1 00:00:13,800 --> 00:00:16,960 Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast. 2 00:00:17,040 --> 00:00:20,000 Speaker 1: My name is Mike Reagan, a senior editor at Bloomberg, 3 00:00:20,120 --> 00:00:24,319 Speaker 1: and i'm Waldonna High Across Acid reporter with Bloomberg. This 4 00:00:24,400 --> 00:00:26,960 Speaker 1: week on the show, Well, let's be frank for a minute. 5 00:00:27,080 --> 00:00:30,960 Speaker 1: For a long time, bonds seemed to be pretty boring 6 00:00:31,640 --> 00:00:34,280 Speaker 1: if your investment portfolio was a meal. Bonds were sort 7 00:00:34,280 --> 00:00:36,919 Speaker 1: of like the vegetable. Yeah, you knew you needed them 8 00:00:36,960 --> 00:00:39,880 Speaker 1: there on the plate, but they weren't very exciting. Rather, 9 00:00:40,000 --> 00:00:43,160 Speaker 1: stocks were the meat and potatoes and dessert crypto. Well, 10 00:00:43,440 --> 00:00:46,159 Speaker 1: maybe that was the Shotton beer you had afterwards, but 11 00:00:46,800 --> 00:00:50,519 Speaker 1: that's all obviously changed after last year's cartage. Bonds of 12 00:00:50,560 --> 00:00:54,560 Speaker 1: all stripes are sporting really attractive yields that look especially 13 00:00:54,680 --> 00:00:58,320 Speaker 1: enticing these days if and when that market focus shifts 14 00:00:58,320 --> 00:01:02,600 Speaker 1: from worries about inflation so worries about economic growth, and 15 00:01:02,720 --> 00:01:06,400 Speaker 1: exchange traded funds especially are reaping the windfalls with hundreds 16 00:01:06,400 --> 00:01:09,640 Speaker 1: of billions of dollars flowing into bond products in the 17 00:01:09,720 --> 00:01:12,959 Speaker 1: last year. You heard it. Bonds are exciting again, and 18 00:01:13,000 --> 00:01:14,480 Speaker 1: we're going to get into it. With the head of 19 00:01:14,520 --> 00:01:19,600 Speaker 1: fixed income at the world's largest asset manager, but filledna First, 20 00:01:19,720 --> 00:01:23,720 Speaker 1: speaking of excited, I was very excited yesterday when I 21 00:01:23,760 --> 00:01:26,680 Speaker 1: came into the office and I noticed you had left 22 00:01:26,680 --> 00:01:30,520 Speaker 1: a book for me on my desk, which I assume 23 00:01:30,600 --> 00:01:33,520 Speaker 1: means I'm finally invited to one of your book clubs. 24 00:01:33,600 --> 00:01:35,800 Speaker 1: And I'm very excited. Oh my gosh, I didn't mean 25 00:01:35,840 --> 00:01:38,479 Speaker 1: it to look that way, but I suppose it looks 26 00:01:38,520 --> 00:01:42,039 Speaker 1: that way like I am giving you I'm offering an invite. Sweet, 27 00:01:42,080 --> 00:01:44,479 Speaker 1: I'm not invited to one of your many book clubs. Okay, 28 00:01:44,520 --> 00:01:46,880 Speaker 1: I suppose you and I have a book club going then, 29 00:01:47,000 --> 00:01:50,480 Speaker 1: because we have a special guest next week, and you 30 00:01:50,520 --> 00:01:53,919 Speaker 1: and I have been tasked with reading his book before 31 00:01:53,960 --> 00:01:57,280 Speaker 1: the podcast. That's why I left it on your desk. 32 00:01:57,720 --> 00:02:00,760 Speaker 1: Oh yeah, Oh, that's not as exciting is one of 33 00:02:00,800 --> 00:02:03,760 Speaker 1: your real, my real book clubs which you're not invited to. 34 00:02:03,840 --> 00:02:08,600 Speaker 1: I'm sorry, I'm wonder about what exactly these books are 35 00:02:08,600 --> 00:02:11,960 Speaker 1: you reading? In these book they're fun books. That's yeah, 36 00:02:12,160 --> 00:02:14,960 Speaker 1: no invite for you. Tell us about the what goes up? 37 00:02:15,120 --> 00:02:16,920 Speaker 1: Book club? Who do we have next week? We have 38 00:02:17,000 --> 00:02:22,000 Speaker 1: Alan Blinder next week and he has a very thorough 39 00:02:22,080 --> 00:02:26,320 Speaker 1: history of monetary and physical policy, so we'll be talking 40 00:02:26,360 --> 00:02:30,040 Speaker 1: to him next week. That is riveting book club material 41 00:02:30,160 --> 00:02:32,600 Speaker 1: right there. But this week's guest is equally exciting. Why 42 00:02:32,600 --> 00:02:34,560 Speaker 1: don't you introduce him? Yeah, I want to bring in 43 00:02:34,600 --> 00:02:37,640 Speaker 1: Steve lap Plea. He's the US head of fixed income 44 00:02:37,680 --> 00:02:41,120 Speaker 1: ETFs at black Rock. Steve, welcome to the show. Thanks 45 00:02:41,120 --> 00:02:44,200 Speaker 1: for having me. You're welcome to join any of my 46 00:02:44,400 --> 00:02:48,560 Speaker 1: many many book clubs that I belong to. The book 47 00:02:48,560 --> 00:02:50,680 Speaker 1: for next week does sound riveeting, so so I'll have 48 00:02:50,720 --> 00:02:52,840 Speaker 1: to check that out. You're well, come on, come on 49 00:02:52,880 --> 00:02:56,120 Speaker 1: into our book club. Then you're very welcome to to 50 00:02:56,200 --> 00:02:59,840 Speaker 1: be part of it. Poor the Chardonnay, I'll bring this 51 00:03:00,960 --> 00:03:03,800 Speaker 1: um see, maybe we can just uh, we can just 52 00:03:03,960 --> 00:03:06,639 Speaker 1: start with So, your US head of fixed income ETFs 53 00:03:06,639 --> 00:03:10,240 Speaker 1: at black Rocks, So tell us about your role. Yeah. 54 00:03:10,280 --> 00:03:12,960 Speaker 1: So I've been with a firm since two thousand and nine, 55 00:03:13,000 --> 00:03:15,440 Speaker 1: and you know, it's been it's been quite a journey. 56 00:03:15,760 --> 00:03:19,200 Speaker 1: When I joined black Rock, bondie tfs that did exist. 57 00:03:19,680 --> 00:03:22,200 Speaker 1: We launched the first set of them in two thousand 58 00:03:22,200 --> 00:03:25,320 Speaker 1: and two, and we recently celebrated the twenty year anniversary 59 00:03:25,360 --> 00:03:27,639 Speaker 1: of those. But it was still, you know, a relatively 60 00:03:28,040 --> 00:03:30,440 Speaker 1: nascent business in terms of where it is today, and 61 00:03:30,480 --> 00:03:33,840 Speaker 1: so you know, we decided to really make it an 62 00:03:33,840 --> 00:03:37,640 Speaker 1: effort at growing that business, and in particular, I'm really 63 00:03:37,640 --> 00:03:40,880 Speaker 1: trying to make the market aware of just how much 64 00:03:40,920 --> 00:03:44,480 Speaker 1: these products could number one, help investors, um that's the 65 00:03:44,480 --> 00:03:47,240 Speaker 1: important part. But also we had a very strong conviction 66 00:03:47,280 --> 00:03:49,560 Speaker 1: that these products were going to change the bond market itself, 67 00:03:49,960 --> 00:03:53,080 Speaker 1: and so I was one of the folks brought in 68 00:03:53,120 --> 00:03:55,520 Speaker 1: to really, you know, start growing this team, and over 69 00:03:55,640 --> 00:04:00,360 Speaker 1: time we build out the bondie TF infrastructure a lot. 70 00:04:00,720 --> 00:04:03,880 Speaker 1: And so my role currently is to oversee that business 71 00:04:03,920 --> 00:04:06,800 Speaker 1: more broadly in terms of, you know, the products that 72 00:04:06,840 --> 00:04:10,360 Speaker 1: we're designing, engaging with clients on their experiences, how we 73 00:04:10,360 --> 00:04:14,320 Speaker 1: can improve the products, working with broker dealers, index providers, 74 00:04:14,440 --> 00:04:17,039 Speaker 1: all of the folks who are very important to the 75 00:04:17,080 --> 00:04:20,360 Speaker 1: ecosystem to make sure everything functions well. Just to overall 76 00:04:20,440 --> 00:04:23,800 Speaker 1: make sure investors are getting the outcomes that they're expecting. 77 00:04:24,240 --> 00:04:25,960 Speaker 1: You know, Steve, I was kind of joking at the 78 00:04:25,960 --> 00:04:28,320 Speaker 1: beginning they're talking about how bonds were boring. Of course 79 00:04:28,360 --> 00:04:30,760 Speaker 1: they are. They've always been very exciting, but clearly in 80 00:04:31,400 --> 00:04:34,719 Speaker 1: that decade of zero interest rate policy or near zero 81 00:04:34,760 --> 00:04:37,760 Speaker 1: interest rate policy. There's just been this massive sea change 82 00:04:37,800 --> 00:04:42,440 Speaker 1: now with higher yields. Every I think investors strategist we 83 00:04:42,520 --> 00:04:46,600 Speaker 1: spoke to recently heading into twenty three was much more 84 00:04:46,600 --> 00:04:51,240 Speaker 1: bullish on bonds. That's kind of reversing a little bit now, 85 00:04:51,279 --> 00:04:52,719 Speaker 1: you know, I'm looking at you know, some of the 86 00:04:52,720 --> 00:04:56,720 Speaker 1: eye shares, uh, you know, big fixed income ETFs, tlt, 87 00:04:57,680 --> 00:05:02,440 Speaker 1: lqd H, the aggregate agg really off to a strong 88 00:05:02,520 --> 00:05:04,960 Speaker 1: year like the stock market, and now kind of back 89 00:05:05,000 --> 00:05:07,840 Speaker 1: to maybe flat flatish on the year, up a little um. 90 00:05:08,600 --> 00:05:10,680 Speaker 1: How do you see the rest of the year shaping out? 91 00:05:10,800 --> 00:05:13,920 Speaker 1: You know, clearly inflation and the FED are the most 92 00:05:13,960 --> 00:05:18,680 Speaker 1: important elements of how bonds will do this year. There 93 00:05:18,680 --> 00:05:23,279 Speaker 1: seems to be a rethink going on about how high 94 00:05:23,279 --> 00:05:25,919 Speaker 1: the Fed will actually hike and when and if inflation 95 00:05:25,920 --> 00:05:31,080 Speaker 1: will actually back normalize back to that two percent area. 96 00:05:30,920 --> 00:05:33,080 Speaker 1: So how are you thinking that you know, how the 97 00:05:33,120 --> 00:05:36,279 Speaker 1: rest of the year will play out in fixed income? Yeah, 98 00:05:36,360 --> 00:05:39,400 Speaker 1: it's it's been a bumpy ride. Last year, as you know, 99 00:05:39,680 --> 00:05:42,240 Speaker 1: was the worst bomb marker we've seen in probably forty years. 