WEBVTT - Ending Short Selling Would Be A Mistake: Former E*Trade CEO 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.000 at Bloomberg dot com slash podcast. Well, we had in Washington, 0:00:23.160 --> 0:00:27.319 d C. Yesterday, you know, the whole discussion about game stock. 0:00:27.360 --> 0:00:29.160 We had all the kinds of different players in the 0:00:29.200 --> 0:00:32.000 market there, but it seems to be maybe more theater, 0:00:32.520 --> 0:00:36.159 uh than real substance. Let's get some expert overview. We 0:00:36.159 --> 0:00:39.559 can do that today with former E Trade CEO Karl Rossner. 0:00:39.600 --> 0:00:42.240 He's now CEO of Left Terrorist Acquisition. Carl, thanks so 0:00:42.320 --> 0:00:46.480 much for joining us here. Again, what was your takeaway 0:00:46.479 --> 0:00:49.760 from the hearings yesterday? So so, I think I think 0:00:49.800 --> 0:00:51.200 you hit it. Thanks for having me on the show, 0:00:51.200 --> 0:00:53.199 And I think you hit it right on the right, 0:00:53.240 --> 0:00:55.120 on the head right. There was a lot of political theater. 0:00:55.880 --> 0:00:58.960 There was some you know, sort of political one one 0:00:59.040 --> 0:01:01.520 upmanship and you know, making sure that each of them 0:01:01.520 --> 0:01:03.440 had their you know, three four or five minutes of 0:01:03.760 --> 0:01:06.280 fame as they call it. Um. But I do think 0:01:06.280 --> 0:01:08.600 a couple of points came out of it that we're 0:01:08.720 --> 0:01:11.760 very helpful. Right. One was around payment for order flow. Um. 0:01:11.800 --> 0:01:15.160 I think maybe retail investors and some of the more 0:01:15.160 --> 0:01:19.400 wider audience maybe can start to understand that payment forward 0:01:19.400 --> 0:01:21.319 to flow does have a place when it comes for 0:01:21.480 --> 0:01:25.000 retail trading, and that there are tradeoffs to just you know, 0:01:25.040 --> 0:01:27.000 a knee jerk reaction of saying there is no no 0:01:27.080 --> 0:01:30.800 more payment for order flow allowed. I think short selling, right, 0:01:30.800 --> 0:01:33.880 we'll come under pressure and they'll definitely be some reviews 0:01:33.920 --> 0:01:37.240 I think in additional rulemaking and lawmaking coming down the pipe, 0:01:37.520 --> 0:01:40.440 and then there will be a push over the next 0:01:40.480 --> 0:01:42.240 few years because I think it will take that long 0:01:42.520 --> 0:01:45.280 to move you know, clearing and settlement to a T 0:01:45.440 --> 0:01:48.560 plus one type arrangement, you know, agreeing with some of 0:01:48.560 --> 0:01:51.480 the witnesses in terms of the the difficulty of moving 0:01:51.520 --> 0:01:54.520 the entire securities clearing to you know intra day. Yeah, 0:01:54.560 --> 0:01:56.960 I thought that was really interesting. Actually, Um, you know 0:01:57.080 --> 0:02:00.160 a lot of the comments from senators maybe one or 0:02:00.240 --> 0:02:03.400 how much their staffs had actually prepared them for this, 0:02:03.920 --> 0:02:07.000 but um, it was worth it to hear ken Griffin 0:02:07.040 --> 0:02:10.359 talk about because I thought Y T plus two, we're 0:02:10.400 --> 0:02:13.000 not in the Stone ages, let's do it instantly, And 0:02:13.120 --> 0:02:16.520 actually Ken Griffin explained that that would be really difficult 0:02:16.560 --> 0:02:20.680 and even dangerous for a lot of market participants. So, um, 0:02:20.760 --> 0:02:25.560 I really learned something. What about the short selling pushback? Carl? Why, 0:02:25.720 --> 0:02:29.960 um wasn't there any? I mean, in an efficient market, 0:02:30.040 --> 0:02:35.760 you need people to go long and um to to 0:02:35.760 --> 0:02:39.160 to keep discipline in order, you need people to go short. Yeah, no, 0:02:39.240 --> 0:02:41.799 I I agree. I think the short sellers are going 0:02:41.840 --> 0:02:44.240 to come under pressure, right if there's any area that 0:02:44.680 --> 0:02:46.400 and you've seen it from some of the senators who 0:02:46.400 --> 0:02:48.800 have written letters and some of the congress men and 0:02:48.840 --> 0:02:51.600 women who have you gotten involved, that they look at 0:02:51.639 --> 0:02:54.160 that as hedge funds gaming the market, and they're going 0:02:54.200 --> 0:02:56.640 to vilify hedge funds. So I do think you'll have 0:02:56.760 --> 0:02:59.760 some focus from you know, the SEC and and other 0:02:59.800 --> 0:03:03.240 relatry bodies to figure out what curbs and what pushback 0:03:03.280 --> 0:03:05.680 can they put around shorts. I agree with you that 0:03:05.720 --> 0:03:08.720 in an efficient market you need all order types, right. 