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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg p m L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. And

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Speaker 1: you know, we are broadcasting from Orlando at the Highatt

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Speaker 1: Regency at the b n Y Melon Pershing's Insight eighteen

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Speaker 1: and one of the insights who want to get a

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Speaker 1: little bit more of has to do with the world's

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Speaker 1: currency and fixed income markets, and here to help us

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Speaker 1: is an Matthias Global rates and foreign currency strategist for

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Speaker 1: Vanguard and so nice to have you with us. Thank

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Speaker 1: you for being here. Um. You know, one of the

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Speaker 1: things I was looking at was the value of the

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Speaker 1: euro down six for sense since it's January. End of January, uh,

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Speaker 1: strength of we're now one seventeen. With today's comments from

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Speaker 1: the European Central Bank about going ahead with their less

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Speaker 1: accommodative of posture, do you think that the dollar is

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Speaker 1: going to remain strong? Well, it's interesting the currencies have

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Speaker 1: not been behaving the way you would often have expected

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Speaker 1: them to behave. They're kind of like the the pre

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Speaker 1: teens of of the world at the moment. In terms

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Speaker 1: of markets. Um, you know, there's a pretty giant interest

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Speaker 1: rate differential between the US and Europe UM. And you

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Speaker 1: would think that that would just strive, continued strengthen the dollar.

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Speaker 1: That's the sort of traditional thing that you learn in school.

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Speaker 1: But you had the euros strengthening pretty strongly at the

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Speaker 1: beginning part of the year, mostly on economic expectations about

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Speaker 1: economic growth, this global synchronized growth in Europe, and that

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Speaker 1: really started to fade. Um. And now now the story

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Speaker 1: is away from economic growth and back to interest rate

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Speaker 1: differentials looking forward. Yeah, so we're going to try to

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Speaker 1: figure them out, just as we try to figure out

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Speaker 1: preteen children. I do want to get your sense though,

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Speaker 1: today we did hear from the c B officials saying

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Speaker 1: they might talk about talking about talking about reducing their

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Speaker 1: bond purchasing at their June meeting. Um, And we were

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Speaker 1: talking ahead of this segment. Is this basically just giving

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Speaker 1: the finger to Italy? Well, Um, it definitely part of

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Speaker 1: the vocal nature of the talking about the talking about

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Speaker 1: you know, coming out with it right now probably has

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Speaker 1: a little bit of something to do with Italy, especially

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Speaker 1: as they've been pairing their purchases of Italian debt exactly exactly.

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Speaker 1: I think what the c B is trying to say is, hey,

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Speaker 1: you know, this is our party and you're welcome to it,

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Speaker 1: but if you're gonna leave, it is not going to

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Speaker 1: be easy for you. They're really trying to avoid the

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Speaker 1: moral hazard situation with Italy and trying to kind of

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Speaker 1: show them a future without the CBS backstop. So I

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Speaker 1: do think there's part of it that is around that.

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Speaker 1: But we've thought for a long time that, you know,

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Speaker 1: in term of timing a fall more specific commentary, more

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Speaker 1: specific plan in the fall of this year around around

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Speaker 1: getting out of the KIWI or easing the qui um

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Speaker 1: that they would have to start communicating in the summer.

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Speaker 1: You know, I do want to just note that that

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Speaker 1: indeed you did see Italian yields increase more than German

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Speaker 1: boon yields in response to this ECB meeting. The idea

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Speaker 1: here being but as ECB pairs its purchases the peripheral regions,

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Speaker 1: particularly Italy, which seems to be at higher risk would

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Speaker 1: suffer more as a result of the pull back. So

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Speaker 1: I think that's interesting. Then, well, I just want to know,

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Speaker 1: is this such a situation in which the ECB is

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Speaker 1: cutting off its nose despite its face because you can

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Speaker 1: stick to rules for the sake of sticking to rules,

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Speaker 1: But when you have a potential crisis, why wait for

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Speaker 1: it to be a real crisis such as Italy which

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Speaker 1: the new government has pledged to spend a lot of

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Speaker 1: money to lower taxes while they still have a huge

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Speaker 1: government deficit. Why would the ECB do that? Sure? Well,

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Speaker 1: I think the reality is we are economics team at

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Speaker 1: Vanguard has done some work on the structure of Italian debt,

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Speaker 1: and they have a very low interest rate on that debt.

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Speaker 1: I mean they've issued most of it in these super

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Speaker 1: low interest rate conditions, so so really their interest cost

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Speaker 1: of quite low on their existing debt, Plus the maturity

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Speaker 1: is really quite long, so they would have to blow

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Speaker 1: their budget deficit really up in order to create a

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Speaker 1: situation where the actual interest um payment on the debt

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Speaker 1: becomes extremely punitive to them. So they're in a weird way.

