WEBVTT - Cash Is Still King 0:00:05.760 --> 0:00:07.560 Well kind of trainance. I'm Joel Webber and I'm Eric 0:00:07.600 --> 0:00:13.239 Beltis Eric. Some things are going a little crazy in 0:00:13.280 --> 0:00:17.440 the currency world, and cash is kind of an interesting 0:00:17.480 --> 0:00:19.840 story right now. It has not been interesting for a 0:00:19.880 --> 0:00:23.280 really long time, and now suddenly it's interesting. It's boring 0:00:23.560 --> 0:00:26.239 always to me, and this is a short term debt 0:00:26.320 --> 0:00:27.720 is probably one of the most boring areas of the 0:00:27.720 --> 0:00:29.800 E t F world to cover, But right now it's 0:00:29.880 --> 0:00:34.559 kind of sexy because it's sort of sometimes it is 0:00:34.600 --> 0:00:37.400 performance chasing to go to something so boring. Um, it 0:00:37.440 --> 0:00:40.240 also yields more so there's been thirty one billion dollars 0:00:40.240 --> 0:00:43.360 into ultra short debt ets, which to be one year 0:00:43.479 --> 0:00:46.760 or less maturity. Right, so everybody is just hiding out. 0:00:46.840 --> 0:00:48.920 They've just run into the cave the Fed. The Fed 0:00:49.000 --> 0:00:52.040 scared them away. Yeah, they're on the sidelines, whatever metaphor 0:00:52.080 --> 0:00:54.760 you want to use. They're totally scared. The Fed has 0:00:54.800 --> 0:00:57.880 just wreaked havoc on everybody's brains. And um, this is 0:00:57.920 --> 0:00:59.560 sort of the one eight they pulled on the market. 0:00:59.640 --> 0:01:02.080 So you know, as somebody in one of the articles 0:01:02.080 --> 0:01:04.560 on Bloomberg Today said, um, now is not a time 0:01:04.600 --> 0:01:06.440 to be a hero. Which I think really sums up 0:01:06.440 --> 0:01:08.280 this market. So we're seeing a lot of money to cash, 0:01:08.280 --> 0:01:09.640 but that would be a good idea to sort of 0:01:09.640 --> 0:01:11.120 break down what these E t F s are, what 0:01:11.160 --> 0:01:13.600 they do. They're not exactly cash, but they're really close 0:01:13.600 --> 0:01:16.840 to it. And this also relates to what's happening in 0:01:16.880 --> 0:01:20.160 currency because strength of the dollar globally is just on 0:01:20.240 --> 0:01:23.360 a tear and we're seeing things like the pound this 0:01:23.400 --> 0:01:25.839 week just get hammered. So I'm sure we'll talk about 0:01:25.840 --> 0:01:27.800 that a little bit here too. Joining us going to 0:01:27.880 --> 0:01:31.880 be Katie Grayfield from Bloomberg News and James Shapeer from 0:01:31.880 --> 0:01:40.680 Boomberg Intelligent. This time, I'm Trilliance. Cash is King, Katie, James, 0:01:40.760 --> 0:01:43.280 Welcome back to Trilliance. How are you guys? Thanks for 0:01:43.360 --> 0:01:45.119 having me. Okay, Katie, I want to start with you 0:01:45.640 --> 0:01:48.880 because you and I've been talking about cash as king 0:01:49.040 --> 0:01:50.920 for a second. Got you working on a Business week 0:01:50.920 --> 0:01:53.160 story to that effect. Talk to us. What do you see? 0:01:53.440 --> 0:01:55.560 I'm kind of obsessed with it at this moment. I 0:01:55.600 --> 0:01:58.480 know that Eric just absolutely ripped on it. I think 0:01:58.520 --> 0:02:01.880 it's actually pretty interesting area to cover right now. I mean, 0:02:02.040 --> 0:02:03.640 on our show E t F I Q for weeks 0:02:03.640 --> 0:02:06.360 you've been talking about the safety dance back into cash. 0:02:06.480 --> 0:02:09.400 Clearly a lot of investors agree with me. I do 0:02:09.480 --> 0:02:12.320 think we're at an interesting moment where cash always has 0:02:12.400 --> 0:02:16.799 this connotation of being kind of cowardly, kind of boring 0:02:17.000 --> 0:02:20.480 to Eric's point, but I mean, it yields so much 0:02:20.600 --> 0:02:23.880 right now, a six month treasury bill yields as much 0:02:23.919 --> 0:02:28.160 as a ten uere treasury note with like magnitudes less duration. Well, like, 0:02:28.200 --> 0:02:30.400 why would you not do that, right? Because duration is 0:02:30.440 --> 0:02:33.760 so important when