Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanibek. We're here every day bringing
Speaker 1: you the latest news from the world of business and finance,
Speaker 1: plus technology, politics, economics, all purtnising the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
Speaker 1: analyst in more than one twenty countries. You can download
Speaker 1: Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com.
Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on YouTube.
Speaker 1: Search to Bloomberg Clobal News. So we are alive from
Speaker 1: Gaylord Texan Convention Center in Dallas, Texas at the b
Speaker 1: n Y Mal and Persing Inside Conference. Two thousand members
Speaker 1: of the financial advice community gathered here for learning Inspiration Network,
Speaker 1: and we're gonna say the financial professionals here, Tim really
Speaker 1: running the gamut. Yeah, everyone's here. Carol, you hosted a
Speaker 1: panel this morning on Krypto. You talked with Matt Walsh
Speaker 1: of Castlaw Adventures, Matt Hogan at bit Wise Asset Management.
Speaker 1: Everyone we do indeed, and we want to bring in
Speaker 1: our next guest because he says that now is the
Speaker 1: perfect time to invest in so called vice related e
Speaker 1: t f s. He says, matter what's happening with the
Speaker 1: economy of the stock market. Ye, people are going to drink, smoke,
Speaker 1: gamble and these days use cannabis products and psychedelic so
Speaker 1: to get to say, looking at the market environment, but
Speaker 1: all of us feel like we could all just do
Speaker 1: a little bit of that. One of them picked right
Speaker 1: wherever it's legal or profect. Maybe. Dan Aaron's is portfolio
Speaker 1: manager at the actively managees have investment management firm Advisor Shares.
Speaker 1: He's on site with us at the B and Y
Speaker 1: Melon Pershing Insight Conference. Dan, good to have you with us.
Speaker 1: How are you? I'm good, Thanks for having me on.
Speaker 1: But I wish it was under better circumstances. The market
Speaker 1: is ugly out there. Well when does it get not ugly?
Speaker 1: When do things turn around? I don't know. Question what
Speaker 1: do you make of the ugliness? Because it does feel
Speaker 1: like it's somewhat orderly. We understand why it's happening, but
Speaker 1: yet it's it's pretty painful. It is painful or trying
Speaker 1: to be. The market seemed to like Powell's announcement for
Speaker 1: a few minutes yesterday. That was very short lived, but
Speaker 1: I think it he gave the market what it expected
Speaker 1: at least. But to say the least, there's a lot
Speaker 1: of uncertainty out there still. Um, we're not seeing a
Speaker 1: massive crash, but we see these continued draw downs. Can
Speaker 1: I get predictions on when that ends? No, but it
Speaker 1: seems to be somewhat orderly, not total chaos. I think
Speaker 1: we're seeing some risk off trades, so that means certain
Speaker 1: assets that people hold that might be in the riskier categories,
Speaker 1: they might get sold off regardless of bingo. But I
Speaker 1: like to think, as I said, maybe not just vice investments,
Speaker 1: but thematic investments could be possibly the right place for
Speaker 1: people to invest because face it, over the last decade
Speaker 1: two decades, people have been two spoiled by just sticking
Speaker 1: money in Spy or q q Q, and those things
Speaker 1: were really really heavily weighted towards the thing stocks that
Speaker 1: were admittedly outperforming. But you've got to look at Netflix
Speaker 1: and get an update on that. So other asset classes,
Speaker 1: other areas are going to come back outperform, maybe be
Speaker 1: less painful. And that's why I think BIS investments or
Speaker 1: even we have an e t F that's in hotels restaurants. Well,
Speaker 1: let's talk about vice first before we get to hotels
Speaker 1: and restaurants. The advisor shares pure Us Cannabis ETF ticker
Speaker 1: m s o S. It's on your shirt right there,
Speaker 1: dan Uh. It's at a fifty two week low today,
Speaker 1: fading at eleven right now, down from last year. More
Speaker 1: than what weed stocks have just been getting feed up.
Speaker 1: When when does that pain end? I'd like to know
Speaker 1: that myself. It's been a very long, painful draw. No,
Speaker 1: it is not. Now. What happened is when Biden first
Speaker 1: got elected and then he said certain statements publicly about marijuana,
Speaker 1: and then we had the runoffs in Georgia, cannabis stocks skyrocketed.
Speaker 1: People somewhat foolishly assumed that legalization of some for was
Speaker 1: right around the corner. Well, politics don't work that way.
Speaker 1: It's been a slow, painful politicians playing politician games ever since.
Speaker 1: And I don't. I've never said there's gonna be a
Speaker 1: full legalization. You're not gonna be able to walk into
Speaker 1: Walmart and buy marijuana. Never, You don't. Never. Interesting because
Speaker 1: a lot of people do think that mass market. Yeah,
Speaker 1: we're totally more mass market. Um, I think it's going
Speaker 1: to be piecemeal. What what I'm planning on seeing in
Speaker 1: this calendar year actually is something called a Safe Banking Act.
Speaker 1: So it's outrageous right now that it's this multi billion
Speaker 1: dollar industry of cannabis. These dispensaries are forced to worry
Speaker 1: about armed robbery on a daily outside of them for
Speaker 1: that reason. So I want the dispensaries to be able
Speaker 1: to bank. But another piece is if we have safe banking,
Speaker 1: then these US plant touching cannabis companies. Again, the I
Speaker 1: guess companies in the world by market cap, well, they
Speaker 1: can't do business with most of the major banks for custody,
Speaker 1: for trading. I'm talking about their stocks now. So if
Speaker 1: we get safe banking, most people feel it will directly
Speaker 1: lead to a m L and finn sends in similar
Speaker 1: rules being rewritten for cannabis. It'll force it, actually, and
Speaker 1: then mask hack and n Y s C will be
Speaker 1: comfortable listing these stocks. But can I say, you know,
Speaker 1: Dani or unfortuately, I wish we had a lot more
Speaker 1: time with you. But we've been here before where there's
Speaker 1: momentum and we think the regulatory environment is going to
Speaker 1: it's all going to happen, and then it doesn't. And
Speaker 1: right now, when I look at all the things that
Speaker 1: are facing regulators and lawmakers, I don't know where the
Speaker 1: sacks app So how patient do we have to be
Speaker 1: as patients? Quickly growing area. It's going to be volatile
Speaker 1: as heck, And we've seen this and we've seen this before,
Speaker 1: ups and downs and candidly when Canada first legalized, right
Speaker 1: but then again, these things skyrocketed when Biden first got elected.
Speaker 1: Um Democrats got you know, the runoffs in the Senate.
Speaker 1: But the stars seemed to be aligning right now for
Speaker 1: people of different opinions coming together thinking we're gonna have
Speaker 1: something and at least the safe banking area, not wide
Speaker 1: sweeping legalization, but having safe banking would be the first
Speaker 1: domino to fall and things would follow. And the do J,
Speaker 1: the d o J just spoke yesterday making changes. All right,
Speaker 1: you gotta come back on her air because we would
Speaker 1: love to continue. Dan Aarons, he's managing director, portfolio manager
Speaker 1: and Advisors Shares Investments. You're listening to Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio. We're live from the Galor Texan Convention Center, Dallas, Texas,
Speaker 1: where at B and Y Melon Pershing inside conference. Two
Speaker 1: thousand members of the financial advice community gathered here for learning, inspiration, networking.
