WEBVTT - Big Take: The Amazon Approaches Point Of No Return 0:00:00.800 --> 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 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.759 at Bloomberg dot com slash podcast. All right, Matt, I 0:00:21.800 --> 0:00:23.639 mean you and I've talked about this before. The big 0:00:23.640 --> 0:00:26.560 take stories that coming out of Bloomberg News are just awesome, 0:00:26.720 --> 0:00:30.000 awesome reporting, awesome journalism. There's some big takes and then 0:00:30.040 --> 0:00:32.880 there's some really big takes. In this story today is 0:00:32.920 --> 0:00:37.239 a really big steak. It's a big topic. Uh, the Amazon, 0:00:37.360 --> 0:00:40.360 the rainforest. We know about the risk to that rainforest. 0:00:40.560 --> 0:00:42.480 I thought I did until I started reading this story. 0:00:42.680 --> 0:00:45.000 Jessica Bryce joins us. She's a senior editor for Latin 0:00:45.000 --> 0:00:50.600 American News from the South. Paulo joining us on the phone. Jessica, Alright, 0:00:50.720 --> 0:00:54.520 the Amazon rainforest, nearest point of no return in Brazil 0:00:54.880 --> 0:00:58.160 land grab. Can you just let us step us step 0:00:58.160 --> 0:01:01.040 out thirty feet and just frame the issue for us. 0:01:01.200 --> 0:01:03.600 I think most of our listeners have a sense that Okay, 0:01:03.640 --> 0:01:07.280 the rainforest is at risk, but how at risk? Hi, 0:01:07.600 --> 0:01:10.160 thanks for having me on the show. Um. Yeah, So 0:01:10.200 --> 0:01:16.040 the rainforest, Uh, deforestation has been an issue for decades UM. 0:01:16.080 --> 0:01:19.040 It's been a crisis in the making for decades UM. 0:01:19.120 --> 0:01:21.560 But recently, what we're seeing is that it's reaching this 0:01:21.760 --> 0:01:25.520 point where it's this. The rainforest, in many ways is 0:01:25.560 --> 0:01:28.760 sort of one giant organism organism, it's this, it's this 0:01:28.880 --> 0:01:33.280 ecosystem that depends on other parts of the ecosystem. And 0:01:33.560 --> 0:01:37.560 what we're seeing is that as the burns worsen, uh, 0:01:37.600 --> 0:01:40.560 not only is our large parts of the Amazon no 0:01:40.680 --> 0:01:43.840 longer pulling greenhouse gases from the air, but they're actually 0:01:43.880 --> 0:01:47.960 contributing and accelerating climate change. And we're nearing a point 0:01:48.040 --> 0:01:52.600 where the Amazon will no longer be a be a rainforest. 0:01:52.640 --> 0:01:55.680 It will turn into a savannah. And that's important because 0:01:55.760 --> 0:01:58.560 not only because of its role, as you know, in 0:01:58.640 --> 0:02:00.880 cleaning the air that we breathe, but also because it 0:02:01.000 --> 0:02:04.880 regulates the weather for South America, and South America is 0:02:04.920 --> 0:02:07.480 a huge producer of food for the globe, and so 0:02:07.880 --> 0:02:11.079 you know, losing the Amazon going over that point, it's 0:02:11.080 --> 0:02:14.520 a very serious problem for everyone. So, first of all, Jessica, 0:02:14.560 --> 0:02:18.920 I learned so much reading this story and I just 0:02:18.960 --> 0:02:23.239 think it's a fantastic piece of journalism. Um. There must 0:02:23.280 --> 0:02:26.440 have been my numbing amounts of research that went into 0:02:26.480 --> 0:02:29.160 this document and interviews, and I just thought it was 0:02:29.200 --> 0:02:31.840 so good. Um. One of the one of the central 0:02:32.200 --> 0:02:36.400 um themes that I took from this is we all 0:02:36.440 --> 0:02:41.760 benefit from the Amazon rainforest, but um, Brazil wants to 0:02:41.760 --> 0:02:45.000 be somehow compensated for that by the rest of the world, 0:02:45.200 --> 0:02:48.320 or they threaten they will go and take the value 0:02:48.320 --> 0:02:51.520 out of it themselves. And you know, you interviewed so 0:02:51.560 --> 0:02:55.200 many people who were just so poor, they didn't have 0:02:55.320 --> 0:02:58.440 shoes and went into this rainforest in order to make 0:02:58.440 --> 0:03:00.320 a living. I mean, what else are they gonna do, right, 0:03:01.040 --> 0:03:04.200 unless the rest of the world steps in and helps 0:03:04.320 --> 0:03:07.080 Brazil do something, because it's not it doesn't seem really 0:03:07.120 --> 0:03:11.400 fair if we all enjoy a resource that, um, you 0:03:11.400 --> 0:03:14.960 know they have to foot the bill or carry the 0:03:15.000 --> 0:03:18.320 debt or however you want to see it. Absolutely, and 0:03:18.360 --> 0:03:20.519 that's that's the key part of the argument and sort 0:03:20.560 --> 0:03:23.120 of the culture in the mindset down here in Brazil. 