WEBVTT - Markets, Fintech, And ETFs (Podcast)

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<v Speaker 1>Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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<v Speaker 1>my co host Matt Miller. Every business day, we bring

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<v Speaker 1>you interviews from CEOs, market pros, and Bloomberg experts, along

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<v Speaker 1>with essential market moving news. Find the Bloomberg Markets Podcast

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<v Speaker 1>on Apple Podcasts or wherever you listen to podcasts, and

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<v Speaker 1>at Bloomberg dot com slash podcast. I want to bring

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<v Speaker 1>in Ted Oakley right now, founder and managing partner at

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<v Speaker 1>Oxbow Advisors. UM and I it's Ted. Is great to

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<v Speaker 1>get a chance to talk with you after we've got

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<v Speaker 1>some kind of confusing consumer confidence numbers and UM, you know,

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<v Speaker 1>we're worried about inflation, we're worried about growth. It's just

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<v Speaker 1>a difficult time right now to make a call on

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<v Speaker 1>the markets. What do you think, Well, I would have

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<v Speaker 1>to say none. It's hard for us. I mean what

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<v Speaker 1>we're seeing is that this latest round of sort of

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<v Speaker 1>a snap back, and in terms of what's going on

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<v Speaker 1>in the consumer, I think they're borrowing all the money

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<v Speaker 1>number one, but number two to all the snapback, people

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<v Speaker 1>can't wait to find the bottom and it just looks

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<v Speaker 1>like we have more to go. And you have to

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<v Speaker 1>think about that relative to the numbers that have come out,

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<v Speaker 1>and uh in May, obviously with oil and that sort

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<v Speaker 1>of thing, the Fed's going to keep on fighting. So

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<v Speaker 1>we can't see the upside here, I'd have to say

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<v Speaker 1>we're looking for more downside? How much more downside? Ted?

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<v Speaker 1>And kind of I think what a lot of folks

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<v Speaker 1>are saying is, you know, where do we find a bottom?

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<v Speaker 1>What is the market pricing in now? Is the market

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<v Speaker 1>pricing and stagflation? Is the pricing in a recession? Or

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<v Speaker 1>are we not even there yet? How do you think

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<v Speaker 1>about kind of identifying you know, not the bottom, but

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<v Speaker 1>maybe you know kind of the beginnings of a bottom. Well,

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<v Speaker 1>the biggest thing is I think it's pricing in profits.

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<v Speaker 1>I mean, if you look at the market, it's always

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<v Speaker 1>pricing in how profitable things are going to be for

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<v Speaker 1>companies that are in the market. And if you look

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<v Speaker 1>at all those companies Brian Large, they haven't made any

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<v Speaker 1>any more money in the last six months, and it

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<v Speaker 1>looks like in order to stay up with things are

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<v Speaker 1>going to have to raise prices where it hurts the

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<v Speaker 1>sales and the margin is going to break down again.

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<v Speaker 1>And so if you can't see the earnings picture, for

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<v Speaker 1>the next six months. To me, that's what the market does,

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<v Speaker 1>discounting or we'll discount more. So, um, what do you

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<v Speaker 1>do if um? Well, first off, if you're not someone

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<v Speaker 1>living on a fixed income, if you're still trying to

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<v Speaker 1>build your nuts so to speak, Uh, what's an investor

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<v Speaker 1>to do right now? You know, we always break that

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<v Speaker 1>down between younger people that are building and someone else

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<v Speaker 1>who has already achieved the wealth level and and they're

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<v Speaker 1>going towards you know, the end of life. But on

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<v Speaker 1>the younger side, we you know, you think normally they

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<v Speaker 1>could just keep on uh dollar cost averaging because they

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<v Speaker 1>put a small end every month and they're young. I

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<v Speaker 1>mean it's going to build up over time, You're Okay,

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<v Speaker 1>for someone that sold a company or they have significant

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<v Speaker 1>wealth at say fifty five or sixty, they need to

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<v Speaker 1>start thinking about preservation as opposed to trying to beat

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<v Speaker 1>the SMP right here, because probably preservation will beat the

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<v Speaker 1>SMP this year. And I think that's where people probably

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<v Speaker 1>there's there's two categories of what we recommend right in there,

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<v Speaker 1>and they are well listening for the young people. Okay,

