Speaker 1: Welcome to Trilliance. I'm Joel Weber, and I'm so Eric.
Speaker 1: I'm the editor of Business Week. As you know, every
Speaker 1: year we do this thing that we call the Jealousy List.
Speaker 1: The Jealousy List is an exercise in humility. Have you
Speaker 1: seen it? Yes? Yeah, no, I've seen him. You've done
Speaker 1: it for a few years, right, multiple years, yeah, And
Speaker 1: so the exercise is one that we invite not only
Speaker 1: the staff of Business Week, but a bunch of our
Speaker 1: contributors throughout the Bloomberg News universe to say, if there
Speaker 1: was one story that someone other than you and and
Speaker 1: Bloomberg did this year, what was it? What are you
Speaker 1: most jealous of in the pantheon of journalism. We get
Speaker 1: a ton of positive feedback about it every year, and
Speaker 1: it makes for a great end of your reading list
Speaker 1: that I encourage everyone to check out over the holidays
Speaker 1: at Bloomberg dot com. And this year was you know,
Speaker 1: everyone was doing good stuff during the pandemic. So it
Speaker 1: was a special treat to be able to look across
Speaker 1: everybody in journalism and say, here's some things that stood
Speaker 1: out to us. And we figured we would take that
Speaker 1: same exercise to trillions this episode and talk to some
Speaker 1: of our main et F contributors and figure out what
Speaker 1: they were jealous of. Yeah, and just curious, did you
Speaker 1: have one that you were jealous of? Yeah? Of course.
Speaker 1: And it was by New York Magazine and the story
Speaker 1: was the World's best Bureaucrat. Do you know who that is? Oh? Yeah,
Speaker 1: well you told yeah, So it was. It was a
Speaker 1: great story that they did. I was super jealous of
Speaker 1: it because, look like we talked about Jerome Pow a lot,
Speaker 1: and we talked about the FED a lot. But the
Speaker 1: way that they framed that, I just thought it was.
Speaker 1: I read the article, It wasn't like I even learned
Speaker 1: that much from it, but they just put it all
Speaker 1: together in this great What was the main framing? Because
Speaker 1: you know, Jerome call gets a lot of ink. Most
Speaker 1: people understand he has big influence on the markets. What
Speaker 1: was the framing here? So Josh Barrow, who you probably
Speaker 1: know he's now a business insider, but he was columns
Speaker 1: for for New York magazine, and and again I just
Speaker 1: thought that it was like the framing of thinking of
Speaker 1: Pale as a bureaucrat, which the trickle down effect and
Speaker 1: why I would still want to talk about it on
Speaker 1: trillions is that you know, he was Superman this year, right,
Speaker 1: and the sun that radiated from the FED basically kept
Speaker 1: the markets and the economy going right. And and so
Speaker 1: the fact that we could talk about that but do
Speaker 1: it through sort of a more of a novel framing,
Speaker 1: I thought was to reach that wider audience that they
Speaker 1: can reach. Yeah, that's really great, and yeah, Josh is
Speaker 1: real good at um he's in the he's in the
Speaker 1: wider world of news, but he knows the markets really well.
Speaker 1: And I can see why you'd pick that. But also,
Speaker 1: can I just go a little crazy with the Superman
Speaker 1: metaphor here? I literally had the thought that you remember
Speaker 1: at the end of Superman one, when he flies around
Speaker 1: the earth like, you know, so fast that he rewinds time.
Speaker 1: I swear as like the Fed kind of pulled the
Speaker 1: Superman one because they made that huge fall in March
Speaker 1: come kind of right back and they really rewound time
Speaker 1: a little bit. It was really unbelievable. I think Superman
Speaker 1: is a pretty apt metaphor. So joining us on this
Speaker 1: episode we have Jako Petershill, who's an editor on the
Speaker 1: Cross Asset team in London. First time on Trillions Clear Balentine,
Speaker 1: who's a cross asset reporter, and Katie Gridfield, the markets
Speaker 1: and et F reporter. And we'll also get Eric's jealousy
Speaker 1: pick too, this time on Trillions Jealousy List. Alright, Yakobe, Claire, Katie,
Speaker 1: great to have you on Trillions again, Thanks for joining us.