0:03:23.840 --> 0:03:28.919 Brazil DeFore station has been UM tragic. Brazil has lost 0:03:29.000 --> 0:03:33.079 a lot of its Amazon, it still has eight percent 0:03:33.280 --> 0:03:37.360 or so of its natural vegetation, which covers three uh 0:03:37.480 --> 0:03:42.040 two thirds of the land in Brazil. The government's argument 0:03:42.080 --> 0:03:43.720 is that there's no other country in the world that 0:03:43.800 --> 0:03:47.000 really has that much rainforest and has preserved that much 0:03:47.080 --> 0:03:50.880 of its natural forest. And it's not wrong, right. However, 0:03:51.160 --> 0:03:55.680 it is a an incredibly important resource in to in 0:03:55.800 --> 0:03:57.680 terms of you know, cleaning the air, but also in 0:03:57.680 --> 0:04:01.160 the commodities it holds. And yet Brazil and the million 0:04:01.160 --> 0:04:05.480 people who live around the Amazon are incredibly poor. Right. 0:04:06.320 --> 0:04:08.680 What you're seeing, however, is that this argument of we 0:04:08.720 --> 0:04:12.040 need to help the poor is being manipulated in a way, 0:04:12.080 --> 0:04:14.400 and of course right, and so that the poor are 0:04:14.560 --> 0:04:17.360 being you know, they do they do go in there, 0:04:17.360 --> 0:04:19.880 and they are driving a lot of this deforestation, but 0:04:20.040 --> 0:04:23.760 that land often ends up into you know, it turns 0:04:23.800 --> 0:04:27.760 into sort of industrial um farming operation. Well, and they'd 0:04:27.800 --> 0:04:29.839 probably be poor no matter what. I think. It's a 0:04:29.839 --> 0:04:32.080 lot like the Middle East, right, and that you know, 0:04:32.120 --> 0:04:35.360 most of the world's oil reserves are there and we 0:04:35.440 --> 0:04:37.919 have to all pay to use them. And as a result, 0:04:37.920 --> 0:04:43.360 there are so many billionaire Saudi princes um in this case, 0:04:43.600 --> 0:04:46.200 it is as if though we're all getting that oil 0:04:46.320 --> 0:04:50.039 for free. And that's I think the good part of 0:04:50.040 --> 0:04:52.880 Bowls Narrow's argument. Of course, the bad part is he 0:04:52.920 --> 0:04:56.320 doesn't really care about this resource, it seems from the story, 0:04:56.760 --> 0:05:00.280 and um, he's willing to just shred it, right. And 0:05:00.279 --> 0:05:02.680 and you know one of the arguments, the Bolson our 0:05:03.200 --> 0:05:07.040 Boson out of government has really pushed for payments to 0:05:07.640 --> 0:05:12.080 private property owners in order to preserve their force. A 0:05:12.160 --> 0:05:16.000 system like that would be incredibly problematic. Uh, not only 0:05:16.080 --> 0:05:20.080 because Brazil government, Brazil has a history of corruption, just 0:05:20.279 --> 0:05:24.400 terrible corruption down here, but also like the forest that's 0:05:24.440 --> 0:05:27.760 being preserved is not as efficient in cleaning our air 0:05:27.880 --> 0:05:30.840 and and you know, uh, producing the rains that we 0:05:30.960 --> 0:05:34.320 need um as the native forest. And by that I 0:05:34.400 --> 0:05:39.600 mean that these forests, the the Amazon has these magnificent 0:05:39.800 --> 0:05:42.880 hardwoods that are just you know, hundreds of years old 0:05:42.960 --> 0:05:47.360 and their um you know, eleven feet in diameter. And 0:05:47.480 --> 0:05:50.039 even if you're preserving the force the private property owners 0:05:50.040 --> 0:05:53.159 are preserving that force, they're still cutting down those trees 0:05:53.240 --> 0:05:56.560 because there's demand in global export markets for those streets. 