WEBVTT - Mortgages, ETFs, Autos, Munis, and Aviation (Podcast) 0:00:00.760 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.520 with essential market moving news on the Bloomberg Markets Podcast, 0:00:15.560 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.960 at Bloomberg dot com slash podcast. All right, I looked 0:00:21.960 --> 0:00:24.320 at the mortgage rate, you know on the Bloomberg termoil 0:00:24.320 --> 0:00:26.680 you can do that. It's over seven percent now the 0:00:26.760 --> 0:00:29.600 average thirty year mortgage. What so I feel did you 0:00:29.640 --> 0:00:32.360 close on your tun closing later today? And I feel 0:00:32.360 --> 0:00:34.919 like I'm gaming the market with the rate I got. 0:00:35.000 --> 0:00:36.800 You locked in a good rate? Yeah, well, no, you 0:00:36.880 --> 0:00:39.760 locked in a good rate. I locked in a egregious rate. 0:00:39.760 --> 0:00:42.640 But it looks better than it does today. But let's 0:00:42.640 --> 0:00:45.080 talk about the mortgage market. Let's talk about the housing market. 0:00:45.400 --> 0:00:48.240 Erica Aidelberg, she joins us here on our Bloomberg Interactor 0:00:48.320 --> 0:00:53.160 Broker's studio ericas the mortgage back security strategist for Bloomberg Intelligence. 0:00:53.720 --> 0:00:56.560 Erica talked to us about just kind of a housing market, 0:00:56.600 --> 0:01:01.680 just the basic housing market today, Ray Tire, it seems 0:01:01.680 --> 0:01:04.040 like there's a real supply problem out there. What are 0:01:04.080 --> 0:01:06.200 you seeing? But we have had big jumps in new 0:01:06.720 --> 0:01:08.760 home sales, are pending home sales, way bigger than we 0:01:08.760 --> 0:01:12.000 were looking for. Yeah, Hi, thanks for having me, Thanks 0:01:12.000 --> 0:01:16.679 for coming. You know, the housing market is on a 0:01:16.760 --> 0:01:19.880 roller coaster. It's just you know, everybody I think who's 0:01:19.959 --> 0:01:23.119 interested in buying houses is taking close look at rates 0:01:23.440 --> 0:01:25.399 that I think there's is a lot of It feels 0:01:25.400 --> 0:01:27.720 like there's a lot of pent up demand. Whenever rates 0:01:27.720 --> 0:01:31.280 fall a little bit, and new home builders have a 0:01:31.280 --> 0:01:33.640 lot of inventory, they're probably looking to move because they 0:01:33.640 --> 0:01:37.039 have more houses under constructions. So there's you know, a 0:01:37.040 --> 0:01:39.479 lot of incentives going around to try to encourage people 0:01:39.520 --> 0:01:41.880 to still be involved in the mortgage market, which I 0:01:41.920 --> 0:01:44.600 think is why I'm sorry in the housing market, which 0:01:44.640 --> 0:01:46.840 is why I think you saw the big jump in 0:01:47.160 --> 0:01:51.160 both existing home sales and new home sales, pending home 0:01:51.240 --> 0:01:53.720 sales and new home sales. You know, as soon as 0:01:53.800 --> 0:01:56.400 rates dropped a little bit, existing home sales are still 0:01:56.520 --> 0:01:59.800 very low, but pending home sales are leading indicator for that. 0:02:00.040 --> 0:02:02.440 Let's separate all those three things. For people who don't 0:02:02.600 --> 0:02:06.320 work in the housing industry, like you do. So pending 0:02:06.360 --> 0:02:10.440 home sales is what contracts signed pending home sales is. 0:02:10.639 --> 0:02:13.720 I think, I know, I know. New home sales are 0:02:13.720 --> 0:02:16.720 contracts signed pending home sales. I'm not sure because it's 0:02:16.919 --> 0:02:19.919 a leading indicator for existing home sales. So yeah, it's 0:02:19.919 --> 0:02:22.400 before closing. So yeah, pending home sales are contract signed 0:02:23.600 --> 0:02:26.600 new home sales. New home sales are just built and sold, right, 0:02:26.720 --> 0:02:29.280 not like if Paul lived in his house for twenty 0:02:29.360 --> 0:02:31.560 years and then sells it. That's existing home sales, right. 