Speaker 1: Thank you. Okay, Eric, I gave you mine. What was
Speaker 1: the jealousy list item that you would put on your
Speaker 1: list this year? Well, there's a lot. You know, I'm
Speaker 1: in research, so I'm gonna kind of look to other
Speaker 1: analysts as opposed to reporters. But um, the people I
Speaker 1: tend to get jealous of our Dave Nadigg, Ben Johnson
Speaker 1: at morning Star, Todd rosen Bluth, they always write, you know,
Speaker 1: a couple of things a year that I am really
Speaker 1: impressed by. But Dave Nadie in particular, had two articles
Speaker 1: this year, won during the fixed income bond ETF sell
Speaker 1: off that really nobody goes as deep into trading as him,
Speaker 1: and I thought that was good. But the one that
Speaker 1: recently came out that I wish I wrote, and I
Speaker 1: was thinking of writing, and I'm probably going to quote
Speaker 1: in this book I'm working on, is an article called
Speaker 1: how big is too big? And it's an e t
Speaker 1: F trends And essentially there's been this steady drumbeat of
Speaker 1: like worrying that the et F fish it were passive
Speaker 1: issuers are getting too big. Vanguard and black Rock in particular,
Speaker 1: they own eight percent each of the average stock. That's
Speaker 1: a lot. It's the most uh. Ever, and this institutionalization
Speaker 1: of holdings where you have maybe I don't know two
Speaker 1: dozen firms that have really a huge amount of power
Speaker 1: over corporate America. And it's an interesting issue and it's legit,
Speaker 1: but a lot of the academics they just sort of
Speaker 1: worry about it without really providing any any major evidence. Uh.
Speaker 1: For example, like airline tickets would go up incredibly because
Speaker 1: there'd be no motive for the owners of the stocks
Speaker 1: to The motive would be for them to make more money,
Speaker 1: so they'd increase airline tickets. But there's a lot of
Speaker 1: counterpoints and then they really never provide any solutions for
Speaker 1: this uh in these in these papers, they really you know,
Speaker 1: what, what what do you want to break up the index funds?
Speaker 1: Ban index funds um The other thing is the index
Speaker 1: funds obviously do a lot of good, so most people
Speaker 1: who own them don't really care about this issue. So
Speaker 1: there's a lot of cross currents in this particular issue.
Speaker 1: But Dave just broke it down, really made a simple
Speaker 1: way to explain why they are worrying about it, but
Speaker 1: did kind of ding them for for this, you know,
Speaker 1: idea of here's what he has this quote. With this
Speaker 1: concentration and ownership, the knee jerk reaction from pundits and
Speaker 1: academics alike will be and is already let's prove this
Speaker 1: is a problem. And I do find that somewhat part
Speaker 1: of this. But he goes through the concerns, goes through
Speaker 1: some counterpoints, and then he also goes through what we
Speaker 1: shouldn't do and what we could do, and I like that.
Speaker 1: I like that uh adding of solutions in there. So
Speaker 1: it was just a really good, well rounded article. I
Speaker 1: highly recommend reading it, especially if you get a little
Speaker 1: alarmed by some article that has the headline of like
Speaker 1: is Vanguard too big or is uh passive going to
Speaker 1: raise your airline tickets? Um, just read this piece and
Speaker 1: it will give you a more well rounded picture of
Speaker 1: the situation. It's pretty nerdy, it is, but it's you know,
Speaker 1: when it's an ongoing issue, and it's one that um,
Speaker 1: you know, the academics would argue that it's not that
Speaker 1: wonky because this could could affect consumers. So anybody who
Speaker 1: buys goods, flies and airplanes, not this year, but regularly. Uh,
Speaker 1: this could affect you. That's what they would say. And
Speaker 1: a lot of people on the index side would you know,
Speaker 1: beg the differ. But that's why it's an issue that
Speaker 1: has a lot of depth in my opinion, because it
Speaker 1: really strikes at the heart of markets and capitalism. Okay, Claire,
Speaker 1: did Eric just steal your jealousy list item? No? Um,
Speaker 1: I had had a different one. I um, it was
Speaker 1: an article and it's technically e t N s and
Speaker 1: not E t f s, but I think it can
Speaker 1: can qualify. But what remind us what E t N is?
Speaker 1: So E t N s are unsecured debt obligations. They
Speaker 1: sound similar to e t F s, but they're actually
Speaker 1: pretty different, um in the in the sense that they're
Speaker 1: similar to bonds. Um they have a maturity date. One
Speaker 1: of the things people like about them is that they
Speaker 1: are leveraged a lot of the times and can deliver
Speaker 1: big returns, but they can also really amplify losses UM,
Speaker 1: and they really came into the spotlight this year during
Speaker 1: all the volatility in March and then you know the
Speaker 1: storage back to all time highs and just how that
Speaker 1: market activity really whipsawed these exchange traded notes that counts
Speaker 1: will go with it so UM. But it was one
Speaker 1: that Akani Otani and Sebastian pelle Haero did for the
Speaker 1: Raw Street Journal UM. It came out at the beginning
Speaker 1: of June UM and its title is bankrupt in just
Speaker 1: two weeks. Individual investors get burned by collapse of complex securities,
Speaker 1: and it was all about more retail, smaller investors that
Speaker 1: put all their money into UM E t N s UM.