0:03:08.760 --> 0:03:10.640 You have to be able to to sort of look 0:03:10.680 --> 0:03:13.400 at the market both ways and having you know, run 0:03:13.400 --> 0:03:16.560 a public company when shorts get into your stock. You 0:03:16.760 --> 0:03:18.760 open your eyes and say, what do we you know, 0:03:19.000 --> 0:03:20.840 is something Are we doing something wrong? Right? Do we 0:03:20.840 --> 0:03:22.840 need to do something better? Are we getting a little 0:03:22.840 --> 0:03:25.800 bit behind? You know? It makes you think, and I 0:03:25.840 --> 0:03:28.520 think that's there are good aspects to it as well. 0:03:28.560 --> 0:03:30.480 So I do hope they don't just knee jerk and 0:03:30.560 --> 0:03:33.160 you know, and start to try and move that out 0:03:33.160 --> 0:03:35.640 of the system. I think that would be a mistake. Well, Carl, 0:03:35.680 --> 0:03:37.320 one of the things, I mean, you know, we we've 0:03:37.320 --> 0:03:41.840 all seen short squeezes before. We've all seen short selling 0:03:41.920 --> 0:03:45.600 come under scrutiny. It happens seems like every four or 0:03:45.600 --> 0:03:49.360 five years. What's different this time is the use of 0:03:49.480 --> 0:03:52.160 social media and the ability of these short sellers to 0:03:52.240 --> 0:03:55.720 really coordinate their actions. Do you expect there to be 0:03:55.760 --> 0:04:01.120 any regulatory overlay on perhaps the use of social media? 0:04:01.320 --> 0:04:03.080 How do you think that might play out? So so, 0:04:03.120 --> 0:04:05.760 I look, I think you heard one of them, one 0:04:05.760 --> 0:04:08.000 of the witnesses yesterday say that, you know, in looking 0:04:08.040 --> 0:04:11.560 at their next sort of short selling campaign or other 0:04:11.640 --> 0:04:14.680 entities that might be looking at going short against they 0:04:14.680 --> 0:04:18.280 will employ sort of data scientists and data data experts 0:04:18.320 --> 0:04:20.520 to take a look at the social media boards and 0:04:20.520 --> 0:04:23.080 and see if there's a you know, and other way. 0:04:23.680 --> 0:04:25.080 I thought that was kind of funny too. And they 0:04:25.120 --> 0:04:27.520 said they're going to employ data scientists. I figured they 0:04:27.560 --> 0:04:30.479 put their teenagers on Reddit, right, I mean, just just 0:04:30.600 --> 0:04:34.200 read Wall Street bets they will employ more than teenagers. 0:04:34.240 --> 0:04:35.960 That I can guarantee you, just given the amount of 0:04:35.960 --> 0:04:38.520 money that's at stake. But I agree, I mean, it's 0:04:38.600 --> 0:04:41.360 it's getting through that piece. I think social media is 0:04:41.400 --> 0:04:44.080 here to stay. I think it's helpful and and by 0:04:44.080 --> 0:04:45.960 that I mean, of course it's here to stay, but 0:04:46.000 --> 0:04:48.080 I look at it in terms of, you know, for 0:04:48.160 --> 0:04:50.520 retail trading and for others to use that as a 0:04:50.600 --> 0:04:54.000 mode of communication and a mode for sharing ideas. I 0:04:54.000 --> 0:04:56.359 think it's a great tool for you know, for retail 0:04:56.480 --> 0:04:58.640 right to learn and to use it as an education tool. 0:04:59.240 --> 0:05:01.279 When you start, you know, sort of getting down the 0:05:01.360 --> 0:05:03.520 edge of manipulation or you start getting on that, then 0:05:03.560 --> 0:05:07.320 then I look to regulators to say, there's a line, right, 0:05:07.360 --> 0:05:09.599 and this is where we think we can start drawing 0:05:09.640 --> 0:05:12.600 that line. But but again, you know, the knee jerk 0:05:12.680 --> 0:05:14.560 red line in the sand, it's not going to work. 0:05:15.560 --> 0:05:18.320 And Carl, if there is that red line to be drawn? 