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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. Let's get to Danielle

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Speaker 1: d Martino Booth. We're very fortunate to have her in

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Speaker 1: our studio again today because she's based in Dallas, so

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Speaker 1: when she comes to New York, we say, please stop by.

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Speaker 1: Danielle d Martino Booth, CEO and chief strategist for Quill Intelligence.

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Speaker 1: All right, Danielle, we haven't chatted with you for a

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Speaker 1: little while here. What is your view about what our

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Speaker 1: federal Reserve is going to do here? Given all the

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Speaker 1: economic data that we've got today and the recession yesterday

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Speaker 1: and the recession called they used the R word. Yes, wow,

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Speaker 1: they're being so forthright. But to Matt's point, we're like

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Speaker 1: in a time compression chamber. Everything's happening so much more

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Speaker 1: quickly than it used to. I mean, we we've got

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Speaker 1: inflation expectations that are collapsing, lapsing among households. Forget the cps,

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Speaker 1: forget the pipe. Dude, you are doing the Tesla story yesterday. Yeah,

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Speaker 1: I know you're saying right, Tesla buyers are now going

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Speaker 1: to wait and see when the next price cuts come.

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Speaker 1: And the mindset among you as households has done a

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Speaker 1: complete one complete one eighty. Cox's Automotive came out and

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Speaker 1: said that in the first week of April, applications to

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Speaker 1: finance a car loan we're down twenty three percent year

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Speaker 1: over year. I mean, this is happening so fast, and

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Speaker 1: I think that that's what we have to appreciate about

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Speaker 1: how aggressive and fast the FED was. So you're long

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Speaker 1: and variable, it's like short and sweet. Yeah. By the way,

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Speaker 1: on the loan front, I've been hearing the word credit

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Speaker 1: crunch more and more often. I think Neil cash Car

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Speaker 1: he said it on one of the Sunday shows a

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Speaker 1: couple of weeks ago, and now everybody's starting to use

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Speaker 1: that phrase. I've all seen seen some survey data that

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Speaker 1: shows consumers aren't getting loans, not because rates are too high,

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Speaker 1: but because the banks are being tighter and tight up

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Speaker 1: with the money. Is that is that true. Are you

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Speaker 1: seeing that in the data? CarMax came out yesterday, CarMax

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Speaker 1: it was, it was, it was on the terminal. CarMax

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Speaker 1: came out yesterday, and they were like, we're not gonna

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Speaker 1: make as many loans. Our standards are tightening quickly. Capital

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Speaker 1: One pulled all of its floor lines for for dealers,

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Speaker 1: so you know, used card dealerships are going to start

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Speaker 1: dropping like flies because they paid up in January. They've

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Speaker 1: paid up in February at auction, which Mannheim Data told us,

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Speaker 1: and then income tax refund season for US households was

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Speaker 1: a disaster. Ye, So you're you're down eleven percent year

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Speaker 1: over year and people don't have as much cash as

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Speaker 1: they thought they were gonna have. Now we're gonna start

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Speaker 1: seeing income receipts, which Janet Yellen is praying please bring

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Speaker 1: the receipts in because the nation's checking account is down

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Speaker 1: to like one hundred billion. It's like, you know, she's

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Speaker 1: getting calls saying, you know you've hit your minimum balance?

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Speaker 1: Are we really? Because Steve Rattner rode An op ed

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Speaker 1: in The New York Times a couple of weeks ago

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Speaker 1: saying he wants people to come back to work and

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Speaker 1: you should really do it, you know, twelve hours a day,

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Speaker 1: sixties and an MD at Goldman, Sorry, but only mds.

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Speaker 1: I'm like, what does that mean for the non MD

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Speaker 1: The one thing he one, well, that means they're they're

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Speaker 1: gonna make those kids come in. The one thing that

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Speaker 1: I thought the most interesting takeaway was that at least

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Speaker 1: in his estimate, there's still a lot more money in

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Speaker 1: UM consumers bank accounts, checking accounts then there was, you know,

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Speaker 1: prepen heavily concentrated among the older and the wealthier. Okay,

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Speaker 1: at this point, you the burn rate for people making

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Speaker 1: seventy five thousand dollars fifty thousand dollars, that burn rate,

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Speaker 1: they burned through the cash. In fact, if you look

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Speaker 1: at the fiscal impulse, it turned negative in a big

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Speaker 1: way in the fourth quarter of twenty twenty two, and

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Speaker 1: the fiscal impulses continued to get lower. And remember they

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Speaker 1: your average American family that was getting receiving food stamps

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Speaker 1: was cut by two hundred and thirty three dollars a month.

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Speaker 1: And you have seen there is really good granular data

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Speaker 1: that shows that grocery shopping receipts are collapsing. People are

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Speaker 1: spending a lot less at the grocery store. This is like,

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Speaker 1: this is before you were born, Matt. But you remember

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Speaker 1: Hamburger Helper. Sure, And this was the thing in the

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Speaker 1: late seventies and eighties. It's that people switched away from

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Speaker 1: steak to ground beef, and how can I make ground

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Speaker 1: beef interesting for the family. We're seeing that in grocery stores.

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Speaker 1: Here's the thing. Ever since I grew this beard, people think,

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Speaker 1: for some reason, I'm a lot younger than I am.

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Speaker 1: I look so much younger with the beard, but I

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Speaker 1: was actually born in nineteen seventy three. Believe I can

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Speaker 1: go on with my day now. Yeah, I've got a listener,

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Speaker 1: an investor, a Bloomberg client who writes in. And first

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Speaker 1: of all, he hasn't said it, but I know he

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Speaker 1: has seen you speak before and he's a big fan,

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Speaker 1: So that's a b. He's got a question for you.

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Speaker 1: Why does the market interpret a FED cut in late

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Speaker 1: twenty three as a positive and not as the negative

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Speaker 1: that it is supposed to be viewed as rate cuts

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Speaker 1: mean bad things with the economy. Yet SMP forty one

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Speaker 1: hundred teams like no one cares and stunks. Yeah, it's

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Speaker 1: a direct look at the VIX. I mean it's it's

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Speaker 1: doesn't all all is good here. I'm not so old

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Speaker 1: that I look at the visail well, I look at

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Speaker 1: zero dated zero days. So these two exoptions, right with

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Speaker 1: with deference to the individual asking the question, I think

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Speaker 1: what people need to be prepared for is that the

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Speaker 1: last rate hike on May third does not mean that

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Speaker 1: quantitative tightening ends. So I don't think that. I don't

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Speaker 1: I believe Powell. I believe Powell in saying there's no

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Speaker 1: rate cut in twenty twenty three. He doesn't care what

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Speaker 1: markets are pricing in. He has talked markets back off

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Speaker 1: of their cliff over and over and over again. People

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Speaker 1: are like, but the markets pricing it in, And I'm like,

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Speaker 1: just wait from to open his mouth. And he's done

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Speaker 1: this since March of twenty twenty two. Nobody realizes that,

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Speaker 1: you know, we just had the largest draw down of

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Speaker 1: the Fed's balance sheet in the most recent week in

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Speaker 1: the history of mankind. That's how many treasuries rolled off

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Speaker 1: so QT and you know, it's it's what Mike McKee,

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Speaker 1: it's like the Super Bowl every Thursday afternoon and every

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Speaker 1: Friday afternoon, waiting for everybody knows what the H four

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Speaker 1: and the H eight are. Now it's like, how did

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Speaker 1: what is four? And I know the weeds. I know

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Speaker 1: about the Fed's balance sheet. You know, I know what

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Speaker 1: about bank balance sheets. But everybody's watching it so closely

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Speaker 1: because the credit crunch is happening way fast. Commercial lending

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Speaker 1: is more than ever before. You know, we we we

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Speaker 1: used to interview company CEOs on bloomber TV. We used

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Speaker 1: to talk about company stocks. Now it's just fed from

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Speaker 1: daybreak to sunday. You know. It's what company CEOs want

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Speaker 1: to know is why they can't get the CNI loans

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Speaker 1: that they want. Remember, we're in an inventory correction. So

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Speaker 1: in most operation managers lives, it's been just in time

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Speaker 1: inventory and now it's just in case. So they're sitting

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Speaker 1: on an inventory that's that is the shortest rate you

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Speaker 1: can possibly name. Operating expensive companies don't know what to do.

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Speaker 1: I would not want to be a CFO right now.

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Speaker 1: So is a recession now in I think we are

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Speaker 1: in recession recession. I think we are in a receptive

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Speaker 1: I think when it goes is it deep? Is it

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Speaker 1: because it well, well, the FETE says it's going to

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Speaker 1: be mild, right, right, I just how can we be

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Speaker 1: in a recession with three and a half percent unemployment

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Speaker 1: and use cars still going from like new car prices

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Speaker 1: plus new car prices are unaffordable for everybody but the

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Speaker 1: top like three percent. That's very true. But we have

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Speaker 1: seen new car prices fall below MSRP for the first

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Speaker 1: time in twenty months. New car prices have come down

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Speaker 1: three months in a row, and judging by how buyers

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Speaker 1: view car prices, we ran it in this morning's data.

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Speaker 1: It's Mary Barra's promise to maintain profit margins and hold

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Speaker 1: up high prices and not do incentive spending. That might work,

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Speaker 1: but it's not gonna work for her competitors. She's holding

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Speaker 1: the line, but Ford is following Tesla and cutting thank you, yeah, yea,

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Speaker 1: So all right, so fed raises here May third, and

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Speaker 1: then is are you kind of with everybody else that

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Speaker 1: they're just gonna kind of hang and see what happens

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Speaker 1: and look at the data. They're gonna hang and roll

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Speaker 1: their balance sheet down. There was a report that came

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Speaker 1: out of the New York Fed a few days ago

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Speaker 1: that said, well, the balance sheet, we expect the balance

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Speaker 1: She's gonna be six trillion dollars in twenty twenty five.

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Speaker 1: I mean, incorporate that into your thinking. The New York

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Speaker 1: Fed thinks that quantitative tightening is going to continue for

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Speaker 1: the next two years. The market is saying zero interest rates,

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Speaker 1: zero bound. They're not talking about cute little twenty five

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Speaker 1: bases point rate cuts. They're talking about gwen to the

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Speaker 1: zero bound immediately and restarting quantitative easing. That's what the

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Speaker 1: market wants. The market just doesn't believe the FED put

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Speaker 1: is going away. The market is like your kids, Paul.

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Speaker 1: You've cut them off the payroll. It's been a couple

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Speaker 1: of years, but they know the worst comes to worse

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Speaker 1: when the s hits the fan. They can still go

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Speaker 1: back to the bank of Dad. When they mean absolutely

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Speaker 1: they have that back. Now. I'm trying to cut that

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Speaker 1: off right down. Yeah, they're good though it I mean

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Speaker 1: they don't, they don't come. It's it's it's pretty good

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Speaker 1: so far, all right, So because they have jobs, because

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Speaker 1: everybody has wait until these FED rate hikes put those

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Speaker 1: kids out of jobs and then all of a sudden,

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Speaker 1: you're gonna have a new roommate in summit or done.

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Speaker 1: Any what you're seeing I mean, you're the entire Northeastern

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Speaker 1: corridor has rising jobless claims from Maine to Pennsylvania. The

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Speaker 1: entire Exceller route. That's my that's my top of my

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Speaker 1: feather tomorrow. The entire exceler route is seeing rising initial

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Speaker 1: jobless claims. And so it's like the recession recognition is

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Speaker 1: coming hard and fast, and it goes right along with

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Speaker 1: what you were saying right before I came on with

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Speaker 1: this whole idea of long and variable labs being really short. Yeah,

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Speaker 1: all right, So I guess is inflation. I mean, what's

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Speaker 1: the biggest concern for you out there in this economy? Right? Yeah,

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Speaker 1: if inflation is coming down, although at this morning and

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Speaker 1: the sticking around these levels, uh, if inflation is coming down,

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Speaker 1: and if unemployment is still you know, at a record low. Um,

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Speaker 1: this recession feels okay to me. How long is it

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Speaker 1: gonna last? It's gonna last until your neighbor loses their job,

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Speaker 1: right yep? And then and and and that's why I

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Speaker 1: think that we're not really prepared. I think we're going

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Speaker 1: to see an unemployment rate shock because everything seems to

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Speaker 1: come like like a with with a bullet. Everything's so

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Speaker 1: dramatic that when it happens. I mean, if we looked

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Speaker 1: at realtors realature's income in the PPI report this morning,

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Speaker 1: and it looks like hockey stick going up and it

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Speaker 1: looks like it's just collapsed coming down. Yeah, I believe that,

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Speaker 1: and sold so many at high prices last year exactly,

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Speaker 1: and it's just except for Paul's house on the shore,

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Speaker 1: it's welcome. And then we saw, yeah, the consumer price

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Speaker 1: in next Hi, what was the data we saw I did.

