1 00:00:08,488 --> 00:00:10,559 This is market pulse by faster forward from 2 00:00:10,639 --> 00:00:13,905 Northern Trust asset servicing. The podcast where experts 3 00:00:13,905 --> 00:00:15,817 share their insights on current trends in the 4 00:00:15,817 --> 00:00:16,136 markets. 5 00:00:16,787 --> 00:00:18,776 My name is Nadia Ba. I'm the c 6 00:00:18,856 --> 00:00:21,322 Coo at Northern Trust Hedge fund services. 7 00:00:21,799 --> 00:00:23,470 I'm very fortunate to be here today with 8 00:00:23,549 --> 00:00:26,110 Grant Johnson, Mark Capital Mark it's great Grant. 9 00:00:26,348 --> 00:00:28,337 Thank you for joining me. Thanks, Nadia. And 10 00:00:28,496 --> 00:00:30,087 I'm really excited because this is my first 11 00:00:30,087 --> 00:00:32,235 time hosting this podcast. So Like to do 12 00:00:32,235 --> 00:00:33,587 it with you. I'll looking forward to it 13 00:00:33,587 --> 00:00:36,577 very much. Thank you. So Grant, very 14 00:00:37,276 --> 00:00:39,034 exciting time in the markets in the last 15 00:00:39,034 --> 00:00:40,393 month, a lot of activity, a lot of 16 00:00:40,393 --> 00:00:42,151 things going on. Can you give us an 17 00:00:42,151 --> 00:00:43,510 update on some of the trends that you're 18 00:00:43,510 --> 00:00:45,759 seeing? We've actually had a pretty busy month 19 00:00:45,759 --> 00:00:47,912 of July and and and back half of 20 00:00:48,072 --> 00:00:48,970 June. So 21 00:00:49,348 --> 00:00:50,863 I think the biggest trend right now is 22 00:00:50,863 --> 00:00:52,937 a rotation that's been happening. We've talked about 23 00:00:52,937 --> 00:00:54,543 this in the prior pod cast. You've got 24 00:00:54,543 --> 00:00:56,686 a general rotation that we've been in for 25 00:00:56,686 --> 00:00:58,829 roughly the past 15 years, which is rather 26 00:00:58,829 --> 00:00:59,329 long 27 00:00:59,781 --> 00:01:02,186 where growth has been favored over value 28 00:01:02,653 --> 00:01:05,276 large cap over small, and, of course, Us 29 00:01:05,276 --> 00:01:06,866 over non Us stocks. And you've seen that 30 00:01:06,866 --> 00:01:08,773 rotation play out by and large since the 31 00:01:08,773 --> 00:01:09,727 global financial crisis. 32 00:01:10,378 --> 00:01:12,234 We've had the strongest inflow 33 00:01:13,089 --> 00:01:15,980 in history in small caps is particularly I, 34 00:01:16,277 --> 00:01:18,031 which is the Russell 2000 Etf. 35 00:01:18,603 --> 00:01:21,149 We're seeing that position expressed both by buying 36 00:01:21,149 --> 00:01:22,183 long I m, 37 00:01:22,899 --> 00:01:25,859 but also in calls, buying calls. And that's 38 00:01:25,859 --> 00:01:28,340 driven a lot right now by retail investors. 39 00:01:28,500 --> 00:01:29,780 That's the other trend that I was follow 40 00:01:29,780 --> 00:01:31,479 where the retail investors doing 41 00:01:31,780 --> 00:01:34,259 because the retail investors control about 39 percent 42 00:01:34,259 --> 00:01:37,061 of us equity market directly, and another roughly 43 00:01:37,061 --> 00:01:39,369 15 percent and and active mutual funds. That 44 00:01:39,369 --> 00:01:41,200 doesn't even include the Etfs, the passive ones 45 00:01:41,200 --> 00:01:41,859 like I. 46 00:01:42,567 --> 00:01:45,029 So they've got a lot of of impact 47 00:01:45,029 --> 00:01:46,776 on the Us stop market, and we're seeing 48 00:01:46,776 --> 00:01:49,159 this rotation where we've had really good, 49 00:01:49,794 --> 00:01:51,462 you know, flows into small cap. 50 00:01:52,590 --> 00:01:54,817 And the other interesting thing is the Mag 51 00:01:54,817 --> 00:01:56,965 7 and and tech and comps have actually 52 00:01:56,965 --> 00:01:58,556 had a a relatively weak period. 53 00:01:59,208 --> 00:02:01,442 But it... What's buck the trend a lot 54 00:02:01,442 --> 00:02:04,154 is that a crypto, Bitcoin in particular actually 55 00:02:04,154 --> 00:02:06,227 performed well. And that's the first time that 56 00:02:06,387 --> 00:02:07,743 I have seen really at least in 4 57 00:02:07,743 --> 00:02:08,381 or 5 years. 58 00:02:09,274 --> 00:02:11,591 The tech stocks in Mag 7 actually do 59 00:02:11,591 --> 00:02:15,187 poorly and Bitcoin actually do well. It's normally 60 00:02:15,187 --> 00:02:17,265 been... You've seen Bitcoin track pretty high. 61 00:02:18,155 --> 00:02:19,663 The the trends that you see in and 62 00:02:19,663 --> 00:02:21,488 tech, the higher risk names over the last 63 00:02:21,488 --> 00:02:22,837 4 or 5 years. So I think it's 64 00:02:22,837 --> 00:02:24,346 actually a... That is actually a good sign 65 00:02:24,346 --> 00:02:26,449 to the market. Showing that there is some 66 00:02:26,902 --> 00:02:29,285 differentiation and some selection going on by investors 67 00:02:29,285 --> 00:02:30,715 right now. So that... That's probably the biggest 68 00:02:30,715 --> 00:02:32,383 trend in the equity side. Can you talk 69 00:02:32,383 --> 00:02:34,547 a little bit about why you think that 70 00:02:34,547 --> 00:02:36,541 these retail investors are looking more at small 71 00:02:36,541 --> 00:02:39,173 cap in this environment? Well, I think there's 72 00:02:39,173 --> 00:02:40,449 a number of reasons for it. I think 73 00:02:40,449 --> 00:02:42,204 firstly, if you buy a dollar right now, 74 00:02:42,283 --> 00:02:43,241 the S and P 500. 75 00:02:43,734 --> 00:02:44,373 You're getting about, 76 00:02:45,091 --> 00:02:46,528 a 35 cents of that in the top 77 00:02:46,528 --> 00:02:48,284 10 stocks. And actually the top 5, I 78 00:02:48,284 --> 00:02:50,759 think represent 28 percent. So you're getting a 79 00:02:50,759 --> 00:02:51,499 very concentrated 80 00:02:52,436 --> 00:02:52,755 portfolio. 81 00:02:53,724 --> 00:02:55,629 Despite those top 10 names being 35 percent 82 00:02:55,629 --> 00:02:57,295 of the market, cap of the s S 83 00:02:57,295 --> 00:02:58,089 and p 500, 84 00:02:58,486 --> 00:03:00,629 they're are only about 23 or 24 percent 85 00:03:00,629 --> 00:03:03,110 of the total earnings. So you're buying names 86 00:03:03,110 --> 00:03:04,626 in the S and P 5 that are 87 00:03:04,626 --> 00:03:06,141 fairly rich, rich valued. 88 00:03:07,018 --> 00:03:08,134 I think the other side of if you 89 00:03:08,134 --> 00:03:09,809 look at the earnings season right now, great 90 00:03:09,809 --> 00:03:10,845 earnings growth right now, 91 00:03:11,897 --> 00:03:13,652 but, you know, so far in the second 92 00:03:13,652 --> 00:03:16,044 quarter, we're just into the earning season, but, 93 00:03:17,160 --> 00:03:19,074 Eps is up about 10 percent in Us 94 00:03:19,074 --> 00:03:20,191 and revenues up about 5. 95 00:03:20,764 --> 00:03:23,805 And we're seeing earnings per share generally stronger 96 00:03:23,805 --> 00:03:25,025 in Russell 2000 97 00:03:25,245 --> 00:03:27,004 than we are in tech names. There's actually 98 00:03:27,004 --> 00:03:30,137 been some fading of expectations of earnings of 99 00:03:30,137 --> 00:03:32,204 tech names and also Ai names. So I 100 00:03:32,204 --> 00:03:34,271 think a lot of folks are anticipating the 101 00:03:34,271 --> 00:03:35,407 cycle, right? Everything's 102 00:03:35,782 --> 00:03:36,282 eventually 103 00:03:36,656 --> 00:03:38,167 goes through a cycle, and you do have 104 00:03:38,167 --> 00:03:39,774 some mean rev. I think that's what going 105 00:03:39,774 --> 00:03:42,171 on or starting to. The other element is, 106 00:03:42,970 --> 00:03:45,527 from this small cap side, how much of 107 00:03:45,527 --> 00:03:48,179 this is expectation of of, interest rates being 108 00:03:48,179 --> 00:03:50,736 cut potentially as early as September. So... And 109 00:03:50,736 --> 00:03:53,294 when interest rates are cut lower, you'd typically 110 00:03:53,294 --> 00:03:56,011 see small caps perform better. Do you do 111 00:03:56,011 --> 00:03:57,702 you think they're... Will will have an shortcut 112 00:03:57,702 --> 00:03:59,686 cut in September. I think the likelihood. Yeah. 113 00:03:59,844 --> 00:04:01,908 It's the... So the Fo meeting September eighteenth. 114 00:04:02,463 --> 00:04:04,368 I mentioned that date in particular because 1 115 00:04:04,368 --> 00:04:05,717 week prior in September eleventh, 116 00:04:06,289 --> 00:04:08,203 is when the Cpi comes out for the 117 00:04:08,203 --> 00:04:10,516 month of August. So the bureau of labor 118 00:04:11,473 --> 00:04:13,547 you know, Cpi numbers are always coming out 119 00:04:13,547 --> 00:04:15,541 to roughly 2 weeks into the following month, 120 00:04:15,700 --> 00:04:18,345 which that they're reporting on. So the August 121 00:04:18,425 --> 00:04:20,656 Cpi is gonna be reported in September eleventh. 