Speaker 1: So many smart conversations going on. And our next guest
Speaker 1: here on site with us, as Ainslie Simmons. She's doesn't
Speaker 1: have Persing X. It's a new unit, a startup at
Speaker 1: the company, ultimately building out a platform of digital solutions
Speaker 1: for Pershing's wealth solutions clients. I cannot wait to talk
Speaker 1: with it. How are you fantastic? So tell us about
Speaker 1: what you're doing. Yeah, So Pershing Access, as you said,
Speaker 1: a fintech within the Bank of New York Melon, and
Speaker 1: we're building what's called an advisory platform, which is all
Speaker 1: the tools and advisor needs to provide a client advice about,
Speaker 1: you know, their financial plan, their portfolio, taxes, you know,
Speaker 1: anything that really will help and end investor make good decisions.
Speaker 1: What specifically were you hearing from investors, from your customers,
Speaker 1: specifically from your customers that made you say we need
Speaker 1: to develop this thing internally, we need to build it.
Speaker 1: And what feedback did they give you about how to
Speaker 1: design it. Yeah, So the really interesting statistic in the
Speaker 1: market is advisors spent other time with clients and seventy
Speaker 1: behind the computer pushing buttons. It sounds like doctors no,
Speaker 1: and that's insane, right, And it is today's day and age.
Speaker 1: Why do financial advisors have to be think so much
Speaker 1: time tether to their desk? And so our clients were like,
Speaker 1: do you have a way to help make us more efficient?
Speaker 1: And the truth of the matter is there is no
Speaker 1: way today. So we decided to set up this division
Speaker 1: and build this product with our clients guiding us by
Speaker 1: the way and helping us prioritize what you come for
Speaker 1: some core five with the sole purpose of saving them
Speaker 1: time so they can help more people. You know what
Speaker 1: that means, they'll grow their business. So let's top of
Speaker 1: mind in terms of how you prioritize what you need
Speaker 1: to have on this platinum resolutely. So the platform itself
Speaker 1: is going to be innovation, right. Never before have you
Speaker 1: been able to connect this application to that application to
Speaker 1: that application, kind of think like g suite, you know
Speaker 1: Google Sweet right, where each product can be itself. But
Speaker 1: like good things happen if you start to use more
Speaker 1: than one product. So the platform itself is our first priority.
Speaker 1: It's really complicated, it's really hard, but that's where we're starting,
Speaker 1: and then we'll put applications on it that advisors need.
Speaker 1: They're not all going to be there to start, and
Speaker 1: we've been really clear about that. How are you thinking
Speaker 1: about this from a hard work perspective? It's a cloud
Speaker 1: based so does that mean that equally people are able
Speaker 1: to access it equally? And you know, to the fullest extent,
Speaker 1: whether they're on a PC, whether they're on a Mac. Yea,
Speaker 1: most advisors are a pcn tablet, right, they don't go
Speaker 1: they're not usually working with clients on a phone. Right.
Speaker 1: So as long as we're doing what's called responsive design,
Speaker 1: it will be able to fit to any device type.
Speaker 1: We should be fine. I think really importantly, it has
Speaker 1: to be secure. It has to be safe. So that's
Speaker 1: where the Bank New York Melon comes in. Right, go ahead.
Speaker 1: What about working from home yet? Because this is going
Speaker 1: to be web based, you can do it from anywhere.
Speaker 1: It's it's that I said before you sat down. I
Speaker 1: we loved reading about your background. You worked in beer,
Speaker 1: you worked it's soup, Carol soup and then fintech right right,
Speaker 1: and do you have your own startup? So how do
Speaker 1: you think about though, like the end consumer right what
Speaker 1: they need? And I can't tell you. People I talked
Speaker 1: to like love technology. That mana drives me crazy. It
Speaker 1: complicates things about it. And if you think about your money,
Speaker 1: you're probably lo it into your bank somewhere. Advisors what site?
Speaker 1: You know, maybe you're are here four O, one case
Speaker 1: somewhere else. And one thing we're really trying to do
Speaker 1: with this effort is and create one end investor site
Speaker 1: that our clients could offer. And you know that was
Speaker 1: really interesting. In our second advisory board meeting, they said,
Speaker 1: this thing's got to have an end investor site because
Speaker 1: what we have today sucks. So and they were they
Speaker 1: literally said that. So I was like, all right, if
Speaker 1: that's what you want, that's what you get. So we're
Speaker 1: going to build that, Okay, go ahead, Well how long?
Speaker 1: How quickly? Yeah, So we're targeting to sort of have
Speaker 1: a sorry, yeah it's okay, I mean a million questions,
Speaker 1: I get it. Fast is the way of the world, right, So,
Speaker 1: but this is a very hard built So we're going
Speaker 1: to put a private data out towards the end of
Speaker 1: year early next year, get some people on it giving
Speaker 1: us feedback. Then we'll start adding apps and and releasing
Speaker 1: after that. So that's what we're like laser focused on.
Speaker 1: I've been dying to ask you because you're in the
Speaker 1: fintech space, and fintech is so hot right now, especially
Speaker 1: getting so much investment from venture capitalists. When you look
Speaker 1: out across the landscape right now, what what is promising
Speaker 1: fintech that you see? Because I always think back to
Speaker 1: what somebody said to me, you know, the most innovative
Speaker 1: fintech we've seen is the A T M. Yeah, that's
Speaker 1: probably true. Um. You know, I think what's really happening
Speaker 1: in payments right now is going to sort of speed
Speaker 1: money and and that's cool. And you know we heard
Speaker 1: this morning a ton about crypto and digital assets and
Speaker 1: and that's also cool. Um. You know, I personally think
Speaker 1: that a lot of uh, there will be a lot
Speaker 1: of consolidation. They can't keep going making these microw fintech apps.
Speaker 1: We're gonna have to start building building bigger experiences. And
Speaker 1: I actually think perging X is sort of at the
Speaker 1: cutting edge of that, because we can't just keep making
Speaker 1: things smaller and smaller and expecting consumers to log into
Speaker 1: all these places, right, it doesn't make sense. It's like, okay,
Speaker 1: maybe not apples to apples, but I think about streaming now,
Speaker 1: like it's all become just multiple apps and it's just
Speaker 1: too much stuff all over. Yeah, it's too much stuff.
Speaker 1: And you're starting to see the innovation. I turned my
Speaker 1: TV on the other day and I'd start they're starting
Speaker 1: to aggregate all of that into these more enterprise like
Speaker 1: collective use and that's exactly what we're trying to do here.
Speaker 1: We can't wait to see where you go with this.
