WEBVTT - Commodities, Bitcoin ETFs, and the Messi Effect (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.080 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.360 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.079 --> 0:00:26.720 Chicago Board of Trade corn prices this year down thirty 0:00:26.720 --> 0:00:28.880 two percent. What is up with that? I'm meeting as 0:00:28.960 --> 0:00:30.360 much corn as they ever have. I don't know what's 0:00:30.360 --> 0:00:32.360 going on the price of corn. I guess it's more 0:00:32.360 --> 0:00:34.400 supply than demand because it's a commodity. But let's check 0:00:34.400 --> 0:00:37.440 out with somebody who does this stuff for a living. Literally, 0:00:37.760 --> 0:00:41.640 Mike mcloughan, senior macro strategists for Bloomberg Intelligence. Mike, I'd 0:00:41.640 --> 0:00:43.479 like corn as much as the next person. Why is 0:00:43.520 --> 0:00:45.519 the price of corn down thirty two percent? 0:00:46.800 --> 0:00:48.960 Well, hey, Paul, as a farmer, say it's the higher 0:00:49.000 --> 0:00:51.920 price cure. That's the bottom line. Corn had a big 0:00:52.000 --> 0:00:55.280 pump last year on the back of Russia. Russia's invasion 0:00:55.320 --> 0:00:58.400 of Ukraine, and what does that typically do? It centifies 0:00:58.480 --> 0:01:02.320 plenty more supply and we're it globally. The US has 0:01:02.400 --> 0:01:04.280 ketchup a little bit. This should be a very good 0:01:04.280 --> 0:01:07.040 crop this year. Crop this year near the highest production ever. 0:01:07.080 --> 0:01:09.360 And most notably what had the most time they pick 0:01:09.400 --> 0:01:12.119 up was a massive supply of corn and soybeans out 0:01:12.120 --> 0:01:14.480 of Brazil. And they just do what they've been doing 0:01:14.480 --> 0:01:17.240 for last almost twenty years. They just amp their production. 0:01:17.319 --> 0:01:19.600 And when you farmers can make profits, they always create 0:01:19.640 --> 0:01:21.640 a lot of supply. And that's the key thing to 0:01:21.720 --> 0:01:24.440 remember about corn, soybeans and wheat is they are just 0:01:24.560 --> 0:01:29.080 they should never stay up because farmers can make more money. 0:01:28.080 --> 0:01:31.000 They'll plant when they can make money, like they did 0:01:31.120 --> 0:01:31.520 last year. 0:01:31.520 --> 0:01:33.600 You're right, because soybeans are down ten percent year to 0:01:33.680 --> 0:01:36.679 date and wheat is down twenty eight percent year to date. 0:01:37.600 --> 0:01:37.800 Yeah. 0:01:37.880 --> 0:01:42.039 So America has held the top spot in terms of 0:01:42.120 --> 0:01:48.560 corn exports for years, years and years and years, but 0:01:48.680 --> 0:01:52.320 now Brazil may be challenging it. What's the dynamic there 0:01:52.360 --> 0:01:55.040 and does this increase competition? Is that going to weigh 0:01:55.080 --> 0:01:57.880 on the price of corn for the first single future. 0:01:58.600 --> 0:02:01.520 Absolutely, it's the price of corn is heading towards four 0:02:01.600 --> 0:02:05.640 dollars a bushel right now. It's just about just below five, 0:02:05.720 --> 0:02:09.239 and it first traded that price in nineteen seventy four. 0:02:09.680 --> 0:02:12.079 That was on the Great Grain Robbery when Russia imported 0:02:12.080 --> 0:02:14.239 a whole I'm sorry this end Soviet Union imported a 0:02:14.240 --> 0:02:16.680 whole bunch of grain. But what you pointed out simonto, 0:02:16.720 --> 0:02:20.440 our body's in motion. Brazil's production has been increasing rapidly 0:02:20.840 --> 0:02:22.560 for at least the last ten years. If you just 0:02:22.639 --> 0:02:25.760 like at charts going back to beginning two thousand and 0:02:25.800 --> 0:02:29.000 it's still handy that way. But what happened with this war, 0:02:29.080 --> 0:02:31.240 which we pointed out right away, just created more and 0:02:31.240 --> 0:02:33.920 more incentive to produce more corn. But also there's been 0:02:33.919 --> 0:02:37.120 