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Speaker 2: I'm Alex Deel longside false.
Speaker 3: We need.
Speaker 4: This is Bloomberg Intelligence Radio. We bring you all the
Speaker 4: top news and business, economics and finance right here at
Speaker 4: our Bloomberg World headquarters in the beautiful Midtown in Manhattan.
Speaker 4: So at the top of the hour of Federal Reserve
Speaker 4: Vice Chairmichael Barr commented in a speech in Washington, and
Speaker 4: this concerns Basil three endgame capital rules for banks, and
Speaker 4: he made some material changes to those bank capital proposals.
Speaker 4: The biggest banks are now going to face just nine
Speaker 4: percent capital increase after some revisions, and some smaller banks
Speaker 4: will be exempt altogether. Michael McKee, Bloomberger inter National Economics
Speaker 4: and Policy correspondent, joins us now to go through all
Speaker 4: of this. Okay, So, if I'm a JP Morgan, I
Speaker 4: like this.
Speaker 5: You like it better than what you had before. It's
Speaker 5: still higher than they would like to see, and it's
Speaker 5: sort of a compromise from the FED and the other
Speaker 5: regulators now. Michael Barr also noted that this hasn't been
Speaker 5: completely finalized yet. They're going to hopefully propose it next
Speaker 5: week and then it has to go through another comment period,
Speaker 5: and he noted that the other regulators haven't signed off yet,
Speaker 5: but this is likely what we're going to see. The
Speaker 5: nine percent is still a fairly hefty additional level of
Speaker 5: cushion against financial shocks for them, So it is better
Speaker 5: than the nineteen percent that had been in a lot
Speaker 5: original proposal. And then the medium sized banks the one
Speaker 5: hundred to two hundred and fifty billion, They won't see
Speaker 5: any change in any additional change in their capital requirements,
Speaker 5: with the exception of capital held to maturity, the stuff
Speaker 5: that got SVB in trouble. They if yours isn't in
Speaker 5: good enough shape, then you'll have to pay a bit more.
Speaker 6: Is this still from great Financial Crisis?
Speaker 7: All these rules.
Speaker 6: Here is kind of I mean, are we done yet?
Speaker 7: I mean, come on enough?
Speaker 2: Maybe after endgame? Maybe this is why it's called endgame?
Speaker 5: Well, jamis that's that's the laugh, you know. The Marvel
Speaker 5: The Avengers movie series did a movie as a two
Speaker 5: part movie called Endgame, which was supposed to be sort
Speaker 5: of the end wrapping up all these threads over the years,
Speaker 5: and now they're doing more Marvel super hero movies. So
Speaker 5: Endgame is not going to be the endgame. There will
Speaker 5: always be something that comes up. But this is a
Speaker 5: process that's been under way for a very long time.
Speaker 5: BOZZL process started back in the nineteen nineties trying to
Speaker 5: harmonize international banking rules, and this Bozzle three process came
Speaker 5: after the Great Financial Crisis and to harmonize and agree
Speaker 5: on safety standards for banks around the world. And that
Speaker 5: goes a lot deeper than just capital it's what kind
Speaker 5: of models they can use. In this case, they're going
Speaker 5: to have to switch from using their own models for
Speaker 5: risk to standardize risk models stuff like that. It has
Speaker 5: a major impact on how the regulatory offices in these
Speaker 5: banks will operate.
Speaker 6: All right, Michael McKee, thank you so much. We appreciate it.
Speaker 6: Michael mcge is a our economics dude here for Bloomberg
Speaker 6: Radio TV JP Morgan is stock down four percent, no idea, why.
Speaker 4: Well, we also have some the big banks are all
Speaker 4: talking right now. So Jimmy Pinto over at JP Morgan
Speaker 4: is saying that third quarter investment bank banking fees could
Speaker 4: rise about fifteen percent from a year ago. Not a
Speaker 4: big fan of acquisitions and asset management, David Solomon, Woman
Speaker 4: Sachs spoke yesterday at a conference talking about their trading revenue.
Speaker 4: So we're getting all that feedback right now.
Speaker 6: So out there, it's September, which means it's conference time.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 4: So today the EU's top court delivered two final binding
Speaker 4: rulings against two US tech companies.
Speaker 2: Apple lost its court fight.
Speaker 4: Over a fourteen point four billion dollar Irish tax bill,
Speaker 4: and Google lost its challenge over a two point four
Speaker 4: billion euro fine for abusing its market power. EU Competition
Speaker 4: Commissioner Margaret Vasteier spoke to Bloomberg following the victories for
Speaker 4: the European Commission, and she said she hopes her record
Speaker 4: show she was willing to take the risks to prove
Speaker 4: that the market works for consumers.
Speaker 8: You need to of course own your victories, but you
Speaker 8: also own your defeats, and we have had both, and
Speaker 8: hopefully that shows that we will to push the envelopes
Speaker 8: also sometimes to take a risk in order to try
Speaker 8: to make sure that the market serves the consumer and
Speaker 8: that we are not just small ponds or meet for
Speaker 8: the machine. And I hope that is what people take
Speaker 8: down from today's judgment, both that we won the Google
Speaker 8: case and it is final, and we won the Apple
Speaker 8: case and its final.
Speaker 4: Now was Margaret Westdeyer joining us. All right, let's get
Speaker 4: more insight here with Tamlin Basin, Bloomberg Intelligence technology analysts
Speaker 4: who joined us on this.
Speaker 2: Was this at all surprising to you? Tamlin?
Speaker 9: Now, this wasn't terribly surprising, Alex. The Apple tax case,
Speaker 9: we start with that. In twenty sixteen, the European Commission
Speaker 9: made this finding. It assess the thirteen billion dollar penalty,
Speaker 9: which is basically what it said were unpaid taxes because
Speaker 9: the Irish tax authority had given these favorable opinions to
Speaker 9: Apple that essentially amounted to improper state aid. Now, what
Speaker 9: was interesting is that the Intermedia A court in twenty
Speaker 9: twenty did reverse that decision and said the Commission didn't
Speaker 9: follow certain guidelines and setting that fine. But when we
Speaker 9: looked at the briefing going into this this final I'm hearing,
Speaker 9: it did seem like this was going to be the result.
Speaker 9: So I think this thirteen million dollar verdict against Apple
Speaker 9: wasn't entirely surprising. And this money has been held in
Speaker 9: s grow for a number of years, so I think
Speaker 9: people sort of saw this this coming this way.
Speaker 6: So I mean, is this just another I guess hurdle
Speaker 6: that Apple and you know, other big tech companies have
Speaker 6: to deal with from a regulatory standpoint just all over
Speaker 6: the world.