Speaker 1: We're going to rocket. We will be checking in with you,
Speaker 1: and thank you so much. Ainslee Simmons here, President of
Speaker 1: Persing X. This is Bloomberg Business Week with Carol Masser
Speaker 1: and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio and
Speaker 1: this week's cover story it's in the remark section. It
Speaker 1: is all about inflation. It's not moderated, it has not peaked,
Speaker 1: and that's why the Fed yesterday took that historic step
Speaker 1: of raising interest rates by walking seventy five bases point
Speaker 1: Tim the biggest time since n Bloomberg Business Week Assistant
Speaker 1: Managing editor Jim Ellis writes all about it in the
Speaker 1: Remarks section of Business Week. This week. He joins us
Speaker 1: along with Joel Webber, the editor of Bloomberg business Week. Joel,
Speaker 1: not that surprising, but I'm kind of surprised that you can,
Speaker 1: you know, uh, win a you can you can actually
Speaker 1: win a nailbell for this. Um. People dislike inflation. I
Speaker 1: should note that Robert Schiller, who has won a Nobel,
Speaker 1: wrote that paper back in people dislike inflation so much.
Speaker 1: Oh man, it just up ends everything that you think, uh,
Speaker 1: you know about the world makes sense, right, And I
Speaker 1: think um as a as a colleague of mine has
Speaker 1: likened it to it's like termites suddenly descending on your
Speaker 1: house and just eating away at at you know, your
Speaker 1: sense of wealth. And that has a very it makes
Speaker 1: you go to some dark places really quick. Uh. And
Speaker 1: that is because of the nature of the last year
Speaker 1: and the spike that we've seen in inflation. UM has
Speaker 1: been something that Americans who have not had a sense
Speaker 1: of of what inflation means is suddenly it is gripping
Speaker 1: the country and it is leading to all kinds of anxieties,
Speaker 1: and that's reverberting across markets. And everything else, and so, uh,
Speaker 1: you know, I turned to Jim Ellis early in the
Speaker 1: cycle and said, you know, Jim, you're uh elder statesman
Speaker 1: on the staff, you live through the seventies and eighties.
Speaker 1: At Business Week, you've written We've asked you to write
Speaker 1: about this stuff before. Can you kind of give us
Speaker 1: a toe hold in it? And then you know, between
Speaker 1: the Fed and the markets and everything this week, it
Speaker 1: really to me what Jim ended up writing was really
Speaker 1: this sense of, uh what it all means? Right? And
Speaker 1: and uh so, Jim, I'm just curious, like I'll take
Speaker 1: Tim's question on children and kind of bring that back
Speaker 1: to you. Why why is inflation such a like almost
Speaker 1: like a cancer for sanity? I guess it it's core.
Speaker 1: It's because it's one of those things that people hey
Speaker 1: don't truly understand, certainly don't understand in the way that
Speaker 1: economists do and um, but don't really have a clear
Speaker 1: definition for what it is. But they sort of know
Speaker 1: when it's there, they sort and they're afraid of it.
Speaker 1: And I think they're most afraid of it because it's
Speaker 1: one of those things that can affect the quality of
Speaker 1: their life. Um. At the same time, they have very
Speaker 1: little control over and because of that, people are terrified
Speaker 1: of it. And um, you know obviously, um, you know,
Speaker 1: an economist might tell you, well, there can be some
Speaker 1: good things about inflation. Inflation starts moving um, you know,
Speaker 1: if prices are if wages start moving up, then you know,
Speaker 1: particularly for people who are either outside the labor force
Speaker 1: or people at the bottom of labor force, maybe that's
Speaker 1: a good thing. But you won't find anyone, as Stiller
Speaker 1: in his research to Ride, you know, they didn't find
Speaker 1: a single soul of the hundreds of people they interviewed
Speaker 1: who actually thought that inflation was a good thing. I mean, instead,
Speaker 1: we're sort of hardwired into thinking that things that we
Speaker 1: don't understand and that we can't control our bad things
Speaker 1: to be avoided, particularly when they um. The only way
Speaker 1: they can help you would be if you could guarantee
Speaker 1: that wages were your wages are going to actually go
Speaker 1: up and continue to go up faster than prices. And
Speaker 1: most people are not willing to gamble that their employer
Speaker 1: is going to do that. Jim, I wanted to go
Speaker 1: back to something that Joel said, you know, he said
Speaker 1: that you were at you were writing about the st
Speaker 1: in the nineteen seventies. You're at Business Week, and you
Speaker 1: wrote about this in the Fall, inflation in the fall,
Speaker 1: and you made some parallels to what you experienced in
Speaker 1: the nineteen seventies. And I'm wondering now, a few months later,
Speaker 1: as inflation has continued to creep up and move higher,
Speaker 1: if you are starting to fear more then you did
Speaker 1: back in the fall, that we are indeed entering some
Speaker 1: sort of thing that was similar to what you experienced
Speaker 1: in the seventies in a way. I mean, obviously there
Speaker 1: are some rather significant differences between now and the seventies.
Speaker 1: I mean, back then we did have, um, you know,
Speaker 1: we had product shortages that were really important because we
Speaker 1: had energy shortages both in at seventy three in and
Speaker 1: seventy nine where we had you know, gas lines. I
Speaker 1: mean today you can get gas if you can afford
Speaker 1: five dollars six dollars gown, you can get it. And also, um,
Speaker 1: we had significantly higher unemployment rates um back then than
Speaker 1: we have now. And now we have a labor shortage
Speaker 1: still from post pandemic, and so in a lot of ways,
Speaker 1: you know, we're in a better place than we were
Speaker 1: in the seventies. Obviously, but one thing that really rings
Speaker 1: true here, uh, you know, in a similarity to seventies,
Speaker 1: is that there is a feeling that there are other
Speaker 1: things afoot. There are other things beyond just um, the
Speaker 1: continual rise in prices that are making people feel uneasy
Speaker 1: and out of control and with their existence. I mean
Speaker 1: right now, we have everything from um, you know, the pandemic,
Speaker 1: the pandemic that doesn't seem to want to end. UM,
Speaker 1: the idea that you know, we have government system that
Speaker 1: we don't know if we are in control of, if
Speaker 1: we can trust what the president who says that the
Speaker 1: you know, the very basis of democracy, you know, the
Speaker 1: idea of you know, transfer power, that the integrity of
Speaker 1: elections is all put to question. We have, UM, a
Speaker 1: lot of things that are making people feel uneasy and
Speaker 1: so UM. To sort of get a handle on this,
Speaker 1: I talked to a number of sort of researchers, including um, UM,
Speaker 1: you know, economists to think about behavior and UM. They're
Speaker 1: saying that when people are afraid, they tend to be
Speaker 1: afraid of everything, and that being afraid of one thing,
Speaker 1: if you have multiple sources of discomfort, it actually sort
Speaker 1: of makes you feel even worse. And so right now
Speaker 1: it's very real to say we do have rising prices,
Speaker 1: so we do have um inflation. But at the same time,
Speaker 1: people feel uncomfortable about government, they feel uncomfortable about safety
Speaker 1: of you know, with guns and safety of schools, and
Speaker 1: all of a sudden, it means that you're pushed to
Speaker 1: the end where you sort of think everything's going to hell.
