WEBVTT - Banking, Cybersecurity, and Green Investing 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.720 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.360 --> 0:00:20.439 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:20.640 --> 0:00:23.000 Let's talk banking. We've got a c suite conversation here. 0:00:23.079 --> 0:00:26.000 We're talking Texas, We're talking banking. We do that with 0:00:26.000 --> 0:00:29.160 the Rob Holmes, CEO of Texas Capital Bank, joins us 0:00:29.480 --> 0:00:32.560 Dan Hoverman Hoverman Hoverman, Thank you very much, sir, ahead 0:00:32.640 --> 0:00:36.599 of corporate and investment banking Texas Capital Bank. Guys, talk 0:00:36.640 --> 0:00:39.479 to us about what is Texas Capital Bank? Who your 0:00:39.479 --> 0:00:40.960 customer's house business? 0:00:41.640 --> 0:00:43.120 Well, that's a lot to unpass. 0:00:43.240 --> 0:00:44.400 That's why we want to talk guy. 0:00:44.600 --> 0:00:45.920 What is Texas Capital Bank. 0:00:46.960 --> 0:00:50.559 It is the first full service financial services for arm 0:00:50.600 --> 0:00:51.879 to headquartered in Texas. 0:00:52.200 --> 0:00:52.480 Nice. 0:00:52.800 --> 0:00:55.120 We did a wholesale transformation over the last two and 0:00:55.120 --> 0:00:59.120 a half years. Most people overuse the word transformation. There 0:00:59.200 --> 0:01:01.720 is nothing it hasn't been touched in this bank. We 0:01:01.760 --> 0:01:06.679 redid the tech stack, the operating org structure about twenty 0:01:06.720 --> 0:01:09.160 five to forty new products and services, depending on how 0:01:09.200 --> 0:01:13.600 you define them. We did segmentation. We founded an investment bank, 0:01:13.720 --> 0:01:17.960 both wholesale investment banking and also institutional sales and trading. 0:01:18.680 --> 0:01:22.040 Both are profitable in the first year, which is pretty great. 0:01:22.400 --> 0:01:25.240 We also have a top five mortgage warehouse business in 0:01:25.280 --> 0:01:28.280 the country, which which allowed us to build frankly, the 0:01:28.600 --> 0:01:30.440 sales and trading floor off the back of that with 0:01:31.440 --> 0:01:35.880 mortgage trading TBA and gestation. So we're a wholesale bank 0:01:36.000 --> 0:01:38.960 built for businesses but also private wealth to people that 0:01:39.040 --> 0:01:44.160 run and own those businesses. We have national verticals, our 0:01:44.200 --> 0:01:51.320 corporate bank, industry verticals so FIG, TMT, Energy, diversified. 0:01:51.760 --> 0:01:53.920 Healthcare, and healthcare government nonprofit. 0:01:54.040 --> 0:01:55.080 So those are those. 0:01:54.840 --> 0:01:57.360 Are the Those are the industry verticals that are nationwide, 0:01:58.400 --> 0:02:02.680 mortgage warehouses, nationwide, season trading obviously, investment banking obviously. 0:02:03.360 --> 0:02:08.560 But the core focus and base and scales is Texas. 0:02:08.720 --> 0:02:09.120 For sure. 0:02:09.200 --> 0:02:12.880 We're the number one lender to Texas businesses of any 0:02:12.919 --> 0:02:14.679 Texas based bank, which is a pretty big deal. 0:02:14.800 --> 0:02:16.160 Nice that is a big deal. 0:02:16.560 --> 0:02:18.520 It's a big state, man, it is a large state, 0:02:18.639 --> 0:02:20.920 and they got a lot going on down there. So 0:02:20.960 --> 0:02:23.960 how important I mean, the oil price must be extremely 0:02:24.000 --> 0:02:27.240 important to you. And we're watching today West Text Intermedia 0:02:27.320 --> 0:02:28.560 went up over ninety five. 0:02:28.400 --> 0:02:31.600 Dollars a barrel. I guess that's good for the Texas economy. 