1 00:00:02,400 --> 00:00:09,000 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Now you're listening to 2 00:00:09,039 --> 00:00:13,040 Speaker 1: the Bloomberg Intelligence Podcast. Catch us live weekdays at ten 3 00:00:13,080 --> 00:00:15,720 Speaker 1: am Eastern on Apple card playing and Broid Auto with 4 00:00:15,720 --> 00:00:18,800 Speaker 1: the Bloomberg Business app. Listen on demand wherever you get 5 00:00:18,840 --> 00:00:22,040 Speaker 1: your podcasts, or watch us live on YouTube. 6 00:00:23,120 --> 00:00:24,400 Speaker 2: I'm Alex Deel longside false. 7 00:00:24,400 --> 00:00:24,640 Speaker 3: We need. 8 00:00:24,760 --> 00:00:26,800 Speaker 4: This is Bloomberg Intelligence Radio. We bring you all the 9 00:00:26,840 --> 00:00:29,560 Speaker 4: top news and business, economics and finance right here at 10 00:00:29,560 --> 00:00:33,320 Speaker 4: our Bloomberg World headquarters in the beautiful Midtown in Manhattan. 11 00:00:33,479 --> 00:00:35,400 Speaker 4: So at the top of the hour of Federal Reserve 12 00:00:35,479 --> 00:00:38,479 Speaker 4: Vice Chairmichael Barr commented in a speech in Washington, and 13 00:00:38,520 --> 00:00:42,279 Speaker 4: this concerns Basil three endgame capital rules for banks, and 14 00:00:42,280 --> 00:00:45,280 Speaker 4: he made some material changes to those bank capital proposals. 15 00:00:45,320 --> 00:00:47,080 Speaker 4: The biggest banks are now going to face just nine 16 00:00:47,120 --> 00:00:50,760 Speaker 4: percent capital increase after some revisions, and some smaller banks 17 00:00:50,880 --> 00:00:54,400 Speaker 4: will be exempt altogether. Michael McKee, Bloomberger inter National Economics 18 00:00:54,400 --> 00:00:57,400 Speaker 4: and Policy correspondent, joins us now to go through all 19 00:00:57,440 --> 00:00:59,560 Speaker 4: of this. Okay, So, if I'm a JP Morgan, I 20 00:00:59,640 --> 00:00:59,920 Speaker 4: like this. 21 00:01:01,440 --> 00:01:04,200 Speaker 5: You like it better than what you had before. It's 22 00:01:04,240 --> 00:01:09,039 Speaker 5: still higher than they would like to see, and it's 23 00:01:09,080 --> 00:01:11,920 Speaker 5: sort of a compromise from the FED and the other 24 00:01:12,000 --> 00:01:15,240 Speaker 5: regulators now. Michael Barr also noted that this hasn't been 25 00:01:15,280 --> 00:01:18,479 Speaker 5: completely finalized yet. They're going to hopefully propose it next 26 00:01:18,520 --> 00:01:22,280 Speaker 5: week and then it has to go through another comment period, 27 00:01:22,560 --> 00:01:25,399 Speaker 5: and he noted that the other regulators haven't signed off yet, 28 00:01:25,400 --> 00:01:28,000 Speaker 5: but this is likely what we're going to see. The 29 00:01:28,480 --> 00:01:34,640 Speaker 5: nine percent is still a fairly hefty additional level of 30 00:01:35,160 --> 00:01:40,480 Speaker 5: cushion against financial shocks for them, So it is better 31 00:01:40,520 --> 00:01:43,759 Speaker 5: than the nineteen percent that had been in a lot 32 00:01:43,800 --> 00:01:47,720 Speaker 5: original proposal. And then the medium sized banks the one 33 00:01:47,800 --> 00:01:50,960 Speaker 5: hundred to two hundred and fifty billion, They won't see 34 00:01:51,000 --> 00:01:55,280 Speaker 5: any change in any additional change in their capital requirements, 35 00:01:55,680 --> 00:02:00,520 Speaker 5: with the exception of capital held to maturity, the stuff 36 00:02:00,520 --> 00:02:04,800 Speaker 5: that got SVB in trouble. They if yours isn't in 37 00:02:04,880 --> 00:02:08,080 Speaker 5: good enough shape, then you'll have to pay a bit more. 38 00:02:08,919 --> 00:02:13,280 Speaker 6: Is this still from great Financial Crisis? 39 00:02:13,320 --> 00:02:14,280 Speaker 7: All these rules. 40 00:02:14,000 --> 00:02:16,760 Speaker 6: Here is kind of I mean, are we done yet? 41 00:02:17,360 --> 00:02:18,399 Speaker 7: I mean, come on enough? 42 00:02:18,880 --> 00:02:21,240 Speaker 2: Maybe after endgame? Maybe this is why it's called endgame? 43 00:02:21,360 --> 00:02:26,080 Speaker 5: Well, jamis that's that's the laugh, you know. The Marvel 44 00:02:26,120 --> 00:02:30,079 Speaker 5: The Avengers movie series did a movie as a two 45 00:02:30,120 --> 00:02:33,799 Speaker 5: part movie called Endgame, which was supposed to be sort 46 00:02:33,840 --> 00:02:36,799 Speaker 5: of the end wrapping up all these threads over the years, 47 00:02:36,919 --> 00:02:40,400 Speaker 5: and now they're doing more Marvel super hero movies. So 48 00:02:40,600 --> 00:02:43,480 Speaker 5: Endgame is not going to be the endgame. There will 49 00:02:43,520 --> 00:02:46,200 Speaker 5: always be something that comes up. But this is a 50 00:02:47,680 --> 00:02:49,920 Speaker 5: process that's been under way for a very long time. 51 00:02:50,160 --> 00:02:53,120 Speaker 5: BOZZL process started back in the nineteen nineties trying to 52 00:02:53,120 --> 00:02:57,480 Speaker 5: harmonize international banking rules, and this Bozzle three process came 53 00:02:57,520 --> 00:03:01,880 Speaker 5: after the Great Financial Crisis and to harmonize and agree 54 00:03:01,919 --> 00:03:06,600 Speaker 5: on safety standards for banks around the world. And that 55 00:03:06,680 --> 00:03:08,800 Speaker 5: goes a lot deeper than just capital it's what kind 56 00:03:08,840 --> 00:03:11,400 Speaker 5: of models they can use. In this case, they're going 57 00:03:11,440 --> 00:03:15,320 Speaker 5: to have to switch from using their own models for 58 00:03:15,440 --> 00:03:20,679 Speaker 5: risk to standardize risk models stuff like that. It has 59 00:03:20,760 --> 00:03:26,360 Speaker 5: a major impact on how the regulatory offices in these 60 00:03:26,400 --> 00:03:27,800 Speaker 5: banks will operate. 61 00:03:28,160 --> 00:03:30,840 Speaker 6: All right, Michael McKee, thank you so much. We appreciate it. 62 00:03:31,400 --> 00:03:33,880 Speaker 6: Michael mcge is a our economics dude here for Bloomberg 63 00:03:33,960 --> 00:03:37,080 Speaker 6: Radio TV JP Morgan is stock down four percent, no idea, why. 64 00:03:37,760 --> 00:03:39,640 Speaker 4: Well, we also have some the big banks are all 65 00:03:39,680 --> 00:03:44,080 Speaker 4: talking right now. So Jimmy Pinto over at JP Morgan 66 00:03:44,120 --> 00:03:47,320 Speaker 4: is saying that third quarter investment bank banking fees could 67 00:03:47,360 --> 00:03:49,560 Speaker 4: rise about fifteen percent from a year ago. Not a 68 00:03:49,560 --> 00:03:53,120 Speaker 4: big fan of acquisitions and asset management, David Solomon, Woman 69 00:03:53,200 --> 00:03:57,200 Speaker 4: Sachs spoke yesterday at a conference talking about their trading revenue. 70 00:03:57,240 --> 00:03:59,000 Speaker 4: So we're getting all that feedback right now. 71 00:03:59,080 --> 00:04:02,760 Speaker 6: So out there, it's September, which means it's conference time. 72 00:04:04,120 --> 00:04:08,000 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 73 00:04:08,080 --> 00:04:11,120 Speaker 1: weekdays at ten am Eastern on Apple car Play and 74 00:04:11,120 --> 00:04:14,040 Speaker 1: Android Auto with the Bloomberg Business app. You can also 75 00:04:14,120 --> 00:04:17,640 Speaker 1: listen live on Amazon Alexa from our flagship New York station, 76 00:04:18,000 --> 00:04:20,760 Speaker 1: Just say Alexa play Bloomberg eleven thirty. 77 00:04:22,240 --> 00:04:26,400 Speaker 4: So today the EU's top court delivered two final binding 78 00:04:26,520 --> 00:04:28,440 Speaker 4: rulings against two US tech companies. 79 00:04:28,520 --> 00:04:30,120 Speaker 2: Apple lost its court fight. 80 00:04:30,080 --> 00:04:32,599 Speaker 4: Over a fourteen point four billion dollar Irish tax bill, 81 00:04:32,839 --> 00:04:35,320 Speaker 4: and Google lost its challenge over a two point four 82 00:04:35,320 --> 00:04:38,880 Speaker 4: billion euro fine for abusing its market power. EU Competition 83 00:04:38,920 --> 00:04:42,200 Speaker 4: Commissioner Margaret Vasteier spoke to Bloomberg following the victories for 84 00:04:42,240 --> 00:04:45,119 Speaker 4: the European Commission, and she said she hopes her record 85 00:04:45,160 --> 00:04:47,320 Speaker 4: show she was willing to take the risks to prove 86 00:04:47,600 --> 00:04:49,680 Speaker 4: that the market works for consumers. 87 00:04:50,200 --> 00:04:52,960 Speaker 8: You need to of course own your victories, but you 88 00:04:53,040 --> 00:04:57,400 Speaker 8: also own your defeats, and we have had both, and 89 00:04:58,360 --> 00:05:01,480 Speaker 8: hopefully that shows that we will to push the envelopes 90 00:05:01,720 --> 00:05:05,679 Speaker 8: also sometimes to take a risk in order to try 91 00:05:05,720 --> 00:05:09,240 Speaker 8: to make sure that the market serves the consumer and 92 00:05:09,320 --> 00:05:11,320 Speaker 8: that we are not just small ponds or meet for 93 00:05:11,400 --> 00:05:14,560 Speaker 8: the machine. And I hope that is what people take 94 00:05:14,600 --> 00:05:17,080 Speaker 8: down from today's judgment, both that we won the Google 95 00:05:17,120 --> 00:05:19,599 Speaker 8: case and it is final, and we won the Apple 96 00:05:19,640 --> 00:05:20,800 Speaker 8: case and its final. 97 00:05:22,120 --> 00:05:24,640 Speaker 4: Now was Margaret Westdeyer joining us. All right, let's get 98 00:05:24,680 --> 00:05:29,640 Speaker 4: more insight here with Tamlin Basin, Bloomberg Intelligence technology analysts 99 00:05:29,640 --> 00:05:30,479 Speaker 4: who joined us on this. 100 00:05:30,680 --> 00:05:32,280 Speaker 2: Was this at all surprising to you? Tamlin? 101 00:05:33,720 --> 00:05:37,520 Speaker 9: Now, this wasn't terribly surprising, Alex. The Apple tax case, 102 00:05:37,560 --> 00:05:40,480 Speaker 9: we start with that. In twenty sixteen, the European Commission 103 00:05:40,560 --> 00:05:44,240 Speaker 9: made this finding. It assess the thirteen billion dollar penalty, 104 00:05:44,560 --> 00:05:47,640 Speaker 9: which is basically what it said were unpaid taxes because 105 00:05:47,680 --> 00:05:51,000 Speaker 9: the Irish tax authority had given these favorable opinions to 106 00:05:51,040 --> 00:05:55,800 Speaker 9: Apple that essentially amounted to improper state aid. Now, what 107 00:05:55,839 --> 00:05:58,279 Speaker 9: was interesting is that the Intermedia A court in twenty 108 00:05:58,320 --> 00:06:01,840 Speaker 9: twenty did reverse that decision and said the Commission didn't 109 00:06:01,880 --> 00:06:06,040 Speaker 9: follow certain guidelines and setting that fine. But when we 110 00:06:06,080 --> 00:06:09,080 Speaker 9: looked at the briefing going into this this final I'm hearing, 111 00:06:09,360 --> 00:06:12,000 Speaker 9: it did seem like this was going to be the result. 112 00:06:12,360 --> 00:06:15,239 Speaker 9: So I think this thirteen million dollar verdict against Apple 113 00:06:15,279 --> 00:06:17,760 Speaker 9: wasn't entirely surprising. And this money has been held in 114 00:06:17,920 --> 00:06:20,480 Speaker 9: s grow for a number of years, so I think 115 00:06:20,520 --> 00:06:22,920 Speaker 9: people sort of saw this this coming this way. 116 00:06:23,279 --> 00:06:27,480 Speaker 6: So I mean, is this just another I guess hurdle 117 00:06:27,640 --> 00:06:30,359 Speaker 6: that Apple and you know, other big tech companies have 118 00:06:30,480 --> 00:06:33,200 Speaker 6: to deal with from a regulatory standpoint just all over 119 00:06:33,240 --> 00:06:33,880 Speaker 6: the world. 