Speaker 9: Here, Yeah, I mean the hurdles are certainly stacking up.
Speaker 9: But I think what's interesting about this is I look
Speaker 9: at these two decisions as really some of the last ripples,
Speaker 9: some really regulatory actions that began kind of nearly a
Speaker 9: decade ago, and I think now we've certainly moved on
Speaker 9: and both and especially in Europe but also in the US,
Speaker 9: there are increasing hurdles there that the companies are having
Speaker 9: to face. I mean, especially if you look at Google
Speaker 9: and you know it's sort are locked up in another
Speaker 9: trial this week with the DJ over competition concerns. So
Speaker 9: these these these challenges really are mounting up around the globe.
Speaker 2: So put it all together. So I guess that's a
Speaker 2: great point.
Speaker 4: What's on the dock at court wise for big tech
Speaker 4: in Europe, and then what's on the dock at big
Speaker 4: tech wise in the US. And do have like a
Speaker 4: spreadsheet that sort of outlines everything? So I honestly can't
Speaker 4: keep track, and also like what the money is associated with.
Speaker 2: All of it?
Speaker 9: Yeah, yeah, We've got quite a few spreadsheets. I do
Speaker 9: have one wide track all the ones that are in Europe.
Speaker 9: And if you look at Europe, what's I say that
Speaker 9: we've moved on from that is because after these these
Speaker 9: regulations or sorry, these litigations were started five, six, seven
Speaker 9: years ago, what the Europegian Commission did is they went
Speaker 9: back and they rewrote some rules where they said, we're
Speaker 9: going to make it easier to really go after some
Speaker 9: of these anti competitive practices that we're seeing. And that's
Speaker 9: why we have the Digital Markett Act, That's why we
Speaker 9: now have the Digital Services Act, and we already see
Speaker 9: under the DMA that there are some probes facing both
Speaker 9: Apple and Google Google for sort of similar practices that
Speaker 9: were at issue here, where it was alleged to have
Speaker 9: abused its dominant position and search to elevate its own
Speaker 9: products over the products of peers. It's already facing investigation
Speaker 9: for that. Apple's facing two DMA probes, both related to
Speaker 9: that store, and I think these ongoing have brying more
Speaker 9: of an operational risk because they really could go to
Speaker 9: how these companies are currently operating, not just sort of
Speaker 9: this backwards looking financial penalty thing that we saw today.
Speaker 9: Then if you look at the US, so of course,
Speaker 9: I think the biggest thing facing Google right now is
Speaker 9: this DOJ lawsuit that is going to trial this week
Speaker 9: based on its ad stack. So I think that could
Speaker 9: have some really profound ramifications for the company, not just
Speaker 9: in terms of financial penalty, but really behavioral remedies, which
Speaker 9: is I think, moving forward, what could be the most
Speaker 9: frightening thing for a lot of these companies.
Speaker 6: Camlin is the UK view of big tech different than
Speaker 6: the EU? And reason asks now that obviously the UK
Speaker 6: is out of the EU, do they look at tech
Speaker 6: any differently than the European Union?
Speaker 9: Maybe there's some slight variations where they maybe trend slightly
Speaker 9: more towards the US, although I say that but US
Speaker 9: now is really fairly aggressive in their stance on big tech.
Speaker 9: But the UK doesn't really quite have the competition rules.
Speaker 9: But they also are saying that we're going to reevaluate
Speaker 9: how some of these rules are going to be applied
Speaker 9: against these big tech firms. So I think it's difficult
Speaker 9: to find any real safe haven in terms of a
Speaker 9: regulatory standpoint for these big tech companies, whether it's EU,
Speaker 9: UK or even increasingly the US.
Speaker 4: How do you handicap all of this within say valuations
Speaker 4: or how you model the stock.
Speaker 9: I honestly think a lot of investors have a little
Speaker 9: bit of regulation fatigue when it comes to this. This
Speaker 9: is by no means a new story, especially if you
Speaker 9: look at how the EU has been going after the
Speaker 9: these dominant firms for over a decade now, and I
Speaker 9: can't say when you look at them you can see
Speaker 9: really a loosening of their grip on the markets here.
Speaker 9: So I do think in many ways that the investors
Speaker 9: are sort of shrugging off these actions. And I think,
Speaker 9: you know, especially when you look at the the increasing
Speaker 9: trials that we're having, that we actually could see some
Speaker 9: huge sort of landmark litigations coming out, So it's definitely
Speaker 9: something to keep an eye on, even though we've been
Speaker 9: seeing it for years and years and years.
Speaker 4: All right, Tamlin and Apple stockdown about eight tenths of
Speaker 4: one percent. Tamlin Basson joining us Bloomberg Technology a technology analyst.
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Speaker 6: Alex Deal Paul Sweeney live here in our Bloomberg Directive
Speaker 6: Brokers studio. We're also streaming live on YouTube as well.
Speaker 6: I've been a loyal BMW customer for probably twenty five
Speaker 6: thirty years, currently driving the X three, which is the
Speaker 6: best vehicle I've ever driven. Period. Not a good day
Speaker 6: however for the stock of BMW down eleven percent today.
Speaker 6: That's the most since March sixteenth, twenty twenty, just the
Speaker 6: beginning of the pandemic, and it's the lowest since twenty
Speaker 6: twenty one. So tough times out there for BMW. Let's
Speaker 6: get the latest of what's happening with them. Michael Dean,
Speaker 6: head of Global Autos of Bloomberg Intelligence, joins us from
Speaker 6: London via zoom. Michael, what's going on with BMW today?
Speaker 6: I saw that they took their earnings forecast down. What's
Speaker 6: driving that?
Speaker 10: So BMW had a profit warning today and that was
Speaker 10: partly on the back of a warranty issue has with
Speaker 10: its breaks not on the xtreet. So you're fine, Paul, good,
Speaker 10: but they're going have to recall one point five million
Speaker 10: vehicles and that's going to cost a high three digits
Speaker 10: million in terms of earnings for twenty twenty four. But
Speaker 10: that doesn't tell the whole story because they've downgraded their
Speaker 10: margin by about two hundred basis points, which is about
Speaker 10: two billion of v bits. So the balance of that
Speaker 10: is coming from we could China sales, lower pricing in Europe,
Speaker 10: lower demand in Europe. So just the demand and pricing
Speaker 10: environment globally has been very difficult and that's part of
Speaker 10: the reason for the profit warning, which.
Speaker 2: Then leads us to Volkswagen.
Speaker 4: So the latest news today is that it's ending its
Speaker 4: job protections for autoworkers in Germany as part of its
Speaker 4: cost cutting push.