Speaker 1: Some of them were talking about their retirement savings going
Speaker 1: in there trying to UM get returns on those and
Speaker 1: sort of learned in by that UM possibility of having
Speaker 1: really outsized gains from these leveraged E t N s
Speaker 1: and how UM some of them just got completely wiped
Speaker 1: out during the volatility in March. And what I really
Speaker 1: liked about it was that it it talked to these
Speaker 1: individual investors, which isn't something that's easy to do to
Speaker 1: find people willing to talk about how much money they
Speaker 1: lost um, and also to be able to sort of
Speaker 1: tell their stories, which is something that I wish we
Speaker 1: did more in our articles and one of the goals
Speaker 1: of mine moving into But I thought they did a
Speaker 1: great job of just really laying out, um, kind of
Speaker 1: why these investors would go into the products, some of
Speaker 1: them trying to boost their retirement savings, UM, just their
Speaker 1: idea that bond yields are so low, um, and just
Speaker 1: sort of searching for products. And there's been such a
Speaker 1: discussion over whether there's enough regulation around these e t
Speaker 1: n s and enough disclaimers to sort of prevent retail
Speaker 1: investors from going into them um. And there's a lot
Speaker 1: of back and forth on that debate. But it's sort
Speaker 1: of hard to read this article and not think, Wow,
Speaker 1: something is sort of messed up in the sense that
Speaker 1: these people can lose so much money from these products. Claire,
Speaker 1: that's a good one. I think e t n s
Speaker 1: are kind of like the wild cousin of the E
Speaker 1: t F. They arguably shouldn't even be under the same umbrella.
Speaker 1: They just they are though. But yeah, a lot of
Speaker 1: them closed. This was a year where a lot of
Speaker 1: exotics closed, so a lot of this worry probably took
Speaker 1: care of itself with all those closures like t vix
Speaker 1: u w T. In our rating system, we call these
Speaker 1: the the n C seventeen products. They're worse than rated
Speaker 1: r UM. But the E t F tent is so big,
Speaker 1: and picking a product that you don't understand is is
Speaker 1: definitely a possibility and something that is you know, should
Speaker 1: be looked at and you know, talked about more. But
Speaker 1: or Yako, you want to talk about Europe and how
Speaker 1: insane it is over there? Um, what in terms of
Speaker 1: E t n s. Yeah, they let anything go there. Yeah,
Speaker 1: there's a as a company called Leverage Shares out here
Speaker 1: that does basically their whole product is just it's an
Speaker 1: e t F that gives you leveraged exposure to a
Speaker 1: single stock. So you can buy this e t F
Speaker 1: as a way of like getting like I mean, I
Speaker 1: don't think it goes up to like seven times or anything,
Speaker 1: but they definitely have like triple leverage TESLA exposure and
Speaker 1: it's an e t F and you just buy it
Speaker 1: on an exchange. It's it's bizarre. Um. And of course Eric,
Speaker 1: you know from the past, we also have like seven
Speaker 1: times you know, negative docks index e t N s
Speaker 1: that are you know, issued by sock Gin and banks
Speaker 1: like that, and those are always fun, Joel. They know
Speaker 1: how to party in Europe. That's the bottom. Mean you
Speaker 1: could you imagine if all that stuff was on robin Hood.
Speaker 1: Oh my god. The three x tesla on robin Hood
Speaker 1: is quite is something to think about. Yeah, yeah, there's
Speaker 1: a bit more freedom out here in Europe. You know.
Speaker 1: It's like, you know, we have nude beaches, we have
Speaker 1: like underage drinking and yeah, it goes right, it goes
Speaker 1: fits right. In hatch bars we heard from Quare Now
Speaker 1: Wall Street Journal gave her pains? What gave you pains?
Speaker 1: What are you jealous of? Okay, so if you know,
Speaker 1: but you know, I dabble in volatility a lot too,
Speaker 1: And and this story is kind of it's mostly about volatility,
Speaker 1: but it's tangentially related to to the et P space because,
Speaker 1: as we know, back in ten, a lot of E
Speaker 1: t F and e t N investors got burned trading volatility.
Speaker 1: A similar thing happened this year UM, but in a
Speaker 1: sort of positive twist, it was less UM retail investors
Speaker 1: that got burned than the institutions. UM. This year, so
Speaker 1: that was kind of a heartwarming sort of development. UM.