Speaker 1: And there's that. So there's that maladies, but then the
Speaker 1: other thing that is sort of echoes off of that
Speaker 1: late seventies early eighties moment. Jim is like the spotlight
Speaker 1: on policymakers. And obviously we had Vulcar back then, and
Speaker 1: and he he took the country to places that we
Speaker 1: haven't gone yet. But I'm I'm curious, you know, in
Speaker 1: the grand scheme of things, we wrap up the story
Speaker 1: yesterday day in the midst of of uh, you know,
Speaker 1: the FED doing what the FED does, uh, and just
Speaker 1: wondering like what what you read on the fete is
Speaker 1: and all of this since um, that's the story of
Speaker 1: the week. Really, I mean the FED is uh, you know,
Speaker 1: they're in the position of being at least if if
Speaker 1: the seventies is any guide, I mean that is um. Um,
Speaker 1: you know, the one body that can bring it into this.
Speaker 1: I mean, you can beat inflation. You know. The problem
Speaker 1: is that to beat inflation, you often have to beat
Speaker 1: down the economy to the point that the people who
Speaker 1: will love you for it, well eventually hate you for it.
Speaker 1: It's simply because um, you know, Paul Volker beat inflation.
Speaker 1: But to do it, he had to get a federal
Speaker 1: funds fate rate. That was what one point. He had
Speaker 1: to take mortgage rates up to, you know, almost twenty
Speaker 1: He had to basically take unemployment up to ten percent.
Speaker 1: He had to basically beat out inflationary expectations at the
Speaker 1: economy simply because everybody sort of completely beaten down. Now,
Speaker 1: that's probably works as a monetary policy, it's very bad
Speaker 1: from a political standpoint, and it's probably going to be
Speaker 1: the reason that, um, the Biden administration very very very
Speaker 1: difficult position for the next year. Well, we all feel
Speaker 1: it here in some of the conversations we're having. Gotta run.
Speaker 1: Thank you so much. Jim ellis, of course, assistant managing
Speaker 1: editor of Business Week, along with Joe Weber, the editor
Speaker 1: of Bloomberg business Week magazine. This is Bloomberg Radio. You're
Speaker 1: listening to Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. We're live at
Speaker 1: the b N Y Mel and Purging Inside conference from
Speaker 1: the Gaylor Texan Convention Center in Dallas, Texas. As we've
Speaker 1: been saying, two thousand members of the financial advice community
Speaker 1: are gathering here for learning, inspiration, networking. And what's interesting
Speaker 1: about coming to this event is you're reminded that in
Speaker 1: the investment advice three space, it's massive firms like a
Speaker 1: black Rock Black Rock, or a longtime player like t
Speaker 1: Rowe Price. It's also smaller independent or standalone r I,
Speaker 1: a registered investment advisors, or like our next guest, it's
Speaker 1: a group of advisors banning together. Yeah, for more, let's
Speaker 1: bring in Jim Dixon. He's the founder, he's board member
Speaker 1: and CEO at Sanctuary Well, it's a partnered independence network
Speaker 1: for investment advisors. He's with us on site at b
Speaker 1: N Y Melon Pershing Inside two. Jim, how are you?
Speaker 1: I'm doing great? How are you guys? We're doing pretty well.
Speaker 1: I mean we're trying to make sense of what's going
Speaker 1: on with the sell off, and we know we were
Speaker 1: chatting a little bit during the break, and I'm just
Speaker 1: curious with all the volatility that we're seeing, with the
Speaker 1: selling that we've seen, what are you hearing from are
Speaker 1: as right now? Yeah, we have talked to a lot
Speaker 1: of our partners with states seventy five partners, and um,
Speaker 1: the phones are starting to ring, and uh, that may
Speaker 1: feel like a bad time, but it's not. It's a
Speaker 1: good sign because when people start to campitulate and the
Speaker 1: phone starts to say, hey, I think we should get out, UM,
Speaker 1: it's either clients or clients of ours. And usually when
Speaker 1: the capitulation comes, we're somewhere near abottom saying we're there.
Speaker 1: But I think we're closer than we've been a long time.
Speaker 1: All right, what are they looking to just get into complete? Yeah?
Speaker 1: You know, and that's when you know somewhere how much
Speaker 1: have they been out already? You know, very little? I
Speaker 1: think I think they've stayed in UM for the most part,
Speaker 1: which is usually the right thing to do, right, it's
Speaker 1: how long you're in the market, not when you're in
Speaker 1: the market usually and so but but I think it's
Speaker 1: scared him. I think yesterday, you know, seventy five business
Speaker 1: points comes in today we're down eight hundred. They're like,
Speaker 1: where are we going here? Where's the bottom? So okay.
Speaker 1: So having said that, when you look at your you know,
Speaker 1: your members, part of your network, and what their clients want,
Speaker 1: what are their biggest needs right now? What are they
Speaker 1: asking about when they make those calls like where do
Speaker 1: where should we go? Where do we like? What's Yeah?
Speaker 1: I think great that this whole concept of thang stocks,
Speaker 1: this technology stocks. Everybody held those and they held them
Speaker 1: for ten or twelve years and it was easy, it
Speaker 1: was full seen ahead, and those are the ones that
Speaker 1: are getting hurt the most. And so I think, you know,
Speaker 1: any time this happens, and it's happened a lot in
Speaker 1: our lives, um, there's a change of leadership. And so
Speaker 1: I think, what everybody's trying to figure out, client's advisors, everyone,
Speaker 1: what's the next change of leadership? And if I do
Speaker 1: go in and I do start to buy, what do
Speaker 1: I buy? And the things they bought for the last
Speaker 1: five or six years, the tech stocks aren't probably the
Speaker 1: right place. And so I think everybodys trying to figure
Speaker 1: out what that leadership is. But let's counter that, do
Speaker 1: you really think all of those big tech names are
Speaker 1: going to go away, not at all. So I mean,
Speaker 1: like when we think about our universe and where our
Speaker 1: world is going, I mean this is increasingly that's it,
Speaker 1: and maybe not everybody's as strong as going forward to
Speaker 1: like how do you think about that? And that maybe
Speaker 1: will once again be leadership. I was explaining this to
Speaker 1: somebody yesterday and it's it's sort of like my mile,
Speaker 1: I go out really fast and then everybody catches up.
Speaker 1: So I don't think the tech stocks are going away.
Speaker 1: I just think they went out really fast, and so
Speaker 1: maybe they've got a year or two that everybody's going
Speaker 1: to catch up to them, even more coming down, I think,
Speaker 1: or just not growth, right, just stay where they are.
Speaker 1: They've grown so much so fast that they just stay.
Speaker 1: And some of the more traditional maybe dividend stocks, things
Speaker 1: that are more you know um uh you know stable
Speaker 1: or steady or you know the turtle may catch the rabbit,
Speaker 1: is it, like you know we've seen like the Smuckers,
Speaker 1: the Hershey's. I mean, this is where you go? Where
Speaker 1: do you go? I think? So I think you go
Speaker 1: to those names. I think you can also go to
Speaker 1: UM energy is gonna be strong. UM you know, I
Speaker 1: think we gotta worry about the consumer a little bit.
Speaker 1: That that's because I think this procession fear is real.