122 00:04:21,293 --> 00:04:23,467 The August 20 23 123 00:04:23,778 --> 00:04:24,278 Cpi 124 00:04:24,812 --> 00:04:27,062 ran at about a 33.7 125 00:04:27,119 --> 00:04:29,585 percent clip. So it's a pretty high inflation 126 00:04:29,585 --> 00:04:30,085 number 127 00:04:30,698 --> 00:04:31,812 that's gonna roll off. 128 00:04:32,383 --> 00:04:34,372 And if inflation comes in line with what 129 00:04:34,372 --> 00:04:36,679 we've seen in recent Cpi reports, which right 130 00:04:36,679 --> 00:04:38,747 now looks like will be for what we 131 00:04:38,747 --> 00:04:40,736 see right now this recording in late July, 132 00:04:41,628 --> 00:04:43,622 it looks like it'll probably still moderate that 133 00:04:43,622 --> 00:04:45,217 2 and a half percent. If that's the 134 00:04:45,217 --> 00:04:46,573 case I think they follow and see it's 135 00:04:46,573 --> 00:04:49,763 gonna get this relatively benign Cpi print, September 136 00:04:49,763 --> 00:04:51,014 eleventh. They release 137 00:04:51,453 --> 00:04:54,484 their interest rate changes. On the eighteenth 1 138 00:04:54,484 --> 00:04:55,521 week later, I think they're gonna be in 139 00:04:55,521 --> 00:04:56,638 a bit of of pressure. 140 00:04:57,355 --> 00:04:59,110 Also, if you look at the June data, 141 00:04:59,429 --> 00:05:01,834 softening and slowing some So I think right 142 00:05:01,834 --> 00:05:04,720 now, there's a pretty high expectation. The market 143 00:05:04,777 --> 00:05:06,629 expects right now 3 cuts 144 00:05:07,004 --> 00:05:08,276 in the... Over the rest of the year, 145 00:05:08,514 --> 00:05:10,761 about 70 basis points is what the futures 146 00:05:10,761 --> 00:05:13,792 market's expecting. Most economists including our own at 147 00:05:13,872 --> 00:05:15,946 Northern Trust expect 2 cuts, 1 in September 148 00:05:15,946 --> 00:05:18,345 and 1 in in December about 50 basis 149 00:05:18,345 --> 00:05:20,170 points of cuts. I will probably go take 150 00:05:20,170 --> 00:05:22,233 the under and that, than the over. But 151 00:05:22,233 --> 00:05:23,844 if we have continued 152 00:05:24,154 --> 00:05:27,448 data that indicates moderating growth, and we have 153 00:05:27,666 --> 00:05:28,486 a relatively 154 00:05:29,024 --> 00:05:29,843 benign Cpi 155 00:05:30,301 --> 00:05:31,817 update the... In August that comes out in 156 00:05:31,817 --> 00:05:33,587 the eleventh of September. I think the the 157 00:05:33,587 --> 00:05:35,095 fed's gonna have a hard time not cutting 158 00:05:35,095 --> 00:05:36,683 rates in September. So I think we're looking 159 00:05:36,683 --> 00:05:38,747 at potential cut. And I think that could 160 00:05:38,747 --> 00:05:39,882 also help this 161 00:05:40,255 --> 00:05:42,900 rotation that we're potentially going to see into 162 00:05:42,900 --> 00:05:43,378 small caps, 163 00:05:44,176 --> 00:05:45,852 you know, into gold. We're still... We're seeing 164 00:05:45,852 --> 00:05:48,006 some buying into gold, pick back up recently 165 00:05:48,006 --> 00:05:50,255 as well. So Think that could be AAAA 166 00:05:50,255 --> 00:05:52,329 bit of a pivot in the market. You 167 00:05:52,329 --> 00:05:53,046 mentioned Ai. 168 00:05:54,402 --> 00:05:56,636 Last week, Goldman came out with a report 169 00:05:56,636 --> 00:05:58,390 around Ai and essentially, 170 00:05:59,443 --> 00:06:02,178 stating that Ai man is is overblown 171 00:06:02,876 --> 00:06:05,431 that it'll cost a lot more to implement 172 00:06:05,431 --> 00:06:07,267 some of these Ai solutions with the cost 173 00:06:07,267 --> 00:06:09,595 being where it is today. Then we'll benefit 174 00:06:09,595 --> 00:06:11,189 that it's really not a good trade. Really 175 00:06:11,189 --> 00:06:12,543 at the end of the day. I'm curious 176 00:06:12,543 --> 00:06:14,216 to get your thoughts on that and and 177 00:06:14,216 --> 00:06:16,288 just in general where you see Ai in 178 00:06:16,288 --> 00:06:17,802 the market. And certainly, you mentioned some of 179 00:06:17,802 --> 00:06:18,415 the tech textile 180 00:06:19,491 --> 00:06:21,086 is what we saw with Nav nvidia in 181 00:06:21,086 --> 00:06:22,602 the last couple of weeks in terms of 182 00:06:22,602 --> 00:06:24,596 their stock price. Is that kind of relevant 183 00:06:24,596 --> 00:06:26,111 to this Ai man, 184 00:06:26,829 --> 00:06:28,105 kind of coming to head at this point. 185 00:06:28,598 --> 00:06:30,269 What Goldman a great piece and I think 186 00:06:30,269 --> 00:06:31,939 it's in the public domain. So if anyone 187 00:06:31,939 --> 00:06:33,690 wants to look it up. There's a 30 188 00:06:33,690 --> 00:06:36,076 sum page report, Coleman produced and they have 189 00:06:36,076 --> 00:06:38,323 a number of folks some over interviewed in 190 00:06:38,323 --> 00:06:40,480 it, but it's something that, you know, our 191 00:06:40,480 --> 00:06:43,197 readers and and listeners can can, probably find 192 00:06:43,197 --> 00:06:43,756 the Internet. 193 00:06:45,208 --> 00:06:47,383 In a nutshell, their thesis is that 194 00:06:47,840 --> 00:06:50,971 Ai is going to be a trillion dollar 195 00:06:51,029 --> 00:06:53,900 investment, and there's no trillion dollar problems that 196 00:06:53,900 --> 00:06:56,698 it solves right now, in essence. And I 197 00:06:56,698 --> 00:06:58,049 think there's a lot of degree in truth 198 00:06:58,049 --> 00:06:59,900 in that. We talked about the May podcast 199 00:06:59,957 --> 00:07:02,262 just the pure cost in the energy that 200 00:07:02,262 --> 00:07:03,137 it's gonna require. 201 00:07:03,945 --> 00:07:06,718 And I don't know what type of solutions. 202 00:07:06,877 --> 00:07:08,778 You, you know, if you're looking at it 203 00:07:08,778 --> 00:07:10,546 using Ai to replace 204 00:07:10,934 --> 00:07:13,085 you know, basic simple processes that you would 205 00:07:13,085 --> 00:07:15,397 use low age for. That's not a great 206 00:07:15,397 --> 00:07:17,070 investment to spend trillions of dollars in a 207 00:07:17,070 --> 00:07:18,560 tech solution to replace 208 00:07:18,997 --> 00:07:19,315 you know, 209 00:07:20,031 --> 00:07:22,020 low wage workers who were, you know, doing 210 00:07:22,020 --> 00:07:23,713 the processes manually. So 211 00:07:24,088 --> 00:07:26,415 that's kind of the thesis now I still 212 00:07:26,415 --> 00:07:28,095 think you're going to see a lot of 213 00:07:28,095 --> 00:07:28,995 money being 214 00:07:29,375 --> 00:07:30,595 put into the 215 00:07:31,055 --> 00:07:33,228 infrastructure. And if you look at what's going 216 00:07:33,228 --> 00:07:35,060 on in the stock market right now. There's 217 00:07:35,060 --> 00:07:37,392 a difference between the Ai 218 00:07:37,768 --> 00:07:40,476 infrastructure stocks like Nvidia is still very strong, 219 00:07:40,635 --> 00:07:41,272 for example, 220 00:07:42,004 --> 00:07:44,404 there's another 1 Pure storage, which has had 221 00:07:44,404 --> 00:07:47,444 a nice run. They make flash storage devices, 222 00:07:47,845 --> 00:07:49,925 Ai so fast. You can't use traditional hard 223 00:07:49,925 --> 00:07:51,285 drive. If you have to use flash storage 224 00:07:51,285 --> 00:07:51,444 for it. 225 00:07:52,419 --> 00:07:53,617 If you... You know look at, 226 00:07:54,336 --> 00:07:56,254 a ari to networks, for example that make 227 00:07:56,254 --> 00:07:58,172 these switches that are far faster than say 228 00:07:58,172 --> 00:08:01,143 what's even Cisco can produce. Those stocks are 229 00:08:01,143 --> 00:08:03,060 still at or close to their all time 230 00:08:03,060 --> 00:08:04,818 highs and are trading at rich multiples. 231 00:08:05,377 --> 00:08:07,055 On the flip side, if you look at 232 00:08:07,055 --> 00:08:09,719 the stocks of companies that are using 233 00:08:10,253 --> 00:08:12,401 Ai, those stocks are not doing very well. 234 00:08:12,878 --> 00:08:14,151 A couple of examples, Ce, 235 00:08:14,964 --> 00:08:17,361 which is a company that uses Ai to 236 00:08:17,361 --> 00:08:19,438 help design drugs in the test, 237 00:08:20,237 --> 00:08:22,966 do kind of a theoretical test that stocks 238 00:08:22,966 --> 00:08:23,844 way off its ties. 239 00:08:25,280 --> 00:08:27,114 You know, if you look at s, which 240 00:08:27,114 --> 00:08:30,145 is a, uses Ai to help automate warehouses, 241 00:08:30,304 --> 00:08:32,714 they are automating. I think all all of 242 00:08:32,714 --> 00:08:33,375 a Walmart 243 00:08:33,834 --> 00:08:36,154 major distribution centers. That stocks also way off 244 00:08:36,154 --> 00:08:38,495 its size and has trend down recently. So 245 00:08:38,714 --> 00:08:41,034 the companies that are using Ai are not 246 00:08:41,034 --> 00:08:43,123 doing as well. Ones that are building the 247 00:08:43,123 --> 00:08:45,375 infrastructure. So I think you'll see that trade 248 00:08:45,433 --> 00:08:48,083 continue a bit. When you see the stocks 249 00:08:48,300 --> 00:08:50,074 like Cert and s, 250 00:08:50,944 --> 00:08:53,017 start to do better that are using Ai. 251 00:08:53,257 --> 00:08:54,613 I think that's when you know the Ai 252 00:08:54,613 --> 00:08:57,085 is starting to solve some real problems as 253 00:08:57,085 --> 00:09:00,457 opposed to make, you know, mundane and administrative 254 00:09:00,769 --> 00:09:02,593 processes more efficient, and that's gonna be the 255 00:09:02,593 --> 00:09:05,290 big payoff in Ai. Goldman point was generally, 256 00:09:05,448 --> 00:09:07,590 that's probably 10 years off before we really 257 00:09:07,590 --> 00:09:08,701 see that that impact. 