WEBVTT - GOP Charges, CPI, and Ukraine (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.400 --> 0:00:22.919 Interesting news here this morning. 0:00:23.000 --> 0:00:24.560 To start out the day on the political side, on 0:00:24.600 --> 0:00:27.400 the local New York side of things, George Santos, the 0:00:27.440 --> 0:00:30.720 embattled Republican congressman from New York, was charged by US 0:00:30.800 --> 0:00:34.360 prosecutors with fraud and money laundering critty. 0:00:34.479 --> 0:00:35.400 This is an interesting story on. 0:00:35.440 --> 0:00:37.239 The local side, but it also goes to just you know, 0:00:37.560 --> 0:00:41.520 Congress and various pieces of legislation, including the debt ceiling, 0:00:42.200 --> 0:00:44.600 and how this may impact some of that. So we 0:00:44.640 --> 0:00:46.880 want to break down kind of what the legal side 0:00:46.880 --> 0:00:50.159 of this is for mister Santos. We welcome Nick Ackerman, 0:00:50.240 --> 0:00:54.080 former assistant special Watergate prosecutor Michael Zelden, former federal prosecutor 0:00:54.600 --> 0:00:57.760 the US Department of Justice. Nick, I want to start 0:00:57.800 --> 0:01:00.680 with you just give us a sense of how this 0:01:00.760 --> 0:01:03.800 is going to play out today for mister Santos. 0:01:03.960 --> 0:01:07.000 Well, he's going to show up before a federal district 0:01:07.080 --> 0:01:10.800 court judge in the Eastern District in New York, and 0:01:10.840 --> 0:01:13.080 he's going to be arraigned. He's going to be fingerprinted 0:01:13.080 --> 0:01:16.880 first and photographed. He'll go in and he'll plead not guilty, 0:01:16.920 --> 0:01:21.119 I assume, and that will be it. Bail will be set, 0:01:21.200 --> 0:01:23.840 and I would assume that he'll be released on his 0:01:23.880 --> 0:01:27.959 own recognisance. But that really is just the start of 0:01:28.000 --> 0:01:31.240 the process. I mean, from that point on, he's going 0:01:31.319 --> 0:01:33.920 to have to decide whether he makes a deal with 0:01:34.120 --> 0:01:38.520 the US Attorney's office or he fights it. And I'm 0:01:38.560 --> 0:01:41.160 just starting to look at this indictment right now, and 0:01:41.800 --> 0:01:46.200 I mean, there is it just seems like overwhelming evidence 0:01:46.280 --> 0:01:49.960 of fraud and deceit here, starting with his campaign and 0:01:50.040 --> 0:01:55.960 raising money and using those funds basically for his own 0:01:56.040 --> 0:02:01.240 personal use, you know, including luxury designer clothing and personal 0:02:01.240 --> 0:02:04.520 credit card payments. And it goes on from there with 0:02:04.640 --> 0:02:10.639 him basically taking money out with respect to funds from 0:02:10.639 --> 0:02:14.720 the pandemic program that would have allowed him to get 0:02:14.760 --> 0:02:17.160 money if he had been unemployed, when in fact, the 0:02:17.200 --> 0:02:19.919 indictment charges he was employed. And it goes on from there. 0:02:20.040 --> 0:02:23.800 So I think he's got really no choice here but 0:02:23.880 --> 0:02:26.240 to try and make a deal, all of which I 0:02:26.240 --> 0:02:29.920 think will probably wind up with him resigning from this 0:02:29.960 --> 0:02:30.440 House seat. 0:02:31.560 --> 0:02:34.040 Would bring this into some perspective for us when it 0:02:34.080 --> 0:02:37.600 comes to timing here, because we do have a presidential 0:02:37.639 --> 0:02:40.720 election coming up, not to mention the debt ceiling debate 0:02:40.800 --> 0:02:42.359 in that will go on for the next two weeks 0:02:42.440 --> 0:02:46.400 or so. How long are these legal proceedings expected to take. 0:02:47.639 --> 0:02:50.120 Well, this could take anywhere up to a year if 0:02:50.120 --> 0:02:52.079 he decides to fight it. I mean, if he goes 0:02:52.120 --> 0:02:56.440 through the process of getting discovery, making motions, pre trial motions, 0:02:57.240 --> 0:03:00.359 and then going to trial, this could take up to year. 0:03:00.919 --> 