Speaker 1: How long it will be none of us know. But
Speaker 1: but what are the things that you need every day
Speaker 1: that you just have to buy? Right? I think those
Speaker 1: are those are the names. I'm curious about the conversation
Speaker 1: that you're having with or in your r A s
Speaker 1: are having with investors about passive versus active management right now,
Speaker 1: because passive has done pretty well over the past ten
Speaker 1: twelve years since posts Great Financial Crisis. If you were
Speaker 1: just in the s in an SMP, you have undern
Speaker 1: index fund, you're pretty happy with yourself. How does how
Speaker 1: did those conversations come in when are as are trying
Speaker 1: to sell their services. It's a really good question and
Speaker 1: really smart smart comment because we're seeing that debate come
Speaker 1: to life for the first time and probably five or
Speaker 1: six years it was all smp as always the tex
Speaker 1: stalks we were talking about, and now you kick you yep,
Speaker 1: that's it, and you did well. It was cheaper, it
Speaker 1: was easier, it was better. But active management starting to
Speaker 1: do better. So I think when we look back at
Speaker 1: the first six months of the year, we're almost at
Speaker 1: that point. We're going to see active management for the
Speaker 1: first time in a really long time have an advantage. Well,
Speaker 1: why is it that passive did so well? Because it
Speaker 1: was it was it was waited These indexes and the
Speaker 1: waitings of these index were so technology focused. It was
Speaker 1: five or six socks that were doing all the lifting, right,
Speaker 1: and they were the winners. Hey, I wanted to ask
Speaker 1: you because there's been a lot of consolidations, certainly on
Speaker 1: Wall Street, and I think about your history. You worked
Speaker 1: at Maryland p of A of course taking it over. Um,
Speaker 1: how does today's Wall Street compare with where you saw
Speaker 1: in your career? You know, I grew up in Maryland.
Speaker 1: It was wonderful for a wonderful time. I loved it.
Speaker 1: Twenty five years there Bank of America bought it just changed.
Speaker 1: Wasn't better, It wasn't worse. It just changed. The culture
Speaker 1: was more um, you know, more business, less family, right,
Speaker 1: And so I think you know what people like Sanctuary
Speaker 1: are trying to do, and other firms like us or
Speaker 1: to bring back that culture um and and get away
Speaker 1: from maybe some of the bigness in the bureaucracy of
Speaker 1: some of the big banks and develop a brand where
Speaker 1: you can shop at all the banks and not just one.
Speaker 1: And so I think that's why you're seeing this move
Speaker 1: towards independence. I don't know if you guys noticed, but
Speaker 1: but this year were the first year in three here
Speaker 1: excuse me, next year that there will be more assets
Speaker 1: in the independent sector than they're on the wirehouse sector,
Speaker 1: which is crazy. But how long are they going to
Speaker 1: be independent? Because you have a lot of r A
Speaker 1: s at this in in their lifetimes, you know, actual
Speaker 1: people saying wait a second, I want to retire. It's
Speaker 1: my turn to actually retire and enjoy some of the
Speaker 1: fruits of my labor. They want to sell, and oftentimes
Speaker 1: they're going to sell to those bigger firms. You know,
Speaker 1: we we were one of those firms, were buyer. We're
Speaker 1: active in the mn A market and um, you know
Speaker 1: what we do is we do partnered independence, which means
Speaker 1: we handle the back office, we handle the middle office
Speaker 1: to front office, and they handle the clients because that's
Speaker 1: really where they want to spend their time. So we
Speaker 1: think that's the model going forward. But the key is
Speaker 1: is they want freedom and flexibility. They want the ability
Speaker 1: to sit down with a client and say This is
Speaker 1: the solutions I think it's best. And it doesn't have
Speaker 1: to come from where I work. It can come from
Speaker 1: all kinds of people, just like at disconference. So when
Speaker 1: you're buying a firm, is there an earn out period
Speaker 1: where the owner stays there to ensure some sort of transition. Yeah,
Speaker 1: usually two or three years they'll stay with us and
Speaker 1: then they'll they'll transition into it. And if you get
Speaker 1: to know advisors well, they love their clients are super important.
Speaker 1: So they want to find that that the right fit
Speaker 1: that they're going to take care of them. They're gonna
Speaker 1: work with them and transition those relationships usually two or
Speaker 1: three years. What is it that advisors have to do
Speaker 1: in terms of attracting a younger generation and how they
Speaker 1: want to address their investment part? You know, I think
Speaker 1: it's a combination. I was talking about this earlier today.
Speaker 1: It's technology and talent, right and so nine this industry
Speaker 1: got a black eye, and it's still not over it,
Speaker 1: believe it or not. We're in two two and still
Speaker 1: and so but what I think you're gonna start to see,
Speaker 1: you know, don't fight the FED. They also don't don't
Speaker 1: fight a demographic. You see so many people retire that
Speaker 1: the opportunity for younger and diverse advisors is so good
Speaker 1: because because there's a whole right, there's so many retiring
Speaker 1: advisors that you know the opportunities there, And so I
Speaker 1: think we're seeing more and more talent coming every day.
Speaker 1: All Right, you're ready to call a bottom close? What's
Speaker 1: close to me? I think we're one more of in
Speaker 1: a way. You know, if you usually look at bottoms,
Speaker 1: they come when there's a really bad, ugly day. And
Speaker 1: I don't think we're quite there yet, but I think
Speaker 1: we're getting closer. I know when I go away in August, right,
Speaker 1: the market always sells off. I'm serious every time I
Speaker 1: go away. Um, what a pleasure. Thank you so much.
Speaker 1: Great to check in with you. Jim Dickson, founder, board
Speaker 1: members CEO of Sanctuary Wealth, joining us here at b
Speaker 1: and Y Mel and Pershing Insight twenty two. You're listening
Speaker 1: to Bloomberg Business Week with Carol Messer and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio. All Right, we are
Speaker 1: live from the Gaylord Texan Convention Center in Dallas, Texas
Speaker 1: at the ben Y Melon Pershing Inside Conference, and I
Speaker 1: got to talk about technology because that is such a
Speaker 1: big part of the financial world. And when it comes
Speaker 1: to worldwide I T spending looking at four point four
Speaker 1: trillion this year, banks and investment firms alone spending about
Speaker 1: six twenty three billion on technology products and services. Our
Speaker 1: next guest knows a lot about the space. We're very
Speaker 1: pleased to have back with us. Rom Nagapon, Chief Investment,
Speaker 1: Chief information officer. Excuse me at B and Y Melon Pershing.
Speaker 1: He's with us at the B N Y Melon Pershing
Speaker 1: inside two conference. Rom, good to chat with you again.
Speaker 1: How are you nice? Nice? Um, nice to be here
Speaker 1: with you. Well, information investment go together. Thank you. Well,
Speaker 1: I mean today they certainly do in this day and age,
Speaker 1: because if you walk around here, and you know, for
Speaker 1: people who can't see where we are, we're in a
Speaker 1: huge convention center and everywhere I look at every booth,
Speaker 1: there's something about technology there. How are you thinking about
Speaker 1: technology this year? Technology drives every one of our business. Um.
