WEBVTT - Betterment CEO on Empowering More Women in Finance 0:00:01.280 --> 0:00:05.640 This is Bloomberg business Week inside from the reporters and 0:00:05.840 --> 0:00:09.400 editors who bring you America's most trusted business magazine, plus 0:00:09.480 --> 0:00:13.640 global business, finance and tech news. The Bloomberg Business Week 0:00:13.680 --> 0:00:18.600 Podcast with Carol Messer and Tim Stenebec from Bloomberg Radio. 0:00:20.640 --> 0:00:23.239 Late last year, Bloomberg News reported how for gen Z, 0:00:23.440 --> 0:00:25.800 it's daunting to think about saving, investing and planning for 0:00:25.840 --> 0:00:28.080 a retirement and in markets that have been in turmoil 0:00:28.360 --> 0:00:31.040 with a possible recession looming, and as wages haven't kept 0:00:31.040 --> 0:00:34.080 pace with inflation and more so, let's get some thoughts 0:00:34.080 --> 0:00:36.720 on financial wellness with us is Sarah Levy. She's chief 0:00:36.720 --> 0:00:40.160 executive officer of the independent Digital Investment Advisor. We're talking 0:00:40.159 --> 0:00:42.800 about betterment. Sarah, by the way, spend over twenty years 0:00:42.840 --> 0:00:46.400 at Viacom, was COO there. She is joining us via 0:00:46.479 --> 0:00:48.920 zoom in New York City. Hey Sarah, great to have 0:00:49.000 --> 0:00:53.080 you here with Katie and myself. What's the question, first 0:00:53.120 --> 0:00:56.600 of all, that you get most asked about in this 0:00:56.720 --> 0:01:02.840 investment environment. To say it's unusual probably an understatement. That 0:01:03.040 --> 0:01:05.560 is an understatement. Thank you so much to both of 0:01:05.600 --> 0:01:08.480 you for having me. I think probably right now, the 0:01:08.560 --> 0:01:11.399 most common question is a pretty basic one, which is 0:01:11.720 --> 0:01:15.200 what should I do with my money in these volatile times? 0:01:16.120 --> 0:01:18.959 And I think that's a question being asked by investors 0:01:19.160 --> 0:01:23.200 really at all stages of their investment journey, and so 0:01:23.319 --> 0:01:26.320 all stages of their investment journey. Obviously, if you think 0:01:26.360 --> 0:01:29.840 over the past two years, the retail investor was a 0:01:30.040 --> 0:01:34.720 type of investor that we got very well acquainted with. Obviously, 0:01:35.040 --> 0:01:37.839 the market environment in twenty twenty two was much different 0:01:37.920 --> 0:01:41.440 from twenty twenty one. Twenty twenty What is the state 0:01:41.520 --> 0:01:45.480 of the retail investor now? What are you seeing at Betterment? 0:01:47.120 --> 0:01:50.639 So our philosophy in general has been sort of tried 0:01:50.720 --> 0:01:53.760 and true in terms of starting with a long term plan, 0:01:54.240 --> 0:01:59.040 sticking to your plan, being diversified, and not getting distracted 0:01:59.080 --> 0:02:02.640 by the markets. What is interesting to see right now 0:02:02.880 --> 0:02:06.160 is that you know, there are other platforms and investment 0:02:06.160 --> 0:02:11.600 solutions that don't necessarily preach that sort of consistency. And so, 0:02:11.800 --> 0:02:14.080 as you point out in twenty twenty one that there 0:02:14.120 --> 0:02:16.680 was a lot of excitement sort of chasing the latest trend, 0:02:17.200 --> 0:02:19.919 we a Betterment never really believed in that, and so 0:02:20.040 --> 0:02:22.560 I think by and large we attract that a consumer 0:02:22.840 --> 0:02:26.359 who agreed with that philosophy, which was, you know, don't 0:02:26.360 --> 0:02:28.680 get just don't get distracted, and don't make changes when 0:02:28.720 --> 0:02:31.320 the market moves, because this is really about a long 0:02:31.480 --> 0:02:35.280 term play and it's about long term savings. So if 0:02:35.280 --> 0:02:38.400 you take that as context, what we're seeing now is 0:02:38.400 --> 0:02:40.800 that we're seeing a lot more money being put into 0:02:40.840 --> 0:02:43.680 savings because it's a high yield environment and there are 0:02:43.919 --> 0:02:47.320 a lot of great rate available while people are sort 0:02:47.360 --> 0:02:49.600 of waiting out you know, the Fed, and