0:02:31.919 --> 0:02:35.240 Well, the great thing about Texa economy is how diversified 0:02:35.280 --> 0:02:38.320 it is. So oil and gas about nine percent, and 0:02:38.400 --> 0:02:40.239 everybody talks about oil and gas and fossil fuels and 0:02:40.240 --> 0:02:43.480 they talk about Texas, but it's also the number one 0:02:43.520 --> 0:02:48.200 and two when in Solar Provider we produce more alternative 0:02:48.320 --> 0:02:53.680 energy than California. So it's oil is a big deal, 0:02:54.160 --> 0:02:56.799 but it's it's not as big as it used to 0:02:56.800 --> 0:02:58.400 be as house people think of Texas. So if you 0:02:58.400 --> 0:03:01.000 look at our ETF, which Dan can talk about, our 0:03:01.000 --> 0:03:05.919 ETF is comprised of contribution of the subsector to GDP 0:03:06.000 --> 0:03:09.480 of the market cap, and the five largest holdings in 0:03:09.560 --> 0:03:15.240 that is Tesla, McKesson, Waste Management, Schwab, and Excellent. Now 0:03:15.360 --> 0:03:17.480 I can't think of a more diverse economy than that, 0:03:17.560 --> 0:03:18.280 right exactly. 0:03:18.360 --> 0:03:20.560 And economy. Look, the economy is ten percent of the 0:03:20.600 --> 0:03:22.000 economy of the United States. 0:03:22.600 --> 0:03:24.919 You can't say a TF without telling me the ticker. 0:03:25.160 --> 0:03:28.720 T XS, t X Texas without the valves. 0:03:28.440 --> 0:03:33.280 T X Texas without pretty cool, right, Hey Dan on 0:03:33.320 --> 0:03:37.040 the corporate investment banking site, what are your clients saying 0:03:37.080 --> 0:03:38.720 about their outlook here? 0:03:38.800 --> 0:03:41.000 I mean, how's business for your clients? 0:03:41.960 --> 0:03:45.640 It remains very robust if you look at the way 0:03:45.640 --> 0:03:49.000 that folks are kind of participating in the economy, at 0:03:49.080 --> 0:03:51.160 least from the Texas angle. If there's a recession in 0:03:51.160 --> 0:03:53.840 the United States, there probably won't be a recession in Texas. 0:03:54.160 --> 0:03:57.320 So if you look at the performance in the TXs 0:03:57.320 --> 0:04:01.240 itself kind of outperforming the Russell MidCap or the SMP. 0:04:02.320 --> 0:04:05.280 The more Texan you get, the more the stocks outperform. 0:04:05.560 --> 0:04:08.200 So the you know, the outperformance on the index is 0:04:08.200 --> 0:04:10.960 really driven by kind of how closely tied people are 0:04:11.040 --> 0:04:11.920 to the Texas economy. 0:04:11.960 --> 0:04:14.080 We got introduced him to Matt Winklin. That's a column 0:04:14.160 --> 0:04:17.599 right there, Yes, exactly, Yes, we have our founder of 0:04:17.600 --> 0:04:20.240 Bloomberg News. He loves going into state by state, looking 0:04:20.240 --> 0:04:22.440 at the data and saying that, you know, for example, 0:04:22.920 --> 0:04:25.960 California is people saying California is San Francisco in trouble. 0:04:26.080 --> 0:04:28.280 It's not what the data shows. So he'd love to 0:04:28.320 --> 0:04:30.800 see talking about that kind of data here. So I mean, 0:04:31.520 --> 0:04:33.960 what's the future, what's the next three to five years 0:04:33.960 --> 0:04:34.560 for your bank? 0:04:34.680 --> 0:04:34.880 Here? 0:04:35.000 --> 0:04:38.200 Is it continue to share in Texas? What's the kind 0:04:38.200 --> 0:04:38.960 of your strategy? 0:04:39.160 --> 0:04:41.560 Look, here's the great news. We started two and a 0:04:41.560 --> 0:04:44.880 half years ago on a wholesale transformation. There was a 0:04:44.920 --> 0:04:47.919 lot of risk and doing everything at once that is done. 0:04:47.960 --> 0:04:51.120 There was risk and acceptance of the strategy by clients 0:04:51.160 --> 0:04:55.080 and by employees and talent check check. The entire platform 0:04:55.160 --> 0:04:57.520 was built about a month ago. Was the first time 0:04:57.560 --> 0:05:01.400 we could say the platform was built, the capabilities were there, 0:05:01.560 --> 0:05:04.320 and the talent was there top to bottom, both both 0:05:04.360 --> 0:05:07.599 top down and bottom up. And so what's next for 0:05:07.720 --> 0:05:11.280 us is just going to lighting clients, onboarding clients as 0:05:11.279 --> 0:05:13.359 fast as we are today. We onboarded more clients the 0:05:13.400 --> 0:05:15.799 first quarter than near the quarter the history of the bank. 0:05:16.040 --> 0:05:18.960 In spite of the first quarter, Vince regional banks were 0:05:19.120 --> 0:05:21.800 on board are thirty percent more clients the second quarter 0:05:21.839 --> 0:05:22.640 than the first quarter. 