a paradigm shift in the US. The US now uses 0:02:37.200 --> 0:02:39.560 almost forty percent of the crop for ethanol. But the 0:02:39.639 --> 0:02:41.440 unique thing about that is, you know, that's for motor 0:02:41.520 --> 0:02:44.440 vehicles for gasoline. The you ney thing about that is 0:02:44.440 --> 0:02:46.320 it's just going back the way we were before. And 0:02:46.520 --> 0:02:51.080 you know, in nineteen twenty, before the automobile became proliferated, 0:02:51.120 --> 0:02:53.560 a lot of the grains that were grown in as 0:02:53.600 --> 0:02:57.639 country oats, and hey, we're for feeding horses. Now it's 0:02:57.680 --> 0:03:00.480 just some of it feeds cars. So that's a key 0:03:00.520 --> 0:03:04.119 thing to remember about corn. In most agriculture countries. Most 0:03:04.120 --> 0:03:07.919 countries are we all subsidized their agriculture production, and we're 0:03:07.919 --> 0:03:10.079 getting to the point now where farmers may be able 0:03:10.120 --> 0:03:13.079 to be subsistent without a lot of these extra programs 0:03:13.080 --> 0:03:15.359 from the government. A lot of it's because we use 0:03:15.560 --> 0:03:17.200 it for clean fuel for ethanol. 0:03:18.080 --> 0:03:22.120 Might sound interesting, I know it's all intertwined. How hard 0:03:22.400 --> 0:03:24.799 or how easy is it to grow corn? 0:03:26.200 --> 0:03:31.120 So corn is difficult. It's the most fertilizer intensive crop. 0:03:32.280 --> 0:03:34.640 And as we mentioned that earlier segment, a lot of 0:03:34.960 --> 0:03:38.240 farmers will say out in Illinois where I'm from, zilk corn, 0:03:38.400 --> 0:03:40.800 grow bean, so they can plant corn the next year. 0:03:40.800 --> 0:03:44.560 But it's the most intensive for you need a lot 0:03:44.600 --> 0:03:47.040 of anhydros ammonia, which is the base for that is 0:03:47.120 --> 0:03:50.040 natural gas, which has plunged this year, which means costs 0:03:50.040 --> 0:03:52.720 of productions going down. But it's harder to grow. Beans 0:03:52.760 --> 0:03:55.040 are much easier. You don't really need a lot of fertilizer. 0:03:55.360 --> 0:03:57.240 But when you work them in rotation, they all work 0:03:57.240 --> 0:03:58.000 out better together. 0:03:58.960 --> 0:03:59.480 Well, And it's. 0:03:59.440 --> 0:04:02.560 Interesting you you were mentioning the impact of the Russian 0:04:02.600 --> 0:04:07.880 invasion of Ukraine before, but fertilizer is a place also 0:04:08.320 --> 0:04:13.240 that is so incredibly dependent on China and Russia. And 0:04:13.280 --> 0:04:15.280 what it sounds like you're saying here is not that 0:04:15.640 --> 0:04:19.159 our desire for corn is or the global demand is 0:04:19.200 --> 0:04:21.440 falling anyway, and simply that the US is eating up 0:04:21.480 --> 0:04:25.360 more of the overall share for itself for non eat 0:04:25.640 --> 0:04:30.000 eating purposes. Does this add to the I guess do 0:04:30.080 --> 0:04:35.280 these shifts add to some of those sustainability concerns as 0:04:35.320 --> 0:04:39.760 the United States is increasingly dependent on corn for like 0:04:39.880 --> 0:04:41.839 transportation issues as well. 0:04:42.680 --> 0:04:44.960 Not at all. We can grow more. We still have 0:04:45.000 --> 0:04:47.400 about ten percent of our higher land in what's called 0:04:47.400 --> 0:04:50.600 the CRP, the Conservation Conservation Reserve program. I used to 0:04:50.600 --> 0:04:53.320 have my farm in that for a little while, and 0:04:53.320 --> 0:04:56.680 it's where the government pays you to not farm. So 0:04:56.720 --> 0:04:58.520 obviously not going to put your best form there. But 0:04:58.880 --> 0:05:00.720 that's the key thing about what's just come point out 0:05:00.760 --> 0:05:04.600 the facts of deflationary forces and corn. The average acre 0:05:04.640 --> 0:05:06.800 of corn plant and this year will probably produce about 0:05:06.800 --> 0:05:10.200 one hundred and seventy five bushels per acre. Just four 0:05:10.279 --> 0:05:12.960 or fifty years ago it was half that. So that's 0:05:13.000 --> 0:05:16.839 just what's happening with rapidly advancing technology, new seed technology, 0:05:16.960 --> 0:05:19.919 new planting, techniques is we can just create more with 0:05:20.120 --> 0:05:22.960 less every day. That's normally what happens with commodities. And 0:05:23.000 --> 0:05:27.359 corn is the most significant agriculture crop on the planet 0:05:27.920 --> 0:05:31.080 and it's the US has been the epicenter. But don't 0:05:31.120 --> 0:05:32.839 worry about us creating more. And even if we have 0:05:32.880 --> 0:05:35.359 a severe drought, there's a lot of different time zones. 0:05:35.360 --> 0:05:39.120 There's irrigation, and there's you know, plenty of production coming 0:05:39.160 --> 0:05:41.320 out of from south of the border, from Brazil. So 0:05:42.360 --> 0:05:44.360 you know, I look at it is I always like 0:05:44.400 --> 0:05:47.200 to point out when people get bullish when markets go up, 0:05:47.520 --> 0:05:49.680 grains are the number one commodity you never want to 0:05:49.680 --> 0:05:51.760 buy after they go up. It's a higher price cure. 0:05:52.120 --> 0:05:55.640 And the thing here's a new thing about ethanol is 0:05:55.880 --> 0:05:59.400 we are now rapidly going to EVS. Total consumption of 0:05:59.480 --> 0:06:02.000 unletted get in this country. He's still about five percent 0:06:02.360 --> 0:06:06.200 below where it was before COVID, and now we're switching 0:06:06.240 --> 0:06:10.320 EV so fast. Total sales of automobiles in the world 0:06:10.320 --> 0:06:13.600 now almost fifteen percent EBS. All that was accelerated by 0:06:13.600 --> 0:06:15.800 the war, and that means a lot of the demand 0:06:15.839 --> 0:06:17.400 source for corn might be going away. 0:06:17.880 --> 0:06:21.200 And I should note I'm looking at the chart of 0:06:21.360 --> 0:06:24.400 corn prices. We're back really to levels where we were 0:06:25.320 --> 0:06:29.559 in mid twenty twenty one. October twenty twenty one looks 0:06:29.640 --> 0:06:35.080 like so, as you said, be cautious about getting into 0:06:35.120 --> 0:06:36.240 commodities after so. 0:06:36.240 --> 0:06:40.680 Mike Spike, Mike, the mclone family used to be used 0:06:40.760 --> 0:06:44.479 on a farm in Indiana. How many farmers are there, 0:06:44.480 --> 0:06:46.200 like the maglones out there, like give us a sense 0:06:46.240 --> 0:06:48.599 of what's the farm economy in the US now versus 0:06:48.640 --> 0:06:52.080 like family owned farmers versus I guess corporate. 0:06:51.720 --> 0:06:55.080 Farms going much more corporate. So we it was always 0:06:55.080 --> 0:06:57.919 a gentleman's farm. My grandfather bought it during the Great Depression, 0:06:58.240 --> 0:07:00.680 and he always cash rented it. That's a term, use 0:07:00.760 --> 0:07:03.120 your own the landing, just let other people farming. They'll 0:07:03.120 --> 0:07:05.359 pay you a cash rent for that. Now I know 0:07:05.440 --> 0:07:09.880 a few big of these big producers out in Champagne, Illinois, 0:07:09.880 --> 0:07:11.880 which is some of the best ground in the planet, 0:07:12.360 --> 0:07:14.400 and they own the land, they manage it, and they 0:07:14.480 --> 0:07:16.960 just have farmers do it. So it's becoming much more corporate. 0:07:17.000 --> 0:07:20.240 But it's so efficient. It's just incredibly efficient. The key 0:07:20.400 --> 0:07:22.080 quote I get every time I get out there is 0:07:22.080 --> 0:07:24.680 the technology is so hard to keep up with. For instance, 0:07:24.920 --> 0:07:27.800 there's this thing called exact Shot from John Deere where 0:07:27.800 --> 0:07:30.320 they can now when they plant that seed, give it 0:07:30.360 --> 0:07:33.040 the exact amount of fertilizer where it needs where they 0:07:33.080 --> 0:07:36.880 want it, and it can reduce fertilizer costs by sixty percent. 