inflations effector right, So, so what do 0:02:33.800 --> 0:02:36.920 you get in that six month uh that you know 0:02:37.960 --> 0:02:40.280 is safer than the tenure bet? Right? Well, you do 0:02:40.360 --> 0:02:42.760 get a place to hang out. You also get the 0:02:42.919 --> 0:02:45.360 peace of mind of knowing that you know, a single 0:02:45.520 --> 0:02:49.280 day's yield movements aren't gonna totally decimate your p ando. 0:02:49.840 --> 0:02:52.400 I mean, you're still on a real basis not keeping 0:02:52.480 --> 0:02:55.240 up with inflation, but you're probably doing a lot better 0:02:55.240 --> 0:02:58.200 than pretty much any other place, unless you're like all 0:02:58.240 --> 0:03:00.840 in on US dollars right now. Well, that's sort of 0:03:00.880 --> 0:03:03.280 my point with this is people must be really scared 0:03:03.320 --> 0:03:07.120 to go into this ultra short term debt because you're right, 0:03:07.200 --> 0:03:09.760 doesn't move as much off off of interest rates, but 0:03:09.840 --> 0:03:11.839 that is where the FED is hiking. They're hiking rate 0:03:11.880 --> 0:03:15.040 in your face, so like SHV and s h Y 0:03:15.160 --> 0:03:17.440 are down. So you could get that three or four 0:03:17.480 --> 0:03:19.920 percent deal, but you are going to lose from the 0:03:19.960 --> 0:03:22.320 price going down because the Fed just hiked again in 0:03:22.320 --> 0:03:24.959 your face. So it's not like a clean four percent, 0:03:25.040 --> 0:03:28.200 it's a risky four percent. But again it's better than 0:03:28.200 --> 0:03:30.680 the alternative. I guess, is this the new tina? Is 0:03:30.720 --> 0:03:34.040 this the new tina? I've heard so many tortured new 0:03:34.080 --> 0:03:37.200 acronyms for there is no alternative I've heard there are 0:03:37.200 --> 0:03:40.480 too many alternatives. Now I feel like that that one 0:03:40.560 --> 0:03:42.520 doesn't quite have a ring to it though. What about 0:03:43.080 --> 0:03:44.840 sell the rip is the new by the dip? I know? 0:03:44.920 --> 0:03:47.440 You like that one. That one's just really hard to 0:03:47.480 --> 0:03:49.240 say on the fly. You have to think about the world. Know. 0:03:49.280 --> 0:03:51.520 I screwed that up on air on TV. I I 0:03:51.840 --> 0:03:53.200 got all jumbled in my head right when I was 0:03:53.240 --> 0:03:56.480 about to say it in rehearsal, and then in the 0:03:56.480 --> 0:03:57.880 thing I was like, way is it by the rips? 0:03:57.960 --> 0:04:01.280 I was like, head game, you can't, you can't peek 0:04:01.320 --> 0:04:06.400 and rehearsal I did Okay, so cash is cash as 0:04:06.400 --> 0:04:08.960 an asset class, Katie walk us through the options, because 0:04:09.360 --> 0:04:11.360 sure you can take that six month, but even like 0:04:11.400 --> 0:04:15.200 a savings gount in your bank, looks pretty good right now. Absolutely, 0:04:15.280 --> 0:04:17.680 Let's talk about one of the more interesting funds I 0:04:17.680 --> 0:04:20.120 think is b I L that's one to three month 0:04:20.200 --> 0:04:22.560 Treasury bills, right, and I wrote this story a few 0:04:22.600 --> 0:04:25.760 months ago, but they're actually paying out monthly dividends again, 0:04:25.920 --> 0:04:28.800 and for a lot of investors that's basically the core 0:04:28.839 --> 0:04:31.200 investing thesis. I'm gonna put my money here, I'm going 0:04:31.240 --> 0:04:33.919 to get a reliable fixed income payment. It all starts 0:04:33.960 --> 0:04:36.880 to make sense. For a long time, these weren't paying 0:04:36.880 --> 0:04:41.160 out anything. That all but totally stopped during the pandemic 0:04:41.160 --> 0:04:44.359 when the federal took rates to zero. And again to 0:04:44.560 --> 0:04:46.640 Eric's point, you can still lose out on the price, 0:04:46.720 --> 0:04:50.080 but you are getting pennies again. It was pennies in July. 0:04:50.200 --> 0:04:52.520 That's been steadily increasing. Is the FETE has just been 0:04:52.560 --> 0:04:57.720 absolutely relentless. It's I think it's pretty damgn close. I mean, 0:04:57.720 --> 