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Speaker 1: What was the data we saw um Personal health up

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Speaker 1: six point eight percent in the CPI yesterday? Child that

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Speaker 1: was childcare. Childcare costs are sore. I'm here to tell

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Speaker 1: you as a man with a two and a half

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Speaker 1: year old kid. Look, I just came back from Berlin,

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Speaker 1: where childcare is luxurious and free. I did not expect

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Speaker 1: it to cost me the average American way. Look at

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Speaker 1: where we look at where the job openings are still

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Speaker 1: really strong, childcare, nursing homes, home healthcare workers. Those individuals

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Speaker 1: are coming back into the labor force, but for now

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Speaker 1: there's still there's still a deficit of these workers. So

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Speaker 1: you pay through the nose for childcare. Those apps and jewels, Yes,

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Speaker 1: all right, this was an extended block. We're really appreciate

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Speaker 1: you taking the time. Danielle Danielle di Martino Booth. She's

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Speaker 1: a CEO and chief strategist at Quill Intelligence. Highly recommend

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Speaker 1: follow the Dallas fed You store Dallas fed fed Up,

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Speaker 1: fed Up still my favorite. Great follow on Twitter, even

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Speaker 1: though I'm off Twitter, but great following Twitter. Some good

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Speaker 1: stuff committed Twitter side. Yes after Facebook. Yeah, I'm done. Done.

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Speaker 1: You're listening to the Team Cancer Live program Bloomberg Markets

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Speaker 1: weekdays at ten am easting on Bloomberg dot com, the

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Speaker 1: I Heard Radio app and the Bloomberg Business App. We're

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Speaker 1: listening on demand wherever you get your podcast. Right now

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Speaker 1: when you want to talk about these markets here, we're

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Speaker 1: gonna bring in a professional, Phil Tase. He's a CEO

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Speaker 1: of Tay's Asset Management. He joins us here in our

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Speaker 1: Bloomberg Interactive Broker Studio. Phil, the last time I think

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Speaker 1: we saw you, or maybe maybe the time before that,

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Speaker 1: we have in our notes ninety percent of the terms

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Speaker 1: assets were in cash, with the remaining ten percent in

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Speaker 1: defensive fixed income. Is that still the case for you, guys,

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Speaker 1: It's not. It was a great place to be in

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Speaker 1: twenty twenty two, but it is it has not this year.

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Speaker 1: So our algorithms bar trend following funds moved us back

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Speaker 1: into the markets the beginning on January the eighteenth, and

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Speaker 1: then we came fully back in over the next couple

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Speaker 1: of days. We had one brief period when we're out

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Speaker 1: just harshly in March for a couple of days, but

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Speaker 1: we've been just enjoying the rally. So let's talk about

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Speaker 1: your new fund. It's the Tay's Agility Shares Managed Risk ETF.

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Speaker 1: And tell us first of all, what it does. Okay,

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Speaker 1: so it's a different way of trying to address risk

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Speaker 1: than leaving the markets. And what it is is it's

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Speaker 1: an SMP five hundred type of ETF, but it has

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Speaker 1: full notional options for tection on a leap that's two

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Speaker 1: years out that we buy every year in December. Here's

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Speaker 1: what's super important. If all you're doing is buying the

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Speaker 1: equities market, but you're and hedging but not figuring out

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Speaker 1: a way to pay for that, you're going to give

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Speaker 1: up most of the above inflation gains. And that's why

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Speaker 1: so few people end up doing options over the long term. Well,

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Speaker 1: so what we also do. Inside of that ETFs, we

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Speaker 1: sell shorter dated calls sixty and ninety days out about

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Speaker 1: five percent above the market. We also sell some put

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Speaker 1: spreads and that brings in a premium each month that

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Speaker 1: helps pay for that put protection. Now, the other important

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Speaker 1: component of this, the way this works is that options

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Speaker 1: need to be dynamically managed. So if we have that

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Speaker 1: leap and it's at the market and the the markets advanced

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Speaker 1: ten or twenty percent in the year, you need to

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Speaker 1: be able to roll that price up to the market

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Speaker 1: so you can bring your protection higher. Here's another super

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Speaker 1: important point. If the market plummets, we can roll the

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Speaker 1: leap down and monetize it. So the key to success

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Speaker 1: with options when you're in the equities market is figuring

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Speaker 1: out a way to both pay for the protection but

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Speaker 1: also monetize and when you have wins when the market

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Speaker 1: move lower. I gotta say it for I feel like

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Speaker 1: for me and Paul, we need illustrations options. I'm just

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Speaker 1: I'm kind of lost there. But what I do know

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Speaker 1: is that on you know, in money markets, in short

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Speaker 1: duration treasury ETFs, you're getting four or five six percent, right,

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Speaker 1: So what kind of returns can you get in something

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Speaker 1: like the agility Shares Managed Risk ETF well, so over

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Speaker 1: its history we have around a seventy percent capture and

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Speaker 1: a forty percent down capture. But if the market would

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Speaker 1: enter into free fall, which we didn't really see in

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Speaker 1: twenty twenty two, we think you could have more offsetting

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Speaker 1: appreciation in those puts and less market down capture than

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Speaker 1: forty percent. So I'll summarize it. It's a way to

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Speaker 1: be in the market with potentially dramatically less risk on

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Speaker 1: the downside and a way to pay for that risk protection.

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Speaker 1: All right, So mr SK is the ticker, yes, and

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Speaker 1: just kind of summary. The holdings are mostly options M

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Speaker 1: risk managed risk. So actually no, the holdings are mainly

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Speaker 1: just the S and P five hundred, okay, using options

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Speaker 1: to both you know, address the possibility of it down

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Speaker 1: and you know, options to help pay you for that. So,

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Speaker 1: so what is your view of the market. We've had

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Speaker 1: a whole slew of economic data just recently on an

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Speaker 1: inflation front suggesting that may be cooling. We're gonna have

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Speaker 1: earnings kicking off tomorrow with some of the banks. How

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Speaker 1: are you guys viewing this market, which, by the way,

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Speaker 1: we should point out, you know yesterday's CPI and today's

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Speaker 1: PPI as fascinating. Well as boring as yesterday's CPI was

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Speaker 1: and as fascinating as today's PPI was, they're not really

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Speaker 1: moving the markets, right, We're still up year to date

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Speaker 1: on the S and P seven and a half percent, right, right, Okay,

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Speaker 1: So I'll give you two views. One is short term.

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Speaker 1: Over the short term, markets are like teenagers, and sometimes

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Speaker 1: it's gonna be like a group of teenagers. And if

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Speaker 1: you get a momentum driven equity market that's higher than

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Speaker 1: it's like a group of teenagers with beers, right, it's

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Speaker 1: not it's not rational, it doesn't make sense. Over the

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Speaker 1: longer term, they're buying ripped genesre ripped genes again. So

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Speaker 1: over the longer term, we have a lot of challenges.

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Speaker 1: One thing that's not talked about at all that I'm

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Speaker 1: in the process of right the paper right now is

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Speaker 1: the global debt situation unprecedented. The consequences I think will

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Speaker 1: be significant. That's more than we have time for in

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Speaker 1: this segment. But also we've addressed that though in the past. Okay,

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Speaker 1: it's nuts. So especially when you look at I thought

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Speaker 1: twenty percent interest rates would have been unbearable in the eighties,

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Speaker 1: and someone reminded me, we had a debt to GDP

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Speaker 1: back then, have like twenty or thirty percent. Now five

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Speaker 1: percent hurt just as much because we have debt to

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Speaker 1: GDP of like one hundred and twenty percent exactly. And

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Speaker 1: the last time we had one hundred percent of debt

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Speaker 1: to GDP was after World War Two. The thing that

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Speaker 1: saved us then was GDP growth, where we grew for

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Speaker 1: twenty years at eight percent a year. That's not going

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Speaker 1: to happen right now. So we have all the kinds

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Speaker 1: of other outcomes. But you know, I was listening to

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Speaker 1: your conversation earlier about the potential for a recession, and

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Speaker 1: I think you still have this enormous wealth effect. So

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Speaker 1: even though we may enter into a recession, we can't

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Speaker 1: ignore the fact that everyone has so much money. Wealth

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Speaker 1: to GDP is near record levels in the US. Well,

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Speaker 1: Danielle is saying that that's pretty skewed, like the wealthy

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Speaker 1: have so much money. That's true. That is true. So

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Speaker 1: you know, I think that it's going to be a

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Speaker 1: grind down, but longer term, looking at where valuations are,

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Speaker 1: I think ultimately it's not a great story, So we're

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Speaker 1: still looking at potentially you know, I was just listening

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Speaker 1: to clip again of Mike Wilson. We might agree with

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Speaker 1: him sort of over the next twelve to eighteen months

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Speaker 1: where we think we've got a tough slog, big baby.

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Speaker 1: So last year you were in so much cash, do

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Speaker 1: you envision kind of getting back to anything close to that? Yeah? Totally,

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Speaker 1: And what would push you there? Just were we used

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Speaker 1: We follow trends. So the reason we're in is because

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Speaker 1: the market has begun to move up, and so we

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Speaker 1: try to buy in in the early stages based on

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Speaker 1: how our systems are built and so then that allows

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Speaker 1: us to participate. But if the market turns down, I

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Speaker 1: was just looking now, if the market moves down only

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Speaker 1: about like about one and a half percent, we're going

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Speaker 1: to sell range again. So it won't take a lot

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Speaker 1: for us to sell. Sometimes there are false signals right

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Speaker 1: where we can come out and then back in again.

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Speaker 1: But the key is if that happens, you know, the

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Speaker 1: world is long, right, the world is betting on fam

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Speaker 1: of French they're scared to do anything but just be

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Speaker 1: in the markets. But most investors they really can't afford that. Oh,

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Speaker 1: the mean works. They need to worry about their own

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Speaker 1: specific lives and address risk, all right, So with that

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Speaker 1: in mind, other than managed risk, what else are you buying?

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Speaker 1: What else do you want to own right now? Well,

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Speaker 1: so we are specialists in just owning indo season figuring

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Speaker 1: out ways to hedge that risk, right, So we do

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Speaker 1: have a strategy that So basically MRSK is your wheel

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Speaker 1: house MRSK or we have you know, a couple of

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Speaker 1: other funds THHLGX, THHSMX funds. Those are our trend following

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Speaker 1: algo funds and those will move into cash inside the

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Speaker 1: funds themselves. So we just like right now being in

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Speaker 1: the markets. I mean, you know, we thought small cap

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Speaker 1: was going to do well. Now we've seen that sort

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Speaker 1: of fall off a ledge recently, so we haven't seen that.

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Speaker 1: But just own the market broadly right now, we think.

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Speaker 1: But the most important advice I would give to investors

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Speaker 1: is that you need to figure out a way to

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Speaker 1: address contingencies. Right don't bet for markets are going to

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Speaker 1: move higher or betas are going to move lower. Bet

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Speaker 1: since stay with the markets, but figure out a way

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Speaker 1: to address the possibility. We think it's a significant possibility

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Speaker 1: that markets are going to move lower. So do you

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Speaker 1: even care? Given you your style and kind of the

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Speaker 1: way you guys do things, you care about earnings, you're

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Speaker 1: gonna pay attention to that stuff. Yeah, yeah, Well we

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Speaker 1: not actually not really no, because we're just gonna follow

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Speaker 1: trends one way or another. We keep hoping someone's going

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Speaker 1: to care about earnings. Really does in terms of the

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Speaker 1: ETF business, I mean we've seen it now grow to

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Speaker 1: what ten trillion dollars globally, I mean across the industry, right,

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Speaker 1: and people will continue to convert mutual funds into ets,

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Speaker 1: people continue to bring out new products. Last year was

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Speaker 1: amazing and they're still You've just brought out a new

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Speaker 1: product yourself. How do you see this market growing? Yeah,

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Speaker 1: I just think that ETFs are going to grow because

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Speaker 1: they have lower expense racers. There's a lot of stuff

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Speaker 1: that goes on with some of these custodians, big custodians

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Speaker 1: where they charge sort of users fees to mutual funds

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Speaker 1: that live there. So there's incentive to convert over to

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Speaker 1: ETFs and avoid all those fees. Plus they can trade

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Speaker 1: them for free. So I think that all is just

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Speaker 1: going to continue to the movement over there. But the

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Speaker 1: one thing about that most of these ETFs are just

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Speaker 1: buy and hold the market and own it forever and

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Speaker 1: their inb indussees you know that has worked extremely well

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Speaker 1: for the last twenty years. But is active is very hot? Right? Well?