waiting to 0:02:49.639 --> 0:02:51.560 see kind of what the markets are going to do. Great, 0:02:51.560 --> 0:02:53.680 that's what I wanted to ask you. Your platform, you know, 0:02:54.320 --> 0:02:57.239 avails you a lot of information, and I was curious 0:02:57.520 --> 0:03:00.120 what were some of the dominant broader investment trends right now. 0:03:00.160 --> 0:03:03.920 So people in cash shorter investment trends basically maybe assign 0:03:04.320 --> 0:03:06.079 a big sign of risk off at this point and 0:03:06.160 --> 0:03:09.280 just kind of waiting it out. Yes, I would say 0:03:09.560 --> 0:03:13.480 for sure risk off. Savings is absolutely a place people 0:03:13.520 --> 0:03:17.160 are putting their money. But retirement investing, I would say, 0:03:17.200 --> 0:03:21.400 is remaining stable. So people putting money into iras, people 0:03:21.440 --> 0:03:24.040 putting money into their four oh one ks, those remain 0:03:24.200 --> 0:03:27.919 really good sort of long term thinking about compounding interest 0:03:28.040 --> 0:03:31.280 and thinking about kind of tax advantaged investing, I would 0:03:31.320 --> 0:03:36.000 say is much more resilient than taxable accounts. Right now, Sara, 0:03:36.040 --> 0:03:38.240 are they reducing the amount of money that they're putting 0:03:38.680 --> 0:03:41.000 in their four oh one K or retirement accounts as 0:03:41.000 --> 0:03:42.840 a result, as we talk about this kind of more 0:03:42.880 --> 0:03:46.880 cautious stance, we're not seeing that. We're seeing a very 0:03:46.920 --> 0:03:50.080 consistent habits in retirement accounts. And what we're seeing is 0:03:50.080 --> 0:03:52.520 really a shift that money we maybe saw last year 0:03:52.760 --> 0:03:55.920 going into investing, those same dollar values are going into 0:03:55.960 --> 0:03:59.680 savings this year. And when you say going into savings, 0:03:59.680 --> 0:04:01.520 could you break down a little bit more of what 0:04:01.560 --> 0:04:03.920 that means because the conversation I have all the time 0:04:04.000 --> 0:04:07.680 is that cash earns something. Right now, if you're talking 0:04:07.720 --> 0:04:11.040 about treasury bills, if you're talking about money market accounts, 0:04:11.040 --> 0:04:13.120 you know the yields there are higher than they have 0:04:13.880 --> 0:04:17.200 been in a long time. I mean, just specify what 0:04:17.240 --> 0:04:20.440 you mean by savings, that's right, Yes, So I think 0:04:20.440 --> 0:04:23.680 on our platform what we offer is a high yield 0:04:23.720 --> 0:04:26.599 cash account. So that's where we're really seeing the activity. 0:04:26.600 --> 0:04:30.680 We're currently offering a four percent apy and that's really 0:04:30.760 --> 0:04:32.960 top of market. One of the things you see is 0:04:33.000 --> 0:04:36.560 that you know, the bigger banks have lower rates and 0:04:36.600 --> 0:04:39.680 that they are benefiting from this cash environment, but we 0:04:40.120 --> 0:04:43.880 see the opportunity to really pass that along to our consumers. 0:04:44.160 --> 0:04:46.080 And so it's been a really great way for our 0:04:46.120 --> 0:04:48.560 particularly for our tenured customer base, but also for new 0:04:48.600 --> 0:04:50.840 customers to kind of enter for the first time and say, 0:04:50.880 --> 0:04:52.440 I'm going to put my cash here, I'm going to 0:04:52.480 --> 0:04:55.520 get some yield. And there hasn't really been a tremendous 0:04:55.560 --> 0:04:59.400 amount of incremental yield to be gained through duration. So 0:04:59.480 --> 0:05:02.200 the idea of sort of locking up your money isn't 0:05:02.279 --> 0:05:05.200 really necessary right now in this climate because short term 0:05:05.320 --> 0:05:07.640 rates are so high. So that's what we're seeing, Sarah. 0:05:07.720 --> 0:05:11.200 One thing I wanted to ask you aim you guys 0:05:11.839 --> 0:05:15.680 generally speaking, you know, platforms like Betterment or robo advisors, 0:05:15.680 --> 0:05:19.920 no stranger to investment algorithms. The focus now on chat, 0:05:19.960 --> 0:05:23.400 GPT and generative AI. What are the conversations that you 0:05:23.440 --> 0:05:25.400 guys are having around that and whether some of the 0:05:25.440 --> 0:05:27.760 folks on your platform are like, hey, what are you doing? 