0:05:23.920 --> 0:05:25.440 We are a top. 0:05:25.279 --> 0:05:30.479 Ten agent for leading bank syndications in the country for 0:05:30.560 --> 0:05:33.640 the first six months. So it's it's just you know, 0:05:33.839 --> 0:05:36.960 we've done everything. Most of the people on this platform 0:05:38.279 --> 0:05:40.960 that our leaders have come from much more complex jobs 0:05:41.279 --> 0:05:45.240 and much more larger companies, and we've all done it 0:05:45.240 --> 0:05:47.360 a thousand times, we haven't done it with this jersey on. 0:05:47.720 --> 0:05:49.479 So we got to do it with this jersey on 0:05:49.560 --> 0:05:52.200 and just build what we have. And we're really, really, 0:05:52.240 --> 0:05:55.000 really excited about doing that, and the client response has 0:05:55.040 --> 0:05:55.760 been overwhelming. 0:05:56.320 --> 0:05:59.200 Hey, Dan, you go into pitch business to on a 0:05:59.320 --> 0:06:02.800 piece of corporate banking, investment banking business. How often are 0:06:02.880 --> 0:06:05.600 you competing against some of our neighbors here in New 0:06:05.680 --> 0:06:08.240 York City. Who's your competitor really day to day? 0:06:08.320 --> 0:06:10.840 Yeah, there's really only two types of competitors when you 0:06:10.880 --> 0:06:14.320 think about it. So we're either competing against other Texas banks, 0:06:14.720 --> 0:06:17.920 and the sales point there is that we're full service 0:06:17.920 --> 0:06:20.880 and nobody else that's headquartered in Texas is. And so 0:06:20.920 --> 0:06:23.239 at some point, unless you bank with us, you're going 0:06:23.240 --> 0:06:27.080 to outgrow your relationship. If you want to have a 0:06:27.120 --> 0:06:29.719 relationship where you never need to go move your accounts, 0:06:29.760 --> 0:06:33.920 you never need to make a new friendship with an RM. Frankly, 0:06:33.960 --> 0:06:35.560 it's going to be tough to find folks that are 0:06:35.560 --> 0:06:40.880 more maniacally focused on delivering great client experience, then you 0:06:40.920 --> 0:06:43.880 should bank with us, or we're competing with one of 0:06:43.880 --> 0:06:45.640 the banks that are in New York and at some 0:06:45.760 --> 0:06:49.200 point our job really is just to make them fungible. 0:06:49.480 --> 0:06:51.919 We work well with every New York bank. We know 0:06:52.000 --> 0:06:54.039 a lot of us have a history of working. 0:06:54.080 --> 0:06:56.640 You work with all the New York banks, even those 0:06:56.680 --> 0:06:59.520 that have a say in social issues. 0:07:00.040 --> 0:07:01.840 A client have any banned them from Texas. 0:07:02.200 --> 0:07:06.560 It's it's you know, we're all about clients in here yesterday. 0:07:06.600 --> 0:07:08.080 So yeah, he's with. 0:07:07.960 --> 0:07:08.760 Us this week. 0:07:10.480 --> 0:07:13.920 Okay, with us today? Oh excellent, Okay, have a dinner 0:07:13.960 --> 0:07:14.360 with him and I. 0:07:14.600 --> 0:07:19.360 So what I would say is it is it is 0:07:20.360 --> 0:07:25.760 highly unusual for a person running a business or that 0:07:25.920 --> 0:07:29.760 owns a business that wants to defer the decision making 0:07:29.840 --> 0:07:33.640 about his or her business to San Francisco, New York 0:07:33.720 --> 0:07:36.280 or Charlotte so they can get the same products and. 0:07:36.240 --> 0:07:38.400 Services and be locally covered. 