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Speaker 1: Welcome to the Bloomberg markets podcast. I'm Paul Sweeney. Alongside

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Speaker 1: my co host Matt Miller, every business day we bring

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Speaker 1: you interviews from CEOS, market pros and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg markets podcast

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Speaker 1: on Apple podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg Dot com slash podcast. Let's get right to

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Speaker 1: our next guest, William Houston, see io of Bay Street

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Speaker 1: Capital Holdings. So William, you prefer William or bill? How

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Speaker 1: are we going here? Yeah, William, awesome. Great. So William portfolio.

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Speaker 1: I grew up with that. That didn't work for me

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Speaker 1: so well this year. What are you kind of doing

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Speaker 1: their over at bay street in terms of allocating access

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Speaker 1: between equities, fixed income, maybe some commodities, maybe some alternatives.

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Speaker 1: I mean, what do you do in a market environment

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Speaker 1: like this? MM HMM. It's not so much the allocation

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Speaker 1: right now as much as what the marketing anticipating. So,

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Speaker 1: you know, as long as the Fed continues down this

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Speaker 1: course of raising rates, we're going to see more of

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Speaker 1: the same of what we're seeing in the market, you know,

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Speaker 1: until they are able to reverse course once the inflation

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Speaker 1: has slowed down. Regards what someone's allocation is, they're going

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Speaker 1: to be looking at a difficult, a difficult path in

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Speaker 1: the equities market. So, Um, it's not like a binary thing,

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Speaker 1: that Um. I always think about it like that. Either

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Speaker 1: they're raising or they're cutting, but they could. I guess

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Speaker 1: the market expectation is that they plateau at some point

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Speaker 1: and just hold for a while. How do you see

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Speaker 1: that going, and how important is your fed call to

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Speaker 1: your investment strategy? Yes, that's the right process. You know,

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Speaker 1: the the market is pricing in the pace that we're

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Speaker 1: going to see these these rate hikes, as you said,

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Speaker 1: everyone's anticipating the seventy basis points. And yes, as soon

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Speaker 1: as that trend reverse this course, you know, we stopped

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Speaker 1: seeing this inversion in the yield curve where, you know,

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Speaker 1: investors are being actually rewarded at a higher rate on

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Speaker 1: these on these shorter term uh will say like like

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Speaker 1: like like yields as opposed to longer term reels. As

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Speaker 1: long as that's the case, yeah, equities are going to

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Speaker 1: perform poorly, um, and and that's where that's what we're

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Speaker 1: looking at for right now. So what do you do?

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Speaker 1: What do you tell your clients these days again, their

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Speaker 1: their bonds haven't worked for them. Their stocks haven't worked

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Speaker 1: for them. I mean, unless they've got a barrel of oil,

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Speaker 1: you know, sitting in their apartment. What do they do?

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Speaker 1: A lot of investors have also gone to cash in

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Speaker 1: a very strong way. Yeah, what do you do? What

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Speaker 1: are your cash balances and where do you put them

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Speaker 1: to work? If you do so, for a lot of

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Speaker 1: folks that are rebalancing at the end of the year,

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Speaker 1: at the beginning of the year, they would have already,

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Speaker 1: you know, positioned themselves with some sort of cash allocation.

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Speaker 1: We went into the year in January with cash. With that,

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Speaker 1: you know, we've still seen similar performance in in the market.

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Speaker 1: We're still down about or team per sent a year

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Speaker 1: to date. You know, with that cast, it's there that

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Speaker 1: we've been able to be opportunistic with Uh. You know,

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Speaker 1: I would say for the next six months the housing

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Speaker 1: market is going to look uh soft. You know, housing

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Speaker 1: also shot up over the last couple of years. With

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Speaker 1: rates as high as they are, though, you know, there's

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Speaker 1: less offers that are coming in. That means there's going

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Speaker 1: to be lower inventories, which means that prices are going

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Speaker 1: to start coming down. So I would say, for for

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Speaker 1: people who are looking today, the smartest thing to do

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Speaker 1: is to just wait. You know, a lot of things

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Speaker 1: have been announcing layoffs. So just in general, the market

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Speaker 1: is going to see some softness in the next six months,

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Speaker 1: nine months. But that doesn't mean, you know, don't be alert,

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Speaker 1: don't be village and it just means let's look around,

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Speaker 1: you know, prepared for, as these opportunities come up, as

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Speaker 1: we intestipate, these prices to come down. Welleam I want

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Speaker 1: to ask you about Um, your life, your studies and

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Speaker 1: you know what you do out there on the left coast,

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Speaker 1: because I initially, you know, I saw your resume, restruck

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Speaker 1: by how much you studied Um investment management at Wharton,

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Speaker 1: Industrial Systems Engineering at Georgia Tech, mathematics Alabama, and classically

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Speaker 1: trained pianist at Vanderbilt's Blair School of Music, which made

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Speaker 1: me think about the fact that a lot of times

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Speaker 1: musicians are so innovative and Um so successful in the

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Speaker 1: world of business and and on Wall Street. And I

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Speaker 1: just wonder what you think about that and how it's

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Speaker 1: how it's affected you. M Hm. So I think you know,

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Speaker 1: no individual is able it's going to be able to

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Speaker 1: outperform the market. You know, fortunately for me, I've been

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Speaker 1: able to surround myself with other individuals from very diverse

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Speaker 1: backgrounds and, you know, it's that diversity of thought in

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Speaker 1: this concept around idea flow. A friend of mine at

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Speaker 1: the Stanford d school, he actually just released a book on,

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Speaker 1: you know, how to come up with good ideas, you know,

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Speaker 1: and the truth to that is, when you're looking at

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Speaker 1: an investment opportunity, every one knows that it's art, you know,

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Speaker 1: Part Art, part science, but the best ideas actually come

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Speaker 1: from actually the abundance of ideas, you know. So something

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Speaker 1: that we do internally as a team is speak through

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Speaker 1: the opportunities that we're looking at, speak through what's going

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Speaker 1: on in the market, but also be comfortable to go

