Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day, we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. I want to bring
Speaker 1: in Ted Oakley right now, founder and managing partner at
Speaker 1: Oxbow Advisors. UM and I it's Ted. Is great to
Speaker 1: get a chance to talk with you after we've got
Speaker 1: some kind of confusing consumer confidence numbers and UM, you know,
Speaker 1: we're worried about inflation, we're worried about growth. It's just
Speaker 1: a difficult time right now to make a call on
Speaker 1: the markets. What do you think, Well, I would have
Speaker 1: to say none. It's hard for us. I mean what
Speaker 1: we're seeing is that this latest round of sort of
Speaker 1: a snap back, and in terms of what's going on
Speaker 1: in the consumer, I think they're borrowing all the money
Speaker 1: number one, but number two to all the snapback, people
Speaker 1: can't wait to find the bottom and it just looks
Speaker 1: like we have more to go. And you have to
Speaker 1: think about that relative to the numbers that have come out,
Speaker 1: and uh in May, obviously with oil and that sort
Speaker 1: of thing, the Fed's going to keep on fighting. So
Speaker 1: we can't see the upside here, I'd have to say
Speaker 1: we're looking for more downside? How much more downside? Ted?
Speaker 1: And kind of I think what a lot of folks
Speaker 1: are saying is, you know, where do we find a bottom?
Speaker 1: What is the market pricing in now? Is the market
Speaker 1: pricing and stagflation? Is the pricing in a recession? Or
Speaker 1: are we not even there yet? How do you think
Speaker 1: about kind of identifying you know, not the bottom, but
Speaker 1: maybe you know kind of the beginnings of a bottom. Well,
Speaker 1: the biggest thing is I think it's pricing in profits.
Speaker 1: I mean, if you look at the market, it's always
Speaker 1: pricing in how profitable things are going to be for
Speaker 1: companies that are in the market. And if you look
Speaker 1: at all those companies Brian Large, they haven't made any
Speaker 1: any more money in the last six months, and it
Speaker 1: looks like in order to stay up with things are
Speaker 1: going to have to raise prices where it hurts the
Speaker 1: sales and the margin is going to break down again.
Speaker 1: And so if you can't see the earnings picture, for
Speaker 1: the next six months. To me, that's what the market does,
Speaker 1: discounting or we'll discount more. So, um, what do you
Speaker 1: do if um? Well, first off, if you're not someone
Speaker 1: living on a fixed income, if you're still trying to
Speaker 1: build your nuts so to speak, Uh, what's an investor
Speaker 1: to do right now? You know, we always break that
Speaker 1: down between younger people that are building and someone else
Speaker 1: who has already achieved the wealth level and and they're
Speaker 1: going towards you know, the end of life. But on
Speaker 1: the younger side, we you know, you think normally they
Speaker 1: could just keep on uh dollar cost averaging because they
Speaker 1: put a small end every month and they're young. I
Speaker 1: mean it's going to build up over time, You're Okay,
Speaker 1: for someone that sold a company or they have significant
Speaker 1: wealth at say fifty five or sixty, they need to
Speaker 1: start thinking about preservation as opposed to trying to beat
Speaker 1: the SMP right here, because probably preservation will beat the
Speaker 1: SMP this year. And I think that's where people probably
Speaker 1: there's there's two categories of what we recommend right in there,
Speaker 1: and they are well listening for the young people. Okay,
Speaker 1: if I'm a young person, I don't how much money
Speaker 1: maybe putting in I think we just decided we don't
Speaker 1: care about young people. That's right. What what if what
Speaker 1: if you sold your company? What if you just sold
Speaker 1: a house. What if you're you know, you've made your
Speaker 1: money on Wall Street with an amazing three decade career,