0:05:57.279 --> 0:06:00.440 And so it's the system in which they're posing the 0:06:00.560 --> 0:06:04.840 solution in which they're proposing is very problematic. Is there 0:06:04.839 --> 0:06:08.960 any solution that is being embraced by the world's economy, 0:06:09.040 --> 0:06:13.000 some of the world governing bodies to perhaps is there 0:06:13.000 --> 0:06:15.400 a solution out there that some people can call us around. 0:06:16.600 --> 0:06:18.880 You know, I think that the narrative, the solution that 0:06:18.960 --> 0:06:21.440 the world is talking about, that narrative needs to change. 0:06:21.520 --> 0:06:24.960 What's happening is that there's a there's a problem with 0:06:25.400 --> 0:06:30.320 the land policy and in here in Brazil and this 0:06:30.839 --> 0:06:34.520 you know, the government incentives that really push people to 0:06:34.760 --> 0:06:41.400 drive the to to DeForest the Amazon. The world values 0:06:41.880 --> 0:06:45.560 is valuing that deforestation because they're buying all of the 0:06:45.640 --> 0:06:49.720 products that come from the Amazon region, um soybeans and 0:06:49.800 --> 0:06:53.560 soy products. I believe the experts in out of Brazil 0:06:54.480 --> 0:06:59.680 that we're valued at thirty billion dollars um. Nuts that 0:06:59.800 --> 0:07:01.920 kind out of Brazil, which can be produced sustainably, it 0:07:02.040 --> 0:07:05.000 was only a hundred million dollars. So there's there's just 0:07:05.160 --> 0:07:09.440 no you know, I think the world it's very important 0:07:09.520 --> 0:07:11.320 that the world has put a lot of pressure on 0:07:11.800 --> 0:07:14.760 beef companies and I think you're seeing some changes. I 0:07:14.800 --> 0:07:17.600 think that some of the beef companies are taking it seriously. 0:07:18.160 --> 0:07:20.080 But I think you also need to the you know, 0:07:20.240 --> 0:07:23.440 international governments also need to look at okay, we're buying 0:07:23.520 --> 0:07:27.840 this stuff. You know, maybe we need to rethink our 0:07:27.960 --> 0:07:31.400 demands and because the world does have great power in 0:07:31.600 --> 0:07:33.680 in making those sort of demands if they wanted. But 0:07:33.720 --> 0:07:36.080 it's not like we're gonna ever not want to buy 0:07:36.080 --> 0:07:38.400 as much beef as we can or Brazilian mahogany. I 0:07:38.440 --> 0:07:40.680 think it seems to me eventually we're gonna have to 0:07:40.720 --> 0:07:43.680 pay up um. But the story is incredible and I 0:07:44.440 --> 0:07:49.760 so want to see these rainforests. It sounds just unbelievably beautiful. 0:07:49.840 --> 0:07:54.040 Jessica Bryce, Senior editor for Latin American News, This is Bloomberg. 0:07:57.680 --> 0:08:00.360 You know, this is really I think one of the 0:08:00.440 --> 0:08:04.800 themes of this year has been meme stocks and robin Hood. 0:08:04.920 --> 0:08:09.160 We've seen hearings on Capitol Hill. Pretty much everybody knows 0:08:09.400 --> 0:08:11.880 what it is. I feel like it's kind of like 0:08:12.000 --> 0:08:15.160 the new TikTok um, the new Snapchat in a sense, 0:08:15.240 --> 0:08:17.240 because this is what the kids are doing. And by kids, 0:08:17.320 --> 0:08:21.559 I mean you know, like middle aged white men sitting 0:08:21.560 --> 0:08:23.800 in their parents basements. Let's bring in Crystal see you 0:08:23.920 --> 0:08:27.240 right now? She is Um Bloomberg News reporter who has 0:08:27.280 --> 0:08:29.640 been covering the story from the get go for us. 0:08:29.840 --> 0:08:32.560 She joins us in the interactive broker studio here at 0:08:33.080 --> 0:08:37.079 one Lexington Avenue. So Crystal thirty eight dollars. That's the 0:08:37.160 --> 0:08:41.080 indication right now. Not so great, is it? It isn't 0:08:41.120 --> 0:08:43.880 so great On an ip O day on the first 0:08:43.960 --> 0:08:47.000 that you usually expect a deal to pop a little bit. 0:08:47.280 --> 0:08:51.640 Some deals go up to a D so for now 0:08:51.679 --> 0:08:54.480 they're looking flat. We all see a couple of hours 0:08:54.720 --> 