Speaker 2: There are several.
Speaker 4: Agreements that were linked to a three decades old pack
Speaker 4: that was supposed to safeguard employment un till twenty twenty nine,
Speaker 4: but now those guarantees are going to run out by
Speaker 4: the middle of next year.
Speaker 2: I mean, wow, yeah.
Speaker 10: So you know, Volkswagen was in the news last week
Speaker 10: because it said it needs to close half a million
Speaker 10: units of capacity in Germany. So that's very difficult because
Speaker 10: of workers' rights. And you know, worker's rights have been
Speaker 10: very one sided for Volkswagen in particular because you have
Speaker 10: VW law and this is where twenty percent of the
Speaker 10: ordinary shares, the voting shares are owned by the States
Speaker 10: of Lower Saxony, which is where Volkswagen's biggest battery is,
Speaker 10: and funnily enough, and they have the ability to block
Speaker 10: certain agreements. So worker's rights are very strong for Volkswagen employees.
Speaker 10: And now I think management are saying, Okay, hold on
Speaker 10: a minute. The automotive world's changing rapidly. We need to
Speaker 10: do something to reduce costs, and part of that is
Speaker 10: the close factories and reduce jobs.
Speaker 6: Michael, give us it just a thirty thousand foot view
Speaker 6: of kind of the global auto business here. I mean,
Speaker 6: the weakness that you're seeing in Europe. The weakness you're
Speaker 6: seeing in China. Is that just general economic weakness effect
Speaker 6: that we've seen in past cycles or is this something
Speaker 6: to do with this ongoing transition to electric vehicles.
Speaker 10: Yeah, it's a bit of both. So you know, you
Speaker 10: have the transition to battery electric vehicles. It's going much
Speaker 10: slower than expected in Western markets. Other markets probably going
Speaker 10: quicker than expected, such as China. But the problem Volkstagener
Speaker 10: has is that the competition is so intense and has
Speaker 10: overtaken them in China, such as BYD So Volkswagen a
Speaker 10: couple of years ago was the market leader in China.
Speaker 10: Now byd within two years has overtaken Volkswagen, and really
Speaker 10: it's going to be a survival of the fittest in
Speaker 10: these markets.
Speaker 4: Well, I mean, these companies aren't going to go under
Speaker 4: or anything, right, So I guess I'm wondering when the
Speaker 4: trough is.
Speaker 2: When do we know what is a trough actually going
Speaker 2: to look like?
Speaker 10: Well, you say, well, a lot of companies could could
Speaker 10: go under, particularly the pure play battery electric vehicles.
Speaker 4: I just meant that, like Germany's not gonna let Bolkswagen
Speaker 4: go bankrupt.
Speaker 10: Now, of course, and the interesting thing if you look
Speaker 10: at the valuation of Volkstagen today is valued at forty
Speaker 10: five billion euros. I've had a lot of clients talk
Speaker 10: to me about this today. They have almost forty billion
Speaker 10: of cash on the balance sheet, there's seventy five percent
Speaker 10: stake in Porsche is worth forty five billion euros. They
Speaker 10: own Lamborghini brands, which has higher probability rates that Ferrari,
Speaker 10: which is currently value at seventy seven billion, So we
Speaker 10: think Lamborghini's worth thirty billion to use a Ferrari valuation.
Speaker 3: So there's some of the parts.
Speaker 10: Is volksg is huge compared to the actual valuation at
Speaker 10: Volkswagen at the moment.
Speaker 6: So you highlight an area for me that just kind
Speaker 6: of feels like a long term issue, which is China.
Speaker 6: I mean, if you they spend decades they being any
Speaker 6: auto company, Volkswagen, BMW, Mercedes, whatever, building brand value and
Speaker 6: brand loyalty in a market like China, and in a
Speaker 6: period of two years they've lost that, it seems like,
Speaker 6: I mean, is that the real barish case for some
Speaker 6: of these global auto companies.
Speaker 3: It's a it's a big case.
Speaker 10: So for the German automakers In the past few years,
Speaker 10: China was the most profitable market, accounted for thirty five
Speaker 10: to forty percent of their profits. Now this year it
Speaker 10: could be as low as ten percent, and you know
Speaker 10: what the market's pricing is is that could be zero
Speaker 10: in the future. And that's because the technology changing and
Speaker 10: the way that startups in China are pushing through so quickly.
Speaker 10: They're really fighting for market share at the moment and
Speaker 10: their future.
Speaker 4: So then it goes back to my question, what does
Speaker 4: the bottom for either US car companies or for European
Speaker 4: car companies wind up looking like as the tariff's go
Speaker 4: into place, as China keeps producing these really cheapvs, as
Speaker 4: we have different restrictions here in the US, like what
Speaker 4: is that?
Speaker 3: Well, you look at what GM and Ford have done.
Speaker 10: I mean, in particulate, it's looked at different markets and
Speaker 10: if it's not profitable, it's pulled out at those markets.
Speaker 10: So China's one example, Europe's another example. So it's whether
Speaker 10: the German automakers take a view that can they be
Speaker 10: profitable in China in the future, And many foreign carmakers
Speaker 10: are saying no. Volksfagen at the moment is saying yes,
Speaker 10: we can and they've got this long term plan and
Speaker 10: they've invested in xpaying so hopefully accelerate their transition. But
Speaker 10: it's going to be very, very difficult for foreign carmakers
Speaker 10: to continue to make profits in China.
Speaker 6: I mean again, it feels like is there an even
Speaker 6: discussion on whether they should be there at some point.
Speaker 10: Certainly within the market, but for the company itself that
Speaker 10: they've invested heavily in China and they've got a plan
Speaker 10: now to try and catch up with local producers, to
Speaker 10: catch up with BYD, which is with this partnership with xpang.
Speaker 10: So they think they've got an opportunity because they've got
Speaker 10: a good brand in China.
Speaker 3: But it's going to be very tough. I mean, pricing
Speaker 3: in China is.
Speaker 10: Really really competitive at the moment, so the point where
Speaker 10: battery electric vehicles are actually priced below internal combustion in
Speaker 10: the vehicles compared to that to Europe, where the average
Speaker 10: battery electric vehicle is thirty five percent higher than a
Speaker 10: ice vehicle, and they still can barely make a profit
Speaker 10: in Europe.
Speaker 3: So yeah, it's a very tough environment.
Speaker 4: Yeah, and then they'll have ev factory there, but then
Speaker 4: all of a sudden you're looking at potential losses then
Speaker 4: for workers in actual Germany.
Speaker 2: A really interesting story.