120 00:06:33,600 --> 00:06:37,680 Speaker 9: Here, Yeah, I mean the hurdles are certainly stacking up. 121 00:06:38,000 --> 00:06:40,040 Speaker 9: But I think what's interesting about this is I look 122 00:06:40,080 --> 00:06:44,159 Speaker 9: at these two decisions as really some of the last ripples, 123 00:06:44,160 --> 00:06:47,440 Speaker 9: some really regulatory actions that began kind of nearly a 124 00:06:47,520 --> 00:06:50,359 Speaker 9: decade ago, and I think now we've certainly moved on 125 00:06:50,680 --> 00:06:53,560 Speaker 9: and both and especially in Europe but also in the US, 126 00:06:53,920 --> 00:06:57,280 Speaker 9: there are increasing hurdles there that the companies are having 127 00:06:57,279 --> 00:06:59,159 Speaker 9: to face. I mean, especially if you look at Google 128 00:06:59,240 --> 00:07:00,960 Speaker 9: and you know it's sort are locked up in another 129 00:07:01,000 --> 00:07:04,680 Speaker 9: trial this week with the DJ over competition concerns. So 130 00:07:04,800 --> 00:07:08,280 Speaker 9: these these these challenges really are mounting up around the globe. 131 00:07:08,960 --> 00:07:11,760 Speaker 2: So put it all together. So I guess that's a 132 00:07:11,760 --> 00:07:12,160 Speaker 2: great point. 133 00:07:12,440 --> 00:07:15,920 Speaker 4: What's on the dock at court wise for big tech 134 00:07:15,960 --> 00:07:17,680 Speaker 4: in Europe, and then what's on the dock at big 135 00:07:17,720 --> 00:07:19,920 Speaker 4: tech wise in the US. And do have like a 136 00:07:19,960 --> 00:07:22,520 Speaker 4: spreadsheet that sort of outlines everything? So I honestly can't 137 00:07:22,600 --> 00:07:24,800 Speaker 4: keep track, and also like what the money is associated with. 138 00:07:24,760 --> 00:07:25,160 Speaker 2: All of it? 139 00:07:26,040 --> 00:07:28,360 Speaker 9: Yeah, yeah, We've got quite a few spreadsheets. I do 140 00:07:28,480 --> 00:07:31,400 Speaker 9: have one wide track all the ones that are in Europe. 141 00:07:31,440 --> 00:07:33,480 Speaker 9: And if you look at Europe, what's I say that 142 00:07:33,520 --> 00:07:36,080 Speaker 9: we've moved on from that is because after these these 143 00:07:36,120 --> 00:07:40,280 Speaker 9: regulations or sorry, these litigations were started five, six, seven 144 00:07:40,320 --> 00:07:42,960 Speaker 9: years ago, what the Europegian Commission did is they went 145 00:07:42,960 --> 00:07:45,040 Speaker 9: back and they rewrote some rules where they said, we're 146 00:07:45,040 --> 00:07:47,080 Speaker 9: going to make it easier to really go after some 147 00:07:47,160 --> 00:07:49,920 Speaker 9: of these anti competitive practices that we're seeing. And that's 148 00:07:49,960 --> 00:07:51,840 Speaker 9: why we have the Digital Markett Act, That's why we 149 00:07:51,920 --> 00:07:54,960 Speaker 9: now have the Digital Services Act, and we already see 150 00:07:55,040 --> 00:07:58,280 Speaker 9: under the DMA that there are some probes facing both 151 00:07:58,640 --> 00:08:01,560 Speaker 9: Apple and Google Google for sort of similar practices that 152 00:08:01,600 --> 00:08:04,240 Speaker 9: were at issue here, where it was alleged to have 153 00:08:04,360 --> 00:08:07,760 Speaker 9: abused its dominant position and search to elevate its own 154 00:08:07,840 --> 00:08:11,760 Speaker 9: products over the products of peers. It's already facing investigation 155 00:08:11,800 --> 00:08:16,040 Speaker 9: for that. Apple's facing two DMA probes, both related to 156 00:08:16,080 --> 00:08:19,000 Speaker 9: that store, and I think these ongoing have brying more 157 00:08:19,000 --> 00:08:21,960 Speaker 9: of an operational risk because they really could go to 158 00:08:22,040 --> 00:08:25,360 Speaker 9: how these companies are currently operating, not just sort of 159 00:08:25,400 --> 00:08:29,880 Speaker 9: this backwards looking financial penalty thing that we saw today. 160 00:08:30,120 --> 00:08:31,680 Speaker 9: Then if you look at the US, so of course, 161 00:08:31,720 --> 00:08:34,520 Speaker 9: I think the biggest thing facing Google right now is 162 00:08:34,559 --> 00:08:38,400 Speaker 9: this DOJ lawsuit that is going to trial this week 163 00:08:38,480 --> 00:08:41,520 Speaker 9: based on its ad stack. So I think that could 164 00:08:41,600 --> 00:08:45,520 Speaker 9: have some really profound ramifications for the company, not just 165 00:08:45,600 --> 00:08:49,200 Speaker 9: in terms of financial penalty, but really behavioral remedies, which 166 00:08:49,240 --> 00:08:52,040 Speaker 9: is I think, moving forward, what could be the most 167 00:08:52,040 --> 00:08:53,679 Speaker 9: frightening thing for a lot of these companies. 168 00:08:54,280 --> 00:08:58,920 Speaker 6: Camlin is the UK view of big tech different than 169 00:08:58,960 --> 00:09:01,760 Speaker 6: the EU? And reason asks now that obviously the UK 170 00:09:01,840 --> 00:09:04,400 Speaker 6: is out of the EU, do they look at tech 171 00:09:04,400 --> 00:09:05,920 Speaker 6: any differently than the European Union? 172 00:09:07,320 --> 00:09:11,080 Speaker 9: Maybe there's some slight variations where they maybe trend slightly 173 00:09:11,200 --> 00:09:13,559 Speaker 9: more towards the US, although I say that but US 174 00:09:13,600 --> 00:09:16,760 Speaker 9: now is really fairly aggressive in their stance on big tech. 175 00:09:17,120 --> 00:09:21,720 Speaker 9: But the UK doesn't really quite have the competition rules. 176 00:09:21,720 --> 00:09:24,640 Speaker 9: But they also are saying that we're going to reevaluate 177 00:09:24,880 --> 00:09:27,880 Speaker 9: how some of these rules are going to be applied 178 00:09:27,960 --> 00:09:31,160 Speaker 9: against these big tech firms. So I think it's difficult 179 00:09:31,200 --> 00:09:34,280 Speaker 9: to find any real safe haven in terms of a 180 00:09:34,280 --> 00:09:38,360 Speaker 9: regulatory standpoint for these big tech companies, whether it's EU, 181 00:09:38,640 --> 00:09:40,680 Speaker 9: UK or even increasingly the US. 182 00:09:41,240 --> 00:09:44,000 Speaker 4: How do you handicap all of this within say valuations 183 00:09:44,080 --> 00:09:45,439 Speaker 4: or how you model the stock. 184 00:09:46,679 --> 00:09:49,959 Speaker 9: I honestly think a lot of investors have a little 185 00:09:49,960 --> 00:09:53,200 Speaker 9: bit of regulation fatigue when it comes to this. This 186 00:09:53,320 --> 00:09:56,439 Speaker 9: is by no means a new story, especially if you 187 00:09:56,480 --> 00:10:00,120 Speaker 9: look at how the EU has been going after the 188 00:10:00,120 --> 00:10:04,280 Speaker 9: these dominant firms for over a decade now, and I 189 00:10:04,320 --> 00:10:06,320 Speaker 9: can't say when you look at them you can see 190 00:10:06,360 --> 00:10:09,439 Speaker 9: really a loosening of their grip on the markets here. 191 00:10:09,480 --> 00:10:13,000 Speaker 9: So I do think in many ways that the investors 192 00:10:13,040 --> 00:10:16,200 Speaker 9: are sort of shrugging off these actions. And I think, 193 00:10:16,280 --> 00:10:19,680 Speaker 9: you know, especially when you look at the the increasing 194 00:10:19,960 --> 00:10:23,160 Speaker 9: trials that we're having, that we actually could see some 195 00:10:24,000 --> 00:10:29,120 Speaker 9: huge sort of landmark litigations coming out, So it's definitely 196 00:10:29,200 --> 00:10:31,560 Speaker 9: something to keep an eye on, even though we've been 197 00:10:31,559 --> 00:10:33,439 Speaker 9: seeing it for years and years and years. 198 00:10:33,520 --> 00:10:35,840 Speaker 4: All right, Tamlin and Apple stockdown about eight tenths of 199 00:10:35,920 --> 00:10:40,400 Speaker 4: one percent. Tamlin Basson joining us Bloomberg Technology a technology analyst. 200 00:10:41,800 --> 00:10:45,679 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 201 00:10:45,760 --> 00:10:48,400 Speaker 1: weekdays at ten am Eastern on Apple, car Play and 202 00:10:48,640 --> 00:10:51,480 Speaker 1: rout Otto with the Bloomberg Business app. Listen on demand 203 00:10:51,520 --> 00:10:55,839 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 204 00:10:56,960 --> 00:10:59,360 Speaker 6: Alex Deal Paul Sweeney live here in our Bloomberg Directive 205 00:10:59,360 --> 00:11:02,360 Speaker 6: Brokers studio. We're also streaming live on YouTube as well. 206 00:11:02,920 --> 00:11:07,040 Speaker 6: I've been a loyal BMW customer for probably twenty five 207 00:11:07,160 --> 00:11:10,120 Speaker 6: thirty years, currently driving the X three, which is the 208 00:11:10,160 --> 00:11:13,120 Speaker 6: best vehicle I've ever driven. Period. Not a good day 209 00:11:13,160 --> 00:11:16,400 Speaker 6: however for the stock of BMW down eleven percent today. 210 00:11:16,720 --> 00:11:20,640 Speaker 6: That's the most since March sixteenth, twenty twenty, just the 211 00:11:20,640 --> 00:11:22,520 Speaker 6: beginning of the pandemic, and it's the lowest since twenty 212 00:11:22,520 --> 00:11:25,199 Speaker 6: twenty one. So tough times out there for BMW. Let's 213 00:11:25,240 --> 00:11:27,560 Speaker 6: get the latest of what's happening with them. Michael Dean, 214 00:11:27,640 --> 00:11:31,040 Speaker 6: head of Global Autos of Bloomberg Intelligence, joins us from 215 00:11:31,320 --> 00:11:35,280 Speaker 6: London via zoom. Michael, what's going on with BMW today? 216 00:11:35,320 --> 00:11:38,560 Speaker 6: I saw that they took their earnings forecast down. What's 217 00:11:38,640 --> 00:11:39,200 Speaker 6: driving that? 218 00:11:40,480 --> 00:11:43,320 Speaker 10: So BMW had a profit warning today and that was 219 00:11:43,400 --> 00:11:46,760 Speaker 10: partly on the back of a warranty issue has with 220 00:11:46,920 --> 00:11:49,960 Speaker 10: its breaks not on the xtreet. So you're fine, Paul, good, 221 00:11:50,800 --> 00:11:53,120 Speaker 10: but they're going have to recall one point five million 222 00:11:53,760 --> 00:11:57,240 Speaker 10: vehicles and that's going to cost a high three digits 223 00:11:57,720 --> 00:12:00,280 Speaker 10: million in terms of earnings for twenty twenty four. But 224 00:12:00,320 --> 00:12:02,679 Speaker 10: that doesn't tell the whole story because they've downgraded their 225 00:12:02,720 --> 00:12:05,320 Speaker 10: margin by about two hundred basis points, which is about 226 00:12:05,320 --> 00:12:07,960 Speaker 10: two billion of v bits. So the balance of that 227 00:12:08,040 --> 00:12:13,240 Speaker 10: is coming from we could China sales, lower pricing in Europe, 228 00:12:13,360 --> 00:12:16,360 Speaker 10: lower demand in Europe. So just the demand and pricing 229 00:12:16,400 --> 00:12:19,360 Speaker 10: environment globally has been very difficult and that's part of 230 00:12:19,360 --> 00:12:21,480 Speaker 10: the reason for the profit warning, which. 