0:07:38.920 --> 0:07:41.960 That's their preference, and we we have a we have 0:07:42.000 --> 0:07:43.680 a high amount of confidence we can do that. 0:07:44.160 --> 0:07:48.360 But what's what's recruiting talent? Like I mean, obviously it's 0:07:48.400 --> 0:07:51.440 a very hot place to move right. Everybody wants to be. 0:07:51.560 --> 0:07:54.640 We hear about Austin all the time. I love Dallas, 0:07:55.160 --> 0:07:57.520 Paul San Antonio. 0:07:57.400 --> 0:08:00.840 Recruiting talent, got some good schools. Texas Okay. 0:08:00.920 --> 0:08:03.200 So Texas had is the only state in the country 0:08:03.200 --> 0:08:07.640 with living Tier one universities. We had started a junior program, 0:08:07.720 --> 0:08:10.520 first junior program ever at this bank, like everything else 0:08:10.560 --> 0:08:11.360 first of this bank. 0:08:12.200 --> 0:08:14.400 The first year we had sixty spots. We had eight 0:08:14.520 --> 0:08:15.400 hundred applications. 0:08:15.400 --> 0:08:18.400 Second year of sixty spots, two thousand applications, third year 0:08:18.440 --> 0:08:19.960 sixty spots, about twenty eight hundred. 0:08:20.240 --> 0:08:24.120 So junior great senior. Let's just put it this way. 0:08:24.160 --> 0:08:27.200 I've had more than two or three CEOs in New 0:08:27.320 --> 0:08:29.480 York called me and asked me how the hell I 0:08:29.640 --> 0:08:32.960 hired that person? And so I would say we were 0:08:33.000 --> 0:08:36.000 able to hire. It's not easy, but people want to 0:08:36.000 --> 0:08:37.800 be a part of a build, they want to make 0:08:37.840 --> 0:08:40.199 a difference, and they love living in Texas. 0:08:40.320 --> 0:08:42.120 What's the biggest challenge you guys face right now? 0:08:42.800 --> 0:08:44.760 The biggest challenge is, you know what, just what I've 0:08:44.800 --> 0:08:48.679 said earlier, We've got to execute perfectly. Like when we 0:08:48.760 --> 0:08:53.640 led the largest aged did debt deal in the country 0:08:53.679 --> 0:08:56.400 two weeks ago for a Texas based on a gas company. 0:08:56.840 --> 0:08:58.840 Now think about that, the largest SOL led deal in 0:08:58.880 --> 0:08:59.600 the country. 0:08:59.400 --> 0:09:03.480 Bank Capital did London. It was a capital markets deal. Okay, 0:09:04.000 --> 0:09:05.160 we don't own any of it. 0:09:05.240 --> 0:09:05.560 Okay. 0:09:05.800 --> 0:09:07.120 It was globally. 0:09:06.679 --> 0:09:10.240 Distributed with the best investors in the world and we 0:09:10.280 --> 0:09:10.800 did it great. 0:09:10.920 --> 0:09:11.880 But it is our first time. 0:09:12.360 --> 0:09:14.120 I mean, if you go talk to the CEO and 0:09:14.160 --> 0:09:16.280 the board, the client, they love it. And by the way, 0:09:16.520 --> 0:09:20.120 a money center bank pitched it, pitched a different structure 0:09:20.559 --> 0:09:23.640 and spit the bit so which is causes harm to 0:09:23.679 --> 0:09:25.920 that client. So they gave him the wrong advice and 0:09:26.000 --> 0:09:28.520 they failed. Two mouths later, we got it done. 0:09:28.760 --> 0:09:31.600 All right, good stuff. I'm glad you guys spared the 0:09:31.640 --> 0:09:33.240 time to come in and see us. Really appreciate that. 0:09:33.320 --> 0:09:33.679 Thank you. 0:09:33.679 --> 0:09:36.360 We always like talking to some of those folks out 0:09:36.360 --> 0:09:38.360 there getting it done on the ground. Rob Holmes, CEO 0:09:38.400 --> 0:09:41.000 of Texas Capital Bank, as well as Dave Hoverman, head 0:09:41.000 --> 0:09:45.320 of Corporate and Investment Banking Texas Capital Bank, based in 0:09:45.559 --> 0:09:46.280 the Big Deep. 0:09:47.360 --> 0:09:51.200 You're listening to the Team ken'shur Live program Bloomberg Markets 0:09:51.240 --> 0:09:54.360 weekdays at ten am Eastern on Bloomberg dot Com, the 0:09:54.440 --> 0:09:57.560 iHeartRadio app, and the Bloomberg Business App, or listen on 0:09:57.640 --> 0:09:59.520 demand wherever you get your podcast. 