WEBVTT - Bloomberg Intelligence: Tesla Stokes Layoff Fears, NYCB Talks 0:00:01.440 --> 0:00:05.320 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:00:05.400 --> 0:00:08.480 weekdays at ten am Eastern on EFFL car playing Android 0:00:08.520 --> 0:00:11.600 Auto with the Bloomberg Business app. Listen on demand wherever 0:00:11.680 --> 0:00:15.520 you get your podcasts, or watch us live on YouTube. 0:00:16.640 --> 0:00:19.599 Tesla That's dock down by three tenths of one percent 0:00:19.640 --> 0:00:21.640 a great scoop by Dana Hall and Ed Ludlow on 0:00:21.680 --> 0:00:24.560 our Bloomberg News team talk about how staff and Tesla 0:00:24.600 --> 0:00:28.560 are bracing for potential job cuts. Apparently, managers were asked 0:00:28.680 --> 0:00:32.240 to affirm whether each of their employees position is critical. 0:00:32.520 --> 0:00:33.280 That feels good. 0:00:33.760 --> 0:00:35.320 Yeah, that always feels. 0:00:35.040 --> 0:00:37.760 Really great when you hear that. Joining us now is 0:00:37.800 --> 0:00:42.200 Steve Mann, Bloomberg Intelligence, Global Autos and Industrials research analyst Hasteve. 0:00:42.240 --> 0:00:44.000 What did you make out of the scoop from Bloomberg? 0:00:44.920 --> 0:00:47.200 Well, I think, I mean, job cuts are never good 0:00:47.280 --> 0:00:50.000 for the employees, but I think the investors will probably 0:00:50.040 --> 0:00:53.519 look at it positively because the stock's been down like 0:00:53.560 --> 0:00:57.000 twelve percent since their last earnings call in thirty percent 0:00:57.200 --> 0:01:00.840 year today, and that's all because as you know, slowing 0:01:00.880 --> 0:01:04.720 EV sales price cuts, so the company needs to do 0:01:04.800 --> 0:01:08.000 something to you know, to address them of the short 0:01:08.080 --> 0:01:09.920 term challenges they're facing. 0:01:10.720 --> 0:01:13.160 So when I see news like this, it's it really 0:01:13.160 --> 0:01:16.679 makes me think, Steve, that maybe they see something fundamental 0:01:16.880 --> 0:01:19.759 in their business such that they have to look at 0:01:19.800 --> 0:01:24.039 a big fixed cost like people, what's the company saying 0:01:24.040 --> 0:01:26.920 these days about where they see well, I guess demand. 0:01:28.040 --> 0:01:30.479 Well, well that's a good question. I think you got 0:01:30.520 --> 0:01:33.919 two questions there. First of all, fundamentally, you know, they've 0:01:33.959 --> 0:01:37.880 done a lot of price cutting, you know, in their operations, 0:01:38.600 --> 0:01:42.800 in an administrative side of things, in their manufacturing, so 0:01:42.840 --> 0:01:45.880 they're naturally they actually they're naturally kind of out of 0:01:46.600 --> 0:01:49.160 They plucked out all the low hanging fruits. There's not 0:01:49.280 --> 0:01:53.559 much to cut anymore other than looking at their human resources, 0:01:53.560 --> 0:01:57.360 and that's what they're doing at this time. Now. Obviously 0:01:58.560 --> 0:02:01.200 you know you don't want to cut, but I think 0:02:01.360 --> 0:02:04.160 they have to. If you look at forged earnings call 0:02:04.640 --> 0:02:09.919 last night, the market is really brutal. They've the margins 0:02:10.000 --> 0:02:13.320 was down, like was that negative ninety eight percent for 0:02:13.320 --> 0:02:16.880 Ford's EV business. That's worse than their third quarter. So 0:02:17.760 --> 0:02:22.000 from that you can see the whole entire EV market 0:02:22.160 --> 0:02:27.320 is still facing you know, price cuts, slower demand, and 0:02:27.320 --> 0:02:29.400 that's you know, I think that's what Tessa is trying 0:02:29.400 --> 0:02:31.760 to dress for twenty twenty four. 0:02:31.919 --> 0:02:34.280 Hey, Steve, do we have an idea of when the 0:02:34.320 --> 0:02:37.600 trough might happen for EV's, when we is just going 0:02:37.680 --> 0:02:39.519 to take cheaper ones or is it going to be 0:02:39.560 --> 0:02:42.399 actually