100 00:05:42,440 --> 00:05:45,480 Speaker 1: It was. It was incredibly challenging. I think to your point, 101 00:05:45,560 --> 00:05:49,520 Speaker 1: investors have been lulled into you know a bit of well, 102 00:05:49,600 --> 00:05:52,240 Speaker 1: rates are low for long and maybe low forever. That 103 00:05:52,440 --> 00:05:55,760 Speaker 1: changed very, very dramatically last year. I think investors were 104 00:05:55,800 --> 00:05:59,040 Speaker 1: looking forward to this idea that, oh, twenty twenty three, 105 00:05:59,040 --> 00:06:01,080 Speaker 1: where these higher yields, it's great, I'm going to allocate, 106 00:06:01,440 --> 00:06:03,919 Speaker 1: I'm going to fix my forty, so to speak. And 107 00:06:03,960 --> 00:06:05,400 Speaker 1: then all of a sudden we got the slew of 108 00:06:05,560 --> 00:06:08,520 Speaker 1: very positive data, and you know, that made everybody, as 109 00:06:08,520 --> 00:06:11,000 Speaker 1: you said, rethink. It does feel like people rethink this 110 00:06:11,040 --> 00:06:14,520 Speaker 1: and maybe overthink it every week, if not more more 111 00:06:14,560 --> 00:06:17,159 Speaker 1: frequently than that. I'm a little more sanguine on this. 112 00:06:17,240 --> 00:06:19,839 Speaker 1: I think that, you know, there is a limit to 113 00:06:20,400 --> 00:06:23,520 Speaker 1: how high rates can go. So I think that the 114 00:06:23,560 --> 00:06:25,839 Speaker 1: Fed's going to be watching the data closely. You know, 115 00:06:25,960 --> 00:06:29,960 Speaker 1: we've maintained a view that consistently that inflation was probably 116 00:06:30,040 --> 00:06:32,760 Speaker 1: not going to go down in a straight line. We've 117 00:06:32,800 --> 00:06:34,479 Speaker 1: been saying that for quite a while, and I think 118 00:06:34,480 --> 00:06:36,159 Speaker 1: that's just what we're seeing now. There's going to be 119 00:06:36,160 --> 00:06:39,080 Speaker 1: some bumps along the way. We do think that, you know, 120 00:06:39,120 --> 00:06:41,920 Speaker 1: it's possible that they may hike a little bit more 121 00:06:42,000 --> 00:06:45,599 Speaker 1: than what was originally expected, and then they may hold 122 00:06:45,680 --> 00:06:48,120 Speaker 1: rates at that elevated level. If you just look at 123 00:06:48,120 --> 00:06:50,599 Speaker 1: the futures market, I think, you know, the peak rate 124 00:06:50,680 --> 00:06:54,240 Speaker 1: is somewhere around and it's probably you know, it's bumping around, 125 00:06:54,279 --> 00:06:56,640 Speaker 1: you know, day over day, but it's somewhere, you know, 126 00:06:56,720 --> 00:06:59,840 Speaker 1: closer to a five and a half percent terminal rate 127 00:06:59,839 --> 00:07:02,320 Speaker 1: than was before, but not quite there. So I think 128 00:07:02,320 --> 00:07:04,440 Speaker 1: there's going to be You're going to see the market, 129 00:07:04,480 --> 00:07:06,880 Speaker 1: you know, kind of trying to find a level here. 130 00:07:07,160 --> 00:07:09,960 Speaker 1: And I do believe that there's there's a limit to 131 00:07:10,000 --> 00:07:13,400 Speaker 1: this because whether people believe it or not, ultimately these 132 00:07:13,480 --> 00:07:16,600 Speaker 1: hikes will impact the economy. They will take hold. There's 133 00:07:16,640 --> 00:07:18,720 Speaker 1: debate about win that can happen, but it will happen. 134 00:07:18,760 --> 00:07:21,360 Speaker 1: It's happened every single time in the past, so they're 135 00:07:21,520 --> 00:07:23,480 Speaker 1: cognizant of that and they don't want to, you know, 136 00:07:23,520 --> 00:07:25,720 Speaker 1: go too fast and too far. Yeah. See, if do 137 00:07:25,760 --> 00:07:27,920 Speaker 1: you guys have an internal view in terms of what 138 00:07:28,040 --> 00:07:31,600 Speaker 1: else to expect, it sounds like maybe two more twenty 139 00:07:31,600 --> 00:07:34,640 Speaker 1: five basis point hikes that we can expect from the FED. 140 00:07:34,720 --> 00:07:37,160 Speaker 1: We have had this discussion over the last couple of 141 00:07:37,160 --> 00:07:40,280 Speaker 1: weeks of some FED members arguing, even for during the 142 00:07:40,320 --> 00:07:42,720 Speaker 1: last meeting, that they should go with fifty basis points 143 00:07:42,720 --> 00:07:45,360 Speaker 1: that potentially the next to the I think the March 144 00:07:45,400 --> 00:07:47,360 Speaker 1: meeting could be fifty basis points. So do you have 145 00:07:47,400 --> 00:07:50,160 Speaker 1: an internal view on what we can expect. I think 146 00:07:50,240 --> 00:07:53,960 Speaker 1: we're we're still thinking that they probably end up somewhere, 147 00:07:54,200 --> 00:07:56,440 Speaker 1: you know, at five and a quarter or maybe one more. 148 00:07:56,520 --> 00:07:58,160 Speaker 1: But but it's really like, if you look at the 149 00:07:58,240 --> 00:08:01,720 Speaker 1: market that's pretty consistent us, we get, you know, a 150 00:08:01,960 --> 00:08:05,800 Speaker 1: really outsized inflation surprise. Um Like I said, we we've 151 00:08:05,840 --> 00:08:09,239 Speaker 1: been pretty consistent that it's not going to be linear. 152 00:08:09,400 --> 00:08:11,320 Speaker 1: It's there, They're going to be some bumps along the way. 153 00:08:11,360 --> 00:08:14,080 Speaker 1: So I think this is you would like to see 154 00:08:14,080 --> 00:08:16,720 Speaker 1: it go down more consistently. But but this this isn't 155 00:08:16,760 --> 00:08:19,760 Speaker 1: really surprising us all that much. Um So, like I said, 156 00:08:19,800 --> 00:08:22,640 Speaker 1: I think I think the market's basically pricing in, you know, 157 00:08:22,680 --> 00:08:24,640 Speaker 1: around five and a quarter, between five and a quarter, 158 00:08:24,720 --> 00:08:27,760 Speaker 1: five and a half. As a terminal point, you know, Steve, 159 00:08:28,200 --> 00:08:31,040 Speaker 1: as I mentioned of the opening, the spent some eye 160 00:08:31,040 --> 00:08:35,160 Speaker 1: popping flows into into the fixed income ETF space at 161 00:08:35,240 --> 00:08:39,120 Speaker 1: Block black Rock ey Shares and really throughout the industry. 162 00:08:39,520 --> 00:08:42,240 Speaker 1: Where are you seeing most of the flows go into? What? 163 00:08:42,400 --> 00:08:45,120 Speaker 1: What is it? Sort of means you, when you look 164 00:08:45,120 --> 00:08:47,640 Speaker 1: at where the flows are going, is it primarily the 165 00:08:47,840 --> 00:08:51,040 Speaker 1: safety haven? You know that TLT, the Treasury's ETF, that 166 00:08:51,120 --> 00:08:53,640 Speaker 1: sort of thing, where you know, is our interest across 167 00:08:53,720 --> 00:08:56,840 Speaker 1: the whole portfolio? Well, it's It's interesting. If you would 168 00:08:56,880 --> 00:09:01,199 Speaker 1: have told me last January that the large just category 169 00:09:01,240 --> 00:09:04,760 Speaker 1: of inflows would have been treasuries, I would have probably disagreed, 170 00:09:04,800 --> 00:09:07,960 Speaker 1: given the you know, how hawkish everyone was in the 171 00:09:08,040 --> 00:09:10,480 Speaker 1: view that you know, rates were We're going to accelerate 172 00:09:10,960 --> 00:09:13,000 Speaker 1: quite a lot. But as it turns out for US anyway, 173 00:09:13,040 --> 00:09:15,160 Speaker 1: it was you know, we took in over one hundred 174 00:09:15,160 --> 00:09:18,000 Speaker 1: billion in the US one hundred and twenty five billion globally. 