Speaker 4: Thank you very much, Michael Dean and joining us from
Speaker 4: bloom Intelligence.
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Speaker 1: Just say Alexa playing Bloomberg eleven thirty.
Speaker 6: It's September, which means it's conference time. It's also time
Speaker 6: to talk about the hedge fund business. I'm not buying it,
Speaker 6: per se. I'm not a fan of the hedge fund business.
Speaker 6: I think the model's broken. I think it was broken
Speaker 6: in the mid two thousand's. That's just my personal opinion.
Speaker 6: Donald Steinberger joints us here. He's founder and CEO of
Speaker 6: Agecroft Partners. I know the term Agecroft. That's from Richmond, Virginia,
Speaker 6: and that's where he's based on a Richmond, which is
Speaker 6: one of my fall time favorite towns. My twins are
Speaker 6: born there, I went to school down there, great town.
Speaker 6: Don I think those whole hedge fund games is scam.
Speaker 6: But tell me about what's going on in the hedge
Speaker 6: fund business in terms of can people raise capital? Are
Speaker 6: they what's the state of the hedge fund business these days?
Speaker 11: Well, first of all, it's great to be back, and
Speaker 11: I think it's probably going to take a couple more
Speaker 11: interviews before I finally get you to buy into hedge funds,
Speaker 11: but it's going to happen. You're moving, you know a
Speaker 11: little bit each time. You know, hedgehont industry is pretty strong.
Speaker 11: I started an industry in two thousand and one. It
Speaker 11: was six hundred billion industry. It's now five trillion. The
Speaker 11: market is pretty saturated, meaning when you look at who's
Speaker 11: investing in hedge funds, pensions and Downmans, foundations, softoign wealth funds,
Speaker 11: the ones that are going to invest in hedge funds
Speaker 11: tend to be pretty fully allocated. So you're not really
Speaker 11: seeing growth from an inflow standpoint. As matter of fact,
Speaker 11: you've had a little bit of money come out of
Speaker 11: the industry, but the industry has grown significantly because of performance.
Speaker 11: For example, you know, year to date, the hedgehont industry
Speaker 11: is up seven point five percent. In addition to that,
Speaker 11: it's a great business to raise assets because you have
Speaker 11: huge divergence in performance between strategies and managers. There's always
Speaker 11: people getting fired. Average person owns a hedge fund for
Speaker 11: five years means twenty percent of the industry turns over
Speaker 11: trillion dollars to be had. But it's still difficult because
Speaker 11: ninety percent of assets are going to five percent of managers.
Speaker 2: Wow, So what kind of strategies work right now?
Speaker 11: Well, the one with the biggest demand right now is
Speaker 11: long short equity. And long short equity went through a
Speaker 11: real laughing at you right now, just yeah, a really
Speaker 11: long period where people just hated it. I mean, last decade,
Speaker 11: money just kept coming out and their performance was under
Speaker 11: the S and P five hundred over and over and
Speaker 11: over again, and a lot of people said, hey, you
Speaker 11: put all your money in the S and P five hundred,
Speaker 11: and what has that done. It's driven the S and
Speaker 11: P five hundred to an extremely high valuation. It's dominated
Speaker 11: by a small handful of stocks. And reason people like
Speaker 11: long shred equity is some people are worried about the market.
Speaker 11: If you're worried about the market, be hedged. If you're
Speaker 11: not worried about the market, go all in.
Speaker 7: Other people like the fact that.
Speaker 11: There's huge divergencies between valuations between value growth, small cap,
Speaker 11: large cap US non US and over time, these these
Speaker 11: vergences have contracted. So it means a lot of people
Speaker 11: think fundamentals are going to add value. And the last
Speaker 11: thing is you can make money on the short book
Speaker 11: in your portfolio because short term rates are high. You
Speaker 11: might get another two percent return based on the interest
Speaker 11: on the short book.
Speaker 3: You know, is it?
Speaker 6: You mentioned that you know a lot of the most
Speaker 6: of the funds are with a relatively few managers, the
Speaker 6: citadels of the world. How did that come about? I mean,
Speaker 6: it used to be a day where if you had
Speaker 6: hotshot trader at Morgan Stander Goldensacks, you could go out
Speaker 6: and raise five hundred million dollar billion dollars. That's not
Speaker 6: as prevalent today, is it?
Speaker 11: You know it's not, And I will say that that
Speaker 11: is one of the big issues at the industry is
Speaker 11: a lot of people by brand. They think you know
Speaker 11: their safety and brand. A lot of these top managers
Speaker 11: had phenomenal track records a long time ago. They're managing
Speaker 11: way too much assets. Their returns have been very mediocre
Speaker 11: for a lot of famous hedge funds. A lot of
Speaker 11: these pods have done recently, have done very well recently,
Speaker 11: but they've gotten very large. You're beginning to see some
Speaker 11: money focus more on smaller managers. Smaller managers, if you
Speaker 11: want good returns, is where you want to invest. But
Speaker 11: you don't want to invest in them unless you understand
Speaker 11: the inefficiency that they're focusing on and what their differential
Speaker 11: advantages to capture that efficiency.
Speaker 4: What about all the main strategies like volatility focused funds.
Speaker 4: CTA is like the trend followers. What's the interest there?
Speaker 11: So there's been a pickup and interest for commodity trading
Speaker 11: advisors And basically they're people that invest in financial futures
Speaker 11: across the forming capital markets and their quantitative quantitative managers
Speaker 11: that are looking at price patterns historically, and they tend
Speaker 11: to do very well during markets selloffs. So they help
Speaker 11: protect markets if the market's going to sell off.
Speaker 6: Help diversify a lot of.
Speaker 11: People are worried about evaluations of the equity marketplace, so
Speaker 11: that's one way to diversify away from equity.
Speaker 6: How about pricing fees? Is two and twenty still the game?
Speaker 2: So is this why you don't like hedge fund because
Speaker 2: of the fees?
Speaker 6: Yeah? No, No, I love the fees, so it likes
Speaker 6: the fee. But I just if I were managing money,
Speaker 6: I just don't think that fee of just the returns
Speaker 6: are worth it.
Speaker 11: People need to focus on fees, and fees have come
Speaker 11: down a lot. You know that the prominent managers you
Speaker 11: pay two and twenty for performance that might not be
Speaker 11: you know, that great because now they're really large, but
Speaker 11: new managers, smaller managers, I mean typical fees probably one
Speaker 11: and a half and seventeen performance fee potentially less. It's
Speaker 11: also diverted between individual investors and institutions. You know a
Speaker 11: lot of people listening to this radio broadcast may indirectly
Speaker 11: own hedge funds through their government pension fund or corporate
Speaker 11: pension fund. Big institutional investors on average are probably paying
Speaker 11: one in ten, maybe one in fifteen, so huge contraction.