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Speaker 1: I think you know, I honestly who cares, right because

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Speaker 1: active or beta, if the market falls off a cliff

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Speaker 1: and move down twenty or thirty percent, you're gonna be

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Speaker 1: talking about being down twenty eight percent versus thirty two, right.

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Speaker 1: I mean, you need things that can really address risk.

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Speaker 1: And so I think and people the thing that people

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Speaker 1: aren't thinking thinking about is the possibility of multi year declines.

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Speaker 1: The longest decline we've had in the last twenty years

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Speaker 1: has been the great you know, the financial crisis, and

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Speaker 1: that was about a sixteen month decline. People aren't thinking

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Speaker 1: about the possibility multi year declines, and those are going

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Speaker 1: to hit in disease hard. All right. It's making my

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Speaker 1: stomach hurts. You can't come in again. There's a lot

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Speaker 1: of risk out there that's multi year declines. Yeah, I

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Speaker 1: don't think that's I thought that was over. That was

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Speaker 1: generations again ago, exactly good right now, And so let's

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Speaker 1: just enjoy it for the moment. Okay, Yeah, that's my strategy,

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Speaker 1: all right, Phil Tas, thank you so much for joining us.

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Speaker 1: Phil Tas, CEO of Tay's Asset Management, joining us live

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Speaker 1: here on our Bloomberg Interactive Brokers studio. Again, kind of

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Speaker 1: looking at the markets here, Matt just kind of s

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Speaker 1: and p up about a half of one percent, so,

427
00:21:09,160 --> 00:21:10,320
Speaker 1: you know, a little bit of a lift off of

428
00:21:10,359 --> 00:21:12,680
Speaker 1: that PPI data. But maybe we thought we might have

429
00:21:12,720 --> 00:21:14,600
Speaker 1: gotten a little we might have gotten a little bit more,

430
00:21:14,600 --> 00:21:17,400
Speaker 1: but we'll see. You're listening to the Take cancerre Live

431
00:21:17,440 --> 00:21:21,880
Speaker 1: program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio,

432
00:21:22,000 --> 00:21:24,760
Speaker 1: the tune in app, Bloomberg dot Com, and the Bloomberg

433
00:21:24,800 --> 00:21:27,880
Speaker 1: Business App. You can also listen live on Amazon Alexa

434
00:21:27,960 --> 00:21:31,240
Speaker 1: from our flagship New York station, Just say Alexa play

435
00:21:31,359 --> 00:21:37,240
Speaker 1: Bloomberg eleven thirty. Now, we were kind of bummed out

436
00:21:37,320 --> 00:21:41,040
Speaker 1: yesterday because we talked to Morgan Paxia, who runs the

437
00:21:41,080 --> 00:21:46,280
Speaker 1: Poseidon Investment management firm. They have a weed etf the

438
00:21:46,280 --> 00:21:48,680
Speaker 1: ticker is PSDN. But we only got a few minutes

439
00:21:48,720 --> 00:21:52,680
Speaker 1: with them, and also it was raining and in Miami.

440
00:21:53,000 --> 00:21:55,800
Speaker 1: Yeah then, which makes it even worse. He's there at

441
00:21:55,840 --> 00:22:00,160
Speaker 1: the Benzinga. I guess it's a weed conference down there.

442
00:22:00,400 --> 00:22:02,120
Speaker 1: We got him back on the line, and I'm glad

443
00:22:02,320 --> 00:22:04,320
Speaker 1: I want to spend some time Morgan. Thanks so much

444
00:22:04,359 --> 00:22:06,880
Speaker 1: for coming back and joining us again. I was kind

445
00:22:06,880 --> 00:22:08,760
Speaker 1: of joking around that you were harsh and my mellow

446
00:22:08,760 --> 00:22:11,119
Speaker 1: and you needed to reach for some sativa yesterday. And

447
00:22:11,160 --> 00:22:13,600
Speaker 1: we do kind of tend to joke around about smoking

448
00:22:13,600 --> 00:22:18,240
Speaker 1: weed on this show, but there are serious there are

449
00:22:18,280 --> 00:22:25,199
Speaker 1: important reasons for marijuana use, legalization and use. You and

450
00:22:25,240 --> 00:22:30,959
Speaker 1: your sister started this investment management company because of a

451
00:22:31,000 --> 00:22:33,679
Speaker 1: difficult time losing your father in the nineties, and you

452
00:22:33,760 --> 00:22:36,280
Speaker 1: realized I guess then that you know, if we'd had

453
00:22:36,280 --> 00:22:38,840
Speaker 1: been legal and hadn't had as much of a stigma,

454
00:22:39,760 --> 00:22:43,400
Speaker 1: it would have been easier for him to go through

455
00:22:43,440 --> 00:22:45,560
Speaker 1: to the next phase. So talk to us about that

456
00:22:45,640 --> 00:22:49,399
Speaker 1: and how successful you've been. That's right, Well, thank you

457
00:22:49,400 --> 00:22:52,480
Speaker 1: for having me back. Today is a much sunnier day

458
00:22:52,960 --> 00:22:55,600
Speaker 1: after one and one thousand year rain event we had

459
00:22:55,600 --> 00:22:58,800
Speaker 1: down here in Florida, so pretty pretty wild times. But yes,

460
00:22:58,880 --> 00:23:01,960
Speaker 1: for Emily and I was certainly was a passion project

461
00:23:02,000 --> 00:23:07,480
Speaker 1: initially just seeing that firsthand, what could have happened I

462
00:23:07,480 --> 00:23:09,840
Speaker 1: guess so to speak, right, where where do you want

463
00:23:09,840 --> 00:23:12,160
Speaker 1: to see someone find some comfort in their final days

464
00:23:12,200 --> 00:23:14,760
Speaker 1: and just not even having something that should be readily

465
00:23:14,800 --> 00:23:17,960
Speaker 1: available as an option not be and actually be thought

466
00:23:18,000 --> 00:23:20,480
Speaker 1: of in a negative way. You know, that just all

467
00:23:20,480 --> 00:23:22,640
Speaker 1: seemed very wrong. And I'll tell you you know, we've

468
00:23:22,680 --> 00:23:25,520
Speaker 1: been doing this for ten years now, and the amount

469
00:23:25,560 --> 00:23:27,520
Speaker 1: of people we've talked to over the years that came

470
00:23:27,560 --> 00:23:31,760
Speaker 1: to this industry with that same familial kind of experience

471
00:23:31,800 --> 00:23:34,000
Speaker 1: where they had a family member that was sick, they

472
00:23:34,000 --> 00:23:36,000
Speaker 1: saw benefits, right, So we actually got to see the

473
00:23:36,040 --> 00:23:38,520
Speaker 1: positive sides for so many people. And that's how it

474
00:23:38,600 --> 00:23:41,280
Speaker 1: changes a stigma, is when you get that firsthand experience

475
00:23:41,320 --> 00:23:44,120
Speaker 1: and you know, a great thing about this industry as

476
00:23:44,720 --> 00:23:46,919
Speaker 1: there's a lot of different applications. Sure you have that

477
00:23:46,960 --> 00:23:50,320
Speaker 1: wellness perspective, and we're even seeing people that do find

478
00:23:51,320 --> 00:23:54,040
Speaker 1: you know, potentially some medicinal benefits for it. But it

479
00:23:54,119 --> 00:23:57,520
Speaker 1: just should be a legal, regulated option for people instead

480
00:23:57,520 --> 00:24:00,439
Speaker 1: of pushing it to the illicit market. That just doesn't work, right.

481
00:24:00,480 --> 00:24:04,320
Speaker 1: We've learned this over again. Hey Morgan, you know Matt

482
00:24:04,359 --> 00:24:06,160
Speaker 1: and I have you know kind of learned a lot

483
00:24:06,200 --> 00:24:08,719
Speaker 1: about the business of cannabis over the last several years

484
00:24:08,560 --> 00:24:12,240
Speaker 1: as more and more states have legalized it. One of

485
00:24:12,240 --> 00:24:14,399
Speaker 1: the challenges that we've come to understand from speaking to

486
00:24:14,440 --> 00:24:17,320
Speaker 1: people like you is just the whole financial side of

487
00:24:17,480 --> 00:24:21,160
Speaker 1: funding the cannabis industry. Talk to us about what you're

488
00:24:21,160 --> 00:24:24,800
Speaker 1: seeing there. I can't imagine some of the banking stresses

489
00:24:24,800 --> 00:24:27,200
Speaker 1: that we've seen over the last several months or several

490
00:24:27,200 --> 00:24:29,680
Speaker 1: weeks with some of these regional lenders can be very helpful.

491
00:24:29,760 --> 00:24:32,760
Speaker 1: Talk to us about the banking side. Sure, yeah, So

492
00:24:32,800 --> 00:24:36,600
Speaker 1: banking has been an ongoing challenge in our industry where

493
00:24:37,560 --> 00:24:41,120
Speaker 1: though people have access to deposit, that's really it. So

494
00:24:41,200 --> 00:24:44,200
Speaker 1: there's been a big growth of In the earlier days,

495
00:24:44,280 --> 00:24:47,200
Speaker 1: we had very strong equity support right where you could

496
00:24:47,280 --> 00:24:50,960
Speaker 1: raise rounds of equity venture capital that we've done private

497
00:24:51,040 --> 00:24:53,280
Speaker 1: rounds or even when when these companies got public, you

498
00:24:53,280 --> 00:24:56,359
Speaker 1: know you could do secondaries and then debt financing from

499
00:24:56,359 --> 00:25:00,359
Speaker 1: private groups or the riis became very prevalent. But all

500
00:25:00,400 --> 00:25:02,440
Speaker 1: of that has been very tight and I think when

501
00:25:02,520 --> 00:25:05,440
Speaker 1: you when you look at these when these banks now

502
00:25:05,520 --> 00:25:08,600
Speaker 1: are are just really pulling back, retrenching on lending um

503
00:25:08,680 --> 00:25:12,879
Speaker 1: that just raises risk, the price of risk and the

504
00:25:12,960 --> 00:25:16,000
Speaker 1: availability of it right becomes even more scarce. And I

505
00:25:16,080 --> 00:25:18,119
Speaker 1: think that's certainly is the case for our industry. But

506
00:25:18,200 --> 00:25:21,560
Speaker 1: we're two years into a very tight capital market, so

507
00:25:21,640 --> 00:25:24,880
Speaker 1: our industry has had to find its own way. Regardless

508
00:25:25,200 --> 00:25:28,760
Speaker 1: of this, banking progress has not been happening. Right. We

509
00:25:29,200 --> 00:25:31,600
Speaker 1: thought we were actually close to seeing some banking reform

510
00:25:31,720 --> 00:25:34,600
Speaker 1: late last year, but it didn't happen, and so our

511
00:25:34,640 --> 00:25:37,959
Speaker 1: industry has had to focus on being self funding, becoming

512
00:25:38,119 --> 00:25:40,760
Speaker 1: cash generative businesses. Well, Morgan, I've been thinking about this

513
00:25:40,880 --> 00:25:43,800
Speaker 1: for a while because of the Safe Banking Act, and

514
00:25:43,840 --> 00:25:49,520
Speaker 1: we've been following the progress in Washington, DC, or lack thereof, right, right,

515
00:25:49,880 --> 00:25:53,680
Speaker 1: I thought that's what was holding back Weed stocks. But

516
00:25:53,800 --> 00:25:55,720
Speaker 1: then we got till Ray results and you and I

517
00:25:55,800 --> 00:25:59,520
Speaker 1: talked about this briefly yesterday. Why would a company like

518
00:25:59,640 --> 00:26:03,199
Speaker 1: that have a drop in revenue year over year? I mean,

519
00:26:03,320 --> 00:26:07,240
Speaker 1: isn't this a burgeoning business? Isn't this I mean I

520
00:26:07,560 --> 00:26:11,080
Speaker 1: have to imagine that weed sales across the country every

521
00:26:11,160 --> 00:26:15,880
Speaker 1: year just climb and climb and climb. Are they stagnating? Well,

522
00:26:15,960 --> 00:26:17,879
Speaker 1: Tilray doesn't do business in the US They are a

523
00:26:17,920 --> 00:26:21,159
Speaker 1: Canadian company. They're listed in the US, but they're and

524
00:26:21,480 --> 00:26:23,320
Speaker 1: they have you know, they have their Canadian business, but

