WEBVTT - Inflation, Regional Bank Earnings, Cannabis, & Nickel 0:00:00.760 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.680 at Bloomberg dot com slash podcast. Let's get to Danielle 0:00:21.720 --> 0:00:24.840 d Martino Booth. We're very fortunate to have her in 0:00:24.880 --> 0:00:27.600 our studio again today because she's based in Dallas, so 0:00:27.600 --> 0:00:29.640 when she comes to New York, we say, please stop by. 0:00:29.880 --> 0:00:33.280 Danielle d Martino Booth, CEO and chief strategist for Quill Intelligence. 0:00:33.440 --> 0:00:35.839 All right, Danielle, we haven't chatted with you for a 0:00:35.880 --> 0:00:38.879 little while here. What is your view about what our 0:00:38.920 --> 0:00:41.960 federal Reserve is going to do here? Given all the 0:00:41.960 --> 0:00:44.640 economic data that we've got today and the recession yesterday 0:00:44.640 --> 0:00:47.519 and the recession called they used the R word. Yes, wow, 0:00:47.600 --> 0:00:50.479 they're being so forthright. But to Matt's point, we're like 0:00:50.600 --> 0:00:54.080 in a time compression chamber. Everything's happening so much more 0:00:54.120 --> 0:00:56.400 quickly than it used to. I mean, we we've got 0:00:56.400 --> 0:01:02.880 inflation expectations that are collapsing, lapsing among households. Forget the cps, 0:01:03.040 --> 0:01:06.920 forget the pipe. Dude, you are doing the Tesla story yesterday. Yeah, 0:01:06.920 --> 0:01:09.160 I know you're saying right, Tesla buyers are now going 0:01:09.200 --> 0:01:11.679 to wait and see when the next price cuts come. 0:01:12.920 --> 0:01:15.760 And the mindset among you as households has done a 0:01:15.840 --> 0:01:20.440 complete one complete one eighty. Cox's Automotive came out and 0:01:20.480 --> 0:01:23.600 said that in the first week of April, applications to 0:01:23.640 --> 0:01:26.520 finance a car loan we're down twenty three percent year 0:01:26.560 --> 0:01:29.960 over year. I mean, this is happening so fast, and 0:01:30.000 --> 0:01:32.880 I think that that's what we have to appreciate about 0:01:33.640 --> 0:01:36.920 how aggressive and fast the FED was. So you're long 0:01:36.959 --> 0:01:39.920 and variable, it's like short and sweet. Yeah. By the way, 0:01:39.920 --> 0:01:42.480 on the loan front, I've been hearing the word credit 0:01:42.520 --> 0:01:44.880 crunch more and more often. I think Neil cash Car 0:01:44.880 --> 0:01:46.200 he said it on one of the Sunday shows a 0:01:46.200 --> 0:01:48.520 couple of weeks ago, and now everybody's starting to use 0:01:48.560 --> 0:01:52.440 that phrase. I've all seen seen some survey data that 0:01:52.520 --> 0:01:56.520 shows consumers aren't getting loans, not because rates are too high, 0:01:56.560 --> 0:01:58.680 but because the banks are being tighter and tight up 0:01:58.720 --> 0:02:00.200 with the money. Is that is that true. Are you 0:02:00.200 --> 0:02:02.840 seeing that in the data? CarMax came out yesterday, CarMax 0:02:02.920 --> 0:02:04.920 it was, it was, it was on the terminal. CarMax 0:02:04.960 --> 0:02:07.240 came out yesterday, and they were like, we're not gonna 0:02:07.240 --> 0:02:11.560 make as many loans. Our standards are tightening quickly. Capital 0:02:11.560 --> 0:02:15.400 One pulled all of its floor lines for for dealers, 0:02:15.440 --> 0:02:17.880 so you know, used card dealerships are going to start 0:02:18.000 --> 0:02:21.120 dropping like flies because they paid up in January. They've 0:02:21.120 --> 0:02:24.640 paid up in February at auction, which Mannheim Data told us, 0:02:24.960 --> 0:02:28.239 and then income tax refund season for US households was 0:02:28.280 --> 0:02:30.919 a disaster. Ye, So you're you're down eleven percent year 0:02:30.919 --> 0:02:33.480 over year and people don't have as much cash as 0:02:33.480 --> 0:02:35.400 they thought they were gonna have. Now we're gonna start 0:02:35.440 --> 0:02:40.399 seeing income receipts, which Janet Yellen is praying please bring 0:02:40.440 --> 0:02:43.600 the receipts in because the nation's checking account is down 0:02:43.600 --> 0:02:45.919 to like one hundred billion. It's like, you know, she's 0:02:45.919 --> 0:02:48.280 getting calls saying, you know you've hit your minimum balance? 