0:02:31.600 --> 0:02:34.040 But new home sales haven't necessarily even closed. So there 0:02:34.040 --> 0:02:37.000 are a lot of cancelations on new home sales because 0:02:37.200 --> 0:02:40.160 the first time move in, right, New homesales is like yeah, 0:02:40.240 --> 0:02:42.920 new brand new home sales. Yeah, and existing home sales 0:02:43.280 --> 0:02:45.799 is on when the loans actually close the house is 0:02:45.840 --> 0:02:49.120 actually true, so existing home sales is usually related to 0:02:49.160 --> 0:02:51.840 rates a couple of months ago. Both new home sales 0:02:51.880 --> 0:02:55.080 and especially pending home sales are based more on you know, 0:02:55.120 --> 0:02:57.520 where rates are today and what type of incentives people 0:02:57.520 --> 0:03:00.680 are getting, and especially for new homes sales, they may 0:03:00.720 --> 0:03:03.240 not even close. There's a lot of cancelation. So that's 0:03:03.280 --> 0:03:05.360 really the whole thing is kind of confusing even for 0:03:05.400 --> 0:03:07.400 an analyst. But the bottom line is we've seen the 0:03:07.480 --> 0:03:14.240 numbers tick up, yeah, from the doldrums, And does that 0:03:14.240 --> 0:03:16.840 mean we've seen a bottom in housing? You know, So 0:03:17.080 --> 0:03:18.920 there's one more number we can throw in there just 0:03:18.919 --> 0:03:22.040 to confuse people. The Mortgage Banker Association does a weekly 0:03:22.080 --> 0:03:26.880 survey and they look at purchase loan applications and refi 0:03:26.960 --> 0:03:29.919 loan applications, which are of course in the basement. Purchase 0:03:30.000 --> 0:03:32.880 loan applications did tick up a little in January, which 0:03:32.880 --> 0:03:35.840 is why so many people thought that's the biggest leading indicator. 0:03:35.920 --> 0:03:39.120 That's like two months out basically, that's that's h you know, 0:03:39.200 --> 0:03:41.920 that's where you know, people were trying to lock in 0:03:42.000 --> 0:03:44.320 mortgages when the race we're a little bit lower. That's 0:03:44.360 --> 0:03:46.360 now back to twenty eight year lows. It's fallen two 0:03:46.400 --> 0:03:50.040 weeks in a row. So I think, you know, bottom 0:03:50.080 --> 0:03:52.600 line is I think that's NBA B perch if you 0:03:52.600 --> 0:03:55.120 want to bring that up. But I think bottom line 0:03:55.240 --> 0:03:58.880 is that, you know, whatever green shoots we're seeing are 0:03:58.920 --> 0:04:02.160 obviously being peated now by the higher mortgage rates. On 0:04:02.200 --> 0:04:05.040 the bright side, we're moving to the spring housing season 0:04:05.120 --> 0:04:07.040 where a lot of people get involved in the markets 0:04:07.360 --> 0:04:10.120 and then okay, so this is not even the season anyway, 0:04:10.200 --> 0:04:12.800 it's just a yeah, we can't really judge it by 0:04:12.800 --> 0:04:15.160 these numbers. I want to ask about something that I 0:04:15.200 --> 0:04:17.520 think Paul's going to be doing next year, and I 0:04:17.560 --> 0:04:20.479 think maybe a lot more people are than have been 0:04:20.480 --> 0:04:24.680 in the past decade, at least maybe longer people are 0:04:24.680 --> 0:04:28.520 getting adjustable rate mortgages because we're so high right bank 0:04:28.600 --> 0:04:32.400 rate says seven point one two percent right now, are 0:04:32.480 --> 0:04:34.599 more people going to be you said, refies are in 0:04:34.600 --> 0:04:38.400 the basement. Obviously, nobody's refinancing at seven percent. That's why 0:04:38.480 --> 0:04:40.960 city is letting go hundreds of people and get mortgage 0:04:40.960 --> 0:04:44.599 in it. But next year people may be doing just that. 0:04:44.720 --> 0:04:47.520 Are a lot of people picking up adjustable rate mortgages 0:04:47.560 --> 0:04:50.600 hoping that rates go down in the future. Adjustable rate 0:04:50.600 --> 0:04:53.479 mortgages have picked up a little bit. You know, keep 0:04:53.520 --> 0:04:56.080 in mind when you think about adjustable rate mortgage, it's 0:04:56.120 --> 0:04:59.160 not the adjustable rate mortgage of yesteryear, where you might 0:04:59.200 --> 0:05:02.039 even get a teaser rate, or at least you can reset, 0:05:02.080 --> 0:05:04.760 you know, resets annually so you get a low rate. 0:05:05.000 --> 0:05:07.400 Right now, there were like five ones, ten ones, so 0:05:07.440 --> 0:05:11.120 the rates only incrementally lower than thirty year. You can 0:05:11.120 --> 0:05:13.160 look at the bank rate. I think it's you know, 0:05:13.440 --> 0:05:15.680 maybe a hundred based points saving, right, So some people 0:05:15.720 --> 0:05:17.880 are taking those out. They don't have to reset for 0:05:17.920 --> 0:05:20.560 five years, and there's pretty serious caps on the first reset, 0:05:20.680 --> 0:05:22.880 so it's not really a risk for the mortgage market. 