175 00:09:18,360 --> 00:09:21,640 Speaker 1: Of that one hundred billion, sixty five billion was in treasuries, 176 00:09:21,679 --> 00:09:23,679 Speaker 1: which was you know again, I think I think most 177 00:09:23,720 --> 00:09:26,679 Speaker 1: people would have been quite surprised that was followed by 178 00:09:26,720 --> 00:09:30,600 Speaker 1: investment grade multisector of municipals UM so Yes, to your point, 179 00:09:30,600 --> 00:09:33,280 Speaker 1: it was all high quality. I do think that was 180 00:09:33,320 --> 00:09:37,960 Speaker 1: a reflection of investors saying, these yields are attractive. I 181 00:09:38,000 --> 00:09:40,240 Speaker 1: can't call the top. I'm not going to try to 182 00:09:40,280 --> 00:09:42,880 Speaker 1: call the top. That's that's pretty tough to get, right, 183 00:09:43,200 --> 00:09:46,640 Speaker 1: so I'm going to start allocating, but you know, I'm 184 00:09:46,679 --> 00:09:49,520 Speaker 1: a little bit worried about where we're going here in 185 00:09:49,640 --> 00:09:52,360 Speaker 1: terms of do we tip into a recession? You know, 186 00:09:52,400 --> 00:09:55,199 Speaker 1: what do we what do we ultimately end up doing 187 00:09:55,240 --> 00:09:56,640 Speaker 1: as far as a land and go. So I'm going 188 00:09:56,640 --> 00:09:59,080 Speaker 1: to buy high quality. The part that helped that out 189 00:09:59,080 --> 00:10:00,600 Speaker 1: the most. If you think about at the front end 190 00:10:00,600 --> 00:10:02,760 Speaker 1: of the yield curve, you know, you have two year 191 00:10:02,800 --> 00:10:04,880 Speaker 1: notes that are now above four and a half percent, 192 00:10:04,960 --> 00:10:08,080 Speaker 1: and so it they didn't have to go down in 193 00:10:08,160 --> 00:10:11,520 Speaker 1: credit to get yield. They were seeing yieldsy haven't seen 194 00:10:11,559 --> 00:10:14,559 Speaker 1: them many many years that that trends persisted this year. 195 00:10:14,600 --> 00:10:17,920 Speaker 1: We're seeing high quality flows this year as well to 196 00:10:18,000 --> 00:10:20,880 Speaker 1: the flows sense to the HyG, the high yield ETF. 197 00:10:21,200 --> 00:10:24,679 Speaker 1: I'm guessing they track closer with risk sentiment in the 198 00:10:24,720 --> 00:10:26,680 Speaker 1: stock market or are you not seeing them there that 199 00:10:26,960 --> 00:10:29,559 Speaker 1: they're more of a risk on type of product. Yeah, 200 00:10:29,600 --> 00:10:33,960 Speaker 1: I agree with that, and particularly HyG has become very 201 00:10:34,160 --> 00:10:37,760 Speaker 1: entrenched in the you know, high yield ecosystem, and so 202 00:10:37,800 --> 00:10:40,560 Speaker 1: it does tend to react very quickly to sentiments. So 203 00:10:40,920 --> 00:10:42,960 Speaker 1: you know, when you have risk on, you'll you know, 204 00:10:43,000 --> 00:10:45,840 Speaker 1: you see equities rally, you'll probably see flows into HyG 205 00:10:45,960 --> 00:10:47,880 Speaker 1: When you have risk off, as you said, you'll probably 206 00:10:47,880 --> 00:10:50,360 Speaker 1: see the opposite, and it does happen to react quickly 207 00:10:50,360 --> 00:10:52,559 Speaker 1: in a large size. I want to ask you more 208 00:10:52,559 --> 00:10:55,480 Speaker 1: about your predictions for what you see for the bond 209 00:10:55,559 --> 00:10:58,280 Speaker 1: ETF space down the line. But but first you mentioned 210 00:10:58,280 --> 00:11:00,679 Speaker 1: the two year note. Um, it's above four and a 211 00:11:00,679 --> 00:11:03,280 Speaker 1: half percent. I'm wondering what you think the bond market 212 00:11:03,360 --> 00:11:05,679 Speaker 1: is telling us right now, given the rise and eels 213 00:11:05,679 --> 00:11:08,720 Speaker 1: that we've seen in recent days. Yeah, I think it 214 00:11:09,000 --> 00:11:13,200 Speaker 1: was this adjustment. The market had started to get to 215 00:11:13,280 --> 00:11:17,320 Speaker 1: a place where, Okay, the end is in sight, all 216 00:11:17,440 --> 00:11:20,080 Speaker 1: is going according to plan, and you know, we can 217 00:11:20,160 --> 00:11:22,360 Speaker 1: even start thinking about a FED pivot. You know, it 218 00:11:22,440 --> 00:11:26,040 Speaker 1: depends on what speaker, what day. But I think, you know, 219 00:11:26,120 --> 00:11:29,800 Speaker 1: the last speech by Powell sort of calmed the market 220 00:11:29,800 --> 00:11:31,360 Speaker 1: down and I think got them to a place where 221 00:11:31,360 --> 00:11:32,599 Speaker 1: it's like, Okay, I can see the light at the 222 00:11:32,679 --> 00:11:36,560 Speaker 1: end of the tunnel. This recent slew of data really 223 00:11:36,720 --> 00:11:40,000 Speaker 1: upended that a bit, where you saw strong employment numbers, 224 00:11:40,040 --> 00:11:43,920 Speaker 1: you know, really really outside the you know, the manufacturing 225 00:11:43,920 --> 00:11:47,760 Speaker 1: indicators PMI et cetera. Were strong, Inflation did not come down, 226 00:11:48,200 --> 00:11:51,120 Speaker 1: you know, as much as as as people had expected 227 00:11:51,200 --> 00:11:54,120 Speaker 1: or hope, and so what you're seeing the market is 228 00:11:54,160 --> 00:11:57,560 Speaker 1: just sort of pricing in, you know, combination of you know, 229 00:11:57,600 --> 00:12:01,120 Speaker 1: maybe an additional hike or you know, higher for longer, 230 00:12:01,120 --> 00:12:02,720 Speaker 1: if you will. And so I think it was just 231 00:12:02,800 --> 00:12:05,959 Speaker 1: that adjustment. We've seen this so remember I think last 232 00:12:06,040 --> 00:12:08,400 Speaker 1: year the peak was somewhere closer to four and a 233 00:12:08,440 --> 00:12:11,720 Speaker 1: half and so we've been on this journey before. We 234 00:12:11,760 --> 00:12:14,839 Speaker 1: may test at some point above four percent again, But 235 00:12:15,160 --> 00:12:17,560 Speaker 1: like I said, I don't think that we're going to 236 00:12:17,559 --> 00:12:21,280 Speaker 1: see yields jumped sharply higher. You may see them grinding 237 00:12:21,280 --> 00:12:23,000 Speaker 1: a little bit higher, but I think we're going to 238 00:12:23,040 --> 00:12:24,560 Speaker 1: be more or less in a range. It might be 239 00:12:24,559 --> 00:12:26,800 Speaker 1: a voliable one as people continue to price in and 240 00:12:26,840 --> 00:12:35,960 Speaker 1: price out what they what the Fed may do. Yeah, Steve, 241 00:12:36,000 --> 00:12:38,680 Speaker 1: you mentioned earlier that notion of you know, bonds being 242 00:12:38,760 --> 00:12:42,000 Speaker 1: that forty percent of the portfolio on a traditional sixty 243 00:12:42,120 --> 00:12:46,160 Speaker 1: forty portfolio. Last year was just one of those bad 244 00:12:46,240 --> 00:12:50,400 Speaker 1: years where that stock and bond correlation reversed. You know, 245 00:12:51,000 --> 00:12:53,920 Speaker 1: typically when you see stocks go up, you would expect 246 00:12:54,200 --> 00:12:57,439 Speaker 1: bonds to fall, yields to go up. As a result 247 00:12:57,840 --> 00:13:01,400 Speaker 1: last year, obviously we saw stocks and bonds fall together 248 00:13:01,920 --> 00:13:05,480 Speaker 1: and sort of eliminate that, you know, hedging aspect of 249 00:13:05,760 --> 00:13:08,920 Speaker 1: a bond in a in a sixty forty portfolio. What 250 00:13:09,000 --> 00:13:13,080 Speaker 1: do you think we need to happen to see happen 251 00:13:13,280 --> 00:13:17,360 Speaker 1: to get that correlation back to what everyone expects it 252 00:13:17,440 --> 00:13:19,240 Speaker 1: to be. I mean, is it a is it a 253 00:13:19,360 --> 00:13:23,040 Speaker 1: narrative shift, is it a sentiment shift? Or is it 254 00:13:23,080 --> 00:13:25,600 Speaker 1: really about the data and inflation normalizing? I mean, do 255 00:13:25,640 --> 00:13:27,640 Speaker 1: we really have to wait for two percent inflation to 256 00:13:27,679 --> 00:13:31,480 Speaker 1: see that old sort of trusted correlation re emerge. So 257 00:13:31,520 --> 00:13:33,920 Speaker 1: it's a combination of some of the things you mentioned. 258 00:13:33,920 --> 00:13:37,400 Speaker 1: So as long as the FED is being very hawkish, 259 00:13:37,480 --> 00:13:40,760 Speaker 1: I think that that sort of perpetuates what you just said. 260 00:13:40,800 --> 00:13:43,640 Speaker 1: So you'll go up, you have risk off, you have 261 00:13:43,640 --> 00:13:46,080 Speaker 1: equity sell offs, how you'll tell us or what have you. 262 00:13:46,520 --> 00:13:48,600 Speaker 1: I think when the market comes to believe that, okay, 263 00:13:49,040 --> 00:13:52,240 Speaker 1: we're we're reaching sort of a you know, a leveling 264 00:13:52,280 --> 00:13:54,880 Speaker 1: off place here. And I do think, you know, we 265 00:13:54,960 --> 00:13:57,480 Speaker 1: may be starting to see that with the olds, you know, 266 00:13:57,600 --> 00:13:59,720 Speaker 1: bumping up closer to four percent, And like I said, 267 00:13:59,720 --> 00:14:02,680 Speaker 1: I'm of the view that we will pounce around in 268 00:14:02,720 --> 00:14:06,840 Speaker 1: this range anyway, But I think investors will start seeing 269 00:14:06,880 --> 00:14:10,040 Speaker 1: that traditional behavior. So as an example, when you don't 270 00:14:10,080 --> 00:14:12,680 Speaker 1: have a hawkish speech in the market, you do tend 271 00:14:12,679 --> 00:14:15,720 Speaker 1: to see the traditional correlation. Where effequities are selling off, 272 00:14:15,760 --> 00:14:18,720 Speaker 1: you'll see yields trend lower. I think it was really 273 00:14:18,720 --> 00:14:20,960 Speaker 1: about getting to that level. I think we're almost there, 274 00:14:21,000 --> 00:14:23,120 Speaker 1: and I think at these levels there's a lot of 275 00:14:23,200 --> 00:14:27,400 Speaker 1: diversification value in yields right now. So you know, you 276 00:14:27,480 --> 00:14:29,680 Speaker 1: need to have a calming down of all the hawkish 277 00:14:29,960 --> 00:14:32,200 Speaker 1: speeches and all that stuff, But I think we're we're 278 00:14:32,240 --> 00:14:35,680 Speaker 1: getting there. The thing that Mike was referencing, I think 279 00:14:35,760 --> 00:14:37,320 Speaker 1: because I wrote it down, I liked what you said. 280 00:14:37,480 --> 00:14:39,520 Speaker 1: You said a lot of people are thinking, I'm going 281 00:14:39,560 --> 00:14:42,720 Speaker 1: to fix the forty part of the sixty forty, and 282 00:14:42,840 --> 00:14:46,040 Speaker 1: I think you guys are saying that advisor sixty forty 283 00:14:46,040 --> 00:14:49,280 Speaker 1: portfolios are under allocated to fixed income by nine percent, 284 00:14:49,480 --> 00:14:52,320 Speaker 1: so and now is a once in a many year 285 00:14:52,320 --> 00:14:54,920 Speaker 1: opportunity to rebalance portfolios. So maybe you can tell us 286 00:14:54,960 --> 00:14:57,760 Speaker 1: more about that. Yeah, it's been interesting. So if you 287 00:14:57,800 --> 00:15:00,680 Speaker 1: think about the last decade, we've had quantity steve easing, 288 00:15:01,240 --> 00:15:04,040 Speaker 1: we've had yields. You know, if you look at where 289 00:15:04,080 --> 00:15:06,640 Speaker 1: the ten year bottomed out, it was fifty basis points, 290 00:15:07,320 --> 00:15:09,720 Speaker 1: which is remarkable. The two year bottomed out somewhere in 291 00:15:09,760 --> 00:15:12,240 Speaker 1: the teens, you know, twelve or fifteen basis points. So 292 00:15:12,680 --> 00:15:16,200 Speaker 1: a lot of investors decided to you know, stay out 293 00:15:16,200 --> 00:15:18,200 Speaker 1: of the market, or you know, they had to take 294 00:15:18,200 --> 00:15:20,280 Speaker 1: on a lot of additional risk to get that yield. 