WEBVTT - Wage Growth is a Complicated Story, Shiller Says 0:00:00.080 --> 0:00:13.040 Yea. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Ley. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:34.200 Bloomberg dot Com, and of course on the Bloomberg Roberts 0:00:34.240 --> 0:00:37.279 Shower with US of Yale University. He is a laureate 0:00:37.400 --> 0:00:41.560 in this that in about fourteen other things as well. John, 0:00:41.560 --> 0:00:44.440 I thought we'd wander into the land of tariffs, and 0:00:44.479 --> 0:00:47.840 now that folds over into a national agony on wage growth. 0:00:47.880 --> 0:00:50.360 What's actually quite interesting as the President has actually scored 0:00:50.360 --> 0:00:54.000 his first win without much media coverage on on trade, 0:00:54.080 --> 0:00:56.920 a revamped trade deal with South Korea. Maybe small at 0:00:56.960 --> 0:00:58.800 the marching, but you do wonder whether this approach of 0:00:58.880 --> 0:01:03.880 this administration can generate results. Professor Schiller Cannon, Well, he's 0:01:03.920 --> 0:01:06.800 got people intimidated, and I think that it has an 0:01:06.800 --> 0:01:11.240 effect on the negotiations. I mean, it may have a 0:01:11.280 --> 0:01:15.000 positive effect in other area like North Korea. The you know, 0:01:15.040 --> 0:01:19.800 he comes across as a kind of unpredictable, aggressive guy, 0:01:19.959 --> 0:01:24.280 and I think he does know something about negotiating. Isn't 0:01:24.319 --> 0:01:26.240 that a really good point that professor should have that 0:01:26.280 --> 0:01:29.040 maybe some people are missing that the approach towards China 0:01:29.120 --> 0:01:32.840 over the last twenty years hasn't resulted in any significant 0:01:32.840 --> 0:01:36.280 opening up of the Chinese economy under pressure just through 0:01:36.319 --> 0:01:38.640 talks that this is probably the way to do it, 0:01:38.760 --> 0:01:43.520 using a stick rather than a carrot. Well, I don't know. 0:01:43.560 --> 0:01:48.320 It's not my personality. I feel unfamiliar territory to me, 0:01:48.840 --> 0:01:52.040 but I I think that a good relationship with these 0:01:52.080 --> 0:01:56.120 countries is also very important, and we're suffering from that 0:01:56.200 --> 0:01:58.920 right now. I was just in China last week. In 0:01:58.960 --> 0:02:03.600 the sense that I got was these these aggressive measures 0:02:03.640 --> 0:02:10.440 are are generating some anger and hostility. The anger and hostility, Professors, 0:02:10.480 --> 0:02:13.520 you've written in Finance and the Good Society and any 0:02:13.560 --> 0:02:16.799 of your other efforts is a societal scream in America. 0:02:16.840 --> 0:02:19.400 All of our listeners know this. The haves and they 0:02:19.440 --> 0:02:24.440 have nuts. Paul Krugman yesterday dropped on us that concept 0:02:24.480 --> 0:02:30.040 of your classes. Monopsony, which is a dominant coal mine 0:02:30.600 --> 0:02:33.840 minor in a coal mining town is the only employer, 0:02:34.400 --> 0:02:36.920 or maybe a rubber plantation in Malaysia where there's one 0:02:37.000 --> 0:02:42.239 rubber plantation in a lot of workers, is America's agony 0:02:42.320 --> 0:02:47.440 here on trade actually about the monopsony of American business 0:02:47.919 --> 0:02:52.359 where they almost can't raise wages because of the dominance 0:02:52.919 --> 0:02:56.120 of select businesses and industries. I thought you were going 0:02:56.160 --> 0:03:00.960 to refer to our trade policy as exploiting monopson moment. 0:03:01.360 --> 0:03:04.440 We may be exploiting it in other countries. But is 0:03:04.480 --> 0:03:08.560 the agony that brings us to this trade debate because 0:03:08.680 --> 0:03:11.600 of a lack of wage growth in America partly from 0:03:12.080 --> 0:03:17.320 monopsimistic tendencies. Uh, there has definitely been a lack of 0:03:17.360 --> 0:03:23.720 wage growth. Is it because monopximistic power has increased? Uh? 0:03:24.840 --> 0:03:28.600 I don't I tend to that. It's undoubtedly a complicated story, 0:03:28.919 --> 0:03:33.360 but I think of important reasons why wage growth hasn't 0:03:33.440 --> 0:03:41.280 been inspiring. Is a technological replacement, labor saving devices and 0:03:41.400 --> 0:03:46.600 be globalization which continues. Do they dwarf the trade debate? 