Speaker 1: It used to be thought like the business is actually
Speaker 1: using the technology. But I wanted to say, being a
Speaker 1: that the technology actually drives the business. As you could say,
Speaker 1: and you said, all these folks here, they're all showcasing
Speaker 1: technology even though there's a business behind it that's the
Speaker 1: one that drives them, and we're excited and being be
Speaker 1: and my melon pershing. We are also showcasing a lot
Speaker 1: of advancements in what we're doing with technology. So what's
Speaker 1: the continued digital disruption impact on the advisory world. Well,
Speaker 1: the pandemic actually accelerated the adoption of digital, but I
Speaker 1: think there's more room for that. There's more digital adoption
Speaker 1: needs to happen in the advice of each space because
Speaker 1: there is an expectation from the investor that it's a
Speaker 1: seven by twenty four any time any place, I want
Speaker 1: to be in touch with the advisor and get the CERTA.
Speaker 1: That was not the case maybe three years ago, but
Speaker 1: now the expectation is like that because every other businesses
Speaker 1: has changed. You know, there's a contact less everything. I mean,
Speaker 1: you walk through this island, this thing, there's like scan
Speaker 1: the QR code, same thing. It's going to embarrass that
Speaker 1: paper here because it feels so yesterday Sweeney hosted Bloomberg
Speaker 1: Markets had no paper people. It's a digital transformation for
Speaker 1: Bloomberg Radio. It is. Well, I'm wondering how this trickles
Speaker 1: down to the client experience. Experience is the king right now,
Speaker 1: It's the play. You know, everything we do, it's all
Speaker 1: about experiences. People love that experiences that they get and
Speaker 1: they want to do business with you. So even though
Speaker 1: the term experience is very broad, it's all about applying
Speaker 1: technology to give that experience, the right experience that they
Speaker 1: really want to use and come back again and again.
Speaker 1: One thing I think about, and I asked this of
Speaker 1: my crypto panel, that it wasn't a cryptop It was
Speaker 1: about the how do you reimagine money? The crypto was
Speaker 1: a big part of it. But we talked so much
Speaker 1: about crypto and understandably sad and I felt like I
Speaker 1: get it now a little bit more. But I mean,
Speaker 1: how do you think about in your world that you
Speaker 1: know you need to be saying to people, Okay in
Speaker 1: five years, ten years. I mean, this may not be
Speaker 1: a thing now, but it will be down the road.
Speaker 1: I always think about the uberization of the world. I
Speaker 1: think it applies to so much digital currency using payments
Speaker 1: real time, so the cash and the checks is not
Speaker 1: going to be used if you really look at the payment,
Speaker 1: that US payment is a little bit backward. I don't
Speaker 1: want to say that, but I'm saying it compared to
Speaker 1: the rest of the world, they have gone into instant
Speaker 1: payments and everything. So what I think is in that
Speaker 1: space that you've mentioned about the cash and the digital
Speaker 1: currency and the crypto, I'm saying, everything is going to
Speaker 1: be digital in the future. How do I pay you?
Speaker 1: It's going to be digital. It's just cannot be that.
Speaker 1: The peer to peer is cannot be done. You know.
Speaker 1: I know there are red moos and zels and other
Speaker 1: things so that, but it's going to be even more
Speaker 1: prominent in terms of the payment that's going to happen.
Speaker 1: I'd like to ask people like you when I have
Speaker 1: the chance, because they're thinking about technology day in, day out,
Speaker 1: probably when you're sleeper thinking about it too, what do
Speaker 1: things look like five years I think that was well
Speaker 1: when I sleep, I got to sleep. I mean hopefully
Speaker 1: hopefully you're not having nightmares, okay, but I'm wondering you.
Speaker 1: You know, let's say we're sitting here five years from
Speaker 1: now at at Insight, what's the technology that's going to
Speaker 1: be showcased. Well, certainly there's a there's a things that's
Speaker 1: going on with metavers I'm just going to be in
Speaker 1: the metaverse. Yes, it's possible that could happen, but I
Speaker 1: think people are trying to figure this out. What is
Speaker 1: the exact use case and especially in the world and finance,
Speaker 1: how it's going to play. We're actually showing something as
Speaker 1: well um in in one of our boots on the
Speaker 1: metaverse web three oh is going to be implemented is
Speaker 1: like you own the data. You want to own and
Speaker 1: control who you give it to and how that has
Speaker 1: been used. What does that mean wrong owning your own
Speaker 1: data in the financial space. I get what it means
Speaker 1: maybe in the retail spaces to maybe a social media identity.
Speaker 1: That makes sense. Yeah, exam So let me let me
Speaker 1: give you an example. Let's say you go to a
Speaker 1: doctor's and you've got about fifty seconds. Yeah, you go
Speaker 1: to a doctor's office. What they give They give you
Speaker 1: a phone and a pat and ask you to sit
Speaker 1: there and fill up a phone. Why you want to
Speaker 1: do that? That's your data? You wanted to have that
Speaker 1: data in your wallet. You wanted to go to the
Speaker 1: doctor's office and say it's click a button and the
Speaker 1: data goes there. You don't want to fill up the phone? Right?
Speaker 1: That is your data and you don't want the doctor
Speaker 1: office to use it for some other purposes besides just
Speaker 1: serving you. Similarly, in the finance data is yours. You
Speaker 1: control the data and why they use it, where they
Speaker 1: use it, and you want to track how they're using it. Okay,
Speaker 1: how soon do we get there? It's it's it's happening,
Speaker 1: it's working. People are working it in in parts probably
Speaker 1: you know, I would say a couple of years before
Speaker 1: everything else good moves, maybe even more. It's a complicated topic, um,
Speaker 1: but people are actively working on it. I love that idea.
Speaker 1: I think that is such a big, big part of
Speaker 1: our future, right in terms of our data control and
Speaker 1: how we do isn't apply and how we benefit from it.
Speaker 1: You own the stocks and the data. All right, so
Speaker 1: when you sleep, you don't think about this. I want
Speaker 1: to sleep. That wasn't the question. I am with you,
Speaker 1: all right. Rom Nagapon, he's the chief information Officer, being
Speaker 1: y Melon Pershing, always a fun conversation when he joins
Speaker 1: us on site here at Inside two. This is Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. We're live from the Gaylor Texan
Speaker 1: Convention Center in Dallas, Texas at the ben Y Melon
Speaker 1: Pershing Inside conference, Tim and I talk a lot about
Speaker 1: diversity and inclusion, and I was thinking about a story
Speaker 1: this week um by a Bloomberg News team about black
Speaker 1: executives rising inside City Group. Even as the firm says
Speaker 1: there's more to be done, there is still so much
Speaker 1: more to be done when it comes to advisory and
Speaker 1: thinking about all of the investors and consumers that are
Speaker 1: out there that need financial advice, well, certainly something our
Speaker 1: next guest knows a lot about the importance of diversity
Speaker 1: when it comes to financial advice. Specifically, Tanya Bottoms is
Speaker 1: managing to actor and senior Managing Council at b N
Speaker 1: y Mel and Pershing. She's with us right now at Insight.
Speaker 1: She's also a member, we should note of the company's
Speaker 1: executive committee. Can we start there, because I think that's important.