0:05:27.800 --> 0:05:31.360 What does this mean for us? So it's interesting because 0:05:31.520 --> 0:05:34.640 I would say we are an automated platform. I think 0:05:34.680 --> 0:05:39.440 to say that AI is powering or investing would be disingenuous. 0:05:39.720 --> 0:05:44.440 So we really have real professionals behind the scenes, those 0:05:44.720 --> 0:05:47.760 human beings. So not the technology are actually putting together 0:05:47.839 --> 0:05:51.760 the portfolios for us. What the technology is doing is 0:05:51.880 --> 0:05:55.239 rebalancing portfolios according to the rules set by the humans. 0:05:55.760 --> 0:05:59.120 So I think in that sense, things like chat GPT 0:05:59.320 --> 0:06:02.440 are not acting our portfolio construction. I think where we're 0:06:02.440 --> 0:06:05.920 seeing the potential of chat CHPT again sort of very 0:06:05.960 --> 0:06:09.320 early days, is thinking about messaging and marketing and taking 0:06:09.320 --> 0:06:12.760 the temperature of things going on in the industry. UM 0:06:12.960 --> 0:06:15.160 where you know, where you can you can work with 0:06:15.160 --> 0:06:18.320 your creative teams um to really kind of meet the moment. 0:06:18.920 --> 0:06:23.480 So let's so for necessarily screening for holdings more like 0:06:23.520 --> 0:06:26.919 you say, it sounds like more language based applications is 0:06:26.920 --> 0:06:29.800 what you're looking for. So far, that's where that's where 0:06:29.800 --> 0:06:32.039 we are. Um, we don't. We don't yet see the 0:06:32.080 --> 0:06:36.240 application necessarily. I think, you know, humans still have a 0:06:36.240 --> 0:06:38.920 real role to play an investment selection UM, and it's 0:06:38.960 --> 0:06:41.320 pretty complicated, so we're not We're not there yet. I 0:06:41.360 --> 0:06:43.800 will say the humans around the world, thank you, Sarah. 0:06:43.960 --> 0:06:47.440 We do want to ask you Goldman Sachs with Goldman Tomorrow, 0:06:47.480 --> 0:06:51.119 you guys are hosting a panel uh and an event 0:06:51.279 --> 0:06:54.440 International Women's Day, Financial Impowerment on the agenda. Tell us 0:06:54.440 --> 0:06:57.360 a little bit about it and what your your focus is. Yes, 0:06:57.560 --> 0:07:00.360 so I'm really excited to be joined by Patti Rafael, 0:07:00.640 --> 0:07:05.760 who is a longtime Goldman Sachs Wealth Wealth executive. She's 0:07:05.800 --> 0:07:08.480 had a tremendous career and so the two of us, 0:07:08.520 --> 0:07:11.680 what we're hoping to do is really sheer tips on investing, 0:07:11.800 --> 0:07:16.000 on careers, maybe on life. And she's a fun and 0:07:16.160 --> 0:07:19.200 fabulous woman, So hopefully there'll be a little personality and 0:07:19.280 --> 0:07:22.560 people will come away with some practical and easy to 0:07:22.680 --> 0:07:25.680 implement tips on sort of how to do the best 0:07:25.720 --> 0:07:27.840 with your money. Are we getting more empowered? Can I 0:07:27.840 --> 0:07:29.360 just ask you? I feel like we've been talking about 0:07:29.400 --> 0:07:33.000 financial empowerment for an awfully long time, probably easily a 0:07:33.040 --> 0:07:36.240 decade or two. Are we getting more financially empowered? In 0:07:36.280 --> 0:07:39.200 your view? Well, I don't know that this is really 0:07:39.240 --> 0:07:42.280 just about women. To be honest, I agree. I think 0:07:42.360 --> 0:07:45.200 women sort of carry the stress sometimes more, and so 0:07:45.240 --> 0:07:47.080 what we can do is we can demystify some of 0:07:47.080 --> 0:07:49.560 that by really breaking it down by offering ways that 0:07:49.800 --> 0:07:52.480 technology can make things kind of simple and set it 0:07:52.520 --> 0:07:55.440 and forget it, you know. I think what I'd like 0:07:55.520 --> 0:07:58.120 to do is really show people that it's not that scary. 