Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast.
Speaker 1: My name is Mike Reagan. I'm a senior editor at
Speaker 1: Bloomberg and I'm Baldonna Higher Across Acid reporter with Bloomberg.
Speaker 1: And this week on the show, Well, investors have been
Speaker 1: scrambling to find somewhere to park their money where red
Speaker 1: hot inflation doesn't erode the value of their holdings. We're
Speaker 1: gonna talk to someone from the world's largest asset manager
Speaker 1: who has a lot of ideas about that. But first,
Speaker 1: l Donna, as a preview of my craziest thing of
Speaker 1: the week, I need to ask you, what is the
Speaker 1: most you've ever spent on sneakers? Sneakers, tennis shoes, trainers,
Speaker 1: if you will, the most, the most hundred bucks? Maybe
Speaker 1: not a lot your bucks. Yeah, you can get kids
Speaker 1: for like kids, Yeah, do you actually own kids? Of course,
Speaker 1: Taylor Swift owns kids, so I must own kids. And
Speaker 1: they're only twenty bucks. I didn't even know they were
Speaker 1: still around. I think you can get them for pretty cheap.
Speaker 1: I mean they're made of like cotton, they ripped very easily.
Speaker 1: Huh do you think I could talk my daughters and
Speaker 1: wearing kids? They if they like Taylor Swift. Yeah, I'm
Speaker 1: as you know, I'm notoriously at a cheap skate at heart,
Speaker 1: but I actually recently spent almost two bucks on a
Speaker 1: pair of running shoes. But it's the kind that comes
Speaker 1: with like you go to one of those running shoe
Speaker 1: stores and they take a video your foot. They oh,
Speaker 1: you fell, And I'm a true believer in it. Look
Speaker 1: as you get older, your feet become a bit of
Speaker 1: a problem. You know, you got your corns and your bunians.
Speaker 1: Oh my god, my listeners don't want to know. I
Speaker 1: fell for the gimmick, and I'm a true leaver in it.
Speaker 1: I think it has helped my feet, even though I don't.
Speaker 1: I don't really run. The only time I actually run
Speaker 1: is when I'm late for the train. But I walk
Speaker 1: a lot. I walk almost like five miles a day,
Speaker 1: you know, to the train, back from the train, up
Speaker 1: to the snack bar a hundred times. You know, I'm
Speaker 1: running away from this conversation right now. I'm going to
Speaker 1: go introduce our guests. Well, I'm so happy that we
Speaker 1: have j Jcobs. He's the US head of Thematics and
Speaker 1: Active Equity E T F said black Rock he's joining
Speaker 1: us this week. I'm thrilled to have you on. Thanks
Speaker 1: so much for joining us, Jay, that's a pleasure to
Speaker 1: be here. We won't ask you about how much you've
Speaker 1: spent on on sneakers just yet. I'm feeling better after
Speaker 1: hearing about Mike's dollar purchase. I think I'm I'm closer
Speaker 1: to your built Anna. Oh thank god. Yeah, I'm so
Speaker 1: happy to hear that. Anyway, you recently started at black Rock.
Speaker 1: I'm I'm sort of hoping we can just start out
Speaker 1: and you can tell us a little bit about you,
Speaker 1: your path to black Rock, and then what your current
Speaker 1: role entails. Absolutely so. I've spent my entire career in
Speaker 1: the E t F industry, which, in some ways the
Speaker 1: industry has been around for a while. It you know,
Speaker 1: got its legs in the mid nineties and now is
Speaker 1: so guests, you know, coming up on thirty years almost.
Speaker 1: But uh, just in the last ten years or so,
Speaker 1: we've seen an explosion of assets and E t F as.
Speaker 1: People have really seen them as these efficient vehicles for
Speaker 1: getting exposure to everything from different asset classes to different
Speaker 1: geographies and maybe even most recently, different themes and looking
Speaker 1: at different structural trends that are accelerating around the world
Speaker 1: and the packet of the different baskets of companies that
Speaker 1: are participating in those themes. So I started very early
Speaker 1: in my career at the New York Stock Exchange, the
Speaker 1: ETF listing group. There, I moved on to join what
Speaker 1: was a start up at the time at Global Acts
Speaker 1: and helped build out their business, and three and a
Speaker 1: half months ago join black Rock as a really exciting
Speaker 1: transition to join what to the great thematic platform. Here
Speaker 1: we not only have index based themes where we're tracking
Speaker 1: targeted baskets of themes like cybersecurity or merchant food and
Speaker 1: actech or robotics, but also actively managed products to where
Speaker 1: we tap into the full platform of black Rocks offering
Speaker 1: with Fundamental Equities and black Rock Systematics. So it's a
Speaker 1: very very exciting place to be with so much depth
Speaker 1: of knowledge in the thematic area. So, Jay, what are
Speaker 1: some of the hot thematic Etcfs of the year. I
Speaker 1: have a inkling as to what they are considering everything
Speaker 1: going on in the world, but what are some of
Speaker 1: the sort of bright spots of the thematics world this year?
Speaker 1: For you? Well, Mike, I'm sorry to say, there's no
Speaker 1: sneaker e t F yet, we can work on that,
Speaker 1: but I'm not sure. If there's we'll work on it.
Speaker 1: At two bucks. I think that's a pretty good. Uh,
Speaker 1: there's some profits out there to be had. Well, you
Speaker 1: get some My craziest thing, you're you're gonna be blown
Speaker 1: away with where the sneaker conversation goes. It's it's absolutely nuts.
Speaker 1: But you work on that, get get get an edgeword
Speaker 1: in EATSF and I think, uh, you know, the sky's
Speaker 1: the limit. But well, but our best people on it.
Speaker 1: We so within within the thematic space, it's been really interesting.
Speaker 1: You know, over the last three or four years, a
Speaker 1: lot of leadership in the f attic space has been
Speaker 1: around disruptive technology. It's been looking at things like cloud computing.
Speaker 1: During the pandemic when we were all working from home,
Speaker 1: it was around genomics and biomedicine when we were you know,
Speaker 1: trying to figure out the vaccine situation and testing um.
Speaker 1: But now it's really pivoted, especially as we've seen broader
Speaker 1: shifts within the market from growth to value. People are
Speaker 1: looking for more themes that are in the value space,
Speaker 1: especially themes that they think that we think are going
Speaker 1: to be more resilient amid this high inflationary environment. So
Speaker 1: we've seen a lot of interest in infrastructure as a theme.
Speaker 1: Part of that, the infrastructure investments that jobs act and
Speaker 1: what's happening there. We've seen really an incredible amount of
Speaker 1: interest in food related themes, especially as we've seen inflation
Speaker 1: at the not maybe not so much at foot locker,
Speaker 1: but we're seeing it at at the supermarket um. And
Speaker 1: then also we've seen interest in in clean energy as
Speaker 1: a play on inflation as well as some of the
Speaker 1: most recent news out of Washington. So we're seeing again
Speaker 1: kind of this shift. It's not just about disruptive tech anymore.