0:05:23.160 --> 0:05:24.960 But yeah, we are seeing a little bit of pickup 0:05:24.960 --> 0:05:27.159 and it's almost one hundred percent correlated right now with 0:05:27.200 --> 0:05:30.440 the spread between thirty year and five ones. So that's 0:05:30.520 --> 0:05:33.200 that's the math people are doing. All right, Erica, let's 0:05:33.200 --> 0:05:36.120 talk about the mortgage backed securities market, fixed income market 0:05:36.160 --> 0:05:40.200 in general. Good January, bad February. Talk to us about 0:05:40.200 --> 0:05:43.080 the MBS market. Where you're seeing opportunities risk? What are 0:05:43.120 --> 0:05:46.480 you telling your clients? Yeah, it was very interesting. We 0:05:46.800 --> 0:05:49.440 came out of a really rotten, the worst ever year 0:05:49.520 --> 0:05:51.520 in twenty twenty two. You know, it came out of 0:05:51.520 --> 0:05:54.400 the gates strong. We had the best January that I've seen, 0:05:54.440 --> 0:05:56.560 at least, you know, in history, I mean going back 0:05:56.560 --> 0:05:58.760 as far as any of our series go, both on 0:05:58.800 --> 0:06:00.760 you know, a hedge return basis as well as a 0:06:00.880 --> 0:06:04.040 bondser back you know, total return basis, and it's just 0:06:04.200 --> 0:06:07.599 been you know, dripped by drip pain since then. And 0:06:07.880 --> 0:06:10.159 what turned the market is the fact that I think 0:06:10.200 --> 0:06:13.680 every the markets have been pricing in after you know, 0:06:13.839 --> 0:06:16.039 a nice turn in CPI, what appeared to be a 0:06:16.040 --> 0:06:18.080 turn in CPI, they've been pricing in the end of 0:06:18.080 --> 0:06:21.240 FED tightening and maybe even easing by the end of 0:06:21.240 --> 0:06:23.440 the year. That's all gone out the window as soon 0:06:23.480 --> 0:06:27.240 as last month's non farm payrolls number came in way 0:06:27.240 --> 0:06:30.440 stronger than anyone expected. And other data is also you know, 0:06:30.520 --> 0:06:33.760 made us think, including isems and numbers today, that you know, 0:06:33.800 --> 0:06:35.520 we're not out of the woods yet. The Fed's probably 0:06:35.520 --> 0:06:37.240 gonna have to go a lot higher and keep rates 0:06:37.240 --> 0:06:39.919 a lot higher for a lot longer than people expected. 0:06:40.279 --> 0:06:44.800 And mortgages don't love that scenario, you know, bobs in 0:06:44.839 --> 0:06:47.360 general don't love that scenario. But it also means there's 0:06:47.360 --> 0:06:50.919 probably ongoing you know, volatility while we're trying to figure 0:06:50.920 --> 0:06:53.440 out what's actually going to happen. So as I say, 0:06:53.480 --> 0:06:55.600 mortgages have given up all of their total raid to 0:06:55.640 --> 0:06:57.840 return near to date, and a lot of their excess 0:06:57.839 --> 0:07:00.920 returned near to date as well. Thirty seconds credit quality 0:07:00.920 --> 0:07:04.800 in the NBAS market mortgage market um. Credit quality is 0:07:04.800 --> 0:07:08.799 still very strong. Delinquencies are still very low. Most people 0:07:08.839 --> 0:07:11.400 still have those two percent mortgages or three percent mortgages, 0:07:11.480 --> 0:07:14.840 So look strong. All right, My man over here's got 0:07:15.000 --> 0:07:18.240 a very low mortgage, don't you on the estate in 0:07:18.360 --> 0:07:21.520 west Chester? Yeah, yeah, it's pretty fantastic. Yeah, I'm paying 0:07:21.520 --> 0:07:23.640 glad I locked that in. Yeah, but it doesn't change 0:07:23.680 --> 0:07:26.640 the fact that my taxes are so high. I could 0:07:26.640 --> 0:07:30.080 honestly be buying like a new nine to eleven every year. 0:07:30.600 --> 0:07:33.560 Just