231 00:12:21,280 --> 00:12:22,719 Speaker 2: Then leads us to Volkswagen. 232 00:12:22,800 --> 00:12:25,000 Speaker 4: So the latest news today is that it's ending its 233 00:12:25,040 --> 00:12:27,559 Speaker 4: job protections for autoworkers in Germany as part of its 234 00:12:27,559 --> 00:12:29,160 Speaker 4: cost cutting push. 235 00:12:29,320 --> 00:12:30,240 Speaker 2: There are several. 236 00:12:29,920 --> 00:12:32,280 Speaker 4: Agreements that were linked to a three decades old pack 237 00:12:32,320 --> 00:12:35,000 Speaker 4: that was supposed to safeguard employment un till twenty twenty nine, 238 00:12:35,040 --> 00:12:36,720 Speaker 4: but now those guarantees are going to run out by 239 00:12:36,720 --> 00:12:38,480 Speaker 4: the middle of next year. 240 00:12:39,240 --> 00:12:42,880 Speaker 2: I mean, wow, yeah. 241 00:12:43,080 --> 00:12:45,520 Speaker 10: So you know, Volkswagen was in the news last week 242 00:12:45,600 --> 00:12:48,400 Speaker 10: because it said it needs to close half a million 243 00:12:48,480 --> 00:12:53,040 Speaker 10: units of capacity in Germany. So that's very difficult because 244 00:12:53,080 --> 00:12:55,720 Speaker 10: of workers' rights. And you know, worker's rights have been 245 00:12:55,800 --> 00:12:58,959 Speaker 10: very one sided for Volkswagen in particular because you have 246 00:12:59,040 --> 00:13:01,840 Speaker 10: VW law and this is where twenty percent of the 247 00:13:02,000 --> 00:13:05,199 Speaker 10: ordinary shares, the voting shares are owned by the States 248 00:13:05,200 --> 00:13:08,679 Speaker 10: of Lower Saxony, which is where Volkswagen's biggest battery is, 249 00:13:08,800 --> 00:13:12,120 Speaker 10: and funnily enough, and they have the ability to block 250 00:13:13,040 --> 00:13:18,720 Speaker 10: certain agreements. So worker's rights are very strong for Volkswagen employees. 251 00:13:18,920 --> 00:13:20,920 Speaker 10: And now I think management are saying, Okay, hold on 252 00:13:21,040 --> 00:13:24,520 Speaker 10: a minute. The automotive world's changing rapidly. We need to 253 00:13:24,559 --> 00:13:27,160 Speaker 10: do something to reduce costs, and part of that is 254 00:13:27,200 --> 00:13:29,360 Speaker 10: the close factories and reduce jobs. 255 00:13:30,240 --> 00:13:32,680 Speaker 6: Michael, give us it just a thirty thousand foot view 256 00:13:32,679 --> 00:13:35,120 Speaker 6: of kind of the global auto business here. I mean, 257 00:13:35,240 --> 00:13:38,040 Speaker 6: the weakness that you're seeing in Europe. The weakness you're 258 00:13:38,040 --> 00:13:42,400 Speaker 6: seeing in China. Is that just general economic weakness effect 259 00:13:42,640 --> 00:13:44,440 Speaker 6: that we've seen in past cycles or is this something 260 00:13:44,480 --> 00:13:48,640 Speaker 6: to do with this ongoing transition to electric vehicles. 261 00:13:49,320 --> 00:13:51,400 Speaker 10: Yeah, it's a bit of both. So you know, you 262 00:13:51,440 --> 00:13:54,440 Speaker 10: have the transition to battery electric vehicles. It's going much 263 00:13:54,480 --> 00:13:58,640 Speaker 10: slower than expected in Western markets. Other markets probably going 264 00:13:58,720 --> 00:14:01,920 Speaker 10: quicker than expected, such as China. But the problem Volkstagener 265 00:14:01,960 --> 00:14:04,800 Speaker 10: has is that the competition is so intense and has 266 00:14:05,240 --> 00:14:08,319 Speaker 10: overtaken them in China, such as BYD So Volkswagen a 267 00:14:08,360 --> 00:14:10,600 Speaker 10: couple of years ago was the market leader in China. 268 00:14:10,920 --> 00:14:14,520 Speaker 10: Now byd within two years has overtaken Volkswagen, and really 269 00:14:14,559 --> 00:14:16,760 Speaker 10: it's going to be a survival of the fittest in 270 00:14:17,080 --> 00:14:17,800 Speaker 10: these markets. 271 00:14:18,080 --> 00:14:20,920 Speaker 4: Well, I mean, these companies aren't going to go under 272 00:14:21,000 --> 00:14:23,160 Speaker 4: or anything, right, So I guess I'm wondering when the 273 00:14:23,200 --> 00:14:23,760 Speaker 4: trough is. 274 00:14:23,800 --> 00:14:26,240 Speaker 2: When do we know what is a trough actually going 275 00:14:26,280 --> 00:14:26,800 Speaker 2: to look like? 276 00:14:27,760 --> 00:14:30,000 Speaker 10: Well, you say, well, a lot of companies could could 277 00:14:30,080 --> 00:14:32,880 Speaker 10: go under, particularly the pure play battery electric vehicles. 278 00:14:33,680 --> 00:14:35,800 Speaker 4: I just meant that, like Germany's not gonna let Bolkswagen 279 00:14:35,840 --> 00:14:36,840 Speaker 4: go bankrupt. 280 00:14:37,640 --> 00:14:40,120 Speaker 10: Now, of course, and the interesting thing if you look 281 00:14:40,120 --> 00:14:43,520 Speaker 10: at the valuation of Volkstagen today is valued at forty 282 00:14:43,520 --> 00:14:46,720 Speaker 10: five billion euros. I've had a lot of clients talk 283 00:14:46,760 --> 00:14:49,320 Speaker 10: to me about this today. They have almost forty billion 284 00:14:49,320 --> 00:14:51,680 Speaker 10: of cash on the balance sheet, there's seventy five percent 285 00:14:51,720 --> 00:14:55,960 Speaker 10: stake in Porsche is worth forty five billion euros. They 286 00:14:56,040 --> 00:15:00,400 Speaker 10: own Lamborghini brands, which has higher probability rates that Ferrari, 287 00:15:00,440 --> 00:15:03,200 Speaker 10: which is currently value at seventy seven billion, So we 288 00:15:03,240 --> 00:15:06,440 Speaker 10: think Lamborghini's worth thirty billion to use a Ferrari valuation. 289 00:15:06,720 --> 00:15:07,800 Speaker 3: So there's some of the parts. 290 00:15:07,800 --> 00:15:12,320 Speaker 10: Is volksg is huge compared to the actual valuation at 291 00:15:12,360 --> 00:15:13,400 Speaker 10: Volkswagen at the moment. 292 00:15:13,960 --> 00:15:17,840 Speaker 6: So you highlight an area for me that just kind 293 00:15:17,840 --> 00:15:19,720 Speaker 6: of feels like a long term issue, which is China. 294 00:15:20,240 --> 00:15:22,880 Speaker 6: I mean, if you they spend decades they being any 295 00:15:22,920 --> 00:15:27,880 Speaker 6: auto company, Volkswagen, BMW, Mercedes, whatever, building brand value and 296 00:15:27,920 --> 00:15:30,520 Speaker 6: brand loyalty in a market like China, and in a 297 00:15:30,520 --> 00:15:33,760 Speaker 6: period of two years they've lost that, it seems like, 298 00:15:34,160 --> 00:15:36,920 Speaker 6: I mean, is that the real barish case for some 299 00:15:36,960 --> 00:15:38,240 Speaker 6: of these global auto companies. 300 00:15:39,440 --> 00:15:40,880 Speaker 3: It's a it's a big case. 301 00:15:40,920 --> 00:15:43,640 Speaker 10: So for the German automakers In the past few years, 302 00:15:43,880 --> 00:15:47,040 Speaker 10: China was the most profitable market, accounted for thirty five 303 00:15:47,080 --> 00:15:49,520 Speaker 10: to forty percent of their profits. Now this year it 304 00:15:49,560 --> 00:15:52,560 Speaker 10: could be as low as ten percent, and you know 305 00:15:52,640 --> 00:15:55,080 Speaker 10: what the market's pricing is is that could be zero 306 00:15:55,120 --> 00:15:59,040 Speaker 10: in the future. And that's because the technology changing and 307 00:15:59,120 --> 00:16:02,960 Speaker 10: the way that startups in China are pushing through so quickly. 308 00:16:04,000 --> 00:16:06,000 Speaker 10: They're really fighting for market share at the moment and 309 00:16:06,000 --> 00:16:06,640 Speaker 10: their future. 310 00:16:07,520 --> 00:16:10,000 Speaker 4: So then it goes back to my question, what does 311 00:16:10,200 --> 00:16:14,040 Speaker 4: the bottom for either US car companies or for European 312 00:16:14,080 --> 00:16:17,480 Speaker 4: car companies wind up looking like as the tariff's go 313 00:16:17,560 --> 00:16:21,320 Speaker 4: into place, as China keeps producing these really cheapvs, as 314 00:16:21,360 --> 00:16:23,760 Speaker 4: we have different restrictions here in the US, like what 315 00:16:23,920 --> 00:16:24,240 Speaker 4: is that? 316 00:16:25,440 --> 00:16:27,320 Speaker 3: Well, you look at what GM and Ford have done. 317 00:16:27,360 --> 00:16:30,480 Speaker 10: I mean, in particulate, it's looked at different markets and 318 00:16:30,480 --> 00:16:32,680 Speaker 10: if it's not profitable, it's pulled out at those markets. 319 00:16:32,800 --> 00:16:36,360 Speaker 10: So China's one example, Europe's another example. So it's whether 320 00:16:36,480 --> 00:16:39,560 Speaker 10: the German automakers take a view that can they be 321 00:16:39,640 --> 00:16:43,560 Speaker 10: profitable in China in the future, And many foreign carmakers 322 00:16:43,560 --> 00:16:46,000 Speaker 10: are saying no. Volksfagen at the moment is saying yes, 323 00:16:46,040 --> 00:16:48,720 Speaker 10: we can and they've got this long term plan and 324 00:16:48,720 --> 00:16:54,200 Speaker 10: they've invested in xpaying so hopefully accelerate their transition. But 325 00:16:54,240 --> 00:16:56,640 Speaker 10: it's going to be very, very difficult for foreign carmakers 326 00:16:56,640 --> 00:16:59,000 Speaker 10: to continue to make profits in China. 327 00:17:00,000 --> 00:17:03,360 Speaker 6: I mean again, it feels like is there an even 328 00:17:03,440 --> 00:17:06,200 Speaker 6: discussion on whether they should be there at some point. 329 00:17:07,119 --> 00:17:11,280 Speaker 10: Certainly within the market, but for the company itself that 330 00:17:11,320 --> 00:17:15,720 Speaker 10: they've invested heavily in China and they've got a plan 331 00:17:15,840 --> 00:17:18,439 Speaker 10: now to try and catch up with local producers, to 332 00:17:18,480 --> 00:17:22,320 Speaker 10: catch up with BYD, which is with this partnership with xpang. 333 00:17:22,680 --> 00:17:25,480 Speaker 10: So they think they've got an opportunity because they've got 334 00:17:25,480 --> 00:17:27,120 Speaker 10: a good brand in China. 335 00:17:27,160 --> 00:17:28,880 Speaker 3: But it's going to be very tough. I mean, pricing 336 00:17:29,080 --> 00:17:30,360 Speaker 3: in China is. 337 00:17:30,720 --> 00:17:33,480 Speaker 10: Really really competitive at the moment, so the point where 338 00:17:33,680 --> 00:17:37,399 Speaker 10: battery electric vehicles are actually priced below internal combustion in 339 00:17:37,359 --> 00:17:40,040 Speaker 10: the vehicles compared to that to Europe, where the average 340 00:17:40,160 --> 00:17:43,679 Speaker 10: battery electric vehicle is thirty five percent higher than a 341 00:17:43,840 --> 00:17:46,399 Speaker 10: ice vehicle, and they still can barely make a profit 342 00:17:46,440 --> 00:17:46,959 Speaker 10: in Europe. 343 00:17:47,000 --> 00:17:48,760 Speaker 3: So yeah, it's a very tough environment. 344 00:17:49,040 --> 00:17:51,400 Speaker 4: Yeah, and then they'll have ev factory there, but then 345 00:17:51,520 --> 00:17:53,640 Speaker 4: all of a sudden you're looking at potential losses then 346 00:17:53,680 --> 00:17:55,400 Speaker 4: for workers in actual Germany. 347 00:17:55,480 --> 00:17:56,639 Speaker 2: A really interesting story. 