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Speaker 1: They're in a good situation to have this kind of

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Speaker 1: populist environment going on in Italy right now, because the

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Speaker 1: reality of it is it it's going to take a

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Speaker 1: lot before it really starts to hurt. You know, I'm

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Speaker 1: struck by the fact that we still have more than

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Speaker 1: seven trillion dollars of negative yielding debt out there in

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Speaker 1: the world, even as the FED continues to pull back

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Speaker 1: from a stimulus and the ECB talks about talking about

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Speaker 1: talking about withdrawing from its quantitative easing program. Do you

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Speaker 1: think that we are going to see this volume of

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Speaker 1: yielding debt persists or you think we're going to see

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Speaker 1: it slowly whittled down as the tape ring goes on.

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Speaker 1: You know that that is the need to move away

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Speaker 1: from this massive bulk of negative yielding debt is something

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Speaker 1: that is driving the more programmatic nature of the European

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Speaker 1: Central Bank that they know, just like the FED new

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Speaker 1: that they had to get away from the zero bound

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Speaker 1: um you know, zero in the US, it's like negative

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Speaker 1: in Euros, So it's the same understood thing. But um

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Speaker 1: central banks feel like they have to get away from

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Speaker 1: this sort of you know, magnet of super low rates,

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Speaker 1: and they're gonna do it every chance they can until

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Speaker 1: they get to some neutral level. But I'm struck by

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Speaker 1: the idea of can the European economy withstand the shock

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Speaker 1: of that? Well, that's a big question. Earlier in the

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Speaker 1: year it looked like it definitely could you know, the

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Speaker 1: economic numbers were looking good, growth was looking good. Um.

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Speaker 1: We view this current situation a little bit more like

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Speaker 1: a soft patch and not a complete derailment of the train. Um.

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Speaker 1: But but that's a big question, which is why I

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Speaker 1: do you find it interesting that the ECB has decided

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Speaker 1: to make noise right now about talking about talking about

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Speaker 1: talking guy. We have listened a minute left. I just

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Speaker 1: want to get real quick tenure treasure yields. Do you

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Speaker 1: think that they're going lower or higher? They definitely seem

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Speaker 1: like they want to go lower. Um. You know, every

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Speaker 1: opportunity we have, the market seems more sensitive to bad

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Speaker 1: news and a and a rally or lower yields UM,

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Speaker 1: and and less sensitive to a big sell off for

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Speaker 1: higher yields. And Matthias, thank you so much for being

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Speaker 1: with us. Come back. It's wonderful to be here with you.

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Speaker 1: And Matthias Global rates and foreign currency strategies to for

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Speaker 1: Vanguard talking about the world of interest rates, especially as

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Speaker 1: the ECB talks about talks about talking about possibly talking

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Speaker 1: about reducing it's bond purchase. It sounds so good when

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Speaker 1: they do it in German, French and Italian. We're broadcasting

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Speaker 1: live from b N Y Melon Pershing's Inside eighteen, Orlando, Florida.

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Speaker 1: I'm Pim Fox along with Lisa Ramoitz. Our next guest

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Speaker 1: is at the forefront of the digital revolution when it

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Speaker 1: comes to the financial services industry. Ram Nagapon is the

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Speaker 1: chief information officer at b N Y Melon Pershing and

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Speaker 1: he joins us now, rom thank you very much for

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Speaker 1: being with us, and thank you for having us here

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Speaker 1: at the conference. Thank you for having me as well.

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Speaker 1: One of the things I do when I come down

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Speaker 1: in the morning here is I take a look at

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Speaker 1: all of the different boots and all of the different presentations.

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Speaker 1: And in addition to the hockey table and the foosball table,

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Speaker 1: what I've noticed is an increase in the amount of

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Speaker 1: digital offerings. Whether it is just flat panels that are

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Speaker 1: being used, but more often it is about the technology

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Speaker 1: that registered reps or people in the industry are being offered.

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Speaker 1: And I'm wondering what is the biggest issue for you.

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Speaker 1: Right now, we can go into things like softwares of services,

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Speaker 1: but what is the biggest focus for you? The biggest

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Speaker 1: focus is our customer wants the best experience in consuming

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Speaker 1: our services. So this technology, the innovation and technology and

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Speaker 1: all these new tools and other innovations is going to

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Speaker 1: help us deliver that experiences. Right, That's the key and

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Speaker 1: our challenges how do we get that best experience to you?

