1 00:00:08,393 --> 00:00:10,562 This is market pulse by faster forward from 2 00:00:10,642 --> 00:00:13,918 Northern Trust asset servicing. The podcast where experts 3 00:00:13,918 --> 00:00:15,835 share their insights on current trends in the 4 00:00:15,835 --> 00:00:16,155 markets. 5 00:00:16,727 --> 00:00:17,520 My name is Nadia. 6 00:00:18,234 --> 00:00:20,615 I'm the c Coo at Northern Trust Hedge 7 00:00:20,615 --> 00:00:21,249 fund services. 8 00:00:21,805 --> 00:00:23,471 I'm very fortunate to be here today with 9 00:00:23,471 --> 00:00:26,121 graham at Johnson, Mark Capital Markets Group. Grant. 10 00:00:26,361 --> 00:00:28,358 Thank you for joining me. Thanks, Nadia. And 11 00:00:28,438 --> 00:00:30,116 I'm really excited because this is my first 12 00:00:30,116 --> 00:00:32,283 time hosting this podcast. Some psych to do 13 00:00:32,283 --> 00:00:33,555 it with you. I'm looking forward to it 14 00:00:33,555 --> 00:00:36,520 very much. Thank you. So Grant, very 15 00:00:37,213 --> 00:00:38,963 exciting time in the markets in the last 16 00:00:38,963 --> 00:00:40,315 month, a lot of activity, a lot of 17 00:00:40,315 --> 00:00:42,398 things going on. You give us an update 18 00:00:42,398 --> 00:00:43,592 on some of the trends that you're seeing? 19 00:00:43,831 --> 00:00:45,662 Yeah. We've actually had a pretty busy month 20 00:00:45,662 --> 00:00:47,891 of July and in and back half of 21 00:00:48,050 --> 00:00:48,868 June. So 22 00:00:49,338 --> 00:00:50,849 I think the biggest trend right now is 23 00:00:50,849 --> 00:00:52,917 a rotation that's been happening. We've talked about 24 00:00:52,917 --> 00:00:54,984 this in the prior podcast. You've got a 25 00:00:54,984 --> 00:00:56,972 general rotation that we've been in for roughly 26 00:00:56,972 --> 00:00:59,094 the past 15 years, which is rather long 27 00:00:59,774 --> 00:01:02,094 where growth has been favored over value, 28 00:01:02,575 --> 00:01:05,295 large cap over small, and of course, Us 29 00:01:05,295 --> 00:01:06,895 over non Us stocks. And you've seen that 30 00:01:06,895 --> 00:01:08,745 rotation play out by and large since the 31 00:01:08,745 --> 00:01:09,776 global financial crisis. 32 00:01:10,332 --> 00:01:12,181 We've had the strongest inflow 33 00:01:13,030 --> 00:01:15,911 in history in small caps is particularly I, 34 00:01:16,204 --> 00:01:18,758 which is the raw till 2000 Etf. We're 35 00:01:18,758 --> 00:01:21,377 seeing that position expressed both by buying long 36 00:01:21,456 --> 00:01:21,956 I, 37 00:01:22,884 --> 00:01:25,838 but also in calls, buying calls. And that's 38 00:01:25,838 --> 00:01:28,230 driven a lot right now by retail investors. 39 00:01:28,470 --> 00:01:29,746 That's the other trend that I was followed 40 00:01:29,746 --> 00:01:32,218 where the retail investors are doing because the 41 00:01:32,218 --> 00:01:34,771 retail investors control about 39 percent of Us 42 00:01:34,771 --> 00:01:37,737 equity market directly and another roughly 15 percent 43 00:01:37,737 --> 00:01:39,812 and and active mutual funds. That doesn't even 44 00:01:39,812 --> 00:01:41,907 include the Etfs, the passive ones like I. 45 00:01:42,539 --> 00:01:45,006 So they've got a lot of of impact 46 00:01:45,006 --> 00:01:46,756 on the Us stop market, and we're seeing 47 00:01:46,756 --> 00:01:49,143 this rotation where we've had really good, 48 00:01:49,780 --> 00:01:51,451 you know, flows into small cap. 49 00:01:52,580 --> 00:01:54,808 And the other interesting thing is the Mag 50 00:01:54,808 --> 00:01:56,876 7 and and tech and comps have actually 51 00:01:56,876 --> 00:01:58,547 had a a relatively weak period. 