348 00:17:56,680 --> 00:17:59,520 Speaker 4: Thank you very much, Michael Dean and joining us from 349 00:17:59,600 --> 00:18:00,720 Speaker 4: bloom Intelligence. 350 00:18:02,160 --> 00:18:06,080 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 351 00:18:06,160 --> 00:18:09,640 Speaker 1: weekdays at ten am Eastern on applecard Play and Android 352 00:18:09,680 --> 00:18:12,480 Speaker 1: Otto with the Bloomberg Business App. You can also listen 353 00:18:12,600 --> 00:18:15,680 Speaker 1: live on Amazon Alexa from our flagship New York station, 354 00:18:16,040 --> 00:18:20,000 Speaker 1: Just say Alexa playing Bloomberg eleven thirty. 355 00:18:20,560 --> 00:18:23,960 Speaker 6: It's September, which means it's conference time. It's also time 356 00:18:23,960 --> 00:18:26,679 Speaker 6: to talk about the hedge fund business. I'm not buying it, 357 00:18:26,720 --> 00:18:28,800 Speaker 6: per se. I'm not a fan of the hedge fund business. 358 00:18:28,840 --> 00:18:30,600 Speaker 6: I think the model's broken. I think it was broken 359 00:18:30,600 --> 00:18:32,600 Speaker 6: in the mid two thousand's. That's just my personal opinion. 360 00:18:32,800 --> 00:18:35,320 Speaker 6: Donald Steinberger joints us here. He's founder and CEO of 361 00:18:35,400 --> 00:18:39,399 Speaker 6: Agecroft Partners. I know the term Agecroft. That's from Richmond, Virginia, 362 00:18:39,640 --> 00:18:41,520 Speaker 6: and that's where he's based on a Richmond, which is 363 00:18:41,560 --> 00:18:44,480 Speaker 6: one of my fall time favorite towns. My twins are 364 00:18:44,520 --> 00:18:46,680 Speaker 6: born there, I went to school down there, great town. 365 00:18:47,080 --> 00:18:50,600 Speaker 6: Don I think those whole hedge fund games is scam. 366 00:18:50,680 --> 00:18:52,680 Speaker 6: But tell me about what's going on in the hedge 367 00:18:52,680 --> 00:18:55,720 Speaker 6: fund business in terms of can people raise capital? Are 368 00:18:55,720 --> 00:18:58,040 Speaker 6: they what's the state of the hedge fund business these days? 369 00:18:58,040 --> 00:18:59,719 Speaker 11: Well, first of all, it's great to be back, and 370 00:18:59,800 --> 00:19:01,680 Speaker 11: I think it's probably going to take a couple more 371 00:19:01,720 --> 00:19:04,359 Speaker 11: interviews before I finally get you to buy into hedge funds, 372 00:19:04,359 --> 00:19:06,040 Speaker 11: but it's going to happen. You're moving, you know a 373 00:19:06,080 --> 00:19:09,119 Speaker 11: little bit each time. You know, hedgehont industry is pretty strong. 374 00:19:09,160 --> 00:19:11,159 Speaker 11: I started an industry in two thousand and one. It 375 00:19:11,200 --> 00:19:15,600 Speaker 11: was six hundred billion industry. It's now five trillion. The 376 00:19:15,680 --> 00:19:18,400 Speaker 11: market is pretty saturated, meaning when you look at who's 377 00:19:18,440 --> 00:19:22,400 Speaker 11: investing in hedge funds, pensions and Downmans, foundations, softoign wealth funds, 378 00:19:22,640 --> 00:19:24,399 Speaker 11: the ones that are going to invest in hedge funds 379 00:19:24,400 --> 00:19:27,600 Speaker 11: tend to be pretty fully allocated. So you're not really 380 00:19:27,600 --> 00:19:30,720 Speaker 11: seeing growth from an inflow standpoint. As matter of fact, 381 00:19:30,720 --> 00:19:32,840 Speaker 11: you've had a little bit of money come out of 382 00:19:32,880 --> 00:19:36,840 Speaker 11: the industry, but the industry has grown significantly because of performance. 383 00:19:36,880 --> 00:19:39,520 Speaker 11: For example, you know, year to date, the hedgehont industry 384 00:19:39,560 --> 00:19:42,560 Speaker 11: is up seven point five percent. In addition to that, 385 00:19:42,640 --> 00:19:47,240 Speaker 11: it's a great business to raise assets because you have 386 00:19:47,400 --> 00:19:51,399 Speaker 11: huge divergence in performance between strategies and managers. There's always 387 00:19:51,400 --> 00:19:54,240 Speaker 11: people getting fired. Average person owns a hedge fund for 388 00:19:54,359 --> 00:19:57,680 Speaker 11: five years means twenty percent of the industry turns over 389 00:19:58,080 --> 00:20:01,959 Speaker 11: trillion dollars to be had. But it's still difficult because 390 00:20:02,520 --> 00:20:05,040 Speaker 11: ninety percent of assets are going to five percent of managers. 391 00:20:05,080 --> 00:20:08,040 Speaker 2: Wow, So what kind of strategies work right now? 392 00:20:08,760 --> 00:20:11,040 Speaker 11: Well, the one with the biggest demand right now is 393 00:20:11,440 --> 00:20:14,560 Speaker 11: long short equity. And long short equity went through a 394 00:20:14,600 --> 00:20:17,199 Speaker 11: real laughing at you right now, just yeah, a really 395 00:20:17,280 --> 00:20:20,920 Speaker 11: long period where people just hated it. I mean, last decade, 396 00:20:20,960 --> 00:20:24,640 Speaker 11: money just kept coming out and their performance was under 397 00:20:24,680 --> 00:20:26,679 Speaker 11: the S and P five hundred over and over and 398 00:20:26,720 --> 00:20:29,639 Speaker 11: over again, and a lot of people said, hey, you 399 00:20:29,720 --> 00:20:31,639 Speaker 11: put all your money in the S and P five hundred, 400 00:20:31,640 --> 00:20:33,639 Speaker 11: and what has that done. It's driven the S and 401 00:20:33,680 --> 00:20:36,800 Speaker 11: P five hundred to an extremely high valuation. It's dominated 402 00:20:36,840 --> 00:20:39,760 Speaker 11: by a small handful of stocks. And reason people like 403 00:20:40,520 --> 00:20:43,160 Speaker 11: long shred equity is some people are worried about the market. 404 00:20:43,160 --> 00:20:45,320 Speaker 11: If you're worried about the market, be hedged. If you're 405 00:20:45,320 --> 00:20:47,480 Speaker 11: not worried about the market, go all in. 406 00:20:48,240 --> 00:20:50,120 Speaker 7: Other people like the fact that. 407 00:20:50,320 --> 00:20:55,320 Speaker 11: There's huge divergencies between valuations between value growth, small cap, 408 00:20:55,440 --> 00:20:59,560 Speaker 11: large cap US non US and over time, these these 409 00:21:00,119 --> 00:21:03,640 Speaker 11: vergences have contracted. So it means a lot of people 410 00:21:03,720 --> 00:21:06,560 Speaker 11: think fundamentals are going to add value. And the last 411 00:21:06,560 --> 00:21:08,800 Speaker 11: thing is you can make money on the short book 412 00:21:08,800 --> 00:21:11,480 Speaker 11: in your portfolio because short term rates are high. You 413 00:21:11,560 --> 00:21:15,480 Speaker 11: might get another two percent return based on the interest 414 00:21:15,560 --> 00:21:16,200 Speaker 11: on the short book. 415 00:21:16,359 --> 00:21:16,920 Speaker 3: You know, is it? 416 00:21:17,200 --> 00:21:19,200 Speaker 6: You mentioned that you know a lot of the most 417 00:21:19,200 --> 00:21:21,800 Speaker 6: of the funds are with a relatively few managers, the 418 00:21:21,840 --> 00:21:24,719 Speaker 6: citadels of the world. How did that come about? I mean, 419 00:21:24,720 --> 00:21:26,199 Speaker 6: it used to be a day where if you had 420 00:21:26,600 --> 00:21:29,080 Speaker 6: hotshot trader at Morgan Stander Goldensacks, you could go out 421 00:21:29,080 --> 00:21:32,840 Speaker 6: and raise five hundred million dollar billion dollars. That's not 422 00:21:33,040 --> 00:21:34,239 Speaker 6: as prevalent today, is it? 423 00:21:35,359 --> 00:21:38,639 Speaker 11: You know it's not, And I will say that that 424 00:21:38,840 --> 00:21:41,000 Speaker 11: is one of the big issues at the industry is 425 00:21:41,160 --> 00:21:43,840 Speaker 11: a lot of people by brand. They think you know 426 00:21:43,880 --> 00:21:46,400 Speaker 11: their safety and brand. A lot of these top managers 427 00:21:46,520 --> 00:21:49,840 Speaker 11: had phenomenal track records a long time ago. They're managing 428 00:21:49,880 --> 00:21:53,399 Speaker 11: way too much assets. Their returns have been very mediocre 429 00:21:53,520 --> 00:21:56,080 Speaker 11: for a lot of famous hedge funds. A lot of 430 00:21:56,119 --> 00:21:59,800 Speaker 11: these pods have done recently, have done very well recently, 431 00:22:00,119 --> 00:22:02,879 Speaker 11: but they've gotten very large. You're beginning to see some 432 00:22:03,040 --> 00:22:06,480 Speaker 11: money focus more on smaller managers. Smaller managers, if you 433 00:22:06,520 --> 00:22:09,600 Speaker 11: want good returns, is where you want to invest. But 434 00:22:09,680 --> 00:22:11,680 Speaker 11: you don't want to invest in them unless you understand 435 00:22:11,720 --> 00:22:14,840 Speaker 11: the inefficiency that they're focusing on and what their differential 436 00:22:14,880 --> 00:22:16,800 Speaker 11: advantages to capture that efficiency. 437 00:22:17,760 --> 00:22:22,240 Speaker 4: What about all the main strategies like volatility focused funds. 438 00:22:22,280 --> 00:22:25,960 Speaker 4: CTA is like the trend followers. What's the interest there? 439 00:22:26,600 --> 00:22:30,840 Speaker 11: So there's been a pickup and interest for commodity trading 440 00:22:30,880 --> 00:22:34,840 Speaker 11: advisors And basically they're people that invest in financial futures 441 00:22:34,880 --> 00:22:41,560 Speaker 11: across the forming capital markets and their quantitative quantitative managers 442 00:22:41,760 --> 00:22:45,120 Speaker 11: that are looking at price patterns historically, and they tend 443 00:22:45,119 --> 00:22:48,480 Speaker 11: to do very well during markets selloffs. So they help 444 00:22:48,520 --> 00:22:52,200 Speaker 11: protect markets if the market's going to sell off. 445 00:22:52,440 --> 00:22:54,000 Speaker 6: Help diversify a lot of. 446 00:22:53,920 --> 00:22:57,280 Speaker 11: People are worried about evaluations of the equity marketplace, so 447 00:22:57,320 --> 00:23:00,080 Speaker 11: that's one way to diversify away from equity. 448 00:23:00,720 --> 00:23:03,680 Speaker 6: How about pricing fees? Is two and twenty still the game? 449 00:23:03,760 --> 00:23:05,240 Speaker 2: So is this why you don't like hedge fund because 450 00:23:05,240 --> 00:23:05,640 Speaker 2: of the fees? 451 00:23:05,760 --> 00:23:07,439 Speaker 6: Yeah? No, No, I love the fees, so it likes 452 00:23:07,480 --> 00:23:09,440 Speaker 6: the fee. But I just if I were managing money, 453 00:23:09,480 --> 00:23:11,520 Speaker 6: I just don't think that fee of just the returns 454 00:23:11,520 --> 00:23:12,399 Speaker 6: are worth it. 455 00:23:13,000 --> 00:23:15,760 Speaker 11: People need to focus on fees, and fees have come 456 00:23:15,800 --> 00:23:18,560 Speaker 11: down a lot. You know that the prominent managers you 457 00:23:18,720 --> 00:23:21,320 Speaker 11: pay two and twenty for performance that might not be 458 00:23:21,760 --> 00:23:24,199 Speaker 11: you know, that great because now they're really large, but 459 00:23:24,800 --> 00:23:28,600 Speaker 11: new managers, smaller managers, I mean typical fees probably one 460 00:23:28,640 --> 00:23:33,560 Speaker 11: and a half and seventeen performance fee potentially less. It's 461 00:23:33,600 --> 00:23:37,600 Speaker 11: also diverted between individual investors and institutions. You know a 462 00:23:37,640 --> 00:23:40,800 Speaker 11: lot of people listening to this radio broadcast may indirectly 463 00:23:40,880 --> 00:23:44,280 Speaker 11: own hedge funds through their government pension fund or corporate 464 00:23:44,280 --> 00:23:47,760 Speaker 11: pension fund. Big institutional investors on average are probably paying 465 00:23:47,880 --> 00:23:52,440 Speaker 11: one in ten, maybe one in fifteen, so huge contraction. 