Speaker 1: We're seeing themes that are playing a little bit more
Speaker 1: in that value into the spectrum as investors look for
Speaker 1: long term structural trends. But those that can still do
Speaker 1: well in this different environment than we've been in, and
Speaker 1: those different themes Jade, they're sort of for this inflationary environment, right,
Speaker 1: So could you maybe walk us through those key themes
Speaker 1: of yours and why exactly they work in a world
Speaker 1: like we're having today. Absolutely so, a lot of it
Speaker 1: has to do with what are the underlying companies in
Speaker 1: this theme and why do we think that it's going
Speaker 1: to benefit in an inflationary environment. So starting with infrastructure,
Speaker 1: a lot of infrastructure asset owners, you know, companies that
Speaker 1: run airports, run toll roads, run supports, or utilities companies,
Speaker 1: they literally get to change their tolls based off of
Speaker 1: cp I, So that is a natural built in business
Speaker 1: hedge for inflation. When inflation has higher, they get to
Speaker 1: raise their rates, especially if they're regulated rates tied to
Speaker 1: c p I, and that just sort of neutralizes those
Speaker 1: businesses from an inflation perspective. I think what's also happening
Speaker 1: in that space is you have a lot of money
Speaker 1: coming into infrastructure from the infant structure investments and jobs acts.
Speaker 1: So there's a lot of build out of infrastructure that frankly,
Speaker 1: these companies don't have to pay for or they get
Speaker 1: tax credits or other benefits to build out this infrastructure,
Speaker 1: which is helping. And then finally, when we think about
Speaker 1: the economic environment that we're in, infrastructure tends to be
Speaker 1: very um uh non cyclical. So if we start to
Speaker 1: see a recession or if the economy slows down, people
Speaker 1: still turn on the lights, they still use their ovens,
Speaker 1: they still pay their water bills, and so not only
Speaker 1: does it have this inflation component, but there's also a
Speaker 1: defensive component within this theme, which is which is kind
Speaker 1: of giving people that sweet spot of we don't know
Speaker 1: if there's a recession, we don't know how a long
Speaker 1: inflation is going to be around, and we also want
Speaker 1: to participate in long term structural growth. Inflation really hits
Speaker 1: on all three of those points. I think the second
Speaker 1: theme that we are um, you know, really excited about
Speaker 1: from that inflation perspective is ag tech and food innovation.
Speaker 1: And I'll be honest, this is a theme that we
Speaker 1: thought was really going to be playing out over the
Speaker 1: next twenty years. We looked at we took a step back,
Speaker 1: and we said, the world's arable land is pretty much limited.
Speaker 1: There's a finite amount of land in the world, if anything,
Speaker 1: that has been shrinking due to you know, changes in
Speaker 1: the climate and more floods and more you know, forest fires,
Speaker 1: which is making arable land somewhat shrink. But on the
Speaker 1: demand side of the equation, we've seen a rising emerging
Speaker 1: market consumer which is spending more money on food and
Speaker 1: more complex foods like proteins and dairies. We've seen a
Speaker 1: growing global population which will reach tenderly and people by
Speaker 1: the year tift um. And we're seeing a change in
Speaker 1: food preferences where people are increasingly demanding sustainable food. So
Speaker 1: just looking at that, we were believing that over the
Speaker 1: next several decades we were going to have this supply
Speaker 1: and demand to balance around food that would create food inflation.
Speaker 1: Of course, that's been pulled forward twenty years earlier than
Speaker 1: we expected because of conflict in Eastern Europe, which has
Speaker 1: brought a lot of weed offline, because of general global
Speaker 1: supply chain disruptions, which has made it more difficult to
Speaker 1: ship food around the world. So, um, we're seeing food inflation,
Speaker 1: we're seeing it in really powerful ways. But we also
Speaker 1: have these solutions that are already out there or with
Speaker 1: attact like precision farming, precision watering, reduced use of chemicals,
Speaker 1: more resilient crops, and that is getting accelerated by this environment.
Speaker 1: And then the third team is clean energy, where we've
Speaker 1: seen that a lot of the cost and clean energy
Speaker 1: is really in the initial build out. You know, you
Speaker 1: build out a solar farm, you build out a wind turbine,
Speaker 1: That cost is mostly up front. Yes, there's some servicing
Speaker 1: that's ongoing, but a lot of those costs are basically
Speaker 1: fixed compared to you know, more traditional forms of energy
Speaker 1: production where you're constantly paying for fuels. So in an
Speaker 1: inflationary environment where you have rising commodity prices, upfront payment
Speaker 1: of a lot of those costs tends to be beneficiary.
Speaker 1: So those are the three segments where we think really
Speaker 1: are in the sweet spot of of inflation. But also
Speaker 1: how these long term tail ones. Yeah, I wonder how
Speaker 1: often uh you're sort of studying the headlines out of Washington,
Speaker 1: uh and and trying to figure out what themes um
Speaker 1: could possibly emerge from sort of the shifting politics of
Speaker 1: the see it and really you know politics globally, you know,
Speaker 1: especially the clean energy e t f UM. You know,
Speaker 1: I'm impressed it's it's actually up here to date. So
Speaker 1: very few things are actually positive year to date, but
Speaker 1: clean energy, uh is it? I c l n is
Speaker 1: the ticker is actually up I think three or four
Speaker 1: percent year to date. But how big of a sort
Speaker 1: of government risk do you see to the clean energy space?
Speaker 1: If you know, we get to the mid terms and
Speaker 1: there's a all of a sudden, Republicans are controlling Congress
Speaker 1: and they're not so friendly to to clean energies. Does that,
Speaker 1: you know, sort of political risk play into you into
Speaker 1: you're thinking very much when when a deciding to to
Speaker 1: create a a thematic etf like that and and be
Speaker 1: you know, saying now it's a good time to to
Speaker 1: get into it or not. So with any theme, what
Speaker 1: we try to look for is what is going to
Speaker 1: be the catalyst that is the game changer for the theme.
Speaker 1: So you know, it takes take anything. We can take
Speaker 1: cybersecurity for example, UM cybersecurity technology. It's a little bit
Speaker 1: better each year companies spend more money on cybersecurity. But
Speaker 1: oftentimes you see a catalyst like a major cyber attack
Speaker 1: or something that happens in the space that suddenly everyone
Speaker 1: is thinking about cybersecurity and becomes a transformational moment for
Speaker 1: the trajectory of that theme. Sometimes it can be a
Speaker 1: technological advancement. Sometimes it can be new policy and legislation. Uh.
Speaker 1: Sometimes it can be something that's changing in society like
Speaker 1: COVID and how much that accelerated certain themes. So earlier
Speaker 1: in this year, a lot of our focus was what
Speaker 1: you know now that we're past the peak of COVID.