0:05:18.520 --> 0:05:22.440 Is it not the SEC? Maybe the CFTC that does it? 0:05:22.680 --> 0:05:25.440 Not are good friends down in the halls of Congress. 0:05:26.040 --> 0:05:29.320 I don't. I don't believe that any rulemaking should come 0:05:29.520 --> 0:05:33.640 from the folks who were on that committee yesterday. Um. 0:05:33.680 --> 0:05:36.360 I think you need to go to deep market experts. 0:05:36.880 --> 0:05:39.680 I think you saw very clearly the difference among the 0:05:39.680 --> 0:05:43.239 witnesses in terms of their expertise, and you only hope 0:05:43.240 --> 0:05:46.920 that certain individuals like that are involved in market structure 0:05:47.120 --> 0:05:50.240 and putting things together that can work, because in my view, 0:05:50.279 --> 0:05:53.159 it's always been a Jenga puzzle. But you can't just 0:05:53.200 --> 0:05:55.200 pull out one piece without knowing what else is going 0:05:55.240 --> 0:05:58.000 to fall. And that's that's what we need when people 0:05:58.000 --> 0:05:59.640 look at this. So I do think it's it's SEC. 0:05:59.839 --> 0:06:02.760 I I believe Gary Gensler. I believe you know, Secretary 0:06:02.839 --> 0:06:05.320 yelling right. You put the right people in the room 0:06:05.400 --> 0:06:07.520 with the right experience, and and maybe we can move 0:06:07.560 --> 0:06:12.120 things forward in a productive way that doesn't box out retail. Hey, Carl, 0:06:12.160 --> 0:06:14.800 thank you so much. We appreciate that. Carl Rossner, he's 0:06:14.800 --> 0:06:17.000 a former e Trade CEO, is now the CEO of 0:06:17.279 --> 0:06:22.039 Left Terrorists Group. UM. You know, really interesting, Matt. I mean, 0:06:22.279 --> 0:06:24.560 you just feel like there are rules in place. The 0:06:24.680 --> 0:06:28.080 SEC is they're looking at these things. Well you know, yeah, 0:06:28.120 --> 0:06:32.760 well there's also you know, um age old rules of thumb. 0:06:32.800 --> 0:06:34.839 There's no such thing as a free lunch, right, And 0:06:35.120 --> 0:06:39.520 when AOC was grilling Lad Tenev and saying, you know, 0:06:39.600 --> 0:06:41.920 you've got these free products have to be as good 0:06:41.920 --> 0:06:44.480 as the ones people pay for, you ask yourself if 0:06:44.480 --> 0:06:47.640 anyone really believes that's the case. Yeah, And I think 0:06:47.680 --> 0:06:50.000 it's just exposed not I guess, not surprisingly that the 0:06:50.400 --> 0:06:53.480 you know, the plumbing, if you will, back office Wall 0:06:53.480 --> 0:06:56.240 Street is not widely understood. So maybe maybe a little 0:06:56.279 --> 0:06:58.440 bit of knowledge came to light yesterday. Maybe that's going 0:06:58.520 --> 0:07:04.120 to be helpful. The housing market continues to be a 0:07:04.240 --> 0:07:08.400 very pleasant surprise in a very difficult economic landscape here 0:07:08.400 --> 0:07:11.280 in US. Just today, sales have previously owned US homes 0:07:11.800 --> 0:07:15.640 unexpectedly rose to a three month high in January. That 0:07:15.760 --> 0:07:21.520 there's pleasant, Yeah, absolutely, well, I think there's right because 0:07:21.840 --> 0:07:23.880 what we've seen, Matt, is particularly here in the metro 0:07:23.920 --> 0:07:26.480 New York area, but another urban areas people kind of 0:07:26.480 --> 0:07:29.240 fleeing the city during the pandemic, trying to get some 0:07:29.240 --> 0:07:31.840 more space going to suburbia, and that has created this 0:07:31.960 --> 0:07:35.760 extraordinary demand in many, many markets around the country. And 0:07:35.800 --> 0:07:38.160 we won't want to talk real estate, Matt. We talked 0:07:38.200 --> 0:07:42.240 to Logan Mohachomy. He is the housing data analysts and 0:07:42.320 --> 0:07:45.240 also lead analysts for the Housing Wire. Logan thanks so 0:07:45.320 --> 0:07:48.280 much for joining us here. I mean, I know interest rates, 0:07:48.360 --> 0:07:51.520 mortgage rates are at or near you know, all time lows, 0:07:51.520 --> 0:07:54.440 despite a little move back in rates here, But are 0:07:54.440 --> 0:07:58.160 you surprised at how strong housing is in this country 0:07:58.200 --> 0:08:02.280 given what's going on with the pandemic. Absolutely not. This 0:08:02.320 --> 0:08:04.680 has been my working thesis for many years that years 0:08:06.200 --> 0:08:08.920 four would have the best housing demographics ever recorded in 0:08:09.040 --> 0:08:13.600 US history. We have the biggest single uh demographic buying patch. 