Speaker 1: I think when you start having members of a team
Speaker 1: are part of the executive committee, it means you have
Speaker 1: a seat at the table when it comes to strategy
Speaker 1: important decisions. Tell us about that. Sure, So um B
Speaker 1: and ym L and Pershing felt that in order to
Speaker 1: make sure that we were seeing lasting change in our
Speaker 1: line of business, UM, and to make sure that we
Speaker 1: were doing work that was going to be aligned with
Speaker 1: our overall corporate strategy. They created a role for a
Speaker 1: Pershing Diversity and Inclusion Advocate, and I was asked to
Speaker 1: fill that role. And the point that you made about
Speaker 1: having a seat at the table is so important. UM.
Speaker 1: I am not window dressing. UM. I'm a full member
Speaker 1: of the executive committee. I weigh in on many different
Speaker 1: types of decisions. UM. Not just there to talk about
Speaker 1: diversity equated inclusion, but also to open our lens right
Speaker 1: and have a wider aperture about who's missing from the conversation.
Speaker 1: So with that is the backdrop here, talk to us
Speaker 1: about numbers because I'm curious about goals and when we
Speaker 1: talk about meaningful change, we need to actually see that
Speaker 1: in the data. So what are you going for? It
Speaker 1: being white Pershing, So we're going for a definite increase
Speaker 1: and representation. UM. We have been challenged as of industry
Speaker 1: and as a business and seeing representation among black, Latin
Speaker 1: X and other ethnically diverse groups in leadership. We've done,
Speaker 1: I think as an industry and an incredibly good job
Speaker 1: on gender diversity. UM. And of course that still remains important,
Speaker 1: but we need to add that other diverse lens. So
Speaker 1: we are focused on increasing representation across the enterprise so
Speaker 1: that in fact it does represent the communities that we serve.
Speaker 1: We also are partnering, you know, with colleagues in the industry,
Speaker 1: other firms as we think about how we can make
Speaker 1: financial services an attractive option. Um, you know, I'm a
Speaker 1: lawyer and financial services I never would have dreamed of
Speaker 1: my job when I was finishing law school. So we
Speaker 1: need to really make sure that everyone understands that there's opportunity.
Speaker 1: You know. Stephanie Pierce b and Y Malon earlier this
Speaker 1: morning in my panel talked about how women are left
Speaker 1: behind when it comes to you know, investing and being
Speaker 1: part of the investing community. And we're talking about trillions
Speaker 1: of dollars. So think about if that was part of
Speaker 1: investment world. And I think about minorities and diverse, our
Speaker 1: diverse population who are left behind. Um, they're ready to
Speaker 1: be represented, aren't they. Absolutely? And the entrepreneurs, the small
Speaker 1: businesses that represent much of the small business community are
Speaker 1: actually started by women, women of color, um or run
Speaker 1: and owned by you know, men and women of different ethnicities.
Speaker 1: They're ready to be part of part of the industry,
Speaker 1: part of the solution. Um. It's not that they want
Speaker 1: something as a token or hand out. They're ready to
Speaker 1: compete on their merit. Well, that's what I wanted to
Speaker 1: talk to you about, is the competition element of this
Speaker 1: and talk about how research has shown this makes a
Speaker 1: firm better, This makes a firm stronger, This makes a
Speaker 1: firm better able to compete with its peers. So you're right, Um,
Speaker 1: there are a number of studies that talk about the
Speaker 1: benefits of having diverse leadership, UM, the increase in representation
Speaker 1: of women and minorities on boards and how that's correlated
Speaker 1: to the profitability of firms. And you know, if you
Speaker 1: think about it, right, we're a data driven industry, so
Speaker 1: that should be right a driving part of it, and
Speaker 1: the data absolutely is. But we've got to also think
Speaker 1: about how we're dealing with people, right, not just numbers,
Speaker 1: and being able to show people that we're all included
Speaker 1: in this effort and in this discussion, that everybody has
Speaker 1: a role to play. And if we're talking about representation
Speaker 1: in black and Latin X communities, it doesn't mean that
Speaker 1: it's to the exclusion of any other community that we serve.
Speaker 1: So having the ability to have um diverse I'm sorry,
Speaker 1: having the ability to have a diverse representation within your
Speaker 1: company is only going to serve you better when you're
Speaker 1: engaging with clients, when you're engaging with other communities, because
Speaker 1: then they can see themselves and you so important when
Speaker 1: we talk about the gaps that are out there in society,
Speaker 1: I mean, this is a big step in reducing those
Speaker 1: gaps we have to run. But thank you so much, really,
Speaker 1: thank you for having me so great. Tanya Bottom, she's
Speaker 1: Managing Directors Senior Imagine Council at the and Y Melon
Speaker 1: Persian joining us here on site. Bro Journal now, but
Speaker 1: you let me drive, no, no, no, please, I'll do
Speaker 1: the riding gravels. I want to drive. Good question. Drive
Speaker 1: is the drive to the clothes than well up down
Speaker 1: on Bluebird Radio. All right, we have just about ten
Speaker 1: and a half minutes left in today's trading session. We
Speaker 1: are driving to the clothes and what has been a
Speaker 1: risk off trade definitely off our best levels of the session,
Speaker 1: and we're just off our worst levels, but nonetheless down.
Speaker 1: As you just heard from Charlie, four point six percent
Speaker 1: lower on the NAZAC dow down two point eight percent,
Speaker 1: and the SMP we're talking about it almost three Really
Speaker 1: eager to hear what Laurie Brignock catches to think. She's
Speaker 1: chief investment Officer and head of Global Liquidity at Investco.
Speaker 1: She joined us on the phone from Atlanta. Laurie, how
Speaker 1: are you. I'll be a lot better when these markets
Speaker 1: closed today. Yeah, well, we count down. It's the countdown
Speaker 1: to the clothes now, so we only got ten minutes
Speaker 1: left at this point. Help us make sense of the
Speaker 1: sell off. I'm wondering what change between yesterday and today
Speaker 1: because we saw quite a rally after FED Chair J
Speaker 1: Powell said that, you know, fifty or seventy five basis
Speaker 1: point rate hikes, that's not the new normal. Yeah, you know.
Speaker 1: But though quite honestly, I think I think yesterday's rally
Speaker 1: was fairly optimistic. I mean, within the FED has a
Speaker 1: real challenge on their hands right now. You know there's
Speaker 1: inflation that is, you know it's going to be worse.
Speaker 1: The prints next month are going to be worse than
Speaker 1: what we just saw with the CPI numbers, and I
Speaker 1: think the expectations numbers, so I think reality setting in
Speaker 1: a little bit um yesterday just kind of felt like
Speaker 1: a little bit of h of a Christmas present, if
Speaker 1: you will, post FED. But the f's got a lot
Speaker 1: of work to do on the inflation front, okay, so
Speaker 1: talk to us a little bit about the work that
Speaker 1: they have in front of them and the blunt tools,
Speaker 1: as FED Chief J. Powell refers to them, the blunt instruments.
Speaker 1: To what extent can they actually bring inflation down? If
Speaker 1: you know who wasn't yesterday, Doug's Yoko over of our
Speaker 1: Capital Partners said, of inflation, it's not something that can
Speaker 1: be done with monetary policy because it's supply related. It's
Speaker 1: about supply chains, and it's about energy. Laurie, it's really
Speaker 1: I think what the FEDS gotta do is try to
Speaker 1: stay ahead of inflation expectations. Right, we all know that,
Speaker 1: and anything that they do today, monetary policy works on
Speaker 1: a lag, you know, anywhere between you know, twelve to
Speaker 1: eighteen months. So what they're doing today isn't impacting anything today.