0:03:46.800 --> 0:03:50.200 I mean, when the president's trade deficits are bad, is 0:03:50.240 --> 0:03:55.760 that discussion, whether it's constructive or not overwhelmed like technology? Yeah, 0:03:56.280 --> 0:03:59.760 you know, the general notion that trade deficits are bad 0:04:00.760 --> 0:04:04.240 is just not supported by economic theory trade. You know, 0:04:04.720 --> 0:04:07.240 trade deficits A lot of people want to invest in 0:04:07.280 --> 0:04:12.560 the US, so they that that helps finance the trade deficit. 0:04:12.960 --> 0:04:16.040 I don't. I don't think it seems like President Trump, 0:04:16.200 --> 0:04:21.520 in focusing so much on that measure is is misguided, 0:04:21.960 --> 0:04:25.479 just as he is in not not respecting the World 0:04:25.560 --> 0:04:29.160 Trade Organization, which is a outgrowth of the General Agreement 0:04:29.200 --> 0:04:33.760 on Tariffs and Trade in that was a post World 0:04:33.839 --> 0:04:38.760 War two, post depression, post World War two active enlightenment. Uh, 0:04:38.800 --> 0:04:42.960 and now we're losing sight of that, Professor um trite 0:04:43.000 --> 0:04:45.440 deficits can be a problem with that persistent drawn out 0:04:45.480 --> 0:04:47.160 of over a long period of time. And if there 0:04:47.160 --> 0:04:51.520 are a consequence of subsidies and protectionism, which which China 0:04:51.560 --> 0:04:55.680 front and center, right right right, that's a problem. Well, 0:04:55.720 --> 0:04:59.360 I think there are problems. I think Peter Navarro, who 0:04:59.480 --> 0:05:04.000 is Trump's advisor, makes it into more of a war 0:05:04.240 --> 0:05:09.960 type problem than uh. You know, there's there's there's there's 0:05:09.960 --> 0:05:16.200 something to be said for respect for other nations. I 0:05:16.240 --> 0:05:20.200 think we want China. I know it's it can be 0:05:20.320 --> 0:05:23.200 played as a cheat on American business, but on the 0:05:23.279 --> 0:05:26.359 other hand, we we do want China to prosper. That 0:05:26.520 --> 0:05:32.920 ultimately helps international accord. And uh, we we're talking about 0:05:32.960 --> 0:05:38.320 another massive nuclear power here. I think there could be 0:05:38.360 --> 0:05:42.440 more balance in our relations. Thank you for the time. 0:05:42.480 --> 0:05:46.080 To the Robert should University, We're housing free there. Next 0:05:46.080 --> 0:05:48.200 time we'll beat him to death about the housing market. 0:06:00.160 --> 0:06:04.600 One of the great engineering programs of America is the 0:06:04.720 --> 0:06:08.719 University of Illinois Urbanish Champaign, and that is where she 0:06:08.920 --> 0:06:12.719 was minted out of or she studied her thermodynamics and 0:06:12.880 --> 0:06:15.800 also a little bit she probably quoted Python when she 0:06:15.920 --> 0:06:20.080 was there. Eilean Bourbage uh joins us. She is a 0:06:20.120 --> 0:06:23.479 course definitive within the United Kingdom tech space, with a 0:06:23.520 --> 0:06:26.080 lot of experience with some of the tech giants over 0:06:26.720 --> 0:06:30.760 the years. We now speak with engineer Eileen Bourbage. Um, 0:06:30.800 --> 0:06:32.760 if you were to speak today II lean to the 0:06:32.880 --> 0:06:36.680 leadership of a beleaguered American tech industry, what would you 0:06:36.720 --> 0:06:40.640 say to them? Great question? Um. First of all, I 0:06:40.760 --> 0:06:42.400 probably asked him if I could get any sort of 0:06:42.400 --> 0:06:45.440 tips on on their future roadmaps. But I would then 0:06:45.480 --> 0:06:47.560 probably try and advise them that now is a really 0:06:47.640 --> 0:06:50.960 good sort of opportunity for them to really step up 0:06:51.000 --> 0:06:55.640 and to really demonstrate that they've got mindfulness and consumer 0:06:55.760 --> 0:06:58.159 sort of responsibility at the heart of what they do. 0:06:58.680 --> 0:07:00.919 I think that's what people are wanting to see. I 0:07:00.960 --> 0:07:04.039 think the