Speaker 11: Also hurdles, you know, hurdle is for performance, and a
Speaker 11: lot of people don't want to pay performance fee on cash.
Speaker 11: They're saying, hey, you got to be cash before we're
Speaker 11: going to pay a performance fake.
Speaker 4: Well, this is any other question, and this may be
Speaker 4: a really ignorant question, but with the dominance of Nvidia
Speaker 4: and the mag seven, how does a hedge fund compete
Speaker 4: against that because the end of the day, like wouldn't
Speaker 4: they do just as relatively well, just like buying the index.
Speaker 11: Or like well, I guess it all depends whether you
Speaker 11: think that those companies can continue to go up the
Speaker 11: way they've gone up. I mean a lot of people
Speaker 11: we have.
Speaker 4: To wait for the mag seven to sort of fall
Speaker 4: out for them. Those hedge fund strategies to pay off.
Speaker 4: Is that the idea, I just.
Speaker 11: Don't think you can you know, I don't think you
Speaker 11: can time it. And if you think that the equity
Speaker 11: market is overvalued, then you want to You don't want
Speaker 11: to wait until certain things happen and then change your portfolio.
Speaker 11: You need to change your portfolio before it happens. And
Speaker 11: so one way is to hedge it. Another is you
Speaker 11: could also overweight certain factors through mutual fund index funds
Speaker 11: if you wanted underweight the S and P overweight other
Speaker 11: types of indiscy that are cheap from a relative value standpoint,
Speaker 11: the S and P five hundred real quick thirty seconds.
Speaker 6: Has the growth in ETF? Is that taking funds away
Speaker 6: from hedge funds, or is that the ETF growth just
Speaker 6: come from mutual funds?
Speaker 3: Maybe.
Speaker 11: Yeah, I think it's come from mutual funds. I think
Speaker 11: it's come from you know, long only managers. You know,
Speaker 11: as I mentioned, the hedge fund industry now is a
Speaker 11: little over five trillion dollars. I think it's you know,
Speaker 11: again fairly saturated, but it's it's growing through performance. And
Speaker 11: you know, the environment for a hedgehond manager is good
Speaker 11: if you're really good, and if you're not really good,
Speaker 11: it's a very difficult market to be in.
Speaker 3: Yep.
Speaker 2: Yeah, there's a life lesson there.
Speaker 7: There is exactly right.
Speaker 6: Donald Steinberger, he's founder and CEO of age Croft Partners,
Speaker 6: joinings live here in our Bloomberg Interactive Broker Studio. Get
Speaker 6: update on the hedge of fund business against five trillion dollars.
Speaker 6: Just extraordinary there and there are some obviously some big
Speaker 6: names out there.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: play Bloomberg eleven thirty.
Speaker 4: Alex Dealer alongside Paul Sweeney. This is Bloomberg Intelligence radio,
Speaker 4: we bring you all the top news in business, economics,
Speaker 4: and finance. There are lens of our Bloomberg Intelligence folks.
Speaker 4: They cover two thousand companies in one hundred and thirty
Speaker 4: industries all around the world. Let's check in with one
Speaker 4: of them right now, with Nathan Dean, Bloomberg Intelligence senior
Speaker 4: policy analysts. Yeah, shaker, there's a debate tonight in case
Speaker 4: no one's been paying attention, So it's at nine pm. Well,
Speaker 4: a special coverage here at eight pm, simulcast on radio
Speaker 4: as well as television. Nathan, though from an equity side,
Speaker 4: is there a Harris or Trump trade evolving at all
Speaker 4: that we can sort of zone in on?
Speaker 7: Now? I don't think exactly.
Speaker 12: I mean, anytime you talk Trump trade or Harris trade,
Speaker 12: you know, we really just you know, there are certain
Speaker 12: sectors you can say we'll impact in certain.
Speaker 7: Ways to the presidency.
Speaker 12: But for I think for tonight's purpose is we really
Speaker 12: want to hear more about tax plans and we want
Speaker 12: to hear more about economic plans, because you know, both
Speaker 12: candidates have been fairly light, you know, over the past
Speaker 12: couple of weeks in terms of saying how they're going
Speaker 12: to actually change certain things Now, obviously for tonight's debate,
Speaker 12: we've heard President Trump say that he wants to cut
Speaker 12: the corporate tax right down to fifteen percent. Kyla Harris,
Speaker 12: the vice president wants to go up to the twenty
Speaker 12: eight percent. But we would always just caution our clients
Speaker 12: and investors and so forth like that, just remember every
Speaker 12: statement that comes out of the candidate's mouth, you have
Speaker 12: to remember how they're going to get that through Congress
Speaker 12: or how they're going to get through Washington. And for
Speaker 12: a lot of these tax proposals that you're going to
Speaker 12: hear tonight, you know, the other folks down on the
Speaker 12: other side of you know, Pennsylvania Avenue the Congress, they
Speaker 12: may have different plans. So it's just interesting to hear
Speaker 12: those thoughts, but you know, most likely they're not They're
Speaker 12: going to have to be curtailed.
Speaker 7: They're restricted some.
Speaker 6: Should a question be asked tonight of both candidates talk
Speaker 6: to us about annual deficits, talk to us about the
Speaker 6: total debt of the United States? Should that be a question?
Speaker 7: I think it should be.
Speaker 12: I mean, this is something that we get from New
Speaker 12: York a lot, especially from you know, asset managers that
Speaker 12: are concerned with the state of the US debt. But
Speaker 12: from the Washington perspective, you know, the US debt is
Speaker 12: not something that many people have thought about, or at
Speaker 12: least if they are thinking about it, it's certainly not reflective
Speaker 12: in what Congress spending goals are. So, you know, I
Speaker 12: think when it comes to the debt, though, however, it's
Speaker 12: really gonna be whoever wins the election, because if Kamala
Speaker 12: Harris wins the election, you're gonna have a return of
Speaker 12: the debt ceiling fights that we saw under the first
Speaker 12: half or the end of the Obama administration, where you know,
Speaker 12: dead ceiling comes up, it's going to be negotiated, and
Speaker 12: then ultimately when the markets begin to react to it,
Speaker 12: they kick the can down the road. Now, the dead
Speaker 12: ceiling doesn't expire till January first, twenty twenty five, which
Speaker 12: is good news because the lame duck it will probably
Speaker 12: be one of President Biden's last signature as president to
Speaker 12: kick the can down even more. But if President Trump wins,
Speaker 12: I don't think you're going to see many of this
Speaker 12: debt ceiling fights at all.