Speaker 1: So my article that I'm jealous of this year is
Speaker 1: called how to Lose a Billion dollars Without Really Trying UM,
Speaker 1: which is an awesome title, and it was written by
Speaker 1: Leanna Or for Institutional Investor magazine UM, and basically it's
Speaker 1: a it's a long feature and a sort of postmortem
Speaker 1: UM that makes the argument that trading volatility was actually
Speaker 1: the the w or like the sub toxic subprime riggage
Speaker 1: of the Corona crash. Everyone knows what happened right in March,
Speaker 1: VIC spike to a record UM, and a lot of
Speaker 1: people were short volatility, a lot of sophisticated hedge funds,
Speaker 1: a lot of pension funds that invest you know, our
Speaker 1: grandparents money for them, UM, and so pretty much everyone
Speaker 1: was like uniformly burnt on this. Ironically, who came out
Speaker 1: sort of not so badly as the retail investor because
Speaker 1: if you guys remember Posten, there was a lot of
Speaker 1: sort of reform in the volatility etp space UM, and
Speaker 1: these things became kind of a lot less nuclear and
Speaker 1: a lot less popular, So there wasn't as much retail
Speaker 1: speculation on volatility. This time around UM and and in fact,
Speaker 1: a lot of the banks that did things like issue
Speaker 1: these crazy structured notes that were sort of leverage bets
Speaker 1: on volatility, they ended up getting burned a lot more
Speaker 1: than the retail investors who actually bought these things. So
Speaker 1: it was a kind of a bit of poetic justice. Yeah.
Speaker 1: I really loved this story. It was really nicely done
Speaker 1: with a lot of colors. So that mine. Leanna is awesome.
Speaker 1: She just writes these deep dives that I wish I
Speaker 1: had the time or brain to do. Um. I hope
Speaker 1: she's listening because I think she's great. And by the way, Yakob,
Speaker 1: you bring up a good point with every two or
Speaker 1: three years to get a teachable moment in et s,
Speaker 1: I think and X I V was that one like
Speaker 1: three years ago, and it kind of did correct itself.
Speaker 1: They neutered all the leverage ones. People worried about t
Speaker 1: VIX now that did get up to about I think
Speaker 1: it was seven billion in March because it was just
Speaker 1: I think it returned two thousand percent in like three
Speaker 1: months or two months or something. But then that's also
Speaker 1: gone now and so the real Vixie, you know, uh,
Speaker 1: leveraged kind of potential problem. Child's children are pretty much
Speaker 1: gone at this point, although I think there's two, there's
Speaker 1: a couple in the hopper. But what was a problem
Speaker 1: in one of I thought Katie did a great job
Speaker 1: covering this one was USO. That was the teachable moment
Speaker 1: this year? Um, Katie, you want to talk about us
Speaker 1: so real quick and what happened that I'm STI scarred?
Speaker 1: I would say it definitely was a teachable moment. But basically,
Speaker 1: USO invested in the front month oil contract, which, as
Speaker 1: we know in April went negative negative thirty seven per barrel,
Speaker 1: which is just hard to wrap your mind around. So
Speaker 1: USL was scrambling to re shift its holdings, which contracts
Speaker 1: it uh it invested in, and it it did that. Um,
Speaker 1: but I believe it's now still under investigation by the SEC.
Speaker 1: Eric maybe jump in here because I might get it
Speaker 1: wrong over whether it properly disclosed to its investors what
Speaker 1: it was doing with its holdings and how it was
Speaker 1: shifting them around. Yeah, I believe that's still a open investigation.
Speaker 1: That might be a rough word for it. But I'm
Speaker 1: not sure they're going to be liable because if you
Speaker 1: read the prospectives they talk about this being possible, um,
Speaker 1: but it was. It was just oil mcgeddon. Nobody thought
Speaker 1: that futures could go negative, and the idea was, you know,
Speaker 1: do we let futures go negative and then we'll have
Speaker 1: to owe people money like the people, or do we
Speaker 1: completely newter the exposure and water it down. And they
Speaker 1: chose the safe route. And so the ultimately the problem
Speaker 1: with it then was that people who who wanted it
Speaker 1: for the hardcore front month exposure didn't get it. They
Speaker 1: weren't getting that oil rebound like they wanted to. So
Speaker 1: the whole thing was a big mess. USO ties into
Speaker 1: the retail story because it was a very popular stock
Speaker 1: on not a stock and et up on robin Hood
Speaker 1: when you could still track their day to day holdings.
Speaker 1: People just kept piling into US. So even as all
Speaker 1: this turmoil was unfolding, because I guess retail investors were
Speaker 1: like this invests in oil. I want to bet on
Speaker 1: the bottom and oil here we go. And Joel, you
Speaker 1: know what's interesting about oil. It's that's one of the
Speaker 1: things I'll get texts about from old college friends and stuff,
Speaker 1: when they see oil go down that much that it
Speaker 1: makes like the CBS Nightly News with Lester Holt or
Speaker 1: whatever they want in they feel like they're Warren Buffett.
Speaker 1: They're like, I'm I'm buying at the bottom and USO
Speaker 1: is kind of the only way to get that exposure.
Speaker 1: And again, a teachable moment. I doubt we're going to
Speaker 1: see that kind of frenzy next time. It sounds like
Speaker 1: something your dad would call you about. Oh yeah, he does.