0:07:58.200 --> 0:08:00.160 I think the word investing can be scarier than the 0:08:00.200 --> 0:08:02.560 word saving. And really there are just two sides at 0:08:02.600 --> 0:08:05.920 the same coin. Right, It's about starting early. So are 0:08:05.960 --> 0:08:08.720 we more empowered? I mean, you know, I like to think, 0:08:08.800 --> 0:08:11.320 so I like to I like to think about these 0:08:11.360 --> 0:08:13.680 you know, senior women who have had great careers and 0:08:13.720 --> 0:08:15.640 think that that sets an example for what the future 0:08:15.720 --> 0:08:18.560 can hold for the you know, the next generation. I 0:08:18.640 --> 0:08:22.640 really like that point that savings sounds safer than investing. 0:08:22.720 --> 0:08:24.280 But I mean, we don't have much time left. But 0:08:24.320 --> 0:08:27.400 I'm also curious. I mean, in thirty forty seconds, what 0:08:27.440 --> 0:08:30.360 does financial empowerment look like? That's a word we toss 0:08:30.400 --> 0:08:33.559 around all the time, but what does being empowered financially 0:08:33.559 --> 0:08:38.079 actually mean? I think being empowered financially starts with a plan, right, 0:08:38.120 --> 0:08:40.040 and there's a rule of thumb you can follow or 0:08:40.080 --> 0:08:42.520 you can personalized, and that's you know, your choice in 0:08:42.679 --> 0:08:44.520 terms of how deep you want to go. I think 0:08:44.520 --> 0:08:47.680 being financially empowered is understanding what's available to you. The 0:08:47.720 --> 0:08:51.400 government offers a tremendous amount of tax advantages. You want 0:08:51.440 --> 0:08:53.400 to take advantage of that, right, whether that's a four 0:08:53.400 --> 0:08:56.120 owin k or an IRA or all the other various 0:08:56.120 --> 0:09:00.640 accounts for educational savings. I think being empowered means means 0:09:00.640 --> 0:09:03.840 compound interest means taking advantage. Time is money, Start now, 0:09:03.960 --> 0:09:07.400 no matter how small, and think and then I think. Lastly, 0:09:07.480 --> 0:09:10.120 I would say, you know, make it simple and stress free. 0:09:10.160 --> 0:09:13.439 And that's where technology can help. All right, I gotta 0:09:13.520 --> 0:09:15.360 leave it on that note. Good luck with your event tomorrow. 0:09:15.360 --> 0:09:18.920 Sarah Levy, she's chief executive officer at Betterment. Joining s 0:09:19.000 --> 0:09:21.360 via Zoom from New York City, Carol Master, Katie Greifeld. 0:09:21.480 --> 0:09:25.840 We are Bloomberg Radio. You're listening to the Bloomberg Business 0:09:25.840 --> 0:09:29.120 Week podcast. Catch us live weekdays from two to five 0:09:29.200 --> 0:09:32.920 pm Eastern on Bloomberg Radio. The Bloomberg Business a band 0:09:33.000 --> 0:09:35.920 you two. You can also listen live to our flagship 0:09:35.960 --> 0:09:39.640 New York station, Just Say Alexa, play Bloomberg E Love 0:09:39.679 --> 0:09:55.800 and Dirty. Yeah. We are talking about a ceiling, the 0:09:55.880 --> 0:09:58.960 debt ceiling, to be exact, it's potentially the risk that 0:09:58.960 --> 0:10:01.559 Wall Street doesn't want to ponder this story in the 0:10:01.640 --> 0:10:05.280 upcoming issue of Bloomberg BusinessWeek magazine, add on newstands later 0:10:05.320 --> 0:10:08.240 this week, already online at Bloomberg dot com slash business Week. 0:10:08.280 --> 0:10:10.880 It's also on the Bloomberg Terminal. It is written by 0:10:10.960 --> 0:10:15.600 Bloomberg's Liz McCormick, Eric Watson, and Josh Wingrove and Mike Dorning. Liz, 0:10:15.679 --> 0:10:18.840 by the way, Bloomberg News, chief correspondent for Global macro markets, 0:10:19.360 --> 0:10:21.800 are go to for everything on this topic, and I 0:10:21.800 --> 0:10:24.360 feel like the bond market man, you are so revered 0:10:24.360 --> 0:10:26.480 around here. She joins us along with the editor of 0:10:26.480 --> 0:10:29.960 Bloomberg Business Week, Joel Webbert Joel and Liz both in 0:10:29.960 --> 0:10:32.199 our Bloomberg Interactive Broker Student. I mean, she's kind of 0:10:32.240 --> 0:10:34.640 a goddess, like her reputation proceeds are. I don't know 0:10:34.640 --> 0:10:36.480 if she knows that, but it does. Can you tell 0:10:36.520 --> 0:10:39.280 my kids that let's talk about let's talk about the 0:10:39.280 --> 0:10:41.400 bonds and really let's talk about the debt ceiling. And 0:10:41.480 --> 0:10:44.280 I just want to say, Lionel Richie's dancing on the ceiling. 