0:03:03.680 On the other hand, if you read this indictment and 0:03:03.720 --> 0:03:06.240 you look at the evidence that's laid out in the 0:03:06.240 --> 0:03:10.280 indictment itself, that would be a pretty futile effort in 0:03:10.280 --> 0:03:13.880 the sense that any effort to really fight this would 0:03:14.040 --> 0:03:16.960 be nothing more than entering into a long term guilty 0:03:17.000 --> 0:03:21.240 plea basically because it sounds like the government has really 0:03:21.480 --> 0:03:22.960 got him solid on this case. 0:03:23.080 --> 0:03:26.440 And you know, the political political ramifications here are very 0:03:26.480 --> 0:03:29.680 important here. You know, the dead ceiling passed two seventeen 0:03:29.720 --> 0:03:34.520 to two fifteen with Santos voting, and so without Santos, 0:03:34.520 --> 0:03:37.240 the fate of that bill will become much less clear 0:03:37.240 --> 0:03:39.600 it might have been, you know, two sixteen to two sixteen. 0:03:39.640 --> 0:03:41.800 So this is the math really is important here as 0:03:41.800 --> 0:03:44.760 it related to mister Santo's seat. Michael Zelden, if you 0:03:44.800 --> 0:03:47.880 were resented, if you were representing an advised or advising 0:03:47.920 --> 0:03:51.160 mister Santos, what would you advise him to do today 0:03:51.200 --> 0:03:52.280 and over the next several. 0:03:52.120 --> 0:03:54.640 Days work out the best plea deal he can. 0:03:54.760 --> 0:03:56.000 Yeah, it seems to be the play. 0:03:56.480 --> 0:03:59.400 Yes, well, I was the chief of the money laundering 0:03:59.560 --> 0:04:02.640 and as a forfeiture office in the Justice Department, and 0:04:02.680 --> 0:04:06.600 these money laundering charges look pretty solid. What he is 0:04:06.640 --> 0:04:10.960 accused of doing is acquiring money under false pretenses and 0:04:11.000 --> 0:04:14.760 then having that what they call specified on lawful activity, 0:04:14.800 --> 0:04:19.080 the money derived from crime. He then engaged in additional 0:04:19.240 --> 0:04:24.120 financial transactions over ten thousand dollars. Those are almost impossible 0:04:24.200 --> 0:04:28.440 charges to win on if the source of the money 0:04:28.839 --> 0:04:32.120 was in fact fraud, And it seems pretty clear in 0:04:32.160 --> 0:04:34.760 the first five counts of this indictment that he did 0:04:34.760 --> 0:04:39.679 in fact solicit money under false pretenses. So he's also 0:04:39.720 --> 0:04:44.560 being charged with false statements to the House of Representatives. 0:04:44.880 --> 0:04:50.159 Also again a very straightforward paper case that you either 0:04:50.360 --> 0:04:52.280 made a statement that's true or you didn't make a 0:04:52.320 --> 0:04:55.120 statement that's true. There's not a lot of movement in 0:04:55.160 --> 0:04:59.839 there from a defense motions standpoint, and then they're asking 0:05:00.080 --> 0:05:03.839 for forfeiture of all the proceeds of his ill gotten gains. 0:05:03.880 --> 0:05:08.320 So I think the play is workout of plea and 0:05:09.120 --> 0:05:11.880 resign from Congress. But he's not that sort of person. 0:05:12.000 --> 0:05:13.919 Yeah, Michael, how he does it? 0:05:14.120 --> 0:05:18.080 Yeah, what type of plea would be reasonable? Do you 0:05:18.080 --> 0:05:20.919 think at this point, given what you know about the indictment. 0:05:21.040 --> 0:05:24.080 Something that caps his exposure to five years? The money 0:05:24.120 --> 0:05:27.839 laundering statute is a twenty year maximum penalty, and the 0:05:27.839 --> 0:05:31.440 way the sentencing around money laundering works is it depends 0:05:31.480 --> 0:05:36.000 on the value of the monies that you laundered. And 0:05:36.640 --> 0:05:42.240 he's probably facing eightish years of actual time on this 0:05:42.880 --> 0:05:46.120 indictment where he convicted of all the charges, and I 0:05:46.160 --> 0:05:48.680 think that he'd like to try to stick within a 0:05:48.760 --> 0:05:52.000 five year period of time. The prosecutors, I don't think, 0:05:52.040 --> 0:05:57.800 are going to treat him softly because of his public position. 