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Speaker 1: Because we are financial services and we are getting compared

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Speaker 1: not with our competition and finance services, but with companies

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Speaker 1: like Apple, Google, Amazon and those So you know, we're

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Speaker 1: all getting about taking these technology innovations that are coming

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Speaker 1: out UM and applying it to wealth management and delivering

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Speaker 1: the best experience. So how much is this just making

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Speaker 1: the interface nicer? It's not just the interface, right, Interfaces

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Speaker 1: that's a misconsumption. People think experiences of our interface know

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Speaker 1: and experience is about UM. For example, you know, I

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Speaker 1: want to tell your password is one of the biggest

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Speaker 1: challenges of people, telling my god, it is so frustrating.

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Speaker 1: You've got forty million passwords from every single difference. Look

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Speaker 1: at it. I'm going to give you a biometric face

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Speaker 1: idea and finger idea. You know fingerprint, that is an experience.

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Speaker 1: It is an interface. It starts with an interface, but

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Speaker 1: experience is more in depth. It starts from experience. You

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Speaker 1: know how you interact to efficiency, you do things a

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Speaker 1: lot faster than you know, just having a nice interface

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Speaker 1: to end you don't look at one click purchase. Is

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Speaker 1: that an interface or is an experience? The ability of

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Speaker 1: the customer to now have access to all of their

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Speaker 1: information is well known. But where that information lives. Does

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Speaker 1: it live in the cloud, does it live at b

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Speaker 1: n Y melon pershing? Where does it live? And what

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Speaker 1: does the cloud movement mean for your business? Yet? So

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Speaker 1: you are touching a very important topic about data, how

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Speaker 1: you keep it and where you keep it and how

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Speaker 1: secure you keep it. Right now, cloud it's getting more

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Speaker 1: secure because people understand. You know, if you put in

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Speaker 1: a cloud, somebody can come and take it. But no,

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Speaker 1: it is getting secured. So I think it is all

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Speaker 1: about who is the custodian that keeps the data more

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Speaker 1: secure so that the privacy information get doesn't get easily tampered.

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Speaker 1: So if you ask me, different people keep the data.

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Speaker 1: But there are regulations and other things that you need

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Speaker 1: to keep data safe that somebody else doesn't compromise it,

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Speaker 1: take it and do something wrong. So data point of view,

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Speaker 1: it's a very biggest challenge in this industry is to

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Speaker 1: make sure that the data is secure and kept intact. Okay,

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Speaker 1: data security is kind of a fuzzy concept because it's

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Speaker 1: one thing for somebody to steal with malicious purposes. It's

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Speaker 1: another for somebody to use somebody's financial data to better

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Speaker 1: market things to them, which could be a huge financial bond.

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Speaker 1: Whoever can sell such data, I'm wondering, you know what

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Speaker 1: sort of the overall regulation on that front. Well, we

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Speaker 1: need to get a client consent even to give it

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Speaker 1: to someone. Even from marketing, you cannot just give your

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Speaker 1: clients data that you're comment Well, but what about you know,

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Speaker 1: overall data, maybe not on a specific person, but sort

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Speaker 1: of trends in in in their financial information. There's a

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Speaker 1: lot of regulations around data on how you need to keep,

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Speaker 1: how do you need, how you keep store it, how

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Speaker 1: do you share it? All of them do exist, but

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Speaker 1: as you know, in the industry, there's a lot more

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Speaker 1: happening around the data and the use. I don't want

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Speaker 1: to name all the companies. Everybody knows that um so

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Speaker 1: there's a lot more you're gonna if you're gonna see

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Speaker 1: around this data. Um see my view as a technologist,

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Speaker 1: you've got to desensitize the data, meaning value of the

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Speaker 1: data when somebody takes it should not be too much.

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Speaker 1: What I meant, if you have a credit card, you

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Speaker 1: cannot just charge. You need something else on top of

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Speaker 1: a curdit card that somebody doesn't misuse it. Things like that.

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Speaker 1: That's where this biometrics and all other technology innovation is

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Speaker 1: going to help us change. It's a slow change, but

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Speaker 1: people are getting to it. Just imagine you come and

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Speaker 1: go into a country and you stand in the turn

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Speaker 1: style and it lets you go in. See that is

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Speaker 1: a you know, biometrics, everything works and to make your

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Speaker 1: experience better a lot of technology and your kid you

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Speaker 1: don't have to worry about keeping the password really really

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Speaker 1: tight because they need your biometrics along with the password

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Speaker 1: to let you in. Tell us about robot advising companies

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Speaker 1: like Betterment Wealth Front, all of them have some form

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Speaker 1: of sig FIG. That's from schwab a Merritrade. What what's

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Speaker 1: your view on robot advisors and how they have progressed

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Speaker 1: in the years since we've spoken to you, meaning this

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Speaker 1: is a topic that has been widely discussed orable but

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Speaker 1: for the last two years. Right. It started as if

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Speaker 1: the technology is going to replace the adviser. My view

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Speaker 1: is it's not going to. So the technology is going

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Speaker 1: to augment our healthy advisor to do a better job.