Speaker 1: Yeah that. I don't know if that has enough for him,
Speaker 1: though he likes even Yeah, that's it's probably two for him.
Speaker 1: By the way, he keeps telling me about t vix
Speaker 1: and how low it's gotten in his account because he
Speaker 1: keeps reverse splitting, and uh, we have a lot of
Speaker 1: fun on that. Yeah, I'm like, hey, but it's up.
Speaker 1: I said t vix went up like two, and he
Speaker 1: basically looked at it at the percentage he went up
Speaker 1: was maybe like one percent, because that's how much he
Speaker 1: had lost over the five years he's held it. Anyway,
Speaker 1: the whole thing was it was funny. There's an episode
Speaker 1: where we interview my dad about his experience with t vix,
Speaker 1: and it's a classic case of you know what Claire
Speaker 1: was talking about, how you have real people who buy
Speaker 1: this stuff. He bought it because he thought Hillary was
Speaker 1: gonna win and the market would just plunge. And he said,
Speaker 1: what will go up to most if the market plunges?
Speaker 1: And I said, well, t vix, but you gotta sell
Speaker 1: it whether it works or not, in a week, and
Speaker 1: he just didn't sell. It's a long term investor in TVA. Okay, Katie,
Speaker 1: uh Uso? Was that? Was that your jealousy pick or
Speaker 1: did you have something else? I think we did a
Speaker 1: pretty good job covering Uso, so I'm actually my jealousy
Speaker 1: pick is pretty recent. It's from earlier this month. It's
Speaker 1: also from the Wall Street Journal, so Claire, we have
Speaker 1: our targets, but it's by Shanna Schoenberger and it's on
Speaker 1: a study that it's really fascinating. I wanted to write
Speaker 1: about it, I just didn't get time. It was released
Speaker 1: in October and it's about target date funds, which are
Speaker 1: it's a one point for trillion dollar industry. It's extremely
Speaker 1: important and uh it's it's exactly what it sounds like.
Speaker 1: You know, investors pick a target date fund with a
Speaker 1: specific date further retirement savings, and it glides them towards
Speaker 1: that date and gradually shifts them into bonds. Yes, exactly,
Speaker 1: you can just set it and forget it. You're on autopilot.
Speaker 1: But this study was from David Brown, a professor at
Speaker 1: the University of Arizona and Sean Davies, professor at the
Speaker 1: University of Colorado at Boulder, and they found basically that
Speaker 1: target date funds sponsors, because target date funds are funds
Speaker 1: of funds, they charged basically two fees, and because of
Speaker 1: those fees, they charged nearly two point five billion in
Speaker 1: XS fees in seen alone versus what you could save
Speaker 1: by just replicating those portfolios with a e t F.
Speaker 1: So it just goes to show that the retire the
Speaker 1: American retirement system could be improved if perhaps of e
Speaker 1: t f s were allowed in for oh one case,
Speaker 1: but just an incredibly important study and story, and she
Speaker 1: did a great job. Added additional reporting where she talked
Speaker 1: to some of the biggest target date fund sponsors, Vanguard
Speaker 1: Fidelity and basically got them to defend their fees. So
Speaker 1: great article. I wish I had written it, but she
Speaker 1: beat me to the punch. Yeah. I think that's a
Speaker 1: um a really good example as well of something that
Speaker 1: I wish we could have covered UM. We definitely have
Speaker 1: our our target set out for one about who we
Speaker 1: have to be. But I think it's a tremendously Like
Speaker 1: you said, it's UM one point four trillion, so it's
Speaker 1: tremendously important for us to cover that and to be
Speaker 1: talking about it. And one thing I will add about
Speaker 1: the study is UM. You know, they estimate from that
Speaker 1: two point five billion and XS fees, investors could save
Speaker 1: about one percent per year by just replicating with E
Speaker 1: t s. But that does kind of ignore the set
Speaker 1: it and forget it mentality. You know, investors probably don't
Speaker 1: want to be working to recreate these portfolios all the time,
Speaker 1: but I mean it's still hugely important if you're saving
Speaker 1: for retirement, that one percent matters a lot. And also
Speaker 1: say that it seems to me that there's the et
Speaker 1: has to become so popular. They trade, there's so much
Speaker 1: innovation that most of the media has really covered them
Speaker 1: to the point where ten years ago there was hardly
Speaker 1: any coverage. Now it's very much matured into full coverage.