0:05:58.040 --> 0:06:01.240 I think that in these public eruption types of cases. 0:06:01.640 --> 0:06:04.600 The government likes to make statements about this because as 0:06:04.640 --> 0:06:08.120 a not only crime, but a breach of public trust. 0:06:08.560 --> 0:06:11.760 So I think he's got a difficult road ahead of him. 0:06:12.360 --> 0:06:15.080 Nick hopping in here, because George Santas isn't the only 0:06:15.120 --> 0:06:18.920 one in legal hot water right now. President Trump is 0:06:19.000 --> 0:06:22.840 as well yet again, this time with the case that 0:06:22.880 --> 0:06:27.040 he's lost against Egene Carroll. Walk us through the consequences there. 0:06:28.080 --> 0:06:32.640 Well, the consequences aren't good because basically he's been labeled 0:06:32.640 --> 0:06:37.839 now as sex predator. And if you're running for president 0:06:38.360 --> 0:06:41.840 and you're trying to get votes from half of the constituents, 0:06:41.880 --> 0:06:45.640 which are women, it's not really helpful in that term. 0:06:46.160 --> 0:06:49.280 It's also not helpful in the suburban areas where he 0:06:49.320 --> 0:06:52.000 needs to get votes that he didn't get the last time, 0:06:52.400 --> 0:06:55.159 where it was really women that made the difference in 0:06:55.839 --> 0:06:59.560 giving the presidency to Joe Biden. So from a political 0:06:59.560 --> 0:07:04.080 standpoint point, this is a complete horror show for the Republicans. 0:07:04.080 --> 0:07:07.800 It couldn't be any worse. It's also I think a 0:07:07.800 --> 0:07:10.480 harbinger of things to come with respect to the New 0:07:10.560 --> 0:07:16.640 York DA's indictment. If you look at what happened here, Basically, 0:07:16.760 --> 0:07:21.720 Donald Trump lost this case right after his lawyer cross 0:07:21.720 --> 0:07:25.240 examined Gene Carroll for two and a half days. There 0:07:25.280 --> 0:07:28.600 was absolutely no reason, you know, from a defense standpoint, 0:07:28.680 --> 0:07:31.120 if what you're trying to prove is that she was 0:07:31.160 --> 0:07:37.440 incredible to actually bolster her credibility by asking you questions 0:07:37.520 --> 0:07:42.240 that let her explain things, let her give her full statements, 0:07:42.560 --> 0:07:47.280 allowed her to show how the alleged assault actually took place. 0:07:48.560 --> 0:07:50.520 And you know, by the time you got through her 0:07:50.560 --> 0:07:53.280 cross examination, I mean, you could see the same thing 0:07:53.360 --> 0:07:55.600 happening with the New York indictment in the sense that 0:07:55.640 --> 0:08:02.560 you've got two cooperating witnesses, both Michael Cohen, who was 0:08:02.600 --> 0:08:06.200 Trump's former lawyer, and David Tecker, who was the head 0:08:06.240 --> 0:08:09.640 of the National Inquirer, that are going to be cross examined. 0:08:10.360 --> 0:08:14.040 And if this case is any kind of sort of 0:08:14.080 --> 0:08:16.760 preview of what's going to happen in the criminal case, 0:08:17.480 --> 0:08:19.720 it's going to be the same thing. They're going to 0:08:20.560 --> 0:08:24.600 do the same kind of cross examination of Michael Cohen 0:08:24.640 --> 0:08:28.640 and David Pecker and will essentially enhance their credibility in 0:08:28.680 --> 0:08:33.360 the situation where both of these individuals are corroborated by 0:08:33.440 --> 0:08:37.160 documents with Gene Carroll. There were no witnesses, nobody saw 0:08:37.200 --> 0:08:41.520 what happened. It was simply her testimony. This case is 0:08:41.880 --> 0:08:45.280 much more solid and a cross examination like that is 0:08:45.400 --> 0:08:46.920 not going to be helpful to Donald Trump. 