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Speaker 1: through as many ideas as possible as a team so

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Speaker 1: that we can so that we can field test these

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Speaker 1: options that are coming up and actually, through trial and error,

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Speaker 1: see well, what is the best option to to to

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Speaker 1: to take in the in the in the in the

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Speaker 1: thing that we're experiencing at that at that moment. So

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Speaker 1: will you what's you know? What do you think you

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Speaker 1: really bring? What do you try to bring to your

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Speaker 1: clients in terms of value, service insight. You know, what

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Speaker 1: do you think is most important that you bring to

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Speaker 1: your clients? Yeah, so something we've always stood behind is

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Speaker 1: investing through the lens of history, right. So we want

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Speaker 1: to be able to look at an opportunity. We want

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Speaker 1: to help investors see around the corner. We want to

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Speaker 1: prevent any emotional decision making. So for us, you know,

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Speaker 1: we want to be able to see what's going on and,

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Speaker 1: when market sentiment is where it is today, be able

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Speaker 1: to explain the position that we're in. Uh, and also,

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Speaker 1: you know, again, even though we were only in cash,

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Speaker 1: instead of going back hindsight and trying to make an

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Speaker 1: impulsive decision, say, okay, this is where we position and

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Speaker 1: over the long term, uh, you know, over time equity

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Speaker 1: markets will pull back up. We can speak investors through

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Speaker 1: this next six to nine months that we see coming

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Speaker 1: so that they're able to have a little rest in

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Speaker 1: peace of mind as we as we step into it. All. Right,

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Speaker 1: good stuff, Hey, William, thanks so much for joining us.

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Speaker 1: Really appreciate you taking some time out of your day

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Speaker 1: to chat with us. William Houston, C I O of

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Speaker 1: Bay Street Capital Holdings and one of investipedia's top one

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Speaker 1: hundred most influential advisors. That's a second year Ro. He's

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Speaker 1: been nominated for that prestigious award. Yeah, we've got a

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Speaker 1: Federal Reserve. They're gonna be chatting with us on Wednesday, Bloomberg.

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Speaker 1: Of course we'll have full coverage of our Federal Reserve

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Speaker 1: and the press conferences and all that good stuff. But

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Speaker 1: the question is, okay, you're raising interest rates. Are you

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Speaker 1: can push this economy into a recession? Let's check in

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Speaker 1: with somebody who thinks about this stuff for a living.

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Speaker 1: Marcus schomer, chief economists at Pine Bridge Investments. Marcus, what's

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Speaker 1: your recession call with a Federal Reserve? That seems pretty

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Speaker 1: you know, hell been on kind of getting its handle

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Speaker 1: on inflation. Uh, it's really hard to to get to

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Speaker 1: get your head around the recession call forecast right now. Um,

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Speaker 1: because it depends a little bit what it's all about,

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Speaker 1: depending what what do you think the Fed will do,

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Speaker 1: as opposed what the feds should do, if you really

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Speaker 1: think that they're hell bend on a recession, if you

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Speaker 1: really think they're so ignorant that they don't see how

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Speaker 1: the inflation environment is turning, and it is changing rapidly

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Speaker 1: over the last couple of months. If they really, if

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Speaker 1: you really believe they're so ignorant that they're not see that,

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Speaker 1: then Um, if we do get a recession next year,

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Speaker 1: it's all about them and it will be the second

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Speaker 1: major policy era after last year getting the inflation story

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Speaker 1: completely wrong. They may get the inflation story completely wrong

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Speaker 1: again and push the economy into recession next year. So, Um,

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Speaker 1: I'm sticking I'm sticking out with the non recession forecast

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Speaker 1: because I, maybe somewhat naively, believe they will get some

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Speaker 1: some sort of economic sense over the next six months

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Speaker 1: or so, realize where we are and stop this kind

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Speaker 1: of ridiculous hawkishness that's coming out of every every remember

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Speaker 1: right now and it's pushing up expectations for rate higher

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Speaker 1: and higher and higher. Marcus, I love your take because, um,

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Speaker 1: of course the Fed is going to play it as

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Speaker 1: hawkish as possible. They want to bring inflation expectations down

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Speaker 1: and the only way to do that is to convince

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Speaker 1: everybody in America or in the world, and that means

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Speaker 1: market participants too, that they will do everything they have

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Speaker 1: to do to crush inflation, that that doesn't mean they're

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Speaker 1: actually going to do it. It doesn't mean they're actually

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Speaker 1: going to ignore a recession, high unemployment, you know, um

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Speaker 1: unrest in the streets, just in order to bring this

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Speaker 1: number that's already coming down down. But they have to

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Speaker 1: put on that Hawk Ish Um uh show. Is that

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Speaker 1: how you think it's gonna work, that they're that they're

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Speaker 1: actually they actually are going to be smart enough or

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Speaker 1: or Um sensitive enough too, if not turn around, at

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Speaker 1: least pause when we start to get unemployment really ticking up.

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Speaker 1: You said, you obviously right in your description there Um,

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Speaker 1: but inflation expectations, I'm not rising inflation next. True, you

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Speaker 1: mission numbers were very were very good. Yet months ago

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Speaker 1: you look at the New York site, has another one

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Speaker 1: with the New York site. Is a three UH inflation

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Speaker 1: outlook number, inflation expectations number there that's been turning. Tips, number, tips,

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Speaker 1: inflation forecast has turned. I mean, I don't see any

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Speaker 1: indicator that suggests inflation expectations are rising. But that's the

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Speaker 1: other problem. Um, I'm kind of very that they have

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Speaker 1: to continue to to talk hawkish, right, otherwise that turns

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Speaker 1: back around. No, it wouldn't. I don't think in face

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Speaker 1: expectation not reven what the Fed says its lasin expectation

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Speaker 1: of driven what people see on the street, and you

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Speaker 1: know what they're seeing. They're seeing falling gas prices and

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Speaker 1: they're seeing certainly a reduction in the upward pressure and

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Speaker 1: prices in other areas. And if you look at look

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Speaker 1: at things like like import prices, import prices, I think,