markets are worried about you know, regulation or 0:07:04.040 --> 0:07:06.839 overstepping from the regulators, and I really think the tech 0:07:06.920 --> 0:07:09.880 leadership can actually thwart that. I think they can preempt 0:07:09.920 --> 0:07:12.800 it if they sort of demonstrate and communicate that they're 0:07:12.800 --> 0:07:15.000 thinking about these issues and that they're not taking them 0:07:15.080 --> 0:07:18.640 too lightly. Do you look at them, is publicly traded 0:07:18.720 --> 0:07:24.200 shareholder responsible managements or is there fiction of public ownership 0:07:24.320 --> 0:07:29.240 so great that they're basically private venture capitalists using the 0:07:29.360 --> 0:07:33.760 system while they do their tech stuff. I do think 0:07:34.280 --> 0:07:36.320 not to be led too much by your great question, 0:07:36.360 --> 0:07:38.760 but I do think they've probably been given a bit 0:07:38.800 --> 0:07:40.640 of a path, and I think, you know, with these 0:07:40.640 --> 0:07:43.840 sort of voting rights than the extraordinary sort of setups 0:07:43.880 --> 0:07:46.640 that a lot of them have, they've benefited from not 0:07:46.720 --> 0:07:49.040 having quite as much scrutiny from the markets and from 0:07:49.040 --> 0:07:52.920 other shareholders as come on, they're not John crying over 0:07:52.920 --> 0:07:56.080 at Deutsche Bank. I mean, that's what it comes, not 0:07:56.160 --> 0:07:58.679 John cry at Deutsche Bank. Is Facebook delivered a return 0:07:58.720 --> 0:08:03.840 of fifty on the I imagine it would be a 0:08:03.840 --> 0:08:06.680 bit different from Mark Zuckerberg, and if he hadn't, Eileen, 0:08:06.760 --> 0:08:09.520 the news coming from from Facebook is that they're going 0:08:09.520 --> 0:08:12.080 to make it more straightforward for users to change their 0:08:12.080 --> 0:08:16.120 their settings and delete data that they've already shared with 0:08:16.120 --> 0:08:18.560 with the company. How big a move is that? And 0:08:18.600 --> 0:08:21.400 if that's the ultimate business model? Now, if if you're 0:08:21.440 --> 0:08:25.120 allowed to delete the data as an end user, how 0:08:25.120 --> 0:08:27.520 do they monetize the platform as efficiently as they have 0:08:28.040 --> 0:08:30.040 over the last couple of years for the next couple 0:08:30.040 --> 0:08:32.920 of years with that a new policy setting. Yeah, so 0:08:33.000 --> 0:08:34.520 I think it's a great step on their part, by 0:08:34.520 --> 0:08:36.320 the way, And that's the kind of reaction that I 0:08:36.400 --> 0:08:38.640 was sort of alluding to, where they've got an opportunity 0:08:38.760 --> 0:08:42.080 to do these things right and make meaningful interventions to 0:08:42.160 --> 0:08:44.480 demonstrate that they're leading from the front. I think that 0:08:44.520 --> 0:08:46.839 the business model is not going to change because it's 0:08:46.880 --> 0:08:49.520 all on a scale, it's all spectrum and all very relative. 0:08:50.040 --> 0:08:53.280 Should some users choose to delete all their data, Facebook 0:08:53.320 --> 0:08:56.280 as an example, will still have more data on more 0:08:56.320 --> 0:08:59.800 people than any other platform in the world, And even 0:09:00.000 --> 0:09:03.520 should one delete their entire profile, they still will have 0:09:03.640 --> 0:09:06.560 the greatest ability to sort of target and offer insights 0:09:06.600 --> 0:09:10.079 to specific groups of people based on other behavior. Um. 0:09:10.160 --> 0:09:12.640 So it's a it's a bet worth taking in it's 0:09:12.679 --> 0:09:16.160 actually a sort of a feature and an option for 0:09:16.280 --> 0:09:19.280 users which they probably should have had all along. There 0:09:19.400 --> 0:09:22.200 is an overarching concern amongst some analysts out there, Eileen 0:09:22.480 --> 0:09:25.400 on Facebook specifically, that maybe we're meeting this point of 0:09:25.480 --> 0:09:29.240 saturation for add growth. Are we anywhere near to that? 0:09:30.520 --> 0:09:33.640 I don't think so. But even I've been skeptable about 0:09:33.679 --> 0:09:36.079 sort of Facebook's ability to keep the stating the growth 0:09:36.080 --> 0:09:38.320 that they've seen over recent years, and obviously I've been 0:09:38.320 --> 0:09:40.679 proven wrong time and time again. So I don't think 0:09:40.760 --> 0:09:43.320 what's happening now is a reason to think that they're 0:09:43.360 --> 0:09:44.959 going to be at saturation point. I think this is 0:09:45.000 --> 0:09:46.960 a minor stepback and actually has much more to do 0:09:47.000 --> 0:09:51.000 with communications and use a responsibility. There's Silicon fen in 0:09:51.040 --> 0:09:54.000 the United Kingdom, or I guess Cambridge Cluster is one 0:09:54.000 --> 0:09:56.720 way to do they have the same arrogance over there, 0:09:56.960 --> 0:09:59.680 or is it discreet to Silicon Valley the mess that 0:09:59.720 --> 0:10:03.160 we've Silicon Valley. Well, I think there's no other place 0:10:03.160 --> 0:10:05.200 in the world that's quite like Silicon Valley, and I 0:10:05.200 --> 0:10:07.880 think the culture is different in Silicon Valley, having been 0:10:07.880 --> 0:10:09.960 there a number of years. We've got silicon roundabout, but 0:10:10.000 --> 0:10:12.719 we also have a number of great huts across the UK, 0:10:12.800 --> 0:10:15.200 and I do think it's it's a different culture for sure, 0:10:15.200 --> 0:10:17.640 but there's lots to learn from both sides. So well, 0:10:17.720 --> 0:10:21.080 that was diplomatic. I come on, how can within the 0:10:21.120 --> 0:10:24.160 competitive landscape, whether it's an island in the East River 0:10:24.200 --> 0:10:27.600 of New York, Good morning, Cornell University, or it's what's 0:10:27.640 --> 0:10:30.480 going on over in the United Kingdom, how do you 0:10:30.679 --> 0:10:36.280 people take advantage of the chaos? Mr Zuckerberg is rot Oh, 0:10:36.320 --> 0:10:38.720 it's fantastic. I mean, there are great advantages even if 0:10:38.760 --> 0:10:41.160 you weren't to think about data privacy and data protection. 0:10:41.480 --> 0:10:43.720 We've got great policymakers who think about things like this 0:10:43.760 --> 0:10:46.080 an event so DPR that's going to be coming out 0:10:46.120 --> 0:10:49.280 in Europe, but even specific subsectors, so if you look 0:10:49.320 --> 0:10:52.600 at fintech or financial services, you know, policymakers here have 0:10:52.640 --> 0:10:54.960 been really helpful for innovation and have been working sort 0:10:54.960 --> 0:10:57.800 of in steps with the industry. That helps a lot. 0:10:58.000 --> 0:11:00.360 See that John Ferrell, that was just a wind And 0:11:00.440 --> 0:11:02.959 how vicious Eileen Burbage can be. Do you see how 0:11:03.520 --> 0:11:06.920 says it was just fantastic. I mean it's the nicest 0:11:07.080 --> 0:11:14.199 person in the world of tech eyes. When are we 0:11:14.200 --> 0:11:17.520 going to talk about cricket? Well, don't don't encourage him, Eileen, 0:11:17.600 --> 0:11:20.719 Please please don't encourage him. Apparently the captain has been 0:11:20.760 --> 0:11:25.160 banned for the Australian team for for twelve months. Under yes, 0:11:25.200 --> 0:11:28.040 I know we're not going We're not going down the road, Eileen, 0:11:28.679 --> 0:11:31.400 looking forward, thinking about someone that might get shredded and 0:11:31.480 --> 0:11:33.839 have their eyes pulled out. Could be Zuckerberg, and it 0:11:33.880 --> 0:11:36.440 could be in front of Congress. The reports the last 0:11:36.440 --> 0:11:40.280 twenty four hours leading us to believe that the CEO 0:11:40.320 --> 0:11:43.520 of Facebook will have his day on the hill. And 0:11:43.559 --> 0:11:47.400 I just wonder, Eileen, as an investor, how nervous investors 0:11:47.400 --> 0:11:49.600 should be about that, given that we know this is 0:11:49.600 --> 0:11:52.840 a man that's incredibly uncomfortable under pressure in those kind 0:11:52.880 --> 0:11:56.200 of situations, you know, I actually, I mean, I don't 0:11:56.200 --> 0:11:59.040 know how investors would feel. I would actually caution them 0:11:59.040 --> 0:12:01.760 that there's not too much concerned here. I think he 0:12:01.800 --> 0:12:05.320 will be extremely well briefed, really well prepped. He'll be 0:12:05.360 --> 0:12:08.439 sort