Speaker 1: and now you just want to keep the money. Well,
Speaker 1: most of our workers with people that have sold a company,
Speaker 1: that's the majority of our assets. And so the new
Speaker 1: money we've had coming in the last two or three
Speaker 1: months went something like this about it or seventy five
Speaker 1: similar between that number is really i right now, it's
Speaker 1: in it's in short treasuries, things along that line. We're
Speaker 1: not trying to you know, we're not trying to bet
Speaker 1: the farm and where rates go right here. We're keeping
Speaker 1: that fairly short, a little bit long. But then on
Speaker 1: the stock side, where we might normally have for somebody
Speaker 1: like that, uh, maybe a third of stock, that's only
Speaker 1: about ten percent for us right now. And then we
Speaker 1: have another strategic called high income, and that one normally
Speaker 1: that would be again about thirty five percent. It's probably
Speaker 1: only about fifteen to twenty right now. So you can
Speaker 1: see we're skewed towards safety. We can make a change
Speaker 1: really quickly. But that's where we are right now, he said,
Speaker 1: I know, you know as a proud texting um people
Speaker 1: in Texas, I'm guessing just have a natural call on
Speaker 1: oil one way or another. I'm looking at w T
Speaker 1: I coude oil here, just one dollars a barrel. What
Speaker 1: are your good friends around the state of Texas saying
Speaker 1: about oil? Well, I have to tell you that I've
Speaker 1: been obviously Texas most of my all my life actually.
Speaker 1: But the thing about it, most people in the one
Speaker 1: guest business are very good when it's very poor, I
Speaker 1: should say. When it comes to sentiment, they are all
Speaker 1: they're always bullish at the high and you can't give it.
Speaker 1: You know, you can't get them to even take giveaway
Speaker 1: oil when it's like eight or nine bucks. But you know,
Speaker 1: so they're all in that mode right now because their
Speaker 1: checks are higher every month, checks a little higher, you
Speaker 1: know when from production, and so you can't get them there.
Speaker 1: The big point is what we're watching is the end
Speaker 1: the march. You know, you're up around one and this
Speaker 1: this miss will be a test here. If you can't
Speaker 1: get much higher, it means that you're I don't know,
Speaker 1: if you sell the gas line numbers, but the sales
Speaker 1: of gasolene, you know, the last two weeks have really,
Speaker 1: even in the hot season like this, are starting to
Speaker 1: really show weakness relative to where they were. So I
Speaker 1: think that's the key. Does that you make? Do you
Speaker 1: do you push that one high? I sort of doubt day. Actually,
Speaker 1: I think you're you know, somewhere in here, you slow
Speaker 1: the whole thing down because of the consumer. I'm actually
Speaker 1: surprised ted that, you know, some of our friends in
Speaker 1: Texas and Oklahoma I haven't started drilling more. But I
Speaker 1: guess they're disciplined. Well, there's two things go into that.
Speaker 1: One they the leases are really expensive right now to
Speaker 1: go buy a brand new lease to drill. And first
Speaker 1: of all, and everybody's out buying minerals, everybody. I'm in
Speaker 1: a couple of mineral deals myself private. But what happens
Speaker 1: is everybody's out by a mineral. So the mental that
Speaker 1: they're paying a lot of money for these leases, and
Speaker 1: so that starts out high, and then you really have
Speaker 1: all the expenses have gone up a lot. Now, all right, Ted,
Speaker 1: we always the politicians are gonna pull the rug out
Speaker 1: from under you soon enough, anyway, throw a little politics.
Speaker 1: We're talking economics here, but boy, we always learned something
Speaker 1: from Ted, Ted ocally founder and managing partner ox Boat
Speaker 1: great on Ted. Yep, absolutely, we'll talk later with Ted.