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<v Speaker 1>if I'm a young person, I don't how much money

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<v Speaker 1>maybe putting in I think we just decided we don't

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<v Speaker 1>care about young people. That's right. What what if what

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<v Speaker 1>if you sold your company? What if you just sold

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<v Speaker 1>a house. What if you're you know, you've made your

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<v Speaker 1>money on Wall Street with an amazing three decade career,

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<v Speaker 1>and now you just want to keep the money. Well,

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<v Speaker 1>most of our workers with people that have sold a company,

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<v Speaker 1>that's the majority of our assets. And so the new

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<v Speaker 1>money we've had coming in the last two or three

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<v Speaker 1>months went something like this about it or seventy five

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<v Speaker 1>similar between that number is really i right now, it's

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<v Speaker 1>in it's in short treasuries, things along that line. We're

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<v Speaker 1>not trying to you know, we're not trying to bet

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<v Speaker 1>the farm and where rates go right here. We're keeping

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<v Speaker 1>that fairly short, a little bit long. But then on

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<v Speaker 1>the stock side, where we might normally have for somebody

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<v Speaker 1>like that, uh, maybe a third of stock, that's only

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<v Speaker 1>about ten percent for us right now. And then we

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<v Speaker 1>have another strategic called high income, and that one normally

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<v Speaker 1>that would be again about thirty five percent. It's probably

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<v Speaker 1>only about fifteen to twenty right now. So you can

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<v Speaker 1>see we're skewed towards safety. We can make a change

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<v Speaker 1>really quickly. But that's where we are right now, he said,

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<v Speaker 1>I know, you know as a proud texting um people

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<v Speaker 1>in Texas, I'm guessing just have a natural call on

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<v Speaker 1>oil one way or another. I'm looking at w T

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<v Speaker 1>I coude oil here, just one dollars a barrel. What

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<v Speaker 1>are your good friends around the state of Texas saying

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<v Speaker 1>about oil? Well, I have to tell you that I've

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<v Speaker 1>been obviously Texas most of my all my life actually.

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<v Speaker 1>But the thing about it, most people in the one

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<v Speaker 1>guest business are very good when it's very poor, I

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<v Speaker 1>should say. When it comes to sentiment, they are all

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<v Speaker 1>they're always bullish at the high and you can't give it.

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<v Speaker 1>You know, you can't get them to even take giveaway

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<v Speaker 1>oil when it's like eight or nine bucks. But you know,

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<v Speaker 1>so they're all in that mode right now because their

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<v Speaker 1>checks are higher every month, checks a little higher, you

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<v Speaker 1>know when from production, and so you can't get them there.

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<v Speaker 1>The big point is what we're watching is the end

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<v Speaker 1>the march. You know, you're up around one and this

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<v Speaker 1>this miss will be a test here. If you can't

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<v Speaker 1>get much higher, it means that you're I don't know,

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<v Speaker 1>if you sell the gas line numbers, but the sales

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<v Speaker 1>of gasolene, you know, the last two weeks have really,

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<v Speaker 1>even in the hot season like this, are starting to

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<v Speaker 1>really show weakness relative to where they were. So I

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<v Speaker 1>think that's the key. Does that you make? Do you

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<v Speaker 1>do you push that one high? I sort of doubt day. Actually,

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<v Speaker 1>I think you're you know, somewhere in here, you slow

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<v Speaker 1>the whole thing down because of the consumer. I'm actually

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<v Speaker 1>surprised ted that, you know, some of our friends in

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<v Speaker 1>Texas and Oklahoma I haven't started drilling more. But I

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<v Speaker 1>guess they're disciplined. Well, there's two things go into that.

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<v Speaker 1>One they the leases are really expensive right now to

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<v Speaker 1>go buy a brand new lease to drill. And first

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<v Speaker 1>of all, and everybody's out buying minerals, everybody. I'm in

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<v Speaker 1>a couple of mineral deals myself private. But what happens

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<v Speaker 1>is everybody's out by a mineral. So the mental that

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<v Speaker 1>they're paying a lot of money for these leases, and

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<v Speaker 1>so that starts out high, and then you really have

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<v Speaker 1>all the expenses have gone up a lot. Now, all right, Ted,

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<v Speaker 1>we always the politicians are gonna pull the rug out

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<v Speaker 1>from under you soon enough, anyway, throw a little politics.

