 Speaker 1: I think over Bolivia as well. Why is this moment 467 00:27:22,880 --> 00:27:29,840 Speaker 1: so crucial when it comes to they're everywhere allegedly right, Well, 468 00:27:29,880 --> 00:27:32,320 Speaker 1: sometimes they might have to go they're going to travel 469 00:27:32,400 --> 00:27:34,840 Speaker 1: from one place to another, so they might cross over 470 00:27:34,880 --> 00:27:37,360 Speaker 1: places that aren't significant to get the places that are. 471 00:27:37,760 --> 00:27:40,640 Speaker 1: And I think from our perspective, you know, this has 472 00:27:40,720 --> 00:27:43,719 Speaker 1: to your point, it's happened over multiple years and multiple 473 00:27:43,760 --> 00:27:46,320 Speaker 1: administration and now it looks like we didn't even know 474 00:27:46,800 --> 00:27:49,359 Speaker 1: that they happened before. It's probably that we're going back 475 00:27:49,359 --> 00:27:51,439 Speaker 1: and looking for a signature that we weren't aware of 476 00:27:51,680 --> 00:27:55,720 Speaker 1: and actually finding them. These balloons might have fit the 477 00:27:55,800 --> 00:27:58,439 Speaker 1: perfect gap instead of the military is calling it. You know, 478 00:27:58,440 --> 00:28:01,480 Speaker 1: our Dwayne domain aware in this gap. So it was 479 00:28:01,520 --> 00:28:04,280 Speaker 1: something that we had a hard time detect. Hopefully, now 480 00:28:04,320 --> 00:28:06,280 Speaker 1: that we tracked this thing across the entirety of the 481 00:28:06,320 --> 00:28:09,240 Speaker 1: United States almost we have now figured out the signature 482 00:28:09,320 --> 00:28:12,440 Speaker 1: so we can re uh compute, if you will, our 483 00:28:12,560 --> 00:28:15,080 Speaker 1: radars in our early detection systems so that they will 484 00:28:15,080 --> 00:28:17,440 Speaker 1: pick these up quicker and we'll be able to say, 485 00:28:17,520 --> 00:28:20,320 Speaker 1: next time interdicted off the coast of Alaska instead of 486 00:28:20,320 --> 00:28:22,280 Speaker 1: watching it go all the way across the United States 487 00:28:22,520 --> 00:28:24,200 Speaker 1: and down they got off the coasts. That's going on. 488 00:28:24,800 --> 00:28:26,840 Speaker 1: So I don't want to put you on the spot here, Mick, 489 00:28:26,920 --> 00:28:30,200 Speaker 1: but we have UM talked to, for example of professor 490 00:28:30,240 --> 00:28:33,320 Speaker 1: at Johns Hopkins who said, well, he was talking about 491 00:28:33,359 --> 00:28:36,359 Speaker 1: the technology that we use in ours five balloons, so 492 00:28:36,440 --> 00:28:41,320 Speaker 1: do we have them too. So to to my knowledge, 493 00:28:41,320 --> 00:28:43,400 Speaker 1: and you know, I'm just talking about what I know. 494 00:28:43,920 --> 00:28:46,160 Speaker 1: I'm the open source, not something I knew from my past, 495 00:28:46,480 --> 00:28:50,640 Speaker 1: we do have all sorts of h collection platforms to 496 00:28:50,680 --> 00:28:53,040 Speaker 1: include balloons. So there has to be something that these 497 00:28:53,040 --> 00:28:56,040 Speaker 1: balloons do. And they're steerable, as we talked about, or 498 00:28:56,080 --> 00:28:58,440 Speaker 1: as the Pentagon has said, this is a starable. They 499 00:28:58,440 --> 00:29:02,040 Speaker 1: can put it right over a location that's obviously closer 500 00:29:02,080 --> 00:29:05,000 Speaker 1: than the satellite and do things like collect not only 501 00:29:05,080 --> 00:29:08,480 Speaker 1: imagery but signals intelligence so everything that emanates from it. 502 00:29:08,560 --> 00:29:10,760 Speaker 1: So I'm sure that if we're doing it, there's some 503 00:29:10,920 --> 00:29:14,400 Speaker 1: value added. That's in addition to spy satellites and obviously 504 00:29:14,520 --> 00:29:18,320 Speaker 1: human collection on the ground, so that both both countries 505 00:29:18,320 --> 00:29:22,800 Speaker 1: of China and the United States like intelligence shot. The 506 00:29:22,840 --> 00:29:26,920 Speaker 1: reason I ask is that so many UM senators and 507 00:29:27,000 --> 00:29:32,200 Speaker 1: congressmen went went went on air saying that they were 508 00:29:32,240 --> 00:29:35,880 Speaker 1: outraged about this, but aren't we doing the exact same thing. 