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Speaker 1: Even the companies you mentioned. It started as if I'm

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Speaker 1: just gonna ask your ten questions, give you a portfolio,

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Speaker 1: and your job is over as an advisor. No. Now

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Speaker 1: they are getting into hybrid models where they're going to

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Speaker 1: kind of put in people at the right time to

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Speaker 1: give you a technology and the hybrid so that which

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Speaker 1: costs more, which costs more? Yes, Um, So the space

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Speaker 1: of robot advice is actually moving from a technology only

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Speaker 1: solution into a hybrid or a digitally enabled advisor type solution.

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Speaker 1: It's so interesting because this is actually echoing what Bank

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Speaker 1: of America's chief Operations and Technology officers said yesterday at

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Speaker 1: a conference at Bloomberg headquarters, where she said, you know

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Speaker 1: that there's been a lot of fear that your job

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Speaker 1: is going to get replaced by automation, but it's really

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Speaker 1: used to augment sort of those human qualities that are

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Speaker 1: really prized. What are those human qualities that are most

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Speaker 1: important now for an adviser, it's understanding the relationship and

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Speaker 1: the entire not just the account or the car and

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Speaker 1: whole the account holder, but do know a lot more

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Speaker 1: your entire life events. It's not just to give you

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Speaker 1: a portfolio and make sure that a tone is Thereay,

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Speaker 1: do you know what color you like? Yes? Yes, There's

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Speaker 1: a lot of things you got to know when you

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Speaker 1: go through your life events. People getting mad with people

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Speaker 1: having a child, people sending it to the college, retirement.

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Speaker 1: You have to know. The holistic technology will help. It's

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Speaker 1: not going to replace. Thank you so much for being

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Speaker 1: with us. We really love having you on Roum knock

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Speaker 1: up In. He is chief information Officer at B and

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Speaker 1: Y Melon Perishing. Definitely. Fintech is transforming a lot of industries.

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Speaker 1: Five years ago, Robert advisory firms were the hot thing.

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Speaker 1: Now everyone is a robo advisor in the investment management

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Speaker 1: space pretty much. Simon Roy joins is now President chief

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Speaker 1: executive officer of gem step invest goos robo advisor. He

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Speaker 1: joins us here at the B n Y Melan Inside

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Speaker 1: conference in Orlando, Florida. Simon, it seems like everyone says

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Speaker 1: they're using, uh, you know, whether it is streamlined data

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Speaker 1: aggregators or other technology to help them be a better advisor. Uh.

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Speaker 1: Doesn't this mean that almost everyone is sort of leading

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Speaker 1: toward robo advisory? Yeah, Lisa, I think if everyone is

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Speaker 1: a robot, part of the reason is we're all millennials now,

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Speaker 1: all right, so give us a sense what what's what

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Speaker 1: is it a robo advisory? And just sort of you know,

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Speaker 1: how much competition is there in this space and how

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Speaker 1: is it defined within a world of technology. The way

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Speaker 1: I look at it is, given we're all millennials, we're

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Speaker 1: all becoming very adept at using technology smartphones and and

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Speaker 1: and other other such technology. Um, the key is how

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Speaker 1: do we make advice more accessible to the massive Americans

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Speaker 1: who don't currently have access? And so we welcome firms

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Speaker 1: leaning into robo and digital advice as we call it, uh,

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Speaker 1: And we think there's a long runway for advisory firms

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Speaker 1: for banks, create a unions, insurance companies to make it

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Speaker 1: easy for clients existing and prospects to sign up for advice.

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Speaker 1: And so part of what Jim SIP does is make

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Speaker 1: it a drop dead five ten minute process to go

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Speaker 1: from an initial context to a client. All right, so

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Speaker 1: as you say this, I have to wonder how many

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Speaker 1: people are open to receiving financial advice and can understand it.

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Speaker 1: I think about my nine year old son will sometimes

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Speaker 1: say to me, Mom, I was listening to you on radio.

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Speaker 1: Why can't you just speak English? You know, because it's

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Speaker 1: it's hard to understand if you're not deeply in the world. Absolutely, so,

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Speaker 1: at the end of the day, individuals invests to achieve

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Speaker 1: their goals secure retirement, kids. You know, you're nine old

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Speaker 1: son going to college. You saved for it for a goal.