Speaker 1: But I feel like they've left the mutual fund world
Speaker 1: too much. There's not enough eiveballs and lights being shined
Speaker 1: and what is still ten trillion dollars. There's a lot
Speaker 1: of things going on there, and that's interesting to me,
Speaker 1: given that mutual funds still have double uh if you
Speaker 1: have money market funds more than double what E t
Speaker 1: F s have uh, yet they are you know, get
Speaker 1: maybe I don't know a third of the coverage, and
Speaker 1: so it's good to see some of that, especially the
Speaker 1: fore when k plans that you know why, because that
Speaker 1: stuff isn't gonna get a lot of clicks. I'm sorry,
Speaker 1: it's just target date fund this that, or it's just
Speaker 1: not going to light it up. But it's good stuff.
Speaker 1: I'll comfort myself with that. I also find that weird, Eric,
Speaker 1: because particularly around March, when we were all talking about
Speaker 1: like the l QD sort of dislocation, a lot of
Speaker 1: that stuff was happening in mutual funds, much worse than
Speaker 1: it was in E t F and there was really
Speaker 1: no one or out to cover it except for like
Speaker 1: you guys at b I. So I'm struck by that
Speaker 1: as well. Okay, wait, Eric, you're gonna put on your
Speaker 1: stand in Clauds costume because Claire Jacob Katie He's got
Speaker 1: a gift for you. I do what what is it, Eric.
Speaker 1: So I went through all of your articles and picked
Speaker 1: one of each I get, I get updates of everything
Speaker 1: you write, so you do great work. And I went
Speaker 1: back and look through all of your articles to pick
Speaker 1: out one of each of yours that I was jealous
Speaker 1: of and just feel like, really nailed it. And so
Speaker 1: I guess I'll start with Claire um. Claire's coverage of
Speaker 1: Cathy Wood has been monumental to me. That's probably the
Speaker 1: story of the year. Again, you know, seventeen billion of
Speaker 1: assets and ARC isn't that much percentage wise, but she's
Speaker 1: just bucked so many odds that you you just can't
Speaker 1: not cover this story. And the one that I really
Speaker 1: liked was Cathy Wood's fun bought more Tesla after shares
Speaker 1: got quote slapped and she had us. See, you guys
Speaker 1: can quote the people, and that's why I think you
Speaker 1: had a lot of value. You can also do stuff
Speaker 1: quicker than weekend in research, so you had you were
Speaker 1: right on this article. Kathy shares her holdings every day
Speaker 1: and she bought more when Tesla went down in September,
Speaker 1: And the quote you have here is I was happy
Speaker 1: it got slapped. We wait for those sorts of delays
Speaker 1: where there's outright fear. If we think this thought has
Speaker 1: dropped enough, we'll move in, and we did. Tesla has
Speaker 1: gone up fifty six per cent since then, and it
Speaker 1: really just, I don't know, adds to the whole mystique
Speaker 1: of Kathy would just being like probably the zeitgeist, the
Speaker 1: active manager of this era. And I think you've had,
Speaker 1: you know, half a dozen articles on her that really
Speaker 1: hit the spot, that one in particular. UM, thank you.
Speaker 1: It's been really fun to cover her and to see
Speaker 1: what she's doing. And I think especially you know, with
Speaker 1: journalism in general, it's all about the people sort of
Speaker 1: behind the market moves and these things like that, but
Speaker 1: especially when it's an active manager who's actively making these
Speaker 1: decisions to go into tesla um or things of that nature.
Speaker 1: And so that's why I've really enjoyed being able to
Speaker 1: in of you Kathy and sort of figure out and
Speaker 1: write about what she's thinking behind some of these moves. UM.
Speaker 1: And Okay, Yacob, speaking of arc I think you know
Speaker 1: I'm going with this. Jacob had an article. I tweeted
Speaker 1: this out and rarely my tweets go quote viral viral.
Speaker 1: For me, is like maybe fifty retweets. For other people,
Speaker 1: it's probably over a thousand. But um, most of our
Speaker 1: stuff is too wonky to get much love. But Yakob
Speaker 1: I tweeted out your JP Morgan article and people loved it.
Speaker 1: And basically, I don't even know how you found this.
Speaker 1: I'd like to know, but the article is basically the
Speaker 1: title is JP Morgan offers you only Live once or
Speaker 1: yolo trade to bet on ark ETFs where they basically,
Speaker 1: you know, these Wall Street banks designed these structure products
Speaker 1: for their high net worth clients or institutions, and in
Speaker 1: this case, they made a structured product tied to e
Speaker 1: t S from arc Um that basically packaged three of
Speaker 1: the e t F s leverage one point five times
Speaker 1: over six years. Um, it makes sense to me that
Speaker 1: they would do this. I think we actually had direction
Speaker 1: on e t F i Q once and I jokingly said,
Speaker 1: when's the three x R e t F coming out?