0:04:59.280 there was a lot a long time where some of 0:04:59.279 --> 0:05:02.680 the haters on Twitter be like the Fed is killing savers, 0:05:02.720 --> 0:05:04.600 Like post world War two, you could always get a 0:05:04.600 --> 0:05:06.520 good yield on your on your like your aunt would 0:05:06.560 --> 0:05:09.360 give you a savings bond. And now they destroyed that. Well, 0:05:09.360 --> 0:05:13.280 now it's back. The problem is the markets are all crushed. Uh, 0:05:13.360 --> 0:05:15.520 this was the cost of doing it. I guess, James, 0:05:15.520 --> 0:05:17.240 what's your take when you think of ultra short term 0:05:17.240 --> 0:05:19.080 debt e T s? Like, what do you think? What 0:05:19.120 --> 0:05:21.240 are you looking for? Think they're boring? Well, I do 0:05:21.320 --> 0:05:23.680 think they're boring. Eric, We'll we'll see these filings. So, 0:05:23.680 --> 0:05:25.680 as you know, we tracked filings for new ets that 0:05:25.680 --> 0:05:27.760 come out, and every like every issue where has a 0:05:27.760 --> 0:05:30.080 short term dead e t F. It's act summer actively manage. 0:05:30.120 --> 0:05:32.080 Many are and he just sends like he'll send a 0:05:32.120 --> 0:05:33.880 link with the filing and just put like a bunch 0:05:33.880 --> 0:05:38.839 of z s nothing else. Um, every single legacy mutual 0:05:38.839 --> 0:05:40.520 fund company that comes to the T space has to 0:05:40.520 --> 0:05:42.960 file an ultra short term dead ETF and then an 0:05:42.960 --> 0:05:46.320 income ETF and G E S G And I'm just like, 0:05:46.360 --> 0:05:48.440 oh my god, I need more espresso too, because I'm 0:05:48.440 --> 0:05:52.039 getting drowsy reading the other side of this is that 0:05:52.080 --> 0:05:55.240 I think rebalancing is another key factor here. So if 0:05:55.279 --> 0:05:57.400 we keep talking on the FED hiking rates, you're crushing 0:05:57.400 --> 0:05:59.720 fixed income. So if you have a sixty forty portfolio 0:06:00.040 --> 0:06:02.240 and your fixed income is going down or whatever whatever 0:06:02.800 --> 0:06:04.880 mix you have in your portfolio, you probably need to 0:06:04.880 --> 0:06:07.880 buy more to maintain that allocations. So rather than going 0:06:07.920 --> 0:06:11.200 into corporates or longer dated things, they're choosing to go 0:06:11.480 --> 0:06:13.960 limited duration, limited credit risk. They're going to these ultra 0:06:14.040 --> 0:06:16.360 short things. They're going to treasuries. So there's all these 0:06:16.400 --> 0:06:18.640 different things that are going they're forcing people into treasuries 0:06:18.640 --> 0:06:21.520 and short term treasury specifically. So what are some tickers 0:06:21.520 --> 0:06:24.279 that are of interest to you? James, Uh, Well, we 0:06:24.600 --> 0:06:28.120 shy Bill sh V. I mean, they're they're pretty standard. 0:06:28.120 --> 0:06:30.040 There's there's some there's some I shares ones out there 0:06:30.080 --> 0:06:33.920 to jeff and then Jeffy, which is another one that 0:06:34.040 --> 0:06:36.880 there's a lot of things. Jeffy is the income right there. 0:06:36.880 --> 0:06:39.280 You think at jpst O JPSD is what I'm thinking. 0:06:39.320 --> 0:06:41.480 So let's let's take a second to divide the difference 0:06:41.520 --> 0:06:44.160 between Bill, s h V and s h Y, which 0:06:44.160 --> 0:06:46.440 are pure treasuries. Those are probably the closest thing to 0:06:46.920 --> 0:06:49.640 Bill is the only one that I think is that's 0:06:49.720 --> 0:06:53.039 really short y is one one to three year UM. 0:06:53.080 --> 0:06:54.640 So you take a little more risk, you a little 0:06:54.640 --> 0:06:59.000 more yield. Now explain jps T, which is the JP Morgan. 