509 00:29:37,960 --> 00:29:41,560 Speaker 1: So that's that's my point. I mean, countries collect intelligence 510 00:29:41,760 --> 00:29:45,400 Speaker 1: on their adversaries, and we try to protect our own 511 00:29:45,440 --> 00:29:48,360 Speaker 1: secrets from our adversaries collecting on it. So I think 512 00:29:48,400 --> 00:29:49,960 Speaker 1: we need to do a much better job. I don't 513 00:29:50,000 --> 00:29:52,640 Speaker 1: know that we need to be outraged, but we certainly 514 00:29:52,720 --> 00:29:56,120 Speaker 1: do need to protect ourselves in the future from this 515 00:29:56,280 --> 00:29:59,520 Speaker 1: ever happening. Again, there's an additional factor on this one. 516 00:29:59,600 --> 00:30:02,160 Speaker 1: In Almo US looks like it was made to embarrass 517 00:30:02,160 --> 00:30:05,000 Speaker 1: the United States, and it is so visible. It just 518 00:30:05,120 --> 00:30:08,959 Speaker 1: loggered over population areas. Perhaps we could be I'm not 519 00:30:09,040 --> 00:30:12,480 Speaker 1: much into be an outrage, but certainly that was intended 520 00:30:12,520 --> 00:30:15,480 Speaker 1: to make us at least angry. It looks like uh 521 00:30:15,520 --> 00:30:19,000 Speaker 1: and and it obviously caused Secretary Blincoln to postpone his 522 00:30:19,080 --> 00:30:22,280 Speaker 1: script evasion. So they got what they asked. So what 523 00:30:22,360 --> 00:30:25,160 Speaker 1: does this mean in terms of the tools that we 524 00:30:25,280 --> 00:30:29,440 Speaker 1: use for surveillance here? Does this then amp up surveillance 525 00:30:29,440 --> 00:30:32,400 Speaker 1: from both sides or kind of wind it down? Well? 526 00:30:32,440 --> 00:30:35,000 Speaker 1: And are we amping up their surveillance? Right? Are they 527 00:30:35,080 --> 00:30:37,080 Speaker 1: are what we want to know is are are they 528 00:30:37,200 --> 00:30:41,720 Speaker 1: using our gear to spy on us? So unfortunately, a 529 00:30:41,720 --> 00:30:44,440 Speaker 1: lot I mean, as we know, uh, a lot of 530 00:30:44,480 --> 00:30:47,920 Speaker 1: the advanced technological equipment around the world comes to the 531 00:30:47,960 --> 00:30:49,800 Speaker 1: United States, so they use that. I don't know if 532 00:30:49,840 --> 00:30:51,680 Speaker 1: there's a way to prevent them from doing that, but 533 00:30:51,720 --> 00:30:54,479 Speaker 1: it's certainly something we should look into. And as far 534 00:30:54,520 --> 00:30:58,000 Speaker 1: as the question is that we're gonna amp up surveillance, absolutely, 535 00:30:58,040 --> 00:31:00,200 Speaker 1: they're gonna take everything they learned for this, are going 536 00:31:00,240 --> 00:31:02,720 Speaker 1: to try to never let it happen again. Something we 537 00:31:02,760 --> 00:31:06,480 Speaker 1: should be concerned about is our pilots that are flying 538 00:31:06,560 --> 00:31:09,800 Speaker 1: near China in their air space but near China are 539 00:31:09,840 --> 00:31:11,680 Speaker 1: likely going to start getting her asked on the Chinese 540 00:31:11,680 --> 00:31:13,840 Speaker 1: Air Force. That happened in the past, it probably will 541 00:31:13,880 --> 00:31:17,040 Speaker 