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<v Speaker 1>We're talking economics here, but boy, we always learned something

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<v Speaker 1>from Ted, Ted ocally founder and managing partner ox Boat

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<v Speaker 1>great on Ted. Yep, absolutely, we'll talk later with Ted.

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<v Speaker 1>So you know, I like to walk around with a

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<v Speaker 1>little bill fold, a little bit of cash, and I

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<v Speaker 1>actually done at mom with park Raceway this past weekend,

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<v Speaker 1>so I got some little winnings in my betting on

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<v Speaker 1>the horse on the ponies had a decent day, not

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<v Speaker 1>a great day. But the kids don't have cash. They

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<v Speaker 1>just everything's on an app, on a card, on this

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<v Speaker 1>and on that. I mean back in the day, I

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<v Speaker 1>don't use my credit card. When was something meaningful? I

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<v Speaker 1>just use my watch every I know, now the watch

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<v Speaker 1>and now the phone. Video. Peter's chief operating officer of

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<v Speaker 1>Markhetta joined this. Margaret is a NASDAC traded company trading

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<v Speaker 1>on the symbol m QUE. Came public last year. Video

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<v Speaker 1>talk to us about what you guys at Marcatta are

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<v Speaker 1>doing in the fintech space. Thanks so much for having

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<v Speaker 1>me here. It's such an exciting time to talk to

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<v Speaker 1>you about Marcatta and what is going on in the

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<v Speaker 1>fintech space. As a bit of background and contact. Marcatta

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<v Speaker 1>is the first modern card issuing platform. So we enable

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<v Speaker 1>any business to be able to build a card of

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<v Speaker 1>their choice to serve their customer, their vendor, their end

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<v Speaker 1>user using very developer friendly tools. And so we're sitting

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<v Speaker 1>at the intersection of watching some of the most modern

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<v Speaker 1>payment flows happening in the industry. But is it a

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<v Speaker 1>card um in collaboration with Visa or MasterCard or Goldman Sachs, Like,

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<v Speaker 1>how does the how does it work? Correct? So, Visa, MasterCard,

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<v Speaker 1>Discover are all our partners, and so we run our

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<v Speaker 1>cards on their payment rails and they've been early partners

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<v Speaker 1>of us. On the journey. We have many customers from

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<v Speaker 1>most of the on demand delivery companies by now paid

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<v Speaker 1>later providers, some of the largest financial institutions like JP,

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<v Speaker 1>Morgan Chase and Market by Goldman Sachs is as you mentioned,

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<v Speaker 1>so we really allow anyone from the most modern innovators

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<v Speaker 1>to the largest financial institutions to the latest fintech to

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<v Speaker 1>be able to build a innovative card of their choice.

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<v Speaker 1>They're very different from the cards you and I have

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<v Speaker 1>in our wallets that do very little. Right if you

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<v Speaker 1>think about the old cards, they check a balance, maybe

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<v Speaker 1>verify the zip code, and imagine a card that allows

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<v Speaker 1>you to pay installments over time, or to be truly

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<v Speaker 1>digitally native, or to ensure that the gig worker picks

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<v Speaker 1>up exactly your order from that restaurant or that grocery store.

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<v Speaker 1>That's the level of control that's possible on a Marquetta

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<v Speaker 1>issued card. So videos, it just feels like with the pandemic,

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<v Speaker 1>people took more and more of their personal financial I

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<v Speaker 1>guess responsibilities themselves and using more and more digital technology.

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<v Speaker 1>I know I use my bank apps much more than

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<v Speaker 1>I did pre pandemic. So what are you seeing from

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<v Speaker 1>from from businesses? Is that what they want? I mean,

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<v Speaker 1>do they need? They? Are they looking to reduce the

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<v Speaker 1>reliance on banks or banks being intermediated a little bit?