0:10:01.240 --> 0:10:03.520 Let's switch over back to these markets. Here again, the 0:10:03.600 --> 0:10:05.360 S and P up about four tenths of one percent 0:10:05.720 --> 0:10:08.680 near an intrut day high, the NASH deck up about 0:10:08.679 --> 0:10:11.080 three tenths of one percent. Liz Young joins us. She's 0:10:11.120 --> 0:10:15.040 head of investment Strategies at SOFI. Hey, Liz, when you 0:10:15.040 --> 0:10:17.319 talk to your clients, When I think of a SOFI client, 0:10:17.360 --> 0:10:19.839 I think of more of a younger client and maybe 0:10:19.840 --> 0:10:23.240 have a longer perspective in these markets. A is at 0:10:23.280 --> 0:10:26.160 the case and B what are you telling them these days? 0:10:28.000 --> 0:10:31.680 Yeah, thanks for having me so. Generally speaking, our investors, 0:10:31.760 --> 0:10:34.720 or the investors on our platform do skew younger. About 0:10:34.760 --> 0:10:37.400 sixty five percent of them are between the ages of 0:10:37.440 --> 0:10:40.920 twenty and forty, so compared to the average investor or 0:10:40.960 --> 0:10:44.160 the average II networth investor, they are younger. However, we 0:10:44.240 --> 0:10:46.720 do have quite a few that are over the age 0:10:46.720 --> 0:10:48.520 of forty as well, so it kind of runs the 0:10:48.559 --> 0:10:52.200 age gamut. I would say, you know, most most of 0:10:52.200 --> 0:10:55.480 our investors do have a longer time horizon. There can 0:10:55.520 --> 0:10:58.240 be a challenge in convincing them of that, though, and 0:10:58.600 --> 0:11:01.320 we've got a market and in an environment today that 0:11:01.360 --> 0:11:03.600 really just forces all of us to focus on the 0:11:03.600 --> 0:11:06.640 short term, and we hang on every data point, every 0:11:06.679 --> 0:11:09.040 word from the FED, and it does make us more 0:11:09.080 --> 0:11:12.000 short term in nature when we're thinking about our investing decisions. 0:11:12.280 --> 0:11:16.720 And just the individual investor of today is a trader. 0:11:16.800 --> 0:11:20.000 I mean, they really do enjoy trading individual stocks, and 0:11:20.040 --> 0:11:23.840 I think that that's an important distinction to make. But 0:11:24.120 --> 0:11:25.800 there are a lot of investors. 0:11:26.120 --> 0:11:30.440 I mean, well, a retail investor trading stocks just a 0:11:30.480 --> 0:11:33.479 recipe for losing money. 0:11:33.679 --> 0:11:37.440 No, it's it's a recipe for learning. And you know, 0:11:37.480 --> 0:11:39.480 it's not necessarily that you would lose money. 0:11:40.080 --> 0:11:42.240 Today stocks as well, like it's in the tune of 0:11:42.400 --> 0:11:44.400 losing two hundred grand in the first year. 0:11:45.200 --> 0:11:46.120 What a great I. 0:11:46.120 --> 0:11:49.840 Mean, I do think that it's a wonderful thing that 0:11:49.880 --> 0:11:53.440 there are so many individual investors today interested in getting 0:11:53.480 --> 0:11:57.440 engaged in their investment horizons and getting engaged in the process. 0:11:57.800 --> 0:12:00.880 I think really the risk is more that if the 0:12:00.920 --> 0:12:04.679 information that you're given is headline worthy, you're probably going 0:12:04.720 --> 0:12:08.200 to end up concentrated in a certain handful of names, 0:12:08.320 --> 0:12:10.320 or in the names that are just the big ones, 0:12:10.679 --> 0:12:14.800 and that's not necessarily creating a diversified portfolio. And there's 0:12:14.840 --> 0:12:18.840 also this fallacy of familiarity, so investing in companies that 0:12:19.200 --> 0:12:21.800 you're only familiar with, rather than making sure that you're 0:12:21.840 --> 0:12:26.960 diversifying out across sector, across asset class, across investment type, 0:12:27.000 --> 0:12:30.360 even in vehicle. So I think it's perfectly fine to 0:12:30.440 --> 0:12:33.600 invest in individual stocks here and there, but I wouldn't 0:12:33.600 --> 0:12:36.200 make it necessarily the core of your portfolio, and you 0:12:36.200 --> 0:12:38.280 want to make sure that you still own a decent 0:12:38.360 --> 0:12:39.800 number of individual stocks. 