1: happen again. We need to retain our course. We have 542 00:31:17,200 --> 00:31:19,400 Speaker 1: all the right in the world of the international air space, 543 00:31:19,760 --> 00:31:22,040 Speaker 1: and we need to make sure that those those aircraft 544 00:31:22,080 --> 00:31:25,280 Speaker 1: are protected fighter aircraft from us. This is in the 545 00:31:25,320 --> 00:31:28,880 Speaker 1: context of military drills already taking place on both sides 546 00:31:28,880 --> 00:31:32,040 Speaker 1: when it comes to South China. See how much worse 547 00:31:32,200 --> 00:31:34,440 Speaker 1: can things get before we kind of get to the 548 00:31:34,520 --> 00:31:40,840 Speaker 1: ultimate outcome, which is kind of direct combat. So as first, 549 00:31:40,880 --> 00:31:42,800 Speaker 1: I think we should do everything we can to avoid that. 550 00:31:43,320 --> 00:31:46,280 Speaker 1: I think the United States will be successful. I'm obviously biased, 551 00:31:46,280 --> 00:31:48,120 Speaker 1: but it's not going to be in either either countries. 552 00:31:48,160 --> 00:31:51,000 Speaker 1: All the world's injury to see a conflict between two superpowers. 553 00:31:51,040 --> 00:31:53,560 Speaker 1: We already have confidence going off around the world, that 554 00:31:53,600 --> 00:31:56,920 Speaker 1: would just be devastating. So we need to do everything 555 00:31:56,920 --> 00:31:59,120 Speaker 1: we can to get back on the diplomatic side and 556 00:31:59,200 --> 00:32:01,320 Speaker 1: a ray from any on a conflict. But I do 557 00:32:01,400 --> 00:32:03,800 Speaker 1: think this is gonna heat up the tension when it 558 00:32:03,840 --> 00:32:06,760 Speaker 1: comes to these kind of gray area uh these these 559 00:32:06,800 --> 00:32:10,800 Speaker 1: kind of uh intelligence collection wars, if you will, and 560 00:32:10,840 --> 00:32:13,720 Speaker 1: they will try to start making sure that we can't 561 00:32:13,760 --> 00:32:16,040 Speaker 1: do what they just did to us. And so that's 562 00:32:16,080 --> 00:32:18,440 Speaker 1: going to be something that's continuous. But we do need 563 00:32:18,520 --> 00:32:21,960 Speaker 1: to make sure that ultimately diplomacy wins. Today, by the way, 564 00:32:21,960 --> 00:32:24,960 Speaker 1: I saw a memo, um I think NBC News had 565 00:32:25,000 --> 00:32:28,280 Speaker 1: reported that an Air Force General, Mike Minahan, who's the 566 00:32:28,280 --> 00:32:31,160 Speaker 1: head of Air Mobility Command, set out a memo to 567 00:32:31,360 --> 00:32:34,440 Speaker 1: his troops saying, I hope I'm wrong, but my gut 568 00:32:34,440 --> 00:32:37,160 Speaker 1: tells me we'll fight in that We're actually going to 569 00:32:37,240 --> 00:32:40,720 Speaker 1: go to war with China, and then he says, you know, 570 00:32:40,840 --> 00:32:44,280 Speaker 1: be ready, don't be distracted. UM, you know, make sure 571 00:32:44,280 --> 00:32:46,920 Speaker 1: you're doing all your training and implementing every every plane 572 00:32:46,960 --> 00:32:50,400 Speaker 1: you can. Is this just, you think, um, a memo 573 00:32:50,480 --> 00:32:52,320 Speaker 1: to keep people on their toes or do you think 574 00:32:52,400 --> 00:32:55,400 Speaker 1: he actually does expect this air Force general a war 575 00:32:55,480 --> 00:33:01,360 Speaker 1: with China? So I think probably and I don't know, 576 00:33:01,440 --> 00:33:03,680 Speaker 1: but I think it's probably more likely to make sure 577 00:33:03,720 --> 00:33:07,880 Speaker 1: that his his troops, if you will, are taking it 578 00:33:07,960 --> 00:33:11,920 Speaker 1: serious and they will be ready for a conflict whether 579 00:33:11,920 --> 00:33:15,240 Speaker 1: it happens, if