insane. Right when you get the scat pack thing coming, 0:07:33.600 --> 0:07:36.280 and you'll be all, you'll be happy. Erica Aidelberg, mortgage 0:07:36.280 --> 0:07:39.840 backed security strategist for Bloomberg Intelligence, joining us here live 0:07:40.080 --> 0:07:42.600 in our Bloomberg Interactive Broker studio on a Friday, so 0:07:42.640 --> 0:07:48.640 that's a double start. I love to Betty Kis. I 0:07:48.680 --> 0:07:52.560 love exchange traded funds. I think, what are they thirty 0:07:52.640 --> 0:07:56.120 years old now, and they just continue to innovation. The 0:07:56.240 --> 0:08:00.280 industry continues to grow. We're talking about at least at 0:08:00.400 --> 0:08:05.800 least nine trillion dollars of funds globally, so incredible growth stories. 0:08:05.800 --> 0:08:08.160 Sylvia Jablonski joins us here a chief investment officer and 0:08:08.160 --> 0:08:12.440 co founder of defiance ETFs and you know Sylvia on 0:08:12.480 --> 0:08:15.080 the Bloomberg terminal. There's this great stories every day on 0:08:15.200 --> 0:08:18.080 ETF space. One that got my attention just recently, Jim 0:08:18.160 --> 0:08:21.880 Kramer ETFs arrives to bet on and against the CNBC 0:08:22.000 --> 0:08:26.280 host picks talk to us. So just about these specialized, 0:08:26.400 --> 0:08:30.320 super specialized kind of ETFs like a pro or con 0:08:30.440 --> 0:08:34.439 Jim Kramer ETF is that is that where the growth 0:08:34.520 --> 0:08:37.120 is as opposed to just like buying in index ETF 0:08:38.640 --> 0:08:41.840 Good morning. You know, it's it's a great question. I 0:08:41.880 --> 0:08:44.320 think it's certainly where the popularity is and where the 0:08:44.400 --> 0:08:47.440 interest is. Um. You know, my sense of it is 0:08:47.480 --> 0:08:51.000 that you kind of have the ETFs out there already 0:08:51.040 --> 0:08:55.640 that you know, a track and represent the classics sectors 0:08:55.640 --> 0:08:58.720 and investors want access to. So for example, there are 0:08:58.760 --> 0:09:01.920 you know, many many options to get SMP five hundred 0:09:01.920 --> 0:09:06.120 exposure and an ETF rapper NASDAK emerging markets you know 0:09:06.160 --> 0:09:08.400 fixed it basic fixed income products and things like that. 0:09:08.520 --> 0:09:12.120 So the second wave of products was really in the 0:09:12.120 --> 0:09:15.360 thematic space and you started to see these cool broader 0:09:15.400 --> 0:09:18.840 themes you know, like um, whether it's space or or 0:09:18.840 --> 0:09:20.960 EVS and things like that. And now you have, as 0:09:21.000 --> 0:09:23.880 you said this this Jim Kramer long, sure, I think 0:09:23.920 --> 0:09:26.280 providers are just coming trying to come out with something 0:09:26.360 --> 0:09:29.360 new that will um, you know, gather assets and will 0:09:29.400 --> 0:09:31.640 represent something that people actually want to trade. And you know, 0:09:31.640 --> 0:09:34.080 people do follow Jim Cramer and have strong opinions either 0:09:34.120 --> 0:09:38.920 way on his side. What's what's a successful ETF in 0:09:39.000 --> 0:09:41.319 terms of size, Like, what's what's considered to be a 0:09:41.360 --> 0:09:45.280 successful et kind of clothes do you need to see? Yeah? Right, 0:09:45.280 --> 0:09:47.280 well it's you know, it depends on the management fee. 0:09:47.320 --> 0:09:50.240 So if obviously the higher the fee, the lower the 0:09:50.280 --> 0:09:53.080 thresholds that you need for success. So if you have 0:09:53.120 --> 0:09:56.320 an ETF that has you know, ninety BIPs to one 0:09:56.400 --> 0:10:00.199 percent and you gather twenty million, you know that's of 0:10:00.200 --> 0:10:02.480 a decent baseline. But if you have an ETF that's 0:10:02.520 --> 0:10:05.040 priced at you know, ten twenty thirty books, you need 0:10:05.040 --> 0:10:08.040 to see hundreds and millions of assets to actually, you know, 0:10:08.120 --> 0:10:10.480 really generate a profit on that product. Because ETFs are 0:10:10.480 --> 0:10:13.240 actually pretty costly to run on the back end, we 0:10:13.360 --> 0:10:17.360 see more and more of these ETFs like the Kramer