0:08:13.640 --> 0:08:15.920 Ages twenty seven and thirty three are the biggest ever. 0:08:16.040 --> 0:08:18.640 They're roughly about thirty two and a half million. And 0:08:18.680 --> 0:08:20.920 mortgage rates have always been low. They've been lows since 0:08:21.000 --> 0:08:23.640 two thousand and eight. But when you combine the biggest 0:08:23.680 --> 0:08:26.600 demographic patch with the lowest mortgage rates ever and you're 0:08:26.640 --> 0:08:29.360 not working from an overheating housing cycle like we had 0:08:29.360 --> 0:08:32.480 in the previous expansion, home sales are gonna rise. And 0:08:32.520 --> 0:08:35.400 this is exactly what's happening here. And I don't think 0:08:35.440 --> 0:08:38.400 it's so much about COVID as it's more about simple 0:08:38.480 --> 0:08:40.679 demographics here. I think a lot of people make that 0:08:40.679 --> 0:08:44.520 that people are fleeing the cities and they need bigger homes. 0:08:44.880 --> 0:08:48.120 This is just a continuation of a slowest steady cycle 0:08:48.280 --> 0:08:52.080 running into this massive demographic patch, and mortgage rates are low, 0:08:52.160 --> 0:08:54.719 and the problem with this is home prices are growing 0:08:54.760 --> 0:08:58.680 to pass the interesting thing. The interesting thing Logan is 0:08:58.720 --> 0:09:03.880 that the last for years has been pushing for more density. 0:09:03.920 --> 0:09:08.559 And I've always thought, you know, if if if I'm 0:09:08.600 --> 0:09:11.000 not wealthy, I don't want to be stuffed into a 0:09:11.120 --> 0:09:13.840 box next to a whole bunch of other people like 0:09:13.880 --> 0:09:16.280 I want to get out there. But the problem is, 0:09:16.360 --> 0:09:18.680 of course the jobs are all in the city, right 0:09:19.360 --> 0:09:23.800 Is this going to uh? Is this new working from 0:09:23.920 --> 0:09:28.040 home UH era gonna stick? Are people going to be 0:09:28.040 --> 0:09:30.640 continue to be able to continue to do that so 0:09:30.720 --> 0:09:32.720 that you don't have to be stuck in a box 0:09:32.760 --> 0:09:34.880 so you can get out there and have a backyard 0:09:34.920 --> 0:09:37.960 and a garage of your own. You know, I if 0:09:38.280 --> 0:09:40.800 even if the working from home thesis doesn't work out, 0:09:40.880 --> 0:09:43.920 I just generally think people would have moved. I mean, naturally, 0:09:44.080 --> 0:09:48.680 people buy bigger homes when they have families or bigger families, 0:09:48.720 --> 0:09:51.040 so this would have been the case anyway. The work 0:09:51.080 --> 0:09:53.600 from home model is like the most exciting thing get 0:09:53.640 --> 0:09:57.120 housing ever because if you don't have to live near 0:09:57.200 --> 0:10:00.439 your work, then if you wanted to, you can move 0:10:00.480 --> 0:10:02.600 to areas that are cheaper. And we're not talking about 0:10:02.640 --> 0:10:04.560 state the state moving. You know, you could just move 0:10:05.440 --> 0:10:08.520 miles away from the city and things are more affordable. 0:10:09.080 --> 0:10:11.800 Uh So that is a very exciting I just think 0:10:11.880 --> 0:10:14.680 we have to wait until after the crisis is over 0:10:15.120 --> 0:10:17.320 and then when people are starting to you know, go 0:10:17.400 --> 0:10:20.680 back to work, and well, we'll see if this actually sticks. 