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<v Speaker 1>So a couple of things here. The pandemic, as you mentioned,

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<v Speaker 1>has been probably the largest and biggest digital transformation accelerant

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<v Speaker 1>for payments. Um, it's so funny hearing you speak about cash,

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<v Speaker 1>but now people think of cash as being dirty. No

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<v Speaker 1>one wants to touch it because it's no longer a

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<v Speaker 1>question of inconvenience now it's a and uh and banks

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<v Speaker 1>are okay with that because now they have more data. Right,

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<v Speaker 1>any time money is moving electronically, it's safer. You have

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<v Speaker 1>better tracking, you have better analytics, you have better intelligence

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<v Speaker 1>on on where that money is going. And so you're

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<v Speaker 1>not seeing banks getting intermediated. You're actually seeing them enjoy

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<v Speaker 1>this and and explore this further. And it's also been

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<v Speaker 1>a bit of a forcing function for them. You know,

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<v Speaker 1>now we're seeing sixty percent of the consumers are using

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<v Speaker 1>their bank mobile app regularly versus visiting a bank's physical branch,

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<v Speaker 1>which is only nine How do banks feel about that?

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<v Speaker 1>I think they feel pretty good because the cost of

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<v Speaker 1>operating a physical branch is pretty high, and if they

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<v Speaker 1>can close more of those physical branches and not hurt

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<v Speaker 1>their business, I think that's good news all around. By

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<v Speaker 1>the way, our visa and MasterCard still kind of my

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<v Speaker 1>only choices because I can't remember which card I had

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<v Speaker 1>or which card they accept But I had the wrong

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<v Speaker 1>combination at Costco the other day, um, and had to

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<v Speaker 1>and had to pull out a water cash. Um, Paul

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<v Speaker 1>Sweeney style. Is there something else? Is there room for

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<v Speaker 1>something else? Oh? There absolutely is. I mean, we have

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<v Speaker 1>used a master card, you have Amax, you have discovered

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<v Speaker 1>you have paulse and you have a series of local networks,

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<v Speaker 1>especially when you go international. Of course, THESA and MasterCard

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<v Speaker 1>tent I still have the lion's share of the market,

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<v Speaker 1>but but you're definitely seeing you know, smaller networks operate

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<v Speaker 1>in UH in international markets for sure. Video thank you

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<v Speaker 1>so much for joining us. Really fascinating stuff there was

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<v Speaker 1>up talking fintech is boyneaging and money. It is changing

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<v Speaker 1>very quickly as technology continues to be deployed across financial services.

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<v Speaker 1>Video p chief operating Officer for Marquetta Nastac traded Company.

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<v Speaker 1>M Q is the symbol on NASTACK. All right, let's

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<v Speaker 1>bring in Katie Greifeld. She's here in our Bloomberg Interactive

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<v Speaker 1>Broker studio. She's a cross asset reporter. One of the

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<v Speaker 1>cross assets I want to talk about is E t

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<v Speaker 1>F s we've had. And she's not just a cross

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<v Speaker 1>asset reporter. What else? She anchors the Bloomberg E t

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<v Speaker 1>F Show. When is the t F i Q on

0:12:28.080 --> 0:12:32.120
<v Speaker 1>Bloomberg Television. I would say it's every Monday at one pm,

0:12:32.160 --> 0:12:35.160
<v Speaker 1>but this week it's Wednesday at one pm. It is,

0:12:35.240 --> 0:12:41.440
<v Speaker 1>which is tomorrow? Yeah? Yeah, Well, we have quite a crew,

0:12:41.480 --> 0:12:44.480
<v Speaker 1>Matt Miller one of them. Eric Falcunis, I've never seen

0:12:44.520 --> 0:12:46.480
<v Speaker 1>you guys in the same room though we have like

0:12:46.520 --> 0:12:50.760
<v Speaker 1>a rotating cast show. Eric has hair. That's the easy

0:12:50.800 --> 0:12:52.280
<v Speaker 1>way to say on that part. All right, Katie, what

0:12:52.280 --> 0:12:54.400
<v Speaker 1>do you got for us on the E t F biz? Okay? Well,

0:12:54.400 --> 0:12:56.640
<v Speaker 1>I want to start with em funds because they really

0:12:56.720 --> 0:12:59.280
<v Speaker 1>saw huge inflows last week. If you look overall, a

0:12:59.440 --> 0:13:03.040
<v Speaker 1>two point a billion dollar streak. Uh, that's interesting in

0:13:03.080 --> 0:13:05.400
<v Speaker 1>and of itself. But what's more interesting if you dig

0:13:05.440 --> 0:13:07.679
<v Speaker 1>under the surface, a lot of that is actually just

0:13:07.840 --> 0:13:11.280
<v Speaker 1>black Rock, And the sort of the thinking in the

0:13:11.320 --> 0:13:14.679
<v Speaker 1>market is that's black Rock tweaking one of its model portfolios.