0:08:57.679 imagined away from the actual trade, so it could go up, 0:08:57.760 --> 0:09:01.400 but it's looking like the first trade wouldn't be significantly 0:09:01.520 --> 0:09:03.559 higher than when they priced it. We we've been talking 0:09:03.600 --> 0:09:06.520 to uh I p O specialists over the past couple 0:09:06.559 --> 0:09:09.120 of days who say the sweet spot would be a 0:09:09.240 --> 0:09:13.079 pop of something like right, if it doubles on the 0:09:13.160 --> 0:09:16.760 first day, lad left a ton of money on the table, 0:09:17.120 --> 0:09:19.840 And if it doesn't do anything, then there's no hype. 0:09:20.160 --> 0:09:22.199 So you do want to see a pop, but you 0:09:22.200 --> 0:09:24.160 don't want to see it too. I mean, Paul knows 0:09:24.200 --> 0:09:26.959 this probably better than anybody because he's priced IPOs for 0:09:27.000 --> 0:09:28.839 a living. Yeah, I mean that's exactly right. And I 0:09:28.920 --> 0:09:31.160 think one of the wild cards here is there is 0:09:31.960 --> 0:09:36.199 higher than typical retail allocation. So I wonder how that's 0:09:36.240 --> 0:09:38.599 going to affect kind of not only the opening of 0:09:38.960 --> 0:09:40.880 the stock, but maybe the you know, the early days 0:09:40.920 --> 0:09:43.160 of trading. Yeah, it's an interesting experiment. I don't think 0:09:43.160 --> 0:09:47.440 anybody has allocated this many shas to retail investors from 0:09:47.520 --> 0:09:50.560 sources we are, we've reported that they're actually don't they 0:09:50.600 --> 0:09:55.439 actually allocated of the entire I p O to retail investors. 0:09:56.280 --> 0:09:59.600 And that's not it there. They have extremely high volume 0:09:59.640 --> 0:10:02.280 on of for stay. Also because they relaxed the lock up, 0:10:02.440 --> 0:10:06.599 so if you're an inside that you can sell, is 0:10:06.720 --> 0:10:09.280 that right? Yeah, and on the day of pricing off 0:10:09.360 --> 0:10:12.400 the first first day, whereas to the traditional lock up 0:10:12.480 --> 0:10:15.640 might be six months. Right. So yeah, so this is 0:10:15.720 --> 0:10:20.120 actually a huge flood of shares that could come in potential, right. 0:10:20.679 --> 0:10:24.920 I mean, if you're an insider who believes in the company, 0:10:24.960 --> 0:10:27.840 then you're not going to do that, well, I thinkainly 0:10:27.840 --> 0:10:31.000 not before the pop, right, yeah, hopefully. I mean so, 0:10:31.120 --> 0:10:33.439 I mean it is the expectation here that the underwriters, 0:10:33.440 --> 0:10:35.880 I mean, it's you know, I guess your sauce just 0:10:35.960 --> 0:10:38.320 coming across the Bloomberg terminal, maybe twelve thirty one pm 0:10:38.360 --> 0:10:40.199 Wall Street times when it may open, and even that 0:10:40.280 --> 0:10:42.760 feels a little bit late relative to some other deals. 0:10:42.880 --> 0:10:46.680 Is that also maybe a red flag here? Not necessarily 0:10:46.720 --> 0:10:48.559 a red flag, but when you have someone volume, I 0:10:48.600 --> 0:10:50.520 think it makes sense that it's taking longer. But I 0:10:50.600 --> 0:10:53.120 think overall Wall Street has been taking this sweet time 0:10:53.160 --> 0:10:55.120 with opening I p O S. Lately we have seen 0:10:55.280 --> 0:10:58.559 deals open after one pm, so we could be sitting 0:10:58.600 --> 0:11:00.360 here for a while. Even on the d Y s C. 0:11:00.960 --> 0:11:03.559 I mean, Paul and I were talking about, you know, 0:11:04.400 --> 0:11:06.720 we remember back in the day when they would open 0:11:06.840 --> 0:11:10.520 things in an hour and a half after the bell um. 0:11:11.120 --> 0:11:14.679 It feels to me like it's Nasdaq that takes this long. Well, 0:11:14.720 --> 0:11:17.480 they actually bowls take a while, and I think there 0:11:17.559 --> 0:11:20.280 is a regulation. There's a requirement you can't actually open 0:11:20.320 --> 0:11:22.559 it within the first two hours. They want to have 0:11:22.800 --> 0:11:26.560 a proper kind of market discovery period on the first trade. Um. 0:11:27.600 --> 0:11:29.400 I mean, it's it's kind of the same system. One 0:11:29.520 --> 0:11:31.439 is the electronic and the other one you have like 0:11:31.480 --> 0:11:35.680 actual people market makers running around. So we actually saw 0:11:35.880 --> 0:11:38.120 on the live stream that there is someone um J. 0:11:38.360 --> 0:11:41.600 Heller at NaSTA he's the person sitting there opening the trade. 