0:12:40.200 --> 0:12:44.360 List, how do your clients use ETFs? I mean, ETFs 0:12:44.400 --> 0:12:48.040 has just been a phenomenal growth story within financial services 0:12:48.080 --> 0:12:51.079 really over the last decade plus. You know, my day 0:12:51.160 --> 0:12:55.000 was mutual funds. Now it's all ETFs. How are they 0:12:55.120 --> 0:12:56.080 used by your customers. 0:12:57.800 --> 0:13:00.520 They're very widely used by our customers, and they're very 0:13:00.559 --> 0:13:04.679 widely used by individual investors everywhere, largely because, number one, 0:13:04.679 --> 0:13:07.400 they give you an opportunity to hold a lot of 0:13:07.400 --> 0:13:10.640 securities for a much lower cost than many of the 0:13:10.679 --> 0:13:14.640 mutual funds of the past did. So there's better opportunity there, 0:13:14.640 --> 0:13:19.239 and there's great diversification opportunity in them. I think ETFs 0:13:19.400 --> 0:13:22.280 are now that they're such a big part of the market, 0:13:22.600 --> 0:13:25.280 it is important to still do your research on them though, 0:13:25.280 --> 0:13:28.040 and there are a number of different options in each space, 0:13:28.160 --> 0:13:31.160 even as you get to more niche parts of the market. So, 0:13:31.480 --> 0:13:34.439 for example, let's say you want to buy a dividend ETF, 0:13:34.960 --> 0:13:37.080 you want to do the research and make sure that 0:13:37.120 --> 0:13:40.720 you're buying a dividend ETF, that is, holding companies with 0:13:40.800 --> 0:13:45.839 sustainable dividends or growing dividends rather than just currently high dividends. Right, 0:13:45.920 --> 0:13:48.439 So there's still different things that you need to do 0:13:49.120 --> 0:13:52.520 to make sure that you're not completely passively investing. But 0:13:52.559 --> 0:13:56.480 I think ETFs are a great tool for investors of 0:13:56.520 --> 0:14:00.000 all wealth categories to use for exposure to the market. 0:14:00.280 --> 0:14:05.199 Do you see people piling into investors piling into, you know, 0:14:05.600 --> 0:14:08.640 treasuries or places where you can get safe return for 0:14:08.679 --> 0:14:10.720 the first time in a generation. 0:14:12.559 --> 0:14:15.680 I don't know if piling in is the right way 0:14:15.720 --> 0:14:17.800 to think about that, but I think that over the 0:14:17.880 --> 0:14:21.760 last year or so, many people have moved into treasuries 0:14:21.800 --> 0:14:25.560 more than they ever expected to, and it has been 0:14:26.040 --> 0:14:28.480 a tough It's been a tough trade lately as we've 0:14:28.480 --> 0:14:31.520 seen a sell off in treasuries, particularly on the longer 0:14:31.680 --> 0:14:34.640 end of the curve. But this is also an environment 0:14:34.680 --> 0:14:38.000 where many investors have not seen yields like this on 0:14:38.040 --> 0:14:42.360 treasuries ever in their investing lifespan, So it's offering you 0:14:43.600 --> 0:14:46.240 to get paid to wait, and I don't think that 0:14:46.240 --> 0:14:49.680 that's a bad idea. I do think that there are 0:14:49.720 --> 0:14:52.680 plenty of people who have also used money market funds 0:14:52.720 --> 0:14:55.680 to do that. But there's still a decent amount of 0:14:55.680 --> 0:14:57.800 appetite for equities. I mean, the S and P is 0:14:57.840 --> 0:15:01.240 only down about seven percent since at local high in July, 0:15:01.840 --> 0:15:04.280 and that's not even in correction territory yet, so there's 0:15:04.280 --> 0:15:07.760 obviously still plenty of money in the equity market. 0:15:08.840 --> 0:15:11.160 What's your market call here, Liz, What are you telling 0:15:11.200 --> 0:15:11.880 your customers. 0:15:13.640 --> 0:15:17.960 I've been pretty cautious all year, obviously wrongfully so in 0:15:18.000 --> 0:15:21.200 the beginning of the year. I continue to be cautious. 