0:10:44.440 --> 0:10:47.520 The tone of that music and that song not the 0:10:47.559 --> 0:10:50.680 same thing that's in the tone of this story. The 0:10:50.760 --> 0:10:55.520 story is all about the debt ceilings down, aren't you? 0:10:55.640 --> 0:10:59.320 We are? And look like it's in the forthcoming issue 0:10:59.440 --> 0:11:04.199 of Business Speak also Today's Big Take. What really resonated 0:11:04.200 --> 0:11:06.360 with me here is that it's like we've been in 0:11:06.360 --> 0:11:10.360 this showdown for a while already. Technically we may have 0:11:10.400 --> 0:11:12.760 already crossed a line a little while ago that was 0:11:12.840 --> 0:11:15.280 kind of a significant when Treasury's kind of bailed us out. 0:11:15.600 --> 0:11:19.000 But it might get a lot worse between now and summer. 0:11:19.040 --> 0:11:22.120 I'm trying to suppress the laughter. We're going to talk 0:11:22.160 --> 0:11:26.280 about this like every day for eternity soon, Yeah, I not, 0:11:26.559 --> 0:11:29.960 But like, how bad could it get less? Well, that's 0:11:30.000 --> 0:11:32.560 the thing. And like you said, we in January hit 0:11:32.600 --> 0:11:35.360 that debt ceiling in which they had set a bit ago, 0:11:35.600 --> 0:11:40.200 and thirty one point four trillion. Now the Treasury departments, 0:11:40.280 --> 0:11:43.760 using extraordinary measures kind of a special accounting moves to 0:11:43.840 --> 0:11:46.320 stay under it because they can't go above it. But 0:11:46.400 --> 0:11:49.400 you're right, Joel, that this is only going to get 0:11:49.440 --> 0:11:52.680 worse because there is, of course a limit to how 0:11:52.760 --> 0:11:55.839 long Treasury Secretary Janet Yellen and her team can do 0:11:55.880 --> 0:11:58.120 these maneuvers and stay under the debt limit, So they 0:11:58.240 --> 0:12:02.319 really needs to raise it or resuspend it, which they 0:12:02.320 --> 0:12:05.080 do many times, and even Chairman Pal today was talking 0:12:05.120 --> 0:12:08.480 and saying this is crucial. We need this, you know, 0:12:08.559 --> 0:12:11.000 full stop. They need to raise the death ceiling. So 0:12:11.520 --> 0:12:13.320 I think it's only going to heat up. So maybe 0:12:13.320 --> 0:12:16.200 we're kind of prodding the markets today and our story 0:12:16.320 --> 0:12:19.520 saying you know, listen, you should be worried more, but 0:12:19.600 --> 0:12:21.760 they'll get more worried for sure. I feel like part 0:12:21.760 --> 0:12:24.240 of the problem though, is that, you know, like you said, 0:12:24.280 --> 0:12:26.280 we reach the debt limit in January and then through 0:12:26.320 --> 0:12:28.760 extraordinary measures, the FED figure is something out and it 0:12:28.840 --> 0:12:31.520 seems like we come up against the seas ceiling and 0:12:31.520 --> 0:12:35.520 then we always figure something out. What's different this time around? Potentially, well, 0:12:35.559 --> 0:12:38.040 I think this time around, and you know, the gentleman 0:12:38.160 --> 0:12:41.040 on the story with me are the you know, Washington 0:12:41.120 --> 0:12:43.959 politics experts, but that you know, Eric Wawson will tell 0:12:44.000 --> 0:12:47.160 you that we have a very contentious situation here where 0:12:47.200 --> 0:12:50.640 both sides, you know, are you know, jockeying. You know, 0:12:50.679 --> 0:12:54.040 the Republicans don't want a clean death sailing raise, which 0:12:54.080 --> 0:12:56.000 means that we just raise it. They want to kind 0:12:56.000 --> 0:12:59.960 of jockey for some future spending cuts. And President Biden 0:12:59.880 --> 0:13:01.920 and his team is saying, no, we don't want to 0:13:01.920 --> 0:13:04.880 do that, and you know, they seem pretty entrenched, and 0:13:05.000 --> 0:13:07.719 it kind of hearkens to twenty eleven where we had 0:13:07.720 --> 0:13:11.880 a very contenent stat sailing episode that they eventually did 0:13:11.960 --> 0:13:14.000 come to something in the final hour, but it was 0:13:14.080 --> 0:13:16.920 such a messy process that the US for the first 