Speaker 1: What does this mean for things like healthcare? What does
Speaker 1: this mean for disrupted supply chains? What does this mean
Speaker 1: for the rising consumer that has continued to become more
Speaker 1: and more powerful even amid COVID, like millennials and emerging
Speaker 1: market consumers, UM, specifically with clean energy. You know, of course,
Speaker 1: there's a lot of policy that comes into play as
Speaker 1: a potential catalyst for this theme. Uh. You know, most
Speaker 1: recently we've seen some interesting headlines around the Inflation Reduction
Speaker 1: Act and specifically targeting about three sixty billion dollars that
Speaker 1: could go to clean energy and electric vehicles. And when
Speaker 1: you see that amount of money potentially potentially entering the space,
Speaker 1: that can be a massive catalyst for the trajectory of
Speaker 1: this theme. UM specifically because it changes the economics of
Speaker 1: a theme. So if clean energy becomes cheaper or electric
Speaker 1: vehicles become cheaper, that accelerates the adoption and um that
Speaker 1: increases the scale of these technologies. As you see scale increase,
Speaker 1: you sent disease costs come down. That's rights law or
Speaker 1: the learning curve, and then you start to see really
Speaker 1: the acceleration of of these themes snowball from there. So UM,
Speaker 1: you know. Absolutely, we look to Washington, but we also
Speaker 1: looked to Silicon Valley, and we also look to you know,
Speaker 1: general trends that are happening around society for these catalysts.
Speaker 1: So J Mike mentioned I C L N, which I
Speaker 1: guess we can pronounce. Is I clean? Yeah? Clean? Absolutely?
Speaker 1: And also you had sent us some some notes before
Speaker 1: we started the podcast about I D R V I drive.
Speaker 1: So some of these et f s in the clean
Speaker 1: energy space, and you said that the market is missing
Speaker 1: a sea change moment. So is that the sea change
Speaker 1: moment you're referring to. Can you talk a little bit
Speaker 1: more about that when it comes to the specific you
Speaker 1: know e t f s in this space. Absolutely, So
Speaker 1: what we're seeing is really the economics of these different
Speaker 1: themes shifting because of uh, this potential policy that you
Speaker 1: know that could be passed. Right. So if we look
Speaker 1: at electric vehicles, for example, UM, right now, your average
Speaker 1: cost of the average purchase price of electric vehicles about
Speaker 1: higher than the average purchase price of all cars in
Speaker 1: the United States. So it's about a fifth to a
Speaker 1: quarter higher. Um. But actually when you look under the hood,
Speaker 1: you see no pun intended If you actually look under
Speaker 1: the hood of these cars. Uh, the total cost of
Speaker 1: ownership over the lifespan of the car is already cheaper
Speaker 1: for electric vehicles. That's because it's cheaper to fuel up
Speaker 1: and it's cheaper to maintain. I was just doing some
Speaker 1: back to the Napkin math. Uh, it's about ten dollars
Speaker 1: to fuel up about three miles of range an electric vehicle.
Speaker 1: It's about forty to fifty dollars nationally right now to
Speaker 1: fuel up a similar internal combustion GIN. So you can
Speaker 1: think about every time you fill it up. Is a
Speaker 1: little bit cheaper electric vehicles that help closes That helps
Speaker 1: to close the price gap. When you add on top
Speaker 1: of that incentives from the government, which could be as
Speaker 1: high as seventy for a new electric vehicle, then the
Speaker 1: economics will really start to get more attractive to consumers
Speaker 1: and it becomes it no longer becomes a question of
Speaker 1: you know, do you like one car more than the other? Um,
Speaker 1: I think the most powerful driver and a lot of
Speaker 1: these things is just purely economics. And if there's a
Speaker 1: cheaper car off the lot, or a similar priced car
Speaker 1: off the lot, but you're filling up for ten dollars
Speaker 1: instead of forty to fifty dollars. That's a really compelling
Speaker 1: argument for a lot of consumers. So when we see
Speaker 1: policy come through that can help change those economics to
Speaker 1: be more attractive to a specific theme, we see that
Speaker 1: as a very powerful accelerant. I'm gonna call j out
Speaker 1: on that. I think that under the hood pawn wasn't
Speaker 1: was actually intended and I'm sorry, it was really good. Yeah,
Speaker 1: I can't let that slipt the speaking of under the hood, Jay,
Speaker 1: I was looking at some of the stocks uh in
Speaker 1: the I d r V, the self driving and e
Speaker 1: V eat t F. I'm curious how a few of
Speaker 1: these fit into the theme. I mean, obviously, Tesla is
Speaker 1: in there, that's that's clear enough. A bunch of chip makers,
Speaker 1: Qualcom and Video Until Eating the engine maker fine, um,
Speaker 1: But Apple, Alphabet and Samsung UM, and maybe I just
Speaker 1: haven't been paying close off attention, but how did those
Speaker 1: companies fit into um a self driving theme. I'm assuming
Speaker 1: it's just they must have ambitions somewhere along the line
Speaker 1: to to somehow be involved in this space to some degree.
Speaker 1: A lot of the big tech players are investing very
Speaker 1: heavily in autonomous vehicles, and a lot of it is that. UM.
Speaker 1: Part of this is it's a brute force equation to
Speaker 1: try to figure out autonomous vehicles. There's a lot of
Speaker 1: processing power and a lot of data that needs to
Speaker 1: be collected to be able to figure out something like
Speaker 1: a unprotected left hand turn, which sounds simple, but when
Speaker 1: you do it in a car, it's it's hard for me,
Speaker 1: and a computer has to take in a lot of
Speaker 1: inputs to figure out how to do that safely. So
Speaker 1: who's really the best position to take in all that data,
Speaker 1: to process that data to apply artificial intelligence. Well, no surprise,
Speaker 1: it's a lot of the companies that lead in uh,
Speaker 1: data collection and artificial intelligence. So we've seen, you know,
Speaker 1: major players in in big tech coming into this space. Um,
Speaker 1: you know, maybe it's kind of pre revenue, but they
Speaker 1: are behind the scenes developing some very powerful products going forward.
Speaker 1: I think the bigger point is when we look at
Speaker 1: thematic investing, we're really trying to understand the entire ecosystem
Speaker 1: of who benefits from this theme. So I'm sure many
Speaker 1: listeners can name a couple of car companies off the
Speaker 1: top of their head that are powerful electric vehicle companies.
Speaker 1: But looking across the ecosystem. You know, who are the
Speaker 1: companies that are building the batteries that go into those
Speaker 1: electric vehicles. Who are the companies supplying those battery manufacturers
Speaker 1: with lithium and other critical medal metals that go into batteries. UM,
Speaker 1: Where the a V developers, Who are the parts suppliers
Speaker 1: Because the parts suppliers in the electric vehicle space are
Speaker 1: very different than internal combustion engines. There's very different parts
Speaker 1: that are required in these two vehicles. So UM in
Speaker 1: thematic investing, A lot of the research that goes into
Speaker 1: these funds is really happening up front trying to understand
Speaker 1: what is the what is the you know, what is
Speaker 1: the state of the world, and what are the subsectors
Speaker 1: and sub industries that are really going to benefit if
Speaker 1: we see this theme really materialize. So last year was
Speaker 1: actually already a transformational year for electric vehicles. About ten
Speaker 1: cars sold year around the world were UM, we're electric.