0:15:21.240 --> 0:15:23.320 And right now, what we're seeing in the market, which 0:15:23.320 --> 0:15:27.200 I wrote about in my blog today, is some quiet weakness. 0:15:27.240 --> 0:15:32.200 There's been a pullback, but quietly weakening from a momentum perspective. 0:15:32.240 --> 0:15:34.040 So if you look at things like the fifty day 0:15:34.040 --> 0:15:36.520 moving average of the S and P recently rolling over 0:15:36.800 --> 0:15:39.880 and moving downward, you look at the number of SMP 0:15:40.080 --> 0:15:43.600 members trading above their two hundred day moving average, that 0:15:43.640 --> 0:15:47.120 percentage is now down to forty percent, and that's dropped 0:15:47.440 --> 0:15:50.720 pretty sharply in the last couple months now, not near 0:15:50.800 --> 0:15:54.200 crisis levels, not near really deep levels of a pullback. 0:15:54.320 --> 0:15:57.200 Usually you get that number somewhere in the eleven percent 0:15:57.360 --> 0:16:01.280 range when things are really bad, but dropped. And then 0:16:01.280 --> 0:16:04.200 you look at things like the relative strength indexes, which 0:16:05.160 --> 0:16:08.840 usually indicate whether things are oversold yet, and that tells investors, Okay, 0:16:08.840 --> 0:16:10.840 we've had a pullback, was it enough? Is it time 0:16:10.880 --> 0:16:14.240 for a bounce? And the Relative Strength Index the RSI 0:16:14.400 --> 0:16:17.360 reading on stocks shows that things have gotten a bit 0:16:17.480 --> 0:16:20.280 worse but are not washed out yet. So I do 0:16:20.360 --> 0:16:23.120 think that there's probably more risk to the downside here, 0:16:23.240 --> 0:16:25.200 especially as yields keep rising. 0:16:25.680 --> 0:16:30.560 Are you concerned about the government shut down as an investor? 0:16:30.600 --> 0:16:33.920 I mean, we're all worried that the pandaicam could be 0:16:34.000 --> 0:16:36.760 turned off, But does it matter to the markets. 0:16:39.520 --> 0:16:42.720 The markets don't seem overly concerned with it, yet I 0:16:42.760 --> 0:16:44.600 do think it matters to the markets. 0:16:44.720 --> 0:16:45.920 This is a. 0:16:45.800 --> 0:16:50.320 Story, though, that keeps repeating itself through market cycles. It 0:16:50.360 --> 0:16:53.320 seems like we're talking about a government shutdown every six 0:16:53.360 --> 0:16:56.880 months to a year, and it's no longer a newer, 0:16:57.000 --> 0:17:00.960 surprising headline or worry for us to climb as market participants. 0:17:01.480 --> 0:17:05.120 And what I think we've been conditioned to believe is that, yeah, 0:17:05.119 --> 0:17:07.880 things might get a little dicey into the eleventh hour, 0:17:07.920 --> 0:17:10.240 but eventually they figure it out. So I think the 0:17:10.280 --> 0:17:12.879 bigger risk here is that there is a shutdown that 0:17:12.960 --> 0:17:16.480 lasts a longer period of time, and it occurs during 0:17:16.840 --> 0:17:19.520 a time when we're hanging on all of that data, 0:17:19.600 --> 0:17:21.639 and what if some of the data is not available 0:17:21.720 --> 0:17:24.639 as we expect it, even just for a few days. 0:17:24.680 --> 0:17:27.440 So I do think there's a risk in the market 0:17:27.520 --> 0:17:29.760 because of that. I think, you know, we're not in 0:17:29.800 --> 0:17:32.879 a place where we want more uncertainty, that's for sure. 0:17:33.600 --> 0:17:35.679 So I don't think it's necessarily a good thing to 0:17:35.720 --> 0:17:38.480 have on the horizon. But so far markets don't seem 0:17:38.600 --> 0:17:40.479 that spooked by it you have. 0:17:40.680 --> 0:17:44.280 I mean, you did mention in your blog, which I'm 0:17:44.320 --> 0:17:45.240 pretty sure on the money. 0:17:45.280 --> 0:17:47.360 Right if I look at sofi dot com, so. 0:17:48.440 --> 0:17:51.879 You point out that the VICS has been marching steadily higher. 