0:06:59.080 --> 0:07:02.280 It's not treasury. I mean this is a little more risky, right. Yeah, 0:07:02.279 --> 0:07:04.800 it's actively managed and they don't just hold treasuries. But 0:07:04.839 --> 0:07:08.000 it's also short term. But JP Morgan is selling it 0:07:08.040 --> 0:07:09.840 pretty well. I mean it's taking in money hand to 0:07:09.920 --> 0:07:12.840 or fist pretty much every day. What are the influs, 0:07:12.920 --> 0:07:15.000 like one billion in a year. So the record I 0:07:15.040 --> 0:07:17.480 believe is around thirty eight billion. We're probably gonna pass it. 0:07:17.800 --> 0:07:19.240 And that was set in two thousand eight, which you 0:07:19.240 --> 0:07:21.240 know was a really rough year, Volmageddon and all that, 0:07:21.280 --> 0:07:23.680 so people ran into cash. So we have probably break 0:07:23.720 --> 0:07:26.640 the record for all time flows here um on JPST 0:07:26.840 --> 0:07:29.400 and MINT. Those are two funds. This is an interesting 0:07:29.480 --> 0:07:31.400 niche that active is found. Actually, you know, past has 0:07:31.440 --> 0:07:34.360 been like ruling the land for a while. People do 0:07:34.440 --> 0:07:37.400 like giving their money to Pimco or JP Morgan and saying, look, 0:07:37.600 --> 0:07:40.120 keep me short duration. So there's no interest, right risk, 0:07:40.360 --> 0:07:42.880 but take little bets. Maybe buy an international bond or 0:07:42.960 --> 0:07:45.320 corporate bond. Try to give me a little more um 0:07:45.400 --> 0:07:48.440 return or yield. Uh so, I almost like their money 0:07:48.480 --> 0:07:50.160 market funds with like a little hot sauce in there. 0:07:50.520 --> 0:07:54.080 But as we know in two they're not cash because 0:07:54.080 --> 0:07:57.080 they did go down quickly. Unlike a money market fund 0:07:57.080 --> 0:08:00.280 where you might have a lot more stability, the can 0:08:00.320 --> 0:08:02.560 go down well. To your point that this has been 0:08:02.600 --> 0:08:06.360 an interesting niche for active to proliferate. I think it's 0:08:06.360 --> 0:08:08.400 a really interesting sign of the sign of the times 0:08:08.440 --> 0:08:11.640 that for much of the last two years, it's starting 0:08:11.640 --> 0:08:14.600 in the pandemic, it was ARC that was the biggest 0:08:14.600 --> 0:08:18.040 active manager. R K was the biggest actively managed fund. 0:08:18.400 --> 0:08:21.560 Now it's jps T I believe, which is again one 0:08:21.560 --> 0:08:25.600 of these short duration boring bond ETFs. Just really sort 0:08:25.600 --> 0:08:27.400 of paints the mood of the market. You're right, that 0:08:27.480 --> 0:08:30.400 is a symbolic move, similar to how the innovation theme 0:08:30.480 --> 0:08:34.120 was the top one now natural resources. Yeah, so, yeah, 0:08:34.240 --> 0:08:37.400 the times are a change until quickly, quickly and all 0:08:37.520 --> 0:08:40.360 took with j PAL making some moves well in inflation, 0:08:40.360 --> 0:08:42.880 prey and inflation. We keep talking about this money markets. 0:08:42.880 --> 0:08:44.960 We brought them up, but they're they're paying almost three percent, 0:08:45.040 --> 0:08:47.559 they're well over two percent. Now. Savings accounts, if you 0:08:47.600 --> 0:08:50.439 have an online savings account they're yielding over two percent. 0:08:50.440 --> 0:08:52.520 They're probably gonna be near three within the next month 0:08:52.600 --> 0:08:55.120 or two. We could be over four percent or near 0:08:55.160 --> 0:08:57.319 four percent in savings accounts by the end of the 0:08:57.360 --> 0:09:00.640 But what's your that's the problem, correct, But I'm saying 0:09:01.440 --> 0:09:04.040 the savings accounts and the money market accounts aren't as 0:09:04.080 --> 0:09:06.400 subject to the risk as some of these other things. 0:09:06.440 --> 0:09:08.360 So I'm kind of surprised so much money is going 0:09:08.440 --> 0:09:10.840 to these e t f s when theoretically, if you're 0:09:11.280 --> 0:09:13.120 I mean, if you're at a brokerage account, you you 0:09:13.120 --> 0:09:15.040 have access to a money market fund, whether it's Vanguard 0:09:15.080 --> 0:09:16.400 or whatever it may be, it's going to be paying 0:09:16.480 --> 0:09:18.760 higher interest rates and obviously going to have a lower 0:09:18.840 --> 0:09:21.600 duration risk. But then obviously the Fed does cut rates, 0:09:21.640 --> 0:09:23.760 you don't get the same upward potential. That sounds like 0:09:23.800 --> 0:09:30.560 you're in cash though, I mean, I don't know, I 0:09:30.640 --> 0:09:33.079 personally don't own any short term treasury e t s. No, 0:09:33.200 --> 0:09:41.120 I do not. I'm going to write that down. There's 0:09:41.120 --> 0:09:43.000 also the option of going with the floating rate notes. 