258 00:09:10,309 --> 00:09:11,983 Just kind of along the... And I know 259 00:09:11,983 --> 00:09:14,454 this isn't a tech podcast, but we'll talk 260 00:09:14,454 --> 00:09:16,447 a little bit about just coming off of 261 00:09:16,606 --> 00:09:17,106 Ai 262 00:09:17,577 --> 00:09:19,248 and commodity trading. And I think it was 263 00:09:19,248 --> 00:09:20,918 in the May or June podcast. You talked 264 00:09:20,918 --> 00:09:22,986 a little bit about trading and energy and 265 00:09:22,986 --> 00:09:24,592 kind of the the flows when we're seeing 266 00:09:24,592 --> 00:09:26,342 there. And I think certainly for me, on 267 00:09:26,342 --> 00:09:28,410 the hedge fund side and well reported that 268 00:09:28,410 --> 00:09:30,421 hedge funds are starting to gain more interest 269 00:09:30,478 --> 00:09:32,466 into energy trading, commodity trading. 270 00:09:32,959 --> 00:09:34,494 And knowing the 271 00:09:35,269 --> 00:09:36,884 what it takes to 272 00:09:37,260 --> 00:09:40,404 to drive Ai from an energy perspective, of 273 00:09:40,462 --> 00:09:41,202 just the 274 00:09:41,898 --> 00:09:43,971 obscene amount of energy that it takes to 275 00:09:43,971 --> 00:09:46,283 run a single chat G query, for example. 276 00:09:47,081 --> 00:09:48,755 I think, in that that in that podcast, 277 00:09:49,009 --> 00:09:51,965 you mentioned that the interest could be because 278 00:09:51,965 --> 00:09:52,684 the trades are cheap. 279 00:09:53,563 --> 00:09:55,321 Do you think it's coming back to the 280 00:09:55,321 --> 00:09:57,491 trade being cheap? Or do you think it 281 00:09:57,491 --> 00:09:59,563 is really this belief in that, you know, 282 00:09:59,882 --> 00:10:01,875 Ai is is here to stay and is 283 00:10:01,875 --> 00:10:03,789 the future in kind of investing in that 284 00:10:03,789 --> 00:10:04,960 underlying energy 285 00:10:05,476 --> 00:10:07,702 that's needed to drive the industry. It... So 286 00:10:07,861 --> 00:10:09,689 I think it's it's both. I think energy 287 00:10:09,689 --> 00:10:11,596 is very cheap right now. There hasn't been 288 00:10:11,596 --> 00:10:13,901 a lot of of, of investment into energy. 289 00:10:15,110 --> 00:10:18,373 Into our, you know, distribution of electricity and 290 00:10:18,373 --> 00:10:20,363 even into the generation of it, and I 291 00:10:20,363 --> 00:10:22,526 also don't believe that the average person, and 292 00:10:22,526 --> 00:10:23,720 we talked about this in May. So of 293 00:10:23,720 --> 00:10:25,391 anyone that missed that podcast can go back 294 00:10:25,391 --> 00:10:28,039 and kind of understand some of the 295 00:10:28,494 --> 00:10:30,722 the the hurdles that you were going to 296 00:10:30,722 --> 00:10:32,673 face and spending, expanding 297 00:10:33,531 --> 00:10:35,449 energy distribution as well as, 298 00:10:36,327 --> 00:10:38,005 production. It's a it's a 2 pronged problem. 299 00:10:38,580 --> 00:10:40,899 So that's a big issue that we have 300 00:10:40,899 --> 00:10:42,659 to, you know, solve for. And I think 301 00:10:42,659 --> 00:10:43,940 there's a lot of money be made in 302 00:10:43,940 --> 00:10:46,500 that and the intermediate and even far off 303 00:10:46,500 --> 00:10:47,139 into the future. 304 00:10:47,951 --> 00:10:49,861 The... There and there's other new technologies that 305 00:10:49,861 --> 00:10:51,532 are continuing to evolve too that we're starting 306 00:10:51,532 --> 00:10:52,907 to see some of our clients 307 00:10:53,600 --> 00:10:55,987 look at, like, the ability to produce 308 00:10:57,120 --> 00:10:59,360 energy with natural gas and essentially 0 emissions. 309 00:10:59,600 --> 00:11:01,600 There's a new initiative now. I just read 310 00:11:01,600 --> 00:11:03,815 about where people are actually looking to mine 311 00:11:04,014 --> 00:11:06,332 a hydrogen trapped in the in the earth 312 00:11:06,332 --> 00:11:08,569 and using hydrogen is energy source as well, 313 00:11:08,729 --> 00:11:10,887 for example. So lot of things that are 314 00:11:10,887 --> 00:11:12,485 happening there that I think are interesting. This 315 00:11:12,485 --> 00:11:13,856 just haven't been invested it in for a 316 00:11:13,856 --> 00:11:16,881 while. Even if Ai doesn't come to fruition, 317 00:11:17,040 --> 00:11:19,587 the reality of it is, we continue is 318 00:11:19,587 --> 00:11:21,577 a, you know, as a society to use 319 00:11:21,577 --> 00:11:22,771 more and more electricity. 320 00:11:23,424 --> 00:11:25,898 And there's no expectation that that's going to 321 00:11:25,898 --> 00:11:27,835 go down. We've had a period where it's 322 00:11:27,894 --> 00:11:30,369 moderated through efficiency gains for the last 10 323 00:11:30,369 --> 00:11:31,965 to 15 years, which is why we've become 324 00:11:31,965 --> 00:11:34,444 complacent. In both production, distribution of energy and 325 00:11:34,444 --> 00:11:36,429 electricity. But you're gonna see I think more 326 00:11:36,429 --> 00:11:38,969 more of that over time. That's the reality 327 00:11:38,969 --> 00:11:40,581 is that is technology 328 00:11:40,954 --> 00:11:41,454 evolves 329 00:11:41,763 --> 00:11:44,067 we end up using more energy not less, 330 00:11:44,305 --> 00:11:46,768 even if even if efficiency gains are are 331 00:11:46,768 --> 00:11:47,268 made 332 00:11:48,038 --> 00:11:50,024 through and through. We've actually continued to use 333 00:11:50,024 --> 00:11:51,870 more energy. So I think there's a don't 334 00:11:51,870 --> 00:11:54,029 do a play there Is relatively inexpensive. If 335 00:11:54,029 --> 00:11:56,830 you look at energy stocks, they are, well 336 00:11:57,309 --> 00:11:59,309 outside of, I think 2 standard deviation in 337 00:11:59,309 --> 00:12:00,990 terms of how cheap they are relative to 338 00:12:00,990 --> 00:12:01,824 the market 339 00:12:02,199 --> 00:12:03,495 in historic. So 340 00:12:03,870 --> 00:12:05,462 I think that's still playing out. And actually 341 00:12:05,462 --> 00:12:06,815 recently, I've seen some of the hedge fund 342 00:12:06,815 --> 00:12:08,979 clients that we represent kind of buying a 343 00:12:08,979 --> 00:12:11,211 little bit more into energy even recently. And 344 00:12:11,211 --> 00:12:13,283 even getting back to to some of our 345 00:12:13,283 --> 00:12:15,037 retail investors. Again, I was really keep close 346 00:12:15,037 --> 00:12:17,603 on these retail investors free aforementioned reasons. We're 347 00:12:17,603 --> 00:12:18,798 starting to see them in 1 of the 348 00:12:18,798 --> 00:12:20,631 big buys that we saw retail investors in 349 00:12:20,631 --> 00:12:23,180 the last quarter was utilities. So you're starting 350 00:12:23,180 --> 00:12:25,252 to see some of that even play out 351 00:12:25,571 --> 00:12:28,294 in in retail investors as well as more 352 00:12:28,294 --> 00:12:28,794 sophisticated 353 00:12:29,171 --> 00:12:31,003 institutional investors. Back Basics. It's right. 354 00:12:32,118 --> 00:12:33,870 You mentioned interest rates, so we talked about 355 00:12:33,870 --> 00:12:34,428 that a little bit. 356 00:12:35,384 --> 00:12:37,870 Curious on your thoughts just in terms of 357 00:12:37,870 --> 00:12:39,465 a rate cut and the impact that that 358 00:12:39,465 --> 00:12:40,821 might have on the housing market. 359 00:12:41,938 --> 00:12:44,091 So the housing markets at a bit of 360 00:12:44,091 --> 00:12:44,410 a, 361 00:12:46,896 --> 00:12:49,125 intersection right now between where we're coming out 362 00:12:49,125 --> 00:12:51,433 of sort of a, a slower period and 363 00:12:51,433 --> 00:12:54,002 the second half of the Covid pandemic where 364 00:12:54,392 --> 00:12:55,745 you you had a lot of folks when 365 00:12:55,745 --> 00:12:57,972 interest rates started to to be raised in 366 00:12:58,449 --> 00:12:59,483 late 20 22, 367 00:13:00,677 --> 00:13:02,688 stopped you know, didn't wanna move because they 368 00:13:02,688 --> 00:13:04,206 had of a a great mortgage already locked 369 00:13:04,206 --> 00:13:06,044 in where they were living. Right now, 370 00:13:06,844 --> 00:13:09,161 as we record this podcast, active listings were 371 00:13:09,161 --> 00:13:10,440 up 18 percent year over year, 372 00:13:11,332 --> 00:13:13,238 pending sales are down 6 percent year over 373 00:13:13,238 --> 00:13:13,476 year. 374 00:13:14,111 --> 00:13:16,414 And then according to Red fin overall buyer 375 00:13:16,414 --> 00:13:18,399 demand they're seeing down about 15 percent year 376 00:13:18,399 --> 00:13:18,796 over year. 377 00:13:19,766 --> 00:13:22,236 On the flip side, I saw a survey 378 00:13:22,236 --> 00:13:23,988 done by... I think it was the university 379 00:13:23,988 --> 00:13:25,900 of Michigan a consumers survey. 