466 00:23:52,640 --> 00:23:56,119 Speaker 11: Also hurdles, you know, hurdle is for performance, and a 467 00:23:56,160 --> 00:23:58,760 Speaker 11: lot of people don't want to pay performance fee on cash. 468 00:23:58,840 --> 00:24:01,199 Speaker 11: They're saying, hey, you got to be cash before we're 469 00:24:01,240 --> 00:24:02,400 Speaker 11: going to pay a performance fake. 470 00:24:02,880 --> 00:24:04,800 Speaker 4: Well, this is any other question, and this may be 471 00:24:04,800 --> 00:24:07,840 Speaker 4: a really ignorant question, but with the dominance of Nvidia 472 00:24:07,920 --> 00:24:11,240 Speaker 4: and the mag seven, how does a hedge fund compete 473 00:24:11,240 --> 00:24:13,399 Speaker 4: against that because the end of the day, like wouldn't 474 00:24:13,400 --> 00:24:16,920 Speaker 4: they do just as relatively well, just like buying the index. 475 00:24:16,720 --> 00:24:19,159 Speaker 11: Or like well, I guess it all depends whether you 476 00:24:19,240 --> 00:24:23,080 Speaker 11: think that those companies can continue to go up the 477 00:24:23,119 --> 00:24:24,600 Speaker 11: way they've gone up. I mean a lot of people 478 00:24:24,720 --> 00:24:25,000 Speaker 11: we have. 479 00:24:24,920 --> 00:24:26,480 Speaker 4: To wait for the mag seven to sort of fall 480 00:24:26,520 --> 00:24:28,640 Speaker 4: out for them. Those hedge fund strategies to pay off. 481 00:24:28,760 --> 00:24:30,000 Speaker 4: Is that the idea, I just. 482 00:24:29,960 --> 00:24:32,920 Speaker 11: Don't think you can you know, I don't think you 483 00:24:32,960 --> 00:24:36,480 Speaker 11: can time it. And if you think that the equity 484 00:24:36,480 --> 00:24:39,800 Speaker 11: market is overvalued, then you want to You don't want 485 00:24:39,800 --> 00:24:42,920 Speaker 11: to wait until certain things happen and then change your portfolio. 486 00:24:42,960 --> 00:24:45,879 Speaker 11: You need to change your portfolio before it happens. And 487 00:24:46,520 --> 00:24:48,840 Speaker 11: so one way is to hedge it. Another is you 488 00:24:48,880 --> 00:24:54,280 Speaker 11: could also overweight certain factors through mutual fund index funds 489 00:24:54,280 --> 00:24:57,240 Speaker 11: if you wanted underweight the S and P overweight other 490 00:24:59,040 --> 00:25:03,200 Speaker 11: types of indiscy that are cheap from a relative value standpoint, 491 00:25:03,320 --> 00:25:06,600 Speaker 11: the S and P five hundred real quick thirty seconds. 492 00:25:06,680 --> 00:25:08,760 Speaker 6: Has the growth in ETF? Is that taking funds away 493 00:25:08,760 --> 00:25:11,520 Speaker 6: from hedge funds, or is that the ETF growth just 494 00:25:11,520 --> 00:25:12,320 Speaker 6: come from mutual funds? 495 00:25:12,359 --> 00:25:12,560 Speaker 3: Maybe. 496 00:25:12,640 --> 00:25:14,680 Speaker 11: Yeah, I think it's come from mutual funds. I think 497 00:25:14,720 --> 00:25:17,320 Speaker 11: it's come from you know, long only managers. You know, 498 00:25:17,520 --> 00:25:20,080 Speaker 11: as I mentioned, the hedge fund industry now is a 499 00:25:20,080 --> 00:25:23,199 Speaker 11: little over five trillion dollars. I think it's you know, 500 00:25:23,400 --> 00:25:27,159 Speaker 11: again fairly saturated, but it's it's growing through performance. And 501 00:25:28,560 --> 00:25:31,720 Speaker 11: you know, the environment for a hedgehond manager is good 502 00:25:31,720 --> 00:25:34,040 Speaker 11: if you're really good, and if you're not really good, 503 00:25:34,200 --> 00:25:36,640 Speaker 11: it's a very difficult market to be in. 504 00:25:36,720 --> 00:25:36,920 Speaker 3: Yep. 505 00:25:37,880 --> 00:25:39,120 Speaker 2: Yeah, there's a life lesson there. 506 00:25:39,160 --> 00:25:40,200 Speaker 7: There is exactly right. 507 00:25:40,240 --> 00:25:44,000 Speaker 6: Donald Steinberger, he's founder and CEO of age Croft Partners, 508 00:25:44,080 --> 00:25:46,360 Speaker 6: joinings live here in our Bloomberg Interactive Broker Studio. Get 509 00:25:46,640 --> 00:25:50,639 Speaker 6: update on the hedge of fund business against five trillion dollars. 510 00:25:50,680 --> 00:25:53,560 Speaker 6: Just extraordinary there and there are some obviously some big 511 00:25:53,640 --> 00:25:55,200 Speaker 6: names out there. 512 00:25:55,680 --> 00:25:59,560 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 513 00:26:00,320 --> 00:26:03,639 Speaker 1: ten am Eastern on applecar Play and Android Auto with 514 00:26:03,720 --> 00:26:06,560 Speaker 1: a Bloomberg Business app. You can also listen live on 515 00:26:06,640 --> 00:26:10,440 Speaker 1: Amazon Alexa from our flagship New York station, Just Say Alexa, 516 00:26:10,640 --> 00:26:12,600 Speaker 1: play Bloomberg eleven thirty. 517 00:26:13,880 --> 00:26:17,000 Speaker 4: Alex Dealer alongside Paul Sweeney. This is Bloomberg Intelligence radio, 518 00:26:17,280 --> 00:26:19,480 Speaker 4: we bring you all the top news in business, economics, 519 00:26:19,480 --> 00:26:21,840 Speaker 4: and finance. There are lens of our Bloomberg Intelligence folks. 520 00:26:21,840 --> 00:26:24,200 Speaker 4: They cover two thousand companies in one hundred and thirty 521 00:26:24,240 --> 00:26:27,720 Speaker 4: industries all around the world. Let's check in with one 522 00:26:27,760 --> 00:26:30,359 Speaker 4: of them right now, with Nathan Dean, Bloomberg Intelligence senior 523 00:26:30,400 --> 00:26:33,480 Speaker 4: policy analysts. Yeah, shaker, there's a debate tonight in case 524 00:26:33,480 --> 00:26:35,520 Speaker 4: no one's been paying attention, So it's at nine pm. Well, 525 00:26:35,520 --> 00:26:38,439 Speaker 4: a special coverage here at eight pm, simulcast on radio 526 00:26:38,760 --> 00:26:43,119 Speaker 4: as well as television. Nathan, though from an equity side, 527 00:26:43,160 --> 00:26:46,760 Speaker 4: is there a Harris or Trump trade evolving at all 528 00:26:47,000 --> 00:26:48,400 Speaker 4: that we can sort of zone in on? 529 00:26:49,400 --> 00:26:50,840 Speaker 7: Now? I don't think exactly. 530 00:26:50,880 --> 00:26:53,480 Speaker 12: I mean, anytime you talk Trump trade or Harris trade, 531 00:26:53,520 --> 00:26:55,320 Speaker 12: you know, we really just you know, there are certain 532 00:26:55,320 --> 00:26:57,720 Speaker 12: sectors you can say we'll impact in certain. 533 00:26:57,480 --> 00:26:58,520 Speaker 7: Ways to the presidency. 534 00:26:58,560 --> 00:27:00,920 Speaker 12: But for I think for tonight's purpose is we really 535 00:27:00,920 --> 00:27:03,320 Speaker 12: want to hear more about tax plans and we want 536 00:27:03,320 --> 00:27:05,320 Speaker 12: to hear more about economic plans, because you know, both 537 00:27:05,359 --> 00:27:07,960 Speaker 12: candidates have been fairly light, you know, over the past 538 00:27:08,040 --> 00:27:09,760 Speaker 12: couple of weeks in terms of saying how they're going 539 00:27:09,760 --> 00:27:12,760 Speaker 12: to actually change certain things Now, obviously for tonight's debate, 540 00:27:12,800 --> 00:27:14,720 Speaker 12: we've heard President Trump say that he wants to cut 541 00:27:14,720 --> 00:27:17,120 Speaker 12: the corporate tax right down to fifteen percent. Kyla Harris, 542 00:27:17,160 --> 00:27:18,640 Speaker 12: the vice president wants to go up to the twenty 543 00:27:18,640 --> 00:27:21,520 Speaker 12: eight percent. But we would always just caution our clients 544 00:27:21,520 --> 00:27:23,640 Speaker 12: and investors and so forth like that, just remember every 545 00:27:23,640 --> 00:27:26,119 Speaker 12: statement that comes out of the candidate's mouth, you have 546 00:27:26,160 --> 00:27:28,120 Speaker 12: to remember how they're going to get that through Congress 547 00:27:28,200 --> 00:27:30,399 Speaker 12: or how they're going to get through Washington. And for 548 00:27:30,440 --> 00:27:32,320 Speaker 12: a lot of these tax proposals that you're going to 549 00:27:32,400 --> 00:27:34,440 Speaker 12: hear tonight, you know, the other folks down on the 550 00:27:34,480 --> 00:27:37,640 Speaker 12: other side of you know, Pennsylvania Avenue the Congress, they 551 00:27:37,640 --> 00:27:40,640 Speaker 12: may have different plans. So it's just interesting to hear 552 00:27:40,680 --> 00:27:43,000 Speaker 12: those thoughts, but you know, most likely they're not They're 553 00:27:43,000 --> 00:27:43,960 Speaker 12: going to have to be curtailed. 554 00:27:43,960 --> 00:27:44,639 Speaker 7: They're restricted some. 555 00:27:45,480 --> 00:27:48,520 Speaker 6: Should a question be asked tonight of both candidates talk 556 00:27:48,560 --> 00:27:51,680 Speaker 6: to us about annual deficits, talk to us about the 557 00:27:51,720 --> 00:27:54,040 Speaker 6: total debt of the United States? Should that be a question? 558 00:27:55,119 --> 00:27:55,960 Speaker 7: I think it should be. 559 00:27:56,000 --> 00:27:57,720 Speaker 12: I mean, this is something that we get from New 560 00:27:57,800 --> 00:28:01,199 Speaker 12: York a lot, especially from you know, asset managers that 561 00:28:01,240 --> 00:28:03,800 Speaker 12: are concerned with the state of the US debt. But 562 00:28:04,160 --> 00:28:07,080 Speaker 12: from the Washington perspective, you know, the US debt is 563 00:28:07,119 --> 00:28:09,479 Speaker 12: not something that many people have thought about, or at 564 00:28:09,520 --> 00:28:12,000 Speaker 12: least if they are thinking about it, it's certainly not reflective 565 00:28:12,000 --> 00:28:14,480 Speaker 12: in what Congress spending goals are. So, you know, I 566 00:28:14,480 --> 00:28:16,840 Speaker 12: think when it comes to the debt, though, however, it's 567 00:28:16,880 --> 00:28:19,520 Speaker 12: really gonna be whoever wins the election, because if Kamala 568 00:28:19,520 --> 00:28:21,720 Speaker 12: Harris wins the election, you're gonna have a return of 569 00:28:21,720 --> 00:28:24,960 Speaker 12: the debt ceiling fights that we saw under the first 570 00:28:24,960 --> 00:28:28,159 Speaker 12: half or the end of the Obama administration, where you know, 571 00:28:28,359 --> 00:28:30,879 Speaker 12: dead ceiling comes up, it's going to be negotiated, and 572 00:28:30,880 --> 00:28:33,400 Speaker 12: then ultimately when the markets begin to react to it, 573 00:28:33,560 --> 00:28:35,280 Speaker 12: they kick the can down the road. Now, the dead 574 00:28:35,320 --> 00:28:37,960 Speaker 12: ceiling doesn't expire till January first, twenty twenty five, which 575 00:28:38,000 --> 00:28:40,600 Speaker 12: is good news because the lame duck it will probably 576 00:28:40,600 --> 00:28:43,000 Speaker 12: be one of President Biden's last signature as president to 577 00:28:43,080 --> 