525
00:26:23,359 --> 00:26:25,080
Speaker 1: they also have European business, and they do a lot

526
00:26:25,119 --> 00:26:27,320
Speaker 1: in alcohol now too. They're almost more of a beer

527
00:26:27,359 --> 00:26:30,480
Speaker 1: company than they are a cannabis company. So there's some

528
00:26:30,600 --> 00:26:36,000
Speaker 1: specific things within their business. Okay, peculiarly Cresco. I don't

529
00:26:36,000 --> 00:26:40,000
Speaker 1: know who makes the Kiva things, but they're brilliant. I mean,

530
00:26:40,359 --> 00:26:44,240
Speaker 1: aren't these sales off the hook? So what's happening is

531
00:26:44,280 --> 00:26:48,160
Speaker 1: you have unit growth, but because there was an overbuilt capacity,

532
00:26:48,240 --> 00:26:51,040
Speaker 1: we had a lot of price compression, and so even

533
00:26:51,080 --> 00:26:54,760
Speaker 1: though positive unit growth, the total dollars in certain markets

534
00:26:54,800 --> 00:26:58,800
Speaker 1: were actually down. But we're getting through that process, right,

535
00:26:58,880 --> 00:27:01,560
Speaker 1: capacity is being rational, lies we're seeing continued demand and

536
00:27:01,680 --> 00:27:05,720
Speaker 1: more access, so it's rebalancing that whole issue of oversupply

537
00:27:05,880 --> 00:27:08,520
Speaker 1: and price compression. So with that unit growth. But I mean,

538
00:27:08,600 --> 00:27:11,760
Speaker 1: like Michigan, as I mentioned, I think yesterday for or

539
00:27:11,840 --> 00:27:14,640
Speaker 1: actually came out afterwards. Michigan in two hundred and fifty

540
00:27:14,680 --> 00:27:17,640
Speaker 1: million dollars in legal sales in the month of March,

541
00:27:17,720 --> 00:27:20,879
Speaker 1: and they've had some of the most aggressive price compression

542
00:27:21,000 --> 00:27:24,000
Speaker 1: in the last year, so they're actually overcoming that price

543
00:27:24,040 --> 00:27:26,560
Speaker 1: compression with such strong unit growth, and that's we look

544
00:27:26,600 --> 00:27:28,720
Speaker 1: at both, right, and you know, we're big investors in

545
00:27:29,040 --> 00:27:31,600
Speaker 1: a data company called Headsets, so we're constantly looking at

546
00:27:31,680 --> 00:27:34,639
Speaker 1: these trends and looking at data across all these different markets.

547
00:27:35,280 --> 00:27:38,400
Speaker 1: But like legacy markets like California, we've seen that very

548
00:27:38,440 --> 00:27:42,200
Speaker 1: significant price compression and so it's been more flat. So

549
00:27:42,280 --> 00:27:44,440
Speaker 1: once we get through that phase, we think we'll start

550
00:27:44,480 --> 00:27:48,480
Speaker 1: to see much more attractive top line growth. Businesses are bored. Yeah,

551
00:27:48,560 --> 00:27:51,040
Speaker 1: about thirty seconds left, Morgan, what's the next big thing

552
00:27:51,400 --> 00:27:53,200
Speaker 1: that you're looking out for that maybe you're looking to

553
00:27:53,280 --> 00:27:57,280
Speaker 1: invest in. We're still very much focused on cannabis. We

554
00:27:57,320 --> 00:27:59,440
Speaker 1: think there's a lot of opportunities. Yeah, within the cannabis space.

555
00:27:59,480 --> 00:28:02,520
Speaker 1: What's the next we should be looking for? Yeah, So

556
00:28:02,680 --> 00:28:04,880
Speaker 1: we think states like Missouri are doing great job. There's

557
00:28:04,880 --> 00:28:06,959
Speaker 1: a lot of movement in the South, so we think

558
00:28:07,000 --> 00:28:09,800
Speaker 1: those are really interesting markets. So we're still doing work

559
00:28:09,840 --> 00:28:12,600
Speaker 1: on the operating side, but we're also very passionate and

560
00:28:12,640 --> 00:28:15,400
Speaker 1: see opportunity on the technology side, so we're doing work

561
00:28:15,480 --> 00:28:18,040
Speaker 1: with private companies on the tech side. There's really not

562
00:28:18,160 --> 00:28:21,040
Speaker 1: much yet in the public markets that we find very

563
00:28:21,080 --> 00:28:24,119
Speaker 1: attractive on the tech side, that is, so you know,

564
00:28:24,280 --> 00:28:25,720
Speaker 1: if you look at our et F there's really not

565
00:28:25,840 --> 00:28:28,760
Speaker 1: much there yet, but always looking, always looking, because we

566
00:28:28,800 --> 00:28:30,720
Speaker 1: think there's a lot of return there. All right, Morgan,

567
00:28:30,760 --> 00:28:32,240
Speaker 1: thanks so much for taking the time to come back

568
00:28:32,280 --> 00:28:33,800
Speaker 1: to us today. I know we did. We got cut

569
00:28:33,840 --> 00:28:35,760
Speaker 1: a little short yesterday, so we had so much more

570
00:28:35,800 --> 00:28:37,840
Speaker 1: we want to cover with you said, thanks for making

571
00:28:37,880 --> 00:28:41,040
Speaker 1: the time there. Morgan Paxi East co founder along with

572
00:28:41,120 --> 00:28:45,280
Speaker 1: his sister, and he's managing partner of Poseidon Investment Management

573
00:28:45,840 --> 00:28:51,200
Speaker 1: that Poseidon Dynamic Cannabis ETFs tickers p S d N.

574
00:28:51,400 --> 00:28:54,160
Speaker 1: So if you want some some exposure to the cannabis business,

575
00:28:54,240 --> 00:28:57,240
Speaker 1: that's one of the ways to go. This is Bloomberg.

576
00:28:58,520 --> 00:29:02,360
Speaker 1: You're listening to the team. Ken's herline program Bloomberg Markets

577
00:29:02,440 --> 00:29:05,480
Speaker 1: weekdays at ten, AMI's Daring on Bloomberg dot com, the

578
00:29:05,600 --> 00:29:08,280
Speaker 1: I Heard Radio app and the Bloomberg Business App. We're

579
00:29:08,360 --> 00:29:13,200
Speaker 1: listening on demand wherever you get your podcast got big

580
00:29:13,240 --> 00:29:16,480
Speaker 1: earning starting tomorrow. But let me ask one of our

581
00:29:16,520 --> 00:29:19,200
Speaker 1: favorite professionals out there kind of what they're looking at.

582
00:29:19,280 --> 00:29:22,840
Speaker 1: Lizan Son, there's chief Investment strategists from Charles Schwabs. She's

583
00:29:22,880 --> 00:29:27,400
Speaker 1: got experience, she's got perspective and money at Schwab's got

584
00:29:27,440 --> 00:29:31,000
Speaker 1: a couple of shekels under assets. How many trillion dollars

585
00:29:31,120 --> 00:29:35,840
Speaker 1: Lizan does of assets under manage? Seven trillion dollars? Tiny

586
00:29:35,880 --> 00:29:39,800
Speaker 1: little seven trillion? Wow, that's amazing. So jeez, all right, Lizanne,

587
00:29:39,840 --> 00:29:42,200
Speaker 1: what are you focused on? Are you focused on the

588
00:29:42,360 --> 00:29:44,360
Speaker 1: Eco screen on the Bloomberg terminal that gives you all

589
00:29:44,400 --> 00:29:46,720
Speaker 1: the PPI and CPI data and all the kind of stuff?

590
00:29:46,720 --> 00:29:49,960
Speaker 1: What are you really focused on here? So? I you know,

591
00:29:50,000 --> 00:29:52,160
Speaker 1: I think it's important. You've seen the needle move a

592
00:29:52,240 --> 00:29:54,920
Speaker 1: little bit in the last couple of days with regard

593
00:29:55,000 --> 00:29:58,120
Speaker 1: to expectation for whether the set's going to go twenty

594
00:29:58,200 --> 00:30:02,280
Speaker 1: five on May sir, recent high it was about seventy

595
00:30:02,320 --> 00:30:06,480
Speaker 1: two percent likelihood with the batch of data that's dropped

596
00:30:06,480 --> 00:30:11,200
Speaker 1: to about sixty six, but clearly still in that direction. Yeah,

597
00:30:11,600 --> 00:30:16,680
Speaker 1: pretty much everything in both the CPI report was either

598
00:30:16,800 --> 00:30:19,680
Speaker 1: in line or better than expected. It just does show

599
00:30:20,240 --> 00:30:23,520
Speaker 1: the important deceleration, the fact that headline inflation dropped a

600
00:30:23,560 --> 00:30:28,320
Speaker 1: full percent in terms of CPI. I'm what, I'm sort

601
00:30:28,360 --> 00:30:33,440
Speaker 1: of grappling with is from an equity market perspective, how

602
00:30:33,600 --> 00:30:37,320
Speaker 1: much of the rally is simply due to the notion

603
00:30:37,440 --> 00:30:42,560
Speaker 1: of a pause or is it a belief in a pivot?

604
00:30:42,840 --> 00:30:46,280
Speaker 1: And I just think that the Goldilocks scenario that seems

605
00:30:46,280 --> 00:30:49,520
Speaker 1: to be part of that narrative of a pivot doesn't

606
00:30:49,560 --> 00:30:53,880
Speaker 1: make sense because the FED is not going to pivot

607
00:30:53,920 --> 00:30:58,160
Speaker 1: to rate cuts unless you either have much more serious

608
00:30:58,160 --> 00:31:00,320
Speaker 1: stress in the banking system than what we're seeing now

609
00:31:00,520 --> 00:31:04,520
Speaker 1: and or a much more significant deterioration in the economy

610
00:31:04,560 --> 00:31:08,040
Speaker 1: and specifically the labor market. This notion that the FED

611
00:31:08,080 --> 00:31:11,080
Speaker 1: would pivot to cuts a pause makes sense. I think

612
00:31:11,120 --> 00:31:13,280
Speaker 1: they'll do it sooner read them later. But a pivot

613
00:31:13,320 --> 00:31:17,920
Speaker 1: to rate cuts with inflation nowhere near their target, you know,

614
00:31:18,320 --> 00:31:20,560
Speaker 1: I think that would be such a hit to their credibility.

615
00:31:20,840 --> 00:31:23,680
Speaker 1: And this year luzianne I mean, I had a listener

616
00:31:23,800 --> 00:31:27,680
Speaker 1: right in earlier he made the point that it doesn't

617
00:31:27,720 --> 00:31:30,760
Speaker 1: make any sense that the market interprets a FED cut

618
00:31:30,920 --> 00:31:34,200
Speaker 1: in twenty twenty three as a positive, because if the

619
00:31:34,320 --> 00:31:37,360
Speaker 1: FED needs to cut this year, after Jerome Powell has

620
00:31:37,360 --> 00:31:39,840
Speaker 1: assured us all over and over and over again that

621
00:31:39,920 --> 00:31:41,800
Speaker 1: the FED is not going to cut this year. That

622
00:31:41,880 --> 00:31:46,000
Speaker 1: would mean something very big has broken or they just

623
00:31:48,040 --> 00:31:51,720
Speaker 1: have no credibility right then it's a credibility problem. I

624
00:31:51,760 --> 00:31:55,360
Speaker 1: think they understand that the credibility problem pre existed even

625
00:31:55,400 --> 00:31:58,120
Speaker 1: the fall of best feed be Given that they concede,

626
00:31:58,240 --> 00:32:00,840
Speaker 1: they probably waited too long to come off the zero

627
00:32:00,920 --> 00:32:05,080
Speaker 1: bound and start shrinking the balance sheet. So I just

628
00:32:05,640 --> 00:32:08,719
Speaker 1: I'm not sure I kind of square the whole circle

629
00:32:08,800 --> 00:32:12,280
Speaker 1: in terms of optimism in the equity market unless it's

630
00:32:12,440 --> 00:32:15,520
Speaker 1: purely a function of just a pause. But as history

631
00:32:15,600 --> 00:32:18,960
Speaker 1: shows that a pause is not necessarily green light for

632
00:32:19,080 --> 00:32:23,280
Speaker 1: the market, you've got a really mixed bag Historically, post pause.

633
00:32:23,360 --> 00:32:27,280
Speaker 1: In fact, post pause is often when the bigger sort

634
00:32:27,280 --> 00:32:30,360
Speaker 1: of part of a crisis unfold, like was the case

635
00:32:30,400 --> 00:32:33,800
Speaker 1: in O eight. Hey, Luzanne, I'm an old equity analyst.