0:08:46.960 --> 0:08:50.079 All Right, a busy, busy morning for legal issues. It's 0:08:50.120 --> 0:08:51.560 not necessarily what we thought we were going to do 0:08:51.760 --> 0:08:53.520 waking up this morning, but there's a lot to cover, 0:08:53.559 --> 0:08:55.760 and I think we did an admiral job thanks to 0:08:55.800 --> 0:08:59.760 our guest Nick Ackerman, former assistant Special Watergate prosecutor, and 0:09:00.000 --> 0:09:04.480 Michael Zelden, former federal prosecutor US Department of Justice. 0:09:05.320 --> 0:09:08.760 You're listening to the Team Ken's are Live program Bloomberg 0:09:08.800 --> 0:09:12.160 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:09:12.240 --> 0:09:15.400 the iHeartRadio app, and the Bloomberg Business App, or listen 0:09:15.480 --> 0:09:17.520 on demand wherever you get your podcast. 0:09:20.280 --> 0:09:22.760 We did get that inflation print this morning. The CPI 0:09:22.880 --> 0:09:26.000 kind of came right in line with expectations. Maybe if 0:09:26.040 --> 0:09:29.440 you dig dig deep, like Michael McKee and the other 0:09:29.520 --> 0:09:31.240 economists tend to do, you get a little sense of 0:09:31.280 --> 0:09:34.640 maybe it's softening a little bit. Let's chicken with professional 0:09:34.840 --> 0:09:40.480 Anaka Treon, chief economist for Van launschat Kempen Anka. What 0:09:40.559 --> 0:09:43.320 did you take away from this CPI print this morning? 0:09:44.960 --> 0:09:47.840 Hi, Well, it looks like, you know, we're sort of 0:09:47.880 --> 0:09:50.640 in this neither here nor their zone where it's not 0:09:50.800 --> 0:09:54.880 clear enough in the data that inflation is abating, but 0:09:54.920 --> 0:09:58.040 it's also not clear enough that it's accelerating. And I 0:09:58.040 --> 0:10:01.120 think that's what makes this whole monetary policy the climate 0:10:01.200 --> 0:10:05.240 really confusing, because I think the main thing that's important 0:10:05.400 --> 0:10:08.200 is central banks, to Fared, the ECB, all of them 0:10:08.640 --> 0:10:12.200 have been quite outspoken about their information target. We're still 0:10:12.280 --> 0:10:15.120 nowhere near their target, and you still see also again 0:10:15.160 --> 0:10:20.320 in the latest data, evidence of stickiness, especially around services inflation, 0:10:20.480 --> 0:10:21.640 especially around wages. 0:10:22.960 --> 0:10:26.080 Well, top, was that again about shelter costs here, because 0:10:26.120 --> 0:10:28.920 something that is so striking to me is that the 0:10:28.920 --> 0:10:32.959 shelter costs piece of this report. You're not seeing the 0:10:33.000 --> 0:10:36.640 same deceleration that I think a lot of people would 0:10:36.679 --> 0:10:42.200 expect one year after the FED started hiking rates, even 0:10:42.280 --> 0:10:44.439 with the lag baked in. Shouldn't shelter have taken a 0:10:44.440 --> 0:10:45.320 bigger hit by now? 0:10:46.920 --> 0:10:47.120 Yeah? 0:10:47.160 --> 0:10:49.720 And I think it's just a function of figuring out 0:10:49.720 --> 0:10:54.240 how long the time lags are, and obviously the time 0:10:54.320 --> 0:10:58.439 lag between the purchase prices of houses versus the rental pricing. 0:10:59.000 --> 0:11:00.839 And I think that's just what makes this whole thing 0:11:00.880 --> 0:11:04.040 so computing, because it's not just about a single source 0:11:04.080 --> 0:11:06.160 of pricing pressure with an inflation you know, it's not 0:11:06.240 --> 0:11:08.840 just about the energy costs. We've moved away from that. 0:11:09.480 --> 0:11:12.160 The baton is being passed from one source of price 0:11:12.240 --> 0:11:16.400 pressure to another, and they all have their respective time lags, 0:11:16.440 --> 0:11:18.400 which just makes it quite complicated. 