of trained in condition to answer appropriately. And I 0:12:08.440 --> 0:12:11.480 actually think it's a good chance for sort of the 0:12:11.520 --> 0:12:13.839 air to be cleared in that there's not going to 0:12:13.920 --> 0:12:15.959 be anything that's going to come out that's going to 0:12:16.040 --> 0:12:18.640 be hugely detrimental. I think it's going to be a 0:12:18.720 --> 0:12:21.319 very straightforward you know, here's when our tea sency is 0:12:21.320 --> 0:12:23.719 always allowed for this is what happened. Yes, we will 0:12:23.760 --> 0:12:26.680 now take greater responsibility to make sure it's easier to understand. 0:12:26.679 --> 0:12:28.880 And we have taken these steps from A to Z 0:12:29.040 --> 0:12:31.679 already and so I actually think it's going to be 0:12:31.720 --> 0:12:35.480 a pretty strong opportunity for Facebook to say we did 0:12:35.520 --> 0:12:39.200 things correctly. We probably should have communicated even better about 0:12:39.280 --> 0:12:42.160 those things, and we will do our best to sort 0:12:42.160 --> 0:12:44.760 of help audit, monitor and verify that these things are 0:12:44.760 --> 0:12:47.600 being abided by even more so in the future. I mean, 0:12:47.640 --> 0:12:51.200 one final question, if we could give us an update 0:12:51.320 --> 0:12:56.720 on how you see the continent of Europe's tone of 0:12:56.960 --> 0:13:03.480 regulation of technology, a reticence about the dominance of technology. 0:13:03.920 --> 0:13:07.120 Is that a trend that's growing, Is it's stable or 0:13:07.160 --> 0:13:10.040 is it just a moment for them. I think it's 0:13:10.080 --> 0:13:12.520 relatively stable, and to be honest, just sort of being 0:13:12.559 --> 0:13:14.160 on this side of the pond, I think it's been 0:13:14.200 --> 0:13:17.520 pretty consistent. So I haven't seen, you know, as Princeton, say, 0:13:17.559 --> 0:13:19.720 a spike up or anything like that. I think it's 0:13:19.720 --> 0:13:23.319 been relatively consistent. Whether they're looking at tax treatment or 0:13:23.360 --> 0:13:26.640 they're looking at data rights and data protection, they've been consistent. 0:13:26.679 --> 0:13:29.360 And it just does happen that the largest tech companies 0:13:29.360 --> 0:13:31.280 are the ones that are squarely in the sites of 0:13:31.520 --> 0:13:33.440 where they might want to set examples or try and 0:13:33.520 --> 0:13:36.480 use for case study. It's going to be the American companies, 0:13:36.800 --> 0:13:38.440 you know. I think what will be interesting is if 0:13:38.480 --> 0:13:40.439 they start to take a look at, you know, maybe 0:13:40.440 --> 0:13:42.760 what companies from Asia are starting to do as they 0:13:42.800 --> 0:13:45.280 become more influential, or they start to increase their user 0:13:45.280 --> 0:13:47.480 basis sort of over here in Europe as well. But 0:13:47.559 --> 0:13:49.760 I think they would do the same, by the way, 0:13:49.800 --> 0:13:51.959 for a company that's coming out of Europe as well. 0:13:52.120 --> 0:13:54.440 I think thank you so much, Ellien Bourbage, a great, great, 0:13:54.440 --> 0:13:56.959 great briefing there with Passion Capital, of course, with their 0:13:56.960 --> 0:14:13.319 perspective Transatlantic perspective on that technology for Global Wall Street. 0:14:13.400 --> 0:14:15.760 This is a great interview. Features up six down, features 0:14:15.840 --> 0:14:20.800 up Mark Conners and the Credit Suites team. You know, 0:14:20.960 --> 0:14:25.720 I love this title, Prime Services, Risk and Portfolio Advisory 0:14:25.760 --> 0:14:28.840 market color and we're going to protect the copyright. We 0:14:28.920 --> 0:14:33.400 don't send it out. It is a spectacular detailed report 0:14:34.520 --> 0:14:37.920 on what hedge funds are actually doing doing And Mark, 0:14:38.040 --> 0:14:41.720 I love what you summarize puzzling positions. I mean, it's 0:14:42.160 --> 0:14:45.360 it's a mess right now, right, yeah, it is. And 0:14:45.480 --> 0:14:47.080 you know, we always like to have one theme because 0:14:47.080 --> 0:14:49.400 that you know, not many people are can take on 0:14:49.440 --> 0:14:52.680 three