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Speaker 1: But but but you have to start Maybe we need

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Speaker 1: to talk offline, but you should start saving now if

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Speaker 1: you haven't, because it's just look crazy. God no, But

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Speaker 1: but the key is at the end of the day,

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Speaker 1: we're looking to help clients meet their financial and ultimately

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Speaker 1: life goals, and so in simple terms, we provide technology

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Speaker 1: to banks, created unions, and other financial institutions to help

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Speaker 1: their clients identify the goals that are important to them.

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Speaker 1: Your kids college and go through a simple questionnaire asking

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Speaker 1: about how old is your son, when would you expect

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Speaker 1: them to go to college? How much do you have

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Speaker 1: saved to date? Sorry about that one and then and

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Speaker 1: then what you can do in working with the firm

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Speaker 1: to have a better chance of actually reaching that goal.

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Speaker 1: And in simple terms, that is what digital or like

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Speaker 1: as we like to say by OIC advice is about

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Speaker 1: how do we help individual how do we help our

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Speaker 1: clients help their investors meet their financial goals. Now, I

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Speaker 1: just want to see if this is accurate that GEM

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Speaker 1: step you don't automate the portfolio management. I mean that's

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Speaker 1: a distinction, right, and because when you think of robot advisor,

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Speaker 1: you think, okay, you plugged on a bunch of information

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Speaker 1: and it gives you this model portfolio and then it

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Speaker 1: just sort of adjust. But the idea is, I think

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Speaker 1: what GEM step you tell us is that if you

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Speaker 1: want to be if you're a registered rep of you're

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Speaker 1: managing money or at a bank or pench whatever it is,

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Speaker 1: and you want to be an active investor, passive investor,

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Speaker 1: you want e t s, want mutual funds, you can

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Speaker 1: do all of that using the GEM step platform. So

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Speaker 1: the GYM step platform is an open investment platform, meaning

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Speaker 1: we don't prescribe to our client firms what their strategy

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Speaker 1: should be. We help them bring their value proposition to

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Speaker 1: the full for their clients, so plane speak. If they

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Speaker 1: want to have an all E T F set of portfolios,

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Speaker 1: we can support that. If they want to have mutual

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Speaker 1: funds or individual securities, we can support that as well.

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Speaker 1: And so we we provide them with the choice to

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Speaker 1: bring their value proposition to bear. The investment side is

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Speaker 1: only one piece of the value proposition, right. The other

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Speaker 1: side is I have a question, how do I raise

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Speaker 1: my hand? How do I get help? And so our

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Speaker 1: belief is that full you know, full Robo maybe serves

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Speaker 1: a small portion of the market. At the end of

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Speaker 1: the day, this is personal finance. You want to be

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Speaker 1: able to reach out and get advice. And so the

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Speaker 1: second part of the value proposition is often what form

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Speaker 1: of access do I have and level of access do

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Speaker 1: I have to an individual advisor or a call center

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Speaker 1: or someone in the branch, so that if I have questions,

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Speaker 1: I know there's someone to talk to. And I may

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Speaker 1: not need it all the time, but when I do

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Speaker 1: raise my hand, I want to know there's someone there.

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Speaker 1: And so whether it's an open platform point Esmonds and

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Speaker 1: supporting that bionic advice, you know, we provide that as

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Speaker 1: a service. You know, we have less in a minute left.

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Speaker 1: But I'm wondering, do you think that more people are

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Speaker 1: financially literate today than they used to be. I think

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Speaker 1: there's been an education process of you know, over the

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Speaker 1: last two decades that have made them a little bit

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Speaker 1: more a little bit more educated when it comes to

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Speaker 1: certain aspects of investment. But I really think that literacy

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Speaker 1: is going to be increasing over the next ten twenty

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Speaker 1: years as this digital technology makes advice and planning goals

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Speaker 1: more accessible to individuals. And I think what what what

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Speaker 1: we'll see is by using services such as gemstep and

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Speaker 1: being able to see the impact of saving more, they'll

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Speaker 1: learn what it means to actually, you know, achieve their

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Speaker 1: goals on the financial side. So I'm optimistic it will increase.

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Speaker 1: And he's also going to make us all younger because

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Speaker 1: we're all millennials. Thank you very much. Simon Roy is

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Speaker 1: the president and the chief executive of invest Goos gems Step.