0:07:36.960 --> 0:07:39.640 So it's just that rapidly advancing technology in the area. 0:07:39.680 --> 0:07:42.520 It's hard to keep up. The weather is still unpredictable, 0:07:42.560 --> 0:07:45.360 but we now have with hybrid seeds and things like 0:07:45.360 --> 0:07:47.800 that you can do pretty well with. For instance, there's 0:07:47.800 --> 0:07:49.920 ano example. When I was a kid, the average cornstock 0:07:50.640 --> 0:07:52.600 had one ear, and now you have two or so 0:07:52.720 --> 0:07:55.280 on per cornstock. My question is what stops that from 0:07:55.320 --> 0:07:58.280 going to six ears per cornstock. It's just the trends 0:07:58.320 --> 0:08:01.240 your friend for production, but app for prices. 0:08:01.560 --> 0:08:03.800 Wow, all right, let's switch gears here. I could talk 0:08:03.800 --> 0:08:05.200 to you know, and we're gonna be We'll get the 0:08:05.200 --> 0:08:07.440 port pillows at some point. But let's turn to gold. 0:08:07.480 --> 0:08:09.680 Here are we still just long gold and kind of 0:08:09.720 --> 0:08:10.520 short everything else? 0:08:11.400 --> 0:08:13.840 I look at gold as the most likely asset and 0:08:13.880 --> 0:08:16.600 commodity to continue advancing. Now that's not so profound because 0:08:16.600 --> 0:08:19.600 it typically outperforms most commodities over time, most knowly copper, 0:08:19.680 --> 0:08:22.200 most noted crudilil. But the average price this year is 0:08:22.280 --> 0:08:24.840 nineteen thirty three, one nine and thirty three. I love 0:08:24.920 --> 0:08:27.840 saying that, Paul, because that was a significant year where 0:08:27.880 --> 0:08:32.920 Franklin Delano Roosevelt debased the dollar versus gold, and that 0:08:33.080 --> 0:08:36.120 bottom all the deflation. Air forces bottom the stock market 0:08:36.320 --> 0:08:40.559 and it bottomed deflation. But I look at gold, that's 0:08:40.559 --> 0:08:43.679 the highest averaged price ever nineteen thirty three. I see 0:08:43.720 --> 0:08:45.640 that's a bull market that's just waiting to break out. 0:08:45.679 --> 0:08:47.920 The key triggers would be some form of fed pivot. 0:08:48.120 --> 0:08:51.080 As you mentioned the earlier segment, the WRP function is 0:08:51.200 --> 0:08:53.520 tilting that way, and I think the key thing to 0:08:53.559 --> 0:08:56.560 get that pet fed pivot is probably a stock market decline. 0:08:56.600 --> 0:08:58.920 But to me, gold is and I just show it 0:08:58.920 --> 0:09:01.439 on the year, it's up six percent. On a twelve 0:09:01.480 --> 0:09:04.160 month basis is up ten percent. Virtually every other commodity 0:09:04.240 --> 0:09:07.440 is down. Here's a question what stops that trajectory. I 0:09:07.480 --> 0:09:10.080 suspect it's more likely accel right, And as you heard 0:09:10.080 --> 0:09:12.880 Ona Wong in the previous segment point about recession. Here's 0:09:12.880 --> 0:09:15.240 one thing I point out about gold is there's one 0:09:15.320 --> 0:09:18.520 hundred percent probability when an unemployment rallies from this level, 0:09:18.520 --> 0:09:20.800 I mean goes higher, that we'll have a recession, because 0:09:20.800 --> 0:09:22.200 that's the way it's always worked, and that to me 0:09:22.320 --> 0:09:24.400 is what's going to trigger gold. So my theme this month, 0:09:24.440 --> 0:09:27.079 as I'm probably mean my commodity outlook is golds has 0:09:27.120 --> 0:09:30.280 been outperforming all other commodities. What stops it versus I'm 0:09:30.280 --> 0:09:32.200 a fareful it's going to accelerate, all right. 0:09:32.080 --> 0:09:35.959 Mike, always great, great segment. Always appreciate getting your color there. 0:09:36.000 --> 0:09:40.080 Mike mcgloan's senior macro strategist for Bloomberg Intelligence is sconced 0:09:40.559 --> 0:09:42.120 down in Miami Beach. 0:09:43.640 --> 0:09:47.000 You're listening to the team Ken's are Live program Bloomberg 0:09:47.120 --> 0:09:50.480 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:09:50.559 --> 0:09:53.720 the iHeartRadio app and the Bloomberg Business app, or listen 0:09:53.760 --> 0:09:55.880 on demand wherever you get your podcasts. 