different ideas at once. But um, when you look 0:14:52.720 --> 0:14:55.280 at the rates position in which now we see funds 0:14:55.320 --> 0:14:57.680 net long to tenure, why would that be when we're 0:14:57.800 --> 0:15:00.600 stairs stepping up to you know, seven in or eight 0:15:00.760 --> 0:15:03.200 moves over the next two years. And people are selling 0:15:03.200 --> 0:15:06.360 base medals when we have you know, inflation, and they 0:15:06.400 --> 0:15:08.960 are selling banks, and we're expecting your characterize you've got 0:15:09.000 --> 0:15:12.840 all these esoteric things, mastery index, long short market blah 0:15:12.880 --> 0:15:17.080 blah blah. The trend guys and the commodity futures guys. 0:15:17.120 --> 0:15:21.240 They're getting hammered. Why is that? So? They January was 0:15:21.280 --> 0:15:23.800 one of the best months they had, right, but January 0:15:23.840 --> 0:15:26.840 is years ago in the world of markets, and then 0:15:26.880 --> 0:15:30.320 they got hammered to your point in February. But one 0:15:30.360 --> 0:15:33.320 reason why we are little, we're pretty constructive, is that 0:15:33.360 --> 0:15:36.440 they got washed out. So these folks are trend followers 0:15:36.440 --> 0:15:39.440 and they can really ramp up the equity positioning, and 0:15:39.600 --> 0:15:42.880 they took it down in feb They went down to 0:15:43.000 --> 0:15:45.960 a bottom desc style positioning. So we don't think that 0:15:45.960 --> 0:15:48.320 we're gonna have much follow through beyond where we are 0:15:48.360 --> 0:15:52.359 today on the equity market. What's the mood in raising 0:15:52.480 --> 0:15:54.120 money right now? I don't want to go into the 0:15:54.280 --> 0:15:56.520 you know, the nintet gritte of credit suite and what 0:15:56.560 --> 0:16:00.200 you're doing in prime brokerage. But can people start a 0:16:00.280 --> 0:16:02.560 hedge fund now or is it just brutal up there 0:16:02.560 --> 0:16:05.440 because people have to see fourteen years of track record 0:16:05.480 --> 0:16:08.200 for you to get you know, X million of dollars going. 0:16:08.480 --> 0:16:10.760 That's always going to be the case about track record. 0:16:10.800 --> 0:16:13.200 That's great, we love your system, we love your setup, 0:16:13.240 --> 0:16:16.560 in your pedigree, uh, your space that you're in, but 0:16:16.760 --> 0:16:18.920 give me a call in eighteen to thirty six months 0:16:18.960 --> 0:16:20.880 when you you know, and that's when your heart sinks. 0:16:21.280 --> 0:16:23.680 So what we're seeing is a lot of platforms are 0:16:24.480 --> 0:16:27.840 seeding uh folks and having them in house. So they're 0:16:28.160 --> 0:16:31.680 letting the hedge fund keep their name, keep the track 0:16:31.720 --> 0:16:34.320 record if they do well, but they're gonna share in 0:16:34.360 --> 0:16:37.040 the economics. So so the bigger getting bigger is what 0:16:37.080 --> 0:16:39.480 we see, and Mark the active guys must be loving this. 0:16:39.920 --> 0:16:41.360 I mean the last couple of months, they must be 0:16:41.400 --> 0:16:43.360 in a better place with a vix's north at twenty. 0:16:44.040 --> 0:16:46.280 So yeah, so what we saw was the reason why 0:16:46.280 --> 0:16:49.400 people couldn't make money was the great compression of two thousand, 0:16:49.440 --> 0:16:51.960 sort of post Q one sixteen, where it was all 0:16:51.960 --> 0:16:55.200 a monolithic move higher. Everything went higher. So now you 0:16:55.240 --> 0:16:58.120 have dispersion, but it would be careful what you wish for, 0:16:58.560 --> 0:17:01.720 because not everyone's of the monetized the vol right, and 0:17:01.760 --> 0:17:05.639 so it's yeah, let's talk about that because I want volatility. 0:17:05.640 --> 0:17:07.280 I want volatility, and then all of a sudden that 0:17:07.320 --> 0:17:09.399 so I don't want this kind of volatility. It is 0:17:09.440 --> 0:17:12.240 this good vall so to speak, is it bad vault? 