Speaker 1: So you know, I like to walk around with a
Speaker 1: little bill fold, a little bit of cash, and I
Speaker 1: actually done at mom with park Raceway this past weekend,
Speaker 1: so I got some little winnings in my betting on
Speaker 1: the horse on the ponies had a decent day, not
Speaker 1: a great day. But the kids don't have cash. They
Speaker 1: just everything's on an app, on a card, on this
Speaker 1: and on that. I mean back in the day, I
Speaker 1: don't use my credit card. When was something meaningful? I
Speaker 1: just use my watch every I know, now the watch
Speaker 1: and now the phone. Video. Peter's chief operating officer of
Speaker 1: Markhetta joined this. Margaret is a NASDAC traded company trading
Speaker 1: on the symbol m QUE. Came public last year. Video
Speaker 1: talk to us about what you guys at Marcatta are
Speaker 1: doing in the fintech space. Thanks so much for having
Speaker 1: me here. It's such an exciting time to talk to
Speaker 1: you about Marcatta and what is going on in the
Speaker 1: fintech space. As a bit of background and contact. Marcatta
Speaker 1: is the first modern card issuing platform. So we enable
Speaker 1: any business to be able to build a card of
Speaker 1: their choice to serve their customer, their vendor, their end
Speaker 1: user using very developer friendly tools. And so we're sitting
Speaker 1: at the intersection of watching some of the most modern
Speaker 1: payment flows happening in the industry. But is it a
Speaker 1: card um in collaboration with Visa or MasterCard or Goldman Sachs, Like,
Speaker 1: how does the how does it work? Correct? So, Visa, MasterCard,
Speaker 1: Discover are all our partners, and so we run our
Speaker 1: cards on their payment rails and they've been early partners
Speaker 1: of us. On the journey. We have many customers from
Speaker 1: most of the on demand delivery companies by now paid
Speaker 1: later providers, some of the largest financial institutions like JP,
Speaker 1: Morgan Chase and Market by Goldman Sachs is as you mentioned,
Speaker 1: so we really allow anyone from the most modern innovators
Speaker 1: to the largest financial institutions to the latest fintech to
Speaker 1: be able to build a innovative card of their choice.
Speaker 1: They're very different from the cards you and I have
Speaker 1: in our wallets that do very little. Right if you
Speaker 1: think about the old cards, they check a balance, maybe
Speaker 1: verify the zip code, and imagine a card that allows
Speaker 1: you to pay installments over time, or to be truly
Speaker 1: digitally native, or to ensure that the gig worker picks
Speaker 1: up exactly your order from that restaurant or that grocery store.
Speaker 1: That's the level of control that's possible on a Marquetta
Speaker 1: issued card. So videos, it just feels like with the pandemic,
Speaker 1: people took more and more of their personal financial I
Speaker 1: guess responsibilities themselves and using more and more digital technology.
Speaker 1: I know I use my bank apps much more than
Speaker 1: I did pre pandemic. So what are you seeing from
Speaker 1: from from businesses? Is that what they want? I mean,
Speaker 1: do they need? They? Are they looking to reduce the
Speaker 1: reliance on banks or banks being intermediated a little bit?
Speaker 1: So a couple of things here. The pandemic, as you mentioned,
Speaker 1: has been probably the largest and biggest digital transformation accelerant
Speaker 1: for payments. Um, it's so funny hearing you speak about cash,
Speaker 1: but now people think of cash as being dirty. No
Speaker 1: one wants to touch it because it's no longer a
Speaker 1: question of inconvenience now it's a and uh and banks
Speaker 1: are okay with that because now they have more data. Right,
Speaker 1: any time money is moving electronically, it's safer. You have
Speaker 1: better tracking, you have better analytics, you have better intelligence
Speaker 1: on on where that money is going. And so you're
Speaker 1: not seeing banks getting intermediated. You're actually seeing them enjoy
Speaker 1: this and and explore this further. And it's also been
Speaker 1: a bit of a forcing function for them. You know,
Speaker 1: now we're seeing sixty percent of the consumers are using
Speaker 1: their bank mobile app regularly versus visiting a bank's physical branch,
Speaker 1: which is only nine How do banks feel about that?