one. 0:10:17.679 --> 0:10:21.000 UM I think before that we got crews and nance 0:10:21.600 --> 0:10:26.480 tracking what not. Nancy Pelosi and Ted Cruise specifically do. 0:10:26.640 --> 0:10:28.920 But what the Republicans do or what the Democrats doing 0:10:29.000 --> 0:10:32.680 for in terms of you know, front running their legislation 0:10:32.760 --> 0:10:39.000 to make money. Are these just a fad? I think 0:10:39.080 --> 0:10:42.720 time will tell, you know, if if they perform. For example, 0:10:43.360 --> 0:10:45.800 there was a period of time last year where um, 0:10:46.200 --> 0:10:48.680 you know, you saw that short ARCTF right where everybody 0:10:48.720 --> 0:10:51.520 became super sour on Kathy what the year prior? You know, 0:10:51.559 --> 0:10:53.800 she was sort of the here the hero of ETFs, 0:10:53.800 --> 0:10:56.839 and her ETF took off and then last year was terrible. No, 0:10:57.000 --> 0:10:59.160 this year her ETF is up twenty percent again. So 0:10:59.679 --> 0:11:02.040 um flows are kind of leaving the short arc and 0:11:02.080 --> 0:11:04.040 going into the long one. So I think it's it'll 0:11:04.080 --> 0:11:06.200 be the same thing with a long short Cramer fund. 0:11:06.240 --> 0:11:08.120 You know, if the performance is there, I think it'll 0:11:08.160 --> 0:11:11.360 generate assets, and there's enough kind of retail investors that 0:11:11.400 --> 0:11:13.600 are interested in in you know, the media of it 0:11:13.640 --> 0:11:16.320 and the publicity of it all. But you know, do 0:11:16.360 --> 0:11:17.840 I think it's going to end up in an asset 0:11:17.880 --> 0:11:21.800 manager's ETF application? You know, probably not got ETF. I 0:11:21.840 --> 0:11:24.320 think a lot of thematic ETFs have a shot too, 0:11:25.120 --> 0:11:27.760 because you know, there is this interest in disruptive technology 0:11:27.760 --> 0:11:30.320 and innovation things like that. But something like that almost 0:11:30.320 --> 0:11:32.800 feels a little bit memi and will probably you know, 0:11:32.880 --> 0:11:35.560 gather some assets in the moment and then unless performance 0:11:35.600 --> 0:11:40.160 is phenomenal or price fade away, unless the congressional stock 0:11:40.240 --> 0:11:43.200 traders are forced to disclose what they do, you know, 0:11:43.320 --> 0:11:46.160 within like ten years of their buy or self. By 0:11:46.160 --> 0:11:49.200 the way, speaking of Cruz, you have an ETF that 0:11:49.280 --> 0:11:55.040 I think Paul would like. Um, he's obsessed with hotels, planes, cruise, 0:11:55.040 --> 0:12:01.080 ships and you've got Cruz. Yeah, I mean, so we've 0:12:01.280 --> 0:12:05.040 we've we launched that ETF to really tackle the the 0:12:05.120 --> 0:12:07.600 idea that you know, post pandemic, there would be this 0:12:07.640 --> 0:12:09.400 pent up demand for people to travel. And you know, 0:12:09.440 --> 0:12:11.760 there's a very popular airline ETF out there, but there 0:12:11.800 --> 0:12:15.000 wasn't something that sort of captured the full picture with 0:12:15.120 --> 0:12:18.880 hotels and cruises and whatnot. So UM, cruise gives you 0:12:18.920 --> 0:12:20.800 just that, it gives you access to the airline, so 0:12:20.800 --> 0:12:23.280 you're getting domestic, but you're also getting that China reopen 0:12:23.400 --> 0:12:26.840 trade that East meets West, you know, um tailwin that 0:12:26.840 --> 0:12:29.280 we're going to see this year. You get cruises and 0:12:29.559 --> 0:12:31.600 we've seen the data there, a lot of the CEOs 0:12:31.600 --> 0:12:34.600 are coming out and saying that pandemic book bookings are 0:12:34.600 --> 0:12:37.640 backed up to pandemic levels. They're starting to generate revenues again. 0:12:37.679 --> 0:12:40.680 They have pricing power, and of course hotels, business travels 0:12:40.720 --> 0:12:43.079 back up. People are out there traveling. So I think 0:12:43.080 --> 0:12:45.600 in the short term, um, particularly if we don't see 0:12:45.640 --> 0:12:47.600 any kind of hard landing and we start to see 0:12:47.600 --> 0:12:50.760 some of this you know, inflationary pressure cool off, Um, 0:12:50.920 --> 0:12:53.640 you might get some gailwinds and in cruise and some 0:12:53.679 --> 0:12:56.120 of these types of names within that ETF for the 0:12:56.200 --> 0:13:01.280 next year or two, it's your highest year to date return. 