Speaker 4: What about some of the sectors on the key sectors
Speaker 4: that are kind of most exposed here.
Speaker 12: Yeah, So, you know, we just put out a large
Speaker 12: report on the Kamala Harris versus Donald Trump race. In
Speaker 12: some of our key sectors to watch where we're like
Speaker 12: renewables tied to the Inflation Reduction Act.
Speaker 7: There's a lot of tax carrots, if you will.
Speaker 12: In there that are spurring renewable investment, especially in cap
Speaker 12: BACX and a lot of GUP states. Others involve the banks,
Speaker 12: you know the Basil three end game. You know, a
Speaker 12: proposal that would increase CAPPER requirements around nine percent for
Speaker 12: the investment banks. If President Trump wins, that may not
Speaker 12: go forward. Other things are global manufacturers due to the
Speaker 12: tax changes that we just talked about healthcare, they're twenty
Speaker 12: five hundred twenty five billion dollars in Obamacare subsidies that
Speaker 12: are up for renewal next year.
Speaker 7: And finally, big tech.
Speaker 12: You know, whether if you Kamala Harris wins, are going
Speaker 12: to have a continuation of the very stringent M and
Speaker 12: a anti trust authority that the Biden era regulators are
Speaker 12: putting on big tech.
Speaker 7: But if JD.
Speaker 12: Vance's idea of economic populism gets into the White House,
Speaker 12: you could see a Republican president also be.
Speaker 7: Very skeptical of big text. So a lot of what ifs.
Speaker 12: But a lot of you know, you know, scenarios in
Speaker 12: which those industries could be heavily impacted.
Speaker 6: You know, I listened to former President Trump's Economic Planet
Speaker 6: Economic Club of New York. I don't know hard time
Speaker 6: making heads or tails out of it, but I guess
Speaker 6: it was lower taxes, higher tariffs. Is that kind of
Speaker 6: the basis of his economic I guess platform.
Speaker 7: Yeah.
Speaker 12: I think that's the really good point to point out,
Speaker 12: because I think it's almost like a phase one, phase
Speaker 12: two type of deal with President Trump wins.
Speaker 7: Phase one is tariffs. You know, this is something that
Speaker 7: he can do.
Speaker 12: The power of the presidency is a lot more powerful there,
Speaker 12: and so sorry the first half of twenty twenty five,
Speaker 12: you could see a lot more tariffs coming in.
Speaker 1: Now.
Speaker 7: I would argue that a lot of these tariffs are
Speaker 7: negotiation ploys.
Speaker 12: You know, if he holds up an executive order and
Speaker 12: says I'm going to sign a tariff, there's probably language
Speaker 12: in that executive order saying two hundred and seventy days
Speaker 12: from now, it won't go into fruition until then, because
Speaker 12: you're gonna give the opposite side multiple times to negotiate.
Speaker 12: But it's certainly something that he's comfortable with and I think,
Speaker 12: you know, would easily put out if he feels that
Speaker 12: it's necessary. But then the tax reform debate is what's
Speaker 12: going to come next, because at the end of twenty
Speaker 12: twenty five, those Trump Ara tax cuts for individuals expire.
Speaker 12: Now President Trump is said fifteen percent corporate tax rate.
Speaker 12: I'm not sure he'll be able to get that. You know,
Speaker 12: he's gonna have to negotiate. We've seen a little bit
Speaker 12: of statements from House Republicans saying, yeah, maybe we should
Speaker 12: go down to twenty or nineteen or eighteen percent, But
Speaker 12: being able to pay for that fifteen percent is going
Speaker 12: to be somewhat difficult for these deficit hawks. So, but
Speaker 12: there's a lot of provisions of the tax era Trump
Speaker 12: are tax cuts that have already expired for industry, and
Speaker 12: I think President Trump is going to try and institute those,
Speaker 12: though at a large level, think Trump two point zero
Speaker 12: is going to do another version of the same tax cut.
Speaker 4: I literally remember having the exact same conversation in twenty fifteen,
Speaker 4: twenty sixteen, like the phase two how you get it done,
Speaker 4: et cetera. So what's interesting to me though, is the
Speaker 4: lack of response though in say, high tax companies versus
Speaker 4: low tax companies, like the things that would make sense
Speaker 4: because those policies are so different, say on corporate taxes.
Speaker 4: Are we seeing that reflected within market moves?
Speaker 3: You know?
Speaker 12: I think so, But you know a lot I've been
Speaker 12: talking to a lot of investors over the last few weeks,
Speaker 12: and a lot of folks come to me and they say,
Speaker 12: we just really don't know what's going to happen on
Speaker 12: tax until we know the makeup of Congress. And the
Speaker 12: reason being is is that if Trump wins but the
Speaker 12: Democrats take the House, pretty much all of his tax vision,
Speaker 12: if you will, is going to be curtailed, negotiated, and
Speaker 12: a lot more restricted. Now, if he ends up winning
Speaker 12: the House and the Senate, they can use reconciliation to
Speaker 12: essentially bypass the Democrats, and they have a very.
Speaker 7: Broad net that they can cast.
Speaker 12: So a lot of people that I've been talking to
Speaker 12: you of saying, look, we understand the Trump era desires,
Speaker 12: and we understand that these broads deficit inducing tax cuts
Speaker 12: potentially could be on the horizon, but we're not excited
Speaker 12: about it. Just yet because we need to see how
Speaker 12: the House and Senate races play out.
Speaker 6: What is the thinking currently in Washington, Nathan about how
Speaker 6: that will play out in Congress?
Speaker 12: Well, look, I mean, you know, if you go to
Speaker 12: the function on the terminal WSL election, you can see
Speaker 12: all the data there.
Speaker 7: But I think you know when.
Speaker 12: It comes to the Senate, that's going to be somewhat
Speaker 12: very difficult for the Democrats to control because right now
Speaker 12: it's fifty one to forty nine. You're gonna lose West
Speaker 12: Virginia because Senator Joe Manchin is retiring, So now you're
Speaker 12: at a fifty to fifty and the Democrats are sent
Speaker 12: have to run the board just to keep that fifty
Speaker 12: to fifty. Think of Senator Shery Brown in Ohio, Senator
Speaker 12: John Tester, and Montana Senator Jackie Rose in Nevada.
Speaker 7: So assuming that if the Democrats.
Speaker 12: Lose one, the Republicans are most likely going to take
Speaker 12: the Senate, and if President Trump wins, then obviously allow
Speaker 12: him the ability to put in judges and his regulatory
Speaker 12: leadership when it comes to the House, I've seen pulling
Speaker 12: up both sides. But my general view, and this is
Speaker 12: just my personal view, is that whoever wins the president
Speaker 12: also wins the house.