295 00:15:20,320 --> 00:15:23,520 Speaker 1: So whether that was overweighting high yield in that traditional 296 00:15:23,560 --> 00:15:25,800 Speaker 1: part of the portfolio where maybe they would have preferred 297 00:15:26,080 --> 00:15:28,440 Speaker 1: higher quality assets but they had to have the income, 298 00:15:28,880 --> 00:15:33,040 Speaker 1: or things like alternatives and private credit, private equity, you know, 299 00:15:33,120 --> 00:15:37,040 Speaker 1: asset classes of those natures. Now investors are looking at 300 00:15:37,080 --> 00:15:40,440 Speaker 1: this market, the public fixed income markets, and realizing that 301 00:15:40,480 --> 00:15:43,960 Speaker 1: they can quote unquote fix their forty by de risking 302 00:15:44,000 --> 00:15:46,960 Speaker 1: it to varying degrees. So you don't have to be 303 00:15:47,760 --> 00:15:49,520 Speaker 1: you know, the majority in high yield to get a 304 00:15:49,520 --> 00:15:51,560 Speaker 1: certain yield target. You can allocate to the front end 305 00:15:51,600 --> 00:15:54,560 Speaker 1: of the treasury curve and get you know, yields that 306 00:15:54,640 --> 00:15:56,160 Speaker 1: you were you were seeing at some point the hig 307 00:15:56,200 --> 00:15:59,720 Speaker 1: yield markets. So it really is an opportunity to get 308 00:15:59,720 --> 00:16:02,640 Speaker 1: back to what that forty was supposed to do, which 309 00:16:02,760 --> 00:16:05,760 Speaker 1: is diversify your risk assets. And then you think about 310 00:16:05,760 --> 00:16:08,440 Speaker 1: its simple. Okay, I have the SMP five hundred, what 311 00:16:08,480 --> 00:16:11,200 Speaker 1: do I want to hold against it? A very simple, 312 00:16:11,360 --> 00:16:13,720 Speaker 1: you know world would be I'll hold long data treasuries 313 00:16:13,760 --> 00:16:16,360 Speaker 1: against it. Mike for the reason you said, which was, 314 00:16:16,640 --> 00:16:19,400 Speaker 1: I know that if the equity market sells off, probably 315 00:16:19,440 --> 00:16:22,240 Speaker 1: long treasuries will rally. But investors are being a lot 316 00:16:22,240 --> 00:16:25,640 Speaker 1: more intentional than that. They are looking at building out 317 00:16:25,680 --> 00:16:29,720 Speaker 1: that forty in a much more deliberate way. So, yes, 318 00:16:29,760 --> 00:16:33,320 Speaker 1: allocating building blocks to treasuries investment grade, having some bit 319 00:16:33,360 --> 00:16:36,600 Speaker 1: of high yield. And I think what we're advocating is 320 00:16:36,640 --> 00:16:40,000 Speaker 1: to get away from this whole active passive paradigm, which 321 00:16:40,000 --> 00:16:41,840 Speaker 1: we think is really just you know, kind of an 322 00:16:41,920 --> 00:16:45,640 Speaker 1: archaic construct. We think really it's both. And so we're 323 00:16:45,720 --> 00:16:51,520 Speaker 1: encouraging investors to use bondy tfs for that core diversification purpose. 324 00:16:51,760 --> 00:16:54,080 Speaker 1: And why is that Well, because you know what they're 325 00:16:54,120 --> 00:16:55,920 Speaker 1: going to do. You could see what the holdings are. 326 00:16:55,920 --> 00:16:58,600 Speaker 1: They're transparent, you know what the strategy is. Because they're 327 00:16:58,600 --> 00:17:02,880 Speaker 1: following an index. Use that predictability as the diversifying part 328 00:17:02,880 --> 00:17:06,320 Speaker 1: of your portfolio. Okay, whether that's treasuries, investment grade, some 329 00:17:06,359 --> 00:17:09,320 Speaker 1: combination of both, and then you can use an active 330 00:17:09,359 --> 00:17:13,000 Speaker 1: manager to get that extra kick in your forty as well. 331 00:17:13,080 --> 00:17:16,919 Speaker 1: So it's not active versus pass if it's both. And 332 00:17:17,040 --> 00:17:19,280 Speaker 1: obviously you know each investor will have to decide what 333 00:17:19,320 --> 00:17:21,520 Speaker 1: that mix looks like. But we do believe that both 334 00:17:21,560 --> 00:17:23,439 Speaker 1: can play a role in that forty and get you 335 00:17:23,480 --> 00:17:26,200 Speaker 1: to a much more robust place than you were before. 336 00:17:27,000 --> 00:17:30,119 Speaker 1: I've never heard somebody argue that before that it should 337 00:17:30,119 --> 00:17:33,280 Speaker 1: be both. It should be both. Yeah, absolutely, I mean 338 00:17:33,320 --> 00:17:35,040 Speaker 1: it's a great time to do it because you know, 339 00:17:35,200 --> 00:17:37,359 Speaker 1: like like you said, it's the first time in you know, 340 00:17:37,440 --> 00:17:39,800 Speaker 1: ten years, done a dozen years that you've been able 341 00:17:39,800 --> 00:17:42,200 Speaker 1: to get these yields and d risk at the same time, 342 00:17:42,200 --> 00:17:45,600 Speaker 1: which is pretty remarkable, you know, Steve. It's it's interesting 343 00:17:45,600 --> 00:17:47,600 Speaker 1: when I think and correct me if I'm wrong and 344 00:17:47,640 --> 00:17:50,040 Speaker 1: how I'm thinking about this. But what I think of 345 00:17:50,119 --> 00:17:53,280 Speaker 1: sort of the audience or the user base for say 346 00:17:53,359 --> 00:17:56,560 Speaker 1: equity ETFs. I think of maybe a lot of self 347 00:17:56,600 --> 00:18:02,399 Speaker 1: directed retail investors, you know, average sort of fuxing around 348 00:18:02,440 --> 00:18:06,200 Speaker 1: with their retirement or just their you know, personal trading account, 349 00:18:06,640 --> 00:18:11,480 Speaker 1: and you know, you're your big equity ETFs are pretty 350 00:18:11,520 --> 00:18:14,560 Speaker 1: easy to understand for that audience. You know, you buy 351 00:18:14,760 --> 00:18:17,800 Speaker 1: the Russell two thousand, you know, buy all the small 352 00:18:17,800 --> 00:18:21,560 Speaker 1: cap stocks by Chinese, large caps, by you know, whatever 353 00:18:21,600 --> 00:18:23,800 Speaker 1: it is. You know. And again I could be wrong 354 00:18:23,840 --> 00:18:27,440 Speaker 1: about this, but I don't see that cohort of investors 355 00:18:27,480 --> 00:18:31,480 Speaker 1: really knowing what they're doing. Uh. As well with fixed 356 00:18:31,520 --> 00:18:35,359 Speaker 1: income ETFs, and my impression is that the user base 357 00:18:35,520 --> 00:18:39,320 Speaker 1: is different that they're it's more of a professional user base. 358 00:18:39,560 --> 00:18:43,640 Speaker 1: Even active bond fund managers a lot of times will park, 359 00:18:44,520 --> 00:18:47,800 Speaker 1: you know, some some inflows into ETFs until they can 360 00:18:47,800 --> 00:18:50,359 Speaker 1: pick out the bonds they want talk to us about. 361 00:18:50,400 --> 00:18:52,719 Speaker 1: That sort of difference is a might write in that thing. 362 00:18:52,840 --> 00:18:56,120 Speaker 1: You know. It's kind of a different user base between 363 00:18:56,840 --> 00:18:59,800 Speaker 1: the different asset classes and ETFs. Well, actually, yeah, I 364 00:18:59,840 --> 00:19:03,440 Speaker 1: think it's um it's a pretty diversified investor base. It's 365 00:19:03,440 --> 00:19:06,640 Speaker 1: pretty broad, and so we we actually do see direct 366 00:19:07,040 --> 00:19:09,760 Speaker 1: flows into fixed income ets now, they do tend to 367 00:19:09,800 --> 00:19:13,720 Speaker 1: be the ones that people know about. Like agg those 368 00:19:13,720 --> 00:19:16,400 Speaker 1: folks will will know that, Okay, that's the bond market. 369 00:19:16,440 --> 00:19:18,159 Speaker 1: I'm just gonna buy that. I'm not an expert. I 370 00:19:18,160 --> 00:19:20,360 Speaker 1: don't want to you know, try to try to get 371 00:19:20,400 --> 00:19:23,240 Speaker 1: too too smart about it or you know, get too granular. 