more hybrid and that trough be really pushed out. 0:02:43.320 --> 0:02:47.600 I think hybrid is a good kind of fill in 0:02:47.680 --> 0:02:52.000 between now and when you know EV's can take off. 0:02:52.840 --> 0:02:56.280 Our view is actually, you know, around twenty twenty six, 0:02:56.800 --> 0:03:01.200 because I think that's when prices cost of manufacturing evs 0:03:01.680 --> 0:03:05.680 will come down, you know, with localization of battery production, 0:03:06.400 --> 0:03:11.160 more EV models out there, and everyone, every automaker right 0:03:11.200 --> 0:03:15.280 now is talking about the second generation of EV vehicles, 0:03:15.280 --> 0:03:18.760 the third generation of EV vehicles. They're actually designed on 0:03:18.800 --> 0:03:22.880 a very different platform than the ICE vehicles, the internal 0:03:22.880 --> 0:03:28.520 combustion engine vehicles that is supposed to streamline production, cut parts, 0:03:29.000 --> 0:03:31.959 cut the number of parts, and hopefully drive costs down 0:03:32.000 --> 0:03:35.520 and make it more affordable for the consumers. 0:03:35.160 --> 0:03:39.880 So it's a twenty sixth story. Will the charging infrastructure 0:03:40.320 --> 0:03:41.720 also be a twenty six story? 0:03:43.040 --> 0:03:46.520 Well, no, there are some spending at the moment to 0:03:46.600 --> 0:03:53.840 increase charging infrastructure, but I mean that's another bottleneck that 0:03:54.360 --> 0:03:57.440 the industry is facing. I think, you know, out on 0:03:57.520 --> 0:03:59.920 the West coast, out in the East coast, charging in 0:04:00.120 --> 0:04:05.080 structure are not of a big concern, but Central America is, 0:04:05.200 --> 0:04:06.960 So that's where the focus is. I think in the 0:04:07.000 --> 0:04:08.880 next couple of years you really built up the charging 0:04:09.280 --> 0:04:11.640 infrastructure in that part of the country. 0:04:11.840 --> 0:04:14.720 How many charging units do you have at the Princeton 0:04:14.760 --> 0:04:16.280 campus at Bloomberg right now? 0:04:17.279 --> 0:04:19.800 Oh, it's It's interesting. If you go out to the 0:04:19.839 --> 0:04:23.559 parking lot here, you think it's a Tesla dealership out here, 0:04:24.640 --> 0:04:29.160 there's probably you know, fifty forty. 0:04:29.000 --> 0:04:31.479 Fifty people have the cars, like are the Tesla's actually 0:04:31.480 --> 0:04:33.080 being plugged in or ev oh. 0:04:33.040 --> 0:04:36.080 Yeah, oh yeah, oh yeah. You'll see mostly Tesla. You'll 0:04:36.080 --> 0:04:38.840 see a couple of Volkswagen, a couple of Volvols. 0:04:38.960 --> 0:04:41.279 But because when I was that's why when I was 0:04:41.320 --> 0:04:43.440 at the Princeton campus, Steve, you know, I guess I 0:04:43.440 --> 0:04:46.400 haven't been there since before the pandemic. It's called it 0:04:46.440 --> 0:04:49.640 five years. Five years we had two. Now you're telling 0:04:49.720 --> 0:04:52.640 we have fifty. That is a good barometer. 0:04:52.760 --> 0:04:53.080 I think. 0:04:53.480 --> 0:04:55.520 I think Bloomberg is usually on the cutting edge of 0:04:55.520 --> 0:04:57.279 this stuff, but still interesting. 0:04:57.360 --> 0:04:58.880 Yeah, and I wonder like, did you get the idea 0:04:58.880 --> 0:05:02.200 that the charging was there, therefore you brought the EV's 0:05:02.800 --> 0:05:06.080 or it's just a clientele that has the EV's. Unfair question, 0:05:06.279 --> 0:05:07.000 But like, what do. 0:05:06.960 --> 0:05:09.880 You think that's a good question. It's all about the 0:05:09.880 --> 0:05:14.159 cost of ownership. I think you're right, Alex. Having the 0:05:14.240 --> 0:05:17.760 charging stations here make it convenient for people to charge 0:05:17.800 --> 0:05:21.240 and really cut their monthly costs. Right, there's no fuel 0:05:21.279 --> 0:05:25.920 costs anymore with the with the evs, and but it's 0:05:26.000 --> 0:05:27.400 all by the cost of ownership. 