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Speaker 1: We are broadcasting from b n Y Melon's inside in Orlando, Florida,

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Speaker 1: and that one of the topics today is the European

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Speaker 1: Central Bank, the chief economists signaling that the bank's first

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Speaker 1: formal round of talks on when to stop buying bonds

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Speaker 1: is imminent. Here to tell us more about this and

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Speaker 1: what it means for your investments is Marvin Low, Managing Director,

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Speaker 1: senior global market strategist for b n Y Melon. Marvin,

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Speaker 1: A pleasure to have you with us, and thank you

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Speaker 1: for being with us here at this conference. So what

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Speaker 1: do you make of these comments from the European Central Bank?

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Speaker 1: You know, I guess, um, everyone's certainly UH is worried

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Speaker 1: about it because it does represent a turning point to

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Speaker 1: one of the largest amounts of liquid that has been

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Speaker 1: put into the financial systems in the history of the world.

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Speaker 1: But ultimately, you know, it shouldn't be a surprise. It's

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Speaker 1: you know, they need to make some an announcement by September.

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Speaker 1: Um data has been okay, you know, firming from kind

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Speaker 1: of where we were last year. But I guess just

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Speaker 1: the fact that it's stark and in front of us

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Speaker 1: now people are are someone concerned about it. You know.

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Speaker 1: One thing that I'm struck with is investor positioning right now,

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Speaker 1: because you do have a generally hawkish tone coming out

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Speaker 1: of the central banks UH, and people had been flooding

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Speaker 1: into short term debt, which sensibly would suffer if rates

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Speaker 1: rose substantially on the short end, I was done seeing

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Speaker 1: a couple of really big flows out of short term

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Speaker 1: exchange traded funds. There was about a billion dollars pulled

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Speaker 1: from uh I share a short term Higle bondy TF

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Speaker 1: in the past week, and there was another billion dollars

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Speaker 1: overnight from SHY the one of three year Treasury e

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Speaker 1: t F run by black Rock. Does this mean anything

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Speaker 1: to you? You know, certainly the expectations around and a

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Speaker 1: lot a lot of that is um you know, a

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Speaker 1: FED story, if you will, but expectations around the FED

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Speaker 1: with regard to how aggressive they could get or couldn't get,

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Speaker 1: as Waxton Wayne recently, um, you know, particularly around uh

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Speaker 1: some of the geopolitical aspects that push yields lower, if

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Speaker 1: you will. But you know, the data that has come

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Speaker 1: out recently, you know, affirms that the FEDS on the

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Speaker 1: right path in terms of you know, talking about another

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Speaker 1: two and I guess the market is gravitating whether or

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Speaker 1: not there's a three. UH for Marvin, if the European

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Speaker 1: Central Bank just to go back there for a second,

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Speaker 1: does curtail their purchases, were like, I think that what

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Speaker 1: they do about two point nine trillion something like that dollars. UM.

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Speaker 1: Don't you think that's gonna tank European stocks? Well, you know,

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Speaker 1: I mean it's a known known UM. You know, the

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Speaker 1: world has you know, certainly been perfect. But wait, wait,

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Speaker 1: wait wait, we knew that. For example, we knew that

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Speaker 1: with the US Federal Reserve, and then you had that nice,

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Speaker 1: huge sell off in US stocks on the twenty of January.

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Speaker 1: I mean, it was like a cliff. I think that.

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Speaker 1: I think that just at you know, looking at volatility

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Speaker 1: kind of in this world where liquidity has played as

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Speaker 1: big of a role, you know, certainly UM is going

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Speaker 1: to create those drifts. And we've got market structure which

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Speaker 1: is very unique from what it was before the crisis.

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Speaker 1: And you know, um, nobody really knows what all of

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Speaker 1: these e t f s, what all of this um

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Speaker 1: UH algorithmic trading is ultimately going to do once the

432
00:24:35,200 --> 00:24:38,040
Speaker 1: central banks are out of there. But while we had

433
00:24:38,040 --> 00:24:42,520
Speaker 1: the downdraft, valuations ultimately did come back, and you know,

434
00:24:42,640 --> 00:24:47,520
Speaker 1: asset values are starting to settle around UM differentials that

435
00:24:47,600 --> 00:24:49,200
Speaker 1: make a bit more sense. You know, we talked about

436
00:24:49,280 --> 00:24:51,159
Speaker 1: Italy and kind of the blow out in Italy, but

437
00:24:51,240 --> 00:24:55,000
Speaker 1: should Italy trade as tight to buns. Probably not. You know,

438
00:24:55,200 --> 00:24:59,200
Speaker 1: Germany and Italy are very very different economies and they

439
00:24:59,240 --> 00:25:03,159
Speaker 1: should have that differential within those numbers. Well, and then

440
00:25:03,280 --> 00:25:06,040
Speaker 1: you're talking about differentials and talk about the differential between