380 00:13:26,458 --> 00:13:29,024 And this blew my mind, 30 percent right 381 00:13:29,024 --> 00:13:30,404 now of of households 382 00:13:31,424 --> 00:13:34,304 currently have a house that's worth over 500000 383 00:13:34,304 --> 00:13:37,184 dollars, and 40 percent of mortgages or 40 384 00:13:37,184 --> 00:13:38,873 percent of homes right now, our mortgage free. 385 00:13:39,112 --> 00:13:39,907 Have no mortgage On. 386 00:13:40,701 --> 00:13:43,006 So if you think about, okay, and if 387 00:13:43,006 --> 00:13:44,913 you've got a, you know, a home right 388 00:13:44,913 --> 00:13:46,264 now that you're looking to sell and move 389 00:13:46,264 --> 00:13:48,431 out of interest rates, mortgage rates are still 390 00:13:48,431 --> 00:13:49,309 in the upper sixes, 391 00:13:50,028 --> 00:13:52,423 and it's gonna be pretty expensive to upgrade 392 00:13:52,423 --> 00:13:54,259 that home, move into a new. If rates 393 00:13:54,259 --> 00:13:55,776 start to come down, I think you're going 394 00:13:55,776 --> 00:13:58,973 to get a little bit more selling activity. 395 00:13:59,211 --> 00:14:01,198 I think that's gonna put, a bit of 396 00:14:01,198 --> 00:14:03,027 a lid on housing prices, you might see 397 00:14:03,027 --> 00:14:05,332 a little bit of, decline in housing prices. 398 00:14:05,491 --> 00:14:08,129 I know anything significant. But again, I think 399 00:14:08,129 --> 00:14:10,218 when the Fed does start to pivot to 400 00:14:10,433 --> 00:14:12,341 interest rate decreases, you're going to see a 401 00:14:12,341 --> 00:14:14,009 number of rotations happen. And I think 1 402 00:14:14,009 --> 00:14:15,938 of them is some life back into the 403 00:14:15,938 --> 00:14:18,576 housing market is is a homeowners and households 404 00:14:18,576 --> 00:14:21,133 right now that have decided not to move 405 00:14:21,133 --> 00:14:22,572 because they don't know where to move. They 406 00:14:22,572 --> 00:14:24,170 don't know what interest rates to. They're going 407 00:14:24,170 --> 00:14:27,381 up paying. Might consider it more. The bigger 408 00:14:27,381 --> 00:14:29,219 issue in my mind is so many folks 409 00:14:29,219 --> 00:14:30,438 are still anchored 410 00:14:30,897 --> 00:14:32,975 to a period that we've all come to 411 00:14:32,975 --> 00:14:35,063 know last 20 years of declining in low 412 00:14:35,063 --> 00:14:36,896 interest rates. That's been a topic. We've talked 413 00:14:36,896 --> 00:14:38,910 about these podcasts. I don't absent in a 414 00:14:39,047 --> 00:14:42,092 massive recession. Don't see that happening again in 415 00:14:42,092 --> 00:14:44,407 the foreseeable future. And so I also think 416 00:14:44,407 --> 00:14:46,083 some of this is the more time that 417 00:14:46,083 --> 00:14:48,478 comes and interest rates don't get down to 418 00:14:48,478 --> 00:14:49,889 3 and a half percent again or more 419 00:14:49,929 --> 00:14:51,674 mortgage rates don't get that low again. You're 420 00:14:51,674 --> 00:14:53,498 also as people just wait they're gonna end 421 00:14:53,498 --> 00:14:55,559 up getting tired and go ahead and pull 422 00:14:55,559 --> 00:14:57,225 the trigger on a on a on a 423 00:14:57,225 --> 00:14:59,384 home sale. The other element to this is 424 00:14:59,384 --> 00:15:01,290 some of the homes you are seeing being 425 00:15:01,290 --> 00:15:03,594 built are actually slightly smaller in square footage 426 00:15:03,594 --> 00:15:05,500 in space, and there's a bit of a 427 00:15:05,500 --> 00:15:07,110 vault you're seeing in cities kind of around 428 00:15:07,110 --> 00:15:09,589 the country with these mega mansions. I think 429 00:15:09,589 --> 00:15:11,269 you're going to see homes built that are 430 00:15:11,269 --> 00:15:13,110 kind of more modern and sized than what 431 00:15:13,110 --> 00:15:14,883 we've seen in the past. And that's also 432 00:15:14,883 --> 00:15:16,639 a reflection of energy prices. I mean, again, 433 00:15:16,799 --> 00:15:17,836 we talked about the may podcast, 434 00:15:18,395 --> 00:15:20,731 electricity prices in the Us have essentially doubled 435 00:15:20,790 --> 00:15:22,067 in the last, I think it was 10 436 00:15:22,067 --> 00:15:24,637 or 12 years. And you're gonna can probably 437 00:15:24,637 --> 00:15:26,395 see that continue to go up as we 438 00:15:26,395 --> 00:15:27,833 invest back into it. So the cost of 439 00:15:27,833 --> 00:15:30,125 heating and cooling and maintaining a home that's 440 00:15:30,244 --> 00:15:31,841 you know, much larger is gonna be much 441 00:15:31,841 --> 00:15:34,555 higher. Do you think that the aging population 442 00:15:34,555 --> 00:15:36,311 and baby boomers have anything to do with 443 00:15:36,311 --> 00:15:38,227 the size of houses as well? Looking to 444 00:15:38,227 --> 00:15:39,265 downsize? Possibly, 445 00:15:39,679 --> 00:15:41,595 That said, there's actually a little bit... If 446 00:15:41,595 --> 00:15:43,271 you look at demographics in the Us right 447 00:15:43,271 --> 00:15:44,628 now, there's a little bit of a spike 448 00:15:44,628 --> 00:15:46,144 right now in the early thirties from some 449 00:15:46,144 --> 00:15:47,342 of the millennials who were looking to get 450 00:15:47,342 --> 00:15:49,427 out and buy homes. So I think that's 451 00:15:49,427 --> 00:15:50,938 going to or starting to have kids. So 452 00:15:51,017 --> 00:15:52,686 I think you might see some offset there. 453 00:15:53,084 --> 00:15:54,912 You've kinda worked through the, you know, the 454 00:15:54,991 --> 00:15:56,501 Gen x. So if you look at the 455 00:15:56,501 --> 00:15:57,217 the age bracket, 456 00:15:58,110 --> 00:16:00,350 that I'm in right late seventies, that was 457 00:16:00,350 --> 00:16:02,590 a low of burst, and then it's tended 458 00:16:02,590 --> 00:16:03,870 back up in the eighties, and of course, 459 00:16:04,029 --> 00:16:06,190 into the nineties, there was a pickup. Those 460 00:16:06,190 --> 00:16:06,690 those 461 00:16:07,400 --> 00:16:09,226 you know, that that demographic is now at 462 00:16:09,226 --> 00:16:10,575 a point where they're having a family and 463 00:16:10,575 --> 00:16:12,955 they're having children. And I think that's going 464 00:16:12,955 --> 00:16:14,622 to pick up some of the selling for 465 00:16:14,622 --> 00:16:15,257 baby boomers. 466 00:16:15,909 --> 00:16:17,990 The big question is what size a home 467 00:16:17,990 --> 00:16:18,649 and what 468 00:16:19,110 --> 00:16:21,350 geographic locations do they wanna buy in relative 469 00:16:21,350 --> 00:16:22,709 to where the baby boomers are selling. And 470 00:16:22,789 --> 00:16:24,125 I do think you were going to see 471 00:16:24,324 --> 00:16:26,237 certain areas of the country that are going 472 00:16:26,237 --> 00:16:26,737 to 473 00:16:27,114 --> 00:16:29,825 either benefit or or not from those types 474 00:16:29,825 --> 00:16:31,978 of trends. Would be remiss not to bring 475 00:16:31,978 --> 00:16:32,695 up the elections. 476 00:16:33,425 --> 00:16:35,172 I think that the market has generally been 477 00:16:35,172 --> 00:16:36,228 pricing for 478 00:16:36,601 --> 00:16:39,062 a Trump win, the selection season, whether or 479 00:16:39,062 --> 00:16:40,412 not that happens, who knows. 480 00:16:41,144 --> 00:16:43,861 But with Biden, opting out over this past 481 00:16:43,861 --> 00:16:46,658 weekend of of the race. Wanna get your 482 00:16:46,658 --> 00:16:48,336 thoughts just in terms of where we are 483 00:16:48,336 --> 00:16:49,455 and where we might be going. 484 00:16:50,107 --> 00:16:52,174 In terms of the the democratic nominee, 485 00:16:52,890 --> 00:16:54,162 and what that might mean for the markets. 486 00:16:54,559 --> 00:16:56,626 So, yeah, fascinating time right now. Right? We... 487 00:16:56,785 --> 00:17:00,059 We've got Biden stepping down from, from running 488 00:17:00,059 --> 00:17:00,956 as the nominee, 489 00:17:01,885 --> 00:17:02,759 all sorts of, 490 00:17:04,267 --> 00:17:04,767 questions 491 00:17:05,140 --> 00:17:06,831 and and potential 492 00:17:07,538 --> 00:17:09,368 unknown still... Right? It's already been a pretty 493 00:17:09,368 --> 00:17:11,835 wild season, for variety of reasons good and 494 00:17:11,835 --> 00:17:11,995 bad. 495 00:17:13,029 --> 00:17:15,993 In election years, there are generally 4 trends 496 00:17:15,993 --> 00:17:18,150 that happen as it relates to capital Markets. 497 00:17:18,709 --> 00:17:22,159 Typically from July to November Vix, right is 498 00:17:22,159 --> 00:17:24,319 a measure of of implied volatility goes up 499 00:17:24,319 --> 00:17:25,279 by 25 percent. 500 00:17:26,000 --> 00:17:27,039 Usually, you see 501 00:17:27,519 --> 00:17:30,159 investment grade spread widened before the election and 502 00:17:30,159 --> 00:17:32,728 then tighten after you tend to see equity 503 00:17:32,728 --> 00:17:33,228 selling 504 00:17:34,241 --> 00:17:36,869 before the election and then equity buying after 505 00:17:36,869 --> 00:17:40,708 the election. And you oftentimes see some folks 506 00:17:40,708 --> 00:17:43,341 parking money in and money funds and cash 507 00:17:43,341 --> 00:17:43,899 and treasuries. 