0:05:27.400 --> 0:05:28.000 It's free. 0:05:28.240 --> 0:05:32.600 The energy should be charging you people down there for this. 0:05:33.120 --> 0:05:36.040 They got I mean they got the solar panels up back, they. 0:05:35.880 --> 0:05:38.279 Got free launch, the literally free launch. 0:05:38.360 --> 0:05:40.200 It's awesome down all right, Steve, thanks so much for 0:05:40.240 --> 0:05:43.560 joining us. Steve Manny's a global autos industrials research he's 0:05:43.560 --> 0:05:46.479 down there in Bloomberg in our Princeton office, which is 0:05:46.520 --> 0:05:47.040 really cool. 0:05:47.160 --> 0:05:49.479 That's you know, that was one of the Bloomberg's first offices. 0:05:49.800 --> 0:05:50.120 Down there. 0:05:50.120 --> 0:05:51.720 They had the global data folks and I don't know 0:05:51.720 --> 0:05:53.200 how many people we have that there with three thousand 0:05:53.279 --> 0:05:56.680 maybe maybe more do some awesome work down there, and 0:05:56.680 --> 0:05:57.599 that's where a lot of. 0:05:57.600 --> 0:06:00.040 The b I folks, and also all the EV's apparently. 0:06:00.000 --> 0:06:01.719 Carent all the EV's fifty. That's pretty cool. 0:06:03.200 --> 0:06:07.080 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:06:07.160 --> 0:06:10.680 weekdays at ten am Eastern on applecard Play and Android 0:06:10.720 --> 0:06:13.479 Otto with the Bloomberg Business app. You can also listen 0:06:13.600 --> 0:06:16.680 live on Amazon Alexa from our flagship New York station. 0:06:17.080 --> 0:06:20.800 Just say Alexa play Bloomberg eleven thirty. 0:06:21.440 --> 0:06:22.440 It's got a Hermit chen here. 0:06:22.440 --> 0:06:24.359 He's a senior and was covering the regional banks Hermit 0:06:24.960 --> 0:06:27.360 New York Community Bank. That's the story of I guess 0:06:27.360 --> 0:06:30.080 the last several days. What's the current status of that? 0:06:30.200 --> 0:06:33.240 Is that something that bank investors in general have to 0:06:33.279 --> 0:06:35.200 worry about regional banks in this country? 0:06:35.360 --> 0:06:40.240 Sure, I think it's definitely brought to the forefront worries 0:06:40.279 --> 0:06:44.400 about commercial real estate in particular. But really New York 0:06:44.400 --> 0:06:48.400 Community's issues are a bit aiosyncratic because they just crossed 0:06:48.400 --> 0:06:51.480 over that one hundred billion dollar threshold that requires tougher 0:06:51.520 --> 0:06:55.839 regulatory scrutiny. And New York Community is also the dominant 0:06:55.920 --> 0:06:59.600 lender in the rent regulated apartment lending area here in 0:06:59.640 --> 0:07:03.720 New York Work, so not much read across to other regionals. 0:07:03.960 --> 0:07:06.479 Well, we also had headline that they want to sell 0:07:06.520 --> 0:07:09.280 some of their RV loans and offloads some mortgage risk. 0:07:09.320 --> 0:07:10.840 Are there going to be the buyers for that. 0:07:11.320 --> 0:07:13.880 Right, so that that's going to be an issue for 0:07:14.080 --> 0:07:15.800 the records. 0:07:15.680 --> 0:07:18.120 The buyers at the right price, buyers at the right price. 0:07:18.160 --> 0:07:21.400 So for newer community what these two actions are really 0:07:22.680 --> 0:07:26.360 a bid to improve their capital ratios. They've talked about 0:07:27.040 --> 0:07:29.560 lifting their CT one ratio to ten percent by the 0:07:29.680 --> 0:07:31.800 end of the year, which would be more in line 0:07:31.840 --> 0:07:35.600 with their larger regional baking peers. And so the synthetic 0:07:35.640 --> 0:07:40.600 transaction to add insurance on their residential mortgage loans and 0:07:40.720 --> 0:07:44.360 offload some RV loans is designed to potentially do that. 0:07:45.320 --> 0:07:48.720 R V loans, now, these are recreational vehicle loans. John 0:07:48.760 --> 0:07:52.040 Tucker thought there's some technical arcane these. 