0:13:16.920 --> 0:13:20.480 time ever by SMP got there rating downgraded from triple A, 0:13:21.040 --> 0:13:23.080 and you know that had a sting, even though we 0:13:23.160 --> 0:13:26.880 didn't see rates jump up sharply. Then you know, the 0:13:26.880 --> 0:13:30.080 stock market went down and it was a tumultuous time. 0:13:30.200 --> 0:13:32.679 So I think that's what people think this time, it's 0:13:32.679 --> 0:13:34.319 going to go down to the wire. And Joel and 0:13:34.400 --> 0:13:36.600 I were talking that, you know, Eric had a nice 0:13:36.600 --> 0:13:41.319 story of like the Democratic leader on this debt negotiation saying, hey, 0:13:41.360 --> 0:13:43.480 we're going to go to the mat here and that 0:13:43.600 --> 0:13:46.800 it really might make them What mean, the markets have 0:13:46.880 --> 0:13:49.800 to go crazy till Washington gets a fire under them, right, 0:13:49.880 --> 0:13:53.160 stock market sells off their constituent saying what's going on? 0:13:53.480 --> 0:13:55.240 You know, and then then he's realized we got to 0:13:55.240 --> 0:13:57.720 come up with an agreement, right, So that that story 0:13:57.760 --> 0:14:03.359 that Eric wasn't did about Brendan Boyle of Pennsylvania representative 0:14:03.400 --> 0:14:08.200 top democrat on the budget community. When I read our 0:14:08.280 --> 0:14:10.800 story and then I read that story, I was like, 0:14:10.840 --> 0:14:14.200 oh boy, this is this got scarier all of a sudden, 0:14:14.280 --> 0:14:16.959 right because he's basically saying like, we're not going to 0:14:17.040 --> 0:14:20.440 back down, like this will have to come from Republicans. 0:14:20.760 --> 0:14:23.480 That is not the dynamic that we had back then. 0:14:24.120 --> 0:14:27.480 So do that calculus exactly. That's why, like I printed 0:14:27.480 --> 0:14:30.200 out Eric's story, I'm like, oh, this is troublesome, you know, 0:14:30.400 --> 0:14:33.040 And you know, it's funny, Joel, because everyone thinks, which 0:14:33.040 --> 0:14:35.840 we came to in our story, that of course they'll 0:14:35.840 --> 0:14:39.320 come to something. We've seen this movie before. It's a headache, 0:14:39.360 --> 0:14:41.960 we hate it, but well they'll do it. But when 0:14:42.000 --> 0:14:43.600 you know, you look at some of this stuff like 0:14:43.720 --> 0:14:46.880 Eric's laying out, it's really troublesome, and you know, like 0:14:46.960 --> 0:14:49.720 we hope, you know, cooler heads will prevail. No one 0:14:49.760 --> 0:14:54.840 would jeopardize the US treasuries as the world's safe haven security, 0:14:54.880 --> 0:14:58.280 which some people say. People may not realize if there's 0:14:58.320 --> 0:15:01.400 a default, be it short, you know, because they'll say, oh, 0:15:01.400 --> 0:15:03.920 well it'll be short, you know, but that doesn't matter. 0:15:04.000 --> 0:15:06.120 You know, the US doesn't default on their debt and 0:15:06.160 --> 0:15:10.120 if they do, it could have repercussions for years and years. Okay, 0:15:10.160 --> 0:15:13.080 so X date, we don't know when that is. What's 0:15:13.120 --> 0:15:15.640 our best sense of not a new dating app is 0:15:15.680 --> 0:15:24.400 it's not well. Janet Yellen says they have at least 0:15:24.440 --> 0:15:27.200 until like June. It seems like most of Wall Street 0:15:27.280 --> 0:15:30.160 is saying it probably goes until August. But it's very 0:15:30.240 --> 0:15:32.600 unclear because you know, it's kind of coming at the 0:15:32.600 --> 0:15:35.600 worst time. We're in tax season right and the government 0:15:35.640 --> 0:15:37.840 doesn't know exactly how tax flows are going. I know, 0:15:37.920 --> 0:15:40.160 I want a refund. They're trying to figure out of 0:15:40.240 --> 0:15:42.600 a Yeah, if we didn't get our refunds, I know, 0:15:43.000 --> 0:15:44.600 I know, I mean, that will happen. But they don't 0:15:44.600 --> 0:15:46.320 know how the flows are going to be, how much 0:15:46.400 --> 0:15:47.920 you know, the cash flows are going to go, how 0:15:48.000 --> 0:15:51.000 much refunds they're gonna have to pay out, how much 0:15:51.080 --> 0:15:54.480 inflows people paying their taxes. So