372 00:19:23,280 --> 00:19:25,440 Speaker 1: I'll just buy the bond marketing. So you'll you'll tend 373 00:19:25,440 --> 00:19:28,080 Speaker 1: to see that with the direct investors, You're right that 374 00:19:28,240 --> 00:19:30,720 Speaker 1: a lot of the you know, if you will, power 375 00:19:30,840 --> 00:19:36,000 Speaker 1: users tend to be these institutional investors, active managers, insurance companies, pensions, 376 00:19:36,000 --> 00:19:38,680 Speaker 1: et cetera. But then there is a very large part 377 00:19:38,760 --> 00:19:42,600 Speaker 1: of the you know, wealth client base, the advisor base 378 00:19:42,840 --> 00:19:45,920 Speaker 1: um that uses bond ets through things like models. Right, 379 00:19:45,960 --> 00:19:48,960 Speaker 1: So models are these recipes for here's how you build 380 00:19:48,960 --> 00:19:52,800 Speaker 1: a portfolio. More and more firms are going that direction 381 00:19:52,880 --> 00:19:56,440 Speaker 1: where instead of saying, hey, you know, buy this set 382 00:19:56,440 --> 00:19:59,000 Speaker 1: of equity ets and then you know, oh for your bonds, 383 00:19:59,080 --> 00:20:01,399 Speaker 1: just go out and you know, build some ladder using 384 00:20:01,600 --> 00:20:06,000 Speaker 1: municipal bonds that you like, they're advocating more for here's 385 00:20:06,040 --> 00:20:08,800 Speaker 1: what your portfolio should look like. On the equity side, 386 00:20:09,040 --> 00:20:11,560 Speaker 1: here's the recipe for that. It's these ETFs. On the 387 00:20:11,640 --> 00:20:14,200 Speaker 1: fixed income side, you can use a combination of these 388 00:20:14,240 --> 00:20:19,040 Speaker 1: ETFs in the model portfolios are a really fast growing business, 389 00:20:19,040 --> 00:20:21,080 Speaker 1: and more and more investors and for that matter of 390 00:20:21,119 --> 00:20:24,439 Speaker 1: advisors like it as well because it allows them to 391 00:20:24,560 --> 00:20:27,040 Speaker 1: free up their time to focus on things like you know, 392 00:20:27,119 --> 00:20:29,199 Speaker 1: tax planning, things like that, and so we're starting to 393 00:20:29,240 --> 00:20:32,120 Speaker 1: see that a lot. So that I think is the 394 00:20:32,160 --> 00:20:35,280 Speaker 1: main you know, growth area, but we're seeing a ton 395 00:20:35,320 --> 00:20:37,800 Speaker 1: of growth in the institutional side as well. To your point, 396 00:20:38,119 --> 00:20:40,480 Speaker 1: And the last thing I would say about it is 397 00:20:40,920 --> 00:20:44,280 Speaker 1: your traditional bond pickers. Some people really love that, right, 398 00:20:44,800 --> 00:20:47,000 Speaker 1: It's it's interesting and fun for them to do it. 399 00:20:47,280 --> 00:20:49,880 Speaker 1: But even they've come to realize that if I am 400 00:20:49,880 --> 00:20:52,320 Speaker 1: I bond ladder person, I can go ahead and do 401 00:20:52,359 --> 00:20:54,919 Speaker 1: that for my client, but to get some diversification around that, 402 00:20:55,359 --> 00:20:58,000 Speaker 1: I can buy something like you know, our eye bonds, 403 00:20:58,040 --> 00:21:00,640 Speaker 1: which is it is a ladder, but you have within 404 00:21:00,760 --> 00:21:03,400 Speaker 1: a given run you can have several hundred ponds. So 405 00:21:03,800 --> 00:21:06,760 Speaker 1: even even the folks who really enjoy laddering as an example, 406 00:21:06,760 --> 00:21:09,560 Speaker 1: are starting to use ETFs alongside of that for for 407 00:21:09,680 --> 00:21:13,080 Speaker 1: liquidity and diversification. So we talked a little bit about 408 00:21:13,160 --> 00:21:16,320 Speaker 1: where you see the flows going. Where you said the 409 00:21:16,320 --> 00:21:19,199 Speaker 1: majority is actually going towards treasuries. Is that also what 410 00:21:19,240 --> 00:21:23,479 Speaker 1: you would recommend how people should be positioning right now? Well, 411 00:21:23,520 --> 00:21:25,600 Speaker 1: I think the investors have to have a view, So 412 00:21:25,760 --> 00:21:30,359 Speaker 1: for investors who are pretty unsure about you know, whether 413 00:21:30,400 --> 00:21:33,320 Speaker 1: we're going to have a recession or when that might happen. 414 00:21:33,560 --> 00:21:35,720 Speaker 1: You know, you can get great yield right in these 415 00:21:35,760 --> 00:21:38,240 Speaker 1: higher quality exposures, whether it's whether it's the front of 416 00:21:38,280 --> 00:21:40,399 Speaker 1: the treasury curve or investment grad or what have you. You 417 00:21:40,280 --> 00:21:43,560 Speaker 1: You don't have to invest in something like high yield. However, 418 00:21:43,840 --> 00:21:47,000 Speaker 1: we do still have investors who are allocating a certain portion. Again, 419 00:21:47,040 --> 00:21:50,600 Speaker 1: think about the model portfolio as the recipe, if you will. 420 00:21:50,760 --> 00:21:52,800 Speaker 1: There's going to be an element in that, and investors 421 00:21:52,800 --> 00:21:55,639 Speaker 1: can make up their minds. If they think that the 422 00:21:56,280 --> 00:21:58,359 Speaker 1: you know, the chance of a recession for example, is 423 00:21:59,560 --> 00:22:02,600 Speaker 1: over stated, then how YO might look attractive right now? 424 00:22:02,720 --> 00:22:04,560 Speaker 1: You know. So if you look at where default rates 425 00:22:04,920 --> 00:22:08,280 Speaker 1: are implied, it's somewhere in the six percent range, which 426 00:22:08,320 --> 00:22:10,480 Speaker 1: isn't super high. I mean a lot of times during 427 00:22:10,520 --> 00:22:13,959 Speaker 1: more some of these bigger selloffs that it's approached double digits. 428 00:22:14,000 --> 00:22:17,600 Speaker 1: But you know, traditionally the realized experience of defaults has 429 00:22:17,600 --> 00:22:19,720 Speaker 1: been around, you know, sort of the high three low 430 00:22:19,760 --> 00:22:22,959 Speaker 1: four percent range. So for investors who have that view 431 00:22:23,040 --> 00:22:26,080 Speaker 1: that well, I either think a recession isn't coming for 432 00:22:26,119 --> 00:22:27,840 Speaker 1: a while or I think it could be a lot 433 00:22:27,920 --> 00:22:31,000 Speaker 1: more shallow than what people are worried about, something like 434 00:22:31,040 --> 00:22:33,760 Speaker 1: how YO could could also look attractive. But we're seeing 435 00:22:33,800 --> 00:22:37,080 Speaker 1: people vote with in terms of flows. We're seeing still 436 00:22:37,119 --> 00:22:39,800 Speaker 1: the majority this year going into the higher quality segments. 437 00:22:40,440 --> 00:22:43,560 Speaker 1: You know, you mentioned that how high rates are at 438 00:22:43,560 --> 00:22:46,160 Speaker 1: that front end of the treasury curve. I mean, every 439 00:22:46,160 --> 00:22:48,040 Speaker 1: time I look at it my eyes, you know, I 440 00:22:48,160 --> 00:22:50,320 Speaker 1: take my glasses off and wipe them off and double 441 00:22:50,400 --> 00:22:52,920 Speaker 1: check that I'm really seeing a three month T bill 442 00:22:53,040 --> 00:22:56,600 Speaker 1: yield at foot nine percent whatever it's. But maybe you 443 00:22:56,600 --> 00:22:59,600 Speaker 1: also need new glasses. I might need new glasses too, 444 00:23:00,640 --> 00:23:04,200 Speaker 1: But I can't help. But wonder if you know, we're 445 00:23:04,240 --> 00:23:08,080 Speaker 1: back into the realm of straordinary measures, you know, to 446 00:23:08,080 --> 00:23:11,359 Speaker 1: to get around the debt ceiling. Is that impacting the 447 00:23:11,440 --> 00:23:14,000 Speaker 1: short end yet? Concerns about the debt ceiling and a 448 00:23:14,000 --> 00:23:17,239 Speaker 1: potential default and if not, will it you know, how 449 00:23:17,320 --> 00:23:20,560 Speaker 1: do how do you see that whole issue playing out 450 00:23:20,680 --> 00:23:24,240 Speaker 1: this year? Um? And what it means for fixed income? Well, 451 00:23:24,240 --> 00:23:27,480 Speaker 1: we've we've seen this movie before right where it has 452 00:23:27,520 --> 00:23:30,760 Speaker 1: happened where we were actually downgraded and everything. But um, 453 00:23:30,800 --> 00:23:33,680 Speaker 1: I don't it's not It's there is a little bit 454 00:23:33,720 --> 00:23:35,679 Speaker 1: of it that's in there if you look at you know, 455 00:23:35,760 --> 00:23:38,159 Speaker 1: for example, credit default swaps. I haven't looked at the 456 00:23:38,240 --> 00:23:40,159 Speaker 1: levels lately, but there was there was sort of some 457 00:23:40,560 --> 00:23:43,440 Speaker 1: of that risk being you know, slightly priced. I think 458 00:23:43,440 --> 00:23:47,440 Speaker 1: as time goes on, that concern could come forward much more, 459 00:23:47,760 --> 00:23:49,760 Speaker 1: you know, as as we had you know, towards the 460 00:23:49,840 --> 00:23:52,440 Speaker 1: summer um, which which is kind of a critical time. 461 00:23:52,480 --> 00:23:55,680 Speaker 1: So I would say it's not dramatically impacting the front 462 00:23:55,720 --> 00:23:58,040 Speaker 1: end yet, could it sure could start creating a lot 463 00:23:58,080 --> 00:24:00,440 Speaker 1: of concern um as we as we start moving towards 464 00:24:00,480 --> 00:24:03,159 Speaker 1: the summer. And then I promised I would ask you 465 00:24:03,160 --> 00:24:06,520 Speaker 1: about your long, long, long term views. And I think 466 00:24:06,560 --> 00:24:10,560 Speaker 1: you guys are seeing are predicting that bond ETF assets 467 00:24:11,119 --> 00:24:14,120 Speaker 1: will go from about one point eight trillion right now 468 00:24:14,160 --> 00:24:17,040 Speaker 1: to five trillion by twenty thirty, and I wanted to 469 00:24:17,080 --> 00:24:19,600 Speaker 1: ask you to speak about that too. You know, this 470 00:24:19,680 --> 00:24:23,320 Speaker 1: is something that we believe is going to happen, and 471 00:24:23,400 --> 00:24:25,800 Speaker 1: I think there are a number of drivers behind that, 472 00:24:25,960 --> 00:24:29,920 Speaker 1: and it before last year we also had that conviction. 