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Speaker 1: already point to the next deflationary impulse that's coming because

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Speaker 1: the dollars super strong. The rest of the world is

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Speaker 1: slowing much harder than the US. Everything we import right

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Speaker 1: now is going down in prices and I think that

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Speaker 1: that that deflationary impults will only intensify in the next

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Speaker 1: six months Um. So I don't see but thefts still

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Speaker 1: sees the problem. It looks at core CPI, which is

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Speaker 1: a terrible number to look at. We should start looking

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Speaker 1: at CPI without housing, because housing is obscuring the turn

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Speaker 1: right now and it is all about the turn and

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Speaker 1: getting conference in the turn. Once operation turns, it has

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Speaker 1: been my view for a while that then the debate

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Speaker 1: would change from how high to how fast will we

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Speaker 1: get to two percent? And that's a very different kind

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Speaker 1: of discustion. Isn't it hard to leave out rents. That's

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Speaker 1: such a sticky component. We hear of inflation, but and

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Speaker 1: it's been out of control on the upside. So it

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Speaker 1: isn't a sticky component. It isn't. It's only sticky because

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Speaker 1: the way it works right, because the way they do

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Speaker 1: that they include rents and CPI, is by taking the

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Speaker 1: very latest information on rent and only using of that

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Speaker 1: for the rental component of CPI. Because you know what,

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Speaker 1: nobody rents a new home every month, right, and nobody

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Speaker 1: buys a house every month. So housing really shouldn't be

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Speaker 1: in there. But SP and CPI should be things that

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Speaker 1: you basically buy every month or every every other month

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Speaker 1: or so you can notice the price is going up

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Speaker 1: or down. But things that you buy only every five

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Speaker 1: years or every two years should really be in the CPI,

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Speaker 1: or at least we should kind of adjust the CPI

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Speaker 1: for the frequency of transaction of that product. And the

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Speaker 1: only thing that's going still up right now, but it's

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Speaker 1: not exactly two but the one thing that's going up

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Speaker 1: right now making everybody worried is housing. Is that what

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Speaker 1: any going down now? He's collapsing right now. Is I'm

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Speaker 1: not going up anymore and rensom are going up anymore.

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Speaker 1: So I was gonna say that's not the case in

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Speaker 1: New York City. But Housing is, uh, you know, rolling over.

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Speaker 1: We get mortgage rates over six per cents. Marcus Scholmer,

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Speaker 1: thanks so much for joining us there. Marcus Scholmer, chief

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Speaker 1: economers for pint bridge investments. I think he's kind of

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Speaker 1: in that Vince Signarella camp, which is hey man, inflation

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Speaker 1: is rolling over. If I'm the Federal Reserve, I can

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Speaker 1: afford the Pauls, if not now, then maybe the next time,

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Speaker 1: but we'll have to see how that plays out. Here

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Speaker 1: in our Bloomberg interactive broker's Radio Studio we got a

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Speaker 1: wall of video screens for all the networks kind of

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Speaker 1: up in front of us and just seeing some video

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Speaker 1: of the Queen's coffin now is arriving at Windsor Castle.

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Speaker 1: This huge, huge procession lined with just throngs of people.

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Speaker 1: Just extraordinary, uh kind of day here. And I was

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Speaker 1: looking at the schedule, man, it starts at six thirty

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Speaker 1: a m this morning the you know, some of these

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Speaker 1: uh rights and events, and doesn't end until seven thirty

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Speaker 1: this evening. So a long day for all involved. And

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Speaker 1: then we'll get a sense of what's going on there

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Speaker 1: on the ground. We bring in Leanne Garan's she's a

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Speaker 1: radio anchor and producer for for Bloomberg News in London. Leanne,

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Speaker 1: thanks so much for taking the time to join us.

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Speaker 1: I'd love to you should get your your view of

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Speaker 1: kind of how the day hasn't folded so far in London,

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Speaker 1: of course. Um. So this morning I was down at

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Speaker 1: Westminster Abbey and you know, the queue that we've seen

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Speaker 1: here in London has been somewhat of a phenomenon. Just

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Speaker 1: hundreds of thousands of people have nine the streets to

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Speaker 1: see the queen lying in states and I spoke to

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Speaker 1: some of the last people to enter that Great Westminster

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Speaker 1: Hall to say their Final Goodbyes today and they've been

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Speaker 1: waiting in the queue for thirteen hours. Shortly after that

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Speaker 1: the queue was closed about six thirty am and then

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Speaker 1: we also saw the queen loaded onto the gun carriage

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Speaker 1: and she was pulled by members and sailors from the

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Speaker 1: military here to Westminster Abbey, which is just eight minutes away,

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Speaker 1: and I witnessed that and it was a moment of

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Speaker 1: raw emotions. We've seen Um pageantry and pomp and ceremony

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Speaker 1: and just a feeling of emotion in London. The gun

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Speaker 1: carriage is so cool. So here's the deal of the

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Speaker 1: gun carriage. Basically, Um, it is an actual carriage for

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Speaker 1: a twelve pound gun. Okay. That was built, I think,

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Speaker 1: in the late eighteen hundreds and when Queen Victoria died

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Speaker 1: um they went to pull it with horses, but the

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Speaker 1: funeral was in February and it was too cold. The

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Speaker 1: horses were freaking out, so they had UM. It was

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Speaker 1: actually Dickie's father, Louis Mount Batten, the original Louis Mount Batton,

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Speaker 1: who said, you know what, we're gonna pull this ourselves,

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Speaker 1: and they had like a hundred guys get out there

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Speaker 1: kidding and pull it. And ever since then it's become

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Speaker 1: an institution in royal funerals. Um So cool. Now they're

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Speaker 1: marching into Windsor Castle. It's gigantic. I never noticed how

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Speaker 1: big it is. I believe it is the biggest royal

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Speaker 1: palace that's still inhabited by kings and Queens in the

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Speaker 1: whole world. Have you been there, Liam? I have been

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Speaker 1: there and I do actually spend a lot of time

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Speaker 1: in one. It's one of my favorite places here in

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Speaker 1: the UK and it was actually one of the Queen's

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Speaker 1: favorite places. She loved it and during the pandemic it

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Speaker 1: was called the Windsor Bubble, where she spent a long

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Speaker 1: time with her former husband and also with the staff

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Speaker 1: of Windsor Castle, and that's because, as we know, the

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Speaker 1: Queen always loved to be outdoors, she loved to walk

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Speaker 1: her Corgis and also have access to the horses, and that's,

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Speaker 1: like you said, Windsor Castle is the place where that happens.