it's very hard for 0:15:54.520 --> 0:15:57.240 the Treasury to kind of have a good timing of, 0:15:57.400 --> 0:15:59.920 you know, when we'll run out of these maneuvers. Help 0:16:00.040 --> 0:16:01.680 if I was getting a refound and I said, why 0:16:01.680 --> 0:16:03.680 don't you guys just sit on it till August and 0:16:03.760 --> 0:16:05.760 like it's like social Security a little bit and maybe 0:16:05.760 --> 0:16:08.320 I get a little bonus. Wow, you're the man. I'm 0:16:08.360 --> 0:16:12.880 just thinking he's got of I don't think I'll give 0:16:12.960 --> 0:16:19.360 mine whatever. Now, what rate do you want? Exactly exactly? 0:16:19.360 --> 0:16:21.480 So that's made it harder. That's why, you know, we 0:16:21.520 --> 0:16:23.960 know in past times, what a lot of the traders 0:16:24.000 --> 0:16:26.680 do is say, hey, listen, I'm not buying any Treasury 0:16:26.720 --> 0:16:30.240 bills or bonds that have coupon payments, which is this 0:16:30.400 --> 0:16:33.520 semi annual interest that's coming around that crazy X date time. 0:16:33.840 --> 0:16:36.920 But now this X date range is so wide that 0:16:37.000 --> 0:16:39.880 it's kind of murky in the market. Right, people are like, 0:16:39.960 --> 0:16:42.560 I don't know yet what debt to avoid, right, So 0:16:42.680 --> 0:16:46.600 maybe maybe that will become more clear as a troublesome 0:16:46.640 --> 0:16:48.480 when we get a better date. You know, maybe we'll 0:16:48.480 --> 0:16:50.400 get an update from the Treasury of when that X 0:16:50.480 --> 0:16:53.000 date is going to be. And is there any sense 0:16:53.600 --> 0:16:57.200 if if the wheels start coming off this car ahead 0:16:57.200 --> 0:16:59.520 of that X date, do we have any sense what 0:17:00.160 --> 0:17:02.360 what's going to break? Or is it just gonna break? 0:17:02.360 --> 0:17:04.240 And then we're gonna find out. Well, you know, after 0:17:04.280 --> 0:17:06.800 twenty eleven, a lot of the called parties that be 0:17:06.920 --> 0:17:09.320 that oversee the treasury market did a lot. They were like, 0:17:09.359 --> 0:17:11.080 we don't want to go through this again with having 0:17:11.080 --> 0:17:13.240 no idea, So they did a lot of backup plans, 0:17:13.320 --> 0:17:16.240 like what if, like maybe Treasury says, well, we'll delay 0:17:16.280 --> 0:17:18.600 the maturities a day. You know, they can deal with 0:17:18.600 --> 0:17:20.960 that because you have to remember there's the repurchase agreement 0:17:21.000 --> 0:17:24.240 market that uses treasuries as collateral. So there's a lot 0:17:24.280 --> 0:17:26.959 of things that you know, what if it couldn't even function. 0:17:27.000 --> 0:17:30.120 So there's been some backup plans. But even those officials say, 0:17:30.840 --> 0:17:33.040 but we're not sure. You know, we haven't been through 0:17:33.080 --> 0:17:35.879 this before. You hope the treasury market will function. But 0:17:36.000 --> 0:17:39.320 Chairman Pale has also said, like, don't expect that the 0:17:39.320 --> 0:17:42.200 Fed can swoop in and make a cure all evils. 0:17:42.200 --> 0:17:44.600 That it would be repercussions on the economy for a 0:17:44.600 --> 0:17:48.600 long time. It may sting borrowing costs for years and 0:17:48.680 --> 0:17:51.320 Years's playing that to me that if indeed we get 0:17:51.359 --> 0:17:53.920 that default, I mean, if somehow then there's a fix, 0:17:54.200 --> 0:17:56.320 quick fix after it, list would we still have that 0:17:56.400 --> 0:18:00.000 long term impact. Well, that's what a lot of people say. 0:17:59.760 --> 0:18:01.960 If course, we don't know till it happens. But you know, 0:18:02.040 --> 0:18:04.680 some very smart people have said in various stories we've 0:18:04.680 --> 0:18:08.320 done that it could be cured very fast. But you 0:18:08.359 --> 0:18:12.119 have to think some big investors say, I might add 0:18:12.160 --> 0:18:14.600 that I need a little cushion because you know the 0:18:14.680 --> 0:18:17.280 US has defaulted, right, you know, so you would say 0:18:17.320 --> 0:18:20.200 there might be some premium added to yields, not just 0:18:20.240 --> 0:18:23.160 for a day or two, maybe maybe small, but as 0:18:23.200 --> 0:18:26.640 a baseline for a long time because it's totally different dynamic. 