0:02:48.480 --> 0:02:51.880 Are we really? Because Steve Rattner rode An op ed 0:02:52.080 --> 0:02:54.120 in The New York Times a couple of weeks ago 0:02:54.800 --> 0:02:57.120 saying he wants people to come back to work and 0:02:57.200 --> 0:02:59.240 you should really do it, you know, twelve hours a day, 0:02:59.280 --> 0:03:04.079 sixties and an MD at Goldman, Sorry, but only mds. 0:03:04.120 --> 0:03:05.880 I'm like, what does that mean for the non MD 0:03:06.320 --> 0:03:09.440 The one thing he one, well, that means they're they're 0:03:09.440 --> 0:03:11.600 gonna make those kids come in. The one thing that 0:03:11.639 --> 0:03:15.200 I thought the most interesting takeaway was that at least 0:03:15.200 --> 0:03:18.480 in his estimate, there's still a lot more money in 0:03:18.919 --> 0:03:22.320 UM consumers bank accounts, checking accounts then there was, you know, 0:03:22.360 --> 0:03:26.919 prepen heavily concentrated among the older and the wealthier. Okay, 0:03:26.919 --> 0:03:29.960 at this point, you the burn rate for people making 0:03:30.520 --> 0:03:33.880 seventy five thousand dollars fifty thousand dollars, that burn rate, 0:03:33.919 --> 0:03:36.720 they burned through the cash. In fact, if you look 0:03:36.760 --> 0:03:39.160 at the fiscal impulse, it turned negative in a big 0:03:39.200 --> 0:03:41.760 way in the fourth quarter of twenty twenty two, and 0:03:41.800 --> 0:03:44.520 the fiscal impulses continued to get lower. And remember they 0:03:44.720 --> 0:03:47.960 your average American family that was getting receiving food stamps 0:03:48.480 --> 0:03:51.000 was cut by two hundred and thirty three dollars a month. 0:03:51.520 --> 0:03:54.640 And you have seen there is really good granular data 0:03:54.720 --> 0:04:00.400 that shows that grocery shopping receipts are collapsing. People are 0:04:00.440 --> 0:04:02.600 spending a lot less at the grocery store. This is like, 0:04:03.160 --> 0:04:05.720 this is before you were born, Matt. But you remember 0:04:05.760 --> 0:04:08.160 Hamburger Helper. Sure, And this was the thing in the 0:04:08.520 --> 0:04:11.520 late seventies and eighties. It's that people switched away from 0:04:11.880 --> 0:04:14.160 steak to ground beef, and how can I make ground 0:04:14.160 --> 0:04:16.839 beef interesting for the family. We're seeing that in grocery stores. 0:04:17.240 --> 0:04:19.920 Here's the thing. Ever since I grew this beard, people think, 0:04:20.000 --> 0:04:21.640 for some reason, I'm a lot younger than I am. 0:04:21.720 --> 0:04:24.880 I look so much younger with the beard, but I 0:04:24.960 --> 0:04:30.640 was actually born in nineteen seventy three. Believe I can 0:04:30.680 --> 0:04:35.200 go on with my day now. Yeah, I've got a listener, 0:04:35.520 --> 0:04:39.040 an investor, a Bloomberg client who writes in. And first 0:04:39.040 --> 0:04:40.720 of all, he hasn't said it, but I know he 0:04:40.760 --> 0:04:42.480 has seen you speak before and he's a big fan, 0:04:42.520 --> 0:04:44.800 So that's a b. He's got a question for you. 0:04:45.480 --> 0:04:47.680 Why does the market interpret a FED cut in late 0:04:47.720 --> 0:04:51.520 twenty three as a positive and not as the negative 0:04:51.839 --> 0:04:53.799 that it is supposed to be viewed as rate cuts 0:04:53.839 --> 0:04:56.719 mean bad things with the economy. Yet SMP forty one 0:04:56.839 --> 0:04:59.680 hundred teams like no one cares and stunks. Yeah, it's 0:04:59.680 --> 0:05:02.320 a direct look at the VIX. I mean it's it's 0:05:02.600 --> 0:05:05.320 doesn't all all is good here. I'm not so old 0:05:05.320 --> 0:05:07.960 that I look at the visail well, I look at 0:05:08.040 --> 0:05:13.440 zero dated zero days. So these two exoptions, right with 0:05:13.440 --> 0:05:17.000 with deference to the individual asking the question, I think 0:05:17.040 --> 0:05:20.040 what people need to be prepared for is that the 0:05:20.160 --> 0:05:23.080 last rate hike on May third does not mean that 0:05:23.200 --> 0:05:28.760 quantitative tightening ends. So I don't think that. I don't 0:05:29.000 --> 0:05:31.640 I believe Powell. I believe Powell in saying there's no 0:05:31.720 --> 0:05:33.839 rate cut in twenty twenty three. He doesn't care what 0:05:33.920 --> 0:05:37.279 markets are pricing in. He has talked markets back off 0:05:37.320 --> 0:05:39.760 of their cliff over and over and over again. People 0:05:39.800 --> 0:05:41.600 are like, but the markets pricing it in, And I'm like, 0:05:41.640 --> 0:05:44.200 just wait from to open his mouth. And he's done 0:05:44.240 --> 0:05:48.520 this since March of twenty twenty two. Nobody realizes that, 0:05:48.560 --> 0:05:50.520 you know, we just had the largest draw down of 0:05:50.560 --> 0:05:53.080 the Fed's balance sheet in the most recent week in 0:05:53.120 --> 0:05:55.760 the history of mankind. That's how many treasuries rolled off 0:05:56.000 --> 0:05:59.599 so QT and you know, it's it's what Mike McKee, 0:05:59.640 --> 0:06:02.480 it's like the Super Bowl every Thursday afternoon and every 0:06:02.480 --> 0:06:04.760 Friday afternoon, waiting for everybody knows what the H four 0:06:04.800 --> 0:06:06.240 and the H eight are. Now it's like, how did 0:06:06.920 --> 0:06:10.080 what is four? And I know the weeds. I know 0:06:10.120 --> 0:06:12.039 about the Fed's balance sheet. You know, I know what 0:06:12.240 --> 0:06:14.919 about bank balance sheets. But everybody's watching it so closely 0:06:15.120 --> 0:06:19.640 because the credit crunch is happening way fast. Commercial lending 0:06:19.720 --> 0:06:22.200 is more than ever before. You know, we we we 0:06:22.520 --> 0:06:25.720 used to interview company CEOs on bloomber TV. We used 0:06:25.760 --> 0:06:29.640 to talk about company stocks. Now it's just fed from 0:06:29.720 --> 0:06:33.680 daybreak to sunday. You know. It's what company CEOs want 0:06:33.680 --> 0:06:37.119 to know is why they can't get the CNI loans 0:06:37.200 --> 0:06:40.200 that they want. Remember, we're in an inventory correction. So 0:06:40.240 --> 0:06:43.760 in most operation managers lives, it's been just in time 0:06:43.800 --> 0:06:46.800 inventory and now it's just in case. So they're sitting 0:06:46.800 --> 0:06:50.320 on an inventory that's that is the shortest rate you 0:06:50.360 --> 0:06:55.000 can possibly name. Operating expensive companies don't know what to do. 0:06:55.200 --> 0:06:56.800 I would not want to be a CFO right now. 0:06:56.839 --> 0:07:00.360 So is a recession now in I think we are 0:07:00.400 --> 0:07:03.159 in recession recession. I think we are in a receptive 0:07:03.320 --> 0:07:05.640 I think when it goes is it deep? Is it 0:07:05.640 --> 0:07:07.800 because it well, well, the FETE says it's going to 0:07:07.839 --> 0:07:11.240 be mild, right, right, I just how can we be 0:07:11.480 --> 0:07:15.120 in a recession with three and a half percent unemployment 0:07:15.520 --> 0:07:20.120 and use cars still going from like new car prices 0:07:20.680 --> 0:07:24.520 plus new car prices are unaffordable for everybody but the 0:07:24.560 --> 0:07:27.120 top like three percent. That's very true. But we have 0:07:27.320 --> 0:07:31.400 seen new car prices fall below MSRP for the first 0:07:31.400 --> 0:07:34.480 time in twenty months. New car prices have come down 0:07:34.560 --> 0:07:39.280 three months in a row, and judging by how buyers 0:07:39.400 --> 0:07:43.400 view car prices, we ran it in this morning's data. 0:07:43.680 --> 0:07:49.000 It's Mary Barra's promise to maintain profit margins and hold 0:07:49.080 --> 0:07:53.200 up high prices and not do incentive spending. That might work, 0:07:53.440 --> 0:07:55.600 but it's not gonna work for her competitors. She's holding 0:07:55.640 --> 0:07:59.280 the line, but Ford is following Tesla and cutting thank you, yeah, yea, 0:07:59.520 --> 0:08:03.080 So all right, so fed raises here May third, and 0:08:03.120 --> 0:08:05.840 then is are you kind of with everybody else that 0:08:05.840 --> 0:08:07.920 they're just gonna kind of hang and see what happens 0:08:07.920 --> 0:08:10.280 and look at the data. They're gonna hang and roll 0:08:10.360 --> 0:08:12.480 their balance sheet down. There was a report that came 0:08:12.480 --> 0:08:13.920 out of the New York Fed a few days ago 0:08:13.960 --> 0:08:16.560 that said, well, the balance sheet, we expect the balance 0:08:16.560 --> 0:08:19.360 She's gonna be six trillion dollars in twenty twenty five. 0:08:20.040 --> 0:08:23.440 I mean, incorporate that into your thinking. The New York 0:08:23.480 --> 0:08:26.840 Fed thinks that quantitative tightening is going to continue for 0:08:26.880 --> 0:08:31.320 the next two years. The market is saying zero interest rates, 0:08:31.480 --> 0:08:34.760 zero bound. They're not talking about cute little twenty five 0:08:34.800 --> 0:08:36.920 bases point rate cuts. They're talking about gwen to the 0:08:37.000 --> 0:08:40.440 zero bound immediately and restarting quantitative easing. That's what the 0:08:40.480 --> 0:08:43.400 market wants. The market just doesn't believe the FED put 0:08:43.440 --> 0:08:45.800 is going away. The market is like your kids, Paul. 0:08:46.280 --> 0:08:48.600 You've cut them off the payroll. It's been a couple 0:08:48.600 --> 0:08:51.520 of years, but they know the worst comes to worse 0:08:51.640 --> 0:08:53.640 when the s hits the fan. They can still go 0:08:53.679 --> 0:08:55.840 back to the bank of Dad. When they mean absolutely 0:08:55.960 --> 0:08:57.520 they have that back. Now. I'm trying to cut that 0:08:57.559 --> 0:09:00.480 off right down. Yeah, they're good though it I mean 0:09:00.520 --> 0:09:02.760 they don't, they don't come. It's it's it's pretty good 0:09:02.760 --> 0:09:04.720 so far, all right, So because they have jobs, because 0:09:04.720 --> 0:09:08.079 everybody has wait until these FED rate hikes put those 0:09:08.160 --> 0:09:10.160 kids out of jobs and then all of a sudden, 0:09:10.160 --> 0:09:12.840 you're gonna have a new roommate in summit or done. 0:09:12.920 --> 0:09:16.680 Any what you're seeing I mean, you're the entire Northeastern 0:09:16.760 --> 0:09:21.600 corridor has rising jobless claims from Maine to Pennsylvania. The 0:09:21.720 --> 0:09:24.200 entire Exceller route. That's my that's my top of my 0:09:24.200 --> 0:09:28.080 feather tomorrow. The entire exceler route is seeing rising initial 0:09:28.160 --> 0:09:32.560 jobless claims. And so it's like the recession recognition is 0:09:32.559 --> 0:09:35.280 coming hard and fast, and it goes right along with 0:09:35.320 --> 0:09:37.080 what you were saying right before I came on with 0:09:37.120 --> 0:09:40.760 this whole idea of long and variable labs being really short. Yeah, 0:09:40.800 --> 0:09:43.880 all right, So I guess is inflation. I mean, what's 0:09:43.920 --> 0:09:47.120 the biggest concern for you out there in this economy? Right? Yeah, 0:09:47.160 --> 0:09:50.719 if inflation is coming down, although at this morning and 0:09:50.840 --> 0:09:54.480 the sticking around these levels, uh, if inflation is coming down, 0:09:54.880 --> 0:09:59.160 and if unemployment is still you know, at a record low. Um, 0:09:59.679 --> 0:10:02.400 this recession feels okay to me. How long is it 0:10:02.400 --> 0:10:06.120 gonna last? It's gonna last until your neighbor loses their job, 0:10:06.520 --> 0:10:09.280 right yep? And then and and and that's why I 0:10:09.320 --> 0:10:10.720 think that we're not really prepared. I think we're going 0:10:10.760 --> 0:10:14.200 to see an unemployment rate shock because everything seems to 0:10:14.200 --> 0:10:18.360 come like like a with with a bullet. Everything's so 0:10:18.440 --> 0:10:21.480 dramatic that when it happens. I mean, if we looked 0:10:21.520 --> 0:10:24.920 at realtors realature's income in the PPI report this morning, 0:10:25.080 --> 0:10:27.240 and it looks like hockey stick going up and it 0:10:27.280 --> 0:10:29.720 looks like it's just collapsed coming down. Yeah, I believe that, 0:10:29.920 --> 0:10:32.480 and sold so many at high prices