it does happen. That's what the U. S. 580 00:33:15,280 --> 00:33:17,840 Speaker 1: Military should be doing. They should they should act as 581 00:33:17,880 --> 00:33:20,160 Speaker 1: if we're going to have a conflict. They should want 582 00:33:20,160 --> 00:33:22,520 Speaker 1: a conflict. They obviously don't make the policy decisions to 583 00:33:22,600 --> 00:33:25,120 Speaker 1: have a conflict, but they have to be prepared. And 584 00:33:25,160 --> 00:33:26,800 Speaker 1: I think, I don't know, but I think that's what 585 00:33:26,840 --> 00:33:29,760 Speaker 1: he was he was ultimately doing. The Pentagon has came 586 00:33:29,760 --> 00:33:31,840 Speaker 1: out into that's not the position of the Pentagon. It's 587 00:33:31,920 --> 00:33:35,360 Speaker 1: just this one particular general. But it is something that 588 00:33:35,400 --> 00:33:38,400 Speaker 1: the military should Our military should always be ready to do. 589 00:33:38,760 --> 00:33:41,560 Speaker 1: That's their job. So let's let's all hope that he 590 00:33:41,680 --> 00:33:45,200 Speaker 1: is wrong, including him but that is something that US 591 00:33:45,280 --> 00:33:48,000 Speaker 1: military should be prepared to do. That's what we expect. 592 00:33:48,400 --> 00:33:50,560 Speaker 1: Let me finally ask you for a status update on 593 00:33:50,640 --> 00:33:54,160 Speaker 1: Russia's war in Ukraine. How does that look to you 594 00:33:54,240 --> 00:33:58,000 Speaker 1: right now? Because we hear that, you know, the the 595 00:33:58,080 --> 00:34:01,280 Speaker 1: Ukrainians have made some advances, then they lost some ground, 596 00:34:01,360 --> 00:34:03,560 Speaker 1: but we've shipped over some tanks or they're in the 597 00:34:03,560 --> 00:34:06,400 Speaker 1: process of learning how to use those. What what's what's 598 00:34:06,440 --> 00:34:10,080 Speaker 1: it look like to you? So on the big picture, 599 00:34:10,120 --> 00:34:12,800 Speaker 1: it looks like there's gonna be a substantial new offensive 600 00:34:12,840 --> 00:34:17,200 Speaker 1: by the Russians. They have called up to describe many 601 00:34:17,400 --> 00:34:20,799 Speaker 1: more people into their military and that is something that 602 00:34:20,840 --> 00:34:23,640 Speaker 1: the Ukrainians are bracing for. Up to two hundred thousand 603 00:34:23,840 --> 00:34:27,600 Speaker 1: additional Russian soldiers coming into this light and now they're 604 00:34:27,680 --> 00:34:29,520 Speaker 1: gonna be equipped. I don't know why they waited until 605 00:34:29,719 --> 00:34:32,359 Speaker 1: now with some of their most modern wequipies they have, 606 00:34:32,440 --> 00:34:35,759 Speaker 1: including tanks. So these tanks at your reference, are going 607 00:34:35,800 --> 00:34:39,720 Speaker 1: to be incredibly important. The Ukrainians can't beat them in numbers, 608 00:34:39,719 --> 00:34:41,879 Speaker 1: so they're gonna have to beat them on skills. They're 609 00:34:41,920 --> 00:34:44,200 Speaker 1: gonna have to beat them on smarts, and that's what 610 00:34:44,239 --> 00:34:47,160 Speaker 1: they've been doing. So far, but these new tanks, the 611 00:34:47,280 --> 00:34:52,120 Speaker 1: challengers coming from the UK, the Leopards coming from Germany, 612 00:34:52,160 --> 00:34:54,319 Speaker 1: and then of course r M on Abrams. They need 613 00:34:54,360 --> 00:34:56,640 Speaker 1: to get there as fast as possible. There will be 614 00:34:56,680 --> 00:35:00,839 Speaker 1: absolutely key to defending Ukrainians haritial and also taken back 615 00:35:00,920 --> 00:35:03,759 Speaker 1: territory the pro Russians from the occupied All right, Nick, 616 00:35:03,840 --> 00:35:05,719 Speaker 1: great talking to