Speaker 2: Okay, interesting, How excited are you for tonight? Is this
Speaker 2: like a super Bowl for you?
Speaker 13: Like?
Speaker 4: Do you get out popcorn? Do you have like guawk,
Speaker 4: do you have avocados? There's an avocado debate happening right
Speaker 4: now on rading.
Speaker 7: I think I'm rich.
Speaker 12: I think I'm gonna try and take as much Bloomberg
Speaker 12: popcorn away from the pantry. I canned home with me tonight.
Speaker 12: So nice, It's gonna be a fun night.
Speaker 2: That was awesome.
Speaker 4: All right, Hey, Nathan, we really appreciate Nathan Dean Bloomberg
Speaker 4: Intelligence senior policy analyst and the most recent deep dive
Speaker 4: on the impact of the US election.
Speaker 2: It's one of those things. I mean, it's one of
Speaker 2: those things where it's like I want to cringe, but
Speaker 2: watch it.
Speaker 4: It's like you want to watch it through your hands,
Speaker 4: like a scary movie or something, because you just don't
Speaker 4: know what's going to rap him, what's going to happen.
Speaker 6: Yeah, and again, as Nathan's just pointing out, this research report,
Speaker 6: which you can get a bi go, is just really
Speaker 6: in depth, basically just saying from an economic Wall Street
Speaker 6: financial perspective, you know, under two different presidencies, which industries
Speaker 6: are winners and losers.
Speaker 13: So it's great research.
Speaker 6: B I go on the terminal and that's where you
Speaker 6: can find it good stuff.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, card Play and
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Speaker 6: Let's talk about the broader markets. One of the things
Speaker 6: we like to do is get a sense of what
Speaker 6: is investor sentiment out in the marketplace. It's one of
Speaker 6: the factors that Genie, Martin Adams and Bloomberg Intelligence factors in.
Speaker 6: And I think if you want to do that on
Speaker 6: the retail side, nobody better than talk to than the
Speaker 6: folks at Charles Swap because they've got like a jillion
Speaker 6: customers out there. Joe missola It joins us head trading
Speaker 6: and derivative strategist for Charles Schwab, joining us here in
Speaker 6: our studio. He's based out in the Bay Area, but
Speaker 6: he joins us here in a New York studio because
Speaker 6: why wouldn't be in New York if you're in your
Speaker 6: financial services business. That's what I say. Talk to us
Speaker 6: about your STACKS index. What is it and what's it
Speaker 6: telling you these days?
Speaker 13: Yeah, hey, thanks for having me. I appreciate that. And
Speaker 13: the STACKS index, what it does is it measures our
Speaker 13: SCHWAB Trading Activity index, or measures are our SWAB clients
Speaker 13: what are they doing?
Speaker 3: You know?
Speaker 13: So it's the behavior over the attitudinal. Basically, what we
Speaker 13: do is we look at thirty two million accounts, we
Speaker 13: take a little subset of that and say where we
Speaker 13: buyers or where we sellers over the course of the month,
Speaker 13: and you learn And there was a little bit of
Speaker 13: selling in August, so it basically pulled back a little
Speaker 13: bit from what we saw in July. Still you know,
Speaker 13: still above levels that are above moderate, but for the
Speaker 13: most part we did see some selling. And what I
Speaker 13: would say is this was almost a tale of two months.
Speaker 13: So beginning of the month, we saw clients kind of
Speaker 13: step in and buy that dip from the August fifth
Speaker 13: sell off, saw a lot of activity and AI stocks
Speaker 13: a lot of buying there, but as a month kind
Speaker 13: of trailed on. What we saw was a little bit
Speaker 13: more of shifting towards away from equities and interfixed income.
Speaker 6: All right, So this index typically ranges between a reading
Speaker 6: of thirty five and seventy, and then I guess the
Speaker 6: reading for August was somewhere in the fifty three range,
Speaker 6: so it's kind of right in the middle there. Does
Speaker 6: that kind of suggest to you that your clients are
Speaker 6: neither overly bearish or bullish.
Speaker 13: So we always follow that up with an attitudinal study
Speaker 13: as well. So we have the behavioral study that we're
Speaker 13: talking about now, but we always like to do like
Speaker 13: a trader sentiment study where we actually asked the clients,
Speaker 13: you know, how they're feeling about going forward, and what
Speaker 13: we found out is that they're still feeling moderate to
Speaker 13: positive kind of as they're heading into the September month.
Speaker 13: There's a little bit of concern around interest rates, so
Speaker 13: that's giving them a little bit of a pause in
Speaker 13: terms of, you know, what the federal action will be.
Speaker 13: We're hearing a little bit of concern in terms of
Speaker 13: the political cycle and what the elections could do for
Speaker 13: the markets as well. But overall, yeah, Paul, you're right,
Speaker 13: I would say for the most part, they're moderately bullish.
Speaker 2: Oh, what are they buying more of the selling.
Speaker 13: So what we saw on the buy side is some
Speaker 13: of the typical names kind of rose to the top,
Speaker 13: in Video being one of them. Amazon is new to
Speaker 13: the list, it's been off for a little bit, so
Speaker 13: that one came back. One of them that we haven't seen.
Speaker 13: I was shocked to see this one was Intel, and
Speaker 13: I think part of that, yeah, I think part of
Speaker 13: that is just because we got about a thirty thirty
Speaker 13: five percent pullback right off for earnings and we saw
Speaker 13: some dit buyers kind of step in on the cell side.
Speaker 13: What was interesting about the cell side is these were
Speaker 13: a lot of the names that kind of flipped lop
Speaker 13: between both sides. But what was interesting to me is
Speaker 13: out of the mag seven names, you had Metta and Apple,
Speaker 13: and if you think about kind of how those stocks
Speaker 13: performed relative to the other ones, they actually held up
Speaker 13: pretty well throughout throughout the month. I mean, Meta even
Speaker 13: put in a fifty two week high. So I think
Speaker 13: what we saw was some profit taking maybe from some
Speaker 13: of the dip buying that we saw earlier in the month.
Speaker 13: And then the last one was Starbucks. And if you
Speaker 13: remember star Wars as a new CEO came over from Chipotle,
Speaker 13: got a nice little pop there, and we saw some
Speaker 13: clients trim some profits after that occurred.
Speaker 6: Yeah, interesting, I'm going to stock that. Remember that day
Speaker 6: was up eighteen percent just when the news I must.