00:28:45,680 Speaker 12: kick the can down even more. But if President Trump wins, 578 00:28:46,200 --> 00:28:47,520 Speaker 12: I don't think you're going to see many of this 579 00:28:47,560 --> 00:28:48,920 Speaker 12: debt ceiling fights at all. 580 00:28:48,960 --> 00:28:51,320 Speaker 4: What about some of the sectors on the key sectors 581 00:28:51,320 --> 00:28:53,120 Speaker 4: that are kind of most exposed here. 582 00:28:54,080 --> 00:28:56,000 Speaker 12: Yeah, So, you know, we just put out a large 583 00:28:56,000 --> 00:29:00,320 Speaker 12: report on the Kamala Harris versus Donald Trump race. In 584 00:29:00,360 --> 00:29:02,080 Speaker 12: some of our key sectors to watch where we're like 585 00:29:02,120 --> 00:29:04,440 Speaker 12: renewables tied to the Inflation Reduction Act. 586 00:29:04,480 --> 00:29:06,640 Speaker 7: There's a lot of tax carrots, if you will. 587 00:29:06,400 --> 00:29:09,520 Speaker 12: In there that are spurring renewable investment, especially in cap 588 00:29:09,520 --> 00:29:12,760 Speaker 12: BACX and a lot of GUP states. Others involve the banks, 589 00:29:12,800 --> 00:29:14,760 Speaker 12: you know the Basil three end game. You know, a 590 00:29:14,840 --> 00:29:17,720 Speaker 12: proposal that would increase CAPPER requirements around nine percent for 591 00:29:17,800 --> 00:29:20,280 Speaker 12: the investment banks. If President Trump wins, that may not 592 00:29:20,360 --> 00:29:23,160 Speaker 12: go forward. Other things are global manufacturers due to the 593 00:29:23,200 --> 00:29:25,920 Speaker 12: tax changes that we just talked about healthcare, they're twenty 594 00:29:25,920 --> 00:29:29,120 Speaker 12: five hundred twenty five billion dollars in Obamacare subsidies that 595 00:29:29,160 --> 00:29:30,480 Speaker 12: are up for renewal next year. 596 00:29:30,640 --> 00:29:31,840 Speaker 7: And finally, big tech. 597 00:29:32,160 --> 00:29:34,239 Speaker 12: You know, whether if you Kamala Harris wins, are going 598 00:29:34,280 --> 00:29:37,120 Speaker 12: to have a continuation of the very stringent M and 599 00:29:37,120 --> 00:29:39,880 Speaker 12: a anti trust authority that the Biden era regulators are 600 00:29:39,920 --> 00:29:40,720 Speaker 12: putting on big tech. 601 00:29:40,960 --> 00:29:41,600 Speaker 7: But if JD. 602 00:29:41,720 --> 00:29:44,640 Speaker 12: Vance's idea of economic populism gets into the White House, 603 00:29:44,800 --> 00:29:46,720 Speaker 12: you could see a Republican president also be. 604 00:29:46,720 --> 00:29:49,840 Speaker 7: Very skeptical of big text. So a lot of what ifs. 605 00:29:49,600 --> 00:29:51,600 Speaker 12: But a lot of you know, you know, scenarios in 606 00:29:51,640 --> 00:29:53,560 Speaker 12: which those industries could be heavily impacted. 607 00:29:53,720 --> 00:29:56,960 Speaker 6: You know, I listened to former President Trump's Economic Planet 608 00:29:57,280 --> 00:30:00,360 Speaker 6: Economic Club of New York. I don't know hard time 609 00:30:00,360 --> 00:30:01,920 Speaker 6: making heads or tails out of it, but I guess 610 00:30:01,960 --> 00:30:05,080 Speaker 6: it was lower taxes, higher tariffs. Is that kind of 611 00:30:05,080 --> 00:30:08,440 Speaker 6: the basis of his economic I guess platform. 612 00:30:08,960 --> 00:30:09,240 Speaker 7: Yeah. 613 00:30:09,320 --> 00:30:12,360 Speaker 12: I think that's the really good point to point out, 614 00:30:12,400 --> 00:30:14,600 Speaker 12: because I think it's almost like a phase one, phase 615 00:30:14,640 --> 00:30:16,640 Speaker 12: two type of deal with President Trump wins. 616 00:30:16,680 --> 00:30:18,920 Speaker 7: Phase one is tariffs. You know, this is something that 617 00:30:18,960 --> 00:30:19,400 Speaker 7: he can do. 618 00:30:19,440 --> 00:30:21,600 Speaker 12: The power of the presidency is a lot more powerful there, 619 00:30:21,920 --> 00:30:24,120 Speaker 12: and so sorry the first half of twenty twenty five, 620 00:30:24,160 --> 00:30:25,640 Speaker 12: you could see a lot more tariffs coming in. 621 00:30:25,680 --> 00:30:25,880 Speaker 1: Now. 622 00:30:26,080 --> 00:30:28,000 Speaker 7: I would argue that a lot of these tariffs are 623 00:30:28,080 --> 00:30:29,200 Speaker 7: negotiation ploys. 624 00:30:29,440 --> 00:30:31,440 Speaker 12: You know, if he holds up an executive order and 625 00:30:31,480 --> 00:30:34,000 Speaker 12: says I'm going to sign a tariff, there's probably language 626 00:30:34,000 --> 00:30:36,120 Speaker 12: in that executive order saying two hundred and seventy days 627 00:30:36,160 --> 00:30:38,600 Speaker 12: from now, it won't go into fruition until then, because 628 00:30:38,640 --> 00:30:41,320 Speaker 12: you're gonna give the opposite side multiple times to negotiate. 629 00:30:41,560 --> 00:30:43,720 Speaker 12: But it's certainly something that he's comfortable with and I think, 630 00:30:43,840 --> 00:30:46,000 Speaker 12: you know, would easily put out if he feels that 631 00:30:46,040 --> 00:30:48,640 Speaker 12: it's necessary. But then the tax reform debate is what's 632 00:30:48,640 --> 00:30:50,360 Speaker 12: going to come next, because at the end of twenty 633 00:30:50,400 --> 00:30:53,600 Speaker 12: twenty five, those Trump Ara tax cuts for individuals expire. 634 00:30:53,880 --> 00:30:56,640 Speaker 12: Now President Trump is said fifteen percent corporate tax rate. 635 00:30:56,880 --> 00:30:58,520 Speaker 12: I'm not sure he'll be able to get that. You know, 636 00:30:58,520 --> 00:31:00,360 Speaker 12: he's gonna have to negotiate. We've seen a little bit 637 00:31:00,360 --> 00:31:03,280 Speaker 12: of statements from House Republicans saying, yeah, maybe we should 638 00:31:03,320 --> 00:31:05,440 Speaker 12: go down to twenty or nineteen or eighteen percent, But 639 00:31:05,800 --> 00:31:07,920 Speaker 12: being able to pay for that fifteen percent is going 640 00:31:07,960 --> 00:31:10,600 Speaker 12: to be somewhat difficult for these deficit hawks. So, but 641 00:31:11,160 --> 00:31:13,760 Speaker 12: there's a lot of provisions of the tax era Trump 642 00:31:13,800 --> 00:31:16,400 Speaker 12: are tax cuts that have already expired for industry, and 643 00:31:16,440 --> 00:31:18,640 Speaker 12: I think President Trump is going to try and institute those, 644 00:31:18,680 --> 00:31:21,240 Speaker 12: though at a large level, think Trump two point zero 645 00:31:21,240 --> 00:31:23,160 Speaker 12: is going to do another version of the same tax cut. 646 00:31:23,360 --> 00:31:26,760 Speaker 4: I literally remember having the exact same conversation in twenty fifteen, 647 00:31:26,840 --> 00:31:29,520 Speaker 4: twenty sixteen, like the phase two how you get it done, 648 00:31:30,160 --> 00:31:33,000 Speaker 4: et cetera. So what's interesting to me though, is the 649 00:31:33,080 --> 00:31:36,960 Speaker 4: lack of response though in say, high tax companies versus 650 00:31:37,040 --> 00:31:39,400 Speaker 4: low tax companies, like the things that would make sense 651 00:31:39,480 --> 00:31:42,480 Speaker 4: because those policies are so different, say on corporate taxes. 652 00:31:42,680 --> 00:31:45,040 Speaker 4: Are we seeing that reflected within market moves? 653 00:31:46,080 --> 00:31:46,280 Speaker 3: You know? 654 00:31:46,800 --> 00:31:48,800 Speaker 12: I think so, But you know a lot I've been 655 00:31:48,800 --> 00:31:51,080 Speaker 12: talking to a lot of investors over the last few weeks, 656 00:31:51,080 --> 00:31:53,080 Speaker 12: and a lot of folks come to me and they say, 657 00:31:53,400 --> 00:31:55,520 Speaker 12: we just really don't know what's going to happen on 658 00:31:55,560 --> 00:31:58,440 Speaker 12: tax until we know the makeup of Congress. And the 659 00:31:58,520 --> 00:32:01,160 Speaker 12: reason being is is that if Trump wins but the 660 00:32:01,160 --> 00:32:05,360 Speaker 12: Democrats take the House, pretty much all of his tax vision, 661 00:32:05,440 --> 00:32:08,480 Speaker 12: if you will, is going to be curtailed, negotiated, and 662 00:32:08,560 --> 00:32:10,920 Speaker 12: a lot more restricted. Now, if he ends up winning 663 00:32:10,920 --> 00:32:13,480 Speaker 12: the House and the Senate, they can use reconciliation to 664 00:32:13,640 --> 00:32:16,800 Speaker 12: essentially bypass the Democrats, and they have a very. 665 00:32:16,680 --> 00:32:18,120 Speaker 7: Broad net that they can cast. 666 00:32:18,520 --> 00:32:20,280 Speaker 12: So a lot of people that I've been talking to 667 00:32:20,280 --> 00:32:23,360 Speaker 12: you of saying, look, we understand the Trump era desires, 668 00:32:23,640 --> 00:32:28,160 Speaker 12: and we understand that these broads deficit inducing tax cuts 669 00:32:28,320 --> 00:32:31,000 Speaker 12: potentially could be on the horizon, but we're not excited 670 00:32:31,000 --> 00:32:33,120 Speaker 12: about it. Just yet because we need to see how 671 00:32:33,160 --> 00:32:34,720 Speaker 12: the House and Senate races play out. 672 00:32:35,360 --> 00:32:39,280 Speaker 6: What is the thinking currently in Washington, Nathan about how 673 00:32:39,320 --> 00:32:40,840 Speaker 6: that will play out in Congress? 674 00:32:41,520 --> 00:32:43,239 Speaker 12: Well, look, I mean, you know, if you go to 675 00:32:43,240 --> 00:32:46,080 Speaker 12: the function on the terminal WSL election, you can see 676 00:32:46,120 --> 00:32:46,880 Speaker 12: all the data there. 677 00:32:46,920 --> 00:32:48,320 Speaker 7: But I think you know when. 678 00:32:48,200 --> 00:32:50,280 Speaker 12: It comes to the Senate, that's going to be somewhat 679 00:32:50,400 --> 00:32:52,640 Speaker 12: very difficult for the Democrats to control because right now 680 00:32:52,680 --> 00:32:55,200 Speaker 12: it's fifty one to forty nine. You're gonna lose West 681 00:32:55,280 --> 00:32:58,280 Speaker 12: Virginia because Senator Joe Manchin is retiring, So now you're 682 00:32:58,280 --> 00:32:59,880 Speaker 12: at a fifty to fifty and the Democrats are sent 683 00:33:00,240 --> 00:33:02,640 Speaker 12: have to run the board just to keep that fifty 684 00:33:02,640 --> 00:33:05,280 Speaker 12: to fifty. Think of Senator Shery Brown in Ohio, Senator 685 00:33:05,360 --> 00:33:08,320 Speaker 12: John Tester, and Montana Senator Jackie Rose in Nevada. 686 00:33:08,440 --> 00:33:10,600 Speaker 7: So assuming that if the Democrats. 687 00:33:10,040 --> 00:33:12,240 Speaker 12: Lose one, the Republicans are most likely going to take 688 00:33:12,240 --> 00:33:15,880 Speaker 12: the Senate, and if President Trump wins, then obviously allow 689 00:33:15,960 --> 00:33:18,280 Speaker 12: him the ability to put in judges and his regulatory 690 00:33:18,360 --> 00:33:20,520 Speaker 12: leadership when it comes to the House, I've seen pulling 691 00:33:20,600 --> 00:33:22,560 Speaker 12: up both sides. But my general view, and this is 692 00:33:22,640 --> 00:33:24,880 Speaker 12: just my personal view, is that whoever wins the president 693 00:33:24,920 --> 00:33:25,760 Speaker 12: also wins the house. 