0:11:19.720 --> 0:11:23.880 And anaka, I'm looking at the CPI X Food and 0:11:24.040 --> 0:11:26.400 Energy year of year of five point five percent that 0:11:26.400 --> 0:11:29.640 came in line with expectations. It's down from five point 0:11:29.679 --> 0:11:33.240 six percent last month, but boy, that number feels sticky 0:11:33.280 --> 0:11:36.600 to me. How do you expect that number to trend 0:11:36.640 --> 0:11:38.600 over the you know, the next six months or so. 0:11:39.960 --> 0:11:42.120 Well, we think it's quite sticky too, and we've been 0:11:42.120 --> 0:11:45.560 saying it for a while, but we're amazed at how 0:11:46.280 --> 0:11:49.400 output the markets are and expecting a u turn in 0:11:49.480 --> 0:11:52.080 policy rates by the Fed. And the only way the 0:11:52.080 --> 0:11:54.280 Fed is going to u turn and actually start cutting 0:11:54.320 --> 0:11:57.360 rates in about four months time, which is what markets expect, 0:11:57.960 --> 0:12:02.320 is if there's really tangible proof of consistent declines in 0:12:02.600 --> 0:12:06.360 core inflation, and to your point, it still looks pretty sticky. 0:12:07.280 --> 0:12:09.960 So that's the biggest risk that we see for markets 0:12:10.559 --> 0:12:11.160 when you talk. 0:12:11.080 --> 0:12:14.440 About risks we're seeing for markets, though inflation is just 0:12:14.600 --> 0:12:16.360 part of the story, I would argue a bigger part 0:12:16.400 --> 0:12:17.800 of the story. But then you have all this kind 0:12:17.800 --> 0:12:21.200 of debt ceiling. I don't want to call it drama, 0:12:21.320 --> 0:12:26.120 but drama. What is the trade there? I mean, in 0:12:26.120 --> 0:12:29.720 this circumstance that no one really thinks is going to 0:12:29.720 --> 0:12:31.600 finally come to fruition, It's going to be an eleventh 0:12:31.600 --> 0:12:36.360 hour development, what is the trade if we do indeed 0:12:36.880 --> 0:12:39.080 see the clock strike twelve and there's no agreement. 0:12:40.679 --> 0:12:43.400 Yeah, I mean, I think the likelihood of the debt 0:12:43.440 --> 0:12:46.160 ceiling not being written the way we're all looking for 0:12:46.200 --> 0:12:48.920 me we think is rather low, because I mean, the 0:12:49.000 --> 0:12:52.360 US government simply cannot afford to go into default. And 0:12:52.400 --> 0:12:55.520 I mean, just look how proactive policymakers were around you know, 0:12:55.559 --> 0:12:58.920 the SVBS as First Republic. As soon as you see 0:12:58.960 --> 0:13:02.480 signs of crisis, they're there to fix, they're there to rescue. 0:13:02.520 --> 0:13:04.760 And I think the same will apply this time. I 0:13:04.800 --> 0:13:07.320 think the trade is I mean, it's basically adding to 0:13:07.400 --> 0:13:13.480 the backdrop of complexity, volatility. And it's ironic because you know, 0:13:13.520 --> 0:13:15.520 the volatility that we're seeing is much more in the 0:13:15.520 --> 0:13:18.280 bond market than the top markets. Look at the VIXSUS 0:13:18.440 --> 0:13:22.920 moving dex and that's the sort of inherent volatility and 0:13:23.000 --> 0:13:26.200 you know, well one of the most important parts of 0:13:26.600 --> 0:13:30.440 capital markets. Actually, it just depicts the picture we're. 0:13:30.320 --> 0:13:33.680 In and like it real quickly. Thirty seconds give us 0:13:33.720 --> 0:13:35.600 a sense of how inflation is in Europe. 0:13:37.200 --> 0:13:39.839 So inflation in Europe it's very similar to the US. 0:13:39.880 --> 0:13:42.040 It's the stickiness and I think the most try thinking 0:13:42.080 --> 0:13:45.840 about Europe what I mentioned about the energy crisis. All 0:13:45.920 --> 0:13:48.160 the tension was on energy prices in Europe because of 0:13:48.200 --> 0:13:51.920 this energy crisis, Ukraine war and you know, energy shortages, 0:13:52.000 --> 0:13:55.320 et cetera. I mean, gas prices in Europe have fallen 0:13:55.480 --> 0:13:58.959 all the way back right pre Ukraine, pre everything. Wow, 0:13:59.480 --> 0:14:02.640 yet plation is still really high, really sticky, and we 0:14:02.760 --> 0:14:05.000 really have a wage inflation problem. 0:14:05.320 --> 0:14:05.800 Interesting. 0:14:05.880 --> 0:14:07.880 Interesting, All right, Anica, We could go on and on 0:14:08.160 --> 0:14:08.880 a lot more questions. 0:14:08.960 --> 0:14:09.720 We'll talk to you soon. 0:14:09.760 --> 0:14:13.560 Anica Treon, chief economist for Van Loonshot Kempen. 