Speaker 4: Be really good, like you leave a job and everyone's
Speaker 4: like yeah exactly.
Speaker 6: One of the sectors that was most pronounced of buying
Speaker 6: was energy, which is interest because we were just talking
Speaker 6: to Mike mcglon our commodity and also we were just
Speaker 6: talking about the decline in oil prices.
Speaker 7: But maybe maybe.
Speaker 6: Some of your customers clients are seeing value there.
Speaker 13: Maybe I think that's probably what it is, Paul. I
Speaker 13: think you're right. I think that there's some day buying
Speaker 13: in there looking for some opportunities with what I found
Speaker 13: interesting as well to consumer discretionary was another sectors in buying.
Speaker 13: I think a lot of that has to do with
Speaker 13: the Amazon, right, the Amazon buying that we saw. When
Speaker 13: you look at the sectors that were sold, a couple
Speaker 13: of rides at the top there and communication services being
Speaker 13: number one. A lot of that has to do with
Speaker 13: some large sales and meta and there as well. What
Speaker 13: I when I look at kind of what our clients
Speaker 13: did relative to where maybe we saw some of the
Speaker 13: rotations in the market. I think it's interesting because the
Speaker 13: breadth right, you know, where we saw kind of a
Speaker 13: breadth thrust would have been more on the interest rate
Speaker 13: sensitive sectors financials right, utilities, reads. Didn't see a lot
Speaker 13: of retail movement into that. To me, that says it's
Speaker 13: a little bit more institutional buying there.
Speaker 2: Here's a numb for a question. How do you feel
Speaker 2: like retails looking at the election?
Speaker 13: Well, I don't know what side they're picking, but I
Speaker 13: know that.
Speaker 7: Yeah.
Speaker 2: But in terms of like do you see any hedging,
Speaker 2: Like yes.
Speaker 13: Yeah, absolutely, no, absolutely, how are doing it? Yeah? So
Speaker 13: there's a couple couple different things we're saying we're seeing
Speaker 13: on the broader side. And I don't know if that's
Speaker 13: retail over its institutional, but you're definitely seeing some put
Speaker 13: buying in the SPX and that's kind of pushing up
Speaker 13: the VIX a little bit. You're seeing the skew kind
Speaker 13: of get bit up a little bit more, the difference
Speaker 13: between the puts and the calls and the twenty five delta.
Speaker 13: So we're starting to see that as well. We do
Speaker 13: see that on the retail side, you know, I'd love
Speaker 13: to say that our clients are educated. I mean, we
Speaker 13: have a lot of educational opportunities for them. A lot
Speaker 13: of them utilize options in their strategies, and we're starting
Speaker 13: to see more and more activity and on the option
Speaker 13: side heading into the elections.
Speaker 6: Do you see your your clients do they trade around
Speaker 6: events like we kind of think that they do, whether
Speaker 6: it's the FED Day or jobs Day? Do you see
Speaker 6: like a spike and volume, a spike in trading. Does
Speaker 6: that happen on that platform or your people just I'm
Speaker 6: just I'm along, I'm holding well.
Speaker 13: I mean, I think you have to look at it
Speaker 13: two ways, right, you have the investor base and then
Speaker 13: you have the trader base, and a lot of that
Speaker 13: trader base came over from the td ror Trade acquisition.
Speaker 13: So they are pretty active clients and they love you know,
Speaker 13: event risks, they love earnings, they love trading around that
Speaker 13: different type of strategies specifically alex As you were talking
Speaker 13: about some option type of strategies around there. So yeah,
Speaker 13: we do see a pickup around those events, and you know,
Speaker 13: and how they had it or how they play it,
Speaker 13: that kind of depends on the client themselves. But we
Speaker 13: do see activity.
Speaker 2: It's so cool. I love all of this insight. How
Speaker 2: are how's retail trading bonds right now?
Speaker 13: Yeah, we've seen a rotation into fixed income and what
Speaker 13: I think what we're seeing from the from that side
Speaker 13: is that they're probably trying to maybe front run the
Speaker 13: FED announcement on September eighteenth, maybe trying to buy bonds
Speaker 13: four yeels come down a.
Speaker 2: Little bit at the front end of the long end.
Speaker 13: We're seeing it more in the middle. Yeah, definitely in
Speaker 13: the middle, a little bit, a little bit of the
Speaker 13: belly ETFs.
Speaker 6: It's just I mean, Alex and I have just been
Speaker 6: amazed at the growth of the ETF business. Maybe yet
Speaker 6: to some extent that the expense of the mutual fund business.
Speaker 6: How much or how often are to what's agree or
Speaker 6: your client's use using ETFs.
Speaker 13: Yeah, I mean think about think about the flexibility that
Speaker 13: ETFs offer, right whether it's you know, being able to
Speaker 13: trade intra day on them or not having to wait
Speaker 13: to end to day settle you want to use option
Speaker 13: type strategy. So yeah, that's something that's employed quite a
Speaker 13: bit by our clients just because, like I said, the
Speaker 13: flexibility and it gives them the ability to have some
Speaker 13: diversification choose sector ETFs. That's another thing we've been looking at,
Speaker 13: and you know it's wy We offer a lot of
Speaker 13: thematic type trading. That's just something that we've really seen
Speaker 13: start to pick up as well too, so clients they
Speaker 13: don't have to necessarily pick a stock, they can pick
Speaker 13: a theme and it gives them the ability to have
Speaker 13: exposure to that.
Speaker 2: This is a super weird question.
Speaker 4: We had an article out a couple weeks ago, I
Speaker 4: think that said that as online gambling has picked up,
Speaker 4: you've seen more of that and less actual retail trading.
Speaker 4: Have you noticed like any correlation of like when you
Speaker 4: see surges and not for retail or is it the
Speaker 4: same kind of volume and stuff that you were seeing
Speaker 4: back in twenty twenty.
Speaker 13: I mean, I would say if you look at the
Speaker 13: options market, ash Pole, right, I mean we're doing I mean,
Speaker 13: not schwapping in general. The whole market is doing fifty
Speaker 13: million contracts a day. So I don't know how much
Speaker 13: of that's being pulled from gambling. I guess we'll find
Speaker 13: out now the football season started again, to see if
Speaker 13: that pulls some of the money away. But at this
Speaker 13: point I just continue to see. You know, the options
Speaker 13: market continue to expand, so I'm assuming it's pulling some
Speaker 13: of that gambling dollars in there.
Speaker 4: So cool, all right, Joe, thanks a lot, Joe Mazzola,
Speaker 4: Charles Schwab, head of Trading and the Rivetive strategist.
Speaker 2: I'd definitely come back.
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