0:09:58.400 --> 0:10:01.439 Sim Own Foxman, Paul Sweeney, You're in Bloomberg Interactive Broker Studio. 0:10:01.440 --> 0:10:03.640 We're streaming live on YouTube, so head over to YouTube 0:10:03.640 --> 0:10:08.319 dot com and search Bloomberg Radio. Let's look ETFs and 0:10:08.400 --> 0:10:11.000 usually I want to talk about flows, where the money's going, 0:10:10.960 --> 0:10:12.120 and all that kind of stuff. But I want to 0:10:12.120 --> 0:10:14.439 do in the context. I'll start off at least by 0:10:14.480 --> 0:10:18.080 talking about bitcoin ETFs because our next person, our next guest, 0:10:18.120 --> 0:10:21.920 has some experience in that, Greg Taylor, CIO of Purpose 0:10:22.000 --> 0:10:25.320 Investments up there in Canada, So Greg, I guess in 0:10:25.360 --> 0:10:27.800 the ETF biz, at least here in the US, A 0:10:27.800 --> 0:10:30.160 lot of talk this week has been, hey, maybe we're 0:10:30.160 --> 0:10:34.120 going to get a bitcoin spot ETF. You guys already 0:10:34.120 --> 0:10:35.600 have that in Canada, don't you. Can you tell us 0:10:35.600 --> 0:10:39.040 a little bit about the bitcoin ETF. 0:10:40.200 --> 0:10:42.720 Yeah, for sure, and thanks for having us on. Yeah, 0:10:42.840 --> 0:10:45.240 in Canada. We like to think that we're one of 0:10:45.320 --> 0:10:47.600 the first innovators in the ETF space. A lot of 0:10:47.920 --> 0:10:50.360 the first and the ETFs globally have hopped in Canada, 0:10:50.360 --> 0:10:53.280 and one of those of late has been the first spot, 0:10:53.320 --> 0:10:57.040 the Bitcoin ETF, which we launched the Purpose in February 0:10:57.040 --> 0:10:59.480 of twenty twenty one. And I think it's great to 0:10:59.679 --> 0:11:02.120 hear the US is finally catching up and then to 0:11:02.160 --> 0:11:04.600 launch one as well, because really, when you look at 0:11:04.880 --> 0:11:07.400 any type of ETF in a commodity world, you do 0:11:07.480 --> 0:11:10.240 want to have spot versus futures, and I think spot 0:11:10.280 --> 0:11:13.280 ETF is something that would be welcome to the crypto space, 0:11:13.320 --> 0:11:15.920 and the experience we've had with it has been very positive. 0:11:15.960 --> 0:11:18.800 And since we launched our fund in February twenty one, 0:11:18.880 --> 0:11:21.319 it's gotten over a billion of assts. It's one of 0:11:21.360 --> 0:11:24.199 the most heavily traded in the TSX, and I think 0:11:24.200 --> 0:11:25.920 it's been a really good experience for a lot of 0:11:25.920 --> 0:11:28.200 investors and a good way to get access to the 0:11:28.200 --> 0:11:30.400 crypto market in a more regulated environment. 0:11:30.640 --> 0:11:35.280 So, based upon your experience with a spot bitcoin ETF, 0:11:35.320 --> 0:11:38.480 are you what do you think has been or the 0:11:38.520 --> 0:11:41.560 SEC or the US regulators have kind of missed judged 0:11:41.720 --> 0:11:44.760 about a futures versus a spot ETF. 0:11:46.160 --> 0:11:47.920 Well, when I think when you go between futures in 0:11:47.920 --> 0:11:50.920 a spot, I think there's no real argument that a 0:11:50.920 --> 0:11:53.400 spot one is way better. And when we set up 0:11:53.400 --> 0:11:56.680 to launch our ri ETF, we weren't really inventing the wheel. 0:11:56.760 --> 0:11:59.080 What we did is we really kind of copied or 0:11:59.080 --> 0:12:02.640 mimicked the way other commodity ETFs have done. Basically, the 0:12:02.720 --> 0:12:06.520 GLD is a widely traveled ETF in the US on 0:12:06.600 --> 0:12:09.000 spot gold, and I think it's looking at when you 0:12:09.040 --> 0:12:11.319 look at a spot versus the futures, there's always better 0:12:11.400 --> 0:12:14.480 because the futures is always going to lose basis points 0:12:14.520 --> 0:12:17.079 on the role, so it was curious why the SEC 0:12:17.200 --> 0:12:20.480 would approve a futures based ETF versus a SPOT because 0:12:20.480 --> 0:12:21.880 at the end of the day, the futures are going 0:12:21.960 --> 0:12:24.640 to have to be backed by something, so there is 0:12:24.679 --> 0:12:26.600 a way to get back in the system. But having 0:12:26.720 --> 0:12:29.600 a futures based ETF isn't really good for anyone or 0:12:29.640 --> 0:12:30.600 the system. 