Speaker 1: I think they feel pretty good because the cost of
Speaker 1: operating a physical branch is pretty high, and if they
Speaker 1: can close more of those physical branches and not hurt
Speaker 1: their business, I think that's good news all around. By
Speaker 1: the way, our visa and MasterCard still kind of my
Speaker 1: only choices because I can't remember which card I had
Speaker 1: or which card they accept But I had the wrong
Speaker 1: combination at Costco the other day, um, and had to
Speaker 1: and had to pull out a water cash. Um, Paul
Speaker 1: Sweeney style. Is there something else? Is there room for
Speaker 1: something else? Oh? There absolutely is. I mean, we have
Speaker 1: used a master card, you have Amax, you have discovered
Speaker 1: you have paulse and you have a series of local networks,
Speaker 1: especially when you go international. Of course, THESA and MasterCard
Speaker 1: tent I still have the lion's share of the market,
Speaker 1: but but you're definitely seeing you know, smaller networks operate
Speaker 1: in UH in international markets for sure. Video thank you
Speaker 1: so much for joining us. Really fascinating stuff there was
Speaker 1: up talking fintech is boyneaging and money. It is changing
Speaker 1: very quickly as technology continues to be deployed across financial services.
Speaker 1: Video p chief operating Officer for Marquetta Nastac traded Company.
Speaker 1: M Q is the symbol on NASTACK. All right, let's
Speaker 1: bring in Katie Greifeld. She's here in our Bloomberg Interactive
Speaker 1: Broker studio. She's a cross asset reporter. One of the
Speaker 1: cross assets I want to talk about is E t
Speaker 1: F s we've had. And she's not just a cross
Speaker 1: asset reporter. What else? She anchors the Bloomberg E t
Speaker 1: F Show. When is the t F i Q on
Speaker 1: Bloomberg Television. I would say it's every Monday at one pm,
Speaker 1: but this week it's Wednesday at one pm. It is,
Speaker 1: which is tomorrow? Yeah? Yeah, Well, we have quite a crew,
Speaker 1: Matt Miller one of them. Eric Falcunis, I've never seen
Speaker 1: you guys in the same room though we have like
Speaker 1: a rotating cast show. Eric has hair. That's the easy
Speaker 1: way to say on that part. All right, Katie, what
Speaker 1: do you got for us on the E t F biz? Okay? Well,
Speaker 1: I want to start with em funds because they really
Speaker 1: saw huge inflows last week. If you look overall, a
Speaker 1: two point a billion dollar streak. Uh, that's interesting in
Speaker 1: and of itself. But what's more interesting if you dig
Speaker 1: under the surface, a lot of that is actually just
Speaker 1: black Rock, And the sort of the thinking in the
Speaker 1: market is that's black Rock tweaking one of its model portfolios.
Speaker 1: It's this huge, booming business model portfolios. They have trillions
Speaker 1: of dollars in them and basically they're ready made strategies
Speaker 1: that advisors can pick off the shelf and give to
Speaker 1: their clients. Black Rock huge in that business. And if
Speaker 1: you look at the I Shares m s C I
Speaker 1: Emerging Markets mint Vall Factor E t F, it's taken
Speaker 1: into ticker. The E E m V is the ticker
Speaker 1: taking in billions and billions of dollars over the past
Speaker 1: few weeks. Uh. And the thinking there is that, Okay,
Speaker 1: nothing was really going on with the E t F
Speaker 1: until a couple of weeks ago. This is probably just
Speaker 1: black rock shifting around some money and the ripple effects.