0:14:13.920 --> 0:14:16.960 You're listening to the tape Cat's Are Live program Bloomberg 0:14:17.080 --> 0:14:20.680 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:14:20.720 --> 0:14:23.960 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:14:24.000 --> 0:14:26.800 You can also listen live on Amazon Alexa from our 0:14:26.840 --> 0:14:31.920 flagship New York station. Just say Alexa, play Bloomberg eleven thirty. 0:14:33.600 --> 0:14:36.440 Your work A talk preferred Stock. I sold some preferred 0:14:36.480 --> 0:14:37.480 stock back in the day. 0:14:37.560 --> 0:14:39.560 Every once in a while it comes into fashion, and 0:14:39.560 --> 0:14:40.920 I would sling a lot of that stuff. 0:14:40.920 --> 0:14:44.640 It definitely himitt in fashion today, right, No dental Warren Buffett, Yep. 0:14:44.720 --> 0:14:48.920 Absolutely, he gets He always gets the high yielding stock. 0:14:48.960 --> 0:14:51.480 He gets people when they're down, they're desperate, Golden Sacks, 0:14:51.760 --> 0:14:53.880 Occidental Patrol. I mean he gets that preferred stock. He's 0:14:54.000 --> 0:14:56.080 very smart about that stuff. All right, let's talk about 0:14:56.120 --> 0:15:01.320 the van K Preferred Securities Ex Financials et pf XF 0:15:01.640 --> 0:15:03.280 for the kids out there with the Bloomberg terminal. 0:15:03.320 --> 0:15:06.560 Brandon Zoski, did I get that? Awesome? 0:15:06.560 --> 0:15:10.320 Brandon Rakzoski, VP and Director of Product Management at Vanek, 0:15:10.440 --> 0:15:12.840 joins us live here in our Bloomberg Interactive Broker studio. 0:15:13.160 --> 0:15:16.800 So Brandon, talk to us about your preferred stock. Etf 0:15:17.720 --> 0:15:21.360 EX Financials talked to why ex financials and kind of 0:15:21.360 --> 0:15:22.280 what are you guys looking to do? 0:15:22.480 --> 0:15:25.000 Yeah, yeah, yeah, it's it's a little bit ironic that 0:15:25.040 --> 0:15:27.680 we're talking about our ETF now, you know, it sounds 0:15:27.720 --> 0:15:29.200 like it was made for the. 0:15:29.160 --> 0:15:31.080 Last two months exactly. I don't want anything to do 0:15:31.120 --> 0:15:31.760 with financials. 0:15:31.840 --> 0:15:34.120 We actually launched the CTF. We listed it back in 0:15:34.120 --> 0:15:36.880 twenty twelve, over another years ago. Okay, right, So we 0:15:36.960 --> 0:15:39.720 launched this when the preferred market was heating up. It 0:15:39.760 --> 0:15:43.560 was post global financial crisis. Rates we're at zero. Investors 0:15:43.600 --> 0:15:46.280 were looking for income, but the global financial crisis was 0:15:46.720 --> 0:15:50.440 fresh in everybody's mind. And you know, fast forward a 0:15:50.480 --> 0:15:53.880 decade and the US banking system was by and large stable. 0:15:54.000 --> 0:15:56.640 So pretty much the reason we launched the CTF the 0:15:56.680 --> 0:16:01.640 diversification away from financials preferred secure curities. You know, it 0:16:02.520 --> 0:16:06.160 didn't really come into play until two months ago. And 0:16:06.800 --> 0:16:08.480 what I think a lot of investors don't know about 0:16:08.520 --> 0:16:12.880 the preferred market is it's dominated by banks, insurance companies, 0:16:12.880 --> 0:16:15.880 and financials. So anybody, any investor that's looking to a fund, 0:16:16.440 --> 0:16:18.440 you know, mutual fund ETF and looking at the broad 0:16:18.480 --> 0:16:22.320 preferred security space, they're getting very heavy financials exposure and 0:16:22.360 --> 0:16:24.560 they've they've if they didn't know that already, they've they've 0:16:24.600 --> 0:16:26.680 certainly woken up to that over the last two months. 0:16:26.760 --> 0:16:29.840 So so we like this ETF within the space. It's 0:16:29.960 --> 0:16:32.120 it's a way for investors to diversify away from that 0:16:32.160 --> 0:16:34.040 heavy financials exposure they get elsewhere. 0:16:34.320 --> 0:16:36.000 So Brandon, let's brown this out a little bit. 0:16:36.040 --> 0:16:37.080 We're talking about financials. 