0:10:20.760 --> 0:10:22.360 I just don't believe it's going to be as big 0:10:22.400 --> 0:10:25.400 as many people think it will be. But naturally, even 0:10:25.440 --> 0:10:28.440 if COVID didn't happen, people would have been moving anyway, 0:10:28.440 --> 0:10:30.880 because you don't live in apartments when you when you 0:10:30.920 --> 0:10:32.680 when you when you're starting to create a family, you 0:10:32.760 --> 0:10:35.400 have to buy something bigger or rent something bigger. So 0:10:35.720 --> 0:10:38.160 this is just a natural progress of running into a 0:10:38.200 --> 0:10:40.160 decade where we have a lot of people ages thirty 0:10:40.200 --> 0:10:43.760 to thirty nine. So logan, let's talk about supply here. 0:10:43.840 --> 0:10:46.760 I mean, there's been a concern that the supply that 0:10:46.760 --> 0:10:48.839 we've seen come on the residential housing market over the 0:10:48.920 --> 0:10:51.880 last decade or so has been more on the higher 0:10:52.000 --> 0:10:54.400 end the mcmanchion's, if you will. We haven't seen enough 0:10:54.880 --> 0:10:59.400 supply for the first time buyer, and that's been a problem. 0:10:59.440 --> 0:11:01.840 What's the stat us now? This is this is a 0:11:01.920 --> 0:11:04.680 long term issue. We've been building bigger and bigger homes 0:11:04.720 --> 0:11:09.760 for many decades, and the builders are trying to bring 0:11:09.880 --> 0:11:12.199 smaller homes into the mix. That's something that happened after 0:11:13.160 --> 0:11:16.319 after the big sales miss they had back then. So naturally, 0:11:17.679 --> 0:11:19.959 even if you bring smaller homes into the market, we're 0:11:19.960 --> 0:11:22.920 still talking about homes that are over two thousand square foot. 0:11:23.040 --> 0:11:26.040 So there is no more kind of a kind of 0:11:26.040 --> 0:11:29.960 a small thousand square foot single family home anymore. Everything 0:11:30.080 --> 0:11:33.199 is bigger here in America. And it's just as as 0:11:33.240 --> 0:11:35.880 long as mortgage rates stay low, people will be able 0:11:35.880 --> 0:11:37.920 to buy homes. You know, millions and millions of people 0:11:37.920 --> 0:11:40.880 buy homes every year. It's just that now we just 0:11:40.960 --> 0:11:44.760 have an extra push of uh demographics coming in with 0:11:44.800 --> 0:11:47.160 lower mortgage rates. And now you see what's happening. The 0:11:47.160 --> 0:11:50.760 prices are up year year fourteen percent. This is very 0:11:50.920 --> 0:11:53.920 unhealthy and the only thing that changes is too hot. 0:11:54.040 --> 0:11:56.680 Right the housing market is too hot, so you basically 0:11:56.720 --> 0:11:59.760 need mortgage rates to rise to calm that. To cool 0:11:59.840 --> 0:12:04.040 that down, we need a breather. Days from sales from 0:12:04.040 --> 0:12:06.199 our days on the market went went from forty three 0:12:06.280 --> 0:12:09.160 days last year to twenty one days. If this continues, 0:12:09.240 --> 0:12:13.320 we could have another twelve percent home price growth year, 0:12:13.679 --> 0:12:17.200 and that's not healthy. Because mortgage rates are abnormally low 0:12:17.280 --> 0:12:20.560 because of COVID, it won't stay here that long. So 0:12:20.920 --> 0:12:24.560 hopefully as rates rise, economy is getting better, it just 0:12:24.679 --> 0:12:26.720 cools the market down a little bit to get a breathing. 0:12:26.760 --> 0:12:30.560 There's way too many multiple dad offers right now generally 0:12:30.559 --> 0:12:33.520 in the market, and unlike the previous expansion where we 0:12:33.559 --> 0:12:36.560 didn't have the best demographics ever, we're running into a passionward. 0:12:36.679 --> 0:12:41.280 Just a lot of people need shelter. Logan is Florida 0:12:41.320 --> 0:12:44.720 at risk of becoming overcrowded. It just seems like every 0:12:44.840 --> 0:12:47.240 day I read a story here, story, see a story 0:12:47.760 --> 0:12:51.920 about this mass migration, companies relocating. It just seems like 0:12:52.000 --> 0:12:55.360 they're all going upon beach. I guess exactly. So who 0:12:55.440 --> 0:12:59.439 tells us about the Florida market. You know, Florida it 0:12:59.559 --> 0:13:02.040 was always you know where that's where baby boomers actually 0:13:02.040 --> 0:13:05.640 go to retire. Now there's this, you know, if tech moves. 