0:11:42.120 --> 0:11:43.880 So yeah, I think it's really up to him. We 0:11:43.960 --> 0:11:46.520 can I mean it could be it could be another 0:11:46.600 --> 0:11:49.360 five minutes, it could be another hour, all right. So, um, 0:11:50.360 --> 0:11:52.679 this was a traditional i PO as opposed to a 0:11:52.760 --> 0:11:55.040 direct listing, as opposed to merging with the spack. What 0:11:55.280 --> 0:11:58.360 did the company say about why they chose an ip O. 0:11:59.360 --> 0:12:01.440 So there is I would say, still a little bit 0:12:01.440 --> 0:12:04.440 of a stigma with going to a SPAC, especially when 0:12:04.480 --> 0:12:06.439 you're very, very large company, you have a lot of 0:12:06.559 --> 0:12:09.880 vcs in it. Um. The stigma is so that you know, 0:12:10.360 --> 0:12:13.200 the spack used to be some thing's done by second 0:12:13.200 --> 0:12:17.160 tier thirtier companies and you don't want to do that. Um. 0:12:17.840 --> 0:12:21.719 But I was talked as back also it's tough but 0:12:21.840 --> 0:12:25.880 not unheard of, um grab when public get over forty 0:12:25.920 --> 0:12:28.840 billion through a spack. Um. But what I would say 0:12:28.920 --> 0:12:31.120 is actually the direct listing and the I p O 0:12:31.320 --> 0:12:35.920 have actually blurred a lot, especially with relaxed lock up 0:12:36.520 --> 0:12:41.120 measures like the like. So with all of that, it 0:12:41.320 --> 0:12:43.920 actually kind of looks a little bit like a direct listing. 0:12:44.440 --> 0:12:47.720 Are you one of the ten million, seven hundred thousand 0:12:47.800 --> 0:12:52.160 degenerates on Wall Street? Bets. I am not, but I 0:12:52.200 --> 0:12:55.000 pay attention. I've just looked. I was just scrolling through 0:12:55.040 --> 0:12:57.000 Wall Street bets to see there's not a lot of 0:12:57.080 --> 0:13:01.240 positive um D D about beIN Hood. I would have 0:13:01.320 --> 0:13:04.400 thought that this crew was going to get behind it, 0:13:04.520 --> 0:13:06.960 but they don't really seem that amped on buying robin 0:13:07.000 --> 0:13:10.400 Hood chairs. Yeah, it seems like the retail investors, at 0:13:10.480 --> 0:13:12.520 least some of them have beef with robin Hood after 0:13:12.600 --> 0:13:16.040 the whole game stops saga and they true good point. 0:13:16.080 --> 0:13:18.640 You didn't understand why they couldn't trade at the high 0:13:18.840 --> 0:13:22.440 they couldn't sell they were welcomed to buy. All right, Crystal, 0:13:22.520 --> 0:13:25.320 thank you so much for joining us. Crystal see us deals. 0:13:25.400 --> 0:13:27.439 I p O reporter covers all that good stuff for 0:13:27.640 --> 0:13:33.760 Bloomberg News. Alright, active investing, passive investing, we've been having 0:13:33.840 --> 0:13:35.679 that discussion for a long time. Is more and more 0:13:35.720 --> 0:13:39.400 money goes passive index investing. We've been having that discussion. 0:13:39.760 --> 0:13:43.120 But how about you know, introducing a thematic element since 0:13:43.240 --> 0:13:49.000 Jack basically exactly right, Um, it's it's a thing. I guess, 0:13:49.000 --> 0:13:51.440 as the kids would say, ra who send Sharma joint 0:13:51.520 --> 0:13:54.840 us R, who is a managing partner at index Roll. 0:13:54.880 --> 0:13:56.400 Thanks so much for joining us here and love to 0:13:56.440 --> 0:14:00.160 get your thoughts on thematic indexing. What is it and 0:14:00.360 --> 0:14:03.160 kind of give us a sense of where it is 0:14:03.200 --> 0:14:06.000 in the in the marketplace right now. Absolutely thanks for 0:14:06.080 --> 0:14:08.800 having me on guys. So, at a very high level, 0:14:08.920 --> 0:14:13.400 thematic indexing is building an index that gains exposure or 0:14:13.480 --> 0:14:16.840 targets a particular theme. Um, So you can look at 0:14:16.840 --> 0:14:20.080 a theme like cloud computing, for example, or cybersecurity, or 0:14:20.200 --> 0:14:24.360 robotics or clean energy. These are examples of thematic indexes 0:14:24.400 --> 0:14:26.040 that we built that have been popular and that have 0:14:26.160 --> 0:14:29.720 been licensed for typically et s here the US and overseas, 0:14:29.800 --> 0:14:32.120 that have gained a lot of aascets over the last 0:14:32.120 --> 0:14:35.240 few years and really reached a tipping point. So it's 0:14:35.280 --> 0:14:39.400 bringing factors just like a step further basically and allowing everybody, 0:14:39.520 --> 0:14:42.240 not just hedge funds, to get in, right. I mean, 0:14:43.000 --> 0:14:45.240 we were one of the early kind of innovators in 0:14:45.280 --> 0:14:48.960 the thematic indexing space, and what we realized was it's 0:14:49.000 --> 0:14:51.640 not a very easy space to access. Like with factors, 0:14:51.680 --> 0:14:53.320 the factors, I mean, there are screens that you can 0:14:53.360 --> 0:14:58.080 easily run to identify factors and to identify companies that qualify. 0:14:58.760 --> 0:15:01.920 Themes often cut a cross sectors and industries on a 0:15:01.960 --> 0:15:05.280 global basis. A good example of that would be five 0:15:05.360 --> 0:15:09.640 G technology or again UM cybersecurity. So what you need 0:15:09.720 --> 0:15:11.680 to do there when you're accessing a theme is you 0:15:11.720 --> 0:15:14.320 need to cast a global net. You need to identify, 0:15:14.960 --> 0:15:17.240 um what is really relevant to that theme, and then 0:15:17.240 --> 0:15:19.680 you've got to go a company by company to identify 0:15:19.840 --> 0:15:23.360 companies that are generating typically a majority of their revenue 0:15:23.760 --> 0:15:26.960 from a theme like cloud computing or cybersecurity or robotics. 0:15:27.040 --> 0:15:29.400 May I UM. So it is different than factor, but 0:15:29.760 --> 0:15:31.720 it is kind of a logical extension there, and it 0:15:31.800 --> 0:15:34.040 does solve a problem, right. I Mean, you hear all 0:15:34.080 --> 0:15:36.680 the time about people who are very interested in looking 0:15:36.880 --> 0:15:40.080 at or gaining exposure of particular concept, but they don't 0:15:40.080 --> 0:15:41.680 really know where to start, right. They might have one 0:15:41.760 --> 0:15:44.640 company that they know or a few companies, But when 0:15:44.680 --> 0:15:46.520 it comes to a thematic index, we've really done the 0:15:46.560 --> 0:15:48.960 research for them and they can gain exposure to an 0:15:49.080 --> 0:15:52.200 entire theme and the companies within that theme through through 0:15:52.200 --> 0:15:54.600 an index and through a through an ETS. All right, 0:15:54.600 --> 0:15:58.680 so well, here's the dumb question of this segment. What's 0:15:58.720 --> 0:16:01.800 the difference between thematic indexing and buying an e T 0:16:02.000 --> 0:16:07.480 F Well, you cannot invest directly in an index. So 0:16:07.600 --> 0:16:09.440 the way it typically works is we will build an 0:16:09.480 --> 0:16:11.960 index and then we will license it to an e 0:16:12.080 --> 0:16:14.520 T f issuer, and the e T f issuer will 0:16:14.880 --> 0:16:17.360 launch a fund that tracks the index. Now, a very 0:16:17.400 --> 0:16:20.760 simple example that most of you guys would know would be, um, 0:16:21.000 --> 0:16:23.600 the S ANDB five hundred with s P Y or IVP. 0:16:23.760 --> 0:16:26.800 That's an ETS that tracks met tracks from index. We 0:16:26.920 --> 0:16:29.720 do the same with other E T f issures. What's 0:16:29.800 --> 0:16:33.280 some of the It's basically screening, right. The hard part 0:16:33.400 --> 0:16:36.840 is screening these things. So what you're saying is when, Um, 0:16:36.920 --> 0:16:39.120 when when when you look at E T S E 0:16:39.360 --> 0:16:41.400 S G I mean, or when you look at space 0:16:41.520 --> 0:16:46.760 for example. It's not so easy to screen as profitability 0:16:46.960 --> 0:16:48.920 or