0:07:52.600 --> 0:07:54.720 We're sure to John Tucker, that was me. I was 0:07:54.720 --> 0:07:56.680 the one who was like, is this a specialized sort 0:07:56.680 --> 0:07:57.080 of loan? 0:07:57.760 --> 0:07:59.080 So is that a thing? 0:07:59.480 --> 0:08:02.480 Yeah, So that's the thing that some regional banks actually do, 0:08:02.640 --> 0:08:04.800 and it's it's a lucrative business. You can think of 0:08:04.800 --> 0:08:07.760 as sort of like a an auto loan, but just 0:08:07.760 --> 0:08:10.680 for r v's and banks like M and T and 0:08:10.760 --> 0:08:12.360 Bank ozk Uh. 0:08:15.920 --> 0:08:17.000 These are RV lenders. 0:08:17.520 --> 0:08:20.400 Well, also, remember that RVs were super hot in twenty twenty. 0:08:20.440 --> 0:08:22.800 Everyone wanted them. You couldn't like make them fast enough 0:08:22.840 --> 0:08:25.400 because that was the only vacation you could have get 0:08:25.400 --> 0:08:26.840 in your RV go around. 0:08:27.160 --> 0:08:29.440 So that's right, what's going to be the open road? 0:08:29.600 --> 0:08:31.960 Exactly what's going to be next for this company? Because 0:08:32.040 --> 0:08:34.800 you could make an argument that they're doing everything right 0:08:34.880 --> 0:08:36.520 and I'm putting that in quotes in terms of like 0:08:36.600 --> 0:08:39.720 updating investors, getting their books in order, et cetera. So 0:08:39.960 --> 0:08:42.559 what do they do now that they right? 0:08:42.800 --> 0:08:46.959 They're trying to control the narrative, But the market's saying 0:08:47.080 --> 0:08:51.600 something else entirely where where the market's concerned that even 0:08:51.600 --> 0:08:54.400 though liquidity is in a pretty good shape and deposits 0:08:54.440 --> 0:08:56.960 are actually up, but since the end of the year, 0:08:57.520 --> 0:08:59.880 are they going to be able to generate enough earn 0:09:00.440 --> 0:09:02.760 to meet their capital ratios? And how are they going 0:09:02.840 --> 0:09:06.319 to fare in the upcoming stress test? When they did that, 0:09:07.200 --> 0:09:08.960 if you step back and when you look at what 0:09:09.000 --> 0:09:12.400 they did after they announced the signature transaction last year, 0:09:12.440 --> 0:09:14.679 when they were viewed as a savior, they could have 0:09:14.760 --> 0:09:17.360 been I guess maybe a bit more aggressive in building 0:09:17.440 --> 0:09:20.400 up their capital and liquidity back then, so they're not 0:09:20.480 --> 0:09:23.920 in a pickle now. But that's really spilled milk at 0:09:23.920 --> 0:09:24.520 this point. 0:09:24.760 --> 0:09:28.360 So one of the themes I'm still in the back 0:09:28.400 --> 0:09:30.000 of my mind if I were a bank investors, I 0:09:30.160 --> 0:09:33.560 just don't know the magnitude of some of these commercial 0:09:33.559 --> 0:09:34.599 real estate exposures. 0:09:35.000 --> 0:09:36.160 I believe in the past you've. 0:09:36.040 --> 0:09:39.680 Said for most lenders, it's not that big a deal, is. 0:09:39.679 --> 0:09:43.840 That right, Well, we're gonna talk specifically about office commercial 0:09:43.880 --> 0:09:47.199 real estate, where that's that's really the potential boogeyman here. 0:09:48.640 --> 0:09:52.959 On average, across our research coverage, which covers the largest 0:09:53.200 --> 0:09:57.080 nineteen twenty regional banks, it's two percent of their total 0:09:57.120 --> 0:10:01.440 low books, so it's actually really small, advantageable and you 0:10:01.679 --> 0:10:04.440 can and then on top of that, you have pretty 0:10:04.679 --> 0:10:07.960 conservative underwriting, and they've they know this is a risk, 0:10:08.000 --> 0:10:09.800 and the regulators know this is a risk, so the 0:10:09.840 --> 0:10:13.040 banks have already started to build up reserves to protect 0:10:13.080 --> 0:10:15.839 against potential losses. So put that all together, it just 0:10:15.840 --> 0:10:17.680 seems like it's going to be a manageable issue. But 0:10:17.720 --> 0:10:19.720 you're going to see losses eventually. 