0:13:05.679 --> 0:13:08.960 I don't think that's too much of a story because 0:13:09.160 --> 0:13:12.160 you know, if a few companies move, they don't really 0:13:12.160 --> 0:13:15.120 bring all their workers in. So I these stories are 0:13:15.160 --> 0:13:17.559 great for headlines. I just don't think it's going to 0:13:17.640 --> 0:13:21.679 be the case where it's this this massive massive migration 0:13:21.800 --> 0:13:26.080 from younger people, middle age people and boomers. It's it's 0:13:26.200 --> 0:13:29.920 just things are cheaper in Florida, and if you can 0:13:30.000 --> 0:13:32.640 work there and you want to raise your family, that's 0:13:32.640 --> 0:13:35.679 what's gonna happen. And Okay, COVID wasn't here, that will 0:13:35.720 --> 0:13:38.600 be there. Logan, thanks so much for joinings Logomota show 0:13:38.679 --> 0:13:43.679 me Housing appreciated, Greg Jared, We really appreciate that update. 0:13:43.760 --> 0:13:45.679 You know, looking at the ten year match again one 0:13:45.720 --> 0:13:49.040 point three, pushing pushing higher. It was wasn't long ago. 0:13:49.120 --> 0:13:51.559 We're down in the very very low ones. Let's get 0:13:51.559 --> 0:13:54.000 a sense of what that means for the pros in 0:13:54.080 --> 0:13:56.720 the fixed income market. And there's nobody better to chat 0:13:56.720 --> 0:13:59.400 with an r J. Gallows, senior portfolio manager, head of 0:13:59.400 --> 0:14:03.720 the group Federated her music got. He manages eleven point 0:14:03.800 --> 0:14:06.320 nine billion out of a total firm wide assets under 0:14:06.320 --> 0:14:10.280 management of five seventy six billion. They're located in beautiful Pittsburgh, 0:14:10.280 --> 0:14:12.440 p A. When I was on the South side, Federate 0:14:12.640 --> 0:14:15.439 was a must stop to talk to the smart people 0:14:15.440 --> 0:14:18.319 out there in Pittsburgh. R J. Again, we've got the 0:14:18.440 --> 0:14:21.040 ten yere at one point three two percent higher than 0:14:21.040 --> 0:14:25.400 we've seen in a while. What does that tell you, Well, 0:14:25.600 --> 0:14:28.760 it feels sort of good as a as a firm 0:14:28.480 --> 0:14:32.480 um we've been short duration and expecting a steeper curve, 0:14:32.800 --> 0:14:35.120 and on the year the ten years now up almost 0:14:35.160 --> 0:14:39.720 forty BIPs, the thirty years up almost forty five, two tens, 0:14:39.800 --> 0:14:42.760 two thirties up forty to forty five basis points as well. 0:14:42.840 --> 0:14:45.760 So in a business like this where we're trying to 0:14:45.880 --> 0:14:48.680 position for what we anticipate happening. When you're short duration 0:14:48.760 --> 0:14:50.440 and expecting a curb to steep and then you get 0:14:50.440 --> 0:14:52.560 it right, it's helped returns and a lot of our 0:14:52.600 --> 0:14:54.880 bond portfolios, like the Total Return Blond pund I'm a 0:14:54.920 --> 0:14:57.240 co manager on that a lot of our portfolios have 0:14:57.320 --> 0:15:00.880 position wealth for the trade so far, We've got to 0:15:00.960 --> 0:15:05.280 keep looking forward from here. All right, Well, that's uh, 0:15:05.320 --> 0:15:08.200 I mean you deserve an iron city for that for sure. 0:15:08.600 --> 0:15:12.440 Do you think that the yield curve will continue steepening? 0:15:12.480 --> 0:15:15.840 I mean, um, it does look like when that happens 0:15:15.880 --> 0:15:18.840 it causes a little bit of havoc in the equity markets. Yeah, 0:15:18.840 --> 0:15:21.840 it's a it's a great point. I think looking forward, 0:15:21.920 --> 0:15:24.760 we've remained short and still think the steepening has some 0:15:24.840 --> 0:15:27.800 more legs to go. The bottom line is when you 0:15:27.920 --> 0:15:31.000 get an entirely changeover in control in Washington, d C. 0:15:31.200 --> 0:15:33.680 That will lead to a fiscal expansion, meaning more debt 0:15:33.800 --> 0:15:38.240 and more spending with macroeconomic implications i e. Faster growth. Uh, 0:15:38.400 --> 0:15:42.080 you shouldn't have inflation expectations rising. That's happened. You should 0:15:42.080 --> 0:15:44.800 have curve steepening. That's