0:13:01.480 --> 0:13:05.320 That ETF is up like twenty percent year to date. Yeah, 0:13:05.360 --> 0:13:10.960 in terms of the largest fund assets you operate, the 0:13:11.040 --> 0:13:15.319 five G Right Defiance, next Gen Connectivity ETF. It's also 0:13:16.480 --> 0:13:19.800 lowest fees of the of the ETFs that you operate 0:13:19.800 --> 0:13:24.880 a guess because it's so big, right, and the highest yield. Yeah. 0:13:24.880 --> 0:13:27.480 So the interesting thing about that is when we launched 0:13:27.480 --> 0:13:31.040 that ETF, we were a new fund and a new 0:13:31.080 --> 0:13:33.840 company and we wanted to come to market. We thought that, 0:13:34.040 --> 0:13:35.640 you know, we really need to make a splash. So 0:13:35.760 --> 0:13:37.760 let's let's try to come up with the most innovative 0:13:37.760 --> 0:13:40.320 product that we can and we thought to ourselves, there's 0:13:40.360 --> 0:13:43.400 no you know, great innovative product in terms of the 0:13:43.400 --> 0:13:45.760 feature of communication, and what is the feature of communication? 0:13:45.800 --> 0:13:48.360 It's really five G. So we structured the product and 0:13:48.360 --> 0:13:50.960 then we thought to ourselves, and this is also around 0:13:51.160 --> 0:13:53.600 you know, kind of it's pre covid, but it kind 0:13:53.640 --> 0:13:56.560 of dove into covid around the time that we launched, 0:13:57.320 --> 0:13:58.959 and we thought to ourselves, you know, who's going to 0:13:59.040 --> 0:14:00.360 trade this. It's going to be a kind of that 0:14:00.400 --> 0:14:02.640 younger Robin hood trader and whatnot. And so let's make 0:14:02.640 --> 0:14:04.760 it your transparent, Let's make it as cost effective as 0:14:04.800 --> 0:14:07.680 possible and try to gather assets and really start a company. 0:14:07.720 --> 0:14:09.920 And so it's really it's really our flagship fund, and 0:14:09.960 --> 0:14:12.679 it's what caught us on the map. And you know, 0:14:12.720 --> 0:14:14.640 we're super proud of that ETF today and we hope 0:14:14.679 --> 0:14:16.120 to see it. We hope to see it start to 0:14:16.160 --> 0:14:20.600 grow again as risk app type picks up in coming years. Hey, Solvia, 0:14:21.000 --> 0:14:24.400 talk to us about the trend of mutual funds converting 0:14:24.440 --> 0:14:27.160 to ETF. So I find that fascinating kind of where 0:14:27.200 --> 0:14:29.280 are we in that process and how do you think 0:14:29.280 --> 0:14:33.320 it plays out going forward. So it's interesting because I think, 0:14:33.440 --> 0:14:36.880 you know, I'm young enough where I've invested in ETFs 0:14:36.880 --> 0:14:38.720 for a really long time, and I've worked with people 0:14:38.720 --> 0:14:43.040 who were really like mutual fund believers, hardcore hutual fund believers, 0:14:43.040 --> 0:14:45.920 and thought that the ETF would would go away. I mean, 0:14:45.960 --> 0:14:49.400 it's just really hard to argue that mutual fund assets 0:14:49.400 --> 0:14:51.680 will remain where they are. ETFs are just a much 0:14:51.720 --> 0:14:54.840 better rapper. You know, they're far more efficiating, got intra 0:14:54.920 --> 0:14:57.440 day trading, combine and sell them throughout the day. You 0:14:57.480 --> 0:14:59.840 know what the intra day NAVI is what the fund 0:14:59.880 --> 0:15:02.760 is actually worth versus what you're paying for it. Um. 0:15:02.920 --> 0:15:04.680 You know, there are a lot of tax benefits to 0:15:04.800 --> 0:15:08.120 using the ETF structure. So we've seen that transition. We've 0:15:08.120 --> 0:15:11.800 seen the outflow from mutual funds into ets And not 0:15:11.840 --> 0:15:13.920 to say that, you know, you have some great actively 0:15:13.920 --> 0:15:15.640 managed mutual funds out there that are never going to 0:15:15.680 --> 0:15:18.840 go away, but I think that the ETF rappers is 0:15:18.880 --> 0:15:21.520 now you know, kind of the preferred product of choice 0:15:21.600 --> 0:15:25.280 by by investors and especially the next generation of investors. 