last year exactly, 0:10:33.640 --> 0:10:35.720 and it's just except for Paul's house on the shore, 0:10:35.800 --> 0:10:39.760 it's welcome. And then we saw, yeah, the consumer price 0:10:39.800 --> 0:10:42.320 in next Hi, what was the data we saw I did. 0:10:42.679 --> 0:10:47.160 What was the data we saw um Personal health up 0:10:47.200 --> 0:10:49.640 six point eight percent in the CPI yesterday? Child that 0:10:49.760 --> 0:10:52.640 was childcare. Childcare costs are sore. I'm here to tell 0:10:52.679 --> 0:10:54.120 you as a man with a two and a half 0:10:54.200 --> 0:10:57.080 year old kid. Look, I just came back from Berlin, 0:10:57.280 --> 0:11:00.400 where childcare is luxurious and free. I did not expect 0:11:00.400 --> 0:11:03.480 it to cost me the average American way. Look at 0:11:03.480 --> 0:11:06.400 where we look at where the job openings are still 0:11:06.679 --> 0:11:12.800 really strong, childcare, nursing homes, home healthcare workers. Those individuals 0:11:12.840 --> 0:11:15.880 are coming back into the labor force, but for now 0:11:15.880 --> 0:11:18.480 there's still there's still a deficit of these workers. So 0:11:18.559 --> 0:11:21.440 you pay through the nose for childcare. Those apps and jewels, Yes, 0:11:21.800 --> 0:11:24.680 all right, this was an extended block. We're really appreciate 0:11:24.679 --> 0:11:27.360 you taking the time. Danielle Danielle di Martino Booth. She's 0:11:27.400 --> 0:11:31.800 a CEO and chief strategist at Quill Intelligence. Highly recommend 0:11:31.800 --> 0:11:35.120 follow the Dallas fed You store Dallas fed fed Up, 0:11:35.240 --> 0:11:37.920 fed Up still my favorite. Great follow on Twitter, even 0:11:37.960 --> 0:11:40.880 though I'm off Twitter, but great following Twitter. Some good 0:11:40.960 --> 0:11:45.199 stuff committed Twitter side. Yes after Facebook. Yeah, I'm done. Done. 0:11:47.040 --> 0:11:50.920 You're listening to the Team Cancer Live program Bloomberg Markets 0:11:50.960 --> 0:11:54.040 weekdays at ten am easting on Bloomberg dot com, the 0:11:54.120 --> 0:11:56.839 I Heard Radio app and the Bloomberg Business App. We're 0:11:56.880 --> 0:12:01.480 listening on demand wherever you get your podcast. Right now 0:12:01.480 --> 0:12:03.200 when you want to talk about these markets here, we're 0:12:03.200 --> 0:12:05.240 gonna bring in a professional, Phil Tase. He's a CEO 0:12:05.240 --> 0:12:07.280 of Tay's Asset Management. He joins us here in our 0:12:07.280 --> 0:12:10.640 Bloomberg Interactive Broker Studio. Phil, the last time I think 0:12:10.679 --> 0:12:12.600 we saw you, or maybe maybe the time before that, 0:12:12.880 --> 0:12:14.920 we have in our notes ninety percent of the terms 0:12:14.920 --> 0:12:17.240 assets were in cash, with the remaining ten percent in 0:12:17.280 --> 0:12:19.840 defensive fixed income. Is that still the case for you, guys, 0:12:20.000 --> 0:12:21.760 It's not. It was a great place to be in 0:12:21.760 --> 0:12:24.320 twenty twenty two, but it is it has not this year. 0:12:24.400 --> 0:12:28.200 So our algorithms bar trend following funds moved us back 0:12:28.240 --> 0:12:30.000 into the markets the beginning on January the eighteenth, and 0:12:30.000 --> 0:12:31.640 then we came fully back in over the next couple 0:12:31.640 --> 0:12:34.080 of days. We had one brief period when we're out 0:12:34.320 --> 0:12:36.360 just harshly in March for a couple of days, but 0:12:36.400 --> 0:12:41.439 we've been just enjoying the rally. So let's talk about 0:12:41.480 --> 0:12:46.040 your new fund. It's the Tay's Agility Shares Managed Risk ETF. 0:12:46.520 --> 0:12:49.959 And tell us first of all, what it does. Okay, 0:12:50.160 --> 0:12:52.960 so it's a different way of trying to address risk 0:12:53.000 --> 0:12:55.120 than leaving the markets. And what it is is it's 0:12:55.120 --> 0:12:58.559 an SMP five hundred type of ETF, but it has 0:12:58.600 --> 0:13:01.520 full notional options for tection on a leap that's two 0:13:01.600 --> 0:13:03.600 years out that we buy every year in December. Here's 0:13:03.600 --> 