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Speaker 1: And I could not believe just the volume of people

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Speaker 1: that have lined the long walk to see the Queen

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Speaker 1: and as a hearst made away, we saw all the

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Speaker 1: roses that had been thrown onto the front of it.

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Speaker 1: And this, for a lot of the British people, is

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Speaker 1: the last time we will really see her. Majesty. She

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Speaker 1: now will go into a service at four o'clock. That's

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Speaker 1: a committal service, and then later on this evening she'll

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Speaker 1: have a private burial with her family and the cameras

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Speaker 1: will not be watching any of that, you know. You

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Speaker 1: know she mentions the Queen's late husband, the late Queen's

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Speaker 1: late husband, Prince Philip. He was Dickie's nephew, dicky Mount

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Speaker 1: Betton so and I watched a crown. I did a

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Speaker 1: deep dive into this today. Apparently Dickie tried to get

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Speaker 1: Prince Charles to marry his granddaughter. I mean they're all

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Speaker 1: related anyway, but they wanted to get even more interrelated.

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Speaker 1: I guess King Charles now the Third Leanne. What what's

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Speaker 1: the Um? What's the feeling, because I know there has

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Speaker 1: have been times in the past when people wanted him

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Speaker 1: to abdicate and pass the throne straight onto William. He's

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Speaker 1: been very vocal about certain Um issues like climate change,

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Speaker 1: which made him for for some time unpopular, and now

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Speaker 1: I imagine that the left has to at least given

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Speaker 1: points for that. How is he being seen now that

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Speaker 1: he's sitting on the throne, so to speak? Well, I

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Speaker 1: think first of all he has big shoes to follow.

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Speaker 1: That's undoubted. His mother reigned over this country for seven

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Speaker 1: decades and she's much loved. But one thing that King

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Speaker 1: Charles has done, and it's one the people's hearts, is

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Speaker 1: as soon as he realized that he was to come

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Speaker 1: to the throne, he went to all four corners of

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Speaker 1: the UK and he visited his whole kingdom. He started

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Speaker 1: off in Scotland, he went in to Northern Ireland, he

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Speaker 1: went to Wales and of course we've seen him here

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Speaker 1: in England. He's been out and about shaking people's hand,

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Speaker 1: connecting with everybody who's come out to pay their respects

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Speaker 1: to their mother. We've also seen an emotional speech given

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Speaker 1: by him thanking his mother and saying I'm going to

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Speaker 1: carry on the legacy, I'm going to carry on the service.

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Speaker 1: So really we see Prince King Charles. I always want

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Speaker 1: to say Prince Charles, King Charles the third. I know

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Speaker 1: it's always on the shoe front of my mind. So

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Speaker 1: we see King Charles the third really coming out and

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Speaker 1: giving people that reassurance that we need after seven decades.

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Speaker 1: I can't remember another queen. Most of my friends you know.

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Speaker 1: So he's really gone out and given the reassuring to

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Speaker 1: the whole of the United Kingdom that he's here to

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Speaker 1: carry on his mother's legacy and he has worked nonstop

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Speaker 1: and so many people have recognized that and also felt

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Speaker 1: a real sense for him because he's mourning the loss

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Speaker 1: of a mother. Well, first of all, um, that's terrible.

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Speaker 1: I don't want to make light of that at all.

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Speaker 1: It's a tragedy. Everyone loved her and, of course, her

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Speaker 1: children for for their loss. I am sorry. Having said that,

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Speaker 1: this has to be an incredible PR campaign for the

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Speaker 1: United Kingdom because for ten days we've all followed along,

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Speaker 1: we've all watched. You know, if you haven't been there,

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Speaker 1: you probably want to go and check it out. If

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Speaker 1: you have, you may want to go back. I mean

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Speaker 1: Um in a way, this has to kind of prove

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Speaker 1: how important the world's are too, uh to tourism dollars

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Speaker 1: right Ly, and there must be an influx of people

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Speaker 1: who want to go to the UK to pay their

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Speaker 1: respect and to check it out. I have never seen

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Speaker 1: London so busy. I've almost not known what to do

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Speaker 1: with myself. People have come in from all over the

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Speaker 1: world and I've actually gone and visited the queue a

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Speaker 1: few times and reported from the queue, and many people

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Speaker 1: I met were foreign who had flown into the country,

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Speaker 1: who said the queen had always struck a chord with them,

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Speaker 1: especially people from the US. They said we don't have

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Speaker 1: this pomp and pageantry and it's something that we really

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Speaker 1: wanted to be immersed in and involved in and we

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Speaker 1: loved the Queen From Afar. And you are right. It

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Speaker 1: is something that has just bought the light here to

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Speaker 1: the UK and today I have a feeling, and I'm

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Speaker 1: sure many people would agree with me, everything almost went seamlessly.

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Speaker 1: It has been so well rehearsed, it has been so

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Speaker 1: well practiced. The queen made a lot of those approvals

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Speaker 1: for the service that we saw today and I feel

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Speaker 1: like London and the UK has done themselves justice. Absolutely agree. Lean.

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Speaker 1: We're gonna have you back later in the program that's

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Speaker 1: how important this stuff is and how interesting compelling parents

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Speaker 1: from Bloomberg radio. All right, it's Monday, it's eleven eighteen ish.

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Speaker 1: That means we talk e t F, and when we

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Speaker 1: do that we do with Katie Greifeld, cross asset reporter

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Speaker 1: for a Bloomberg News N A N C K R

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Speaker 1: U Z. What kind of e t F Vance and cruise?