508 00:17:45,415 --> 00:17:49,013 This year, you have seen Vix essentially decline 509 00:17:49,013 --> 00:17:50,520 up until last week, we had a pop, 510 00:17:50,679 --> 00:17:52,266 but it's already coming back down today. So 511 00:17:52,424 --> 00:17:53,480 Vix is not 512 00:17:53,932 --> 00:17:56,049 materially higher really. And, you know, as we 513 00:17:56,169 --> 00:17:57,838 record this podcast. I think it's 15 right 514 00:17:57,838 --> 00:18:00,144 now. So relatively benign and low. Some of 515 00:18:00,144 --> 00:18:02,472 that's the 0 days to expiry 516 00:18:03,164 --> 00:18:05,525 options that have kind of suppressed vix, but 517 00:18:05,724 --> 00:18:07,400 it's still relatively low and we haven't seen 518 00:18:07,400 --> 00:18:09,714 that pickup. Ig spreads have actually tightened since 519 00:18:09,714 --> 00:18:10,991 the beginning of the year, although they have 520 00:18:10,991 --> 00:18:11,549 widened and very, 521 00:18:12,268 --> 00:18:14,831 a little bit recently, But, you know, investment 522 00:18:14,831 --> 00:18:16,501 grade spreads are still a little under a 523 00:18:16,501 --> 00:18:18,091 hundred basis points right now So it's very 524 00:18:18,091 --> 00:18:19,864 tight. So we're not seeing that 525 00:18:20,318 --> 00:18:21,511 play out at all. And again, we talked 526 00:18:21,511 --> 00:18:22,863 about the last podcast. I think some of 527 00:18:22,863 --> 00:18:25,105 that's because balance sheets are actually really clean 528 00:18:25,105 --> 00:18:27,093 and very strong. Our corporate earnings are very 529 00:18:27,093 --> 00:18:28,287 strong right now as we talked about. 530 00:18:29,400 --> 00:18:30,410 There's been massive, 531 00:18:30,769 --> 00:18:32,769 buying of equities. So that has really booked 532 00:18:32,769 --> 00:18:33,750 the trend of years 533 00:18:34,130 --> 00:18:34,450 prior, 534 00:18:35,090 --> 00:18:37,009 and and I'll be curious to see if 535 00:18:37,009 --> 00:18:37,809 that continues. 536 00:18:38,464 --> 00:18:40,455 So you know, and there... We have seen 537 00:18:40,455 --> 00:18:42,446 money flowing into money funds. So of what 538 00:18:42,446 --> 00:18:44,278 you would normally expect in an election year, 539 00:18:44,517 --> 00:18:46,668 not surprisingly, we're not seeing those trends play 540 00:18:46,668 --> 00:18:47,225 out this year. 541 00:18:48,195 --> 00:18:50,103 And if we if I look forward. So 542 00:18:50,103 --> 00:18:52,726 from an outlook standpoint, going into the back 543 00:18:52,726 --> 00:18:54,952 half of the summer into into the fall, 544 00:18:55,524 --> 00:18:56,961 I think there's a few things to to 545 00:18:56,961 --> 00:18:59,276 keep in mind. I do expect there to 546 00:18:59,276 --> 00:19:02,709 be some moderation of of equity buying. I 547 00:19:02,709 --> 00:19:03,848 think it's just gonna be 548 00:19:04,226 --> 00:19:04,625 inevitable. 549 00:19:05,679 --> 00:19:07,197 If you look at some of the trends 550 00:19:07,197 --> 00:19:08,955 right now that I'm following in the market. 551 00:19:09,274 --> 00:19:11,032 1 of the biggest is, again, C metro 552 00:19:11,032 --> 00:19:13,110 retail investors, How retail investors invested right now. 553 00:19:13,682 --> 00:19:14,420 They are 554 00:19:14,951 --> 00:19:17,331 about as long in Us equity markets it's 555 00:19:17,331 --> 00:19:19,472 historically they have ever been. And when that 556 00:19:19,472 --> 00:19:21,559 happens, you typically see 557 00:19:22,506 --> 00:19:24,817 short term bad sign. Right? That usually means 558 00:19:24,817 --> 00:19:26,968 there's some correction. There's gonna be a little 559 00:19:26,968 --> 00:19:28,323 bit of a sell off long term. It's 560 00:19:28,323 --> 00:19:28,960 actually a good sign. 561 00:19:29,854 --> 00:19:32,731 That's 1. 2, the relative strength of the 562 00:19:32,811 --> 00:19:34,888 S and P 500 over every time period 563 00:19:35,048 --> 00:19:37,526 I could look at monthly, quarterly yearly. It's 564 00:19:37,526 --> 00:19:40,352 very, very strong. And I actually went back 565 00:19:40,567 --> 00:19:43,509 and looked at what does that mean historically. 566 00:19:43,827 --> 00:19:46,213 So when we have strong relative strength and 567 00:19:46,213 --> 00:19:47,981 be a very strong market. So the first 568 00:19:47,981 --> 00:19:49,736 half of the of the year, I think 569 00:19:49,736 --> 00:19:51,331 the s and p 500 is up over 570 00:19:51,331 --> 00:19:53,564 14 percent. So if you look at the 571 00:19:53,644 --> 00:19:55,797 S and p 500, Whenever it's up over 572 00:19:55,797 --> 00:19:57,569 10 percent and the first half of a 573 00:19:57,569 --> 00:19:57,730 year. 574 00:19:58,369 --> 00:20:01,169 1 month later, it's about a 50 50, 575 00:20:01,329 --> 00:20:02,929 whether it's up or down from there. 576 00:20:03,984 --> 00:20:06,622 And then 6 months later, it's higher 83 577 00:20:06,622 --> 00:20:07,900 percent of the time. So very good sign, 578 00:20:08,060 --> 00:20:10,298 long term, very bad sign short term. So 579 00:20:10,298 --> 00:20:11,976 as I think about the election and what's 580 00:20:11,976 --> 00:20:14,470 going on right now, I go. Alright. We've 581 00:20:14,470 --> 00:20:15,750 got a lot of unknowns, a lot of 582 00:20:15,750 --> 00:20:18,149 risk. Right? There's a several different trends here 583 00:20:18,149 --> 00:20:20,710 that I'm following indicate some short term softening. 584 00:20:21,044 --> 00:20:22,000 A but long term, 585 00:20:22,955 --> 00:20:24,548 strength. And I think that could play out 586 00:20:24,548 --> 00:20:25,743 here over the back half of the summer. 587 00:20:25,902 --> 00:20:27,278 And remember from about, 588 00:20:27,893 --> 00:20:28,212 you know, 589 00:20:29,406 --> 00:20:32,288 independence day weekend and until the end of 590 00:20:32,447 --> 00:20:34,677 August and really up until Labor day. It's 591 00:20:34,677 --> 00:20:36,508 usually the quiet period of not just the 592 00:20:36,826 --> 00:20:39,473 Us markets but global markets. It doesn't take 593 00:20:39,473 --> 00:20:41,870 a lot of selling or buying to have 594 00:20:41,870 --> 00:20:44,188 a material impact, you know, small impacts in 595 00:20:44,188 --> 00:20:46,585 a low vol and a low volume environment 596 00:20:46,585 --> 00:20:49,320 can have relatively profound impacts on the actual 597 00:20:49,320 --> 00:20:52,299 price direction. So I'd be very cautious here 598 00:20:52,359 --> 00:20:53,740 over the next 2 months 599 00:20:54,039 --> 00:20:55,880 because we have had such high strength in 600 00:20:55,880 --> 00:20:58,133 the markets. And we have these retail investors 601 00:20:58,133 --> 00:21:00,210 are very heavily invested. We have a lot 602 00:21:00,210 --> 00:21:01,729 of unknowns in the market. A lot of 603 00:21:01,729 --> 00:21:03,028 things that are going on 604 00:21:03,726 --> 00:21:06,773 that that are both concerning but also don't 605 00:21:06,773 --> 00:21:08,841 really have much of a conclusion that we 606 00:21:08,841 --> 00:21:10,671 can predict right now. And I think the 607 00:21:10,671 --> 00:21:12,182 market's going to reflect that. I think people 608 00:21:12,182 --> 00:21:13,614 are gonna back out a little to the 609 00:21:13,614 --> 00:21:15,936 election period. The last thing I'll mentioned the 610 00:21:15,936 --> 00:21:18,720 election is the options market is still predicting 611 00:21:18,720 --> 00:21:22,075 much higher volatility in October right for the 612 00:21:22,075 --> 00:21:23,824 election. So I think the future futures Vix 613 00:21:23,824 --> 00:21:26,209 mark got an 18... A little bit over 614 00:21:26,209 --> 00:21:27,958 an 18 estimate of what Vix is gonna 615 00:21:27,958 --> 00:21:29,285 be come October. So 616 00:21:30,200 --> 00:21:31,871 that'll be interesting to see. But that said, 617 00:21:32,109 --> 00:21:33,462 there's not a lot of hedging going in 618 00:21:33,462 --> 00:21:33,860 right now. 619 00:21:34,815 --> 00:21:36,804 I'm surprised we haven't seen a lot of 620 00:21:36,804 --> 00:21:38,609 option selling, right, either 621 00:21:39,126 --> 00:21:41,115 selling calls or puts, which is considered to 622 00:21:41,115 --> 00:21:42,466 be more of a low vol strategy. 623 00:21:42,944 --> 00:21:44,852 And you can right now, you can hedge 624 00:21:44,852 --> 00:21:46,681 a portfolio is is cheap. 625 00:21:47,569 --> 00:21:49,550 Is you probably ever can historically. 626 00:21:50,343 --> 00:21:52,958 I will say very recently we have had 627 00:21:52,958 --> 00:21:55,440 a few of our clients start to think 628 00:21:55,440 --> 00:21:56,000 about hedging, 629 00:21:57,039 --> 00:21:58,799 but still very, very minor, 630 00:21:59,679 --> 00:22:01,679 you know, risk management at this point, most 631 00:22:01,679 --> 00:22:03,209 people are still very bullish in the direction 632 00:22:03,209 --> 00:22:04,404 of the market. I got... I think part 633 00:22:04,404 --> 00:22:05,758 of that's just the earnings that we're seeing 634 00:22:05,758 --> 00:22:07,909 very strong earnings. Do you have any any 635 00:22:07,909 --> 00:22:10,299 pricing concerns or risks that you're you're focus 636 00:22:10,299 --> 00:22:10,857 on right now? 637 00:22:11,907 --> 00:22:13,281 A few of them. So 638 00:22:14,291 --> 00:22:17,232 1, there's still a lot of amend and 639 00:22:17,232 --> 00:22:18,288 extend of 640 00:22:18,663 --> 00:22:19,163 both 641 00:22:19,537 --> 00:22:22,178 commercial real estate, as well as leveraged loans. 