Speaker 1: As you can see if you look at the category
Speaker 1: of overall, it's just black rock. So I'm I love
Speaker 1: the show mainly because I love the funk chin E
Speaker 1: t F go. So I was able to find the
Speaker 1: information you were just telling us by typing E t
Speaker 1: F go. And I'm looking at all funds um, asset
Speaker 1: class equity. I guess I could take that out right,
Speaker 1: and then I and then I started by flow. I
Speaker 1: look at the one week flow and I see E
Speaker 1: m V is the sixth sixth biggest. Now if I
Speaker 1: take out the equities, Um, you're starting to add other
Speaker 1: things in there. Um. But such a cool function. Did
Speaker 1: such about tunists actually make this himself? I don't know
Speaker 1: if we can credit him with that, but he certainly
Speaker 1: has popularized. One of the things that Paul was talking
Speaker 1: about is that investors love E t s on the
Speaker 1: markets on it's way up. Um, But what about when
Speaker 1: it's on its way down? Now we do know you
Speaker 1: can supercharge bets short bets with the t F s right, you,
Speaker 1: certainly has been dangerous. Only sophisticated investors should try this.
Speaker 1: But that being said, if you look at the pro
Speaker 1: shares Bitcoin strategy e t F this remember this is
Speaker 1: the first derivatives bitcoin backed sort of e t F
Speaker 1: that launched in the US. Two big fanfare back in
Speaker 1: October has uh you guys probably know. Bitcoin hasn't done
Speaker 1: too hot since October since this fun launch. It's actually
Speaker 1: one of the worst performing e t F so far
Speaker 1: this year. What's interesting if you look at the short interest,
Speaker 1: the ticker is bit O b I t O and
Speaker 1: the short interest on this e t F is close
Speaker 1: to an all time high. It's hovering around ten percent.
Speaker 1: And this caught my eye because there's not yet a
Speaker 1: short bitcoin futures e t F in the U S.
Speaker 1: There's been filings, nothing has been approved yet though, so
Speaker 1: it seems like in the meantime traders are turning to
Speaker 1: this fund and shorting it sort of as a proxy
Speaker 1: for that short bitcoin exposure. If you also look at
Speaker 1: the put call ratio on this e t F, which
Speaker 1: you can also do on the terminal, super high, close
Speaker 1: to a record, so just shows you that a lot
Speaker 1: of people are bracing for more bitcoin downside here positioning
Speaker 1: for it. How do you see the put call ratio?
Speaker 1: Oh my gosh, this is sort of a long involved
Speaker 1: process on G chart. I can show you, tell me after,
Speaker 1: show you after all right, So, how about fund flows
Speaker 1: were as the market turned down in two What have
Speaker 1: we seen for fund flows for ETFs? You've seen so
Speaker 1: much money going to bond ETFs, to bond out of
Speaker 1: bond utual funds, like a hundred and fifty What are
Speaker 1: you talking about year to date right now? Year to date?
Speaker 1: We're talking year to date. You've seen I don't know,
Speaker 1: some fifty billion dollars going to bond e t f s,
Speaker 1: mostly to the short end, those cash like e t
Speaker 1: f s. Also, just in the last week or so,
Speaker 1: you've started to see some money come back into broad
Speaker 1: index tracking equity funds such as SPY and VOOS. So
Speaker 1: there is some by the dip impulse there, but a
Speaker 1: lot and value right and if you look here to
Speaker 1: date is the biggest inflows year to date. But v
Speaker 1: TV is the second biggest, and that is the Vanguard
Speaker 1: Value et F. So' strong stomach for that one. But
Speaker 1: people are doing it. I don't think so I feel
Speaker 1: like why you know, I don't know. I feel you
Speaker 1: know what. I love cows. We talk about cows on
Speaker 1: this show a lot cash cows and the brilliant that
Speaker 1: you can make plays like this in a very violatile
Speaker 1: market where people are worried about girls, feel like value
Speaker 1: continues to break hearts. It has its moments in the sun,
Speaker 1: and it always goes alive, certainly in your lifetime. It's true.
Speaker 1: All right, Katie, good stuff as always, Katie Greifeldt here
Speaker 1: in Bloomberg and her actor broker studio. She's across asset reporter.