0:15:25.280 --> 0:15:28.160 I mean, if you ask um, like a seventeen year 0:15:28.160 --> 0:15:30.080 old about a mutual fund they but not even know 0:15:30.120 --> 0:15:34.280 what it is. What about regulation? I mean, one thing 0:15:34.280 --> 0:15:37.600 about mutual funds I know is that my four o 0:15:37.680 --> 0:15:40.680 one k is like puking mutual funds. Can you put 0:15:40.760 --> 0:15:44.240 ETFs easily in a four oh one k? Are investors limited? 0:15:44.240 --> 0:15:48.440 Because that's a big it's a big pool there. Yeah, 0:15:48.480 --> 0:15:50.120 that's the limit. That's the limit, and that's where the 0:15:50.120 --> 0:15:52.120 assets are sticky for mutual funds. So I think that 0:15:52.840 --> 0:15:55.640 UM either have been talks about this sort of you know, 0:15:55.840 --> 0:15:58.680 forever at least for the last decade that that I've 0:15:58.680 --> 0:16:00.800 been an ETFs that you know, all the retirement plans 0:16:00.840 --> 0:16:02.520 are going to open up to ETFs, and some of 0:16:02.520 --> 0:16:05.280 them have and some of them haven't. The majority have not. 0:16:05.680 --> 0:16:07.920 You know, I suspect that there's going to become a 0:16:08.000 --> 0:16:11.320 time just because there's so much user demand for it, 0:16:11.440 --> 0:16:14.880 where you'll see that open up to ETF products, at 0:16:14.960 --> 0:16:18.520 least certain ETF products, And I think, you know, I 0:16:18.560 --> 0:16:21.480 think in that case that just even further propels the 0:16:21.520 --> 0:16:26.000 EATTF asset number by the trillions and shrinks the mutual 0:16:26.000 --> 0:16:28.320 fund assets. And you see a lot of the you know, 0:16:28.400 --> 0:16:31.160 top actively managed mutual funds trying to create ETFs out 0:16:31.160 --> 0:16:33.160 of their strategies too, so they sort of know that 0:16:33.160 --> 0:16:36.400 they're not, you know, they're not kind of eroding their 0:16:36.400 --> 0:16:38.280 own assets, but they sort of realize that they have 0:16:38.320 --> 0:16:41.400 to switch over to keep their assets. Yeah, just amazing. 0:16:41.440 --> 0:16:43.840 It's one of the just greatest or most you know, 0:16:43.880 --> 0:16:46.440 impactful changes I've seen in the last decade, and I 0:16:46.440 --> 0:16:48.760 know it's been longer than that. I'm going to start. 0:16:49.120 --> 0:16:52.440 I'm gonna start dating people by your either pre ETF 0:16:52.520 --> 0:16:55.160 or posting. Yeah, yeah, you're definitely because you started on 0:16:55.200 --> 0:17:02.080 the street. Yes, before spies were coiled out, exactly, but Sylvia, no, 0:17:02.360 --> 0:17:06.639 after absolutely, Sylvia Jablonski, chief investment Officer, co founder of 0:17:06.680 --> 0:17:10.280 Defiance ETFs, and then on the Bloomberg terminal. For those 0:17:10.320 --> 0:17:11.879 of you are sitting in front of a terminal, et 0:17:12.200 --> 0:17:14.840 F go is a great function. Gives you all the 0:17:14.840 --> 0:17:18.200 good information you want about the ETF space and looking 0:17:18.200 --> 0:17:21.440 at the Defiance ones. Five G is Matt mentioned the 0:17:21.800 --> 0:17:23.800 biggest one and it's got great returns there. It's got 0:17:23.880 --> 0:17:29.000 seven hundred million dollars assets under management. All Right, we 0:17:29.080 --> 0:17:31.480 got Kevin tyin in on here. He's a senior autos 0:17:31.520 --> 0:17:36.439 analyst for Bloomberg Intelligence. No real agenda here, but I 0:17:36.480 --> 0:17:38.760 want to just start Kevin. I know Michael Dean, your 0:17:38.800 --> 0:17:42.120 colleague in London, follows Volf Volkswagen. But Volkswagen came out 0:17:42.160 --> 0:17:46.719 today saying, you know, their boosting production. Demand is still there. 