642 00:22:22,894 --> 00:22:25,760 Last month in June was a record and 643 00:22:25,760 --> 00:22:28,627 in ref financing, I shouldn't say ref financing, 644 00:22:28,866 --> 00:22:32,820 really pushing out the maturation of leverage loans 645 00:22:32,880 --> 00:22:36,180 without ref financing them. Mh. So these these 646 00:22:36,240 --> 00:22:38,880 these securities, whether the commercial real estate or 647 00:22:38,880 --> 00:22:41,265 leverage loans or what have you, they are 648 00:22:41,265 --> 00:22:43,492 not able to, you know, refinance them in 649 00:22:43,492 --> 00:22:46,211 a traditional way. And so essentially, the the 650 00:22:46,211 --> 00:22:47,506 lenders and the borrowers 651 00:22:48,518 --> 00:22:50,983 have come to the table, numerous times and 652 00:22:50,983 --> 00:22:52,034 had to you know, 653 00:22:52,752 --> 00:22:55,465 return the the paper without a proper ref 654 00:22:55,465 --> 00:22:57,460 financing. So that's a that's a concern. So 655 00:22:57,460 --> 00:22:59,055 we're still not seeing normality. 656 00:22:59,628 --> 00:23:02,811 In some of these, fixed income markets outside 657 00:23:02,811 --> 00:23:04,641 of, corporate corporate credit. 658 00:23:06,073 --> 00:23:07,983 The other interesting thing is we've had a 659 00:23:07,983 --> 00:23:08,381 real pivot. 660 00:23:09,429 --> 00:23:10,302 Away from, 661 00:23:11,016 --> 00:23:13,000 higher inflation, which used to be the concern 662 00:23:13,000 --> 00:23:14,587 the last 2 years and really into growth 663 00:23:14,587 --> 00:23:15,937 and worse growth gonna continue. 664 00:23:16,987 --> 00:23:20,259 And and geopolitical conflict is also raised a 665 00:23:20,259 --> 00:23:22,014 lot in profile in terms of the risk. 666 00:23:22,253 --> 00:23:24,817 So b of a's, a global fund manager 667 00:23:24,817 --> 00:23:27,360 survey that they just conducted last month for 668 00:23:27,360 --> 00:23:29,904 the first time in 3 years, high inflation 669 00:23:29,904 --> 00:23:31,985 or 2 years, high inflation, was not the 670 00:23:31,985 --> 00:23:34,053 number 1 risk that fund managers were focused 671 00:23:34,053 --> 00:23:35,643 on. It was global conflict. 672 00:23:36,438 --> 00:23:38,505 We've also the most bankruptcies, corporate wide. 673 00:23:39,715 --> 00:23:41,315 In the Us. And so I think 20 674 00:23:41,315 --> 00:23:42,674 11 for the first half of the year. 675 00:23:43,075 --> 00:23:44,995 So we're talking the most bankruptcy since the, 676 00:23:45,075 --> 00:23:46,755 you know, kind of the aftermath of the 677 00:23:46,755 --> 00:23:47,795 global financial crisis. 678 00:23:48,609 --> 00:23:50,846 That said, I do wanna bi kate here, 679 00:23:51,485 --> 00:23:55,001 the higher quality issuers very strong. So if 680 00:23:55,161 --> 00:23:58,228 I look at the investment grade universe, 681 00:23:58,923 --> 00:24:02,030 we're seeing very strong investment grade issuance. We're 682 00:24:02,030 --> 00:24:04,675 seeing strong demand. Actually longer dated tenor are 683 00:24:04,675 --> 00:24:06,350 actually doing the best. They have the best 684 00:24:06,350 --> 00:24:07,626 demand in the new issue market, 685 00:24:08,263 --> 00:24:10,417 where we have concerns and where their risk 686 00:24:10,417 --> 00:24:11,613 is on the lower end of the high 687 00:24:11,613 --> 00:24:15,051 yield market. So right now, the triple c 688 00:24:15,051 --> 00:24:18,312 credit relative to b. Right? Not that far 689 00:24:18,312 --> 00:24:20,419 in terms of of credit profile 690 00:24:20,876 --> 00:24:22,790 differentiation both considered high yield junk bonds. 691 00:24:23,667 --> 00:24:25,183 That's the widest spread that those have been 692 00:24:25,183 --> 00:24:26,858 in and gosh at least 5 or 6 693 00:24:26,858 --> 00:24:29,432 years since I've been watching those. So there's 694 00:24:29,664 --> 00:24:32,286 you know, some concern on the lower end 695 00:24:32,286 --> 00:24:35,225 of, you know, smaller and and lower end 696 00:24:35,225 --> 00:24:37,547 of the credit side, you But again, I 697 00:24:37,547 --> 00:24:38,822 think these are healthy signs for the market. 698 00:24:38,981 --> 00:24:40,198 Right? The fact that there's 699 00:24:40,575 --> 00:24:41,952 differentiation going on here 700 00:24:42,408 --> 00:24:43,842 is a good sign. People aren't just hitting 701 00:24:43,842 --> 00:24:46,115 the buy you know, the buy button 702 00:24:46,575 --> 00:24:47,474 ind intermittently 703 00:24:47,775 --> 00:24:49,535 without really understanding what's going in the market. 704 00:24:49,694 --> 00:24:51,375 So good good trends. 705 00:24:52,027 --> 00:24:53,613 That's it. Those are where the gaps. I 706 00:24:53,613 --> 00:24:55,596 think, right now, the cracks are gonna come 707 00:24:55,596 --> 00:24:56,944 from. And, of course, we've talked a lot 708 00:24:56,944 --> 00:24:59,243 about desk spending. That's not an issue that's 709 00:24:59,243 --> 00:25:01,252 gonna rear self up overnight. That's probably a 710 00:25:01,252 --> 00:25:03,489 longer term concern. That's why I would really 711 00:25:03,489 --> 00:25:05,966 focus in on what's going on with the 712 00:25:05,966 --> 00:25:07,005 lower credit profile. 713 00:25:07,740 --> 00:25:09,659 Smaller and more regional Us banks, which, by 714 00:25:09,659 --> 00:25:12,460 the way are also seeing worsening liquidity ratios 715 00:25:12,700 --> 00:25:14,220 relative to the bigger banks too. Do you 716 00:25:14,220 --> 00:25:15,579 see private markets playing a role? 717 00:25:17,025 --> 00:25:18,452 Private markets are tricky right now, 718 00:25:19,165 --> 00:25:19,720 there is... 719 00:25:20,592 --> 00:25:22,335 If you actually look at private equity, this 720 00:25:22,335 --> 00:25:23,366 is interesting private. 721 00:25:23,779 --> 00:25:26,660 Equity multiples right now are getting close to 722 00:25:26,660 --> 00:25:27,779 what we see in the pry in the 723 00:25:27,779 --> 00:25:28,339 public market. 724 00:25:29,380 --> 00:25:31,460 I mentioned the podcast last time around some 725 00:25:31,460 --> 00:25:34,029 of the private equity firms starting to get 726 00:25:34,029 --> 00:25:34,847 into buying 727 00:25:35,303 --> 00:25:37,771 companies at relatively high multiples where you may 728 00:25:37,771 --> 00:25:40,637 not be getting quite the, you know, the 729 00:25:40,637 --> 00:25:43,283 the same return that you that you might. 730 00:25:44,240 --> 00:25:45,596 But it's hard to say that's gonna play 731 00:25:45,596 --> 00:25:46,075 out. I mean, 732 00:25:47,032 --> 00:25:49,505 you know, private credit right now has been 733 00:25:49,505 --> 00:25:51,833 a really good opportunity. A lot of the... 734 00:25:52,152 --> 00:25:53,747 Because of the weakness in the banks. So 735 00:25:53,747 --> 00:25:56,060 when used to go finance a a property, 736 00:25:56,220 --> 00:25:57,894 banks prior to the, 737 00:25:58,533 --> 00:26:00,606 pandemic would oftentimes give you 65 cents in 738 00:26:00,606 --> 00:26:01,220 the dollar 739 00:26:01,978 --> 00:26:03,414 in terms of a loan, now you hard 740 00:26:03,414 --> 00:26:04,771 pressed to get more than 50 cents and 741 00:26:04,771 --> 00:26:07,425 the dollar. So coming up with that 15 742 00:26:07,484 --> 00:26:10,213 percent you know, between the equities side and 743 00:26:10,213 --> 00:26:11,969 and the in the borrowing of the or 744 00:26:11,969 --> 00:26:14,364 the credit side is where a lot of 745 00:26:14,364 --> 00:26:16,758 private capital investors are are stepping in, and 746 00:26:16,758 --> 00:26:18,490 we're seeing a lot of interest there. So 747 00:26:18,848 --> 00:26:20,125 It'll be... It'll be curious to see how 748 00:26:20,125 --> 00:26:22,198 that all plays out. I I think there's 749 00:26:22,198 --> 00:26:23,953 more opportunities right now on private credit than 750 00:26:23,953 --> 00:26:25,947 there is private equity. So, Grant, you've talked 751 00:26:25,947 --> 00:26:27,303 a lot about retail investors, 752 00:26:27,861 --> 00:26:29,954 institutional investor the things that you're seeing. Can 753 00:26:29,954 --> 00:26:31,794 you talk a little bit more about any 754 00:26:31,794 --> 00:26:34,115 of your other clients, touch funds and and 755 00:26:34,115 --> 00:26:34,434 the like, 756 00:26:35,234 --> 00:26:37,075 and asset managers and things that you're seeing 757 00:26:37,075 --> 00:26:39,250 in space? Yeah. So firstly, we are still 758 00:26:39,250 --> 00:26:41,730 seeing a lot of interest in listed options 759 00:26:41,730 --> 00:26:43,890 trading that continues to pick up, 760 00:26:44,690 --> 00:26:45,970 especially to to 761 00:26:46,703 --> 00:26:49,811 express long views. So our options business is 762 00:26:49,811 --> 00:26:51,883 continuing to grow, and we're still seeing a 763 00:26:51,883 --> 00:26:52,383 lot 764 00:26:52,839 --> 00:26:55,322 of activity there. So that's 1 area. 765 00:26:55,799 --> 00:26:58,924 And as I mentioned, even amongst institutional investors 766 00:26:59,776 --> 00:27:00,833 being able to play 767 00:27:01,704 --> 00:27:04,340 the the, Russell 2000 trade, 768 00:27:05,539 --> 00:27:07,856 the last couple weeks has been has been 769 00:27:07,856 --> 00:27:09,430 done a lot through the expression of Op. 770 00:27:09,708 --> 00:27:11,138 So we're still seeing a lot of options 771 00:27:11,138 --> 00:27:11,638 volume 772 00:27:12,330 --> 00:27:13,760 that takes that's that's going on there. 