0:10:19.480 --> 0:10:21.480 So can this bank stay in business. 0:10:21.760 --> 0:10:22.880 That's going to be an open question. 0:10:23.040 --> 0:10:23.120 Uh. 0:10:23.760 --> 0:10:27.040 They've tried to put a very encouraging view out there 0:10:27.320 --> 0:10:31.000 on their earning, on their management call earlier this morning, 0:10:31.240 --> 0:10:35.400 talking about the strength of deposit franchise and you're not 0:10:35.440 --> 0:10:38.520 seeing deposits flow out of the branches, and they have 0:10:38.720 --> 0:10:41.959 a boost of liquidity. So they're they're what they need 0:10:42.040 --> 0:10:44.640 is time and it remains to be seen if the 0:10:44.640 --> 0:10:46.800 market's going to give them time to build up their capital. 0:10:47.640 --> 0:10:49.440 I want some m and A. I want some business. 0:10:49.520 --> 0:10:51.120 I want to come in here every Monday morning and 0:10:51.120 --> 0:10:53.160 see company A, bank A buying bank B. 0:10:53.480 --> 0:10:55.240 But that's what they did. And look what they're in now. 0:10:58.920 --> 0:11:00.640 Careful what you wish? What are we going to see? 0:11:01.920 --> 0:11:07.680 You know, this whole issue surrounding your community. Where they 0:11:08.160 --> 0:11:11.920 came in, helped out the FDIC and the regulators and 0:11:12.000 --> 0:11:16.400 really helped out the banking system by taking over signature, 0:11:16.760 --> 0:11:18.760 and now they're in this pickle where they have to 0:11:18.800 --> 0:11:23.000 adhere to these tougher regulations clearing that one hundred billion mark. 0:11:23.320 --> 0:11:25.280 I don't think any other bank that's going to be 0:11:25.280 --> 0:11:28.720 in this same situation wants to jump into that same scenario. 0:11:28.800 --> 0:11:30.720 Can I answer a quse stupid question. Is there a 0:11:30.760 --> 0:11:33.640 stock price that we need to be worried about? Is 0:11:33.679 --> 0:11:37.079 it three seventy well zero, but three seventy nine right now? 0:11:37.160 --> 0:11:38.880 Down another today? 0:11:40.200 --> 0:11:45.720 I think if the market pressure continues, it's going to 0:11:45.840 --> 0:11:49.280 be something where where the regulators take a more focus 0:11:49.440 --> 0:11:52.920 view and maybe be more forceful with what's next. 0:11:53.040 --> 0:11:54.440 But you have to wonder too. You know they were 0:11:54.480 --> 0:11:57.080 able to do that with SVBN First Republic, right, but 0:11:57.200 --> 0:11:59.760 now look at what happened with this bank which boughts 0:11:59.840 --> 0:12:01.840 of first of public access because of that? So what 0:12:01.840 --> 0:12:04.120 will regulators do to that? 0:12:04.280 --> 0:12:04.520 Right? 0:12:04.600 --> 0:12:07.319 Hey, Jamie, Jamie, sorry to ask, but I got another 0:12:07.440 --> 0:12:08.520 favor you got to do me. 0:12:08.520 --> 0:12:10.240 For here start a body down at St. 0:12:10.280 --> 0:12:12.559 Barts, but can you go over and buy you in 0:12:12.559 --> 0:12:14.640 your community bank? Hermit Chap, Thank you so much. We 0:12:14.720 --> 0:12:17.520 appreciate that, Hermit cham He's a senior analys He covers 0:12:17.520 --> 0:12:20.240 the regional banks in the US Force. It's been a 0:12:20.280 --> 0:12:22.920 go to source here really over the last you know, 0:12:23.400 --> 0:12:25.000 twelve to eighteen months as we kind of figure out 0:12:25.000 --> 0:12:26.960 what's happening with the regional bank business. 0:12:28.440 --> 0:12:32.319 You're listening to the Bloomberg Intelligence podcast Catch Us live 0:12:32.400 --> 0:12:35.120 weekdays at ten am Eastern on Apple car Playing and 0:12:35.240 --> 0:12:38.120 broud Otto with the Bloomberg Business app. Listen on demand 0:12:38.160 --> 0:12:42.480 wherever you get your podcasts, or watch us live on YouTube. 