you. Thank you so much for joining us. 617 00:35:05,760 --> 00:35:08,600 Speaker 1: Always appreciate getting some time with you. McK mulroy there 618 00:35:08,680 --> 00:35:14,239 Speaker 1: is the co founder of the Lobo Institute. We're gonna 619 00:35:14,239 --> 00:35:16,680 Speaker 1: talk a little corporate finance right now from the perspective 620 00:35:16,880 --> 00:35:19,600 Speaker 1: of a fintech that's trying to make the world a 621 00:35:19,640 --> 00:35:22,520 Speaker 1: better place. A j Amati joins us. He's head of 622 00:35:22,560 --> 00:35:28,400 Speaker 1: corporate financing there over at Atomic Financial So Atomic Financial 623 00:35:28,880 --> 00:35:32,800 Speaker 1: UM is an infrastructure for connecting apps and services to 624 00:35:32,840 --> 00:35:35,200 Speaker 1: payroll accounts and A j it's great to have you 625 00:35:35,239 --> 00:35:39,520 Speaker 1: on the program. You're talking about the delta between what 626 00:35:39,719 --> 00:35:43,400 Speaker 1: companies can earn on deposits if they have their money 627 00:35:43,440 --> 00:35:47,439 Speaker 1: at say Chase or Wells Fargo UM, as opposed to 628 00:35:47,840 --> 00:35:50,120 Speaker 1: what they can earn on a one year treasury and 629 00:35:50,160 --> 00:35:53,000 Speaker 1: it's massive right now. If you get nothing, if you 630 00:35:53,000 --> 00:35:55,000 Speaker 1: put your money in a bank, then a one year 631 00:35:55,040 --> 00:35:57,040 Speaker 1: Treasury is paying more than four and a half percent. 632 00:35:58,880 --> 00:36:01,640 Speaker 1: That's right, Thanks for having me on the program that UM, 633 00:36:01,680 --> 00:36:03,920 Speaker 1: and I think that's the issue that we're trying to solve. 634 00:36:03,960 --> 00:36:07,640 Speaker 1: The fed UM continues to hike rates so as that 635 00:36:07,840 --> 00:36:10,319 Speaker 1: the yield curve continues to move up, and so that 636 00:36:10,360 --> 00:36:13,960 Speaker 1: provides an opportunity Banks continue to pay low interest rates 637 00:36:14,320 --> 00:36:17,160 Speaker 1: for depositors, so that provides an opportunity for fintech such 638 00:36:17,160 --> 00:36:22,319 Speaker 1: as Atomic and others to provide accessibility to higher yielding products. 639 00:36:22,560 --> 00:36:25,120 Speaker 1: So is this something you're doing only for corporate clients? 640 00:36:25,160 --> 00:36:28,040 Speaker 1: And how much of that difference can you make up? 641 00:36:28,080 --> 00:36:30,319 Speaker 1: I mean, if you're if I'm a small business and 642 00:36:30,400 --> 00:36:33,759 Speaker 1: I haven't a half million dollars sitting with Bank America 643 00:36:34,480 --> 00:36:38,040 Speaker 1: earning nothing, can you can you give me closer to 644 00:36:38,320 --> 00:36:41,719 Speaker 1: treasury rates on that and let me maintain the kind 645 00:36:41,719 --> 00:36:46,919 Speaker 1: of liquidity i'd need as a small business. That's exactly right. 646 00:36:47,000 --> 00:36:52,359 Speaker 1: So if you're a UM small samme, or if you're 647 00:36:52,440 --> 00:36:57,440 Speaker 1: a corporate or even an individual UM depositor, you're likely 648 00:36:57,480 --> 00:37:00,279 Speaker 1: to earn just a few basis points when you're checking count, 649 00:37:00,280 --> 00:37:03,359 Speaker 1: maybe slightly more on your savings account. What we do 650 00:37:03,440 --> 00:37:07,560 Speaker 1: is offer a suite of products, and we don't offer 651 00:37:07,600 --> 00:37:11,000 Speaker 1: these direct consumers. But what we do is we provide 652 00:37:11,000 --> 00:37:14,320 Speaker 1: a white and label investing services, and we connect with banks, 653 00:37:14,400 --> 00:37:17,960 Speaker 1: fin techs, and credit unions so that they can connect 654 00:37:17,960 --> 00:37:22,200 Speaker 1: with us and then provide these services to their end customers. UM. 655 00:37:22,320 --> 00:37:25,440 Speaker 1: The yields that we are able to provide UM are 656 00:37:25,600 --> 00:37:29,160 Speaker 1: very close and sometimes in excess of US T bills. 