Speaker 1: And what they're really trying to do is just make
Speaker 1: sure inflation expectations don't become unhinged. And I think that's
Speaker 1: the critical the critical component I mean also the the
Speaker 1: thing too, as we know, you know, monetary policy was
Speaker 1: too easy for too long, so they've got to make
Speaker 1: up some ground here to try to stay ahead of it.
Speaker 1: So unfortunately, I don't think that the news is going
Speaker 1: to get any better over the next month for the FED.
Speaker 1: In terms of inflation, we're starting to see some weaker
Speaker 1: numbers just I think in the overall economy, and so
Speaker 1: you know, this is a this is a tough situation
Speaker 1: for them to be in. But we're also hopeful that
Speaker 1: once we sort of get past the peak of the
Speaker 1: summer that some of these things that we've seen, you know,
Speaker 1: in terms of Target and best Buy and some of
Speaker 1: the supply issues. Um, you know, how you start, you
Speaker 1: should start to see those pricings start to abate a
Speaker 1: little bit and maybe give them a little breathing room.
Speaker 1: I have to say, when I saw that you were
Speaker 1: gonna be on with us, I thought it was the
Speaker 1: perfect guest post FED because you know, when it comes
Speaker 1: to the right liquidity play and where do we go
Speaker 1: short term. Um, we just had a guest on earlier,
Speaker 1: Jim Dixon, who said that all of you know, it's
Speaker 1: the network of registered investment advisors and so many of
Speaker 1: their clients are calling and like we're out. I'm done
Speaker 1: with the market. I'm done. So where do you go
Speaker 1: when you're looking for the right liquidity play right now? Well,
Speaker 1: you know, quite honestly, it's been a challenge because every
Speaker 1: time that you thought about putting some money to work
Speaker 1: and what has been you know, traditional rate hikes that
Speaker 1: we've seen over the last twenty plush years. Right, you know,
Speaker 1: you can, you can start to step your toe back
Speaker 1: into the market. Every time you've done that, you've been punished.
Speaker 1: So you know, obviously in my position, you know, we
Speaker 1: run money market funds, liquidity products, and so what we're
Speaker 1: talking to clients about right now is just you know,
Speaker 1: I know, some of these yields look attractive, but stay short.
Speaker 1: The Fed's got a lot of work to do. You
Speaker 1: need to hide out the front end. And you actually
Speaker 1: see it. I mean when you look at money fund
Speaker 1: assets in the United States, we're still near the highs
Speaker 1: that we saw right right past covid Um Corporate Treasurer.
Speaker 1: You're still holding a lot of cash um banks are
Speaker 1: you know, seed deposits are going up up, so there
Speaker 1: is a ton of dry powder. I think people are
Speaker 1: hiding in the front end and we're seeing that with
Speaker 1: some of the dislocations because there's just not a whole
Speaker 1: heck of a lot of supply to go around for
Speaker 1: all the demand. So okay, but if you have to
Speaker 1: make a choice, I mean, is it just go to
Speaker 1: cash the ultimate liquid asset? You know? Do you go
Speaker 1: to t bills? Do you go to ccs? You know,
Speaker 1: we kind of laugh at you know, we're all getting
Speaker 1: bombarded with money market. Yeah, but they're like points for
Speaker 1: you know, an interest rate. It's it's negligible at this point, right,
Speaker 1: it's pretty low. So where do you go? Well, it's
Speaker 1: interesting if you think about, like you said, you throughout
Speaker 1: you know, treasury bills. If you look at the six
Speaker 1: months tea bill, it's training at a too to fifteen
Speaker 1: to twenty that's going to be underwater, you know, in
Speaker 1: a month. So you know, yes, a lot of people
Speaker 1: are putting money to work in treasury, treasury bills, commercial paper,
Speaker 1: but there's only so much supply to go around. You know.
Speaker 1: What we're turning clients to do is really just parket
Speaker 1: market the overnight because anything that you buy at this
Speaker 1: point is going to be underwater very very quickly. And
Speaker 1: the other thing too that's been really interesting is when
Speaker 1: you look at treasuries cash balance. You know, um, we
Speaker 1: saw that balance go up. You know, tax receipts were
Speaker 1: quite strong this year, so Treasury has actually been cutting
Speaker 1: back on the amount of bill supply in the front end.
Speaker 1: So if you think about these trillions of dollars that
Speaker 1: are not normally in the front end chasing very little supply,
Speaker 1: it's been it's been a little it's been your classic
Speaker 1: supply demand mismatch. So unfortunately, you know, we are telling
Speaker 1: people just to stay in overnight right now. It just
Speaker 1: makes the most sense until we get past these next
Speaker 1: couple of FED meetings. So timis pointing and like, ask
Speaker 1: about the liquidity survey. The thing I'm interested in is
Speaker 1: about corporate liquidity. I want to know about the health
Speaker 1: of corporations. Um, what are you seeing? What are you hearing? Well?
Speaker 1: So the AFP has been doing this corporate um Liquidity
Speaker 1: survey for seventeen years and as you guys know that,
Speaker 1: you know that's that's a long time to be able
Speaker 1: to track what are corporate treasures thinking, what are they doing,
Speaker 1: how are they managing their liquidity, and obviously we saw
Speaker 1: the big dash for cash UM back in March of UM.
Speaker 1: We still are saying, you know, corporations are whole thing
Speaker 1: near record liquidity. You know, they haven't really deployed a
Speaker 1: lot of that cash, but they are starting to put
Speaker 1: money to work, which is really encouraging. I think one
Speaker 1: thing that it will be interesting, UM is you know
Speaker 1: that cash can be put to work, whether it's going
Speaker 1: to be buybacks. There's probably going to be some of
Speaker 1: that cash that will get drugged down, if you will,
Speaker 1: just naturally because of higher costs and things like that.
Speaker 1: But you know, they are staying quite short because kind
Speaker 1: of like you said, you're you know, customers are asking
Speaker 1: what do we do with our cash? Corporate treasures are
Speaker 1: in the same boat. Do we extend or do we
Speaker 1: stay very very short? So they are also staying cautious
Speaker 1: just because of some of the geopolitical risks. Well, so
Speaker 1: great and a perfect guest to talk to us after
Speaker 1: that FED meeting in the current environment. Laurie Brickn actually
Speaker 1: ce IO and head of Global Aquidity and Vestco joining
Speaker 1: us on the phone from Atlanta. Well, we're firmly in
Speaker 1: a bear market here, Carol, the SMP five thunder down
Speaker 1: so far this year. Even more if you look at
Speaker 1: the peak, we're also seeing declines at two point five
Speaker 1: in the in the Dow. Thanks for listening to Bloomberg
Speaker 1: Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg
Speaker 1: dot com, and you can also listen to our radio
Speaker 1: show at two pm Eastern on Bloomberg Radio or watch
Speaker 1: us on YouTube search Bloomberg Global News