0:13:06.000 what's super important. If all you're doing is buying the 0:13:06.080 --> 0:13:08.959 equities market, but you're and hedging but not figuring out 0:13:09.000 --> 0:13:10.480 a way to pay for that, you're going to give 0:13:10.520 --> 0:13:12.400 up most of the above inflation gains. And that's why 0:13:12.400 --> 0:13:15.520 so few people end up doing options over the long term. Well, 0:13:15.520 --> 0:13:17.680 so what we also do. Inside of that ETFs, we 0:13:17.720 --> 0:13:20.920 sell shorter dated calls sixty and ninety days out about 0:13:20.920 --> 0:13:23.240 five percent above the market. We also sell some put 0:13:23.280 --> 0:13:26.760 spreads and that brings in a premium each month that 0:13:26.800 --> 0:13:29.360 helps pay for that put protection. Now, the other important 0:13:29.400 --> 0:13:32.440 component of this, the way this works is that options 0:13:32.480 --> 0:13:34.960 need to be dynamically managed. So if we have that 0:13:35.080 --> 0:13:37.640 leap and it's at the market and the the markets advanced 0:13:37.640 --> 0:13:39.880 ten or twenty percent in the year, you need to 0:13:39.880 --> 0:13:42.040 be able to roll that price up to the market 0:13:42.080 --> 0:13:44.720 so you can bring your protection higher. Here's another super 0:13:44.760 --> 0:13:47.520 important point. If the market plummets, we can roll the 0:13:47.600 --> 0:13:51.040 leap down and monetize it. So the key to success 0:13:51.080 --> 0:13:53.920 with options when you're in the equities market is figuring 0:13:53.920 --> 0:13:56.320 out a way to both pay for the protection but 0:13:56.480 --> 0:13:59.960 also monetize and when you have wins when the market 0:14:00.080 --> 0:14:01.839 move lower. I gotta say it for I feel like 0:14:01.880 --> 0:14:06.720 for me and Paul, we need illustrations options. I'm just 0:14:06.840 --> 0:14:08.720 I'm kind of lost there. But what I do know 0:14:09.040 --> 0:14:13.160 is that on you know, in money markets, in short 0:14:13.240 --> 0:14:17.360 duration treasury ETFs, you're getting four or five six percent, right, 0:14:17.720 --> 0:14:20.920 So what kind of returns can you get in something 0:14:20.960 --> 0:14:24.520 like the agility Shares Managed Risk ETF well, so over 0:14:24.600 --> 0:14:26.640 its history we have around a seventy percent capture and 0:14:26.680 --> 0:14:29.200 a forty percent down capture. But if the market would 0:14:29.280 --> 0:14:30.960 enter into free fall, which we didn't really see in 0:14:31.000 --> 0:14:33.520 twenty twenty two, we think you could have more offsetting 0:14:33.520 --> 0:14:36.400 appreciation in those puts and less market down capture than 0:14:36.480 --> 0:14:39.440 forty percent. So I'll summarize it. It's a way to 0:14:39.480 --> 0:14:42.960 be in the market with potentially dramatically less risk on 0:14:43.000 --> 0:14:46.280 the downside and a way to pay for that risk protection. 0:14:46.400 --> 0:14:49.720 All right, So mr SK is the ticker, yes, and 0:14:50.240 --> 0:14:52.760 just kind of summary. The holdings are mostly options M 0:14:52.840 --> 0:14:55.520 risk managed risk. So actually no, the holdings are mainly 0:14:55.560 --> 0:14:57.800 just the S and P five hundred, okay, using options 0:14:57.840 --> 0:14:59.920 to both you know, address the possibility of it down 0:15:00.360 --> 0:15:02.800 and you know, options to help pay you for that. So, 0:15:02.800 --> 0:15:04.680 so what is your view of the market. We've had 0:15:04.680 --> 0:15:07.760 a whole slew of economic data just recently on an 0:15:07.760 --> 0:15:10.440 inflation front suggesting that may be cooling. We're gonna have 0:15:10.440 --> 0:15:13.520 earnings kicking off tomorrow with some of the banks. How 0:15:13.520 --> 0:15:15.840 are you guys viewing this market, which, by the way, 0:15:15.840 --> 0:15:19.200 we should point out, you know yesterday's CPI and today's 0:15:19.240 --> 0:15:23.280 PPI as fascinating. Well as boring as yesterday's CPI was 0:15:23.520 --> 0:15:26.440 and as fascinating as today's PPI was, they're not really 0:15:26.440 --> 0:15:28.840 moving the markets, right, We're still up year to date 0:15:28.880 --> 0:15:32.000 on the S and P seven and a half percent, right, right, Okay, 0:15:32.040 --> 0:15:34.160 So I'll give you two views. One is short term. 0:15:34.240 --> 0:15:38.160 Over the short term, markets are like teenagers, and sometimes 0:15:38.120 --> 0:15:39.800 it's gonna be like a group of teenagers. And if 0:15:39.800 --> 0:15:42.160 you get a momentum driven equity market that's higher than 0:15:42.200 --> 0:15:45.240 it's like a group of teenagers with beers, right, it's 0:15:45.240 --> 0:15:48.040 not it's not rational, it doesn't make sense. Over the 0:15:48.080 --> 0:15:54.280 longer term, they're buying ripped genesre ripped genes again. So 0:15:54.560 --> 0:15:57.120 over the longer term, we have a lot of challenges. 0:15:57.360 --> 0:15:59.320 One thing that's not talked about at all that I'm 0:15:59.320 --> 0:16:00.680 in the process of right the paper right now is 0:16:00.680 --> 0:16:04.320 the global debt situation unprecedented. The consequences I think will 0:16:04.360 --> 0:16:06.360 be significant. That's more than we have time for in 0:16:06.360 --> 0:16:09.360 this segment. But also we've addressed that though in the past. Okay, 0:16:09.520 --> 0:16:13.720 it's nuts. So especially when you look at I thought 0:16:13.760 --> 0:16:16.560 twenty percent interest rates would have been unbearable in the eighties, 0:16:16.560 --> 0:16:18.280 and someone reminded me, we had a debt to GDP 0:16:18.360 --> 0:16:21.120 back then, have like twenty or thirty percent. Now five 0:16:21.160 --> 0:16:23.000 percent hurt just as much because we have debt to 0:16:23.080 --> 0:16:25.120 GDP of like one hundred and twenty percent exactly. And 0:16:25.160 --> 0:16:27.000 the last time we had one hundred percent of debt 0:16:27.000 --> 0:16:29.240 to GDP was after World War Two. The thing that 0:16:29.320 --> 0:16:31.760 saved us then was GDP growth, where we grew for 0:16:31.800 --> 0:16:34.240 twenty years at eight percent a year. That's not going 0:16:34.280 --> 0:16:36.240 to happen right now. So we have all the kinds 0:16:36.240 --> 0:16:38.200 of other outcomes. But you know, I was listening to 0:16:38.200 --> 0:16:40.680 your conversation earlier about the potential for a recession, and 0:16:40.720 --> 0:16:43.080 I think you still have this enormous wealth effect. So 0:16:43.320 --> 0:16:45.400 even though we may enter into a recession, we can't 0:16:45.400 --> 0:16:48.040 ignore the fact that everyone has so much money. Wealth 0:16:48.080 --> 0:16:50.560 to GDP is near record levels in the US. Well, 0:16:50.640 --> 0:16:53.280 Danielle is saying that that's pretty skewed, like the wealthy 0:16:53.360 --> 0:16:56.040 have so much money. That's true. That is true. So 0:16:56.400 --> 0:16:57.760 you know, I think that it's going to be a 0:16:57.800 --> 0:17:01.040 grind down, but longer term, looking at where valuations are, 0:17:01.120 --> 0:17:03.480 I think ultimately it's not a great story, So we're 0:17:03.520 --> 0:17:06.840 still looking at potentially you know, I was just listening 0:17:06.920 --> 0:17:09.760 to clip again of Mike Wilson. We might agree with 0:17:09.840 --> 0:17:11.600 him sort of over the next twelve to eighteen months 0:17:11.600 --> 0:17:13.840 where we think we've got a tough slog, big baby. 0:17:14.280 --> 0:17:16.119 So last year you were in so much cash, do 0:17:16.160 --> 0:17:20.880 you envision kind of getting back to anything close to that? Yeah? Totally, 0:17:21.240 --> 0:17:24.280 And what would push you there? Just were we used 0:17:24.560 --> 0:17:27.440 We follow trends. So the reason we're in is because 0:17:27.440 --> 0:17:28.960 the market has begun to move up, and so we 0:17:29.119 --> 0:17:30.840 try to buy in in the early stages based on 0:17:30.880 --> 0:17:34.000 how our systems are built and so then that allows 0:17:34.080 --> 0:17:36.119 us to participate. But if the market turns down, I 0:17:36.160 --> 0:17:38.200 was just looking now, if the market moves down only 0:17:38.240 --> 0:17:40.520 about like about one and a half percent, we're going 0:17:40.560 --> 0:17:42.640 to sell range again. So it won't take a lot 0:17:42.720 --> 0:17:45.040 for us to sell. Sometimes there are false signals right 0:17:45.080 --> 0:17:47.119 where we can come out and then back in again. 