Speaker 1: Because normally when an e t F breaks through like
Speaker 1: that and gets a couple of billion, you see a
Speaker 1: leverage version of it. And so they kind of joked
Speaker 1: and didn't say anything. But I'm not surprised that this
Speaker 1: is happening. But it really struck a nerve with people,
Speaker 1: and I'm just curious how you found the article and
Speaker 1: maybe if you want to explain how the product works. Yeah, sure, Um,
Speaker 1: I mean these things this was a publicly you know,
Speaker 1: SEC registered note. So I have a little search that
Speaker 1: I have every once in a while, I I take
Speaker 1: a little spin through the latest freaky you know, Wall
Speaker 1: Street inventions, and um, yeah, I spotted arc. I had
Speaker 1: never seen anything like this one because it was linked
Speaker 1: to three RK E t F s and they're they're
Speaker 1: certainly having like there's zeitgeist moment um. But I also
Speaker 1: noticed it was crazy, like it's a six year note
Speaker 1: leveraged one and a half times, Like like Eric, you
Speaker 1: were talking about not holding these leveraged you know, vix
Speaker 1: etp s for longer than a week, Like can you
Speaker 1: imagine who holding something for six years that's a leverage
Speaker 1: one and a half times. I mean, it's just wild.
Speaker 1: I mean I fell in love as soon as I
Speaker 1: saw it. Um. And so yeah, we we did this story.
Speaker 1: And interestingly, a guy actually wrote in afterwards and I
Speaker 1: don't think I'm gonna be able to do this story,
Speaker 1: so I might as well kind of give him a
Speaker 1: shout out on this financial advisor from Princeton, New Jersey,
Speaker 1: which is not far from where you are. Eric wrote
Speaker 1: in and said, hey, I was the one who came
Speaker 1: up with this structure. I went to Ben P. Parry
Speaker 1: Bah back in October to build me this exact same
Speaker 1: note UM and he was like, I want credit, you know.
Speaker 1: And and so Dan over at White Night Strategic Wealth
Speaker 1: Advisors actually came up with this structure back in October
Speaker 1: UM and and yeah, he told me like this is
Speaker 1: a sleeve in his UM in some of his investors portfolio,
Speaker 1: like they're already exposed to ARC. But he was like,
Speaker 1: look why not, Like it was a kind of a
Speaker 1: Yolow play. It's like, why not make this into a
Speaker 1: tiny little sleeve of their portfolio. He's really a big
Speaker 1: fan of Cathy would and he thinks the fact that
Speaker 1: it's actively managed UM means that they're gonna just keep
Speaker 1: on winning. You know that that's his sort of justification.
Speaker 1: So anyway, yeah, it was. It was a weird story,
Speaker 1: but thanks for highlighting it. That's amazing. That is amazing,
Speaker 1: isn't it? Um Sign of the times? I the skeptic
Speaker 1: of that UM and which I think you you had
Speaker 1: in the stories I recall yago was that it also
Speaker 1: is like, could you imagine a better indicator for the
Speaker 1: top of the market than than that product? Yeah? Yeah,
Speaker 1: And and in fairness that the terms. I I showed
Speaker 1: it to a couple of you know, structured product geeks,
Speaker 1: and they were like, no, these are not good terms,
Speaker 1: you know, they're They're just like you will get screwed
Speaker 1: on this note eventually, you know. But hey, it's it's
Speaker 1: it's a fun ride while it lasts. Okay, So for Katie, look,
Speaker 1: there's so there's so much to choose from Katie. It
Speaker 1: was an embarrassment of I thought. I thought he was
Speaker 1: gonna say, really, it was a really bad year, Katie,
Speaker 1: it was a really bad year. You gotta pick it
Speaker 1: up next year. But yeah, so look for of all um,
Speaker 1: the headline of yours I like the best. So this
Speaker 1: isn't the article, but just the headline this. I read
Speaker 1: this and I was like, oh my god, there's so
Speaker 1: much going on here. It's almost like sometimes your ability
Speaker 1: to make the headlines seem downright Shakespearean is amazing. So
Speaker 1: here's the headline about USO giant fund at heart of
Speaker 1: oil storm. Loses most cash in four years. I just
Speaker 1: I don't know. I just love that, Like the the
Speaker 1: density of that headline is and the package drama in
Speaker 1: there is amazing. So that's just that. That was my
Speaker 1: favorite headline of yours. Now the story I like the
Speaker 1: best is this one that was that was the stocking.