0:12:44.000 --> 0:12:45.440 All right, let's get a sense of what we're doing 0:12:45.440 --> 0:12:47.760 here with this market's We're about halfway through the earnings 0:12:47.800 --> 0:12:51.120 for the quarter. We've got to fed that presumably is 0:12:51.160 --> 0:12:53.000 in the mood of rate cutting. 0:12:53.280 --> 0:12:54.080 So what do we do here? 0:12:54.160 --> 0:12:56.960 Couch Schlife joins and she's a chief investment officer at 0:12:56.960 --> 0:13:00.439 Bimo Family Offices. I remember when they were Bank of Montreal, 0:13:00.480 --> 0:13:02.960 but some I'm sure you know consultant came in and 0:13:02.960 --> 0:13:06.079 said bemo and shorten it to BEMO. So Pang of 0:13:06.120 --> 0:13:08.120 Montreal bought a lot of my loans that I originated 0:13:08.120 --> 0:13:10.640 at Chase, So we love those folks. Carol, what are 0:13:10.679 --> 0:13:12.760 we doing with this market here? I had a great 0:13:12.960 --> 0:13:15.079 November December. I'm not sure if everybody else did, but 0:13:15.120 --> 0:13:17.640 I had a great period there. I'm wondering what do 0:13:17.679 --> 0:13:18.880 I do now in twenty twenty four. 0:13:19.880 --> 0:13:24.679 Yeah, November and December were definitely fun periods, especially coming 0:13:25.000 --> 0:13:29.360 after October. But we think the market's got a little 0:13:29.400 --> 0:13:32.240 over their skis with exuberance about how soon and how 0:13:32.280 --> 0:13:35.319 often the FED was going to cut this year, and 0:13:35.400 --> 0:13:39.040 so the some rationalization of that coming into this year 0:13:39.080 --> 0:13:40.640 is actually makes a lot of sense. 0:13:40.760 --> 0:13:43.320 But our approach really hasn't changed much. 0:13:43.360 --> 0:13:45.760 We actually were in the soft landing camp all of 0:13:45.880 --> 0:13:48.040 last year, from the beginning of the year on, thinking 0:13:48.040 --> 0:13:50.840 the FED was going to be able to navigate both 0:13:50.960 --> 0:13:55.040 keeping the employment and the economy humming along while we 0:13:55.040 --> 0:13:59.800 were seeing inflation straighten itself out. But coming into this 0:14:00.080 --> 0:14:03.040 you're keeping that balanced approach to risk where you're getting 0:14:03.040 --> 0:14:05.880 paid to invest in some bonds, so having that portion 0:14:05.960 --> 0:14:08.880 of your portfolio maybe out of cash into some of 0:14:08.880 --> 0:14:12.400 those higher yielding, shortened intermediate term bonds, but then also 0:14:12.720 --> 0:14:16.400 not wanting to back away from a growth oriented sort 0:14:16.440 --> 0:14:19.240 of We think the economy is in decent shape. We 0:14:19.280 --> 0:14:25.600 think you'll see a broadening like you saw in November 0:14:25.680 --> 0:14:29.280 December last year. The most encouraging thing about that period 0:14:29.360 --> 0:14:31.960 was seeing that broadening of the market, the participation. 0:14:32.520 --> 0:14:33.520 You narrowed it up. 0:14:33.480 --> 0:14:36.240 On the good days here as we've had earnings from 0:14:36.280 --> 0:14:39.280 the Magnificent seven or five or two as you were 0:14:39.320 --> 0:14:43.840 talking earlier, but bringing that through and continuing to see 0:14:43.880 --> 0:14:47.080 more participation in mid and small cap will really be necessary. 0:14:47.160 --> 0:14:49.680 And we think too, Carol, But I guess I wonder 0:14:49.800 --> 0:14:51.680 when we get there, because it doesn't seem like a 0:14:51.720 --> 0:14:55.640 really no one's going to sell right now? That feels clear, right, 0:14:55.680 --> 0:14:58.600 The hurdle to cell feels really high. But if I 0:14:58.600 --> 0:15:01.440 have money in a money market fund, the hurdle to 0:15:01.520 --> 0:15:04.360 then buy here feels also really high. So what am 0:15:04.360 --> 0:15:05.120 I supposed to do? 0:15:06.080 --> 0:15:07.080 Yeah, it does. 0:15:07.200 --> 0:15:09.800 It feels high until we're looking back and the Fed's 0:15:09.840 --> 0:15:11.560 done a couple cuts and all of a sudden, you're 0:15:11.600 --> 0:15:14.240 five percent in cash is three three and a half percent. 