0:16:37.080 --> 0:16:39.920 We've got to talk about the banking crisis. Is it 0:16:39.960 --> 0:16:42.240 still a crisis or are we kind of passed that? 0:16:42.480 --> 0:16:42.680 Yeah? 0:16:42.680 --> 0:16:45.040 I mean, I don't know that anyone can tell you 0:16:45.040 --> 0:16:48.080 that definitively in that and that that's why why, that's 0:16:48.080 --> 0:16:50.240 why investors have to be aware of their risks, right, 0:16:50.320 --> 0:16:51.760 I mean we see, you know, you hear about a 0:16:51.760 --> 0:16:54.160 new bank every every day, so you know, it's it 0:16:54.200 --> 0:16:56.160 all started two months ago. It's been two months and 0:16:56.400 --> 0:17:00.520 we're hearing about you know, name the Pack, the West, 0:17:00.600 --> 0:17:04.439 whatever it might be. You've got these banks, and you 0:17:04.440 --> 0:17:07.040 look at the preferred securities market, you look at broad indexes, 0:17:07.080 --> 0:17:10.840 and regional banks are still despite the selloff, regional banks 0:17:10.840 --> 0:17:13.320 are still accounting for ten to fifteen percent of these 0:17:13.359 --> 0:17:17.879 broad indexes. So there's risk and exposure that are in 0:17:18.000 --> 0:17:21.119 these ETFs and investors should be aware of them because 0:17:21.119 --> 0:17:22.879 these are the shares that are getting hurt the most. 0:17:22.960 --> 0:17:24.359 Well, is that a part of the market that's just 0:17:24.400 --> 0:17:26.600 going to get wiped out? I mean, this isn't an 0:17:26.640 --> 0:17:29.160 equal comparison, but when I'm thinking wiped out, I'm thinking 0:17:29.160 --> 0:17:31.920 that's kind of the eighty one bond story from Credit SUITEZ, 0:17:31.960 --> 0:17:34.120 where just a class of investors just got wiped out. 0:17:34.520 --> 0:17:36.320 Is that something that could happen if you continue to 0:17:36.320 --> 0:17:37.920 see these bank failures. 0:17:39.000 --> 0:17:41.199 We lived through this in the global financial crisis and 0:17:41.240 --> 0:17:43.040 it didn't get wiped out. I don't think it will 0:17:43.040 --> 0:17:44.719 get wiped out. I think there's a lot of investors 0:17:44.800 --> 0:17:46.800 right now that are actually looking to that space as 0:17:46.800 --> 0:17:49.760 a value opportunity. These are just so well so over 0:17:49.800 --> 0:17:52.240 sold at the moment. So if you can be opportunistic 0:17:52.240 --> 0:17:54.639 and you can look to some of these regional banks 0:17:54.640 --> 0:17:56.679 and some of their preferred shares, if you're willing to 0:17:56.680 --> 0:17:59.199 take on that risk, there could be reward. But if 0:17:59.200 --> 0:18:01.280 you're a buy and holding investor that's just looking for 0:18:01.320 --> 0:18:04.440 that monthly income check and you're not willing to to 0:18:04.720 --> 0:18:07.439 to to weather that volatility in your portfolio, then then 0:18:07.480 --> 0:18:11.040 you should really think twice about about initiating exposure in 0:18:11.080 --> 0:18:13.400 some of these these broad indexed products. 0:18:13.520 --> 0:18:17.480 All right, so when your ETF pf XF is the ticker, 0:18:18.359 --> 0:18:19.360 what do you guys own there? 0:18:19.560 --> 0:18:21.760 Yeah, so okay, so you're you're you're cutting out a 0:18:21.800 --> 0:18:25.200 big chunk of the market. When you exclude financial banks, insurance, 0:18:25.200 --> 0:18:28.359 that's seventy to seventy five percent assisted market. 0:18:27.640 --> 0:18:28.679 Yet yeah, the. 0:18:28.640 --> 0:18:31.560 Whole financial sectors, it's it's dominant. So what you're left with, 0:18:31.600 --> 0:18:33.720 You've got utilities, You've got which. 0:18:33.680 --> 0:18:36.439 I pitched prefers to in telecom companies back again, Yeah. 0:18:36.320 --> 0:18:38.119 It's a it's a big portion of p effects. You know, 0:18:38.119 --> 0:18:41.080 that's twenty percent of the portfolio sold a few and 0:18:41.119 --> 0:18:41.880 then you've got. 0:18:42.040 --> 0:18:43.880 Wait, how many telecom companies are there? 