773 00:27:14,554 --> 00:27:15,849 Gold an interesting 1 774 00:27:16,223 --> 00:27:18,184 very recently for the first time we've action 775 00:27:18,224 --> 00:27:20,219 of these seen some investors buying into gold. 776 00:27:21,336 --> 00:27:23,889 If you remember from the prior podcast and 777 00:27:23,889 --> 00:27:25,619 some of the trends that we've seen in 778 00:27:25,819 --> 00:27:27,416 Most of the gold buying has been by 779 00:27:27,416 --> 00:27:29,571 big Central banks. We haven't seen a lot 780 00:27:29,571 --> 00:27:31,806 of investors in the Us really invest in 781 00:27:31,806 --> 00:27:31,966 gold. 782 00:27:32,684 --> 00:27:34,974 And that's starting to change. In particular, I'm 783 00:27:35,094 --> 00:27:37,007 seeing some hedge funds start to express positions 784 00:27:37,007 --> 00:27:39,399 in gold. I think kind of anticipation of 785 00:27:39,399 --> 00:27:41,312 interest rates going up when interest rates rise. 786 00:27:41,711 --> 00:27:43,957 You normally see gold do well. Seeing the 787 00:27:43,957 --> 00:27:45,649 pause we saw in gold pricing 788 00:27:46,024 --> 00:27:48,329 in June was because China is not buying 789 00:27:48,329 --> 00:27:50,396 as much or hasn't been. I'll be curious 790 00:27:50,396 --> 00:27:53,678 to see how that that trend changes. The 791 00:27:53,678 --> 00:27:55,193 other thing that we are starting to see 792 00:27:55,193 --> 00:27:56,948 in the hedge fund space is we are 793 00:27:56,948 --> 00:27:59,500 starting to see a little bit of a 794 00:27:59,500 --> 00:28:01,175 pivot out of some of the tech names. 795 00:28:01,588 --> 00:28:03,498 And again, that's why I'm starting to really 796 00:28:03,498 --> 00:28:06,124 pay attention to the rotation that may be 797 00:28:06,124 --> 00:28:08,750 happening here because these trends tend to last. 798 00:28:09,163 --> 00:28:10,911 15 years or less and we're right it 799 00:28:10,911 --> 00:28:13,295 15 years. So from a timing standpoint, from 800 00:28:13,295 --> 00:28:15,202 everything going on the mark of the presidential 801 00:28:15,202 --> 00:28:17,681 election, the the pivot out of this low 802 00:28:17,681 --> 00:28:19,429 interest rate environment into a higher 1, but, 803 00:28:19,509 --> 00:28:21,178 you know, possibly with some interest rates coming 804 00:28:21,178 --> 00:28:23,324 down a little bit. You're starting to wonder 805 00:28:23,324 --> 00:28:24,755 okay. This gonna be the time that you 806 00:28:24,755 --> 00:28:27,792 might see a small caps emerge, non Us, 807 00:28:27,951 --> 00:28:30,678 which look at earnings even in developed markets 808 00:28:31,053 --> 00:28:33,537 outside the Us, very, very strong and emerging 809 00:28:33,537 --> 00:28:35,371 markets are starting to catch back up very 810 00:28:35,371 --> 00:28:36,328 few exceptions to that. 811 00:28:37,524 --> 00:28:39,119 So I think that's what's going to happen 812 00:28:39,119 --> 00:28:40,794 it. And then I think from the the 813 00:28:40,794 --> 00:28:41,911 hedge fund side as well, 814 00:28:43,125 --> 00:28:45,765 probably a little bit less equity exposure that 815 00:28:45,765 --> 00:28:46,404 than I've seen. 816 00:28:47,125 --> 00:28:48,244 But I'd love to ask you a couple 817 00:28:48,244 --> 00:28:49,605 of questions while we have a few more 818 00:28:49,605 --> 00:28:52,003 minutes here Okay. And your background been working 819 00:28:52,003 --> 00:28:54,012 a lot with our hedge fund clients, and 820 00:28:54,147 --> 00:28:55,735 and we've built a big business, 821 00:28:56,211 --> 00:28:58,355 you know, with our fund admin business supporting 822 00:28:58,355 --> 00:28:59,799 a hedge funds here. I'd love to hear 823 00:28:59,799 --> 00:29:01,388 a little bit about what we do for 824 00:29:01,388 --> 00:29:03,557 hedge funds on the on the hedge fund 825 00:29:03,692 --> 00:29:05,043 administration side of things. Maybe if you could 826 00:29:05,043 --> 00:29:05,837 give some context. 827 00:29:06,408 --> 00:29:08,074 There, And then my follow question of that 828 00:29:08,074 --> 00:29:10,217 as well will be what trends you have 829 00:29:10,217 --> 00:29:11,962 seen over that time. Sure. 830 00:29:12,835 --> 00:29:13,335 So 831 00:29:13,723 --> 00:29:16,105 us, hedge fund administration is really middle office 832 00:29:16,105 --> 00:29:18,883 services, back office services. So we pick up 833 00:29:18,883 --> 00:29:20,550 after our clients trade and kind of see 834 00:29:20,550 --> 00:29:21,599 things all the way. Through. 835 00:29:22,715 --> 00:29:23,853 Very fortunate, 836 00:29:24,310 --> 00:29:26,464 and and I say that with with a 837 00:29:26,464 --> 00:29:27,660 little bit of a grain of salt and 838 00:29:27,660 --> 00:29:30,611 that we seem to play really well with 839 00:29:30,611 --> 00:29:33,253 complex funds. So obviously, we have clients that 840 00:29:33,253 --> 00:29:33,753 trade 841 00:29:34,208 --> 00:29:35,958 short equity and what have you, but, 842 00:29:36,674 --> 00:29:39,493 we have trading in catastrophe swap. Ops, and 843 00:29:39,627 --> 00:29:41,054 we talked a lot about energy, 844 00:29:41,925 --> 00:29:42,242 really, 845 00:29:42,797 --> 00:29:44,620 anything that you can think of, Our clients 846 00:29:44,620 --> 00:29:46,382 have probably dabble in talked about. 847 00:29:47,497 --> 00:29:50,444 Think post Covid, things have evolved a bit 848 00:29:50,444 --> 00:29:52,753 in the market where a lot of the 849 00:29:52,753 --> 00:29:55,235 established managers, large managers that we're seeing a 850 00:29:55,235 --> 00:29:57,534 lot of capital flows come in, and that 851 00:29:57,534 --> 00:29:59,754 continues to be the case. Institutional investors are 852 00:29:59,754 --> 00:30:02,544 really looking at. Those managers for their a 853 00:30:02,544 --> 00:30:05,322 strong track record. They've had incredible returns. The 854 00:30:05,322 --> 00:30:06,116 market's been strong, 855 00:30:06,831 --> 00:30:08,577 and that's translated to a lot of growth. 856 00:30:09,609 --> 00:30:11,689 What that has also led to is a 857 00:30:11,689 --> 00:30:13,288 lot of managers looking at how they can 858 00:30:13,288 --> 00:30:14,007 deploy capital. 859 00:30:14,566 --> 00:30:16,484 You can only get so big at some 860 00:30:16,484 --> 00:30:18,801 point. Right? And so, we've really seen a 861 00:30:18,801 --> 00:30:20,733 trend in terms of multi manager platform forms, 862 00:30:21,370 --> 00:30:23,438 across clients and across the industry as well 863 00:30:23,438 --> 00:30:24,336 where you have 864 00:30:24,790 --> 00:30:27,549 large managers who are seeding other managers, forms 865 00:30:28,069 --> 00:30:30,226 And I think that trend continue. Sometimes those 866 00:30:30,226 --> 00:30:33,182 managers are in house. Sometimes they're outside, but 867 00:30:33,182 --> 00:30:34,860 it's really been an effective way to kind 868 00:30:34,860 --> 00:30:37,262 of deploy that that capital that that wants 869 00:30:37,262 --> 00:30:38,217 to be put to work. 870 00:30:38,932 --> 00:30:40,444 The other thing we're seeing and you talked 871 00:30:40,444 --> 00:30:42,690 a lot about retail investors is Is this 872 00:30:42,690 --> 00:30:44,609 interest in the hedge fund industry to look 873 00:30:44,609 --> 00:30:47,169 at a different type of investor base. And 874 00:30:47,169 --> 00:30:50,069 so it has historically been institutional investors, 875 00:30:50,769 --> 00:30:53,255 height... Net worth right, but really looking at 876 00:30:53,255 --> 00:30:54,631 some of these more 877 00:30:55,645 --> 00:30:58,250 wealth channels looking at, where maybe they can 878 00:30:58,369 --> 00:31:00,363 plug in to retail networks in a different 879 00:31:00,363 --> 00:31:01,878 way than has been done historically. 880 00:31:02,915 --> 00:31:05,227 And in my 25 years in in the 881 00:31:05,227 --> 00:31:07,460 hedge fund space. I think that we're really 882 00:31:07,460 --> 00:31:09,700 at the this point where from an investment 883 00:31:09,700 --> 00:31:10,811 perspective, the complexity, 884 00:31:11,287 --> 00:31:14,701 the volumes are getting to incredible levels that 885 00:31:14,701 --> 00:31:16,700 that we never would have seen, right, when 886 00:31:16,779 --> 00:31:19,079 I started my career in this industry. But 887 00:31:19,079 --> 00:31:20,904 then certainly looking at where you can kind 888 00:31:20,904 --> 00:31:22,911 of put capital to work and bring capital 889 00:31:23,125 --> 00:31:25,290 into these funds that that may not have 890 00:31:25,290 --> 00:31:26,088 existed in the past? 891 00:31:26,727 --> 00:31:28,482 It's this kind of an interesting time. How 892 00:31:28,482 --> 00:31:31,115 how did how did the made off situation? 