0:13:14.720 --> 0:13:17.920
<v Speaker 1>It's this huge, booming business model portfolios. They have trillions

0:13:17.920 --> 0:13:20.920
<v Speaker 1>of dollars in them and basically they're ready made strategies

0:13:20.920 --> 0:13:23.120
<v Speaker 1>that advisors can pick off the shelf and give to

0:13:23.160 --> 0:13:26.640
<v Speaker 1>their clients. Black Rock huge in that business. And if

0:13:26.679 --> 0:13:29.199
<v Speaker 1>you look at the I Shares m s C I

0:13:29.280 --> 0:13:32.560
<v Speaker 1>Emerging Markets mint Vall Factor E t F, it's taken

0:13:32.559 --> 0:13:35.840
<v Speaker 1>into ticker. The E E m V is the ticker

0:13:36.120 --> 0:13:38.480
<v Speaker 1>taking in billions and billions of dollars over the past

0:13:38.520 --> 0:13:41.640
<v Speaker 1>few weeks. Uh. And the thinking there is that, Okay,

0:13:41.679 --> 0:13:43.679
<v Speaker 1>nothing was really going on with the E t F

0:13:43.800 --> 0:13:46.440
<v Speaker 1>until a couple of weeks ago. This is probably just

0:13:46.559 --> 0:13:49.000
<v Speaker 1>black rock shifting around some money and the ripple effects.

0:13:49.000 --> 0:13:50.920
<v Speaker 1>As you can see if you look at the category

0:13:51.000 --> 0:13:56.000
<v Speaker 1>of overall, it's just black rock. So I'm I love

0:13:56.840 --> 0:14:00.839
<v Speaker 1>the show mainly because I love the funk chin E

0:14:01.000 --> 0:14:03.680
<v Speaker 1>t F go. So I was able to find the

0:14:03.720 --> 0:14:05.880
<v Speaker 1>information you were just telling us by typing E t

0:14:06.040 --> 0:14:09.760
<v Speaker 1>F go. And I'm looking at all funds um, asset

0:14:09.800 --> 0:14:12.280
<v Speaker 1>class equity. I guess I could take that out right,

0:14:13.200 --> 0:14:15.440
<v Speaker 1>and then I and then I started by flow. I

0:14:15.480 --> 0:14:17.600
<v Speaker 1>look at the one week flow and I see E

0:14:18.040 --> 0:14:21.440
<v Speaker 1>m V is the sixth sixth biggest. Now if I

0:14:21.440 --> 0:14:24.680
<v Speaker 1>take out the equities, Um, you're starting to add other

0:14:24.760 --> 0:14:29.200
<v Speaker 1>things in there. Um. But such a cool function. Did

0:14:29.320 --> 0:14:32.520
<v Speaker 1>such about tunists actually make this himself? I don't know

0:14:32.560 --> 0:14:35.080
<v Speaker 1>if we can credit him with that, but he certainly

0:14:35.120 --> 0:14:37.560
<v Speaker 1>has popularized. One of the things that Paul was talking

0:14:37.600 --> 0:14:40.360
<v Speaker 1>about is that investors love E t s on the

0:14:40.360 --> 0:14:43.080
<v Speaker 1>markets on it's way up. Um, But what about when

0:14:43.080 --> 0:14:45.000
<v Speaker 1>it's on its way down? Now we do know you

0:14:45.000 --> 0:14:48.240
<v Speaker 1>can supercharge bets short bets with the t F s right, you,

0:14:48.360 --> 0:14:52.720
<v Speaker 1>certainly has been dangerous. Only sophisticated investors should try this.