Speaker 1: We were a little bit further behind in the United States. UM,
Speaker 1: but we expect that gap will close UM again because
Speaker 1: of the economic argument we have, right, we have higher
Speaker 1: gas prices, UM, we have more models that are coming
Speaker 1: into this space and electric vehicles. We have prices generally
Speaker 1: following electric vehicles, and now we might have another tax
Speaker 1: credit which makes the economics even more attractive. And Jay,
Speaker 1: when you're talking to clients and you're talking about the
Speaker 1: other two categories that you mentioned to agriculture and infrastructure,
Speaker 1: what are some of the e t F that you're
Speaker 1: focusing on when it comes to those two themes. Absolutely
Speaker 1: so in the infrastructure space, it's IFRA um. I'm a
Speaker 1: big I'm a big fan of ticket pronunciation as well,
Speaker 1: So I f r A we pronounced IFRA. It's our
Speaker 1: US infrastructure funds. So we're looking, uh, not only at
Speaker 1: traditional infrastructure owners, the companies that kind of own and
Speaker 1: operate infrastructure around the United States, but also the companies
Speaker 1: that are building infrastructure of the future and the inputs
Speaker 1: that go into building infrastructure of the future. Part of
Speaker 1: that is due to the Infrastructure Investments on Jobs Act
Speaker 1: and at one point two trillion dollars that's going into
Speaker 1: infrastructure around the United States. Part of that is increased
Speaker 1: investment from the private side, from states, from local municipalities. Basically,
Speaker 1: there's a lot of investment coming into infrastructure which had
Speaker 1: largely been neglected over the last several decades in this country.
Speaker 1: And you know, there's a great report that comes out
Speaker 1: every four years, the American Society of Civil Engineers, and
Speaker 1: they gave the u S a D plus on infrastructure.
Speaker 1: So we knew this was coming. We knew there was
Speaker 1: going to be a need for a lot more investment.
Speaker 1: We don't just want to own the existing asset owners,
Speaker 1: but also who are building the new airports and the
Speaker 1: new seaports and the new six lane highways going through
Speaker 1: the country. And then on the on the food side
Speaker 1: of things are tickers I VE EDGE, I V E
Speaker 1: g Um, which is our emergent food and Actec Multisectory
Speaker 1: TF and that's really looking at who are the innovators
Speaker 1: within food. Um I did a kind of a fun
Speaker 1: test within the office. Um I bought two types of strawberries,
Speaker 1: traditional strawberries and my fancy New age strawberries. And a
Speaker 1: traditional strawberry has grown about miles away from New York City,
Speaker 1: oftentimes grown in California. UM Oftentimes it can use as
Speaker 1: much as three hundred times the way to the strawberry
Speaker 1: and water. UH. It could have up to eight pesticides
Speaker 1: being used in that strawberry UH and of course it
Speaker 1: has to be transported across the country so that we
Speaker 1: can enjoy it um. You know, in New York City.
Speaker 1: My special fancy strawberry UM that I also brought in
Speaker 1: is grown in Jersey City, so about a hundred times closer. Uh.
Speaker 1: In an indoor vertical farm. It can be grown year round,
Speaker 1: It uses about nine less water. Oftentimes, it can use
Speaker 1: no pesticides at all because it's grown inside and there's
Speaker 1: less risk of of of pests coming in and eating
Speaker 1: the crops um and so uh and the cherry on
Speaker 1: top of this strawberry is that a robot can actually
Speaker 1: analyze the strawberry when it's growing and perfectly optimize the
Speaker 1: time to harvet for its juiciest, most flavorful moment. So
Speaker 1: we did a little taste test in the office with
Speaker 1: these two different kinds of strawberries, and naturally, people gravitated
Speaker 1: towards our delicious hand hand robot picked indoor vertically farm strawberry.
Speaker 1: But the point is to show that ad tech can
Speaker 1: have a really powerful um implication on how we grow
Speaker 1: our crops and where we get it from and what
Speaker 1: are the inputs into those crops. And you know, going
Speaker 1: back to inflation. We're seeing inflation, and labor costs we're
Speaker 1: seeing inflation, and chemicals we're seeing inflation and water prices.
Speaker 1: So if you get all those different inputs and you
Speaker 1: can replace them or reduce their usage through at tech,
Speaker 1: you can start to fight inflation. And so you know,
Speaker 1: right now some of these technologies are a little bit
Speaker 1: nason but as we see more adoption and more scale,
Speaker 1: we believe that will drive down costs of food going forward.
Speaker 1: I had not heard of these fancy Jersey City shrubberries.
Speaker 1: That's pretty cool. They tasted better because they're grown in
Speaker 1: Jersey City. They actually taste like pork roll of Bildana.
Speaker 1: That's the secret. Yeah, my, my only I actually have
Speaker 1: heard of them. My only fear is that the fancy
Speaker 1: shruberries cost like forty strawberry or something. No, it's not
Speaker 1: that high, but it's it's expensive. These are when you
Speaker 1: look at the trajectory of Nassan technologies, they often start
Speaker 1: expensive and you need to attack the early adopters. And
Speaker 1: so think about the EV industry, what was the strategy
Speaker 1: go for the fancy luxury car market. These are the
Speaker 1: people that are gonna have more disposable income to spend
Speaker 1: on a fancy ev go for tax credits lobby in
Speaker 1: Washington to get more money to bring down the costs.
Speaker 1: As you start to see that scale, then you and
Speaker 1: start building cars for the masses. And I think we're
Speaker 1: gonna see a similar trajectory and actect. Right now, we
Speaker 1: have fancy, somewhat expensive strawberries, but as this technology scales,
Speaker 1: costs will come down and soon all of our strawberries
Speaker 1: maybe we'll be grown in Jersey City in an indoor warehouse.
Speaker 1: But Jay, I, it's a it's really a fascinating concept
Speaker 1: of thematic ETFs. And you know we're joking about you know,
Speaker 1: uh Air Jordan's sneaker ETF. But I can only imagine
Speaker 1: your team at Black Rocks sitting around and the ideas.
Speaker 1: You know, there must be a million ideas a day
Speaker 1: about a new theme, you know, especially over the past
Speaker 1: few years. You know, we went from the trade war
Speaker 1: with China to COVID to energy inflation, you know, the
Speaker 1: food shortage. Um, you know, it's just been a battery
Speaker 1: year banner few years for potential thematic ways to invest.
Speaker 1: So I'm just curious about the process at Black Rock,
Speaker 1: you know, am I right to think of you, you know,
Speaker 1: y'all bantering around, battering around about a hundred different ideas
Speaker 1: that every time you get together, and how do you
Speaker 1: sort of win it with down um to one that
Speaker 1: you actually want to launch? And to make this a
Speaker 1: twelve part question, you know, is there sort of a
Speaker 1: number in your mind of how many new ones per
Speaker 1: year or per quarter that you'd want to you know,
Speaker 1: limit your launches to. And and sort of what is
Speaker 1: the process of of going from drawing word to bringing
Speaker 1: a thematic etf to to the market. It's a great question.