0:17:12.400 --> 0:17:14.240 It is. So let's just look at returns right to 0:17:14.359 --> 0:17:16.919 what Tom is talking about. With returns earlier in the 0:17:16.960 --> 0:17:21.600 Master index UM hedge funds only caught about downside of 0:17:21.640 --> 0:17:25.080 feb So market was down, hedge funds were down only 0:17:25.880 --> 0:17:28.560 it March is going to be the test. So we're 0:17:28.600 --> 0:17:32.000 gonna find out, you know, week chaff, who the adults 0:17:32.040 --> 0:17:35.600 are in the room about how they didn't March. How 0:17:35.640 --> 0:17:41.760 do you respond, is a grizzled prime brokerage, strategist and analyst. 0:17:42.240 --> 0:17:45.280 When you see the media frenzy over a few select 0:17:45.480 --> 0:17:49.400 ginormous hedge fund players, whether they're up x per cent 0:17:49.520 --> 0:17:51.879 or down wide percent, when you see them, you know, 0:17:51.880 --> 0:17:54.200 I want to pick up Mr Ackman right now. When 0:17:54.240 --> 0:17:56.560 you see that focus on a few guys, how does 0:17:56.600 --> 0:18:00.480 a grizzled pro like you respond to that? You you 0:18:00.520 --> 0:18:03.399 step back and you say, definitely a segment of the market, 0:18:03.840 --> 0:18:07.200 an individual high profile. But you know, we don't speak 0:18:07.240 --> 0:18:11.719 about specific managers in case their clients. We look at 0:18:11.720 --> 0:18:14.640 the hedge funds space still three point one three point 0:18:14.680 --> 0:18:19.040 two trillion. That doesn't even speak to the alternative beta 0:18:19.160 --> 0:18:22.320 spaces that are derivative that some of these managers are 0:18:22.320 --> 0:18:25.760 also rolling in. They're becoming businesses. So a lot of 0:18:25.760 --> 0:18:28.520 these clients are no longer single strats, but they are 0:18:28.600 --> 0:18:32.600 multiple strategies down the margin. I would suggest in the 0:18:32.640 --> 0:18:37.360 real world of hedge funds, people are more diversified than 0:18:37.400 --> 0:18:42.199 the headline grabbing bets that the media is fixated on. 0:18:42.280 --> 0:18:43.959 Do I have that right? You did? You got too 0:18:44.040 --> 0:18:46.720 quicker than I did, so that's why. And you're exactly right, 0:18:47.119 --> 0:18:49.520 People are no longer saying, you know what I'm gonna 0:18:49.520 --> 0:18:51.639 bet against, you know, going back decades, I'm gonna bet 0:18:51.680 --> 0:18:54.080 against a certain currency pair, or I'm going to bet 0:18:54.080 --> 0:18:56.280 on a certain that is out the way I mean, John, 0:18:56.359 --> 0:18:58.240 let me translate this for you. When you're at bill 0:18:58.280 --> 0:19:00.719 Bok having the Cajun Chicken, I don't know what you're 0:19:00.760 --> 0:19:02.919 talking about. A week when you're at the bill Bokay, 0:19:03.280 --> 0:19:05.320 you know, they introduce you to a hed treat guy. 0:19:05.440 --> 0:19:09.280 He's way more diversified typically and way more managing his 0:19:09.560 --> 0:19:15.159 risk than all the headline grabbing alternative investment. Just I've 0:19:15.200 --> 0:19:17.280 only ever been to that restaurant three times, and those 0:19:17.280 --> 0:19:21.600 three times you took me. Okay, I have took myself. 0:19:21.960 --> 0:19:28.399 You took me good morning to Rhado, keeper of the continue. 0:19:28.760 --> 0:19:33.360 Did you expense that? Did your trouble? Mark Connors? How 0:19:33.400 --> 0:19:36.399 important was it that the treasury market actually took a 0:19:36.400 --> 0:19:39.640 bit yesterday in a risk off move in a significant way. 0:19:39.720 --> 0:19:41.560 We had a bit of one last week, but actually 0:19:41.600 --> 0:19:44.679 finally the treasury market acted as a shock absorber in 0:19:44.680 --> 0:19:47.000 the traditional way. How important was that? So that's that's 0:19:47.119 --> 0:19:49.040 very important because as you know, Tom was talking about 0:19:49.040 --> 0:19:52.000 the diversified hedge fund world. Not everyone is in equally 0:19:52.080 --> 0:19:55.400 long short. Some folks are playing that cross asset, and 0:19:55.480 --> 0:19:58.720 so when those brakes hit UM, it is constructive and 0:19:58.800 --> 0:20:01.840 acts as a breaker in the market. So one reason 0:20:01.840 --> 0:20:04.000 why a note we went out today to some clients 0:20:04.080 --> 0:20:06.880 was we don't we think the market acting well. We're 0:20:06.920 --> 0:20:10.399 not seeing a Q one sixteen de leveraging which was 0:20:10.640 --> 0:20:15.879 massively UM destructive to the alternative space, worst months in 0:20:16.040 --> 0:20:18.399 five years. Something that I think a lot of people 0:20:18.520 --> 0:20:20.440 will pick up on from listening to you was something 0:20:20.440 --> 0:20:22.560 you said about the positioning of some of these hedge funds. 