Speaker 1: This is the big present with the special Santa Claus wrapping. Um. Okay,
Speaker 1: Wall Street theories on billions slashing through Schwab funds Okay,
Speaker 1: not the most interesting topic. But the approach here is
Speaker 1: fascinating and it's something we can't do and b I
Speaker 1: so I'm jealous of this, but I also find that
Speaker 1: smart of you. We don't know who's doing what in
Speaker 1: e T s. This is one of the reason institutions
Speaker 1: love using them. There's there's no trace and so every
Speaker 1: time you see these flows, it's like a Sherlock Holmes mystery,
Speaker 1: and you you've got to try to solve it. Now,
Speaker 1: you could just sort of take a shot, or I
Speaker 1: don't know, uh, go with the best theory. But I
Speaker 1: love that you print all the theories. So you go
Speaker 1: down here, you look at the flows, and then you've
Speaker 1: got Okay, here's what James Pillow at Moore's and Kabat says,
Speaker 1: I'm probably butchering that name. Here's what Nature a c
Speaker 1: at the E T F Store says, Here's what Matt
Speaker 1: Haley Maley at Miller says, Here's what Athanacios that's from
Speaker 1: b I well, here's what he says, and here's what
Speaker 1: Todd says. So you know, the reader can kind of
Speaker 1: read all these and to me, this is just this
Speaker 1: shines a light on the whole concept of flows and
Speaker 1: E t F and how you never really ever know
Speaker 1: unless the person who did it steps forward, and they
Speaker 1: never do. And this happened recently with Claire's Voo article
Speaker 1: saw eight billion dollars out and we you know, you
Speaker 1: guys both were trying to put that together. Can you
Speaker 1: talk a little bit about just trying to solve these
Speaker 1: mysteries when it comes to flows. Yeah, well, credit were
Speaker 1: credits do? I wrote that shop story with Claire, and
Speaker 1: I wrote that Voo article with Claire, And I mean,
Speaker 1: I want to give a shout out to our editors
Speaker 1: who are I really appreciate that they let us have
Speaker 1: that flexibility, because there's sometimes when Claire and I are
Speaker 1: just chasing our tails and we do end up with
Speaker 1: like five different theories for what could be behind a
Speaker 1: huge movement, and it's impossible to know unless we hear
Speaker 1: it from the horse's mouth, and a lot of the
Speaker 1: times we don't even know who the horse is. So
Speaker 1: I've I just love that format for when you do
Speaker 1: see just you know, a huge outflow that everyone's talking about,
Speaker 1: there's not one unifying theory that we're able to just
Speaker 1: break it out and be like, you're the best guesses,
Speaker 1: choose your own adventure, and uh, most of the times,
Speaker 1: I mean, we get a lot of engagement from those articles,
Speaker 1: which I also really appreciate, and you can get a
Speaker 1: pretty good sense of what's going on. Yeah, I think
Speaker 1: that adds a value to our readers too, to be
Speaker 1: able to look at and say, hey, these are some
Speaker 1: of the theories behind it um and that gives some
Speaker 1: sort of more insight into our thinking too, instead of
Speaker 1: us just sort of pretending like we know what's going on,
Speaker 1: because a lot of times we just it's impossible to
Speaker 1: actually know. And that wasn't this is a new thing,
Speaker 1: this didn't happen, this is a So that's why I
Speaker 1: wanted to point it out. I think it's a great
Speaker 1: evolution of the articles rather than just as you said,
Speaker 1: I think it's good just put all the theories out
Speaker 1: there that that's the truth. The truth is you don't know,
Speaker 1: and but here's the theories I did. Audience can be
Speaker 1: the judge. All right. Congratulations to our Jealousy list honorees. Eric,
Speaker 1: thank you for playing Santa Claus. You did a very
Speaker 1: good job. Special special thing that was lame. That was
Speaker 1: a lame ho ho by the way, joke just I
Speaker 1: went to the mall on Friday morning. Every year I
Speaker 1: go to the mall on a weekday morning to beat
Speaker 1: the system and do Christma shoping when there's nobody there,
Speaker 1: and I saw the Santa and it is behind these
Speaker 1: plexiglass and they put the kids in front of the
Speaker 1: glass so that maybe you don't see the glass. And
Speaker 1: the photo was so sad. We we we did an
Speaker 1: amazing story and and quick take collab um about Santa's
Speaker 1: and snow globes. That was like a mal trend. They
Speaker 1: have like a snow globe setup. So the story for
Speaker 1: kids is that Santa got trapped in the snow globe.
Speaker 1: Uh and special thanks to Clear Jakob and Katie for
Speaker 1: for joining us and Trillions and and and sharing something
Speaker 1: I know that hurts, which is what you were jealous of.
Speaker 1: Happy holiday, So all of you guys, thank you, thank you,
Speaker 1: thanks for listening to Trillions. Until next time. You can
Speaker 1: find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcast, Spotify,
Speaker 1: and wherever else you like to listen. We'd love to
Speaker 1: hear from you. We're on Twitter, I'm at Joel ever Show,
Speaker 1: He's at Eric Falcunas. You can find Katie at k Greifeld,
Speaker 1: Claire at CFB Underscore eighteen, and Jacob at y Peter Steal.
Speaker 1: This episode of Trillions was produced by Magnus Hendrickson. Francesca
Speaker 1: Leedy is the head of Bloomberg Podcast by