636
00:32:34,200 --> 00:32:38,520
Speaker 1: Earnings matter to me, so I'm going to be paying

637
00:32:38,560 --> 00:32:41,480
Speaker 1: attention to this earning cycle that season, even if most

638
00:32:41,560 --> 00:32:44,000
Speaker 1: others aren't. What are you looking for? What do you

639
00:32:44,040 --> 00:32:45,760
Speaker 1: expect to see? What are you looking to see out

640
00:32:45,800 --> 00:32:47,800
Speaker 1: of this earnings over the next several weeks. I think

641
00:32:47,880 --> 00:32:51,400
Speaker 1: what's less important in this earning season are the stats

642
00:32:51,440 --> 00:32:54,920
Speaker 1: like the beat eight percent by which companies beat. I

643
00:32:55,080 --> 00:32:59,200
Speaker 1: think it's the outlook and obvious specificity coming from the

644
00:32:59,320 --> 00:33:04,800
Speaker 1: financial on what they're seeing across the spectrum of you know,

645
00:33:05,040 --> 00:33:10,680
Speaker 1: demand outflows, credit tightening, loan demand continuing to come down,

646
00:33:11,120 --> 00:33:14,400
Speaker 1: net interest margin pressures. But I think it's also the

647
00:33:14,480 --> 00:33:19,840
Speaker 1: case that analysts are sort of this narrow window they've

648
00:33:19,880 --> 00:33:24,440
Speaker 1: been operating under in terms of adjusting estimates. Not because

649
00:33:24,560 --> 00:33:30,800
Speaker 1: they're being lazy or they just don't have the foresight,

650
00:33:30,880 --> 00:33:36,160
Speaker 1: it's just companies are providing less precision and guidance not

651
00:33:36,440 --> 00:33:39,760
Speaker 1: quite as dire as with the situation during the worst

652
00:33:39,800 --> 00:33:42,080
Speaker 1: part of the pandemic, when a record percentage of companies

653
00:33:42,120 --> 00:33:45,160
Speaker 1: just said, we're not just gutting down, we'll withdrawing guidance

654
00:33:45,240 --> 00:33:47,680
Speaker 1: all together because you know, we have no idea. It's

655
00:33:47,720 --> 00:33:50,520
Speaker 1: gotten better, but it's still not the kind of clarity.

656
00:33:50,640 --> 00:33:53,400
Speaker 1: So analysts sort of have this, all right, maybe I'll

657
00:33:53,440 --> 00:33:56,360
Speaker 1: make an adjustment out the next quarter or two, but

658
00:33:56,520 --> 00:34:00,880
Speaker 1: then wait until we get the current core or commentary

659
00:34:01,160 --> 00:34:03,280
Speaker 1: and then maybe make adjustments to the out year. So

660
00:34:03,400 --> 00:34:06,320
Speaker 1: this idea of you know, negative year every year in

661
00:34:06,360 --> 00:34:08,479
Speaker 1: the first quarter, in the second quarter, that makes sense.

662
00:34:08,560 --> 00:34:10,399
Speaker 1: Maybe that's still a little bit too high, but then

663
00:34:10,520 --> 00:34:13,399
Speaker 1: you get back into positive territory and the third quarter

664
00:34:13,520 --> 00:34:15,840
Speaker 1: and consensus is that you're back in double ditch a

665
00:34:15,880 --> 00:34:18,879
Speaker 1: growth territory. About the fourth quarter, that's where I think

666
00:34:18,960 --> 00:34:22,279
Speaker 1: it's the path of leisure. Distance may still be down,

667
00:34:22,320 --> 00:34:24,640
Speaker 1: and I think we'll have a bit more color on

668
00:34:24,880 --> 00:34:27,560
Speaker 1: that forward twenty twenty three guide and so maybe even

669
00:34:27,600 --> 00:34:31,960
Speaker 1: twenty twenty four that can help with the whole valuation analysis.

670
00:34:33,080 --> 00:34:36,239
Speaker 1: You know, the recession worries I think really kicked off

671
00:34:36,280 --> 00:34:39,600
Speaker 1: in earnest with SBB and signature. At least I was having,

672
00:34:39,760 --> 00:34:44,960
Speaker 1: you know, slight heart palpitations, and we did see across

673
00:34:45,760 --> 00:34:50,400
Speaker 1: banking money move from deposits to money market funds to

674
00:34:51,680 --> 00:34:54,759
Speaker 1: short term treasury ETFs. I feel like its Schwab. You know,

675
00:34:54,800 --> 00:34:56,880
Speaker 1: there was a little bit of worry, but the you

676
00:34:57,000 --> 00:35:00,920
Speaker 1: have the real benefit that you have those you know,

677
00:35:01,480 --> 00:35:06,200
Speaker 1: broker dealer assets, so people who had money could stay

678
00:35:06,320 --> 00:35:08,680
Speaker 1: inside Schwab. What do you see in terms of the

679
00:35:08,760 --> 00:35:12,960
Speaker 1: flows there, Well, I don't comment on our stock on

680
00:35:13,440 --> 00:35:16,520
Speaker 1: the sort of internals of what's happening at Schwab. That's

681
00:35:16,600 --> 00:35:18,799
Speaker 1: you know what that ends are enters our CEO if

682
00:35:18,840 --> 00:35:22,359
Speaker 1: your corvids are CFO, so I but I think there

683
00:35:22,440 --> 00:35:24,880
Speaker 1: has been a lot of information and yes, um, you

684
00:35:24,960 --> 00:35:26,719
Speaker 1: know you're you're quoting what I hope we now all

685
00:35:26,840 --> 00:35:29,800
Speaker 1: know isn't a firm like ours. It stays you know,

686
00:35:30,120 --> 00:35:33,880
Speaker 1: within the mothership. So well, that's the benefit. And I

687
00:35:34,160 --> 00:35:36,840
Speaker 1: don't mean to ask you about the business of SCHWAB.

688
00:35:36,920 --> 00:35:38,839
Speaker 1: I just mean to ask you know what you're seeing

689
00:35:38,960 --> 00:35:43,919
Speaker 1: because you're in you have such an advantageous view over

690
00:35:44,320 --> 00:35:47,560
Speaker 1: seven trillion dollars in assets. You know, have they come

691
00:35:47,600 --> 00:35:50,520
Speaker 1: back a little bit from short term treasuries and money

692
00:35:50,600 --> 00:35:53,319
Speaker 1: market funds or I mean, what we're seeing in terms

693
00:35:53,400 --> 00:35:57,160
Speaker 1: of flows broadly in the mutual fund space, in the

694
00:35:57,239 --> 00:36:01,800
Speaker 1: ETF space is consistent with what data from the likes

695
00:36:01,840 --> 00:36:04,840
Speaker 1: of the icies of the world, so broader overall industry

696
00:36:04,920 --> 00:36:09,520
Speaker 1: data is pretty consistent. There's clearly been a bias toward

697
00:36:09,800 --> 00:36:15,520
Speaker 1: not just cash, higher yielding type investments, but fixed income.

698
00:36:15,560 --> 00:36:17,799
Speaker 1: There's income and fixed income again, and you've seen those

699
00:36:18,280 --> 00:36:22,560
Speaker 1: flows on the fixed income side. Obviously, you've also seen

700
00:36:22,680 --> 00:36:26,320
Speaker 1: flows up the cap spectrum on the equity side, and

701
00:36:26,560 --> 00:36:30,120
Speaker 1: some renewed interest on the international equity side, which has

702
00:36:30,200 --> 00:36:34,000
Speaker 1: been a recommendation of ours for some time, not so

703
00:36:34,160 --> 00:36:38,040
Speaker 1: much sell US by international, but a lot of investors,

704
00:36:38,080 --> 00:36:40,680
Speaker 1: either because they didn't rebalance or just had a home

705
00:36:40,760 --> 00:36:45,880
Speaker 1: country bias, let portfolios get a bit over bias toward

706
00:36:46,640 --> 00:36:52,160
Speaker 1: US over international. So we are seeing a shift there

707
00:36:52,200 --> 00:36:54,680
Speaker 1: on the equity side to international. But it's you know,

708
00:36:54,840 --> 00:36:57,520
Speaker 1: it's as you would expect and somewhat consistent with what

709
00:36:57,600 --> 00:37:01,880
Speaker 1: you're seeing with broad industry data. Hey, listen, you know

710
00:37:02,280 --> 00:37:05,279
Speaker 1: so many investors in this marketplace they you know, all

711
00:37:05,320 --> 00:37:08,560
Speaker 1: they've really known over the last ten, twelve, fourteen years

712
00:37:08,960 --> 00:37:13,120
Speaker 1: has been Tech has been the leader of this market.

713
00:37:13,600 --> 00:37:15,480
Speaker 1: Is that still the case or they've given up their

714
00:37:15,520 --> 00:37:18,279
Speaker 1: mantle too. I don't know what industrials are something else.

715
00:37:18,640 --> 00:37:21,320
Speaker 1: Do you need to see tech leading this market to

716
00:37:21,360 --> 00:37:23,960
Speaker 1: have a broad rally? Not necessarily. In fact, in this

717
00:37:24,520 --> 00:37:27,720
Speaker 1: particular environment, I think you need to see some stabilization

718
00:37:27,880 --> 00:37:31,719
Speaker 1: and improvement in financials given what that's at the heart

719
00:37:31,760 --> 00:37:34,360
Speaker 1: of in terms of the inner workings of the economy

720
00:37:34,520 --> 00:37:37,400
Speaker 1: right now. And I think there is this misperception that

721
00:37:37,520 --> 00:37:41,200
Speaker 1: without tech that you can have a market that does well.

722
00:37:41,239 --> 00:37:43,920
Speaker 1: We also have to think about how a lot of

723
00:37:43,960 --> 00:37:48,000
Speaker 1: people think of tech like lowercase T. For instance, you're

724
00:37:48,040 --> 00:37:50,279
Speaker 1: to day people think, oh it's been a big tech rally. Well,

725
00:37:50,320 --> 00:37:54,080
Speaker 1: communication services is the best performing sector this year, So

726
00:37:54,200 --> 00:37:59,560
Speaker 1: there's that kind of trio of sectors comm services, consumer discretionary,

727
00:37:59,719 --> 00:38:04,200
Speaker 1: where a stock like Amazon falls into consumer discretionary, not tech.

728
00:38:04,719 --> 00:38:07,359
Speaker 1: So it's these sort of techie companies, and they did

729
00:38:07,480 --> 00:38:12,279
Speaker 1: represent the lockdown era's kind of defensive names, but they

730
00:38:12,360 --> 00:38:15,719
Speaker 1: represented the only ecosystem in which we're living. The more

731
00:38:15,840 --> 00:38:18,359
Speaker 1: recent pushback into those names, some of it I think

732
00:38:18,400 --> 00:38:20,800
Speaker 1: is short covering, but some of it I think is

733
00:38:21,480 --> 00:38:25,040
Speaker 1: in this higher interest rate, higher inflation environment, with the

734
00:38:25,120 --> 00:38:28,839
Speaker 1: woes in the banking system and the credit contraction we're

735
00:38:28,880 --> 00:38:31,600
Speaker 1: starting to see. I think investors are saying, I want

736
00:38:31,640 --> 00:38:35,640
Speaker 1: big companies that are shorter duration in nature, meaning they

737
00:38:35,760 --> 00:38:38,560
Speaker 1: have cash flows and earnings in here, and now they've

738
00:38:38,640 --> 00:38:40,960
Speaker 1: got ample cash on the balance sheet, they don't need

739
00:38:41,040 --> 00:38:44,080
Speaker 1: to go to credit markets or the banking system to

740
00:38:44,200 --> 00:38:48,200
Speaker 1: funder operations. So I think the fundamentals behind the move

741
00:38:48,320 --> 00:38:51,400
Speaker 1: this time are different from what was the case three

742
00:38:51,480 --> 00:38:53,440
Speaker 1: years ago. Lizzie, thank you so much for joining us.

743
00:38:53,440 --> 00:38:56,400
Speaker 1: Really appreciate it. As always. Lizzie Saunders, Chief investment strategist

744
00:38:56,400 --> 00:38:59,279
Speaker 1: at Charles Ruff. You're listening to the Take kens are

745
00:38:59,360 --> 00:39:03,000
Speaker 1: Line PROGRAMM Bloomberg Markets weekdays at ten am Eastern on

746
00:39:03,200 --> 00:39:06,160
Speaker 1: Bloomberg Radio, the tun in app, Bloomberg dot Com, and

747
00:39:06,280 --> 00:39:09,000
Speaker 1: the Bloomberg Business App. You can also listen live on

748
00:39:09,120 --> 00:39:12,359
Speaker 1: Amazon Alexa from our flagship New York station. Just say

749
00:39:12,440 --> 00:39:18,440
Speaker 1: Alexa play Bloomberg eleven thirty Looking at gold today, up

750
00:39:18,480 --> 00:39:22,480
Speaker 1: another one point two percent, two thou thirty eight for

751
00:39:22,680 --> 00:39:25,480
Speaker 1: gold near an all time Hi, what is going on there?