657 00:37:29,160 --> 00:37:31,719 Speaker 1: So right now, you know, anywhere on the curve that 658 00:37:31,719 --> 00:37:34,000 Speaker 1: you look at up to one year, it's it's roughly 659 00:37:34,040 --> 00:37:36,960 Speaker 1: four and a half to five percent now and continues 660 00:37:37,000 --> 00:37:39,000 Speaker 1: to move up. And so we are able to build 661 00:37:39,000 --> 00:37:43,120 Speaker 1: structures either through money market funds, through T build ladders, 662 00:37:43,200 --> 00:37:45,799 Speaker 1: or other such instruments and reach four and a half 663 00:37:45,800 --> 00:37:48,879 Speaker 1: and five yields. So this is really a function of 664 00:37:49,040 --> 00:37:51,799 Speaker 1: the Federal Reserve. It's a relatively new phenomenon um in 665 00:37:51,840 --> 00:37:54,279 Speaker 1: the last couple of months or so at a time 666 00:37:54,280 --> 00:37:56,359 Speaker 1: when we're talking about when the Fed will go back 667 00:37:56,400 --> 00:37:59,280 Speaker 1: to quote unquote normal, how long is this dynamic gonna last? 668 00:38:01,280 --> 00:38:04,440 Speaker 1: It's a good question, I think. Um, there's there's a 669 00:38:04,440 --> 00:38:06,800 Speaker 1: few ways of looking at it. I think, first of all, 670 00:38:07,480 --> 00:38:11,319 Speaker 1: the current economic context, most analysts would say, is a 671 00:38:11,400 --> 00:38:15,080 Speaker 1: tough and challenging economic climate. But what we're doing by 672 00:38:15,120 --> 00:38:19,480 Speaker 1: offering such corporate investing products is UM. What we hear 673 00:38:19,480 --> 00:38:22,840 Speaker 1: from clients is that it's very attractive UM, and it 674 00:38:22,920 --> 00:38:25,960 Speaker 1: shows that these kind of offerings can continue to grow 675 00:38:26,040 --> 00:38:29,160 Speaker 1: even in a down cycle. Now, when the FED begins 676 00:38:29,200 --> 00:38:32,880 Speaker 1: to normalize UM, and it's increasingly look like looking like 677 00:38:32,960 --> 00:38:35,680 Speaker 1: that's going to be pushed out further further given the 678 00:38:36,160 --> 00:38:39,040 Speaker 1: very high jobs number that came out last week. But 679 00:38:39,280 --> 00:38:41,520 Speaker 1: you know, eventually when they begin to normalize, I think 680 00:38:41,520 --> 00:38:44,279 Speaker 1: there's a few things to consider. I think one is 681 00:38:44,320 --> 00:38:47,000 Speaker 1: that it's very unlikely that they'll go back to a 682 00:38:47,120 --> 00:38:49,920 Speaker 1: zero interest rate environment, as has been the case over 683 00:38:49,960 --> 00:38:53,160 Speaker 1: the past decade, and so even at a FED funds 684 00:38:53,239 --> 00:38:56,160 Speaker 1: rate of two to three percent, I think this kind 685 00:38:56,200 --> 00:38:59,239 Speaker 1: of product would continue to be attractive. And I think 686 00:38:59,320 --> 00:39:03,840 Speaker 1: second is UH, it's a countercyclical product. So ATOMIC also 687 00:39:04,480 --> 00:39:08,840 Speaker 1: provides offerings in the equity space. We're looking at providing 688 00:39:08,880 --> 00:39:13,839 Speaker 1: offerings in alternative assets, and so as clients shift from 689 00:39:13,880 --> 00:39:17,360 Speaker 1: perhaps this product to an equity product a few years 690 00:39:17,360 --> 00:39:19,920 Speaker 1: down the line, we will be there. We have the 691 00:39:19,960 --> 00:39:23,279 Speaker 1: offerings