Speaker 1: And um, the opportunities in some sense are unlimited. As
Speaker 1: you said, you know, themes are constantly evolving. New themes
Speaker 1: are emerging from nowhere. Other themes are sunsetting, you know,
Speaker 1: as they kind of grow into maature industries, and so
Speaker 1: it's a constantly evolving space. And UM, I think that
Speaker 1: really proved out in the last few years we saw
Speaker 1: assets and thematic ets quintuple from one as people increasingly
Speaker 1: saw these new ways of slicing and dicing the market
Speaker 1: as really trying to align their ideas with investments. Um. Again,
Speaker 1: going back to the pandemic, it wasn't enough to just
Speaker 1: look for tech sectory TF People really specifically wanted to
Speaker 1: look for where am I spending my money? I'm spending
Speaker 1: it online, Where am I spending my time? I'm spending
Speaker 1: it on video games and knee commerce, and how am
Speaker 1: I working I'm working remotely through cloud computing. People really
Speaker 1: wanted these more refined exposures UM that got a little
Speaker 1: bit deeper than you know, more traditional sector E t
Speaker 1: f s. But when we think about the process of themes,
Speaker 1: we have to apply a rigid structure to it so
Speaker 1: we don't get lost in this UM you know, infinite
Speaker 1: possibilities space, and really we're looking for a few different things. UM.
Speaker 1: First of all, we really want to develop our conviction
Speaker 1: behind the theme. So we have five different categories of
Speaker 1: megatrends within Black Rock. We're looking at breakthrough technologies. We're
Speaker 1: looking at climate change and resource scarcity, we're looking at
Speaker 1: changing demographics, we're looking at the emergent consumer, and we're
Speaker 1: looking at urbanization. And so oftentimes we're looking within and
Speaker 1: across those buckets of where are we're seeing powerful trends,
Speaker 1: And the more a trend the lines with one of
Speaker 1: those buckets, the more conviction we have behind it. UM.
Speaker 1: But we'll dig in. We want to find out if
Speaker 1: this is a new technology, how good is this technology,
Speaker 1: are people using it? How big is the market for
Speaker 1: this technology going forward? Are there other technologies that need
Speaker 1: to emerge with this technology for it to be viable
Speaker 1: or profitable? And so we really dig in and research
Speaker 1: this UM not just within I Share us, but within
Speaker 1: our partners across Black Rock to really understand what is
Speaker 1: the opportunity set in this theme and do we believe
Speaker 1: that this theme is going to have a powerful impact
Speaker 1: on the world around us. The second thing we have
Speaker 1: to look at tho is it also investable? Can we
Speaker 1: get good exposure to this theme? Uh in an e
Speaker 1: t F and E t S can only invest in
Speaker 1: public equities. UM, we can invest globally, so we can
Speaker 1: look anywhere around the world, within any sector, within energy,
Speaker 1: any geography for this opportunity. But we still need to
Speaker 1: find those companies that are really leading in this space.
Speaker 1: And so some themes are interesting. They might have this,
Speaker 1: you know, incredibly large total addressable market, but if we
Speaker 1: can invest in it, we're not going to bring it
Speaker 1: out as a theme. And then really the third thing
Speaker 1: we look at his time horizon. We want these themes
Speaker 1: not to be over tomorrow. That's going to be too fast.
Speaker 1: We don't want them to start taking off a hundred
Speaker 1: years from now because we don't we don't have the
Speaker 1: patients for that either. There's a sweet spot in thematic investing,
Speaker 1: which is that really we we anticipate that a catalyst
Speaker 1: can happen in the next three to five years, and
Speaker 1: that the expression of this theme will happen over the
Speaker 1: next decade or so. That is the sweet spot from
Speaker 1: a time horizon perspective. So um like to some extent,
Speaker 1: you're right, we do get to sit around and think
Speaker 1: about some you know, off the wall ideas, but when
Speaker 1: we put it through this rigid process, that's what narrows
Speaker 1: it down to, you know, the handful of themes that
Speaker 1: we launch each year. So can you tell us which
Speaker 1: themes or trends are on your radar right now? And
Speaker 1: I sort of imagine you guys have a little list
Speaker 1: of things that are interesting to you or that you
Speaker 1: think will you know, check off all of the boxes
Speaker 1: for the things you just mentioned. I remember talking to
Speaker 1: an issue or a couple of years ago who had said,
Speaker 1: you know, clean energy or sorry water water use was
Speaker 1: going to be a theme that they had been looking at. Obviously,
Speaker 1: Crypto has been a very hot or I don't even
Speaker 1: know how to describe it anymore, but um, it's caught
Speaker 1: a lot of people's attentions, a lot of issuers attention
Speaker 1: over the last couple of months. And feel free to
Speaker 1: share as much proprietary black Rock internal information as you
Speaker 1: as you want. I was going to say, as as
Speaker 1: much as I would love to share. This is like
Speaker 1: the recipe to diet coke or something. It's under like
Speaker 1: triple secret lock a lot of these ideas, but this
Speaker 1: is your chance, this is your chance to really open up.
Speaker 1: At least give us the worst theme idea you've ever heard.
Speaker 1: Maybe it was the Air Jordan idea. I don't know.
Speaker 1: I like that theme. I um, you know, like like,
Speaker 1: let's play with that a little bit, Mike like, so
Speaker 1: underlying I'm serious, like the sneaker theme. So what is
Speaker 1: it really representing? There is a new consumer. There's this
Speaker 1: rising millennial consumer in this rising emerging market consumer that
Speaker 1: is finding that they have more money than they've had
Speaker 1: it previously. Because they are increasingly entering the workforce, they're
Speaker 1: sizing up the ranks of their companies and they have
Speaker 1: to decide where they want to spend their money. And
Speaker 1: what's interesting about this consumer group is that they are
Speaker 1: more likely to spend money on sneakers than previous generations.
Speaker 1: So um, you know, I don't know if a sneaker
Speaker 1: ETF is really viable, but there are megatrends within that.
Speaker 1: You know, if you broaden that out, there's a mega
Speaker 1: trend behind that, which is what is the new consumer
Speaker 1: and how are they spending their money differently from other
Speaker 1: generations and so uh. Part of that, you know, is
Speaker 1: related to blockchain. We see that there's a lot of
Speaker 1: people in the emerging markets who have been unbanked in
Speaker 1: the past and can suddenly access finance through um, through blockchain,
Speaker 1: into centralized finance. Part of that is through food. Millennials
Speaker 1: are much more likely to prefer food from sustainable sources
Speaker 1: than other generations, and so the food that they demand
Speaker 1: is kind of it looks different than the food that
Speaker 1: previous generations have demanded. And that's why we see alternative
Speaker 1: proteins and alternative bairies showing up on you know, on
Speaker 1: all the aisles in our in our supermarkets. So um,
Speaker 1: there is a theme behind sneakers, Mike, uh and uh
Speaker 1: and and it's a powerful one. It's one that we
Speaker 1: certain we have our eyes on. I'm not going to
Speaker 1: promise this, Nikerta, but it's but the changing consumer is
Speaker 1: a very powerful megatrend. Absolutely. And what what were some
Speaker 1: of those themes you were just about to share with us?
Speaker 1: So I thought I wiggled out of that one. You'll
Speaker 1: have to invite me back and I can share we
Speaker 1: have some we have exciting themes under development, but I'll
Speaker 1: have to come back and share them when they're ready
Speaker 1: for the public. I uh and assume E s G
Speaker 1: must play a pretty significant uh input in how you're
Speaker 1: thinking about these, just given black Rocks sort of emphasis
Speaker 1: on e ST and and also just the investing public.
Speaker 1: You know, I'm trying to think who your your target
Speaker 1: buyer of a thematic et F would be? Is it individuals?