752
00:39:25,520 --> 00:39:28,359
Speaker 1: Will mcdonnegh, He's the CEO and lead portfolio manager at

753
00:39:28,480 --> 00:39:33,759
Speaker 1: EMG Advisors. Boy, the goldbugs are out in force here. Well,

754
00:39:33,800 --> 00:39:37,800
Speaker 1: what's going on with that precious metal gold? Well, you know,

755
00:39:38,239 --> 00:39:42,560
Speaker 1: as we always see in times where markets are you know, volatile,

756
00:39:42,640 --> 00:39:45,520
Speaker 1: people go to flight to quality. They go to gold,

757
00:39:45,560 --> 00:39:48,400
Speaker 1: and they go to base metals that they take confidence in.

758
00:39:49,320 --> 00:39:51,960
Speaker 1: You know, they go to the assets that are fixed

759
00:39:52,120 --> 00:39:55,800
Speaker 1: or diminishing supply because you know, US dollars and the

760
00:39:55,920 --> 00:39:59,480
Speaker 1: like are clearly worthless day over day, and so we'll

761
00:39:59,480 --> 00:40:02,880
Speaker 1: continue to see action towards gold and other precious metals.

762
00:40:03,920 --> 00:40:07,520
Speaker 1: But where's the demand actually coming from? Is this a

763
00:40:08,040 --> 00:40:10,120
Speaker 1: kind of simply market move this is how you head

764
00:40:10,200 --> 00:40:13,319
Speaker 1: your portfolio bid or is there physical demand that's driving

765
00:40:13,400 --> 00:40:16,719
Speaker 1: this as well? Yeah, there's not physical demand. I think

766
00:40:16,800 --> 00:40:19,759
Speaker 1: that's what's funny is people just don't know any better.

767
00:40:19,880 --> 00:40:22,080
Speaker 1: It's just what people have been been doing for a

768
00:40:22,160 --> 00:40:25,040
Speaker 1: long time is thinking, when I want to be safe,

769
00:40:25,080 --> 00:40:28,200
Speaker 1: I go to gold. But gold doesn't even you know,

770
00:40:28,440 --> 00:40:32,920
Speaker 1: make fake teeth anymore. Gold isn't used in society. World

771
00:40:33,080 --> 00:40:37,840
Speaker 1: uses copper, lithium, nickel, cobalts. Those are the base metals

772
00:40:37,880 --> 00:40:40,400
Speaker 1: that we focus on. I have no interest in holding

773
00:40:40,480 --> 00:40:42,480
Speaker 1: gold for the long term because there's less and less

774
00:40:42,560 --> 00:40:45,480
Speaker 1: use cases for gold day over day, in year over year.

775
00:40:45,920 --> 00:40:49,000
Speaker 1: You know. I want fixed supply assets that actually have

776
00:40:49,239 --> 00:40:52,200
Speaker 1: demands and not just from you know four one ks

777
00:40:52,280 --> 00:40:54,520
Speaker 1: that pivot to that when they want to lessen their

778
00:40:54,640 --> 00:40:57,759
Speaker 1: SMP exposures. But isn't that a pretty bold call. I'd

779
00:40:57,840 --> 00:41:01,279
Speaker 1: say the power of the Chinese an Indian consumer who

780
00:41:01,719 --> 00:41:06,239
Speaker 1: primarily use gold from a consumption purpose. Yeah, I think

781
00:41:06,280 --> 00:41:09,120
Speaker 1: that the future of demand there is not gold. I

782
00:41:09,200 --> 00:41:12,359
Speaker 1: think that the future is more so copper. It's more

783
00:41:12,440 --> 00:41:15,800
Speaker 1: so all these green energy metals that have massive rising

784
00:41:15,880 --> 00:41:20,680
Speaker 1: demand and have more and more volatile supply chains. And yes,

785
00:41:20,800 --> 00:41:22,879
Speaker 1: gold is still relied on in different parts of the world,

786
00:41:22,960 --> 00:41:26,160
Speaker 1: but less and less day over day. What's the supply

787
00:41:26,320 --> 00:41:28,719
Speaker 1: picture for gold? I never think about it that way.

788
00:41:28,760 --> 00:41:30,719
Speaker 1: I just kind of think about it with the you know,

789
00:41:30,800 --> 00:41:32,680
Speaker 1: the price on my screen here, But what's the supply

790
00:41:32,800 --> 00:41:36,200
Speaker 1: situation look like? Yeah, we all take that stuff for granted,

791
00:41:36,239 --> 00:41:38,160
Speaker 1: And the truth of the matter is nobody really wants

792
00:41:38,200 --> 00:41:40,360
Speaker 1: to talk about it because it's not pretty. You know,

793
00:41:40,520 --> 00:41:45,080
Speaker 1: gold comes from largely non democratic parts of the world

794
00:41:45,640 --> 00:41:51,080
Speaker 1: that don't have e S or G compliance and you know,

795
00:41:51,280 --> 00:41:53,080
Speaker 1: so nobody wants to talk about that. They just want

796
00:41:53,080 --> 00:41:54,600
Speaker 1: to see it on their screen and they don't want

797
00:41:54,640 --> 00:41:56,080
Speaker 1: to think about what it's going to take to actually

798
00:41:56,160 --> 00:41:58,759
Speaker 1: get it. But then also, the volumes that trade in

799
00:41:58,880 --> 00:42:02,400
Speaker 1: gold are largely by people who have no capacity to

800
00:42:02,480 --> 00:42:06,200
Speaker 1: take physical delivery of the metal itself, and so it's

801
00:42:06,239 --> 00:42:08,800
Speaker 1: just more screen the screen as you reference, than it

802
00:42:09,000 --> 00:42:12,120
Speaker 1: is people that are actually utilizing the underlying metal. And

803
00:42:12,280 --> 00:42:14,560
Speaker 1: that's why you know, I have concerned for that over

804
00:42:14,600 --> 00:42:17,839
Speaker 1: the long haul. Well what does it then mean for Well,

805
00:42:17,840 --> 00:42:20,319
Speaker 1: we got to bring it back to central bank policy specifically,

806
00:42:20,800 --> 00:42:24,120
Speaker 1: how is the Federal Reserve or the Bank of England.

807
00:42:24,440 --> 00:42:27,680
Speaker 1: Looking at what these gold prices are doing. We always

808
00:42:27,719 --> 00:42:29,400
Speaker 1: ask our guests, what is the bond market telling you

809
00:42:29,440 --> 00:42:31,600
Speaker 1: about the FED? What is the gold market telling you

810
00:42:31,640 --> 00:42:34,640
Speaker 1: about the Fed? Well, I think it's telling us that

811
00:42:34,800 --> 00:42:37,480
Speaker 1: people don't trust the FED and that, you know, the

812
00:42:37,800 --> 00:42:40,400
Speaker 1: the amount of money that's been pumped into the system.

813
00:42:40,880 --> 00:42:42,960
Speaker 1: You know, I think it was nineteen seventy two that

814
00:42:43,040 --> 00:42:47,120
Speaker 1: the US government depegged the US dollar from its gold reserve.

815
00:42:47,840 --> 00:42:51,120
Speaker 1: Ever since that day, you know, gold and the underlying

816
00:42:51,160 --> 00:42:54,160
Speaker 1: price of it has had really no bearing on the

817
00:42:55,480 --> 00:42:59,320
Speaker 1: value of the US dollar or of global currencies. Sadly,

818
00:43:00,080 --> 00:43:02,320
Speaker 1: and because of that, we find ourselves in environments like

819
00:43:02,400 --> 00:43:05,279
Speaker 1: we're in today, where you know, they can just print

820
00:43:05,400 --> 00:43:08,080
Speaker 1: as much money as they choose to to calm and

821
00:43:08,200 --> 00:43:12,200
Speaker 1: satiate the markets, and less and less is that correlated

822
00:43:12,280 --> 00:43:14,759
Speaker 1: to two golds. So more so gold is rising as

823
00:43:14,840 --> 00:43:18,520
Speaker 1: something that people perceive to have fixed supply or more

824
00:43:18,600 --> 00:43:22,960
Speaker 1: finite supply than US dollars have or will have. And therefore,

825
00:43:23,040 --> 00:43:26,280
Speaker 1: you see when people, you know, find volatility in those markets,

826
00:43:26,640 --> 00:43:29,000
Speaker 1: they're gonna they're gonna drive to those base metals and

827
00:43:29,080 --> 00:43:32,600
Speaker 1: those fixed supply assets just because you know there's nobody

828
00:43:32,800 --> 00:43:34,760
Speaker 1: sitting at the helm that can just press a button

829
00:43:34,840 --> 00:43:38,759
Speaker 1: and create more of them overnight. So another story here

830
00:43:38,880 --> 00:43:40,560
Speaker 1: will that got my attention here just in the metal

831
00:43:40,640 --> 00:43:44,400
Speaker 1: space is JP Morgan. You know, they're the biggest players

832
00:43:44,560 --> 00:43:48,439
Speaker 1: in trading metals globally. It kind of feels like maybe

833
00:43:48,480 --> 00:43:50,440
Speaker 1: they're they're cutting back a little bit. They're cutting back

834
00:43:50,440 --> 00:43:52,200
Speaker 1: on some of their bonuses, they cut back on their

835
00:43:52,680 --> 00:43:55,040
Speaker 1: roster of clients they'll deal with. I know they were

836
00:43:55,440 --> 00:43:58,479
Speaker 1: had some bed uh, you know, exposure to the nickel

837
00:43:58,560 --> 00:44:02,480
Speaker 1: market last year and that short squeeze. What do you

838
00:44:02,560 --> 00:44:04,920
Speaker 1: take from when you see something like JP Morgan say

839
00:44:04,960 --> 00:44:08,359
Speaker 1: maybe we're gonna pull back our exposure to commodities. Yeah,

840
00:44:08,520 --> 00:44:12,040
Speaker 1: you know, that disappoints me. And I think there's two

841
00:44:12,080 --> 00:44:15,080
Speaker 1: angles to it. One is when Silicon Valley Bank goes

842
00:44:15,160 --> 00:44:18,880
Speaker 1: under and regional banks find a lot of pressure, the

843
00:44:19,000 --> 00:44:22,719
Speaker 1: big banks who have consolidated those assets now all of

844
00:44:22,719 --> 00:44:24,719
Speaker 1: a sudden, they don't have to take as much risk,

845
00:44:25,640 --> 00:44:28,320
Speaker 1: right because they don't have as much competition. And so

846
00:44:28,560 --> 00:44:31,200
Speaker 1: when you have a zero risk environment, you know where

847
00:44:31,600 --> 00:44:35,640
Speaker 1: you can buy treasuries that give good yields. JP Morgan

848
00:44:35,719 --> 00:44:39,239
Speaker 1: ironically also announced today that they're in emerging market debt

849
00:44:39,280 --> 00:44:42,239
Speaker 1: because they can get teams like returns. You see people

850
00:44:42,360 --> 00:44:45,759
Speaker 1: going into the debt markets for high single digit and

851
00:44:45,880 --> 00:44:49,920
Speaker 1: low double digit returns and not needing to take Chinese

852
00:44:50,000 --> 00:44:53,560
Speaker 1: counterparty risk, Russian counterparty risk, and trade in some of

853
00:44:53,640 --> 00:44:57,200
Speaker 1: these more esoteric markets. So it's net negative for all

854
00:44:57,280 --> 00:45:01,040
Speaker 1: of us because the big banks aren't innovation and putting

855
00:45:01,080 --> 00:45:05,160
Speaker 1: more risk assets into play. It's net negative for the

856
00:45:05,239 --> 00:45:08,680
Speaker 1: global commodities markets because you have one less player. But

857
00:45:08,760 --> 00:45:11,600
Speaker 1: what that's going to result in is less competition for

858
00:45:11,680 --> 00:45:14,680
Speaker 1: the same underlying assets, which is arguably going to drive

859
00:45:14,760 --> 00:45:17,640
Speaker 1: pricing up. I think you just see JP Morgan throwing

860
00:45:17,640 --> 00:45:20,120
Speaker 1: their hands in the air and saying, we clearly aren't

861
00:45:20,160 --> 00:45:23,080
Speaker 1: good at this. This isn't our expertise. You know, we

862
00:45:23,160 --> 00:45:25,120
Speaker 1: don't need to be taking these risks and we got

863
00:45:25,200 --> 00:45:27,000
Speaker 1: to leave this to the experts, which is good for

864
00:45:27,520 --> 00:45:30,640
Speaker 1: you know, EMG and good for my business because you

865
00:45:30,680 --> 00:45:33,120
Speaker 1: know that happens to be where we focus. So where

866
00:45:33,200 --> 00:45:34,799
Speaker 1: are you guys other than gold? Where are you guys,

867
00:45:35,280 --> 00:45:37,320
Speaker 1: you know, doing some work these days? Where you guys active?