to switch between these type of products. UM. One 692 00:39:23,280 --> 00:39:25,760 Speaker 1: of the benefits of putting your money in a bank 693 00:39:25,960 --> 00:39:29,239 Speaker 1: is it's f d I c ensured. You know, businesses 694 00:39:29,320 --> 00:39:32,480 Speaker 1: often have a lot more than the maximum limit of two, 695 00:39:33,640 --> 00:39:38,839 Speaker 1: but consumers maybe don't. UM, so is this product just 696 00:39:38,920 --> 00:39:41,480 Speaker 1: as safe? Is it safe or even do you manage 697 00:39:41,480 --> 00:39:43,160 Speaker 1: to structure it so that it's just as safe as 698 00:39:43,160 --> 00:39:48,280 Speaker 1: the treasuries that you're investing in. That's right. So, depending 699 00:39:48,280 --> 00:39:52,560 Speaker 1: on the exact product which a client would invest in, UM, 700 00:39:52,640 --> 00:39:55,640 Speaker 1: it comes with different types of structure. So for example, 701 00:39:55,719 --> 00:39:59,640 Speaker 1: we have a sweet product that is FDI ensured UH 702 00:40:00,040 --> 00:40:03,160 Speaker 1: in more than the typical FDI insurance amount we have. 703 00:40:03,560 --> 00:40:06,759 Speaker 1: We provide access to t build ladder structures and of 704 00:40:06,800 --> 00:40:11,040 Speaker 1: course UM those are fully guaranteed and considered safe by 705 00:40:11,080 --> 00:40:15,200 Speaker 1: the market. UM. We also offer other products that enhanced 706 00:40:15,239 --> 00:40:18,799 Speaker 1: field but provide less protection, and so we work with 707 00:40:18,800 --> 00:40:21,799 Speaker 1: our clients to understand the risk tolerance, to understand their 708 00:40:21,840 --> 00:40:24,960 Speaker 1: liquidity needs and based on that constructor of product that 709 00:40:25,080 --> 00:40:29,040 Speaker 1: would UM I think UM provide the safety if they required, 710 00:40:29,160 --> 00:40:31,759 Speaker 1: or additional yield if that's what they're looking for. So 711 00:40:31,920 --> 00:40:35,279 Speaker 1: where if you know, consumers listening to this right now 712 00:40:35,320 --> 00:40:40,000 Speaker 1: and thinking I would love to have instantly accessible money 713 00:40:40,040 --> 00:40:42,760 Speaker 1: in a an account that earns four and a half percent. 714 00:40:43,400 --> 00:40:44,880 Speaker 1: Where can they get that? You say, you don't go 715 00:40:44,920 --> 00:40:48,680 Speaker 1: to direct consumer, You're a white label UM service that 716 00:40:48,760 --> 00:40:51,440 Speaker 1: allows I guess other banks and fin techs to do that. 717 00:40:51,520 --> 00:40:55,960 Speaker 1: What are what are some of your big clients then, UM, 718 00:40:55,960 --> 00:41:00,120 Speaker 1: I think it's I think rather than name the specific clients, 719 00:41:00,320 --> 00:41:03,480 Speaker 1: what I could say is you can the clients could 720 00:41:03,480 --> 00:41:05,960 Speaker 1: our individuals can contact Atomic and we can put you 721 00:41:06,040 --> 00:41:09,919 Speaker 1: in touch with some of our partner banks, syntexts, UM 722 00:41:10,040 --> 00:41:14,400 Speaker 1: and and credit unions that we partner with. UM. Alternatively, 723 00:41:15,000 --> 00:41:18,279 Speaker 1: they can request this from from their institution that they 724 00:41:18,360 --> 00:41:21,680 Speaker 1: usually partner with, and then UM their institution can reach 725 00:41:21,680 --> 00:41:23,840 Speaker 1: out to us so that we can form a partnership 726 00:41:23,880 --> 00:41:27,440 Speaker 1: with them. It sounds like a pretty interesting product. I 727 00:41:27,520 --> 00:41:30,200 Speaker 1: kind of want to use it myself. Yeah, I mean, 728 00:41:31,080 --> 00:41:33,840 Speaker 1: my financial advisor is always telling us, you've got to 729 00:41:33,880 --> 00:41:37,200 Speaker 1: have rainy day cash enough that you could cover your 730 00:41:37,239 --> 00:41:40,440 Speaker 1: bills for six months in the event you get fired 731 00:41:40,640 --> 00:41:43,800 Speaker 1: or whatever, you know, and UM, I'd rather have that sitting. 