Speaker 1: Is it pensions you know, uh, institutions? And and how
Speaker 1: big of a sort of impetus is our E s
Speaker 1: G considerations when when looking at teams. Yeah, absolutely so. Um.
Speaker 1: First of all, one of our megatron pillars is climate
Speaker 1: and resource scarcity. So when we look at some of
Speaker 1: the powerful trends happening around the world today. Some of
Speaker 1: them are very much related to climate. We've already talked
Speaker 1: about it with food and you know how we're seeing
Speaker 1: kind of shrinkage of airable land. When it comes to
Speaker 1: clean energy, we're seeing the powerful forces within policy and
Speaker 1: consumer demand that are powering greater growth in in clean
Speaker 1: energy production. So that's an entire pillar of our megatrends framework. UM.
Speaker 1: But to your question around who's the buyer of thematic,
Speaker 1: it really runs a wide gamut. And I think part
Speaker 1: of that is that on one hand, these are very
Speaker 1: approachable ideas that people can intuitively understand, So a novice
Speaker 1: investor can wrap their head around an idea like, um,
Speaker 1: I see a lot of electric vehicles on the road.
Speaker 1: Is this a growing theme? How do I get exposure
Speaker 1: to it? Oh, there's an eye dry BTF. But on
Speaker 1: the other hand, these are sophisticated concepts. These are providing
Speaker 1: exposures that are crossing geographies, crossing sectors, providing really unique
Speaker 1: exposures to a portfolio. And we see even institutions using
Speaker 1: them in their portfolios to get these unique cuts and
Speaker 1: these unique exposures. UM in a in a broader, more
Speaker 1: diverse five portfolio. So there's a very wide buyer base
Speaker 1: of these themes. Um, it really can't be pigeonholed to
Speaker 1: just one type of investor. And I have one more
Speaker 1: question for you about sort of the internal dealings of
Speaker 1: how you guys come up with different funds. One thing
Speaker 1: that's super interesting to me is tickers, and we we
Speaker 1: we've mentioned a bunch of really great ones that you
Speaker 1: guys have. There's some really really catchy ones where when
Speaker 1: you see the ticker, you definitely know what you can
Speaker 1: expect from the E t F. So how important is
Speaker 1: it to have I don't know if catchy is the
Speaker 1: best word. Maybe you have a better word to to
Speaker 1: to use in this case, But how important is it
Speaker 1: to have a very good ticker where somebody can easily
Speaker 1: find you or sort of get enticed by the ticker
Speaker 1: itself to even become interested in the E t F.
Speaker 1: I think it helps a ton. I mean, people have
Speaker 1: a strong memory for for tickers, and so I guess,
Speaker 1: backing up very early in my career, my very first
Speaker 1: job at then at the New York Soaker Change was
Speaker 1: actually reserving tickers for t f issuers. That's part of
Speaker 1: the job. So it's kind of like being the I
Speaker 1: assume it's like being the person at the DMV that
Speaker 1: does vanity license plates, but you're only working with up
Speaker 1: to four characters. They're a little bit more limited. But
Speaker 1: I I love a great ticker. I'm I'm as much
Speaker 1: of a fan as you. Um yeah, having a good
Speaker 1: memorable ticker I think means a lot. I mean that
Speaker 1: I shares. We have a very um uh kind of
Speaker 1: common approach where we'll use IE for the eye and
Speaker 1: aishers and then we have three letters at our disposal
Speaker 1: to do something memorable. So when we think about you know,
Speaker 1: emergent food, we have i've edge. When we think about
Speaker 1: electric vehicles, we have I drive, you know, for cybersecurity,
Speaker 1: I hack and so we try to take both that
Speaker 1: kind of familiarity of using the eye, but then also
Speaker 1: having something that really links the ticker to the theme.
Speaker 1: But I love a good ticker, and and and and
Speaker 1: are you sort of compiling lists and then going to
Speaker 1: the exchanges and reserving them just in case you want
Speaker 1: to come up with a fund down the line? Oh no,
Speaker 1: we well, we we try to tie it to product
Speaker 1: launches specifically, so we think, you know, we we we
Speaker 1: get people in the room and think through the different
Speaker 1: ticker ideas. As we're getting ready for a product launch,
Speaker 1: s n k R is available. J. I just just
Speaker 1: throwed it out there. You know, maybe maybe I s
Speaker 1: n K I sneeze so J. How about in UM
Speaker 1: in fixed income? I mean, I know, UH shares is
Speaker 1: obviously famous for the T L T, the H y G,
Speaker 1: you know, the big Treasury and and UH and how
Speaker 1: you'll bond e TF Is there space in thematics for
Speaker 1: fix fixed income? From your perspective, we haven't seen much
Speaker 1: of it yet, but we're seeing growing adoption of themes.
Speaker 1: Themes are really just different ways to slice in dise
Speaker 1: the market to get exposure to forward looking ideas UM
Speaker 1: and so for the most part, we've seen a lot
Speaker 1: of that focused on the equity space because you can
Speaker 1: get really targeted exposures to equities and you can get
Speaker 1: a lot of we call it kind of theme beta.
Speaker 1: It's a little bit of a nerdy term for how
Speaker 1: much exposure are you getting to of a theme. So
Speaker 1: if robotics takes off, is our robotics and the real
Speaker 1: economy is taking off? Are we seeing you know, the
Speaker 1: robotics stocks taking off as well. Um, you could apply
Speaker 1: that to fixed income. Uh we we we haven't done
Speaker 1: much in that space, Uh you know yet. But I
Speaker 1: think the breath of opportunity of thematic is expanding very rapidly,
Speaker 1: and I would expect to see a lot more product
Speaker 1: innovation and across assets, across themes, across geography is going forward.
Speaker 1: And Jay, obviously we've we have so many different e
Speaker 1: t F s. I forget what the number is now,
Speaker 1: it's probably over two thousand. You you probably know the
Speaker 1: number off the top of your head, just in the
Speaker 1: A t F in the entire et F universe. I'm
Speaker 1: just wondering if you ever think about the space being
Speaker 1: overly saturated, or if we can get to a point
Speaker 1: where there's just so many options out there for people,
Speaker 1: too many. I think choices and is an incredible thing
Speaker 1: for investors because it lets people express their opinions their
Speaker 1: e t s using really re find um exposures of
Speaker 1: the ligne with their views. So I'll give you a
Speaker 1: little bit of an example within the robotics space in
Speaker 1: the TF industry, there's about five different robotics ETFs. The
Speaker 1: average overlap between those products is less than so even
Speaker 1: though all the products are looking at robots, we're all
Speaker 1: looking at robots a little bit differently, um, whether that's
Speaker 1: black Rock Views Views on Robotics or someone else. And
Speaker 1: so that gives investors a lot of choice. I think
Speaker 1: that gives investors also need to have a lot of
Speaker 1: trust in the issue are behind that et F of
Speaker 1: how they've designed the exposure to that specific theme. Um.
Speaker 1: But we think that choice is wonderful for investors to
Speaker 1: be able to really look again under the hood. I'm
Speaker 1: sorry for the pun. I guess that doesn't apply to robots,
Speaker 1: but look under the hood at an e V t
Speaker 1: F and understand what is the exposure and is that
Speaker 1: really the exposure they're looking for. Yeah, I imagine there's
Speaker 1: a little bit of Darwinism at played. So you know,
Speaker 1: if the if the thing's not gathering enough assets to
Speaker 1: make it sustainable, then you you know, it goes into
Speaker 1: retirement or the et F graveyard as Baltunists would call it. Uh.