868
00:45:38,320 --> 00:45:40,160
Speaker 1: We are most active. We have an ETF on the

869
00:45:40,200 --> 00:45:45,400
Speaker 1: New York Stock Exchange called charge HRG, which is purely copper, lithium, nickel,

870
00:45:45,440 --> 00:45:49,600
Speaker 1: and cobalt, giving investors exposure to the future price activity

871
00:45:49,960 --> 00:45:54,320
Speaker 1: and exploration of the future you know, price hopefully increase

872
00:45:54,680 --> 00:45:58,680
Speaker 1: of the base metals necessary for solar wind ev all

873
00:45:58,719 --> 00:46:02,680
Speaker 1: of that adoption. You know, we're very heavily allocated to

874
00:46:02,760 --> 00:46:06,440
Speaker 1: copper today because copper is needed for all solar, all

875
00:46:06,480 --> 00:46:10,919
Speaker 1: wind all or ev all charging infrastructure for any ev

876
00:46:11,400 --> 00:46:15,680
Speaker 1: So no matter who wins the race between GM FORD, TESLA, RIVAN,

877
00:46:15,760 --> 00:46:18,760
Speaker 1: we don't really care. They all need the same base metals,

878
00:46:18,840 --> 00:46:21,759
Speaker 1: and so we give investors a pure allocation to that,

879
00:46:22,000 --> 00:46:24,520
Speaker 1: you know, through the New York Stock Exchange under CHRG.

880
00:46:25,360 --> 00:46:27,480
Speaker 1: I wonder about then, the actual I guess safety of

881
00:46:27,520 --> 00:46:30,200
Speaker 1: the trade you mentioned JP Morgan. Recently they've talked about

882
00:46:30,239 --> 00:46:33,440
Speaker 1: kind of getting into trouble with a nickel trade in

883
00:46:33,560 --> 00:46:35,800
Speaker 1: which the nickel wasn't actually there was there was no

884
00:46:35,920 --> 00:46:40,120
Speaker 1: physical supply to back up the contracts that they were pushing.

885
00:46:40,680 --> 00:46:43,000
Speaker 1: Does that then have a little bit of a kind

886
00:46:43,040 --> 00:46:46,359
Speaker 1: of risk factor for other investors, maybe not the biggest banks,

887
00:46:46,400 --> 00:46:48,200
Speaker 1: to say, well, do we really want to get involved

888
00:46:48,520 --> 00:46:50,879
Speaker 1: in the commodity trade to begin We've always already seen,

889
00:46:51,200 --> 00:46:54,320
Speaker 1: for example, in oil prices that open interest is completely dropped.

890
00:46:54,320 --> 00:46:57,239
Speaker 1: Are we seeing that in the metals? You are for

891
00:46:57,400 --> 00:47:00,680
Speaker 1: sure you're seeing less players in the term open interest

892
00:47:00,800 --> 00:47:02,360
Speaker 1: is an important one, and I know you know the

893
00:47:02,440 --> 00:47:05,439
Speaker 1: space well. I've followed you tracking it for a while

894
00:47:05,520 --> 00:47:07,239
Speaker 1: and I think you do a good job covering it.

895
00:47:08,680 --> 00:47:12,160
Speaker 1: You know, people more and more are realizing that you

896
00:47:12,280 --> 00:47:16,040
Speaker 1: need to have deep industry expertise to trade in these markets,

897
00:47:16,480 --> 00:47:19,200
Speaker 1: and so there's a lot of offscreen trading that occurs

898
00:47:19,280 --> 00:47:24,600
Speaker 1: between counterparties like miners and like the consumers or the producers. Sadly,

899
00:47:24,800 --> 00:47:27,960
Speaker 1: you know, China, to their own benefit, have gone out

900
00:47:28,000 --> 00:47:31,200
Speaker 1: over the last decade and secured off take agreements and

901
00:47:31,400 --> 00:47:34,279
Speaker 1: locked up you know in Nickels specifically, I think they

902
00:47:34,320 --> 00:47:37,360
Speaker 1: have thirty five percent of the global processing capacity is

903
00:47:37,360 --> 00:47:39,759
Speaker 1: in China. So they've gone out and locked in. They

904
00:47:39,920 --> 00:47:43,120
Speaker 1: locked in these off take agreements from the physicals all

905
00:47:43,160 --> 00:47:46,560
Speaker 1: across the world, and now we're hoarding and creating a

906
00:47:46,600 --> 00:47:50,239
Speaker 1: bottleneck in the processing capacity. So that results in less

907
00:47:50,320 --> 00:47:54,960
Speaker 1: open interest because there's less parties trading and a more

908
00:47:55,040 --> 00:47:59,440
Speaker 1: controlled environment, which is bad because you know that arms

909
00:47:59,520 --> 00:48:02,040
Speaker 1: priced tocovery, and therefore you know it is going to

910
00:48:02,080 --> 00:48:05,920
Speaker 1: result in higher pricing because there's less counterparties to create competition.

911
00:48:06,880 --> 00:48:10,359
Speaker 1: So I'm just looking at this HRG. You your ETFE,

912
00:48:10,760 --> 00:48:15,759
Speaker 1: where's the biggest swing factor for that ETF. You know,

913
00:48:15,840 --> 00:48:18,720
Speaker 1: we've taken the position that you know, the four trillion

914
00:48:18,840 --> 00:48:21,880
Speaker 1: dollars that have been committed to going green and carbon

915
00:48:21,960 --> 00:48:26,439
Speaker 1: neutrality global over the next ten to fifteen years, which

916
00:48:26,480 --> 00:48:28,959
Speaker 1: by the way, is more money than every other human

917
00:48:29,080 --> 00:48:34,279
Speaker 1: endeavor ever undertaken, which is from the World Bank, that

918
00:48:34,600 --> 00:48:38,719
Speaker 1: demand curve and that pull with stimulus from global governments,

919
00:48:39,120 --> 00:48:43,480
Speaker 1: with top ten car companies committing to only selling evs,

920
00:48:43,560 --> 00:48:46,400
Speaker 1: with the EPA yesterday coming out and saying it's going

921
00:48:46,440 --> 00:48:49,480
Speaker 1: to be harder and harder for people to get combustion

922
00:48:49,560 --> 00:48:53,320
Speaker 1: engine vehicles approved because of their emissions, we think that

923
00:48:53,440 --> 00:48:57,160
Speaker 1: that demand curve is going to be way outpacing the

924
00:48:57,280 --> 00:49:01,680
Speaker 1: supply capacity for the existing infrastructure, and therefore we think

925
00:49:01,719 --> 00:49:04,120
Speaker 1: that the price of those base medals is going to

926
00:49:04,280 --> 00:49:07,280
Speaker 1: increase in these coming years, and that's why we built

927
00:49:07,320 --> 00:49:11,320
Speaker 1: the product. It's also very hard, as you reference to

928
00:49:11,480 --> 00:49:14,160
Speaker 1: trade futures. Yeah. I used to work at Goldman Sachs

929
00:49:14,200 --> 00:49:17,239
Speaker 1: and my old desk turned me down there when they

930
00:49:17,280 --> 00:49:19,680
Speaker 1: said unless you have passed on the pause that you

931
00:49:19,800 --> 00:49:21,960
Speaker 1: can't trade. And yeah, all right, well we're gonna have

932
00:49:21,960 --> 00:49:24,120
Speaker 1: to have to leave it there just because of time.

933
00:49:24,160 --> 00:49:27,799
Speaker 1: Will mcdonea CEO and lead portfolio manager for EMG Advisors.

934
00:49:28,000 --> 00:49:31,080
Speaker 1: You're listening to the tape cancer O Live program Bloomberg

935
00:49:31,200 --> 00:49:34,680
Speaker 1: Markets weekdays at ten am Eastern on Bloomberg Radio, the

936
00:49:34,800 --> 00:49:38,000
Speaker 1: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

937
00:49:38,080 --> 00:49:40,880
Speaker 1: You can also listen live on Amazon Alexa from our

938
00:49:40,920 --> 00:49:45,320
Speaker 1: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

939
00:49:47,200 --> 00:49:51,840
Speaker 1: Pandu shahre joins us. He is COCO of Indie's Capital.

940
00:49:51,920 --> 00:49:55,359
Speaker 1: He is Indonesian Coal Mining Association. He's the chairman there,

941
00:49:55,400 --> 00:49:58,520
Speaker 1: so he can really talk to us about Indonesia. Pan

942
00:49:58,560 --> 00:50:00,719
Speaker 1: do thanks so much for taking the the time here.

943
00:50:01,200 --> 00:50:03,080
Speaker 1: Can you give us kind of if you will. Let's

944
00:50:03,120 --> 00:50:06,640
Speaker 1: start us off with the elevator pitch for Indonesia from

945
00:50:06,640 --> 00:50:09,719
Speaker 1: an investment perspective. Yeah, sure, thank you. Thank you for

946
00:50:09,840 --> 00:50:12,920
Speaker 1: having us Indonesia as a member of the g TWNT.

947
00:50:13,040 --> 00:50:15,839
Speaker 1: We hosted the gun last year. You know, we've been

948
00:50:15,920 --> 00:50:19,200
Speaker 1: growing at about five six percent per clip, and in

949
00:50:19,280 --> 00:50:21,880
Speaker 1: the next seven years, most people expect that will be

950
00:50:22,080 --> 00:50:25,520
Speaker 1: part of the G seven as the seven largest economy

951
00:50:25,760 --> 00:50:27,920
Speaker 1: in the world. And a lot of it is actually

952
00:50:28,000 --> 00:50:31,040
Speaker 1: driven by energy transition and a lot of it is

953
00:50:31,080 --> 00:50:34,160
Speaker 1: related to nickel. You are here, I'm in the US

954
00:50:34,280 --> 00:50:37,320
Speaker 1: right now, Washington, d C. What's so interesting is that,

955
00:50:37,920 --> 00:50:43,040
Speaker 1: you know, majority of cars motorcycles will be mainly be

956
00:50:43,200 --> 00:50:46,080
Speaker 1: driven by electric vehicles, and a lot of it will

957
00:50:46,120 --> 00:50:48,959
Speaker 1: come the battery source will come from nickel, and maybe

958
00:50:49,040 --> 00:50:51,239
Speaker 1: for some of your listeners that know or don't know,

959
00:50:52,000 --> 00:50:55,840
Speaker 1: majority or a quarter of those supply will come from Indonesia.

960
00:50:56,239 --> 00:50:59,520
Speaker 1: Indonesia's the largest nickel producer and now just leader supplier

961
00:50:59,560 --> 00:51:01,600
Speaker 1: in the world. And you know there's a lot of

962
00:51:01,640 --> 00:51:05,560
Speaker 1: activities happening between America and Indonesia. So, you know, happy

963
00:51:05,600 --> 00:51:08,160
Speaker 1: to talk more about what's going on in our part

964
00:51:08,200 --> 00:51:10,239
Speaker 1: of the world. Yeah, that's interesting, So talk to us

965
00:51:10,239 --> 00:51:12,880
Speaker 1: about just the energy pivot you're talking about. I know

966
00:51:13,760 --> 00:51:15,920
Speaker 1: you're involved or have been involved in the coal industry.