893 00:31:31,848 --> 00:31:33,601 Change things too when you had a hedge 894 00:31:33,601 --> 00:31:34,897 fund that had clearly, 895 00:31:35,433 --> 00:31:36,947 you know, misled investors. 896 00:31:37,505 --> 00:31:39,576 How do that change things for hedge funds 897 00:31:39,656 --> 00:31:41,011 And how do that change things in your 898 00:31:41,011 --> 00:31:42,783 world? We'll assume all of our listeners are 899 00:31:42,783 --> 00:31:44,541 of the age of where they remember. 900 00:31:45,820 --> 00:31:45,980 Situation. 901 00:31:46,779 --> 00:31:48,777 It completely changed things. So, 902 00:31:49,895 --> 00:31:52,324 investors very much expected independence 903 00:31:53,176 --> 00:31:55,643 and demanded it. And so for us, that 904 00:31:55,643 --> 00:31:57,416 really opened up our business 905 00:31:58,667 --> 00:32:00,075 to a complete 906 00:32:00,750 --> 00:32:02,736 complete change and kind of a transformation within 907 00:32:02,736 --> 00:32:05,516 the markets. So really looking at independence in 908 00:32:05,516 --> 00:32:07,938 terms of trade management and food processing, 909 00:32:08,391 --> 00:32:11,646 looking at independent verification, things like striking an 910 00:32:11,646 --> 00:32:13,552 nav, net asset value of the funds. 911 00:32:14,505 --> 00:32:16,826 And it's evolved food from there, to not 912 00:32:16,826 --> 00:32:18,178 just be kind of that check the box 913 00:32:18,178 --> 00:32:19,689 and what you need to do, but also 914 00:32:19,689 --> 00:32:23,150 looking at where managers can focus on generating 915 00:32:23,210 --> 00:32:24,970 alpha, generating those returns, 916 00:32:25,529 --> 00:32:27,130 and where maybe they're just not best suited 917 00:32:27,130 --> 00:32:28,730 in doing certain things in house. So kind 918 00:32:28,730 --> 00:32:31,303 of went from a must do to now, 919 00:32:31,861 --> 00:32:34,035 it like to do because you have providers 920 00:32:34,412 --> 00:32:36,007 that can do things in a more effective 921 00:32:36,007 --> 00:32:38,557 and scalable way. So it's really evolved and 922 00:32:38,557 --> 00:32:40,640 change where we're supporting clients in terms of 923 00:32:40,640 --> 00:32:44,054 regulatory filings we're obviously managing investor flows and 924 00:32:44,054 --> 00:32:45,006 things of that nature. 925 00:32:45,880 --> 00:32:47,642 But, you know, picking things up, when the 926 00:32:47,642 --> 00:32:49,892 trade is done all the way through to 927 00:32:50,346 --> 00:32:52,096 seeing the books closed, right at the end 928 00:32:52,096 --> 00:32:54,220 of the period. But it made off completely 929 00:32:54,419 --> 00:32:56,993 transformed the fund administration and 930 00:32:57,450 --> 00:32:57,848 outsourcing, 931 00:32:58,646 --> 00:32:59,864 within that space 932 00:33:00,401 --> 00:33:03,272 completely. That makes sense when people had no 933 00:33:03,272 --> 00:33:04,963 idea what their positions were and then they 934 00:33:04,963 --> 00:33:07,836 were being accounted for reconciled internally. It opens 935 00:33:07,836 --> 00:33:10,709 up the ability for abuse. 1 more question 936 00:33:10,709 --> 00:33:11,768 for you. Where 937 00:33:12,306 --> 00:33:12,839 where do you 938 00:33:13,356 --> 00:33:15,422 expect hedge funds to evolve. What are we 939 00:33:15,422 --> 00:33:18,283 doing at Northern to to support that evolution? 940 00:33:18,442 --> 00:33:20,110 Where's the where is the industry headed? 941 00:33:21,479 --> 00:33:21,979 We 942 00:33:22,355 --> 00:33:26,259 really pride ourselves within hedge fund services on 943 00:33:26,259 --> 00:33:28,250 looking at not just what our clients have 944 00:33:28,250 --> 00:33:29,859 done historically, but where are they go it, 945 00:33:29,939 --> 00:33:30,576 what are they doing? 946 00:33:31,293 --> 00:33:33,205 We have a platform, very fortunate to have 947 00:33:33,205 --> 00:33:35,516 a platform that was built to support 1 948 00:33:35,516 --> 00:33:37,109 of the largest hedge funds in the world 949 00:33:37,109 --> 00:33:38,942 and has now kind of grown and expanded 950 00:33:38,942 --> 00:33:42,154 from there. Like to support multiple clients that 951 00:33:42,154 --> 00:33:44,315 are on the platform, but it... The intent 952 00:33:44,315 --> 00:33:46,075 is that it's fit for purpose across these 953 00:33:46,075 --> 00:33:48,403 different products so not kind of bolt on 954 00:33:48,403 --> 00:33:50,235 different pieces of software and what have you, 955 00:33:50,713 --> 00:33:52,705 not processing stub trades and things of that 956 00:33:52,705 --> 00:33:54,713 nature. It's really important for us to have 957 00:33:54,713 --> 00:33:55,452 a fully 958 00:33:56,149 --> 00:33:58,542 mapped out trade, for example, it really starts 959 00:33:58,542 --> 00:34:00,536 there and kinda seeing it from there. So 960 00:34:00,616 --> 00:34:02,700 I would say just from an evolution perspective, 961 00:34:02,859 --> 00:34:04,609 it's looking at where we can continue to 962 00:34:04,609 --> 00:34:04,927 do that. 963 00:34:05,722 --> 00:34:07,709 Most recently, we've worked to build out a 964 00:34:07,709 --> 00:34:09,379 lot more in the energy space in the 965 00:34:09,379 --> 00:34:10,754 commodity space, where 966 00:34:11,143 --> 00:34:13,129 trading, you know, was not as heavy as 967 00:34:13,129 --> 00:34:13,844 it was 968 00:34:14,320 --> 00:34:16,067 at 1 point, and and we're seeing that 969 00:34:16,067 --> 00:34:16,623 renewed interest. 970 00:34:17,497 --> 00:34:19,244 And then different products that our clients might 971 00:34:19,244 --> 00:34:21,247 be trading. So really looking how we can 972 00:34:21,247 --> 00:34:22,385 support that holistically. 973 00:34:23,239 --> 00:34:25,232 And ultimately, just making sure that we're positioned 974 00:34:25,232 --> 00:34:27,065 for success to continue to be an extension 975 00:34:27,065 --> 00:34:28,832 of our clients business at And at the 976 00:34:28,832 --> 00:34:30,901 end of the day, that they're partnering with 977 00:34:30,901 --> 00:34:33,050 the right person that can do that. And 978 00:34:33,050 --> 00:34:34,722 we're very fortunate to have his broad network 979 00:34:34,722 --> 00:34:36,950 at northern and where, as our clients fund 980 00:34:36,950 --> 00:34:40,815 dom missiles have... Expanded into different international 981 00:34:42,550 --> 00:34:45,823 regions as their fund complexity has changed as 982 00:34:45,823 --> 00:34:47,315 they've expanded their trading products 983 00:34:47,914 --> 00:34:49,832 that we've been able to kind of grow 984 00:34:49,832 --> 00:34:52,309 with them and expand our capabilities with them. 985 00:34:52,789 --> 00:34:55,346 Well, that's interesting. I appreciate those insights and 986 00:34:55,346 --> 00:34:57,000 hedge funds. Thanks, and thanks for doing this 987 00:34:57,119 --> 00:34:59,831 paid with me. Thank you. Anything else that 988 00:34:59,831 --> 00:35:01,666 you wanna touch on before we close? No. 989 00:35:01,825 --> 00:35:03,420 I mean, I I think I think, you 990 00:35:03,420 --> 00:35:04,696 know, the next couple of months or something 991 00:35:04,856 --> 00:35:06,985 I just encourage investors to really keep a 992 00:35:07,105 --> 00:35:08,704 close eye out with everything going on. We 993 00:35:08,704 --> 00:35:10,224 talked about. There's a lot of signs that 994 00:35:10,224 --> 00:35:12,305 we could have some potential weakness over the 995 00:35:12,305 --> 00:35:15,114 next couple of months, but I'm pretty optimistic 996 00:35:15,114 --> 00:35:17,341 when we get the the election behind us, 997 00:35:18,296 --> 00:35:20,046 you know, I think whichever president gets elected, 998 00:35:20,205 --> 00:35:23,397 they're gonna be... Fiscal stimulating the economy for 999 00:35:23,397 --> 00:35:24,588 better or worse in the long term, 1000 00:35:25,461 --> 00:35:26,652 but I think the next couple of months 1001 00:35:26,652 --> 00:35:28,637 are ones that I would encourage our listeners, 1002 00:35:29,288 --> 00:35:31,599 and viewers just to be cautious on and 1003 00:35:31,599 --> 00:35:33,192 to be really careful. There's not a lot 1004 00:35:33,192 --> 00:35:34,228 of volume in the market at the back 1005 00:35:34,228 --> 00:35:35,742 half of the summer, so it's not gonna 1006 00:35:35,742 --> 00:35:37,989 take a a lot of shifts to to 1007 00:35:37,989 --> 00:35:39,585 have some big impact on the market, and 1008 00:35:39,585 --> 00:35:42,137 we're seeing some signs that this recent rally 1009 00:35:42,137 --> 00:35:43,652 is maybe a little long in the tooth. 1010 00:35:43,812 --> 00:35:45,646 But again, I still don't see anything that 1011 00:35:45,726 --> 00:35:48,460 I would be overly concerning right now, but 1012 00:35:49,019 --> 00:35:51,340 you definitely wanna be prudent through the, next 1013 00:35:51,340 --> 00:35:53,980 few months. Great. Thank you, Grant. Thanks, Nadia. 1014 00:35:54,314 --> 00:35:56,146 And as always, thank you to our listeners, 1015 00:35:56,305 --> 00:35:57,898 and we'll see you on the next edition 1016 00:35:57,898 --> 00:35:59,654 of market post. By faster forward. 1017 00:36:04,556 --> 00:36:04,679 By