0:12:31.040 --> 0:12:33.840 No, we saw a share or sorry, we saw the 0:12:33.880 --> 0:12:37.800 price of bitcoin pop after the decision came down. 0:12:37.840 --> 0:12:40.920 In this case, I think there was a lot of enthusiasm. 0:12:40.960 --> 0:12:44.520 Hey all these people are going to pile into an 0:12:44.520 --> 0:12:49.240 ETF rather than try and go out and buy bitcoin themselves. 0:12:49.640 --> 0:12:52.200 That said, you know, there's a JP Morgan strategist talking 0:12:52.200 --> 0:12:55.120 about how you know, if you have a launch, say 0:12:55.200 --> 0:12:59.640 of one of these these bitcoin ETFs, it's not really 0:12:59.679 --> 0:13:03.160 going to change the overall market enthusiasm for this. It's 0:13:03.200 --> 0:13:07.040 just going to draw liquidity away from other products. 0:13:07.960 --> 0:13:09.400 Is this a zero sum game to you? 0:13:10.960 --> 0:13:12.680 I don't think it is yet, because I still think 0:13:12.679 --> 0:13:15.600 crypto is a commodity that's still really in the early 0:13:15.640 --> 0:13:19.520 innings of of its growth, and I think having a 0:13:19.559 --> 0:13:21.800 spot ETF which is one of the best ways to 0:13:21.800 --> 0:13:23.520 get access to it is only going to bring on 0:13:23.559 --> 0:13:26.520 more investors. Currently, if you want to get exposure to 0:13:26.559 --> 0:13:29.680 crypto the traditional way, it's really not the easiest system. 0:13:29.720 --> 0:13:32.640 You have to open a separate account with the crypto provider. 0:13:32.679 --> 0:13:34.800 You get figured if you're doing a cold or hot wallet, 0:13:35.120 --> 0:13:36.800 and a lot of people just don't want to do that, 0:13:36.840 --> 0:13:39.120 so they want to wait for an ETF that's going 0:13:39.160 --> 0:13:42.520 to be easy and contract the index. And further to that, 0:13:42.800 --> 0:13:44.400 I think a lot of people are looking again at 0:13:44.440 --> 0:13:47.080 real assets. With the amount of money printing going on 0:13:47.080 --> 0:13:49.280 in central banks, there has been a case to add 0:13:49.280 --> 0:13:52.320 more of your portfolio towards real assets, and certainly the 0:13:52.320 --> 0:13:55.400 commodities and gold and real estate are benefiting from this. 0:13:55.520 --> 0:13:57.480 But I think there's also a way to get that 0:13:57.520 --> 0:14:00.400 crypto with into that bucket of real assets. I think 0:14:00.440 --> 0:14:03.120 there's demand for real assets or just demand for crypto, 0:14:03.280 --> 0:14:05.280 and people want an easy way to do that, and 0:14:05.320 --> 0:14:07.760 I think having a spot ETF is one of the 0:14:07.840 --> 0:14:10.280 simplest ways to get access to it. So I don't 0:14:10.320 --> 0:14:12.400 think it's a zero sum game. I think once the 0:14:12.520 --> 0:14:14.839 US does get a spot ETF, I think that will 0:14:14.880 --> 0:14:17.960 open up more buyers and sellers, and that's probably why 0:14:17.960 --> 0:14:21.280 the commodity reacted so well to a hints that it 0:14:21.320 --> 0:14:23.440 does seem like the US getting closer to approving this. 0:14:24.280 --> 0:14:25.680 Great Let's step back and take a look at the 0:14:25.680 --> 0:14:28.600 ETF space in general, give us just an overview. Are 0:14:29.080 --> 0:14:32.360 is the money continuing to gush into etfses? To give 0:14:32.440 --> 0:14:34.040 us a sense of how this year's been. 0:14:35.280 --> 0:14:38.200 Yeah, we've had netflows and that positive flows this year. 0:14:38.920 --> 0:14:41.000 ETFs have definitely been a way that a lot of 0:14:41.040 --> 0:14:43.520 people are getting access to it. One of the big 0:14:43.560 --> 0:14:46.400 box spots for us and I think for the whole 0:14:46.440 --> 0:14:49.440 ecosystem in ETFs. In the last few months has been 0:14:49.960 --> 0:14:53.200 really looking at the money market ETFs. Certainly money market 0:14:53.240 --> 0:14:56.080 has become a hot topic of late, and with a 0:14:56.240 --> 0:14:58.520 yields for cash in the five to six percent, I 0:14:58.520 --> 0:15:01.280 think that's been an area people are trying to get 0:15:01.320 --> 0:15:03.200 access to and I think that's where a lot of 0:15:03.280 --> 0:15:05.560 the games with the whole sector have been. But I 0:15:05.560 --> 0:15:08.440 think over time, people are looking for access and simple 0:15:08.440 --> 0:15:10.760 ways to get it, and in a low fee environment, 0:15:10.800 --> 0:15:12.560 I think ETFs are one of those ways to get 0:15:12.600 --> 0:15:13.200 access to it. 0:15:14.000 --> 0:15:17.760 Greg we've been hearing from some investment strategists, investment strategies 0:15:17.800 --> 0:15:20.840 pointing to sort of defensive sectors in a way from 0:15:20.920 --> 0:15:24.640 like the tech driven height that we've seen over the 0:15:24.680 --> 0:15:29.840 past couple of months. Are we seeing places like healthcare 0:15:30.440 --> 0:15:34.280 and places like energy reflected in some of the ETF 0:15:34.360 --> 0:15:38.400 flows and will we see more of that as we 0:15:38.560 --> 0:15:39.640 head towards the end of the year. 0:15:40.920 --> 0:15:44.000 I think that's certainly the hope. And being a Canadian, 0:15:44.040 --> 0:15:46.440 we're definitely what our indice is tilted more towards the 0:15:46.440 --> 0:15:48.480 cyclicals and the resource sector. I think we'd love to 0:15:48.480 --> 0:15:51.920 see that rotation away from technology towards the commodity sectors, 0:15:51.960 --> 0:15:55.520 and we are starting to see that. Certainly. The last 0:15:55.600 --> 0:15:58.000 few years has been really good for the commodity growth, 0:15:58.040 --> 0:16:02.040 as we've seen both entered and base metals do quite well. 0:16:02.080 --> 0:16:05.120 And I think that's really setting up quite nicely for 0:16:05.160 --> 0:16:07.760 the second half the year. There's a lot of rumblings 0:16:07.800 --> 0:16:11.360 about China launching other stimulus program into September, and as 0:16:11.360 --> 0:16:13.520 the world starts to talk more about a soft landing 0:16:13.640 --> 0:16:16.520 more stimulus from China. That's setting up for a decent 0:16:16.600 --> 0:16:19.080 move in the commodities, and I think that could cause 0:16:19.120 --> 0:16:22.600 more rotation away from these these textocks which have really 0:16:22.640 --> 0:16:25.120 driven in this is higher to start the year, and 0:16:25.200 --> 0:16:27.600 maybe some of that money flows back to the cyclicals, 0:16:27.640 --> 0:16:31.119 which are setting up quite nicely. From a supply demand economics. 0:16:31.160 --> 0:16:34.120 There's not a lot of supply for modern new minds 0:16:34.160 --> 0:16:36.840 and new oil bills coming on. So I does feel 0:16:36.840 --> 0:16:38.760 like the second half of the year could remind could 0:16:38.880 --> 0:16:41.320 could belong to more the cyclicals than the text talks. 0:16:42.160 --> 0:16:44.120 Hey, Greg, thanks so much for joining us. Really appreciate 0:16:44.160 --> 0:16:48.720 getting your thoughts. Greg Taylor, CIO at Purpose Investments checking 0:16:48.760 --> 0:16:51.920 in with us, giving us the latest on the ETF space. 0:16:52.080 --> 0:16:56.880 Just continues to see amazing funds flow into the ETF space. 0:16:56.960 --> 0:16:59.960 Makes you wonder about the future of the mutual fund business, 0:17:00.040 --> 0:17:02.320 which we all grew up with, and now it's really 0:17:02.320 --> 0:17:05.639 fair I think in large part due to the cost differential, 0:17:06.080 --> 0:17:07.639 ETFs aer a way to go for a lot of folks. 