473 00:24:29,960 --> 00:24:31,640 Speaker 1: So I think we originally came out with a five 474 00:24:31,760 --> 00:24:35,359 Speaker 1: trillion even before some of the astonishing flows that we 475 00:24:35,400 --> 00:24:37,520 Speaker 1: saw last year, and there are a number of trends 476 00:24:37,600 --> 00:24:39,800 Speaker 1: driving that. You know, I've mentioned a few of them already. 477 00:24:40,200 --> 00:24:44,159 Speaker 1: You know, one would be, you know, this growing institutional adoption. 478 00:24:44,760 --> 00:24:48,520 Speaker 1: So we talked about how you know, before an active 479 00:24:48,560 --> 00:24:51,920 Speaker 1: fixed income manager, as an example, would probably not touch 480 00:24:51,960 --> 00:24:54,240 Speaker 1: one of these products because they viewed it as well, 481 00:24:54,280 --> 00:24:56,600 Speaker 1: that's a passive product, I'm an active manager, I'm a 482 00:24:56,640 --> 00:25:01,199 Speaker 1: bond picker, etc. We have moved has that in our 483 00:25:01,240 --> 00:25:04,520 Speaker 1: view where you have active managers using these products just 484 00:25:04,600 --> 00:25:08,560 Speaker 1: as tools for active management, which is pretty remarkable. And 485 00:25:08,600 --> 00:25:13,320 Speaker 1: so nine of the ten largest active bond managers do 486 00:25:13,560 --> 00:25:16,120 Speaker 1: use I shares fixed income ETFs and they use them 487 00:25:16,160 --> 00:25:19,640 Speaker 1: for active management tools. So that's that's a pretty interesting trend. 488 00:25:19,680 --> 00:25:22,960 Speaker 1: And again we're seeing insurance companies, pensions, all of these 489 00:25:23,040 --> 00:25:28,199 Speaker 1: larger institutional clients really embraced the products. COVID accelerated that 490 00:25:28,280 --> 00:25:32,040 Speaker 1: because liquidity issues you're experiencing in the underlying market. Last 491 00:25:32,119 --> 00:25:35,840 Speaker 1: year was a further accelerant on that trend. Another long 492 00:25:35,960 --> 00:25:38,679 Speaker 1: term trend that we see that's been talked about a 493 00:25:38,680 --> 00:25:42,160 Speaker 1: lot is just this idea of the bond market finally modernizing. 494 00:25:42,520 --> 00:25:45,480 Speaker 1: Some people laugh out loud when you use the term 495 00:25:45,520 --> 00:25:48,960 Speaker 1: modernizing and bond market in the same sentence, because it's 496 00:25:48,960 --> 00:25:52,000 Speaker 1: still not what we would call that modern compared to, 497 00:25:52,440 --> 00:25:55,600 Speaker 1: you know, for example, the equity markets. But we do 498 00:25:55,680 --> 00:25:59,360 Speaker 1: think that the presence of fixed income ETFs and their 499 00:25:59,359 --> 00:26:04,400 Speaker 1: infrastructure has really kicked the bond market into high gear 500 00:26:04,440 --> 00:26:07,040 Speaker 1: in terms of modernizing. So a lot of the things 501 00:26:07,040 --> 00:26:10,000 Speaker 1: that you see today in terms of activity, you know, 502 00:26:10,280 --> 00:26:14,119 Speaker 1: call it portfolio traits, which are large bond basket trades 503 00:26:14,200 --> 00:26:17,760 Speaker 1: that are priced and traded simultaneously. That's not possible without 504 00:26:17,840 --> 00:26:20,639 Speaker 1: bond ETFs because they're the hedge for that and the 505 00:26:21,480 --> 00:26:26,560 Speaker 1: plumbing around that. So the creation redemption mechanism is what 506 00:26:26,720 --> 00:26:29,800 Speaker 1: brings that to life. It allows the dealers to move 507 00:26:30,000 --> 00:26:33,840 Speaker 1: large blocks of bonds to and from the exchange into 508 00:26:33,840 --> 00:26:36,040 Speaker 1: the over the counter market, and so that's a very 509 00:26:36,080 --> 00:26:39,520 Speaker 1: powerful innovation. I think. The other part of that is 510 00:26:39,600 --> 00:26:43,520 Speaker 1: just pricing pricing, something that everyone sort of took for 511 00:26:43,680 --> 00:26:47,480 Speaker 1: granted for many years. It was something that index pricing 512 00:26:47,520 --> 00:26:50,159 Speaker 1: services did not A lot of thought was given to 513 00:26:50,240 --> 00:26:54,560 Speaker 1: a butt. Because of this acceleration of these large block 514 00:26:54,600 --> 00:26:58,359 Speaker 1: traits of bonds in conjunction with ETFs, it's become not 515 00:26:58,400 --> 00:27:00,880 Speaker 1: only important and necessary to be able to price large 516 00:27:00,960 --> 00:27:03,480 Speaker 1: numbers of bonds and price them quickly. So now you 517 00:27:03,520 --> 00:27:07,040 Speaker 1: have things like algorithmic pricing in credit, which is which 518 00:27:07,080 --> 00:27:10,439 Speaker 1: is pretty astonishing. I think further developments will be you know, 519 00:27:10,760 --> 00:27:14,600 Speaker 1: all to all trading. You're seeing the market structure itself change. 520 00:27:14,680 --> 00:27:18,080 Speaker 1: And we think all of these things were really catalyzed 521 00:27:18,119 --> 00:27:21,600 Speaker 1: by bondytfs and just the desire by investors to use 522 00:27:21,640 --> 00:27:24,479 Speaker 1: these products, but also not only directly, but to use 523 00:27:24,520 --> 00:27:26,720 Speaker 1: them as tools for some of the other things we 524 00:27:26,840 --> 00:27:30,359 Speaker 1: just talked about. The way advisors and you know and 525 00:27:30,400 --> 00:27:34,159 Speaker 1: direct investors are using bondyts to build portfolios. We think 526 00:27:34,240 --> 00:27:37,879 Speaker 1: that's only going to accelerate this idea of using transparent 527 00:27:37,880 --> 00:27:40,600 Speaker 1: building blocks for your forty that's going to continue. And 528 00:27:40,680 --> 00:27:44,399 Speaker 1: then lastly, just we'll continue to see innovation in the 529 00:27:44,480 --> 00:27:47,560 Speaker 1: number of offerings, the number and type of bondy TF 530 00:27:47,560 --> 00:27:50,000 Speaker 1: offerings over time. So those are kind of the four 531 00:27:50,040 --> 00:27:53,080 Speaker 1: long term drivers. Like I said, we were already growing 532 00:27:53,119 --> 00:27:56,560 Speaker 1: pretty rapidly double digit growth every single year. I think 533 00:27:56,600 --> 00:27:59,600 Speaker 1: COVID accelerated that, and then the yield spike of last 534 00:27:59,680 --> 00:28:02,720 Speaker 1: year for they're accelerated, so we're pretty confident in that 535 00:28:02,760 --> 00:28:06,879 Speaker 1: five trillion dollar prediction. We're almost we're approaching two trillion today, 536 00:28:06,920 --> 00:28:09,600 Speaker 1: and honestly, if it wouldn't have been for this yield 537 00:28:09,640 --> 00:28:13,679 Speaker 1: chock which caused the values of fixed income assets to 538 00:28:13,680 --> 00:28:16,520 Speaker 1: go down, we probably would have already crossed two trillions. 539 00:28:16,640 --> 00:28:21,320 Speaker 1: Does getting to that five trillion imply a shrinkage in 540 00:28:21,480 --> 00:28:25,719 Speaker 1: AUM in traditional bond mutual funds? You know, that's up 541 00:28:25,720 --> 00:28:28,560 Speaker 1: for debate. We think there will probably be a role 542 00:28:28,800 --> 00:28:31,919 Speaker 1: for different types of rappers, depending on what investors like. 543 00:28:32,480 --> 00:28:35,760 Speaker 1: There's certainly you know, you've seen a migration by certain 544 00:28:35,800 --> 00:28:39,400 Speaker 1: types of investors from mutual funds to ETFs. You've seen 545 00:28:39,560 --> 00:28:42,320 Speaker 1: a lot in equities, the same thing starting to happen 546 00:28:42,320 --> 00:28:45,120 Speaker 1: in the bond market, which explains why you're seeing more 547 00:28:45,160 --> 00:28:49,520 Speaker 1: and more traditional active managers offering ETFs because they know 548 00:28:49,640 --> 00:28:51,640 Speaker 1: that a certain segment of the investor base wants it. 549 00:28:52,160 --> 00:28:54,760 Speaker 1: So I think ourgue is we want to give clients 550 00:28:54,800 --> 00:28:57,120 Speaker 1: the exposure that they want in the wrapper that works 551 00:28:57,120 --> 00:29:00,800 Speaker 1: for them. Some people don't really view the TF as 552 00:29:00,880 --> 00:29:02,760 Speaker 1: something that they need because well, I'm not going to 553 00:29:02,800 --> 00:29:04,800 Speaker 1: trade every day, I'm not going to look at it 554 00:29:04,840 --> 00:29:07,400 Speaker 1: every day. It's not that big of a concern. But 555 00:29:07,520 --> 00:29:10,680 Speaker 1: we talked about these model investors. They very much want 556 00:29:10,760 --> 00:29:13,320 Speaker 1: ETFs as part of that. So I think over time 557 00:29:13,400 --> 00:29:15,880 Speaker 1: there will be some sort of an equilibrium, but I 558 00:29:15,880 --> 00:29:17,840 Speaker 1: think we're still in