441
00:25:06,280 --> 00:25:09,640
Speaker 1: US and German yields, right, because that's also blown out

442
00:25:09,680 --> 00:25:13,159
Speaker 1: and should that be as wide as it is? Um No,

443
00:25:13,600 --> 00:25:15,240
Speaker 1: I don't think so. I think I think that there's

444
00:25:15,280 --> 00:25:18,160
Speaker 1: going to be a convergence around this, particularly as we

445
00:25:18,880 --> 00:25:21,880
Speaker 1: get more into this ECB discussion, where you know, they

446
00:25:21,920 --> 00:25:25,440
Speaker 1: will stop buying bonds at the end of this year. Um.

447
00:25:25,720 --> 00:25:29,240
Speaker 1: Draggy term ends late in twenty nineteen, so we'll see

448
00:25:29,440 --> 00:25:31,840
Speaker 1: if he takes the route that Yelling did in terms of,

449
00:25:31,920 --> 00:25:33,640
Speaker 1: you know, getting a little bit more to the middle

450
00:25:33,760 --> 00:25:35,919
Speaker 1: rather than being as as devilish as he has been

451
00:25:36,000 --> 00:25:39,560
Speaker 1: during his entire uh tenure. But um, you know, they

452
00:25:39,560 --> 00:25:41,960
Speaker 1: are slowly going down that path the way the Fed

453
00:25:42,119 --> 00:25:44,720
Speaker 1: slowly went down that path. So you think that the

454
00:25:44,800 --> 00:25:47,440
Speaker 1: gap in the yields are going to shrink because German

455
00:25:47,480 --> 00:25:50,240
Speaker 1: boon yields are gonna rise faster even then US yields

456
00:25:50,280 --> 00:25:52,479
Speaker 1: going forward, And and some of that's a reversal from

457
00:25:52,520 --> 00:25:54,600
Speaker 1: what we saw this year, just the U S yields

458
00:25:54,600 --> 00:25:57,960
Speaker 1: have gapped out so much more, and we UM can

459
00:25:58,040 --> 00:26:02,320
Speaker 1: conceivably have a conversation about end the FED might be

460
00:26:02,440 --> 00:26:05,040
Speaker 1: forced to pull back a little bit from its more

461
00:26:05,080 --> 00:26:07,040
Speaker 1: aggressive stance that it's that's out there. You know, I

462
00:26:07,760 --> 00:26:11,240
Speaker 1: find it difficult to see them doing another seven or

463
00:26:11,280 --> 00:26:13,640
Speaker 1: eight rate hikes during the cycle, to be honest with you,

464
00:26:14,440 --> 00:26:18,240
Speaker 1: any thoughts on trade wars and what increases in tariffs

465
00:26:18,520 --> 00:26:21,840
Speaker 1: would do to all of the projections for corporate earnings,

466
00:26:22,440 --> 00:26:24,680
Speaker 1: you know, uh, most most certainly it's going to be

467
00:26:24,840 --> 00:26:27,600
Speaker 1: a UM pick and choose kind of environment in terms

468
00:26:27,600 --> 00:26:30,840
Speaker 1: of which companies are are better off than not. You know,

469
00:26:30,840 --> 00:26:33,040
Speaker 1: I don't I can't offer a whole lot of insight

470
00:26:33,119 --> 00:26:35,840
Speaker 1: into UM, you know, the more other than the more

471
00:26:35,840 --> 00:26:38,440
Speaker 1: obvious types of industries that that are that are hurt,

472
00:26:38,480 --> 00:26:43,159
Speaker 1: you know, auto outo manufacturers, et cetera. UM. The fact

473
00:26:43,200 --> 00:26:46,200
Speaker 1: that we really have had a lot of rhetoric but

474
00:26:46,320 --> 00:26:50,720
Speaker 1: not a lot of action, I think is a constructive

475
00:26:50,760 --> 00:26:52,800
Speaker 1: view that the market is ultimately taking. You know what,

476
00:26:52,800 --> 00:26:55,520
Speaker 1: we'll we'll we'll see what we'll see what happens. Okay,

477
00:26:55,600 --> 00:26:58,359
Speaker 1: But UM, just taking a look at what has already happened.

478
00:26:58,400 --> 00:27:01,359
Speaker 1: If you look at stocks in your stocks in Asia,

479
00:27:01,840 --> 00:27:04,520
Speaker 1: they're flat or down for the year. And it's not

480
00:27:04,560 --> 00:27:05,840
Speaker 1: as if you've made a lot of money in the

481
00:27:05,920 --> 00:27:08,520
Speaker 1: SMP five this year either you're up maybe three three

482
00:27:08,560 --> 00:27:14,240
Speaker 1: and a quarter percent. So I mean, that's not a

483
00:27:14,359 --> 00:27:17,520
Speaker 1: ringing endorsement, you know what, UM. I mean, there's certainly something.