0:20:23.040 --> 0:20:25.600 There is a narrative out there that the market in 0:20:25.640 --> 0:20:29.760 its entirety is net short treasuries and net short the 0:20:29.840 --> 0:20:32.639 U s, though in quite a significant way. But I 0:20:32.680 --> 0:20:34.919 heard you say something very different about the funds that 0:20:34.960 --> 0:20:36.919 you cover and about the positioning of those funds in 0:20:36.960 --> 0:20:39.880 those markets. Just walk me through it and what's driving it. Yeah, 0:20:39.960 --> 0:20:42.160 it's a time frame. We think it's a tactical move. 0:20:42.640 --> 0:20:45.520 And whether it's the you know, a longer lower for 0:20:45.640 --> 0:20:48.400 longer narrative UM over the outs, you know, for a 0:20:48.440 --> 0:20:51.800 period of time of one, two, three months, But it 0:20:51.920 --> 0:20:56.359 is absolutely opposite. What the narrative is of rate higher? 0:20:56.400 --> 0:20:58.639 Who wants to be long a tenure when three percent 0:20:58.760 --> 0:21:01.240 is a given? We went out with this when it 0:21:01.280 --> 0:21:05.399 was to and we're two seventy five, so they got 0:21:05.480 --> 0:21:08.000 it right. So c t A s are making money 0:21:08.000 --> 0:21:11.080 on rates now and that's why people like a c 0:21:11.240 --> 0:21:14.600 t A sleeve in their long equities. The counterbalance for 0:21:14.640 --> 0:21:18.440 those of you c tas are trend based. Uh, good morning, 0:21:18.440 --> 0:21:21.000 Monroe Trout if you're listening and John Henry of the 0:21:21.040 --> 0:21:24.200 Red Sox trend base people. That seems where my head 0:21:24.280 --> 0:21:26.439 is as well. How are the quants doing? How are 0:21:26.480 --> 0:21:30.199 the math the studs out of kurant n Yu are 0:21:30.240 --> 0:21:34.119 out of Carnegie Mel and how are the quants doing? Uh? 0:21:34.200 --> 0:21:37.600 There it's a wide dispersion. Some having a tough year. 0:21:38.200 --> 0:21:42.320 Again back to the volatility. They're not monetizing it. Uh 0:21:42.320 --> 0:21:44.280 And whether it because they had a tilt to the 0:21:44.320 --> 0:21:47.680 longside in the you know, given what's happening in seventeen 0:21:47.760 --> 0:21:51.920 with it being a so where are they flat to 0:21:52.960 --> 0:21:55.800 either side of the one question? We're gonna come back 0:21:55.800 --> 0:21:58.040 with you and keep this going. What is the short 0:21:58.119 --> 0:22:01.200 everybody wants? Now? They all up that go. Well, we're 0:22:01.200 --> 0:22:03.840 gonna give you our prime brokerage, but we gotta get shares. 0:22:03.880 --> 0:22:06.479 And what's that It's not Krispy Kreme, right, I mean 0:22:06.520 --> 0:22:10.159 we're past Crispy Creme, thank god? Right, because what's the short? No, 0:22:10.359 --> 0:22:12.000 I got gotta I gotta get I gotta get four 0:22:12.040 --> 0:22:16.040 million shares short? Go right, So we can't talk single names. 0:22:16.280 --> 0:22:20.080 Come on, no one's listening. My phone is already buzzing, 0:22:20.160 --> 0:22:24.680 So thank you on that one. Um so the I'll 0:22:24.680 --> 0:22:29.240 speak a little broader. The shorts are working. So for 0:22:29.240 --> 0:22:32.320 for two and a half years, you saw short underperformance 0:22:32.359 --> 0:22:34.919 eat away at alpha. I mean hedge funds weren't producing 0:22:35.000 --> 0:22:38.840 alpha a lot because of shorts. That changed mid seventeen 0:22:39.440 --> 0:22:44.240 and whether it was the advent of fiscal policy, tax initiatives, 0:22:44.600 --> 0:22:47.760 what have you um or rates, we did see shorts 0:22:47.800 --> 0:22:50.160 start to add to the bottom line. So whatever names 0:22:50.160 --> 0:22:52.919 you want to say, there there is more interest in 0:22:53.280 --> 0:22:56.680