Speaker 1: But speaking about t J, I'm I'm sure you've running
Speaker 1: him at some point. He's our et F guru here.
Speaker 1: Eric Beltrino said, um at Bloomberg. He tweeted something the
Speaker 1: other day that I found pretty interesting. UM shouldn't be
Speaker 1: that surprising, I guess. But it was basically a bar
Speaker 1: chart of assets in UH E t F sorted by
Speaker 1: what their UH expense ratios are, you know, and and
Speaker 1: obviously the lower the expense ratio, the higher the assets
Speaker 1: UM And I wonder how you think about that. In thematics,
Speaker 1: it's you know, I'm looking at, say, for example, the
Speaker 1: the I d r V expense ratio of forty seven
Speaker 1: basis points, which is not a huge expense ratio. But
Speaker 1: when you compared to say, you know, uh NZAQUE or
Speaker 1: an SMP, one of those really competitive spaces for index
Speaker 1: ETFs UM, they get down into these minuscule expense ratios.
Speaker 1: So how hard is it to to cut those expenses
Speaker 1: on a thematic even if it's not an active one,
Speaker 1: I mean even a past someone. There's this whole process
Speaker 1: and research that goes into it. How big of a
Speaker 1: deal is the expense ratio and thematics UM and and
Speaker 1: you think, you know, I'm assuming there's always an effort
Speaker 1: to bring it down. Uh, you know, how do you
Speaker 1: go about that process? Yeah? So a lot of it
Speaker 1: comes down to portfolio construction. So you know, many investors
Speaker 1: will do more of a core satellite approach where they
Speaker 1: will have the lion share of their assets in very
Speaker 1: you know, low cost diversified core products and you know,
Speaker 1: get the SMP five hundred tracking and their fixed income
Speaker 1: and really cover you know, wide spots on the market
Speaker 1: with that low cost exposure. And then they'll supplement that
Speaker 1: with smaller satellite positions that can give them more growth
Speaker 1: or give them more income, or give them more risk
Speaker 1: management and um. And that's where it's going to be
Speaker 1: kind of smaller allocations but really help them to achieve
Speaker 1: their outcomes. So oftentimes we'll see you know, three or
Speaker 1: four thematic ETFs put into the satellite portion of one's portfolio.
Speaker 1: Maybe it's tent of their portfolio, but it's giving them
Speaker 1: that growth opportunity that is enhanced above the core. Because
Speaker 1: that tends to be a smaller allocation. You know, the
Speaker 1: funds are going to be smaller in size than core funds.
Speaker 1: You know, we haven't seen a thematic et F each
Speaker 1: hundrebillion in assets. Yeah, they often tend to be smaller
Speaker 1: than that, and that you know, sort of justifies the
Speaker 1: fees and in terms of scale. But oftentimes you can
Speaker 1: still achieve a very low cost, diversified portfolio with thematic
Speaker 1: with all in fees that are very low. So we
Speaker 1: think that we're continuing to provide a lot of value
Speaker 1: to investors with with the pricing of of both our
Speaker 1: themes and the core. Yeah, what is the big or
Speaker 1: the clean energy ones like five billion or something that is. Yep,
Speaker 1: that's one of the biggest on our platform. Absolutely ja
Speaker 1: good stuff. Um, we gotta send Veldona over to get
Speaker 1: some of those Jersey City strawberries that tastes like pork roll.
Speaker 1: I would love I would love to try park roll.
Speaker 1: It tastes like delicious strawberries. All right, Well, that's that's
Speaker 1: indoor Jersey City strawberries. That's that's less exciting. That's less
Speaker 1: innovative than that I was hoping for in these Jersey
Speaker 1: City strawberries. But as the garden state, I'm sure they're good.
Speaker 1: But I think it's that time, Vildonna, do you know
Speaker 1: what time it is? Well, the strawberry thing is pretty crazy,
Speaker 1: but I think it's time for us to also play
Speaker 1: craziest thing we saw in markets. Okay, whereest thing, craziest thing,
Speaker 1: crazy whatever we call it? Still crazy, still craziest thing
Speaker 1: after all these years, you go first. I've got high
Speaker 1: hopes for your crazy thing this week. Mine is so good.
Speaker 1: But it's so good that you actually might have heard
Speaker 1: of it already. And it made me a little bit queasy,
Speaker 1: which is why I'm going with it. Queezy queazy. You'll
Speaker 1: see worse than the how many rats can be found
Speaker 1: in a dollar store warehouse? You tell me all right.
Speaker 1: Fancy Feast is opening a pop up Italian restaurant in
Speaker 1: New York City with quote upscale dishes that are inspired
Speaker 1: by its canned cat food. It's launching this month in
Speaker 1: downtown New York City. I actually think it starts next week.
Speaker 1: I would love to actually just maybe go and scope
Speaker 1: this out. So it's branded Gotto Bianco, which means white cat,
Speaker 1: and they're going to be serving dishes like salmon calm
Speaker 1: parton palmer rodini not pronouncing this very well, but salmon
Speaker 1: with cherry tomatoes and brassado dimonzo, which is beef short
Speaker 1: ribs in red wine. And you can have lemon pancotta
Speaker 1: for dessert. I mean, it actually sounds delicious. I don't
Speaker 1: know why they felt inclined to make the connection to
Speaker 1: cat food in this Uh you know, I don't know.
Speaker 1: Can you bring your cat to the I don't think so.
Speaker 1: I mean with cats are antisocial, they don't want to
Speaker 1: be going out for dinner. But um, it doesn't make
Speaker 1: you queasy. Well when you uh say the names of
Speaker 1: the dishes, it makes me very hungry. But when I
Speaker 1: think fancy fees, I do get a little queasy. I
Speaker 1: wonder you're a cat person. Is this like something cat
Speaker 1: people will embrace? No, no way, dog lovers are going
Speaker 1: nowhere near this place. I'll tell you that. You know,
Speaker 1: I don't know who's going near this place. I would
Speaker 1: love to, honestly just see what it looks like. But
Speaker 1: when I feed my cat and I open it and
Speaker 1: a little bit of the stuff gets on my hand,
Speaker 1: I literally it's like it's like a nuclear waste touching
Speaker 1: my skin. The last thing you're thinking is good, will
Speaker 1: give you some of that I want to place? Yeah, exactly,
Speaker 1: that's pretty good. I did see that one, but I
Speaker 1: will I'll give you mad respect, as the kids say,
Speaker 1: for it's a good one. How about you, Jay? You
Speaker 1: see anything crazy in the markets recently. I'm gonna stick
Speaker 1: with the with strawberries over cat food. I just want
Speaker 1: to make that clear. I know I'm all for food innovation,
Speaker 1: but that that's a step too far for me. Um. Yeah,
Speaker 1: I'll stick with the food theme. I think this is
Speaker 1: this is crazy as far as as as finance nerds get.