0:15:14.440 --> 0:15:16.000 So I need to buy small cabs now. 0:15:17.440 --> 0:15:20.600 Is smaller mid cap in terms of more broadly, and 0:15:20.640 --> 0:15:22.960 there's ways to do it in a passive way. There's 0:15:23.000 --> 0:15:26.160 ways to look through. You know, are there interesting sectors 0:15:26.200 --> 0:15:29.800 or industries or actively managed ETFs that you want to 0:15:29.800 --> 0:15:33.640 be part of. There's some secular stories going on out there, 0:15:33.800 --> 0:15:37.440 as it relates to artificial intelligence, as it relates to 0:15:38.280 --> 0:15:39.680 infrastructure rebuild. 0:15:40.040 --> 0:15:42.680 There's some active ETFs. 0:15:41.840 --> 0:15:47.160 That follow those those segments, if you will, And so 0:15:47.240 --> 0:15:49.920 there's interesting ways to play it. And then again too, 0:15:50.000 --> 0:15:53.040 even if you have passive s and P exposure and 0:15:53.080 --> 0:15:57.640 dollar cost average into that you're getting participation de facto 0:15:57.840 --> 0:16:02.760 by the overweight in those major indexes to technology in 0:16:02.760 --> 0:16:04.840 the United States here in particular. 0:16:04.880 --> 0:16:07.920 So cal when when you talk to your your clients 0:16:07.920 --> 0:16:11.880 at BIMO Family Office, the the you know, the financial 0:16:11.920 --> 0:16:16.480 consultants at BIMO, what's the ETF allocation. 0:16:16.040 --> 0:16:16.400 For you guys? 0:16:16.440 --> 0:16:18.920 How often do you say do you recommend an ETF 0:16:18.960 --> 0:16:21.800 to get at you know, maybe just exposure to fixed 0:16:21.840 --> 0:16:23.960 income or just different asset classes. 0:16:24.000 --> 0:16:25.880 So how important are ETFs? 0:16:26.880 --> 0:16:30.920 Well, ETFs play a role, so do active and passive. 0:16:30.960 --> 0:16:36.800 We also have passively managed tax or passively managed tax 0:16:36.840 --> 0:16:41.040 efficient strategies where we can do separate accounts. So there's 0:16:41.080 --> 0:16:43.120 a variety. It depends on the size of the account. 0:16:43.120 --> 0:16:46.120 It depends on the inclinations. If we're going to take 0:16:46.360 --> 0:16:50.560 and say, adopt an exposure to artificial intelligence, an extra 0:16:50.640 --> 0:16:54.560 exposure to Japan or artificial intelligence, we might take a 0:16:54.640 --> 0:16:59.040 three to five percent position in a particular ETF or 0:16:59.040 --> 0:17:03.360 a suite of ETF. If the account is the such 0:17:03.400 --> 0:17:05.800 a size that we want to use ETFs to deploy 0:17:05.840 --> 0:17:09.560 some short, intermediate, long term bonds, the whole position might 0:17:09.600 --> 0:17:12.120 be in a variety of ETFs, and they would most 0:17:12.160 --> 0:17:13.359 likely be passive. 0:17:13.000 --> 0:17:16.040 There what do you really hate right now? Like what 0:17:16.080 --> 0:17:17.000 can you not touch? 0:17:18.200 --> 0:17:19.240 What could we not touch? 0:17:19.520 --> 0:17:23.120 Yeah, I'm not sure depending on the client, that there's 0:17:23.400 --> 0:17:26.800 anything we really hate, if you will, that's part of 0:17:26.840 --> 0:17:30.520 being balanced. We're going to be underweight some certain things. 0:17:30.560 --> 0:17:37.160 Emerging markets, develop markets in Europe where underweight those relative 0:17:37.200 --> 0:17:39.240 to relative to. 0:17:39.480 --> 0:17:41.919 The overweight we've had in the United States. 