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Speaker 1: The world has been waiting for these filings. So, if

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Speaker 1: you haven't guessed so, these are filings. They haven't been

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Speaker 1: launched at the filings for e t f s that

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Speaker 1: would track the personal portfolios of members of Congress and

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Speaker 1: their families and their dependent children, because, because members of

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Speaker 1: Congress tend to beat the S and P by a mile,

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Speaker 1: who knows where they get that kind of investing edge,

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Speaker 1: but it's it's the acumen that you need to become

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Speaker 1: a good politicians just being great at investing. We have

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Speaker 1: aric cultures. He actually crunched the numbers for Bloomberg Intelligence,

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Speaker 1: which did prove that point that these portfolios do tend

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Speaker 1: to outperform. Whether or not it's going to be like

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Speaker 1: a great portfolio, something you would actually want to invest in,

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Speaker 1: it's almost guaranteed to generate buzz because obviously there's been

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Speaker 1: a lot of controversy when you're talking. Okay, so people

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Speaker 1: of our age here, the things we want to invest in,

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Speaker 1: our things that make the most money. Yeah, for sure,

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Speaker 1: it's different with people in your generations. Yeah, what over,

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Speaker 1: General Generalization, Um, but let me tell you about the methodology.

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Speaker 1: The financial world, and financial twitter especially, has been waiting

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Speaker 1: for someone to try to do this. The fact that

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Speaker 1: these filings finally landed uh, sort of went viral, but

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Speaker 1: in any case. So they're going to look at disclosures.

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Speaker 1: Members of Congress have to disclose any transactions they make

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Speaker 1: valued more than a thou and dollars within forty five days.

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Speaker 1: So you do run the risk of missing those short

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Speaker 1: term trades, but you can see what their long term

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Speaker 1: holdings are and you can construct a portfolio around five hundred,

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Speaker 1: six hundred names, and that's what this issue is trying

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Speaker 1: to do. What's give me just a sense of how

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Speaker 1: many e t f s come to market on a

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Speaker 1: weekly basis. It seems like every time you come you've

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Speaker 1: got more new crazy names. It's a cost of launching

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Speaker 1: the TF like next to nothing. It would appear that way.

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Speaker 1: The cost to file and E T F certainly doesn't

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Speaker 1: cost very much. We see so many interesting filings. The

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Speaker 1: reality is that if you look at the e t

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Speaker 1: f market at this point, you have three thousand e

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Speaker 1: t f s in the US, just the US. Um

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Speaker 1: there's not a lot of weights. Nine trillion dollar market

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Speaker 1: exactly a TV show about it. You have a TV

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Speaker 1: show about it. Issuers have to get creative to find

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Speaker 1: any sort of white space, any area of that nine

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Speaker 1: trillion dollar industry that isn't saturated. And if these actually

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Speaker 1: come to pass, they will be the only existing e

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Speaker 1: t f s on the market that are trying to

428
00:24:10,359 --> 00:24:13,119
Speaker 1: do this well. But these to me make the most

429
00:24:13,119 --> 00:24:17,760
Speaker 1: sense of all of everything because, Um, if you a

430
00:24:17,800 --> 00:24:21,040
Speaker 1: lot of people get angry about the fact that members

431
00:24:21,040 --> 00:24:24,000
Speaker 1: of Congress are investing and very cynical people think, hey,

432
00:24:24,040 --> 00:24:29,200
Speaker 1: they're using their position of power to make a profit. Um,

433
00:24:29,240 --> 00:24:31,840
Speaker 1: you know, and now you can do it along with them.

434
00:24:32,359 --> 00:24:34,600
Speaker 1: That makes sense. So the only problem I have is

435
00:24:34,640 --> 00:24:37,160
Speaker 1: with the disclosures. As a member of Congress you only

436
00:24:37,200 --> 00:24:39,600
Speaker 1: have to disclose your investments within a, I think a

437
00:24:39,640 --> 00:24:43,720
Speaker 1: forty five day period. Exactly are those laws gonna Change?

438
00:24:43,840 --> 00:24:47,040
Speaker 1: Is this gonna stay legal? Well, it's interesting. There was

439
00:24:47,119 --> 00:24:51,920
Speaker 1: this big bipartisan push last year to basically change the

440
00:24:52,000 --> 00:24:55,440
Speaker 1: laws require more disclosures or maybe make it so that

441
00:24:56,119 --> 00:24:59,360
Speaker 1: lawmakers would only be able to invest in SMP five

442
00:24:59,560 --> 00:25:01,679
Speaker 1: dred tracking funds, are indextracting funds which a lot of

443
00:25:01,720 --> 00:25:05,199
Speaker 1: corporate employees. Those are the restrictions were under. We're on

444
00:25:05,240 --> 00:25:07,720
Speaker 1: our show going to hear from Emily Wilkins, she's a

445
00:25:07,760 --> 00:25:11,520
Speaker 1: congressional and government reporter at Bloomberg News, about those efforts

446
00:25:11,520 --> 00:25:15,359
Speaker 1: because again it was a big bipartisan sort of unity moment.

447
00:25:15,440 --> 00:25:18,600
Speaker 1: But it seems like that pushes largely stalled. I don't

448
00:25:18,640 --> 00:25:22,800
Speaker 1: think there's been any action on the legislatives front. Funds flow.

449
00:25:23,080 --> 00:25:25,080
Speaker 1: People still putting the money in. Oh, here's the thing.