0:18:44.040 --> 0:18:46.520 There's a lot, there's tower companies, there's all kinds of stuff. 0:18:46.680 --> 0:18:49.200 Well back in the day, I mean, is celling your telephone, 0:18:49.760 --> 0:18:50.800 fixed line, wireless? 0:18:50.800 --> 0:18:51.720 This is back in the day. 0:18:51.880 --> 0:18:53.560 So yeah, no, you still you got AT and T 0:18:53.600 --> 0:18:55.119 as a portion of the portfolio. 0:18:55.320 --> 0:18:58.080 Quest you know, you haves AT and T and Hoverizon 0:18:58.119 --> 0:18:58.880 like what else is there? 0:18:59.119 --> 0:19:00.000 But fair enough? 0:19:00.160 --> 0:19:03.359 Continue but nonetheless, and then in real estate, that's of 0:19:03.400 --> 0:19:05.119 course on top of everyone's mind. So you are going 0:19:05.160 --> 0:19:07.880 to get some read exposure through this through this preferred ETF. 0:19:07.920 --> 0:19:09.879 So that's something to be aware of. But you know, 0:19:09.920 --> 0:19:14.040 the wonderful thing about this ETF we lived, as I mentioned, 0:19:14.119 --> 0:19:16.840 we lived through this period where systemic risk in the 0:19:16.960 --> 0:19:20.200 US banking system just wasn't top of mind for investors. 0:19:20.200 --> 0:19:22.560 So what else did this CTF give you? It gives 0:19:22.560 --> 0:19:25.040 you a bit of a yield pickup. So X financials 0:19:25.040 --> 0:19:27.040 prefers tend to have a little bit of a higher yield. 0:19:27.240 --> 0:19:30.000 They've got a lower duration profile because these bank and 0:19:30.080 --> 0:19:33.639 financial institution prefers they're perpetual, they're you know, they're very 0:19:33.680 --> 0:19:35.840 long dated. So you're getting this yield pick up with 0:19:35.880 --> 0:19:38.960 lower duration, lower call risk, and that all comes in 0:19:39.040 --> 0:19:40.520 this this X financials wrapper. 0:19:41.240 --> 0:19:44.560 So when I think lower duration an X financial rapper, 0:19:44.600 --> 0:19:48.560 I mean immediately think tech stocks. From from my perspective, 0:19:49.200 --> 0:19:51.000 it doesn't feel like there's a ton of exposure to 0:19:51.000 --> 0:19:51.400 that here. 0:19:51.600 --> 0:19:53.960 No, that, yeah, you don't see that from the tech sector, 0:19:54.040 --> 0:19:56.520 the traditional high flying growth stocks. They're just not heavy 0:19:56.520 --> 0:19:57.800 issues with preferred securities. 0:19:58.720 --> 0:20:03.320 So as you think about putting stuff into this ETF, 0:20:03.640 --> 0:20:05.120 what are some of the characteristics that you rule. 0:20:05.200 --> 0:20:06.600 Is there a certain minimum. 0:20:06.240 --> 0:20:09.560 Yield you want to see, is a certain credit profile 0:20:09.600 --> 0:20:11.240 you want to see? How do you guys screen for 0:20:11.280 --> 0:20:12.560 some names to get into the CTF. 0:20:13.200 --> 0:20:16.959 We, you know, we work within a rule book, a 0:20:17.000 --> 0:20:19.720 framework that applies to the index. It's a nice ice 0:20:19.760 --> 0:20:22.720 index and it's basically built to be very broad and 0:20:22.760 --> 0:20:25.720 inclusive when you know, the simple exclusion of course is 0:20:26.000 --> 0:20:29.760 financials issuers and their underlying issues. But you know, we 0:20:29.840 --> 0:20:33.920 look to fixed rate, floating rate. You know, these can 0:20:33.960 --> 0:20:36.080 be investment grade, non investment grade, they can actually be 0:20:36.119 --> 0:20:38.520 not not rated. There's a lot of you know, rates 0:20:38.520 --> 0:20:40.440 out there that they don't go through the step of 0:20:40.480 --> 0:20:44.639 obtaining a rating. So there's a very broad profile to this, 0:20:44.840 --> 0:20:47.040 to this CTF, and it's a complicated space. And I 0:20:47.040 --> 0:20:49.320 think that's why investors have looked to mutual funds and 0:20:49.320 --> 0:20:54.080 ETFs because there are calls, there are mandatory converts applicable 0:20:54.119 --> 0:20:56.359 to some of these preferred shairs. So so it's it's 0:20:56.400 --> 0:21:00.359