694 00:33:26,400 --> 00:33:29,320 Speaker 2: Okay, interesting, How excited are you for tonight? Is this 695 00:33:29,440 --> 00:33:30,320 Speaker 2: like a super Bowl for you? 696 00:33:30,400 --> 00:33:30,440 Speaker 13: Like? 697 00:33:30,480 --> 00:33:32,880 Speaker 4: Do you get out popcorn? Do you have like guawk, 698 00:33:33,000 --> 00:33:35,160 Speaker 4: do you have avocados? There's an avocado debate happening right 699 00:33:35,200 --> 00:33:36,040 Speaker 4: now on rading. 700 00:33:36,040 --> 00:33:36,600 Speaker 7: I think I'm rich. 701 00:33:37,160 --> 00:33:38,840 Speaker 12: I think I'm gonna try and take as much Bloomberg 702 00:33:38,880 --> 00:33:41,240 Speaker 12: popcorn away from the pantry. I canned home with me tonight. 703 00:33:41,320 --> 00:33:42,880 Speaker 12: So nice, It's gonna be a fun night. 704 00:33:44,080 --> 00:33:44,680 Speaker 2: That was awesome. 705 00:33:44,720 --> 00:33:46,920 Speaker 4: All right, Hey, Nathan, we really appreciate Nathan Dean Bloomberg 706 00:33:46,960 --> 00:33:50,680 Speaker 4: Intelligence senior policy analyst and the most recent deep dive 707 00:33:50,720 --> 00:33:52,880 Speaker 4: on the impact of the US election. 708 00:33:53,640 --> 00:33:55,400 Speaker 2: It's one of those things. I mean, it's one of 709 00:33:55,440 --> 00:33:57,000 Speaker 2: those things where it's like I want to cringe, but 710 00:33:57,160 --> 00:33:57,640 Speaker 2: watch it. 711 00:33:57,640 --> 00:33:59,320 Speaker 4: It's like you want to watch it through your hands, 712 00:33:59,320 --> 00:34:01,280 Speaker 4: like a scary movie or something, because you just don't 713 00:34:01,320 --> 00:34:03,280 Speaker 4: know what's going to rap him, what's going to happen. 714 00:34:03,440 --> 00:34:06,680 Speaker 6: Yeah, and again, as Nathan's just pointing out, this research report, 715 00:34:06,680 --> 00:34:08,960 Speaker 6: which you can get a bi go, is just really 716 00:34:09,080 --> 00:34:12,000 Speaker 6: in depth, basically just saying from an economic Wall Street 717 00:34:12,160 --> 00:34:16,440 Speaker 6: financial perspective, you know, under two different presidencies, which industries 718 00:34:16,440 --> 00:34:17,160 Speaker 6: are winners and losers. 719 00:34:17,200 --> 00:34:18,000 Speaker 13: So it's great research. 720 00:34:18,320 --> 00:34:20,960 Speaker 6: B I go on the terminal and that's where you 721 00:34:21,000 --> 00:34:23,399 Speaker 6: can find it good stuff. 722 00:34:23,440 --> 00:34:27,320 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 723 00:34:27,400 --> 00:34:30,440 Speaker 1: weekdays at ten am Eastern on Apple, card Play and 724 00:34:30,440 --> 00:34:33,359 Speaker 1: Android Otto with the Bloomberg Business App. You can also 725 00:34:33,440 --> 00:34:36,600 Speaker 1: listen live on Amazon Alexa from our flagship New York 726 00:34:36,680 --> 00:34:40,800 Speaker 1: station Just Say Alexa playing Bloomberg eleven thirty. 727 00:34:41,880 --> 00:34:44,160 Speaker 6: Let's talk about the broader markets. One of the things 728 00:34:44,239 --> 00:34:46,439 Speaker 6: we like to do is get a sense of what 729 00:34:46,640 --> 00:34:49,200 Speaker 6: is investor sentiment out in the marketplace. It's one of 730 00:34:49,239 --> 00:34:51,920 Speaker 6: the factors that Genie, Martin Adams and Bloomberg Intelligence factors in. 731 00:34:51,920 --> 00:34:53,080 Speaker 6: And I think if you want to do that on 732 00:34:53,120 --> 00:34:55,719 Speaker 6: the retail side, nobody better than talk to than the 733 00:34:55,719 --> 00:34:57,840 Speaker 6: folks at Charles Swap because they've got like a jillion 734 00:34:58,640 --> 00:35:01,320 Speaker 6: customers out there. Joe missola It joins us head trading 735 00:35:01,360 --> 00:35:04,440 Speaker 6: and derivative strategist for Charles Schwab, joining us here in 736 00:35:04,440 --> 00:35:06,480 Speaker 6: our studio. He's based out in the Bay Area, but 737 00:35:06,520 --> 00:35:08,040 Speaker 6: he joins us here in a New York studio because 738 00:35:08,040 --> 00:35:09,319 Speaker 6: why wouldn't be in New York if you're in your 739 00:35:09,320 --> 00:35:12,160 Speaker 6: financial services business. That's what I say. Talk to us 740 00:35:12,160 --> 00:35:15,360 Speaker 6: about your STACKS index. What is it and what's it 741 00:35:15,400 --> 00:35:16,200 Speaker 6: telling you these days? 742 00:35:16,440 --> 00:35:18,440 Speaker 13: Yeah, hey, thanks for having me. I appreciate that. And 743 00:35:18,960 --> 00:35:21,200 Speaker 13: the STACKS index, what it does is it measures our 744 00:35:21,480 --> 00:35:24,680 Speaker 13: SCHWAB Trading Activity index, or measures are our SWAB clients 745 00:35:24,680 --> 00:35:25,200 Speaker 13: what are they doing? 746 00:35:25,280 --> 00:35:25,520 Speaker 3: You know? 747 00:35:25,640 --> 00:35:29,920 Speaker 13: So it's the behavior over the attitudinal. Basically, what we 748 00:35:29,960 --> 00:35:32,000 Speaker 13: do is we look at thirty two million accounts, we 749 00:35:32,040 --> 00:35:34,200 Speaker 13: take a little subset of that and say where we 750 00:35:34,239 --> 00:35:36,200 Speaker 13: buyers or where we sellers over the course of the month, 751 00:35:36,320 --> 00:35:38,719 Speaker 13: and you learn And there was a little bit of 752 00:35:38,760 --> 00:35:41,879 Speaker 13: selling in August, so it basically pulled back a little 753 00:35:41,880 --> 00:35:43,840 Speaker 13: bit from what we saw in July. Still you know, 754 00:35:43,960 --> 00:35:46,319 Speaker 13: still above levels that are above moderate, but for the 755 00:35:46,320 --> 00:35:48,000 Speaker 13: most part we did see some selling. And what I 756 00:35:48,040 --> 00:35:50,880 Speaker 13: would say is this was almost a tale of two months. 757 00:35:50,960 --> 00:35:53,360 Speaker 13: So beginning of the month, we saw clients kind of 758 00:35:53,360 --> 00:35:55,719 Speaker 13: step in and buy that dip from the August fifth 759 00:35:55,760 --> 00:35:58,360 Speaker 13: sell off, saw a lot of activity and AI stocks 760 00:35:58,360 --> 00:36:00,359 Speaker 13: a lot of buying there, but as a month kind 761 00:36:00,400 --> 00:36:02,680 Speaker 13: of trailed on. What we saw was a little bit 762 00:36:02,719 --> 00:36:06,280 Speaker 13: more of shifting towards away from equities and interfixed income. 763 00:36:06,640 --> 00:36:10,000 Speaker 6: All right, So this index typically ranges between a reading 764 00:36:10,000 --> 00:36:12,680 Speaker 6: of thirty five and seventy, and then I guess the 765 00:36:12,760 --> 00:36:16,319 Speaker 6: reading for August was somewhere in the fifty three range, 766 00:36:16,320 --> 00:36:18,040 Speaker 6: so it's kind of right in the middle there. Does 767 00:36:18,080 --> 00:36:20,960 Speaker 6: that kind of suggest to you that your clients are 768 00:36:21,040 --> 00:36:23,760 Speaker 6: neither overly bearish or bullish. 769 00:36:24,000 --> 00:36:27,040 Speaker 13: So we always follow that up with an attitudinal study 770 00:36:27,040 --> 00:36:29,359 Speaker 13: as well. So we have the behavioral study that we're 771 00:36:29,360 --> 00:36:31,279 Speaker 13: talking about now, but we always like to do like 772 00:36:31,280 --> 00:36:34,080 Speaker 13: a trader sentiment study where we actually asked the clients, 773 00:36:34,120 --> 00:36:36,680 Speaker 13: you know, how they're feeling about going forward, and what 774 00:36:36,719 --> 00:36:38,880 Speaker 13: we found out is that they're still feeling moderate to 775 00:36:38,960 --> 00:36:42,560 Speaker 13: positive kind of as they're heading into the September month. 776 00:36:42,920 --> 00:36:45,040 Speaker 13: There's a little bit of concern around interest rates, so 777 00:36:45,080 --> 00:36:46,880 Speaker 13: that's giving them a little bit of a pause in 778 00:36:46,960 --> 00:36:48,680 Speaker 13: terms of, you know, what the federal action will be. 779 00:36:48,920 --> 00:36:51,000 Speaker 13: We're hearing a little bit of concern in terms of 780 00:36:51,040 --> 00:36:54,200 Speaker 13: the political cycle and what the elections could do for 781 00:36:54,280 --> 00:36:56,919 Speaker 13: the markets as well. But overall, yeah, Paul, you're right, 782 00:36:57,000 --> 00:36:59,719 Speaker 13: I would say for the most part, they're moderately bullish. 783 00:37:00,120 --> 00:37:01,600 Speaker 2: Oh, what are they buying more of the selling. 784 00:37:02,040 --> 00:37:04,360 Speaker 13: So what we saw on the buy side is some 785 00:37:04,440 --> 00:37:06,080 Speaker 13: of the typical names kind of rose to the top, 786 00:37:06,120 --> 00:37:08,759 Speaker 13: in Video being one of them. Amazon is new to 787 00:37:08,800 --> 00:37:10,200 Speaker 13: the list, it's been off for a little bit, so 788 00:37:10,239 --> 00:37:12,960 Speaker 13: that one came back. One of them that we haven't seen. 789 00:37:13,080 --> 00:37:14,960 Speaker 13: I was shocked to see this one was Intel, and 790 00:37:15,000 --> 00:37:16,920 Speaker 13: I think part of that, yeah, I think part of 791 00:37:16,920 --> 00:37:18,680 Speaker 13: that is just because we got about a thirty thirty 792 00:37:18,719 --> 00:37:21,439 Speaker 13: five percent pullback right off for earnings and we saw 793 00:37:21,480 --> 00:37:24,720 Speaker 13: some dit buyers kind of step in on the cell side. 794 00:37:24,840 --> 00:37:27,200 Speaker 13: What was interesting about the cell side is these were 795 00:37:27,280 --> 00:37:29,239 Speaker 13: a lot of the names that kind of flipped lop 796 00:37:29,239 --> 00:37:33,239 Speaker 13: between both sides. But what was interesting to me is 797 00:37:33,280 --> 00:37:35,960 Speaker 13: out of the mag seven names, you had Metta and Apple, 798 00:37:36,040 --> 00:37:38,480 Speaker 13: and if you think about kind of how those stocks 799 00:37:39,640 --> 00:37:42,080 Speaker 13: performed relative to the other ones, they actually held up 800 00:37:42,080 --> 00:37:44,399 Speaker 13: pretty well throughout throughout the month. I mean, Meta even 801 00:37:44,440 --> 00:37:46,239 Speaker 13: put in a fifty two week high. So I think 802 00:37:46,239 --> 00:37:48,480 Speaker 13: what we saw was some profit taking maybe from some 803 00:37:48,520 --> 00:37:51,040 Speaker 13: of the dip buying that we saw earlier in the month. 804 00:37:51,320 --> 00:37:54,040 Speaker 13: And then the last one was Starbucks. And if you 805 00:37:54,080 --> 00:37:56,680 Speaker 13: remember star Wars as a new CEO came over from Chipotle, 806 00:37:57,000 --> 00:37:59,000 Speaker 13: got a nice little pop there, and we saw some 807 00:37:59,040 --> 00:38:01,720 Speaker 13: clients trim some profits after that occurred. 808 00:38:01,840 --> 00:38:03,399 Speaker 6: Yeah, interesting, I'm going to stock that. Remember that day 809 00:38:03,440 --> 00:38:06,160 Speaker 6: was up eighteen percent just when the news I must. 810 00:38:06,200 --> 00:38:08,440 Speaker 4: Be really good, like you leave a job and everyone's 811 00:38:08,480 --> 00:38:10,520 Speaker 4: like yeah exactly. 812 00:38:10,880 --> 00:38:13,920 Speaker 6: One of the sectors that was most pronounced of buying 813 00:38:14,760 --> 00:38:16,359 Speaker 6: was energy, which is interest because we were just talking 814 00:38:16,400 --> 00:38:18,279 Speaker 6: to Mike mcglon our commodity and also we were just 815 00:38:18,280 --> 00:38:20,320 Speaker 6: talking about the decline in oil prices. 