0:18:26.760 --> 0:18:30.680 You know. Yeah, okay, so this is gonna be fun. 0:18:30.720 --> 0:18:35.720 We're gonna talk about this how many times? Yeah, I know, 0:18:35.800 --> 0:18:37.800 we're gonna be here for a little bit. Um, what 0:18:38.320 --> 0:18:42.560 do we think on the Republican side? Um, are they 0:18:42.680 --> 0:18:46.879 Is there any cracks anywhere in the in the in 0:18:46.960 --> 0:18:50.160 the wall that may be exposed here that may lead 0:18:50.359 --> 0:18:53.040 you know, a small group of people to say, you 0:18:53.080 --> 0:18:57.360 know what, we're not standing with McCarthy anymore. Well, not yet. 0:18:57.440 --> 0:18:59.919 And again the guys on the story were better on this, 0:19:00.040 --> 0:19:02.399 and Eric was saying earlier today when we talk that 0:19:03.000 --> 0:19:06.720 you know there's a few strongholds. Remember McCarthy took so 0:19:06.760 --> 0:19:08.959 many votes to get him in as speaker, and he 0:19:09.000 --> 0:19:11.280 had to cut some deals and you know that's made 0:19:11.280 --> 0:19:14.360 it harder because they also can kind of, let's just say, 0:19:14.359 --> 0:19:16.560 in late terms, spike him as the speaker. They have 0:19:16.640 --> 0:19:19.480 that option, so he has a lot to kind of 0:19:19.480 --> 0:19:22.840 payback to, do you know. Eric was saying that maybe, 0:19:23.320 --> 0:19:25.879 you know, McCarthy in the end, you know, do the 0:19:25.880 --> 0:19:28.520 best for the country and say, you know, I'll followed 0:19:28.560 --> 0:19:31.760 by sword and you know, we'll make a bipartisan deal, 0:19:32.960 --> 0:19:35.639 you know, so that it may go that way. But again, 0:19:35.680 --> 0:19:38.160 I think it comes down to markets getting ginned up, 0:19:38.280 --> 0:19:41.320 stock selling off, and that being in the front of 0:19:41.359 --> 0:19:45.720 the local papers and things that policymakers may realize, oh, 0:19:45.720 --> 0:19:49.159 this is bad, and you know, we'll come up with 0:19:49.200 --> 0:19:51.359 a deal. So it's just hard for me to believe 0:19:51.440 --> 0:19:55.800 that they won't. But like you know, one investor said 0:19:55.800 --> 0:19:57.960 to me, I don't know, never say never, you know, 0:19:58.040 --> 0:20:01.399 don't know. You know, Okay, So why throughout all of 0:20:01.400 --> 0:20:06.639 this and whatever may come yet Marcus been kind of 0:20:06.760 --> 0:20:11.199 singling like everything seems like it's not quite registered that 0:20:11.320 --> 0:20:15.359 this could go awry. Well, I think there's a few things. 0:20:15.440 --> 0:20:17.760 One is, like we said, they can't kind of know 0:20:18.040 --> 0:20:21.600 yet exactly when we'll hit that wall. Number two there's 0:20:21.600 --> 0:20:23.800 a lot of other problems, right, you know that we're 0:20:24.000 --> 0:20:26.880 market went crazy today because it looks like FED will 0:20:27.000 --> 0:20:30.120 raise rates even further. Inflation is going to be sticky, 0:20:30.560 --> 0:20:32.919 you know, not to minimize traders, but there's only so 0:20:32.960 --> 0:20:35.119 many things they can worry about at once, right, So 0:20:35.160 --> 0:20:37.640 the death ceiling, they're kind of far away, yea far 0:20:37.680 --> 0:20:41.040 away a little bit. We have seen US credit default swaps, 0:20:41.080 --> 0:20:43.880 which is insurance against a default in the US. They're 0:20:43.920 --> 0:20:46.720 not a huge product here and they're not that liquid, 0:20:46.760 --> 0:20:48.880 but those you know, rates have gone up, so there 0:20:48.960 --> 0:20:51.720 is a few people buying some hedges against a default. Right, 0:20:51.800 --> 0:20:53.880 So I guess there's a little concern, but I think 0:20:53.880 --> 0:20:57.200 we need to get some more clarity. You know, when 0:20:57.280 --> 0:20:59.640 this we could hit this wall from Marcus to really 0:20:59.680 --> 0:21:02.400 kind of like sell treasuries at that point in etc. 0:21:03.359 --> 0:21:06.080 Have we heard anything from the biggest holders of US 0:21:06.160 --> 0:21:08.479