450
00:25:25,119 --> 00:25:28,639
Speaker 1: I want to talk converting mutual funds. Like Matt and

451
00:25:28,640 --> 00:25:31,879
Speaker 1: I grew up with mutual funds. You put the fidelity,

452
00:25:32,200 --> 00:25:36,600
Speaker 1: you know, Contra Fund, the fidelity. Think about how revolutionary

453
00:25:36,640 --> 00:25:40,879
Speaker 1: they were at the time. Vogel is man a myth,

454
00:25:40,920 --> 00:25:43,919
Speaker 1: a legend who changed the way we invest. But now

455
00:25:44,280 --> 00:25:47,159
Speaker 1: mutual funds are converting to e t S. right. It

456
00:25:47,400 --> 00:25:52,040
Speaker 1: is a growing trend. The first happened about two years ago. Honestly,

457
00:25:52,400 --> 00:25:55,120
Speaker 1: I think it's slowed down a little bit. Uh. Some

458
00:25:55,160 --> 00:25:57,919
Speaker 1: proponents in the et f industry would tell you that

459
00:25:57,920 --> 00:26:01,560
Speaker 1: it's still growing, but we did have new Burger Berman.

460
00:26:01,640 --> 00:26:05,040
Speaker 1: They did convert earlier this month, uh, some of their

461
00:26:05,160 --> 00:26:08,160
Speaker 1: mutual funds into an e t f. This trend, it's

462
00:26:08,200 --> 00:26:11,800
Speaker 1: expected to grow to basically a one trillion dollar wave.

463
00:26:11,880 --> 00:26:15,480
Speaker 1: We're not close to that point yet, but if you

464
00:26:15,480 --> 00:26:18,399
Speaker 1: look at the flow of funds, new money or money

465
00:26:18,400 --> 00:26:21,439
Speaker 1: coming into the ecosystem, it's all it's like a zero

466
00:26:21,600 --> 00:26:25,840
Speaker 1: sum sort of flow picture. But in terms of issuers

467
00:26:25,880 --> 00:26:28,080
Speaker 1: actually converting their mutual fund into E T F S,

468
00:26:28,280 --> 00:26:30,159
Speaker 1: people think there's a lot more runway. But you have

469
00:26:30,240 --> 00:26:33,240
Speaker 1: to consider the fact that mutual funds are the preferred

470
00:26:33,320 --> 00:26:36,960
Speaker 1: structure for retirement plans for four oh one case. So

471
00:26:37,119 --> 00:26:40,840
Speaker 1: there's incentive to convert, but there's also plenty of reasons

472
00:26:40,920 --> 00:26:44,640
Speaker 1: to stay in that specific structure. One PM Wall Street time.

473
00:26:44,720 --> 00:26:46,400
Speaker 1: What are you and that gonna be up to? We're

474
00:26:46,400 --> 00:26:49,600
Speaker 1: going to talk, I think, a lot about the congressional

475
00:26:49,720 --> 00:26:52,560
Speaker 1: trading e t f s, again, just filings. They haven't

476
00:26:52,640 --> 00:26:55,760
Speaker 1: launched yet. That would probably take until November. So we're

477
00:26:55,760 --> 00:26:58,120
Speaker 1: also going to talk to invest goes, head of thematic

478
00:26:58,520 --> 00:27:01,280
Speaker 1: research theme the E T S. it's been a little

479
00:27:01,320 --> 00:27:03,760
Speaker 1: bit of a struggle to attract the same magnitude of

480
00:27:03,760 --> 00:27:06,000
Speaker 1: flows that we saw in some of the years past.

481
00:27:06,040 --> 00:27:07,840
Speaker 1: I don't know if you've guys heard, but we've keep

482
00:27:07,880 --> 00:27:10,280
Speaker 1: toggling in and out of the bear market. That tends

483
00:27:10,320 --> 00:27:12,880
Speaker 1: to be PAT news for themes, but they do have

484
00:27:12,920 --> 00:27:16,520
Speaker 1: some winners. They're including the P B J e t f.

485
00:27:16,520 --> 00:27:18,560
Speaker 1: it's a food and beverage GTF. I'm excited to dig in.

486
00:27:18,680 --> 00:27:23,200
Speaker 1: Themes are different than factors. They are they are now.

487
00:27:23,760 --> 00:27:30,280
Speaker 1: I don't know, momentum quality, those are factors inflation, robotics.

488
00:27:29,440 --> 00:27:33,680
Speaker 1: Thank you's all right, she's smart. I'm ready that's why

489
00:27:33,720 --> 00:27:35,960
Speaker 1: we have around the program Harford College. That's a really

490
00:27:35,960 --> 00:27:39,000
Speaker 1: good college, by the way. On the mainline, yes, the mainline,

491
00:27:39,160 --> 00:27:45,560
Speaker 1: Katie Graydfeld, cross asset reporter for Bloomberg News. I want

492
00:27:45,560 --> 00:27:47,560
Speaker 1: to bring in now Christopher Ralph. He is the Frankfurt

493
00:27:47,560 --> 00:27:51,640
Speaker 1: Bureau chief and he is my go to source on

494
00:27:51,720 --> 00:27:55,159
Speaker 1: anything V W related. And then, because he's my go

495
00:27:55,240 --> 00:27:58,760
Speaker 1: to source on Folkswagon, that means he's automatically my go

496
00:27:58,880 --> 00:28:06,960
Speaker 1: to source on Porsche, Bentley, Audi, Bugatti, Scoda is the

497
00:28:07,000 --> 00:28:10,160
Speaker 1: one right. Ducatti is my own thing, but yeah, Bugatti

498
00:28:10,240 --> 00:28:13,159
Speaker 1: is a great, cool company. Anyway, Christoph, thanks so much

499
00:28:13,160 --> 00:28:16,119
Speaker 1: for joining us. Paul and I um both noticed the

500
00:28:16,160 --> 00:28:18,880
Speaker 1: same thing when we saw the initial stories coming out

501
00:28:18,920 --> 00:28:22,360
Speaker 1: over the weekend. Porsche is going now for a much

502
00:28:22,400 --> 00:28:25,520
Speaker 1: lower valuation than we thought. I mean ten billion dollars

503
00:28:25,560 --> 00:28:29,600
Speaker 1: lopped off the valuation. Now Seventies, seventy five rather than

504
00:28:29,680 --> 00:28:33,920
Speaker 1: eighty five. Why is that? Yeah, I'm Matt. I think.