the midst of a migration. But 559 00:29:17,920 --> 00:29:22,320 Speaker 1: I do think will happen is that you will see investors, 560 00:29:22,400 --> 00:29:26,320 Speaker 1: more and more investors using bond ETFs instead of just 561 00:29:26,440 --> 00:29:29,120 Speaker 1: going out and buying bonds. Right. So, as an example, 562 00:29:29,160 --> 00:29:31,920 Speaker 1: if I'm an active manager, you know, instead of going out, 563 00:29:32,120 --> 00:29:33,840 Speaker 1: I want to start a new strategy. Instead of going 564 00:29:33,840 --> 00:29:38,040 Speaker 1: out and buying hundreds or more bonds. To implement that strategy, 565 00:29:38,120 --> 00:29:41,320 Speaker 1: I may start with a series of bond ETFs and 566 00:29:41,360 --> 00:29:46,320 Speaker 1: then I can put my higher conviction bets into individual 567 00:29:46,400 --> 00:29:50,000 Speaker 1: bonds or other positions. Right, So, recognizing that there's always 568 00:29:50,000 --> 00:29:52,960 Speaker 1: a core of a portfolio that can easily be accomplished 569 00:29:53,000 --> 00:29:55,280 Speaker 1: through a low cost BONDYTF, and then you can add 570 00:29:55,320 --> 00:30:12,360 Speaker 1: value around that. Steve, I'm gonna put you on the 571 00:30:12,400 --> 00:30:15,080 Speaker 1: spot with one final question here before we get to 572 00:30:15,120 --> 00:30:17,320 Speaker 1: the crazy things. I'm looking at the ten year treasury 573 00:30:17,400 --> 00:30:21,240 Speaker 1: yield now three point nine three about if we're in 574 00:30:21,320 --> 00:30:23,720 Speaker 1: a fast word to the end of twenty twenty three, 575 00:30:23,720 --> 00:30:26,040 Speaker 1: and I throw out a numbers, say three point five 576 00:30:26,360 --> 00:30:28,440 Speaker 1: in the ten year. You're taking the over the under 577 00:30:28,480 --> 00:30:31,960 Speaker 1: on that, and show your math. Tell me why I'm 578 00:30:32,000 --> 00:30:37,000 Speaker 1: going to I'm gonna take the over on that, but 579 00:30:37,120 --> 00:30:39,360 Speaker 1: just slightly. If you were, if you would have rephrased 580 00:30:39,360 --> 00:30:41,240 Speaker 1: that differently, where do you think will in? I would 581 00:30:41,240 --> 00:30:44,400 Speaker 1: have said probably three fifty. So I think you'll see 582 00:30:44,400 --> 00:30:46,520 Speaker 1: these bumps along the way where you know, you just 583 00:30:46,640 --> 00:30:49,200 Speaker 1: keep testing. You know, you'll tire because I think people 584 00:30:49,240 --> 00:30:51,960 Speaker 1: are still very nervous about the FED and inflation. But 585 00:30:52,000 --> 00:30:55,240 Speaker 1: that's all going to reconcile, hopefully by December. We'll have 586 00:30:55,280 --> 00:30:57,920 Speaker 1: to call you next year and check on your prediction. 587 00:30:59,400 --> 00:31:01,760 Speaker 1: That'll be interesting. Let's hope that I'm not off by 588 00:31:01,760 --> 00:31:06,560 Speaker 1: an entire handle or something. But I you know, I agree, 589 00:31:06,600 --> 00:31:09,880 Speaker 1: I don't. I don't think we'll see, you know, a 590 00:31:10,040 --> 00:31:13,200 Speaker 1: collapse and yields to anything like what we were used to. 591 00:31:13,320 --> 00:31:15,640 Speaker 1: But I you know, to your point, it is hard 592 00:31:15,680 --> 00:31:18,360 Speaker 1: to see them going, you know, continue this sort of 593 00:31:18,960 --> 00:31:21,600 Speaker 1: march higher throughout the rest of the years. So all right, 594 00:31:21,600 --> 00:31:24,480 Speaker 1: I'll I think I'm with you. I'll take slightly higher too. 595 00:31:25,040 --> 00:31:27,440 Speaker 1: What do you think Phildana, Is this the time where 596 00:31:27,440 --> 00:31:32,640 Speaker 1: I admit I hate the bond market? I hate it? 597 00:31:33,160 --> 00:31:35,120 Speaker 1: Why do you hate the bond market? Oh my gosh, 598 00:31:35,120 --> 00:31:37,880 Speaker 1: because it's so contintuitive, like you have to flip everything 599 00:31:37,880 --> 00:31:40,280 Speaker 1: in your head before you can even think about what's 600 00:31:40,280 --> 00:31:45,120 Speaker 1: going on. You like this, the nice, simple, easy to 601 00:31:45,200 --> 00:31:48,800 Speaker 1: understand Market's like crypto better. Yes, exactly exactly. I was 602 00:31:48,840 --> 00:31:54,720 Speaker 1: gonna say, how do you reconcile that? In my mind? 603 00:31:54,760 --> 00:31:59,360 Speaker 1: It's much more straightforward. I love the crypto market. All right, Well, 604 00:32:00,360 --> 00:32:02,640 Speaker 1: Steve is great, great to get here, your insights here, 605 00:32:02,680 --> 00:32:05,840 Speaker 1: but we can't quite let you go just yet. We've 606 00:32:05,880 --> 00:32:09,719 Speaker 1: got attrition here on this podcast. Uh Thebata tell him 607 00:32:09,760 --> 00:32:11,600 Speaker 1: what it is. We are going to play the craziest 608 00:32:11,600 --> 00:32:15,120 Speaker 1: things you you saw in the market this week. I'll 609 00:32:15,120 --> 00:32:17,520 Speaker 1: go first for once. For once, I'll go I'll go first. 610 00:32:18,080 --> 00:32:20,680 Speaker 1: I was I was hoping to go first. Actually all right, 611 00:32:20,680 --> 00:32:22,520 Speaker 1: well you go first. Well, because I haven't update for 612 00:32:22,600 --> 00:32:25,959 Speaker 1: something that you I don't know, maybe it was like 613 00:32:25,960 --> 00:32:29,240 Speaker 1: five or six episodes ago. Um, I think you made 614 00:32:29,320 --> 00:32:33,440 Speaker 1: me guess on an iPhone, like an original two thousand 615 00:32:33,440 --> 00:32:35,719 Speaker 1: and seven iPhone, how much it was going to go 616 00:32:35,840 --> 00:32:39,440 Speaker 1: for and right, and the final auction took place. I 617 00:32:39,440 --> 00:32:43,480 Speaker 1: don't know if you saw this, Oh, I know it 618 00:32:43,600 --> 00:32:48,400 Speaker 1: missed it thirty thousand dollars. No, it's way more. It 619 00:32:48,520 --> 00:32:52,200 Speaker 1: sold for sixty three thousand dollars. Wow. Yeah, it's like 620 00:32:52,200 --> 00:32:56,360 Speaker 1: a vintage. I have pictures. Can we call it vintage? Yes, 621 00:32:56,480 --> 00:32:59,040 Speaker 1: it's in its box with the with the plastic wrap 622 00:32:59,160 --> 00:33:03,720 Speaker 1: and everything. Yeah, sixty three thousand dollars. If that's vintage, 623 00:33:03,800 --> 00:33:06,240 Speaker 1: I'm a I'm a full on antique at this point. Well, 624 00:33:06,600 --> 00:33:08,720 Speaker 1: I may have one of those. Uh, I may have 625 00:33:08,760 --> 00:33:12,560 Speaker 1: one of those my garage somewhere. Now you have sixty 626 00:33:12,640 --> 00:33:17,120 Speaker 1: three thousand dollars investment, put it up for auction, but 627 00:33:17,200 --> 00:33:21,240 Speaker 1: I have one. I have another crazy thing. Okay, my 628 00:33:21,280 --> 00:33:24,440 Speaker 1: weirdest thing is Starbucks has this new drink. Did you 629 00:33:24,480 --> 00:33:28,360 Speaker 1: see this? No? No, I can't believe it because my 630 00:33:28,440 --> 00:33:31,720 Speaker 1: kids have met make me driving the Starbucks at least 631 00:33:31,840 --> 00:33:34,000 Speaker 1: twice a week. Well, you're gonna be driving them to 632 00:33:34,040 --> 00:33:40,920 Speaker 1: get coffee with olive oil. They're literally just putting olive 633 00:33:40,960 --> 00:33:43,120 Speaker 1: oil into the coffee. And it's I don't know how 634 00:33:43,120 --> 00:33:47,560 Speaker 1: to pronounce it. It's called oliato. Oliato latte with milk 635 00:33:47,600 --> 00:33:50,720 Speaker 1: and olive oil. Is that a thing? Like? Is that 636 00:33:50,800 --> 00:33:52,880 Speaker 1: an old Italian thing to do? I have no idea. 637 00:33:52,960 --> 00:33:55,840 Speaker 1: There's a picture and it's like, you know, like how 638 00:33:55,880 --> 00:33:58,560 Speaker 1: they make the coffee look so beautiful, like all the 639 00:33:58,600 --> 00:34:02,000 Speaker 1: milk is like dripping down, and then there's just olive 640 00:34:02,040 --> 00:34:04,640 Speaker 1: oil next to all the coffees. So yeah, it looks 641 00:34:04,640 --> 00:34:07,760 Speaker 1: like it's literally just olive oil and coffee. I can't 642 00:34:07,800 --> 00:34:10,120 Speaker 1: wait to try it. Anyway, that's my weirdest thing. I 643 00:34:10,160 --> 00:34:11,960 Speaker 1: don't know, Steve, that's a that's a tough one. The top. 644 00:34:12,400 --> 00:34:14,919 Speaker 1: What's the craziest thing you've seen in markets? I don't 645 00:34:14,920 --> 00:34:16,799 Speaker 1: know how that's a market. I guess Starbucks is a 646 00:34:18,160 --> 00:34:21,560 Speaker 1: well all right, fine, fine, yeah, I can't compete with that. 647 00:34:21,600 --> 00:34:25,760 Speaker 1: I would say, um, the craziest thing I've seen, um, 648 00:34:25,800 --> 00:34:27,640 Speaker 1: and it wasn't this week thing. But I just had 649 00:34:27,680 --> 00:34:30,040 Speaker 1: this realization, you know, when we were talking about cash 650 00:34:30,080 --> 00:34:32,120 Speaker 1: in the front end of the curve, you can buy 651 00:34:32,120 --> 00:34:36,360 Speaker 1: a treasury floater, okay, which has almost no duration for 652 00:34:36,520 --> 00:34:39,680 Speaker 1: like I think it's somewhere between