0:17:48.200 --> 0:17:51.040 I want to ask you from the global auto industry, 0:17:51.320 --> 0:17:56.040 is this supply chain issue is that fixed? Well, it's better, 0:17:57.080 --> 0:17:59.520 but you know, and we've talked about this a lot, 0:17:59.560 --> 0:18:02.919 like I'm not sure how much of it was chips 0:18:02.960 --> 0:18:06.360 and supply chain and how much of it was constraining 0:18:06.520 --> 0:18:12.200 output to maintain pricing and margins. So, um, you know, 0:18:12.240 --> 0:18:15.800 automakers are are going to get back to a little 0:18:15.800 --> 0:18:19.120 bit more of that growth mode as the demand is there. 0:18:19.160 --> 0:18:22.560 But um, you know, I think it's an easier hurdle now, right, 0:18:22.640 --> 0:18:26.800 Like across in the key regions, you you don't have 0:18:26.880 --> 0:18:32.000 this um sales for sales sake kind of mindset anymore, right, 0:18:32.080 --> 0:18:36.760 Like the product portfolio is different, costs irrationalized, and it's um, 0:18:36.800 --> 0:18:39.000 you know, it's your most expensive stuff that you're putting 0:18:39.000 --> 0:18:42.959 out there, so um, you know, demand just carmakers, by 0:18:42.960 --> 0:18:44.640 the way, Kevin, you know last week I was down 0:18:44.680 --> 0:18:48.320 at the Ducati shop in Soho and the North American 0:18:48.359 --> 0:18:52.640 CEO Jason Schinnickck told me after their experience during the pandemic, 0:18:52.680 --> 0:18:57.600 they're pushing towards basically thirtyty fifty thousand dollars models rather 0:18:57.640 --> 0:19:00.560 than the entry level ten tho dollar bike used to sell. 0:19:00.800 --> 0:19:02.960 And even same thing at Harley Davidson. Right, if you 0:19:03.000 --> 0:19:06.040 look at that company, you know, this move away from 0:19:06.160 --> 0:19:08.520 volume for volume sake because they got out of a 0:19:08.560 --> 0:19:13.480 lot of difficult regions for them, you know, um international markets, 0:19:13.680 --> 0:19:19.280 and are really just focused on constraining supply, driving prices higher, 0:19:20.040 --> 0:19:22.760 you know, and just filling orders at the highest possible 0:19:22.800 --> 0:19:27.480 price and margin. So my question to you is is 0:19:27.520 --> 0:19:29.560 that a thing? Kevin? Is that a long term trend? 0:19:29.800 --> 0:19:32.119 I mean, this is an industry for it seems like 0:19:32.200 --> 0:19:35.040 my entire lifetime at least. You know, you produced seventeen 0:19:35.080 --> 0:19:38.600 million cars and you sell them, you haggle and you 0:19:38.720 --> 0:19:41.000 do all that kind of stuff. Now you're talking tell 0:19:41.040 --> 0:19:44.159 me fifteen million, and it's you stick a price or 0:19:44.200 --> 0:19:47.080 above is what you're gonna pay? Yeah, Well, here's the thing. Right, 0:19:47.119 --> 0:19:49.280 So if you look at it from a volume perspective, 0:19:49.320 --> 0:19:52.159 you're going to say where where do two and a 0:19:52.200 --> 0:19:54.600 half million units go? And do they ever come back? 0:19:54.640 --> 0:19:57.160 But the thing is at seventeen and a half million, 0:19:57.960 --> 0:20:01.520 you know, from the manufacturer's perspective, even from the dealership's perspective. 0:20:01.520 --> 0:20:04.119 You know, the average transaction price was thirty five thousand 0:20:04.160 --> 0:20:07.720 dollars in twenty twenty three. If we do fifteen million units, 0:20:07.760 --> 0:20:09.960 the average transaction price is going to be about forty 0:20:10.000 --> 0:20:14.159 nine thousand dollars. Excuse me. So when you look at 0:20:14.200 --> 0:20:18.600 the revenue pool, actually, this market is actually bigger than 0:20:18.680 --> 0:20:21.880 when it was peak volume. And that's what I think 0:20:21.960 --> 0:20:26.040 automakers are focused on that consumers aren't right, they're just 0:20:26.119 --> 0:20:30.960 saying or the markets or analysts are just saying seventeen million, 0:20:31.280 --> 0:20:34.520 seventeen and a half to fifteen is bad. But everybody 0:20:34.520 --> 0:20:36.920 else or the automakers are going, yeah, but the revenue 0:20:36.920 --> 0:20:39.400 pool is bigger by about eighty billion dollars, at least 0:20:39.440 --> 0:20:41.920 here in the US. So I think you have to 0:20:42.040 --> 0:20:45.720 layer in that one other data point above just simply volume, 0:20:45.760 --> 0:20:47.840 and say like, okay, well let's look at where how 0:20:47.920 --> 0:20:50.399