505
00:28:34,080 --> 00:28:36,840
Speaker 1: I think the IT basically bolts down to the fact

506
00:28:36,840 --> 00:28:39,600
Speaker 1: that actually they have been looking at a very broad

507
00:28:39,720 --> 00:28:43,400
Speaker 1: range of different valuations. When you like, like, uh, sort

508
00:28:43,400 --> 00:28:45,800
Speaker 1: of like look a few weeks back, we've had like

509
00:28:46,080 --> 00:28:48,720
Speaker 1: the number of like eighty five billions floating around. Some

510
00:28:48,720 --> 00:28:51,080
Speaker 1: some analytis actually speculating might be as worth as much

511
00:28:51,080 --> 00:28:54,600
Speaker 1: as one dred billion. Uh. And then our last Thursday

512
00:28:54,640 --> 00:28:57,320
Speaker 1: or Friday was we saw an HSS. No doubt it

513
00:28:57,320 --> 00:28:59,440
Speaker 1: basically said, oh no, it's like gonna it's gonna be

514
00:28:59,440 --> 00:29:02,520
Speaker 1: worth much. Basically they were looking at about forty five

515
00:29:02,600 --> 00:29:05,920
Speaker 1: to fifty billion. So I think they sit pretty much

516
00:29:06,080 --> 00:29:08,240
Speaker 1: right in the middle of the valuation which has been

517
00:29:08,760 --> 00:29:12,040
Speaker 1: basically discussed through a pretty broad range. So I do

518
00:29:12,240 --> 00:29:15,400
Speaker 1: think they try really hard to not not push it

519
00:29:15,480 --> 00:29:19,000
Speaker 1: too hard from a pricing perspective and, yeah, aim for

520
00:29:19,080 --> 00:29:21,360
Speaker 1: something that sits pretty much right in the middle of them.

521
00:29:22,520 --> 00:29:26,960
Speaker 1: To get this is my first thought is Um, you know,

522
00:29:27,080 --> 00:29:30,600
Speaker 1: were I too, if I were allowed to invest in this,

523
00:29:30,760 --> 00:29:32,920
Speaker 1: obviously I would back up the truck and buy as

524
00:29:32,920 --> 00:29:35,360
Speaker 1: many shares as I could. I'd have to call every

525
00:29:35,400 --> 00:29:38,240
Speaker 1: broker I know to try and get some syndicate. How

526
00:29:38,280 --> 00:29:42,240
Speaker 1: are they gonna deal with that kind of demand? Yeah,

527
00:29:42,240 --> 00:29:45,200
Speaker 1: they basically have like a group of banks that is

528
00:29:45,200 --> 00:29:48,720
Speaker 1: targeting specifically institutional investors. Four of the big anchor investors

529
00:29:48,720 --> 00:29:51,960
Speaker 1: have been out there already, have been announced and we

530
00:29:52,000 --> 00:29:54,400
Speaker 1: reported them before. But they also aligned up a number

531
00:29:54,400 --> 00:29:56,760
Speaker 1: of banks, torture bank being one of them, who are

532
00:29:57,000 --> 00:30:00,479
Speaker 1: specifically targeting, targeting retail customers, because they who have a

533
00:30:00,480 --> 00:30:03,600
Speaker 1: pretty sort of affluent group of customers that are very

534
00:30:03,640 --> 00:30:05,440
Speaker 1: like loyal to the brand. I've been driving posts for

535
00:30:05,440 --> 00:30:07,920
Speaker 1: a couple of years or decades maybe, are members of

536
00:30:07,920 --> 00:30:09,800
Speaker 1: like the Porsche Club. So that's definitely a group of

537
00:30:10,120 --> 00:30:13,720
Speaker 1: potentially invested as well. Alright, so the the anchor investors,

538
00:30:13,720 --> 00:30:17,480
Speaker 1: by the way, are like the Saudi right, Um, Norwayway,

539
00:30:17,760 --> 00:30:20,000
Speaker 1: nor just. They have the biggest. Who? Who? Who else

540
00:30:20,040 --> 00:30:23,959
Speaker 1: are the big anchor investors? Remind us? UH, yeah, it was.

541
00:30:24,000 --> 00:30:27,120
Speaker 1: It was in August, the the the sovereign wealthfront from uh,

542
00:30:27,320 --> 00:30:32,360
Speaker 1: from Norway, then Qatar was was was one. was another investor.

543
00:30:32,360 --> 00:30:35,560
Speaker 1: T ro always on board, a D Q, I think. So. Yeah,

544
00:30:35,760 --> 00:30:38,360
Speaker 1: a number of like pretty pretty established names out there.

545
00:30:38,400 --> 00:30:41,440
Speaker 1: Now I understand there's some weird family dynamics going on

546
00:30:41,480 --> 00:30:43,520
Speaker 1: here in this. I P O will dress some of it.

547
00:30:43,760 --> 00:30:45,600
Speaker 1: I'm not sure if you can do this in a

548
00:30:45,680 --> 00:30:49,600
Speaker 1: simplified version, but family. That in a book. Yeah, the

549
00:30:49,640 --> 00:30:52,840
Speaker 1: Porsche family and the peach. Is it peach, Peach Peach.

550
00:30:52,920 --> 00:30:55,080
Speaker 1: I can't even pronounce it correctly. Christoph, can you give

551
00:30:55,080 --> 00:30:59,480
Speaker 1: it a shot? Yeah, the name is is it pronounced Pah?

552
00:30:59,600 --> 00:31:02,040
Speaker 1: And yes, I'll do my best at the night's challenge.

553
00:31:02,080 --> 00:31:04,440
Speaker 1: You wrapped it up in a few seconds and I'll

554
00:31:04,440 --> 00:31:06,480
Speaker 1: write that book and send it to you, Matt, right

555
00:31:06,520 --> 00:31:09,520
Speaker 1: after this show wraps up. The thing is, basically they

556
00:31:09,960 --> 00:31:12,960
Speaker 1: lost direct control over what used to be their family

557
00:31:13,480 --> 00:31:15,760
Speaker 1: business just over a decade ago, back in the day's

558
00:31:15,800 --> 00:31:19,120
Speaker 1: Porsche's previous management is tried to to take over the

559
00:31:19,200 --> 00:31:22,760
Speaker 1: much larger Folkswagen group. The whole thing basically like ran

560
00:31:22,840 --> 00:31:25,200
Speaker 1: out of funding during the dead crisis and as part

561
00:31:25,200 --> 00:31:28,040
Speaker 1: of like a pretty complex deal for Porsche a g,

562
00:31:28,240 --> 00:31:32,000
Speaker 1: the Sports Cup business was folded into Folkswagen, and now

563
00:31:32,040 --> 00:31:35,240
Speaker 1: this idea allows the family to regain some direct influence.