0:17:47.359 --> 0:17:51.000 But the key is if that happens, you know, the 0:17:51.040 --> 0:17:53.760 world is long, right, the world is betting on fam 0:17:53.840 --> 0:17:56.119 of French they're scared to do anything but just be 0:17:56.240 --> 0:17:59.720 in the markets. But most investors they really can't afford that. Oh, 0:17:59.800 --> 0:18:02.040 the mean works. They need to worry about their own 0:18:02.040 --> 0:18:06.359 specific lives and address risk, all right, So with that 0:18:06.480 --> 0:18:10.840 in mind, other than managed risk, what else are you buying? 0:18:10.960 --> 0:18:13.120 What else do you want to own right now? Well, 0:18:13.200 --> 0:18:16.200 so we are specialists in just owning indo season figuring 0:18:16.200 --> 0:18:19.159 out ways to hedge that risk, right, So we do 0:18:19.200 --> 0:18:22.800 have a strategy that So basically MRSK is your wheel 0:18:22.840 --> 0:18:25.240 house MRSK or we have you know, a couple of 0:18:25.240 --> 0:18:29.159 other funds THHLGX, THHSMX funds. Those are our trend following 0:18:29.200 --> 0:18:32.760 algo funds and those will move into cash inside the 0:18:32.760 --> 0:18:35.520 funds themselves. So we just like right now being in 0:18:35.560 --> 0:18:38.200 the markets. I mean, you know, we thought small cap 0:18:38.280 --> 0:18:39.680 was going to do well. Now we've seen that sort 0:18:39.720 --> 0:18:41.720 of fall off a ledge recently, so we haven't seen that. 0:18:41.800 --> 0:18:44.080 But just own the market broadly right now, we think. 0:18:44.320 --> 0:18:47.400 But the most important advice I would give to investors 0:18:47.560 --> 0:18:49.159 is that you need to figure out a way to 0:18:49.160 --> 0:18:51.920 address contingencies. Right don't bet for markets are going to 0:18:51.960 --> 0:18:54.240 move higher or betas are going to move lower. Bet 0:18:54.760 --> 0:18:56.680 since stay with the markets, but figure out a way 0:18:56.680 --> 0:18:59.680 to address the possibility. We think it's a significant possibility 0:19:00.040 --> 0:19:03.080 that markets are going to move lower. So do you 0:19:03.119 --> 0:19:05.639 even care? Given you your style and kind of the 0:19:05.680 --> 0:19:07.560 way you guys do things, you care about earnings, you're 0:19:07.560 --> 0:19:09.560 gonna pay attention to that stuff. Yeah, yeah, Well we 0:19:09.920 --> 0:19:14.040 not actually not really no, because we're just gonna follow 0:19:14.080 --> 0:19:16.520 trends one way or another. We keep hoping someone's going 0:19:16.560 --> 0:19:20.439 to care about earnings. Really does in terms of the 0:19:20.440 --> 0:19:23.639 ETF business, I mean we've seen it now grow to 0:19:24.040 --> 0:19:27.679 what ten trillion dollars globally, I mean across the industry, right, 0:19:28.400 --> 0:19:32.360 and people will continue to convert mutual funds into ets, 0:19:32.480 --> 0:19:34.560 people continue to bring out new products. Last year was 0:19:34.600 --> 0:19:37.159 amazing and they're still You've just brought out a new 0:19:37.160 --> 0:19:40.480 product yourself. How do you see this market growing? Yeah, 0:19:40.520 --> 0:19:42.160 I just think that ETFs are going to grow because 0:19:42.160 --> 0:19:44.119 they have lower expense racers. There's a lot of stuff 0:19:44.160 --> 0:19:46.840 that goes on with some of these custodians, big custodians 0:19:46.840 --> 0:19:49.960 where they charge sort of users fees to mutual funds 0:19:49.960 --> 0:19:51.840 that live there. So there's incentive to convert over to 0:19:51.840 --> 0:19:54.040 ETFs and avoid all those fees. Plus they can trade 0:19:54.040 --> 0:19:55.760 them for free. So I think that all is just 0:19:55.760 --> 0:19:57.760 going to continue to the movement over there. But the 0:19:57.840 --> 0:19:59.720