Speaker 1: Let's bring in Alfonso Pettiello right now, m Alfonso, what's
Speaker 1: going to happen at the e c B. Are they
Speaker 1: going to get realness fight against inflation? Are they still
Speaker 1: going to give us like little bip increases? Well, guys,
Speaker 1: the incentive scheme of the European Central Bank has clearly
Speaker 1: changed here um and they have to tighten. They have
Speaker 1: to tie them because they need to preserve credibility. Very
Speaker 1: little that left on the inflation fighting front. The guys,
Speaker 1: you were saying inflition is printing pretty high in you know,
Speaker 1: it's not only headlines, but core inflation is three point
Speaker 1: eight percent on a U new basis, and if you
Speaker 1: look at the composition, it's broading towards the services side
Speaker 1: of the inflation from the stickiest parts of the inflationary basket.
Speaker 1: And this scares policymakers in the first place, so they
Speaker 1: will hike. And starting to hear the first discussion about
Speaker 1: the fifty basis morning right in September. So fun So,
Speaker 1: I mean it feels too probably a lot of our listeners.
Speaker 1: They hear commentators say the US Federal Reserve is behind
Speaker 1: the curve, but it seems to me that the e
Speaker 1: c B is even further behind the curve. How effective
Speaker 1: can they be to the extent they do turn more hawkers,
Speaker 1: they can be pretty effective, to ask me. So um
Speaker 1: monetary policy should always be judged in comparison to what
Speaker 1: the neutral interest rate is for the economy. And we
Speaker 1: hear the Federal Reserve and estimates called the neutral rate
Speaker 1: at round about two to two and a half percent, right,
Speaker 1: and now European points in nakers have to come up
Speaker 1: with an estimate too, because they're gonna hike interest rates.
Speaker 1: But up until what point if you want to rein
Speaker 1: an inflation. What you do is you interest rates above
Speaker 1: neutral levels. Well, European policymakers and now begating whether whether
Speaker 1: you know, neutral levels in Europe are between one and
Speaker 1: two percent, but the deposit rate in Europe is negative
Speaker 1: to fifty basis point. So before we get at least
Speaker 1: to neutral levels the European Central Bank, that's too hyped
Speaker 1: by at least a hundred and fifty basis point, which
Speaker 1: would be the fastest hiking cycle the European Central Bank
Speaker 1: they's ever embarked, I think over the last fifty into
Speaker 1: twenty years at least. All right, in terms of what
Speaker 1: we're seeing here in the US, is there a big
Speaker 1: difference between um, you know, our central Bank here with
Speaker 1: its two mandates and others who which only have one. Yeah,
Speaker 1: I mean effectively, the c B offers two mondays if
Speaker 1: you're asking, one is postibility, the other one is to
Speaker 1: preserve Europe and the euro as a good jobs which
Speaker 1: which limits as well the ability that they have to
Speaker 1: really hike and to push on the title. And possibly
Speaker 1: that you need to look at the Italian government, bomb
Speaker 1: spreads against the German government bones they're already above two
Speaker 1: hundred basis point because investors as missing that monetary policy
Speaker 1: is about to get either and quick, but each is
Speaker 1: going to be wins by the three hundreds or four
Speaker 1: hundred basis point. Then obviously preserving the Euro, which is
Speaker 1: the second Hidden Monday of ec PEO, will come back
Speaker 1: to play again. All right, Alfonso, good stuff. We appreciate
Speaker 1: getting your global perspective. Alfonso Petillo is the author of
Speaker 1: the macro Accompass, and he's also formerly a fun manager.
Speaker 1: To I n G. Thanks for listening to the Bloomberg
Speaker 1: Markets podcast. You can subscribe and listen to interviews with
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.
Speaker 1: I'm on Twitter at Matt Miller V three. Pet On
Speaker 1: boll Sweeney I'm on Twitter at pt Sweeney. Before the podcast,
Speaker 1: you can always catch us worldwide at Bloomberg Radio