0:09:43.040 --> 0:09:46.440 So like UM, Wisdom Tree, USFAR and T Flow have 0:09:46.600 --> 0:09:49.280 also taken in a ton of money. UM again boring 0:09:49.360 --> 0:09:51.800 but they would float with the interest rates, and so 0:09:51.840 --> 0:09:53.839 that's been a popular trade and senior loans are like 0:09:53.880 --> 0:09:56.360 a high yield version of that. So if we think 0:09:56.400 --> 0:10:00.360 about this being this flight to safety and just like 0:10:00.520 --> 0:10:02.920 chill on the sidelines, how long do you think this 0:10:02.920 --> 0:10:04.920 sticks around? For what what our investor is going to 0:10:04.960 --> 0:10:08.880 be looking forward before they go from from these moves elsewhere. 0:10:09.440 --> 0:10:11.880 So so I sit next to Ira Jersey, who has 0:10:11.880 --> 0:10:14.240 a rate strategist. He's been on the podcast before. So 0:10:14.360 --> 0:10:16.160 right now, the market is pricing for the FED to 0:10:16.280 --> 0:10:20.800 hike basically seventy five basis points, then fifty in December November, 0:10:20.840 --> 0:10:23.240 fifty in December, and a little bit more through March, 0:10:23.360 --> 0:10:25.240 and then the market is basically pricing for them to 0:10:25.280 --> 0:10:28.520 start cutting rates pretty quickly in the spring. Ira, the 0:10:28.600 --> 0:10:32.280 fed um our economist team believe that we're going to 0:10:32.320 --> 0:10:34.920 stay flat at that higher plateau for much longer than 0:10:34.960 --> 0:10:38.000 the market is pricing. Obviously, the market can change things. 0:10:38.240 --> 0:10:39.760 I mean, if you talk to anyone, if they asked you, 0:10:39.800 --> 0:10:41.079 wherefore we thought we were gonna be a three or 0:10:41.120 --> 0:10:43.320 four percent by the fall. Uh, No one would have 0:10:43.320 --> 0:10:46.160 said that. But basically, our Bloomberg intelligence team thinks that 0:10:46.160 --> 0:10:48.320 we're going to get above that four percent level and 0:10:48.440 --> 0:10:51.520 sit there for a good chunk of and that will 0:10:51.559 --> 0:10:54.960 impact everything. Well, that theoretically bodes well for cash. If 0:10:55.000 --> 0:10:57.480 the FED sits at terminal for a while and rates 0:10:57.520 --> 0:11:01.360 just sort of stay at this very relatively very high plateau, 0:11:01.480 --> 0:11:03.720 that would mean your T bills continue to pay out 0:11:03.960 --> 0:11:08.120 pretty lofty yields. Yeah, which means maybe this wasn't the 0:11:08.160 --> 0:11:10.040 place to be a year ago as race went up. 0:11:10.080 --> 0:11:12.760 But if this is where rates stay, then being there 0:11:12.960 --> 0:11:16.240 now could be good for a while, especially if inflation 0:11:16.280 --> 0:11:18.960 does especially if the FED does get inflation under control. 0:11:19.000 --> 0:11:21.360 That's I would agree. Here's the thing with the inflation number, 0:11:21.360 --> 0:11:23.280 which is confusing, and I've worked this out with us 0:11:23.280 --> 0:11:25.559 a little bit. The month over month has been pretty 0:11:25.640 --> 0:11:27.360 nice for the past couple of months. It's hasn't like 0:11:27.360 --> 0:11:30.080 shown a huge move, but again year over year still 0:11:30.120 --> 0:11:32.719 like eight percent, right, eight nine? Well, the year over 0:11:32.800 --> 0:11:34.760 year was I think the first jump was what six 0:11:34.760 --> 0:11:37.199 seven months ago? Was that when the first print hit. 0:11:37.640 --> 0:11:39.840 Don't we have to go twelve months to go back 0:11:39.880 --> 0:11:42.240 to where the high water mark is now? Where then 0:11:42.280 --> 0:11:45.280 it's under two percent, So it would seem to me, 0:11:45.400 --> 