four sixty and you know, 653 00:34:40,040 --> 00:34:43,239 Speaker 1: sixty four seventy somewhere around there. It's it's amazing that 654 00:34:43,320 --> 00:34:46,520 Speaker 1: you can get income off of something that has almost 655 00:34:46,600 --> 00:34:50,160 Speaker 1: no duration and it's it's a treasury. So think about, 656 00:34:50,719 --> 00:34:52,799 Speaker 1: you know what you had to do three years ago 657 00:34:52,880 --> 00:34:55,160 Speaker 1: to get that kind of yield um. Either had to 658 00:34:55,480 --> 00:34:57,120 Speaker 1: take on a lot of duration or a lot of 659 00:34:57,120 --> 00:34:59,000 Speaker 1: credit risk. And now you can now you can do 660 00:34:59,040 --> 00:35:02,200 Speaker 1: that with with with treasury floaters. That's pretty pretty amazing, 661 00:35:02,600 --> 00:35:04,359 Speaker 1: That is pretty That is a good one. You know, 662 00:35:04,520 --> 00:35:06,399 Speaker 1: as you were when you were talking about how low 663 00:35:06,440 --> 00:35:08,400 Speaker 1: yields got there for a while, I was, you know, 664 00:35:08,760 --> 00:35:13,239 Speaker 1: flashing back to the whole notion of negative yielding treasuries, 665 00:35:13,320 --> 00:35:15,040 Speaker 1: you know, which the front end did I guess go 666 00:35:15,160 --> 00:35:16,840 Speaker 1: negative for a while there. But you know, we remember, 667 00:35:17,480 --> 00:35:20,200 Speaker 1: you know, it was this big debate if and when 668 00:35:20,400 --> 00:35:22,280 Speaker 1: you know like that with the ten year yield actually 669 00:35:22,280 --> 00:35:24,759 Speaker 1: go negative, life comes at you fast, you know when 670 00:35:24,800 --> 00:35:26,520 Speaker 1: you when you think about how that was the uh 671 00:35:27,280 --> 00:35:29,480 Speaker 1: the craziest things we were talking about a few years ago. 672 00:35:29,560 --> 00:35:34,759 Speaker 1: So it's quite quite a difference. But all right, I'm 673 00:35:34,760 --> 00:35:38,080 Speaker 1: gonna give you mine. Um, Vilda, do you watch the 674 00:35:38,239 --> 00:35:43,640 Speaker 1: w NBA at all Women's National Basketball Association? Okay, well 675 00:35:43,680 --> 00:35:45,200 Speaker 1: you might not be very good at this one, then, 676 00:35:45,520 --> 00:35:50,560 Speaker 1: uh you chose it. I keep an eye on women's basketball. 677 00:35:50,600 --> 00:35:53,359 Speaker 1: You know the dirty secret in the Regan family growing up, 678 00:35:53,360 --> 00:35:57,520 Speaker 1: there were six of us, five boys, one girl. We all, 679 00:35:58,000 --> 00:36:01,000 Speaker 1: you know, fancied ourselves as as who hoop stars. But 680 00:36:01,680 --> 00:36:03,719 Speaker 1: my sister was really the best. She was the only 681 00:36:03,760 --> 00:36:07,320 Speaker 1: one who played college ball. So I've always had a 682 00:36:07,360 --> 00:36:12,120 Speaker 1: soft spot for women's basketball. Diamond Miller at University of Maryland, 683 00:36:12,120 --> 00:36:15,279 Speaker 1: where my daughter goes. Now is google her highlight reel. 684 00:36:15,320 --> 00:36:19,760 Speaker 1: She's something special. There's a very famous recent w NBA player, 685 00:36:20,760 --> 00:36:22,520 Speaker 1: and I'm probably gonna say her name wrong, but I 686 00:36:22,520 --> 00:36:29,600 Speaker 1: believe it's Sabrina in Nescu. Sabrina in Nescum and her 687 00:36:30,040 --> 00:36:34,640 Speaker 1: rookie card. Just sold. Her rookie card for the w 688 00:36:34,920 --> 00:36:41,160 Speaker 1: NBA just sold at auction, highest ever price for a 689 00:36:41,280 --> 00:36:45,400 Speaker 1: w NBA trading card. Give you a few details. Here's 690 00:36:45,480 --> 00:36:49,160 Speaker 1: one of just five copies in existence. It's created as 691 00:36:49,200 --> 00:36:53,600 Speaker 1: a perfect gem mint ten whatever that means. That's good. 692 00:36:53,680 --> 00:36:56,040 Speaker 1: I guess that's that's like a triple A bonds, Steve, 693 00:36:56,080 --> 00:37:02,560 Speaker 1: I guess by third party greater PSA. So I'll take 694 00:37:02,600 --> 00:37:05,560 Speaker 1: their word on it. So it's time to play the 695 00:37:05,600 --> 00:37:10,359 Speaker 1: prices precise as you as you now know fill down 696 00:37:10,360 --> 00:37:17,360 Speaker 1: a highest ever auction sale for a WNBA trading card 697 00:37:18,680 --> 00:37:21,719 Speaker 1: according to CBS Sports. Where I got this story from? 698 00:37:21,760 --> 00:37:23,960 Speaker 1: What do you think it was? I have negative knowledge 699 00:37:24,000 --> 00:37:27,759 Speaker 1: about any of these topics, literally negative, but this was. 700 00:37:27,840 --> 00:37:29,839 Speaker 1: There's only five of them, so it's very unique. This 701 00:37:30,000 --> 00:37:35,040 Speaker 1: is an exceptional player her rookie card. So that's why 702 00:37:35,080 --> 00:37:36,839 Speaker 1: I chose it. I think it's a challenging one. Okay, 703 00:37:36,840 --> 00:37:40,239 Speaker 1: I'm gonna go with forty five thousand dollars. Forty five 704 00:37:40,239 --> 00:37:43,040 Speaker 1: thousand dollars. I like your confidence in that. In that answer, 705 00:37:43,400 --> 00:37:47,160 Speaker 1: it's um feeling very not confident in that, But that's 706 00:37:47,200 --> 00:37:51,960 Speaker 1: my guess. All right, Steve, Prices precise rules are are 707 00:37:51,960 --> 00:37:55,279 Speaker 1: the standard rules you know of that game show of 708 00:37:55,320 --> 00:37:58,439 Speaker 1: a similar name. Yeah, yeah, that shall not be named. 709 00:37:58,480 --> 00:38:00,839 Speaker 1: But you know if you go over, you'll lose, So 710 00:38:01,160 --> 00:38:03,960 Speaker 1: keep that in mind. So can I do the Can 711 00:38:04,000 --> 00:38:06,400 Speaker 1: I do the Prices right thing and just go over 712 00:38:06,480 --> 00:38:10,480 Speaker 1: by a penny? Absolutely? Can? I'll be a little more bold, 713 00:38:10,520 --> 00:38:13,799 Speaker 1: I'll say, Um, I'll do six figures. I'll say one 714 00:38:13,840 --> 00:38:15,840 Speaker 1: hundred grand. Yeah, it's a tough one. I don't know 715 00:38:15,880 --> 00:38:19,720 Speaker 1: what I would have guessed, to be honest, uh, ten thousand, 716 00:38:19,800 --> 00:38:28,600 Speaker 1: eight hundred dollars. Yeah, from one ye, right, I don't know. 717 00:38:28,640 --> 00:38:32,480 Speaker 1: You both went over, so I think and I won. 718 00:38:32,560 --> 00:38:35,320 Speaker 1: I think I'm the real winner here. You have guessed 719 00:38:36,800 --> 00:38:40,600 Speaker 1: I probably would have gone closer to Steve. I think, 720 00:38:40,880 --> 00:38:43,480 Speaker 1: you know, you kind of hype it up. You know, 721 00:38:43,719 --> 00:38:46,160 Speaker 1: it depends how you hype it up. You know, you 722 00:38:46,239 --> 00:38:49,480 Speaker 1: think highest ever price. But at the end of the day, 723 00:38:49,520 --> 00:38:51,359 Speaker 1: you were still talking about eleven grand for a piece 724 00:38:51,360 --> 00:38:55,720 Speaker 1: of cardboard. It's pretty amazing. Um. So I have nagative 725 00:38:55,840 --> 00:39:01,759 Speaker 1: knowledge around card collecting as well. So, but yeah, who 726 00:39:01,800 --> 00:39:05,320 Speaker 1: would have thought sixty three thousand four a quote unquote 727 00:39:05,680 --> 00:39:11,880 Speaker 1: vintage iPhone and eleven thousand four piece of paper? Yeah? Yeah, 728 00:39:11,960 --> 00:39:14,239 Speaker 1: I wonder if you can still use the iPhone? You know, 729 00:39:14,840 --> 00:39:18,160 Speaker 1: I think you wouldn't want to literally wrapped up, Yeah, 730 00:39:18,160 --> 00:39:19,800 Speaker 1: because I guess in ten years you'll sell it for 731 00:39:19,880 --> 00:39:23,919 Speaker 1: double Yeah all right, Steve, go check that garage. I'm 732 00:39:23,920 --> 00:39:30,279 Speaker 1: definitely gonna check that garage anyway. Great to catch up 733 00:39:30,320 --> 00:39:32,319 Speaker 1: with you, Steve. I hope we can have you back 734 00:39:32,440 --> 00:39:34,480 Speaker 1: again somebody. Maybe we'll have you back on the end 735 00:39:34,480 --> 00:39:36,839 Speaker 1: of the year and see how that year end. Yeah, 736 00:39:37,600 --> 00:39:40,239 Speaker 1: that's nice. That could be fun, I know than all right? 737 00:39:41,040 --> 00:39:52,399 Speaker 1: Thank you, Steve, What Goes Up We'll be back next week. 738 00:39:52,880 --> 00:39:55,360 Speaker 1: Until then, you can find us on the Bloomberg Terminal, 739 00:39:55,600 --> 00:39:59,919 Speaker 1: website and app, or wherever you get your podcasts. We'd 740 00:40:00,040 --> 00:40:01,560 Speaker 1: love it if you took the time to rate and 741 00:40:01,600 --> 00:40:04,440 Speaker 1: review the show so more listeners can find us. And 742 00:40:04,520 --> 00:40:08,760 Speaker 1: you can find us on Twitter, follow me at Waldonna Hirich. 743 00:40:09,320 --> 00:40:13,240 Speaker 1: Mike Reagan is at Reaganonymous. You can also follow Bloomer 744 00:40:13,360 --> 00:40:17,640 Speaker 1: Podcasts at podcasts. What Goes Up is produced by Stacy 745 00:40:17,719 --> 00:40:21,280 Speaker 1: Wong and our head of podcasts is Sage Baldman. Thanks 746 00:40:21,280 --> 00:40:25,120 Speaker 1: for listening and we'll see you next week.