0:17:51.920 --> 0:17:56.800 It's not alarming yet, right, but it is starting to 0:17:56.880 --> 0:18:00.520 creep up and look more and more interesting it Right now, 0:18:00.520 --> 0:18:04.520 it's trading at seventeen to nine, right. 0:18:04.480 --> 0:18:07.720 Well, it's funny. I mean, as investors lately, we've been 0:18:07.800 --> 0:18:11.160 conditioned to expect AVIC somewhere between thirteen and fourteen, which 0:18:11.480 --> 0:18:15.280 as we know, is historically low. So having it at 0:18:15.320 --> 0:18:17.920 seventeen eighteen, it's been above eighteen for a few days. 0:18:18.680 --> 0:18:23.199 Having it in those that level seems high compared to 0:18:23.200 --> 0:18:26.760 what we've been experiencing on average. It's not really that high, 0:18:26.800 --> 0:18:29.640 and the mental threshold is usually twenty, So as long 0:18:29.680 --> 0:18:34.600 as it's below twenty, things are still typically considered subdued 0:18:34.880 --> 0:18:39.639 or you know, not necessarily unsafe or terribly volatile. But 0:18:40.119 --> 0:18:43.679 it's worth noting that it has marched up four points 0:18:43.800 --> 0:18:46.000 or so in a pretty short period of time. And 0:18:46.040 --> 0:18:48.159 that goes along with some of the other things that 0:18:48.160 --> 0:18:50.600 I mentioned earlier in the interview, with you know, number 0:18:50.640 --> 0:18:53.440 of stocks above the two hundred day falling, the RSI, 0:18:54.240 --> 0:18:57.200 number of stocks that are showing over sold rising. So 0:18:57.600 --> 0:19:01.200 there's there's clearly some breakdown and some weakening happening under 0:19:01.200 --> 0:19:03.720 the surface in the market. Again, none of this is 0:19:03.760 --> 0:19:08.000 at alarming levels, but it's happening enough that it's starting 0:19:08.040 --> 0:19:11.000 to feel like paper cuts and it's a nagging pain 0:19:11.160 --> 0:19:13.200 that I don't think we should gloss over. 0:19:13.200 --> 0:19:15.760 All right, Liz, thanks so much for joining us. As always, 0:19:15.800 --> 0:19:19.080 Liz Young, head of Investment Strategies at SOFAR, giving us 0:19:19.600 --> 0:19:20.840 her market call. 0:19:20.920 --> 0:19:24.040 Here, you're listening to the tape catch are live program 0:19:24.080 --> 0:19:28.040 Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, 0:19:28.200 --> 0:19:30.919 the tune in app, Bloomberg dot Com, and the Bloomberg 0:19:30.960 --> 0:19:34.040 Business app. You can also listen live on Amazon Alexa 0:19:34.080 --> 0:19:37.400 from our flagship New York station. Just say Alexa play 0:19:37.520 --> 0:19:38.840 Bloomberg eleven thirty. 0:19:40.320 --> 0:19:45.240 Let's continue our discussion on the ecosystem ESG the green outlook. 0:19:45.240 --> 0:19:47.680 If you will, we can do that with doctor Lise 0:19:47.920 --> 0:19:52.240 Castillo Nilis. She is with the firm Ramball and she 0:19:52.359 --> 0:19:55.960 joins us via zoom. Hey, Lise, can you just tell 0:19:56.000 --> 0:19:58.280 us let's start off real quick. What does Ramball do? 0:19:58.359 --> 0:19:59.560 What are you guys doing over there? 0:20:00.840 --> 0:20:05.000 Yeah, thanks for inviting me. Ramble is a consulting company 0:20:05.080 --> 0:20:08.399 and engineering company as well, and we do a lot 0:20:08.480 --> 0:20:12.320 of environmental health sciences and other types of sciences. 0:20:13.640 --> 0:20:15.840 So what does that I mean? 0:20:16.000 --> 0:20:18.080 Do you like measure the hole in the ozone or 0:20:18.080 --> 0:20:19.920 what kind of sciences are we talking about. 0:20:21.520 --> 0:20:23.479 So we do a lot of different things, but I 0:20:23.560 --> 0:20:28.159 personally work heavily on biodiversity and ecosystem services. So we 0:20:28.200 --> 0:20:31.520 help our clients meet their sustainability goals in a variety 0:20:31.560 --> 0:20:35.400 of different ways and help them increase biodiversity on their sites, 0:20:35.480 --> 0:20:37.640