0:11:48.240 nothing will get resolved until a whole year passes from 0:11:48.280 --> 0:11:52.079 that shock print. So you're asking me to do some 0:11:52.200 --> 0:12:00.600 math right here, we're talking about you. Yeah, she messed 0:12:00.600 --> 0:12:03.199 with the dot plot. The dot plot crowd, they were 0:12:03.240 --> 0:12:05.760 not happy, but some people were on your side. Some 0:12:05.760 --> 0:12:07.640 people enjoy it was a joke. I said that the 0:12:07.679 --> 0:12:10.360 dot plot is a meaningless image. It's so silly. And 0:12:10.440 --> 0:12:14.280 someone said, you're a financial journalist, how did this mean 0:12:14.320 --> 0:12:17.960 nothing to you? Okay, but the best comment that someone 0:12:18.000 --> 0:12:20.720 gave to me was a line is a dot that 0:12:20.760 --> 0:12:24.160 went for a walk. M h spoken like an artist. 0:12:24.720 --> 0:12:26.960 I do think you know one thing I will say 0:12:27.400 --> 0:12:29.640 to your point, and I think ramp Capital was the 0:12:29.640 --> 0:12:32.320 one who said yes, because it's meaningless because these people 0:12:32.400 --> 0:12:34.200 don't really know what they're talking about. They're always wrong, 0:12:34.760 --> 0:12:37.240 um and they have missed a lot. Nobody called this, 0:12:37.320 --> 0:12:39.199 as James just pointed out. The other thing that kind 0:12:39.200 --> 0:12:42.120 of annoys me is the cell side research people who 0:12:42.160 --> 0:12:44.680 come out like it's like Goldman now has an S 0:12:44.720 --> 0:12:46.760 and P outlook and they just revised it down because 0:12:46.760 --> 0:12:50.040 the market had a rough week. I'm like, well, you 0:12:50.080 --> 0:12:52.040 can't do that. You pick it at the beginning of 0:12:52.080 --> 0:12:54.760 the year and stick to it, Like I don't understand 0:12:54.760 --> 0:12:57.760 that prediction based on what just happened. I get I 0:12:57.800 --> 0:12:59.880 get why they do it, but it just seems like, 0:13:00.000 --> 0:13:01.360 why am I going to listen at all? Then I'll 0:13:01.400 --> 0:13:04.560 just look at past performance and extrapolate that forward and 0:13:04.559 --> 0:13:06.840 go That's what the sull side thinks. Well, the FED, 0:13:06.920 --> 0:13:09.240 to their credit, I feel like they try to stress 0:13:09.320 --> 0:13:13.640 that these are not forecasts necessarily or this this is 0:13:13.679 --> 0:13:15.880 not like up set in stone policy. They're going to 0:13:15.920 --> 0:13:18.280 react where it happens. Yeah, they do try to get 0:13:18.280 --> 0:13:20.360 the message across, but everyone just takes it like their 0:13:20.440 --> 0:13:26.040 data dependent exactly. Well, Um, when I was lucky enough 0:13:26.040 --> 0:13:28.959 to guest host the Clothes, yeah, we had the White 0:13:28.960 --> 0:13:31.920 House person on, you know, the economic advisor, So I 0:13:32.000 --> 0:13:33.920 never get to ask these non et F questions, but 0:13:33.960 --> 0:13:36.080 I did, and I was sort of like talking about 0:13:36.080 --> 0:13:39.040 the election because inflation is by far the number one 0:13:39.080 --> 0:13:42.679 issue with voters. It took COVID's place. Voter say it's 0:13:42.679 --> 0:13:45.280 the number one issue. COVID is not one percent completely 0:13:45.320 --> 0:13:49.559 flop flip flopped, and so I think the FED has 0:13:49.559 --> 0:13:52.520 a political pressure as well because this is the biggest 0:13:52.559 --> 0:13:55.360 issue for the election. So I do wonder if we 0:13:55.400 --> 0:13:57.720 have this election, the mid terms, if there might be 0:13:57.760 --> 0:13:59.400 a little bit of the foot off the gas just 0:13:59.440 --> 0:14:01.840 because there's the political pressure might die down a little 0:14:01.840 --> 0:14:03.600 bit because there's no election coming up. I don't think 0:14:03.640 --> 0:14:06.240 it's political pressure. I think it's part of the mandate. Right, 0:14:06.320 --> 0:14:08.880 they have a mandate, and this is part of the mandate. 