564
00:31:35,280 --> 00:31:38,240
Speaker 1: They don't go at Porsche at the at the sports cooperation.

565
00:31:38,280 --> 00:31:40,600
Speaker 1: They don't get like full control, but they will receive

566
00:31:40,600 --> 00:31:43,840
Speaker 1: a blocking minority of twenty five percent of the voting

567
00:31:43,880 --> 00:31:47,080
Speaker 1: stock in that Sports Cup business. When is this still

568
00:31:47,120 --> 00:31:49,680
Speaker 1: going to happen? Is this this week? This month? What's

569
00:31:49,680 --> 00:31:55,280
Speaker 1: the timing? We've just heard that the German financial market

570
00:31:55,400 --> 00:31:59,480
Speaker 1: regulator Baffin has signed off on the on the prospective,

571
00:32:00,120 --> 00:32:02,360
Speaker 1: on the on the ibe of Prospectus, so that should

572
00:32:02,400 --> 00:32:06,120
Speaker 1: land at some point later this this afternoon, at the

573
00:32:06,160 --> 00:32:10,040
Speaker 1: coming hours. And Yeah, basically then it then the preparation.

574
00:32:10,160 --> 00:32:12,360
Speaker 1: The preparations are going to continue and the goal is

575
00:32:12,400 --> 00:32:15,760
Speaker 1: that the first day of trading will be September twenty nine.

576
00:32:15,960 --> 00:32:19,880
Speaker 1: It's pretty exciting. Um. The only thing that is kind

577
00:32:19,880 --> 00:32:22,600
Speaker 1: of a bummer for me, and probably cool for Kristoff,

578
00:32:22,760 --> 00:32:26,400
Speaker 1: is that they're doing it on the Frankfurt Bersia, which is,

579
00:32:27,600 --> 00:32:31,800
Speaker 1: I mean, so lame. No offense, Christoff, but there's nobody

580
00:32:31,840 --> 00:32:33,680
Speaker 1: that even works there. Like, why not doing on the

581
00:32:33,680 --> 00:32:38,760
Speaker 1: New York Stock Exchange where there's real pomp and UH

582
00:32:39,160 --> 00:32:43,600
Speaker 1: and and and celebration? Yeah, I think I'm I'm I

583
00:32:43,640 --> 00:32:45,840
Speaker 1: guess I'm totally biased that because like the Frankfort stock

584
00:32:45,840 --> 00:32:48,160
Speaker 1: ex changes to stock a walk from our office. So

585
00:32:48,240 --> 00:32:50,640
Speaker 1: I'm all for it, Matt Uh and, yeah, I guess

586
00:32:50,640 --> 00:32:52,640
Speaker 1: we have to bring you back to Germany, guess, Christopher.

587
00:32:52,680 --> 00:32:54,520
Speaker 1: Are they going to do like a road show, like

588
00:32:54,880 --> 00:32:56,959
Speaker 1: go to New York, go to London, did that kind

589
00:32:57,000 --> 00:32:59,960
Speaker 1: of thing? Well, that they have been on a pretty

590
00:33:00,000 --> 00:33:02,920
Speaker 1: sent the FROAD trow over the past few, uh, well

591
00:33:03,000 --> 00:33:05,760
Speaker 1: months really, they've been to to Boston, to New York,

592
00:33:05,800 --> 00:33:09,320
Speaker 1: to London, they've been touring Asia, so they've really like

593
00:33:09,400 --> 00:33:12,360
Speaker 1: travel the globe, basically. But they decided, yeah, it's it's

594
00:33:12,400 --> 00:33:14,360
Speaker 1: it's a Germany, it's a German company. They want to

595
00:33:14,360 --> 00:33:16,280
Speaker 1: be what they wanted to be listed in Germany. So

596
00:33:16,400 --> 00:33:19,000
Speaker 1: that's basically why they picked Frankfurt. Alright, good stuff now,

597
00:33:19,000 --> 00:33:21,200
Speaker 1: you know, maybe maybe we'll send Matt over there for that.

598
00:33:21,200 --> 00:33:24,000
Speaker 1: That can be a good little uh police boot markets. Yeah,

599
00:33:24,040 --> 00:33:27,040
Speaker 1: we'll send we'll send him your away, Christoph Rovald, bureau

600
00:33:27,120 --> 00:33:31,000
Speaker 1: chief Frankfort Munich, pretty much all of Germany for Bloomberg News.

601
00:33:31,000 --> 00:33:32,760
Speaker 1: He kind of keeps us on top of what's happening

602
00:33:33,320 --> 00:33:35,840
Speaker 1: in Germany. And again this I P O of Porsche

603
00:33:36,240 --> 00:33:39,560
Speaker 1: looking to raise as much as nine point four billion euros.

604
00:33:43,120 --> 00:33:46,240
Speaker 1: Thanks for listening to the Bloomberg markets podcast. You can

605
00:33:46,240 --> 00:33:50,040
Speaker 1: subscribe and listen to interviews with apple podcasts or whatever

606
00:33:50,120 --> 00:33:53,760
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on twitter

607
00:33:54,040 --> 00:33:57,560
Speaker 1: at Matt Miller. Three pet on Boll Sweeney, I'm on

608
00:33:57,560 --> 00:34:00,520
Speaker 1: twitter at PT Sweeney. Before the podcast you can always

609
00:34:00,520 --> 00:34:04,280
Speaker 1: catch US worldwide at Bloomberg Radio M