816 00:38:20,360 --> 00:38:21,640 Speaker 7: But maybe maybe. 817 00:38:21,520 --> 00:38:24,319 Speaker 6: Some of your customers clients are seeing value there. 818 00:38:24,360 --> 00:38:26,000 Speaker 13: Maybe I think that's probably what it is, Paul. I 819 00:38:26,000 --> 00:38:29,120 Speaker 13: think you're right. I think that there's some day buying 820 00:38:29,120 --> 00:38:32,080 Speaker 13: in there looking for some opportunities with what I found 821 00:38:32,120 --> 00:38:35,879 Speaker 13: interesting as well to consumer discretionary was another sectors in buying. 822 00:38:35,920 --> 00:38:36,960 Speaker 13: I think a lot of that has to do with 823 00:38:37,000 --> 00:38:41,279 Speaker 13: the Amazon, right, the Amazon buying that we saw. When 824 00:38:41,320 --> 00:38:44,280 Speaker 13: you look at the sectors that were sold, a couple 825 00:38:44,280 --> 00:38:46,680 Speaker 13: of rides at the top there and communication services being 826 00:38:46,719 --> 00:38:48,759 Speaker 13: number one. A lot of that has to do with 827 00:38:48,800 --> 00:38:52,560 Speaker 13: some large sales and meta and there as well. What 828 00:38:52,640 --> 00:38:55,000 Speaker 13: I when I look at kind of what our clients 829 00:38:55,040 --> 00:38:57,000 Speaker 13: did relative to where maybe we saw some of the 830 00:38:57,160 --> 00:39:00,480 Speaker 13: rotations in the market. I think it's interesting because the 831 00:39:01,280 --> 00:39:03,279 Speaker 13: breadth right, you know, where we saw kind of a 832 00:39:03,320 --> 00:39:05,560 Speaker 13: breadth thrust would have been more on the interest rate 833 00:39:05,640 --> 00:39:10,239 Speaker 13: sensitive sectors financials right, utilities, reads. Didn't see a lot 834 00:39:10,239 --> 00:39:13,040 Speaker 13: of retail movement into that. To me, that says it's 835 00:39:13,040 --> 00:39:14,480 Speaker 13: a little bit more institutional buying there. 836 00:39:14,560 --> 00:39:16,560 Speaker 2: Here's a numb for a question. How do you feel 837 00:39:16,560 --> 00:39:18,240 Speaker 2: like retails looking at the election? 838 00:39:19,640 --> 00:39:21,600 Speaker 13: Well, I don't know what side they're picking, but I 839 00:39:21,680 --> 00:39:22,000 Speaker 13: know that. 840 00:39:22,120 --> 00:39:22,319 Speaker 7: Yeah. 841 00:39:22,480 --> 00:39:24,240 Speaker 2: But in terms of like do you see any hedging, 842 00:39:24,440 --> 00:39:25,000 Speaker 2: Like yes. 843 00:39:24,920 --> 00:39:27,640 Speaker 13: Yeah, absolutely, no, absolutely, how are doing it? Yeah? So 844 00:39:27,760 --> 00:39:29,600 Speaker 13: there's a couple couple different things we're saying we're seeing 845 00:39:29,600 --> 00:39:31,920 Speaker 13: on the broader side. And I don't know if that's 846 00:39:31,960 --> 00:39:35,560 Speaker 13: retail over its institutional, but you're definitely seeing some put 847 00:39:35,600 --> 00:39:37,759 Speaker 13: buying in the SPX and that's kind of pushing up 848 00:39:37,800 --> 00:39:39,480 Speaker 13: the VIX a little bit. You're seeing the skew kind 849 00:39:39,480 --> 00:39:41,280 Speaker 13: of get bit up a little bit more, the difference 850 00:39:41,280 --> 00:39:43,760 Speaker 13: between the puts and the calls and the twenty five delta. 851 00:39:43,880 --> 00:39:46,000 Speaker 13: So we're starting to see that as well. We do 852 00:39:46,040 --> 00:39:49,160 Speaker 13: see that on the retail side, you know, I'd love 853 00:39:49,200 --> 00:39:50,920 Speaker 13: to say that our clients are educated. I mean, we 854 00:39:50,960 --> 00:39:52,839 Speaker 13: have a lot of educational opportunities for them. A lot 855 00:39:52,880 --> 00:39:55,480 Speaker 13: of them utilize options in their strategies, and we're starting 856 00:39:55,480 --> 00:39:57,719 Speaker 13: to see more and more activity and on the option 857 00:39:57,840 --> 00:39:59,240 Speaker 13: side heading into the elections. 858 00:39:59,480 --> 00:40:02,840 Speaker 6: Do you see your your clients do they trade around 859 00:40:02,880 --> 00:40:05,560 Speaker 6: events like we kind of think that they do, whether 860 00:40:05,600 --> 00:40:08,600 Speaker 6: it's the FED Day or jobs Day? Do you see 861 00:40:08,640 --> 00:40:10,400 Speaker 6: like a spike and volume, a spike in trading. Does 862 00:40:10,440 --> 00:40:13,120 Speaker 6: that happen on that platform or your people just I'm 863 00:40:13,160 --> 00:40:14,759 Speaker 6: just I'm along, I'm holding well. 864 00:40:15,040 --> 00:40:16,000 Speaker 13: I mean, I think you have to look at it 865 00:40:16,000 --> 00:40:17,799 Speaker 13: two ways, right, you have the investor base and then 866 00:40:17,800 --> 00:40:19,160 Speaker 13: you have the trader base, and a lot of that 867 00:40:19,200 --> 00:40:21,759 Speaker 13: trader base came over from the td ror Trade acquisition. 868 00:40:22,200 --> 00:40:25,480 Speaker 13: So they are pretty active clients and they love you know, 869 00:40:25,600 --> 00:40:28,080 Speaker 13: event risks, they love earnings, they love trading around that 870 00:40:28,160 --> 00:40:30,440 Speaker 13: different type of strategies specifically alex As you were talking 871 00:40:30,480 --> 00:40:32,919 Speaker 13: about some option type of strategies around there. So yeah, 872 00:40:32,960 --> 00:40:35,719 Speaker 13: we do see a pickup around those events, and you know, 873 00:40:35,840 --> 00:40:38,040 Speaker 13: and how they had it or how they play it, 874 00:40:38,080 --> 00:40:40,239 Speaker 13: that kind of depends on the client themselves. But we 875 00:40:40,280 --> 00:40:41,040 Speaker 13: do see activity. 876 00:40:41,440 --> 00:40:43,759 Speaker 2: It's so cool. I love all of this insight. How 877 00:40:43,960 --> 00:40:46,919 Speaker 2: are how's retail trading bonds right now? 878 00:40:47,520 --> 00:40:50,279 Speaker 13: Yeah, we've seen a rotation into fixed income and what 879 00:40:50,360 --> 00:40:52,720 Speaker 13: I think what we're seeing from the from that side 880 00:40:52,800 --> 00:40:55,960 Speaker 13: is that they're probably trying to maybe front run the 881 00:40:55,960 --> 00:40:59,840 Speaker 13: FED announcement on September eighteenth, maybe trying to buy bonds 882 00:41:00,000 --> 00:41:00,880 Speaker 13: four yeels come down a. 883 00:41:00,880 --> 00:41:02,640 Speaker 2: Little bit at the front end of the long end. 884 00:41:02,800 --> 00:41:04,600 Speaker 13: We're seeing it more in the middle. Yeah, definitely in 885 00:41:04,600 --> 00:41:06,239 Speaker 13: the middle, a little bit, a little bit of the 886 00:41:06,239 --> 00:41:07,839 Speaker 13: belly ETFs. 887 00:41:08,400 --> 00:41:09,880 Speaker 6: It's just I mean, Alex and I have just been 888 00:41:09,920 --> 00:41:13,040 Speaker 6: amazed at the growth of the ETF business. Maybe yet 889 00:41:13,080 --> 00:41:15,280 Speaker 6: to some extent that the expense of the mutual fund business. 890 00:41:15,719 --> 00:41:17,880 Speaker 6: How much or how often are to what's agree or 891 00:41:17,920 --> 00:41:19,360 Speaker 6: your client's use using ETFs. 892 00:41:19,440 --> 00:41:21,400 Speaker 13: Yeah, I mean think about think about the flexibility that 893 00:41:21,480 --> 00:41:23,800 Speaker 13: ETFs offer, right whether it's you know, being able to 894 00:41:23,800 --> 00:41:25,719 Speaker 13: trade intra day on them or not having to wait 895 00:41:25,760 --> 00:41:27,520 Speaker 13: to end to day settle you want to use option 896 00:41:27,600 --> 00:41:30,239 Speaker 13: type strategy. So yeah, that's something that's employed quite a 897 00:41:30,239 --> 00:41:32,360 Speaker 13: bit by our clients just because, like I said, the 898 00:41:32,400 --> 00:41:34,279 Speaker 13: flexibility and it gives them the ability to have some 899 00:41:34,360 --> 00:41:38,239 Speaker 13: diversification choose sector ETFs. That's another thing we've been looking at, 900 00:41:38,320 --> 00:41:40,200 Speaker 13: and you know it's wy We offer a lot of 901 00:41:40,360 --> 00:41:43,359 Speaker 13: thematic type trading. That's just something that we've really seen 902 00:41:43,400 --> 00:41:45,440 Speaker 13: start to pick up as well too, so clients they 903 00:41:45,440 --> 00:41:47,560 Speaker 13: don't have to necessarily pick a stock, they can pick 904 00:41:47,560 --> 00:41:49,440 Speaker 13: a theme and it gives them the ability to have 905 00:41:49,480 --> 00:41:50,160 Speaker 13: exposure to that. 906 00:41:50,600 --> 00:41:52,000 Speaker 2: This is a super weird question. 907 00:41:52,400 --> 00:41:54,360 Speaker 4: We had an article out a couple weeks ago, I 908 00:41:54,360 --> 00:41:57,359 Speaker 4: think that said that as online gambling has picked up, 909 00:41:57,640 --> 00:42:00,480 Speaker 4: you've seen more of that and less actual retail trading. 910 00:42:00,719 --> 00:42:04,560 Speaker 4: Have you noticed like any correlation of like when you 911 00:42:04,600 --> 00:42:06,799 Speaker 4: see surges and not for retail or is it the 912 00:42:06,800 --> 00:42:09,160 Speaker 4: same kind of volume and stuff that you were seeing 913 00:42:09,200 --> 00:42:10,200 Speaker 4: back in twenty twenty. 914 00:42:11,200 --> 00:42:12,440 Speaker 13: I mean, I would say if you look at the 915 00:42:12,480 --> 00:42:14,759 Speaker 13: options market, ash Pole, right, I mean we're doing I mean, 916 00:42:14,800 --> 00:42:17,359 Speaker 13: not schwapping in general. The whole market is doing fifty 917 00:42:17,400 --> 00:42:19,799 Speaker 13: million contracts a day. So I don't know how much 918 00:42:19,840 --> 00:42:22,359 Speaker 13: of that's being pulled from gambling. I guess we'll find 919 00:42:22,360 --> 00:42:24,879 Speaker 13: out now the football season started again, to see if 920 00:42:24,880 --> 00:42:27,960 Speaker 13: that pulls some of the money away. But at this 921 00:42:28,040 --> 00:42:30,120 Speaker 13: point I just continue to see. You know, the options 922 00:42:30,120 --> 00:42:32,560 Speaker 13: market continue to expand, so I'm assuming it's pulling some 923 00:42:32,640 --> 00:42:33,759 Speaker 13: of that gambling dollars in there. 924 00:42:34,160 --> 00:42:36,080 Speaker 4: So cool, all right, Joe, thanks a lot, Joe Mazzola, 925 00:42:36,320 --> 00:42:38,520 Speaker 4: Charles Schwab, head of Trading and the Rivetive strategist. 926 00:42:38,520 --> 00:42:39,719 Speaker 2: I'd definitely come back. 927 00:42:40,160 --> 00:42:44,640 Speaker 1: This is the Bloomberg Intelligence Podcast, available on apples, Spotify, 928 00:42:44,840 --> 00:42:48,520 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 929 00:42:48,640 --> 00:42:51,600 Speaker 1: ten am to noon Eastern on Bloomberg dot com, the 930 00:42:51,680 --> 00:42:54,959 Speaker 1: iHeart Radio app, tune In, and the Bloomberg Business app. 931 00:42:55,080 --> 00:42:58,200 Speaker 1: You can also watch us live every weekday on YouTube 932 00:42:58,320 --> 00:42:59,960 Speaker 1: and always on the Bloomberg termal 933 00:43:00,640 --> 00:43:02,320 Speaker 3: Out round the