0:14:09.840 --> 0:14:13.120 But it's hard to untangle politics from the mandate in 0:14:13.160 --> 0:14:15.520 my opinion. But I suppose you're right. I just I 0:14:15.520 --> 0:14:17.520 don't know. I just can't see the FED is completely 0:14:17.559 --> 0:14:19.640 a political I just can't know. I'm with you, but 0:14:19.680 --> 0:14:21.560 that they do have a mandate. They're they're targeting a 0:14:21.560 --> 0:14:24.240 specific amount of inflation, and they've basically said they expect 0:14:24.280 --> 0:14:28.080 to hip. What's interesting into more higher unemployment. What's interesting 0:14:28.160 --> 0:14:30.240 me becomes if if they actually say two percent is 0:14:30.280 --> 0:14:32.880 unrealistic anymore and like become the new two percent. But 0:14:32.920 --> 0:14:34.840 we'll see where that ends up. It is amazing that 0:14:34.840 --> 0:14:37.520 they've stuck to it. But again, if if your goal 0:14:37.600 --> 0:14:40.080 is to go not over two percent from when like okay, 0:14:40.160 --> 0:14:42.560 jumped eight percent, so we'll call that the new normal, 0:14:43.200 --> 0:14:45.520 you're saying, no, two percent from where the new high 0:14:45.560 --> 0:14:49.200 water mark is so all they've actually accomplished that to 0:14:49.240 --> 0:14:51.200 a degree because the month over month hasn't gone up, 0:14:51.360 --> 0:14:52.920 so all they gotta do is wait a year. So 0:14:53.000 --> 0:14:55.960 I do sometimes wonder why they're continuing to hike given 0:14:56.000 --> 0:14:57.680 that all they gotta they're not trying to get the 0:14:57.680 --> 0:14:59.840 eight percent down back down to where it was. That 0:15:00.080 --> 0:15:02.360 chip has sailed. It's just a matter of keeping that 0:15:02.440 --> 0:15:04.880 eight percent year over year where it is, which they're 0:15:04.920 --> 0:15:07.360 doing right. Yeah, Well, for the most part of you 0:15:07.400 --> 0:15:09.000 can break out core CPI, we can get into the 0:15:09.000 --> 0:15:12.720 real details of inflation numbers. Um. But we can get 0:15:12.760 --> 0:15:14.640 into the details inflation, which I don't think we should 0:15:14.680 --> 0:15:16.800 really necessarily do in this podcast. But if you look 0:15:16.800 --> 0:15:18.840 at inflation, one of the things that's baked in is 0:15:18.840 --> 0:15:21.800 is rent and homeowner's equivalent rent, those things, it takes 0:15:21.840 --> 0:15:23.880 It's like a lagging indicator. So that's going to take 0:15:23.880 --> 0:15:26.320 time to filter through the inflation numbers. So we're basically 0:15:26.360 --> 0:15:29.360 guaranteed to get higher inflation to some extent. It's so 0:15:29.400 --> 0:15:31.520 the problem is is the FED looking at leading indicators 0:15:31.560 --> 0:15:33.800 are lagging indicators, and that's what they're trying to wrestle 0:15:33.800 --> 0:15:35.600 with and so you have people on both sides arguing 0:15:35.600 --> 0:15:37.760 that the Fed's hiking too much now because most of 0:15:37.760 --> 0:15:40.120 the inflation is behind us, like you're kind of arguing, Eric, 0:15:40.200 --> 0:15:42.040 And then people are saying, well, they're still supply chain 0:15:42.080 --> 0:15:43.680 issues as other issues, So we need to make sure 0:15:43.720 --> 0:15:45.320 that we don't let it get out of control, because 0:15:45.320 --> 0:15:48.480 once inflation starts going, it'll keep going. I have a 0:15:48.560 --> 0:15:51.320 question about ETFs to bring it back to e t 0:15:51.440 --> 0:15:55.040 F So the Fed, Jerome Pal obviously has made it 0:15:55.120 --> 0:15:58.600 very clear that they're going to hike into inflation even 0:15:58.600 --> 0:16:01.000 if it tips the economy into session. And with that 0:16:01.040 --> 0:16:03.120 in mind, I think it's interesting. In addition to all 0:16:03.160 --> 0:16:05.880 of the short term flows we've seen into these cash 0:16:05.920 --> 0:16:07.920 like e t f s, you're also seeing t LT 0:16:08.560 --> 0:16:10.840 get a lot of love recently, a lot more love 0:16:11.000 --> 0:16:13.400 for duration. It feels like it's just the middle of 0:16:13.440 --> 0:16:17.040 the belly, if you will. That isn't seeing a lot 0:16:17.080 --> 0:16:19.040 of sparkle right now. I don't know what you guys 0:16:19.040 --> 0:16:21.120 think about that. Yes, So the way I look at it, 0:16:21.160 --> 0:16:22.680 there's like a whole bunch of reasons why Treasury e 0:16:22.760 --> 0:16:24.240 t F are getting because it's not even just t 0:16:24.400 --> 0:16:26.400 LT on the long end, those are twenty plus yours. 