0:17:42.280 --> 0:17:46.760 Sector Wise, it's tough because there's a lot of interesting 0:17:46.840 --> 0:17:50.399 things going on, especially from a secular build standpoint in 0:17:50.440 --> 0:17:53.439 the United States, and there's a lot of things that 0:17:53.480 --> 0:17:58.480 are overlooked and unloved. We don't hate technology, but clearly 0:17:58.560 --> 0:18:01.000 that's where all the emphasis has been. But there's a 0:18:01.000 --> 0:18:04.760 lot of things like industrial and infrastructure companies where when 0:18:04.800 --> 0:18:07.000 you look at those as sectors, they're only ten or 0:18:07.040 --> 0:18:09.440 twelve percent of the S and P. And we think 0:18:09.480 --> 0:18:13.720 you'll see that grow as we reindustrialize and bring manufacturing 0:18:13.760 --> 0:18:16.080 back here, as we build out the grid. You mentioned 0:18:16.480 --> 0:18:20.080 having the green and the hook, you need to get 0:18:20.119 --> 0:18:24.119 it on the grid. Also in places where take Minnesota, 0:18:24.160 --> 0:18:27.679 where you've got the western part of the state is 0:18:27.720 --> 0:18:30.800 where the solar can be built, but it's not attached 0:18:30.840 --> 0:18:32.879 to the grid, so they actually have to build hundreds 0:18:32.920 --> 0:18:35.439 of miles of transmission power just to get it to 0:18:35.480 --> 0:18:35.919 the grid. 0:18:36.119 --> 0:18:37.760 To be fair, there is like a name for that thing, 0:18:38.000 --> 0:18:40.240 that thing, but I just know the thing that you 0:18:40.280 --> 0:18:41.359 need to plug into the grid. 0:18:41.560 --> 0:18:43.680 But there is a need a plugging things. 0:18:43.720 --> 0:18:46.280 It's the pluggy thing. We'll just coin that right here. 0:18:46.480 --> 0:18:49.359 So, Carol, we're about halfway through earnings. Here is anything 0:18:49.440 --> 0:18:50.720 kind of jumping out at you? 0:18:50.760 --> 0:18:50.920 Here? 0:18:50.960 --> 0:18:51.159 Are you? 0:18:51.240 --> 0:18:53.119 Are you okay with the earnings? Do you think we're. 0:18:53.000 --> 0:18:56.000 Seeing some cracks maybe in earnings power out there? 0:18:56.720 --> 0:18:58.399 I think the thing that jumps out at me on 0:18:58.480 --> 0:19:01.679 earnings is that you can't and you can't broad brushstroke 0:19:01.760 --> 0:19:04.199 even in an entire sector. There's been a lot of 0:19:04.240 --> 0:19:07.119 dispersion in those sectors about the haves and the have nots. 0:19:07.160 --> 0:19:10.680 There's also been a lot of dispersion in how investors 0:19:10.720 --> 0:19:13.359 are treating them because a company might beat on the 0:19:13.359 --> 0:19:15.879 top and the bottom line, and they nail the stock 0:19:15.960 --> 0:19:18.879 because they don't like what the CFOs said and the 0:19:18.920 --> 0:19:23.920 conference call, and so it's really it feels and smells 0:19:23.960 --> 0:19:28.440 like we're back into a stock pickers market. We're actively managed, 0:19:28.520 --> 0:19:31.840 should have an advantage if they've got deep and broad research, 0:19:31.880 --> 0:19:33.879 and so that's one of the things that strikes me, 0:19:34.000 --> 0:19:36.320 because overall earnings are pretty reasonable. 0:19:36.720 --> 0:19:38.760 They're not as exuberant. 0:19:38.640 --> 0:19:40.760 On the beats on the top and bottom line as 0:19:40.800 --> 0:19:43.280 they have been in prior quarters, but they're reasonable and 0:19:43.320 --> 0:19:47.920 they're consistent with this economy. The other thing that's really 0:19:47.960 --> 0:19:51.560 notable is companies are seeing from the reaction and other 0:19:51.600 --> 0:19:54.280 stock prices that if they announce, oh, we're triming heads 0:19:54.280 --> 0:19:56.320 over here and we're cutting costs over here, the stock 0:19:56.359 --> 0:19:59.000 prices go up sort of no matter what the numbers are, 0:19:59.040 --> 0:20:04.160 because it looks like management teams are staying really focused 0:20:04.160 --> 0:20:06.920 to be laser precise in how they're running their business. 0:20:07.240 --> 0:20:09.360 In the street likes that it does. 0:20:09.560 --> 0:20:12.680 Absolutely. We saw that with Meta last year. Just amazing. 0:20:12.960 --> 0:20:16.520 Cowrischlife, Chief Investment Officer for BEMO Family Office, Thanks so 0:20:16.600 --> 0:20:19.280 much for joining us. Based after in Minneapolis, Saint Paul, 0:20:19.600 --> 0:20:22.400 I'm happening to be a Saint Paul fan versus Minneapolis. 0:20:22.400 --> 0:20:25.040