0:17:07.680 --> 0:17:10.560 Yeah, it's places like Betterman, etc. 0:17:11.080 --> 0:17:14.080 Yeah, it's easy, yeah exactly, and it's interesting. I think 0:17:14.160 --> 0:17:17.320 what I understand is from tax free accounts still a 0:17:17.359 --> 0:17:20.240 place for mutual funds, but otherwise ets and the cost 0:17:20.280 --> 0:17:22.120 truction and reporting and all the type of stuff seems 0:17:22.160 --> 0:17:23.280 to be a better rapper. 0:17:23.640 --> 0:17:26.760 You're listening to the tape Ken's are Live program Bloomberg 0:17:26.840 --> 0:17:30.439 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:17:30.480 --> 0:17:33.680 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:17:33.760 --> 0:17:36.560 You can also listen live on Amazon Alexa from our 0:17:36.600 --> 0:17:41.640 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:17:42.359 --> 0:17:44.520 All right, we get some smart research coming out of 0:17:44.560 --> 0:17:47.919 the folks at Bloomberg Intelligence. Joe Levington one of the 0:17:47.920 --> 0:17:50.840 smarter folks we like at BI. He's a director of 0:17:50.840 --> 0:17:53.480 credit research, so we better be good. But he's got 0:17:53.480 --> 0:17:56.119 a nice note out here on Tesla and it's a 0:17:56.160 --> 0:17:59.040 little bit different twist here and Joel covers the credit 0:17:59.080 --> 0:18:01.920 side of some of these industrial companies. He joins his 0:18:02.040 --> 0:18:04.879 life here in our Bloomberg Interactive Broker studio. Joe, what 0:18:04.920 --> 0:18:07.960 do you think about tests there? Because our friends, you know, 0:18:08.080 --> 0:18:11.760 in Detroit Ford GM Stalantis. I think they've got some 0:18:11.960 --> 0:18:13.080 labor problem, don't they. 0:18:13.200 --> 0:18:16.840 They have a massive labor problem coming up. There's a 0:18:16.840 --> 0:18:19.199 strike with the UAW that's going to be set for 0:18:19.240 --> 0:18:23.800 September fourteenth, as they work through their contracts expectations are 0:18:23.840 --> 0:18:26.639 that pricing could go up thirty to forty percent on 0:18:27.359 --> 0:18:30.560 their labor costs, which creates an opportunity for a low 0:18:30.600 --> 0:18:33.240 cost player like Tesla to come in and continue to 0:18:33.280 --> 0:18:36.760 price down. You know, Paul, the average Tesla price is 0:18:36.760 --> 0:18:40.159 down about thirty seven percent this year already. And if 0:18:40.200 --> 0:18:42.560 you really, yeah, even if you look at consensus estimates 0:18:42.600 --> 0:18:44.280 just on their cars at the beginning of the year, 0:18:44.600 --> 0:18:47.239 it would have the market was expecting about fifty four 0:18:47.240 --> 0:18:49.960 thousand dollars of cards down to forty six thousand. So 0:18:49.960 --> 0:18:53.520 they're really applying the pressure on these other old line 0:18:53.680 --> 0:18:58.880 ice engine manufacturers to really step up or step out. 0:18:58.920 --> 0:19:01.080 And you're starting to see some that's stepping out already 0:19:01.119 --> 0:19:04.840 occurring that might be exacerbated by this by a potential strike. 0:19:05.280 --> 0:19:05.399 You know. 0:19:05.520 --> 0:19:08.240 What's interesting with the strikes though, is if the auto 0:19:08.320 --> 0:19:14.440 workers are pretty successful, then doesn't it create pressure on 0:19:14.680 --> 0:19:17.320 Tesla's own workforce to. 0:19:17.200 --> 0:19:18.600 Say, hey, they got a good deal. 0:19:19.000 --> 0:19:21.240 Maybe maybe we'll we'll get a good deal if we, 0:19:21.680 --> 0:19:25.639 you know, resist the anti union efforts of Tesla and 0:19:25.720 --> 0:19:27.000 go ahead and organize. 0:19:27.080 --> 0:19:30.760 Yeah, one hundred percent, And I would start with a 0:19:30.840 --> 0:19:33.440 base of if you know, labor costs go up thirty 0:19:33.480 --> 0:19:36.760 to forty percent at Ford. At a non unionized plant 0:19:36.880 --> 0:19:38.840 like at Tesla, if it goes a fifteen percent, you're 0:19:38.880 --> 0:19:41.399 still ahead of the game point at least on a 0:19:41.440 --> 0:19:43.960 relative basis, and you're already very far ahead of the game. 0:19:44.160 --> 0:19:45.680