0:16:26.720 --> 0:16:29.040 It's it's the middle of the curve. Every all treasuries 0:16:29.040 --> 0:16:31.000 are taking in money. And if you talk to people, 0:16:31.000 --> 0:16:32.440 a lot of people think the Fed is going to 0:16:32.480 --> 0:16:34.040 hike us into our session and then they're going to 0:16:34.120 --> 0:16:36.560 get cold feet, and then a're gonna start cutting rates again. 0:16:36.760 --> 0:16:38.480 So if they start cutting rates and you're you're in 0:16:38.520 --> 0:16:41.040 these high duration treasuries, you're gonna shoot off like a 0:16:41.120 --> 0:16:43.360 rocket ship, like we saw t LT do numerous times 0:16:43.360 --> 0:16:45.400 when the FED starts cutting rates. I agree. I think 0:16:45.400 --> 0:16:47.920 t l T is a recession play. It's it's betting 0:16:47.920 --> 0:16:50.280 the Fed has gone too far, Whereas I think the 0:16:50.320 --> 0:16:53.120 cash is more of a hiding out. I think TLT 0:16:53.240 --> 0:16:54.720 is more of a bet. I would agree with James 0:16:54.760 --> 0:16:56.720 on that. Yes, that is not it's not a really 0:16:56.960 --> 0:16:59.560 safe place to be. TALT does do a good job 0:16:59.560 --> 0:17:02.640 buffering stocks typically, but not this time. I mean also, 0:17:02.680 --> 0:17:05.280 the duration, like we talked about, I don't know, fifteen 0:17:05.320 --> 0:17:08.280 minutes ago, you can get your face ripped off. Oh yeah, 0:17:08.320 --> 0:17:10.760 t l T s uh pretty pretty vaultlight, I think, 0:17:11.280 --> 0:17:13.840 you know. But you're to James's point. That's why I 0:17:13.880 --> 0:17:17.000 like I like geo vt This is the eye shares. 0:17:17.000 --> 0:17:19.040 It goes. It just buys the whole curve in one shot. 0:17:19.080 --> 0:17:21.320 So you own everything to get a little recession bed, 0:17:21.359 --> 0:17:23.240 a little cash, a little you know. Uh. And that 0:17:23.280 --> 0:17:25.400 one I think might be the top ten most successful 0:17:25.440 --> 0:17:34.600 et F s of the year, maybe top fifteen. Okay, 0:17:34.600 --> 0:17:37.320 so we've talked about cash, We've talked about some debt. 0:17:37.560 --> 0:17:39.960 Let's talk about what's happening in the currency e t 0:17:40.240 --> 0:17:43.440 s sticks out to you, I guess you up. That's 0:17:43.440 --> 0:17:46.960 Investco's Bullish Dollar fund. It's absolutely crushing it this year. 0:17:46.960 --> 0:17:51.040 It's up at a record high and then some. But 0:17:51.119 --> 0:17:53.360 I keep looking for a size and scope to write 0:17:53.359 --> 0:17:55.359 about beyond the fact that it's at a record high. 0:17:55.359 --> 0:17:59.920 But the flows just haven't really matched that performance. Yeah, 0:18:00.000 --> 0:18:02.359 and let's be clear, eight percent for a currency ETF 0:18:02.480 --> 0:18:05.480 is ridiculous. That that's not a lot for a growth 0:18:05.480 --> 0:18:07.480 fund or whatever, but for currency, that is an absurd 0:18:07.520 --> 0:18:11.040 amount of return. Um. What's interesting about currency ETF that 0:18:11.160 --> 0:18:13.840 just you know, straight bet on currencies. They've never really 0:18:13.880 --> 0:18:15.400 had a market in the e t F world. They've 0:18:15.800 --> 0:18:19.119 real small, they've never got gone mainstream. My theory is 0:18:19.160 --> 0:18:23.000 that people regular people just don't do currency betting. They 0:18:23.040 --> 0:18:25.600 just don't need it. There long the dollar plenty with 0:18:25.640 --> 0:18:27.760 all their other investments, there's no reason. So I think 0:18:27.800 --> 0:18:30.040 it appeals to a certain kind of trading crowd, maybe 0:18:30.040 --> 0:18:32.320