0:14:53.360 --> 0:14:56.320
<v Speaker 1>But that being said, if you look at the pro

0:14:56.440 --> 0:14:59.320
<v Speaker 1>shares Bitcoin strategy e t F this remember this is

0:14:59.360 --> 0:15:03.680
<v Speaker 1>the first derivatives bitcoin backed sort of e t F

0:15:03.760 --> 0:15:06.400
<v Speaker 1>that launched in the US. Two big fanfare back in

0:15:06.480 --> 0:15:10.240
<v Speaker 1>October has uh you guys probably know. Bitcoin hasn't done

0:15:10.240 --> 0:15:12.720
<v Speaker 1>too hot since October since this fun launch. It's actually

0:15:12.760 --> 0:15:14.480
<v Speaker 1>one of the worst performing e t F so far

0:15:14.520 --> 0:15:17.000
<v Speaker 1>this year. What's interesting if you look at the short interest,

0:15:17.680 --> 0:15:20.680
<v Speaker 1>the ticker is bit O b I t O and

0:15:20.760 --> 0:15:22.640
<v Speaker 1>the short interest on this e t F is close

0:15:22.720 --> 0:15:25.600
<v Speaker 1>to an all time high. It's hovering around ten percent.

0:15:25.920 --> 0:15:28.040
<v Speaker 1>And this caught my eye because there's not yet a

0:15:28.240 --> 0:15:30.680
<v Speaker 1>short bitcoin futures e t F in the U S.

0:15:30.760 --> 0:15:33.280
<v Speaker 1>There's been filings, nothing has been approved yet though, so

0:15:33.320 --> 0:15:35.320
<v Speaker 1>it seems like in the meantime traders are turning to

0:15:35.440 --> 0:15:38.000
<v Speaker 1>this fund and shorting it sort of as a proxy

0:15:38.160 --> 0:15:41.320
<v Speaker 1>for that short bitcoin exposure. If you also look at

0:15:41.360 --> 0:15:43.280
<v Speaker 1>the put call ratio on this e t F, which

0:15:43.280 --> 0:15:45.440
<v Speaker 1>you can also do on the terminal, super high, close

0:15:45.480 --> 0:15:47.560
<v Speaker 1>to a record, so just shows you that a lot

0:15:47.640 --> 0:15:50.640
<v Speaker 1>of people are bracing for more bitcoin downside here positioning

0:15:50.640 --> 0:15:52.400
<v Speaker 1>for it. How do you see the put call ratio?

0:15:52.640 --> 0:15:54.600
<v Speaker 1>Oh my gosh, this is sort of a long involved

0:15:54.640 --> 0:15:57.520
<v Speaker 1>process on G chart. I can show you, tell me after,

0:15:58.240 --> 0:16:01.200
<v Speaker 1>show you after all right, So, how about fund flows

0:16:01.240 --> 0:16:04.400
<v Speaker 1>were as the market turned down in two What have

0:16:04.400 --> 0:16:06.720
<v Speaker 1>we seen for fund flows for ETFs? You've seen so

0:16:06.800 --> 0:16:10.560
<v Speaker 1>much money going to bond ETFs, to bond out of

0:16:10.640 --> 0:16:12.840
<v Speaker 1>bond utual funds, like a hundred and fifty What are

0:16:12.840 --> 0:16:14.680
<v Speaker 1>you talking about year to date right now? Year to date?

0:16:14.720 --> 0:16:16.640
<v Speaker 1>We're talking year to date. You've seen I don't know,

0:16:16.800 --> 0:16:19.200
<v Speaker 1>some fifty billion dollars going to bond e t f s,

0:16:19.360 --> 0:16:22.200
<v Speaker 1>mostly to the short end, those cash like e t

0:16:22.400 --> 0:16:24.520
<v Speaker 1>f s. Also, just in the last week or so,

0:16:24.640 --> 0:16:27.040
<v Speaker 1>you've started to see some money come back into broad

0:16:27.080 --> 0:16:31.280
<v Speaker 1>index tracking equity funds such as SPY and VOOS. So

0:16:31.600 --> 0:16:34.120
<v Speaker 1>there is some by the dip impulse there, but a

0:16:34.160 --> 0:16:36.560
<v Speaker 1>lot and value right and if you look here to

0:16:36.640 --> 0:16:41.280
<v Speaker 1>date is the biggest inflows year to date. But v

0:16:41.440 --> 0:16:45.280
<v Speaker 1>TV is the second biggest, and that is the Vanguard

0:16:45.360 --> 0:16:48.320
<v Speaker 1>Value et F. So' strong stomach for that one. But