happened too. We don't think we're 0:15:44.840 --> 0:15:47.360 done with this dynamic. I mean, obviously we've had a 0:15:47.360 --> 0:15:51.560 pretty good size move um. The vaccination push, despite its 0:15:51.640 --> 0:15:53.480 hurdles and bumps in the road because we know it 0:15:53.480 --> 0:15:55.880 hasn't been as smooth as many would have hoped, is 0:15:55.920 --> 0:16:00.360 still leading towards more people getting vaccinated over time, months 0:16:00.440 --> 0:16:03.240 roll forward, and that will also support in the economic 0:16:03.240 --> 0:16:07.120 normalization and pent up demand for services, travel, hospitality, etcetera. 0:16:07.360 --> 0:16:09.160 Are all wind at the back of the economy. So 0:16:09.200 --> 0:16:11.560 we're pretty bullish on the economy, which means that we 0:16:11.760 --> 0:16:14.200 think freights should still be heading somewhat higher. We had 0:16:14.240 --> 0:16:17.800 the tenuere before the change in the Georgia Senate seats, 0:16:18.200 --> 0:16:19.960 probably around one and a quarter by the end of 0:16:19.960 --> 0:16:22.000 the year, and then once Georgia flipped control of the 0:16:22.000 --> 0:16:24.600 Democrats with narrow margins, we felt the ten years probably 0:16:24.640 --> 0:16:27.320 one fifty maybe with some upside beyond there. So we 0:16:27.360 --> 0:16:29.920 still have some room to go as we look forward 0:16:29.960 --> 0:16:32.640 into the rest. I'm here. I'm here to tell you, 0:16:32.680 --> 0:16:36.360 by the way, UM, be happy about the vaccine situation 0:16:36.360 --> 0:16:39.040 that you've got, because you're one of the world leaders 0:16:39.200 --> 0:16:42.600 in terms of R and D, in terms of developing 0:16:42.640 --> 0:16:45.720 the vaccine, in terms of acquiring the doses, and in 0:16:45.800 --> 0:16:49.160 terms of giving them out. I know that when you're 0:16:49.200 --> 0:16:51.640 there in the US doesn't feel great, but you're doing 0:16:51.680 --> 0:16:54.560 better than almost any other country in the world. You're 0:16:54.640 --> 0:16:56.920 up there with the UK and Israel. Here in Germany, 0:16:57.320 --> 0:17:02.680 you know, we basically having started yet so because I 0:17:02.800 --> 0:17:05.399 was so, we had a national sales conference recently, I 0:17:05.440 --> 0:17:07.440 was saying that exact thing to all of our sales 0:17:07.440 --> 0:17:09.840 people around the country. Even though you see it in 0:17:09.840 --> 0:17:13.560 the media, this frustration and disappointment. We are vaccinating and 0:17:13.600 --> 0:17:15.280 are more rapid pace than much of the rest of 0:17:15.280 --> 0:17:18.160 the world. And we're vaccinating and much more rapid pace 0:17:18.320 --> 0:17:22.640 than the well famous polio vaccine way back in the fifties. 0:17:22.640 --> 0:17:25.760 People invoke that as being, you know, the gold standard. 0:17:25.960 --> 0:17:28.920 We're actually vaccinating more people now over the same time 0:17:28.960 --> 0:17:33.679 period than occurred in nineteen So this is a complicated process. 0:17:33.680 --> 0:17:36.639 I'm with you. But yet in the media and you 0:17:36.640 --> 0:17:38.600 know when you talk to your parents who still can't 0:17:38.600 --> 0:17:41.359 get their shot. Yeah, there's a lot of frustration, but 0:17:41.560 --> 0:17:46.040 in big picture perspectives I agree with. So now, what's 0:17:46.080 --> 0:17:48.160 what's the pushback then? Because usually the Germans are known 0:17:48.160 --> 0:17:51.919 as for efficiency, so all things is the government. I 0:17:51.920 --> 0:17:53.840 will tell you what I what I have noticed. If 0:17:53.840 --> 0:17:56.520 you go onto JOHNS Hopkins website and look at who 0:17:56.680 --> 0:18:00.720 are the world leaders? Um, you see Israel, there, you 0:18:00.760 --> 0:18:04.280 see the United States, there, you see the UK there, um. 0:18:04.320 --> 0:18:07.879 And these are countries that had governments who think things 0:18:07.920 --> 0:18:11.399 like America first, right, These are countries, um, who have 0:18:11.880 --> 0:18:15.040 governments who think, you know, protect the homeland at all costs. 