732 00:41:44,000 --> 00:41:46,080 Speaker 1: I'd rather have that earning four and a half percent 733 00:41:46,400 --> 00:41:49,160 Speaker 1: and easily be able to pull it out, and I 734 00:41:49,200 --> 00:41:53,840 Speaker 1: guess this is the idea, right A J. That's exactly right. Um. 735 00:41:53,960 --> 00:41:57,200 Speaker 1: Both for individuals you need a rady day fund, you 736 00:41:57,239 --> 00:42:00,400 Speaker 1: want access to it. But for example, we could structure 737 00:42:00,400 --> 00:42:02,520 Speaker 1: that in a t buil ladder so that you get 738 00:42:02,560 --> 00:42:05,880 Speaker 1: liquidity on a monthly basis um. And if you needed 739 00:42:05,880 --> 00:42:09,279 Speaker 1: the entire amount um, we could also provide that to 740 00:42:09,320 --> 00:42:11,960 Speaker 1: you as well. Um. There might be a small principle hit, 741 00:42:12,000 --> 00:42:15,840 Speaker 1: but it's largely available. So the liquidity characteristics of this 742 00:42:15,920 --> 00:42:19,080 Speaker 1: product is excellent. And again, if you are parked at 743 00:42:19,080 --> 00:42:22,120 Speaker 1: a bank where you're only earning hand to twenty basis 744 00:42:22,160 --> 00:42:25,239 Speaker 1: points um, this is a very attractive offering. And that's 745 00:42:25,320 --> 00:42:28,560 Speaker 1: I think why our partners sound really excited. You know, 746 00:42:28,600 --> 00:42:32,160 Speaker 1: we're talking to clients both in the US and even abroad, um, 747 00:42:32,200 --> 00:42:34,360 Speaker 1: and we haven't touched on the international arena, but we 748 00:42:34,400 --> 00:42:38,560 Speaker 1: have clients and partner institutions abroad who are gaining access 749 00:42:38,600 --> 00:42:41,719 Speaker 1: to US both equity and six income markets for the 750 00:42:41,719 --> 00:42:44,600 Speaker 1: first time, and that's very exciting for them, all right, 751 00:42:44,760 --> 00:42:46,880 Speaker 1: A J. Thanks so much for joining us. A j 752 00:42:46,960 --> 00:42:49,680 Speaker 1: Amati there. He is the head of corporate Financing at 753 00:42:49,680 --> 00:42:53,000 Speaker 1: Atimic financially. He's also a senior fellow at Harvard. You 754 00:42:53,040 --> 00:42:55,880 Speaker 1: may have heard of it talking fam talking to us 755 00:42:55,920 --> 00:42:58,520 Speaker 1: about a product. I think a lot of people are 756 00:42:58,640 --> 00:43:03,200 Speaker 1: find interesting since bank UH savings accounts rates have gotten 757 00:43:03,320 --> 00:43:06,680 Speaker 1: so far away from the Fed funds rate um and 758 00:43:06,719 --> 00:43:09,360 Speaker 1: the question is will they really ever get back there again? 759 00:43:10,320 --> 00:43:12,359 Speaker 1: Who knows? As Katie Greyfield says, you have to work 760 00:43:12,360 --> 00:43:18,919 Speaker 1: at Hindsight Capital to have that kind of intelligence. Thanks 761 00:43:18,960 --> 00:43:22,400 Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe 762 00:43:22,440 --> 00:43:26,200 Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast 763 00:43:26,200 --> 00:43:29,759 Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at 764 00:43:29,800 --> 00:43:33,600 Speaker 1: Matt Miller three. Pet Ball Sweeney I'm on Twitter at 765 00:43:33,640 --> 00:43:36,480 Speaker 1: pt Sweeney. Before the podcast, you can always catch us 766 00:43:36,520 --> 00:43:37,919 Speaker 1: worldwide at Bloomberg Radio