0:16:48.400 --> 0:16:50.880
<v Speaker 1>people are doing it. I don't think so I feel

0:16:50.920 --> 0:16:53.320
<v Speaker 1>like why you know, I don't know. I feel you

0:16:53.320 --> 0:16:55.400
<v Speaker 1>know what. I love cows. We talk about cows on

0:16:55.440 --> 0:16:59.080
<v Speaker 1>this show a lot cash cows and the brilliant that

0:16:59.120 --> 0:17:02.640
<v Speaker 1>you can make plays like this in a very violatile

0:17:02.880 --> 0:17:05.280
<v Speaker 1>market where people are worried about girls, feel like value

0:17:05.320 --> 0:17:08.119
<v Speaker 1>continues to break hearts. It has its moments in the sun,

0:17:08.359 --> 0:17:11.440
<v Speaker 1>and it always goes alive, certainly in your lifetime. It's true.

0:17:12.640 --> 0:17:15.280
<v Speaker 1>All right, Katie, good stuff as always, Katie Greifeldt here

0:17:15.280 --> 0:17:18.359
<v Speaker 1>in Bloomberg and her actor broker studio. She's across asset reporter.

0:17:23.480 --> 0:17:28.160
<v Speaker 1>Let's bring in Alfonso Pettiello right now, m Alfonso, what's

0:17:28.160 --> 0:17:29.760
<v Speaker 1>going to happen at the e c B. Are they

0:17:29.760 --> 0:17:32.600
<v Speaker 1>going to get realness fight against inflation? Are they still

0:17:32.600 --> 0:17:39.560
<v Speaker 1>going to give us like little bip increases? Well, guys,

0:17:39.600 --> 0:17:42.560
<v Speaker 1>the incentive scheme of the European Central Bank has clearly

0:17:42.680 --> 0:17:46.159
<v Speaker 1>changed here um and they have to tighten. They have

0:17:46.240 --> 0:17:49.760
<v Speaker 1>to tie them because they need to preserve credibility. Very

0:17:49.760 --> 0:17:53.120
<v Speaker 1>little that left on the inflation fighting front. The guys,

0:17:53.119 --> 0:17:56.080
<v Speaker 1>you were saying inflition is printing pretty high in you know,

0:17:56.240 --> 0:17:58.680
<v Speaker 1>it's not only headlines, but core inflation is three point

0:17:58.720 --> 0:18:01.320
<v Speaker 1>eight percent on a U new basis, and if you

0:18:01.359 --> 0:18:04.280
<v Speaker 1>look at the composition, it's broading towards the services side

0:18:04.280 --> 0:18:07.840
<v Speaker 1>of the inflation from the stickiest parts of the inflationary basket.

0:18:08.320 --> 0:18:11.240
<v Speaker 1>And this scares policymakers in the first place, so they

0:18:11.280 --> 0:18:14.200
<v Speaker 1>will hike. And starting to hear the first discussion about

0:18:14.200 --> 0:18:17.399
<v Speaker 1>the fifty basis morning right in September. So fun So,

0:18:17.520 --> 0:18:20.320
<v Speaker 1>I mean it feels too probably a lot of our listeners.

0:18:20.520 --> 0:18:24.159
<v Speaker 1>They hear commentators say the US Federal Reserve is behind

0:18:24.200 --> 0:18:27.119
<v Speaker 1>the curve, but it seems to me that the e

0:18:27.160 --> 0:18:30.280
<v Speaker 1>c B is even further behind the curve. How effective

0:18:30.320 --> 0:18:33.600
<v Speaker 1>can they be to the extent they do turn more hawkers,

0:18:35.080 --> 0:18:38.240
<v Speaker 1>they can be pretty effective, to ask me. So um

0:18:38.880 --> 0:18:42.240
<v Speaker 1>monetary policy should always be judged in comparison to what

0:18:42.359 --> 0:18:44.960
<v Speaker 1>the neutral interest rate is for the economy. And we

0:18:45.040 --> 0:18:47.840
<v Speaker 1>hear the Federal Reserve and estimates called the neutral rate

0:18:47.880 --> 0:18:50.199
<v Speaker 1>at round about two to two and a half percent, right,

0:18:50.600 --> 0:18:53.040
<v Speaker 1>and now European points in nakers have to come up

0:18:53.040 --> 0:18:55.480
<v Speaker 1>with an estimate too, because they're gonna hike interest rates.