Speaker 1: But I was looking into inflation a bit. The cost
Speaker 1: of a dozen eggs has gone up sixty in the
Speaker 1: last year. It took twenty years to have the same
Speaker 1: amount of inflation and eggs um before that, So from
Speaker 1: two thousand to two thousand, twenty was the same increase.
Speaker 1: I think that's crazy, and that you know a lot
Speaker 1: of what we've talked about today with food inflation, and
Speaker 1: you know the bill when you leave the supermarket and
Speaker 1: some of the sticker shock on that. Um, it's pretty
Speaker 1: wild to see that amount of that amount of increase
Speaker 1: in such a short time. Yeah. Absolutely, I wonder is it?
Speaker 1: I wonder if it's the input costs the chicken feed.
Speaker 1: Literally that's uh, that's done. It probably right? That that
Speaker 1: is nuts? All right? I promised to something related to sneakers,
Speaker 1: uh and are probague. Miss Lorena had a really amazing story, Um,
Speaker 1: Vildana you probably read it, but it's about an air
Speaker 1: Jordan's ponzi scheme. I believe that the first of its kind,
Speaker 1: and it's all goes back to this stock X. I
Speaker 1: think this was one of my crazy things from a
Speaker 1: few years ago. But there's this exchange basically for sneakers, um,
Speaker 1: mainly Air Jordan's, but I guess you know, plenty of
Speaker 1: others trade on it took kids. I don't know about kids.
Speaker 1: I don't know. I'm kidding. I gotta I'm gonna talk
Speaker 1: to my kids into getting kids. Um. But this story
Speaker 1: is nuts because the details of this ponzi scheme. Basically,
Speaker 1: the this couple was promising rare Air Jordan's at you know,
Speaker 1: way below what the market price was. But as a ponzi,
Speaker 1: the people would send them their money, they wouldn't get
Speaker 1: the sneakers. Maybe they'd complain and he'd send them some
Speaker 1: money back. But uh, you know, there were some fraudulent
Speaker 1: bank loans involved. It's a big mess. But a got
Speaker 1: me poking around on the site of stock X, and
Speaker 1: believe it or not, they stock X has Air Jordan's indexes. Uh,
Speaker 1: there's an Air Jordan four. I guess the fourth version
Speaker 1: of the Air Jordan was a very popular one. And
Speaker 1: there's a Nike air Max one index. They also have
Speaker 1: have you ever heard of cause either when you hear
Speaker 1: of K A W. S figurines, I've never heard of this.
Speaker 1: It's some graffiti artist, um who started making these little
Speaker 1: funny figurines, and they're a hot thing now among collectors,
Speaker 1: I guess um. And also a basketball Trading cards index.
Speaker 1: Basketball cards are a big thing. So I found this
Speaker 1: report on their website and they track the appreciation of
Speaker 1: each of these indexes from uh the beginning of sold
Speaker 1: the end of April. So that is the the golden
Speaker 1: era of crazy market action right there, beginning of to
Speaker 1: April and of April. So, uh J, I regret to
Speaker 1: inform you you are now contestant on the price. What
Speaker 1: did we decide? The name of the show was the
Speaker 1: price is correct? The price the prices cracked? Yes, we
Speaker 1: can't call it prices right. Yes, we do not want
Speaker 1: to get correct suitor or punched by Bob Barker like
Speaker 1: Happy Gilbert, the prices accurately. No, I like the prices correct.
Speaker 1: The prices correct, all right, So beginning of to the
Speaker 1: end of April, we're gonna chart the Air Jordan four index,
Speaker 1: the Nike air Max one Index, the Cause Figurine Index,
Speaker 1: the Baseball basketball pardon me, Trading Card Index, and a
Speaker 1: quaint little index known as the SMP five. What do
Speaker 1: you think performed the best and what was return? I'm
Speaker 1: gonna go with this Air Jordan's four index and I'll
Speaker 1: say it was up twelve. Okay, all right, I'm gonna
Speaker 1: keep my poker face on. As a reminder, j We've
Speaker 1: got the Air Jordan four Index, the Nike Airmax one Index,
Speaker 1: the Cause Figures, and the Basketball Trading Cards Index, and
Speaker 1: the SMP five. What do you think performed the best
Speaker 1: from the beginning of till the end of April? And
Speaker 1: that's the time frame in their report. That's the only
Speaker 1: reason I don't have the actual data to play around with.
Speaker 1: They have never heard of cause I'm gonna go with
Speaker 1: basketball cards. I think basketball has really entered the zekegeist
Speaker 1: and people are tracking it really closely, and I'm I'm
Speaker 1: gonna go with basketball cards. I'm gonna say a ten
Speaker 1: x two thousand percent. Okay, they'll do it once again.
Speaker 1: I regret to inform you you've you've lost the prices
Speaker 1: accurate this week. I'm shocked. I'm shocked, considering all my
Speaker 1: deep knowledge of weird sneakers. J J got it on
Speaker 1: the head. The basketball trading card index little frothy on
Speaker 1: your on your returns there was it was uh return
Speaker 1: uh but still pretty good. I mean for basketball cards
Speaker 1: who knew Uh. The SMP for comparisons only up about
Speaker 1: over that time Eric Jordan's four index up a hundred,
Speaker 1: uh caused cause beat the like their maximus. Cause still
Speaker 1: beat the SMP over that period, for whatever the heck
Speaker 1: they are. Naturally, that's the world we live in in
Speaker 1: that some stupid thing none of us have even heard of. Uh,
Speaker 1: some silly little toys beat the SMP over that period, thankfully, J.
Speaker 1: I don't know. Have the markets come back to earth?
Speaker 1: Are they saying again do you think or how are
Speaker 1: you thinking? Overall about that sort of the insanity of
Speaker 1: the markets? Uh? Now, compared to what we saw the
Speaker 1: previous two years, I think we found our footing. There's
Speaker 1: been a bit of a shakeout. I think the shift
Speaker 1: from growth to value has helped people recalibrate their portfolios.
Speaker 1: They think they're still going to be more volatility. We're
Speaker 1: still trying to digest what you know, living with inflation
Speaker 1: looks like for the longer period of time what shortages
Speaker 1: mean in the economy as well. But it seems like
Speaker 1: the markets have found their footing a bit so, a
Speaker 1: little bit more driven by fundamentals than maybe it was
Speaker 1: a couple of years ago. Yeah, that's that sounds that
Speaker 1: sounds about right to me. And just for your own notes, Uh,
Speaker 1: j cause Kaws that tookers available to you know, it's
Speaker 1: just just throwing it out there. We'll take a look
Speaker 1: into it. Yeah, I cause it's for good cause cows.
Speaker 1: Maybe it's cows. I don't know. Move. What's the movie
Speaker 1: e TF there's a movie cash Cow, Cash, Cash cass
Speaker 1: damn though it has nothing to do with good I
Speaker 1: love it anyway. With that said, Jay, fascinating conversation. We
Speaker 1: really appreciate your time, and I hope we can have
Speaker 1: you back again to uh to hear what's new with
Speaker 1: the mad except black Rock in the future. Absolutely, thanks
Speaker 1: for having me, Thank you, Jake, what goes up? We'll
Speaker 1: be back next week and so then you can find
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Speaker 1: Thanks for listening. To see you next time, Oh,