967
00:51:16,000 --> 00:51:20,120
Speaker 1: Talk to us about just Indonesian general that switch. Yeah,

968
00:51:20,640 --> 00:51:23,280
Speaker 1: so you know, the switch happened I think the last

969
00:51:23,320 --> 00:51:25,520
Speaker 1: two three years where you know, we are the largest

970
00:51:25,560 --> 00:51:29,279
Speaker 1: coal producer and exporter in the world, and you know,

971
00:51:29,360 --> 00:51:33,160
Speaker 1: our president essentially says we have to switch and we're

972
00:51:33,239 --> 00:51:37,560
Speaker 1: moving away from just crossing raw materials and moving into

973
00:51:38,520 --> 00:51:40,880
Speaker 1: the downstream industry and nickel it's one of the main

974
00:51:41,360 --> 00:51:44,600
Speaker 1: market that we're focusing on. And what's interesting in Indonesia

975
00:51:44,719 --> 00:51:46,600
Speaker 1: today it can go from a raw material of nickel

976
00:51:47,080 --> 00:51:49,840
Speaker 1: all the way to the battery creation and now creating

977
00:51:50,480 --> 00:51:56,080
Speaker 1: the motorcycle and what is it called cars. An example,

978
00:51:56,760 --> 00:52:03,239
Speaker 1: Yanda just finished the largest car manufacturing facility in Indonesia

979
00:52:03,320 --> 00:52:07,080
Speaker 1: for all of its four wheeler for Southeast Asia. Soon,

980
00:52:07,280 --> 00:52:10,560
Speaker 1: I think Ford just sign an MoU last week in

981
00:52:10,640 --> 00:52:14,400
Speaker 1: Jakarta to build a facility too in Indonesia using nickel

982
00:52:14,880 --> 00:52:16,640
Speaker 1: and hopefully soon I think. I'm sure you've heard it

983
00:52:16,680 --> 00:52:20,600
Speaker 1: in Bloomberg about Tesla as well. You know, for ourselves

984
00:52:20,719 --> 00:52:25,400
Speaker 1: we're building two wheelers motorcycle. Indonesia's the second largest motorcycle

985
00:52:25,760 --> 00:52:28,560
Speaker 1: in the world right because a massive market. You know,

986
00:52:28,640 --> 00:52:31,919
Speaker 1: you're talking about per industry thirty to forty billion per anna.

987
00:52:32,880 --> 00:52:36,200
Speaker 1: So in in Indonesia here talk You talk a lot

988
00:52:36,200 --> 00:52:37,920
Speaker 1: about the nickel and how important that is. Is it

989
00:52:38,440 --> 00:52:42,520
Speaker 1: is that sourced in Indonesia. Has that always been a

990
00:52:43,120 --> 00:52:48,120
Speaker 1: mineral available? It's always it's always been a middle available

991
00:52:48,160 --> 00:52:50,080
Speaker 1: in Indonesia, but most people don't know what to do

992
00:52:50,200 --> 00:52:54,560
Speaker 1: with it right now, with technology and obviously the amount

993
00:52:54,560 --> 00:52:58,440
Speaker 1: of demand for ev Indonesia has become the battleground for

994
00:52:58,600 --> 00:53:01,759
Speaker 1: most car manufacturers because essentially all the car manufacturers in

995
00:53:01,800 --> 00:53:06,080
Speaker 1: the world today has become mineral specialists. And you're seeing

996
00:53:06,120 --> 00:53:09,880
Speaker 1: this globally, right And if you talk about alternative I

997
00:53:09,920 --> 00:53:12,840
Speaker 1: would say supply chain, Indonesia today has become one of

998
00:53:12,880 --> 00:53:18,279
Speaker 1: the most important places globally for car manufacturers. So if

999
00:53:18,360 --> 00:53:20,719
Speaker 1: i'm if it Indonesia, give us a sense of the

1000
00:53:21,600 --> 00:53:24,319
Speaker 1: business climate there, particularly on on the venture capital side.

1001
00:53:24,400 --> 00:53:28,880
Speaker 1: I mean it sounds like, obviously resource rich nation, is

1002
00:53:29,040 --> 00:53:32,160
Speaker 1: how easy or how supportive is the environment to kind

1003
00:53:32,200 --> 00:53:37,080
Speaker 1: of build businesses there? Create? Oh venture amazing? I think,

1004
00:53:37,280 --> 00:53:39,600
Speaker 1: thank you for asking this question. I think venture capital

1005
00:53:39,840 --> 00:53:43,239
Speaker 1: I think Indonesia's stopped five in the world after America.

1006
00:53:43,360 --> 00:53:46,520
Speaker 1: Obviously China is a big market, then it's actually India

1007
00:53:46,560 --> 00:53:50,840
Speaker 1: and Indonesia those are the key growth markets globally or

1008
00:53:50,960 --> 00:53:54,400
Speaker 1: venture related businesses, and as you know, the big side

1009
00:53:54,440 --> 00:53:57,239
Speaker 1: and venture is outside of AI. I think AI is

1010
00:53:57,320 --> 00:54:00,280
Speaker 1: very big here in the US. Number two is related

1011
00:54:00,360 --> 00:54:03,640
Speaker 1: to energy transition, so things related to the carbon credit,

1012
00:54:04,000 --> 00:54:08,320
Speaker 1: anything related to how how do you create more renewable

1013
00:54:08,480 --> 00:54:11,920
Speaker 1: energy sources? What are you doing with processing of raw

1014
00:54:12,040 --> 00:54:16,280
Speaker 1: materials and creation of batteries. I would say Indonesia stopped

1015
00:54:16,280 --> 00:54:19,799
Speaker 1: for in the world of amount of venture capital investment

1016
00:54:20,200 --> 00:54:22,759
Speaker 1: going into these sectors. Talk to us a little bit

1017
00:54:22,760 --> 00:54:25,080
Speaker 1: about China here. So much change, you know over the

1018
00:54:25,200 --> 00:54:29,480
Speaker 1: last several years. Give us just a sense historically how

1019
00:54:29,600 --> 00:54:33,880
Speaker 1: Indonesia's interacted with China and maybe how that is changing

1020
00:54:34,160 --> 00:54:36,960
Speaker 1: from a you know, both as a customer and as

1021
00:54:37,000 --> 00:54:42,399
Speaker 1: a source and trade in general, things are changing a lot.

1022
00:54:42,520 --> 00:54:44,880
Speaker 1: I know Bloombergers in the middle of this too, But

1023
00:54:45,120 --> 00:54:47,600
Speaker 1: Indonesia has been you know, we're good friends with everyone.

1024
00:54:48,440 --> 00:54:50,600
Speaker 1: China is a big trading partner. But again, you know,

1025
00:54:50,760 --> 00:54:54,160
Speaker 1: it's just win win, right with a US too. There's

1026
00:54:54,200 --> 00:54:57,120
Speaker 1: been significant amount of new investment coming in especially the

1027
00:54:57,239 --> 00:55:00,200
Speaker 1: last twelve months, and outside of Nickel, there's a lot

1028
00:55:00,239 --> 00:55:04,280
Speaker 1: of investment coming up in digital infrastructure and things related

1029
00:55:04,280 --> 00:55:06,120
Speaker 1: to renewable energy. And that's why we're all here in

1030
00:55:06,200 --> 00:55:08,920
Speaker 1: Washington and after this we're going to New York. Is

1031
00:55:08,960 --> 00:55:11,279
Speaker 1: because to engage a lot with both the public and

1032
00:55:11,320 --> 00:55:14,920
Speaker 1: the private sector anything to do with energy transition, you

1033
00:55:15,040 --> 00:55:17,680
Speaker 1: have to manage both the public sectors as well as

1034
00:55:17,680 --> 00:55:20,440
Speaker 1: the private sectors. So is that how I mean? I

1035
00:55:20,520 --> 00:55:22,759
Speaker 1: think what we're learning in order at least the folks

1036
00:55:22,800 --> 00:55:24,880
Speaker 1: that are really focusing on the energy transition is a

1037
00:55:25,000 --> 00:55:29,400
Speaker 1: private public partnership. The government can't do at all. Private

1038
00:55:29,440 --> 00:55:31,719
Speaker 1: companies and venture capitalists can't do it all. It's got

1039
00:55:31,800 --> 00:55:33,320
Speaker 1: to be some type of Is that the kind of

1040
00:55:33,320 --> 00:55:37,520
Speaker 1: the model you're following in Indonesia? I think so we are,

1041
00:55:37,600 --> 00:55:40,640
Speaker 1: and we're learning a lot the way things work in India,

1042
00:55:40,719 --> 00:55:42,680
Speaker 1: for example, that's a good example. I think it is

1043
00:55:42,680 --> 00:55:45,960
Speaker 1: halfway between the US and Indo. A government place a

1044
00:55:46,000 --> 00:55:49,800
Speaker 1: significant role from a policy perspective to encourage people to

1045
00:55:49,960 --> 00:55:53,879
Speaker 1: switch behavior. So there's a certain critical mass where things

1046
00:55:53,920 --> 00:55:56,880
Speaker 1: switches and everybody start using it. A good example is

1047
00:55:56,880 --> 00:56:00,279
Speaker 1: the usage of electric vehicle. Right today, we used yourtional

1048
00:56:00,440 --> 00:56:03,880
Speaker 1: means for cars. You need to have incentive programs, so

1049
00:56:04,000 --> 00:56:07,680
Speaker 1: in a good example incentive program where people can buy

1050
00:56:07,760 --> 00:56:10,640
Speaker 1: and get a discuss with you buy EV. So the

1051
00:56:10,840 --> 00:56:13,960
Speaker 1: regulation nesia has happened two weeks ago. It's probably the

1052
00:56:14,080 --> 00:56:17,920
Speaker 1: most aggressive across all the Nation States and Assam. And

1053
00:56:18,040 --> 00:56:20,800
Speaker 1: I think this will help encourage further investment into the

1054
00:56:20,880 --> 00:56:24,000
Speaker 1: EV sector as well as building the manufacturing in Indonesia.

1055
00:56:24,560 --> 00:56:28,120
Speaker 1: So ponder what's a lot of tailwinds of course for Indonesia.

1056
00:56:28,200 --> 00:56:31,200
Speaker 1: What's the biggest challenge for Indonesia to achieve? Kind of

1057
00:56:31,600 --> 00:56:35,839
Speaker 1: what are some of the opportunities. Yeah, I think there's

1058
00:56:35,880 --> 00:56:37,920
Speaker 1: just two. I mean, we're in such a good momentum

1059
00:56:37,960 --> 00:56:40,640
Speaker 1: today because now we've entered the global stage as we

1060
00:56:40,760 --> 00:56:43,480
Speaker 1: host the gpuenty last year well and this year we're

1061
00:56:43,520 --> 00:56:46,760
Speaker 1: hosting the Assam Sement. I think it's more about execution,

1062
00:56:47,040 --> 00:56:51,200
Speaker 1: continuously execute, execute. And second, obviously we're next year is

1063
00:56:51,239 --> 00:56:54,680
Speaker 1: election years, similar to here in the US, so continuity

1064
00:56:54,760 --> 00:56:57,440
Speaker 1: will be top of mind for any investors. So how

1065
00:56:57,520 --> 00:57:02,040
Speaker 1: do you continue the policy of of creating what's called

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Speaker 1: a stable environment? So politics also played croll in that. Pondu,

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Speaker 1: thank you so much for taking a time to join

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Speaker 1: us from glad we had had the chance to have

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Speaker 1: this conversation Pendu Shahre, He's COCO of Indies Capital, really

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Speaker 1: involved all across the public private partnerships across Indonesia. He's

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00:57:19,800 --> 00:57:21,280
Speaker 1: been called one of the you know, the leading venture

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00:57:21,320 --> 00:57:24,280
Speaker 1: capitalists in Indonesia. So we're just trying to get you know,

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00:57:24,400 --> 00:57:26,320
Speaker 1: get more educated on that part of the world, and

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00:57:26,360 --> 00:57:27,760
Speaker 1: I think that we're starting to do more and more

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00:57:27,800 --> 00:57:30,040
Speaker 1: of that. Is a lot of folks look to say, hey,

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00:57:30,160 --> 00:57:34,440
Speaker 1: where else can we source part of our products and

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Speaker 1: services other than China? As China's you know, kind of

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00:57:37,440 --> 00:57:40,320
Speaker 1: backing off a little bit again people talking about India,

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00:57:40,440 --> 00:57:43,800
Speaker 1: of course, but Indonesia a definitely in the center of

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00:57:43,880 --> 00:57:47,040
Speaker 1: that conversation as well. Thanks for listening to the Bloomberg

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00:57:47,160 --> 00:57:50,520
Speaker 1: Markets podcast. You can subscribe and listen to interviews with

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00:57:50,560 --> 00:57:55,360
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.

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00:57:55,680 --> 00:57:59,160
Speaker 1: I'm on Twitter at Matt Miller nineteen seventy three, pen

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00:57:59,240 --> 00:58:02,400
Speaker 1: On Falswhinnie on Twitter at pt Sweeney. Before the podcast,

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00:58:02,480 --> 00:58:05,000
Speaker 1: you can always catch us worldwide at Bloomberg Radio.