0:18:55.480 --> 0:18:58.200
<v Speaker 1>But up until what point if you want to rein

0:18:58.240 --> 0:19:01.240
<v Speaker 1>an inflation. What you do is you interest rates above

0:19:01.520 --> 0:19:05.240
<v Speaker 1>neutral levels. Well, European policymakers and now begating whether whether

0:19:05.680 --> 0:19:07.840
<v Speaker 1>you know, neutral levels in Europe are between one and

0:19:07.880 --> 0:19:10.960
<v Speaker 1>two percent, but the deposit rate in Europe is negative

0:19:10.960 --> 0:19:13.760
<v Speaker 1>to fifty basis point. So before we get at least

0:19:13.800 --> 0:19:16.280
<v Speaker 1>to neutral levels the European Central Bank, that's too hyped

0:19:16.359 --> 0:19:19.160
<v Speaker 1>by at least a hundred and fifty basis point, which

0:19:19.240 --> 0:19:22.119
<v Speaker 1>would be the fastest hiking cycle the European Central Bank

0:19:22.160 --> 0:19:25.240
<v Speaker 1>they's ever embarked, I think over the last fifty into

0:19:25.280 --> 0:19:30.280
<v Speaker 1>twenty years at least. All right, in terms of what

0:19:30.320 --> 0:19:32.640
<v Speaker 1>we're seeing here in the US, is there a big

0:19:32.680 --> 0:19:37.000
<v Speaker 1>difference between um, you know, our central Bank here with

0:19:37.119 --> 0:19:42.280
<v Speaker 1>its two mandates and others who which only have one. Yeah,

0:19:42.280 --> 0:19:45.399
<v Speaker 1>I mean effectively, the c B offers two mondays if

0:19:45.400 --> 0:19:47.919
<v Speaker 1>you're asking, one is postibility, the other one is to

0:19:48.000 --> 0:19:53.560
<v Speaker 1>preserve Europe and the euro as a good jobs which

0:19:53.600 --> 0:19:56.440
<v Speaker 1>which limits as well the ability that they have to

0:19:56.760 --> 0:20:00.560
<v Speaker 1>really hike and to push on the title. And possibly

0:20:01.080 --> 0:20:03.880
<v Speaker 1>that you need to look at the Italian government, bomb

0:20:03.880 --> 0:20:06.800
<v Speaker 1>spreads against the German government bones they're already above two

0:20:06.880 --> 0:20:10.200
<v Speaker 1>hundred basis point because investors as missing that monetary policy

0:20:10.240 --> 0:20:12.760
<v Speaker 1>is about to get either and quick, but each is

0:20:12.800 --> 0:20:14.840
<v Speaker 1>going to be wins by the three hundreds or four

0:20:14.880 --> 0:20:17.800
<v Speaker 1>hundred basis point. Then obviously preserving the Euro, which is

0:20:17.840 --> 0:20:19.920
<v Speaker 1>the second Hidden Monday of ec PEO, will come back

0:20:19.960 --> 0:20:23.320
<v Speaker 1>to play again. All right, Alfonso, good stuff. We appreciate

0:20:23.359 --> 0:20:27.439
<v Speaker 1>getting your global perspective. Alfonso Petillo is the author of

0:20:27.800 --> 0:20:30.879
<v Speaker 1>the macro Accompass, and he's also formerly a fun manager.

0:20:30.880 --> 0:20:34.119
<v Speaker 1>To I n G. Thanks for listening to the Bloomberg

0:20:34.160 --> 0:20:37.560
<v Speaker 1>Markets podcast. You can subscribe and listen to interviews with

0:20:37.640 --> 0:20:42.399
<v Speaker 1>Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.

0:20:42.720 --> 0:20:46.320
<v Speaker 1>I'm on Twitter at Matt Miller V three. Pet On

0:20:46.400 --> 0:20:49.480
<v Speaker 1>boll Sweeney I'm on Twitter at pt Sweeney. Before the podcast,

0:20:49.560 --> 0:20:52.000
<v Speaker 1>you can always catch us worldwide at Bloomberg Radio