484
00:27:17,560 --> 00:27:20,240
Speaker 1: There's certainly some negatives to it, no doubt, U U

485
00:27:20,280 --> 00:27:23,879
Speaker 1: S stocks themselves are not screaming by by by any means.

486
00:27:24,040 --> 00:27:26,040
Speaker 1: You know, they're holding their own, which kind of given

487
00:27:26,160 --> 00:27:29,800
Speaker 1: where valuations have been, is pretty good given all of

488
00:27:29,840 --> 00:27:32,359
Speaker 1: the tail once. I mean, there's there's volatility that's been

489
00:27:32,359 --> 00:27:35,320
Speaker 1: created by certainly the geopolitical aspects that are going on

490
00:27:35,400 --> 00:27:38,480
Speaker 1: in the world, and there are and there's volatility based

491
00:27:38,520 --> 00:27:41,280
Speaker 1: on the fact that the central banks are UM, you know,

492
00:27:41,320 --> 00:27:45,120
Speaker 1: starting to move towards a more neutral position. UM. At

493
00:27:45,160 --> 00:27:48,920
Speaker 1: some point this year, we'll probably be talking about shrinking

494
00:27:48,920 --> 00:27:50,960
Speaker 1: balance sheets across the G four, which will be the

495
00:27:51,000 --> 00:27:53,560
Speaker 1: first time. And you know that's since certainly all of

496
00:27:53,640 --> 00:27:56,600
Speaker 1: us have been coming to insight. So what's the one

497
00:27:56,680 --> 00:27:59,880
Speaker 1: question that everyone asks you, all your clients and traders.

498
00:28:00,280 --> 00:28:02,480
Speaker 1: You know, I think UM, I think there are still

499
00:28:02,480 --> 00:28:05,840
Speaker 1: and you kind of see it whenever we get, um,

500
00:28:05,880 --> 00:28:07,480
Speaker 1: a little bit of a calm in the world. And

501
00:28:07,520 --> 00:28:09,280
Speaker 1: it's not as if there's not headlines today, but you

502
00:28:09,280 --> 00:28:11,480
Speaker 1: see yields gapping out, and I think that there is

503
00:28:11,520 --> 00:28:15,040
Speaker 1: concern about a four percent um four percent ten year.

504
00:28:15,160 --> 00:28:18,400
Speaker 1: You know, do some of those prognosis is hold any weight.

505
00:28:18,800 --> 00:28:21,720
Speaker 1: I'm in the camp that we might have seen the

506
00:28:21,800 --> 00:28:23,560
Speaker 1: highs of the year, or you know, close to the

507
00:28:23,600 --> 00:28:25,440
Speaker 1: highs of the year, if you will. Um, I think

508
00:28:25,480 --> 00:28:28,400
Speaker 1: things get a little bit more murky and cloudier later

509
00:28:28,400 --> 00:28:30,119
Speaker 1: in the year, particularly if we start talking about an

510
00:28:30,160 --> 00:28:33,080
Speaker 1: e c P that's pulling things back. UM. So you know,

511
00:28:33,119 --> 00:28:35,200
Speaker 1: everyone is looking at yields, which is great for a

512
00:28:35,280 --> 00:28:37,640
Speaker 1: fixed income guy. Yeah, Marvin Love, thank you so much

513
00:28:37,640 --> 00:28:40,400
Speaker 1: for joining us here. Marvin Lowe is managing director and

514
00:28:40,520 --> 00:28:44,600
Speaker 1: senior Global market strategist for the n Why melon joining

515
00:28:44,680 --> 00:28:52,760
Speaker 1: us here at Inside in Orlando, Florida. Thanks for listening

516
00:28:52,800 --> 00:28:55,680
Speaker 1: to the Bloomberg P and L podcast. You can subscribe

517
00:28:55,680 --> 00:28:59,280
Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever

518
00:28:59,320 --> 00:29:02,440
Speaker 1: podcast by form you prefer. I'm PIM Fox. I'm on

519
00:29:02,480 --> 00:29:06,360
Speaker 1: Twitter at pim Fox. I'm on Twitter at Lisa Abramo.

520
00:29:06,480 --> 00:29:09,080
Speaker 1: It's one before the podcast. You can always catch us

521
00:29:09,080 --> 00:29:10,680
Speaker 1: worldwide on Bloomberg Radio