buy backs or something where you can just super 0:16:49.000 --> 0:16:52.280 easily use the Bloomberg to do it. And um, there's 0:16:52.320 --> 0:16:54.640 a lot of choice out there, do you do you 0:16:54.720 --> 0:16:58.880 have uh, you know, difficulty making those choices when you're 0:16:58.920 --> 0:17:01.200 looking at certain things, because I imagine you could cast 0:17:01.240 --> 0:17:05.040 the net wide and you could also be for example space, 0:17:05.080 --> 0:17:07.200 you could just do rockets and satellites. But you could 0:17:07.200 --> 0:17:10.600 also look at telecoms and lidar and a whole bunch 0:17:10.600 --> 0:17:14.280 of other things. That's exactly you're hitting the nail on 0:17:14.320 --> 0:17:16.760 the head. So it's it's really a multipart problem. The 0:17:16.880 --> 0:17:19.919 first is how do you define that theme? And UM, 0:17:20.160 --> 0:17:21.600 like you said, do we look at rockets, do we 0:17:21.680 --> 0:17:25.480 look at satellites, we look at other types of trajectory technology, 0:17:26.119 --> 0:17:29.040 So that's part one UM, it's defining the theme and 0:17:29.080 --> 0:17:31.720 our research team does that UM. And then part two 0:17:31.840 --> 0:17:35.320 is of course identifying the companies that are generating typically 0:17:35.800 --> 0:17:38.880 revenue and ideally a majority of their revenue from that theme. 0:17:38.920 --> 0:17:42.680 Because you don't want a company that's generating negligible amount 0:17:42.760 --> 0:17:45.040 of revenue from a theme, because that's not really the 0:17:45.080 --> 0:17:46.960 exposure that you're looking for, right. You want a company 0:17:47.000 --> 0:17:49.439 that really is tied to that concept UM. And that's 0:17:49.480 --> 0:17:51.520 what we've been doing for for six plus years now, 0:17:51.880 --> 0:17:55.200 and it typically as a revenue focused target. We have 0:17:55.280 --> 0:17:57.760 a dedicated team of analysts spread across a couple of 0:17:57.840 --> 0:18:01.000 offices globally. Uh I do this and have done this 0:18:01.119 --> 0:18:03.119 for for six years now. What are some of the 0:18:03.200 --> 0:18:08.240 more popular indexes that you've recently worked on worth of 0:18:08.320 --> 0:18:11.960 demand from the marketplace. Well, I would say it's in 0:18:12.000 --> 0:18:15.840 a couple of different areas. The first is of course technology. UM. 0:18:16.000 --> 0:18:18.240 I think people get technology because it's something that they 0:18:18.320 --> 0:18:22.040 interact with on a daily basis. So are five G 0:18:22.960 --> 0:18:26.440 Technology Index has done quite well. We licensed that here 0:18:26.480 --> 0:18:28.680 to an issueer called first Trust for any TF that's 0:18:28.760 --> 0:18:33.639 raised over a billion dollars. UM Robotics and Artificial Intelligence 0:18:33.760 --> 0:18:35.720 is another one of our early themes that has also 0:18:35.720 --> 0:18:39.680 been quite successful. That's where ANYTF here with global x 0:18:39.720 --> 0:18:41.879 Funds that's raised over two and a half billion dollars. 0:18:42.000 --> 0:18:44.199 And then, of course another one UM that has been 0:18:44.240 --> 0:18:46.280 in the news a lot lately has been infrastructure. So 0:18:46.400 --> 0:18:49.080 we have a US Infrastructure Index that we've built probably 0:18:49.080 --> 0:18:52.040 around five years ago now UM that is recently taken 0:18:52.080 --> 0:18:53.840 off and again has a few billion dollars in it. 0:18:54.280 --> 0:18:57.960 UM and healthcare healthcare as well, working from home, cloud computing, 0:18:58.080 --> 0:19:01.360 and now we've also seen clean energy really I think 0:19:01.359 --> 0:19:03.480 start to hit a critical masterroom business perspective, and as 0:19:03.520 --> 0:19:04.919 a result, people are starting to look at it more 0:19:05.040 --> 0:19:08.080 from an investment perspective as well. By the way, infrastructure 0:19:08.200 --> 0:19:11.600 is that is the perfect example of something that would 0:19:11.600 --> 0:19:15.639 be difficult to define because you know, fifty percent of 0:19:15.640 --> 0:19:18.960 Americans think of it as just rhoades, bridges and airports, 0:19:19.119 --> 0:19:22.720 and uh fifty I'm thinking basically as a Republican Democrats 0:19:22.720 --> 0:19:26.560 split right Democrats would think of it as child care 0:19:27.000 --> 0:19:32.760 and nutrition and fascinating stuff. Rahul, great having you on, 0:19:32.880 --> 0:19:34.960 hoping get you back. Rahoul san Charma there. He's a 0:19:34.960 --> 0:19:38.199 managing partner at Index and as he's been explaining to us, 0:19:38.400 --> 0:19:41.680 UM they put together thematic indexes and license them out 0:19:41.720 --> 0:19:45.320 to um A t F companies. And that's really the 0:19:45.400 --> 0:19:48.359 way the kids love to invest these days. And you 0:19:48.400 --> 0:19:55.760 can understand why this is Bloomberg. I want to bring 0:19:55.800 --> 0:19:58.159 in Bill Smith. He's a managing director at cb I 0:19:58.320 --> 0:20:02.560 z M h M S National Tag Office. And Um, 0:20:02.720 --> 0:20:05.840 we got this infrastructure deal voted on late last night. Um, 0:20:05.880 --> 0:20:07.960 they're gonna seems like they're gonna work it out now 0:20:08.960 --> 0:20:11.920 and make it happen. Um, what do we know about 0:20:11.920 --> 0:20:14.440 the tax changes? This is what the market seems to 0:20:14.480 --> 0:20:17.119 care about. David costing from Goldman taxes on the other day. 0:20:17.119 --> 0:20:18.840 So the only things that matter for the market right 0:20:18.880 --> 0:20:25.560 now are rates and tax policy. Well, well, we don't 0:20:25.600 --> 0:20:29.200 know is virtually anything about taxes, because we've got the 0:20:29.680 --> 0:20:34.160 two bills going, and there's no guarantee that the one 0:20:34.280 --> 0:20:37.960 tee that has been agreed upon, the Biparisan one, is 0:20:38.119 --> 0:20:42.440 going anywhere because essentially all they did was agree to 0:20:43.000 --> 0:20:45.840 bring it up for debate. It had been blocked for debate, 0:20:45.920 --> 0:20:48.800 so it couldn't go anywhere. So now it's up for 0:20:48.920 --> 0:20:52.440 debate on the Senate floor. Hopefully they get it past. 0:20:52.720 --> 0:20:55.639 We don't really have tax provisions in that one. The 0:20:55.840 --> 0:20:59.520 one that will contain the tax provisions most likely is 0:20:59.640 --> 0:21:03.600 the fall targeted three point five trillion dollar bill that 0:21:03.680 --> 0:21:06.840 they're going to try and push through using reconciliation, meaning 0:21:06.880 --> 0:21:09.159 they don't have to get their sixty votes in the Senate, 0:21:09.640 --> 0:21:12.400 they only need the all the Democrats and the Vice 0:21:12.520 --> 0:21:16.320 President to get that through. So there they are right 0:21:16.440 --> 0:21:19.840 now debating on what the pay fors for that will be, 0:21:20.080 --> 0:21:22.200 meaning how are they going to pay for that bill 0:21:22.520 --> 0:21:26.479 because reconciliation doesn't allow you to increase the deficit over 0:21:26.560 --> 0:21:29.720 the tenure budget window. So we have what I like 0:21:29.840 --> 0:21:32.040 to call the wish list, which is the green book 0:21:32.080 --> 0:21:35.200 put out by Treasury that puts some flesh on the 0:21:35.280 --> 0:21:39.200 bones of the Biden tax plans, but everything seems to 0:21:39.240 --> 0:21:42.960 be up for debate. The scariest part of that perhaps 0:21:44.080 --> 0:21:48.080 was the reference to the increase in capital gains to 0:21:48.400 --> 0:21:51.399 ordinary income rates if you're over a million dollars was 0:21:51.480 --> 0:21:54.560 going to be effective as of the quote unquote announcement date, 0:21:54.680 --> 0:21:57.520 which wasn't defined but could have been pushed back as 0:21:57.640 --> 0:22:02.520 late as April. So we think that there's probably going 0:22:02.560 --> 0:22:05.920 to be no retroactivity because the bill has gone so 0:22:06.119 --> 0:22:09.919 deep into the year. So I think we're probably safe 0:22:09.960 --> 0:22:13.720 that we're not going to have that retroactive capital gains increase, 0:22:14.160 --> 0:22:16.040