0:18:15.480 --> 0:18:18.520 And because of you know, by the time Donald Trump 0:18:18.600 --> 0:18:21.920 left office, the US was vaccinating a million people a day. 0:18:21.920 --> 0:18:24.800 So whether you agree or disagree with his policies, um, 0:18:24.840 --> 0:18:27.159 it doesn't matter. The point is he already had the 0:18:27.280 --> 0:18:31.000 number up to Joe Biden's goal, right. And and then 0:18:31.080 --> 0:18:35.240 here in Germany you've got a more liberal, multilateral approach 0:18:35.280 --> 0:18:38.760 of things. They didn't want to grab the vaccines and 0:18:38.800 --> 0:18:41.600 have them before the Italians. They didn't want to leave 0:18:41.640 --> 0:18:43.320 the French in their dust, you know, they wanted to 0:18:43.400 --> 0:18:45.080 bring everybody up at the same pace. So what they 0:18:45.080 --> 0:18:46.760 did is they decided to give it to this huge 0:18:46.760 --> 0:18:50.560 bureaucracy in Brussels and let them handle it. And then 0:18:50.600 --> 0:18:52.520 Brussels was like, we'll wait and see if we can 0:18:52.560 --> 0:18:56.880 get someone eBay later. All right. R J. Gallow, thank 0:18:56.880 --> 0:18:59.719 you so much for joining us there. Archi Gallo, Senior 0:19:00.080 --> 0:19:04.200 portfolio manager at Federated Hermes and Matt. That's an interesting 0:19:04.200 --> 0:19:07.359 here because again the feeling is okay, it's going well, 0:19:07.400 --> 0:19:09.720 but it should be going a lot better, Like here 0:19:09.720 --> 0:19:13.040 in New Jersey, We've got these mega distribution centers set 0:19:13.119 --> 0:19:15.520 up all around the state. But they're just sitting there, 0:19:15.560 --> 0:19:18.679 you know, somewhat vacant and just waiting for supply. But 0:19:18.720 --> 0:19:21.520 I guess the good news is, uh, they are set up. 0:19:21.640 --> 0:19:25.320 We are ready to go. And once you according to 0:19:25.400 --> 0:19:29.879 JOHNS Hopkins, you have administered fifty seven million doses, You've 0:19:29.920 --> 0:19:35.800 gotten sixteen million people vaccinated. A conversation that you and 0:19:35.880 --> 0:19:38.159 I had the other day reminded me of something that 0:19:38.200 --> 0:19:39.960 I want to bring up with Tim O'Brien. He's a 0:19:40.000 --> 0:19:44.240 Bloomberg opinion columnist, and he wrote, Texas shows what comes 0:19:44.240 --> 0:19:50.520 from ignoring climate change. Um. Clearly, Tim, Texas has had 0:19:50.560 --> 0:19:53.680 something happened for which it was not prepared. Um. You know, Greg, 0:19:53.760 --> 0:19:57.760 Jared's family comes from down in San Antone, and uh, 0:19:58.080 --> 0:20:00.960 it's unlikely that they thought when were building a house 0:20:01.040 --> 0:20:04.880 that they should insulate their pipes. Right. Sort Of like, 0:20:05.080 --> 0:20:07.960 as Greg mentioned the other day, if you're building something 0:20:07.960 --> 0:20:12.359 in Chicago, you don't need to use San Francisco earthquake codes, right, 0:20:12.359 --> 0:20:14.679 because it's terribly unlikely that you're going to have an 0:20:14.720 --> 0:20:20.960 earthquake in Chicago. And yet that's basically what happened in Texas. Well. 0:20:21.000 --> 0:20:24.200 Actually though Texas had the same problem in two thousand 0:20:24.240 --> 0:20:29.480 and eleven. It's entire grid from and UM industry and 0:20:29.560 --> 0:20:32.880 analysts said you should winter rise the grid. Uh. It's 0:20:32.880 --> 0:20:36.639 a straight forward, uh risk practice that will keep you 0:20:36.680 --> 0:20:39.879 in good stead. And at that point, Texas was beginning 0:20:39.880 --> 0:20:43.199 to diversify the energy sources that uses it used to 0:20:43.200 --> 0:20:45.760 power the grid, uh, and it made sense to winter 0:20:45.880 --> 0:20:49.640 rise all of it. There are wind turbines and natural 0:20:49.680 --> 0:20:55.359 gas powered turbines in northern climates such as Sweden for example, 0:20:55.720 --> 0:20:58.320 that don't freeze up in the winter, and they didn't 0:20:58.320 --> 0:21:01.879 do it, and then low and beholds around and the 0:21:01.920 --> 0:21:05.800