52 00:01:59,200 --> 00:02:01,359 But it... What's buck the trend a lot 53 00:02:01,359 --> 00:02:04,159 is that a crypto bitcoin in particular actually 54 00:02:04,159 --> 00:02:06,239 performed well. And that's the first time that 55 00:02:06,319 --> 00:02:07,760 I have seen really at least in 4 56 00:02:07,760 --> 00:02:08,319 or 5 years, 57 00:02:09,294 --> 00:02:11,531 the tech stocks and Mag 7 actually do 58 00:02:11,531 --> 00:02:15,127 poorly and Bitcoin actually do well. It's normally 59 00:02:15,127 --> 00:02:17,205 been... You've seen Bitcoin track pretty high. 60 00:02:18,099 --> 00:02:19,620 The the trends that you see in in 61 00:02:19,620 --> 00:02:21,460 tech, the higher risk names over the last 62 00:02:21,460 --> 00:02:22,900 4 or 5 years. So I think it's 63 00:02:22,900 --> 00:02:24,419 actually a that is actually a good sign 64 00:02:24,419 --> 00:02:26,448 to the market. Showing that there is some 65 00:02:26,900 --> 00:02:29,202 differentiation and some selection going on by investors 66 00:02:29,202 --> 00:02:30,710 right now. So that... That's probably the biggest 67 00:02:30,710 --> 00:02:32,298 trend in the equity side. Can you talk 68 00:02:32,298 --> 00:02:34,300 a little bit about why you think think 69 00:02:34,300 --> 00:02:36,300 that these retail investors are looking more at 70 00:02:36,300 --> 00:02:38,060 small cap in this environment? 71 00:02:38,460 --> 00:02:39,819 Well, I think there's a number of reasons 72 00:02:39,819 --> 00:02:41,500 for it I think firstly, if you buy 73 00:02:41,500 --> 00:02:42,860 a dollar right now, the S and p 74 00:02:42,860 --> 00:02:43,260 500. 75 00:02:43,674 --> 00:02:44,472 You're getting about 76 00:02:45,110 --> 00:02:46,545 a 35 cents of that in the top 77 00:02:46,545 --> 00:02:48,220 10 stocks. And actually, the top 5, I 78 00:02:48,220 --> 00:02:50,772 think, represent 28 percent. So you're getting a 79 00:02:50,772 --> 00:02:51,511 very concentrated, 80 00:02:52,446 --> 00:02:52,765 portfolio. 81 00:02:53,659 --> 00:02:55,659 Despite those top 10 names being 35 percent 82 00:02:55,659 --> 00:02:57,259 of the market cap of the s S 83 00:02:57,259 --> 00:02:59,819 and p 500, they're are only about 23 84 00:02:59,819 --> 00:03:01,875 or 24 percent of the total earnings. So 85 00:03:02,074 --> 00:03:03,826 you're buying names in the S and P 86 00:03:03,826 --> 00:03:06,136 5 that are fairly rich, rich valued. 87 00:03:07,012 --> 00:03:08,127 I think the other side of, if you 88 00:03:08,127 --> 00:03:09,800 look at the earnings season right now, great 89 00:03:09,800 --> 00:03:10,835 earnings growth right now, 90 00:03:11,889 --> 00:03:13,647 but, you know, so far in the second 91 00:03:13,647 --> 00:03:15,964 quarter, we're just into the earning season, but, 92 00:03:17,163 --> 00:03:18,601 Eps is up about 10 percent in the 93 00:03:18,761 --> 00:03:20,852 Us and revenues is up about 5. And 94 00:03:20,852 --> 00:03:23,793 we're seeing earnings per share, generally stronger in 95 00:03:23,952 --> 00:03:25,008 Russell 2000 96 00:03:25,224 --> 00:03:26,893 than we are in tech names. There's actually 97 00:03:26,893 --> 00:03:30,088 been some fading of expectations of earnings of 98 00:03:30,088 --> 00:03:32,237 tech names and also Ai names. So I 99 00:03:32,237 --> 00:03:34,306 think a lot of folks are anticipating the 100 00:03:34,306 --> 00:03:36,239 cycle. Right, Everything eventually 101 00:03:36,615 --> 00:03:38,302 goes through a cycle and do have some 102 00:03:38,302 --> 00:03:39,736 mean rev version. I think that's what's going 103 00:03:39,736 --> 00:03:42,365 on or starting to. The other element is 104 00:03:42,922 --> 00:03:45,567 from the small cap side, how much of 105 00:03:45,567 --> 00:03:48,120 this is expectation of, of interest rates being 106 00:03:48,120 --> 00:03:50,752 cut potentially as early as September. So... And 107 00:03:50,752 --> 00:03:53,304 when interest rates are cut lower, you typically 108 00:03:53,304 --> 00:03:54,580 see small caps perform better. 109 00:03:55,233 --> 00:03:57,068 Do you do you think there will well 110 00:03:57,068 --> 00:03:58,743 have an interest rate cut in September? I 111 00:03:58,743 --> 00:04:00,499 think the likelihood. Yeah. It's... The... So the 112 00:04:00,578 --> 00:04:01,855 Fo meeting September eighteenth. 113 00:04:02,507 --> 00:04:04,416 I mentioned that date in particular because 1 114 00:04:04,416 --> 00:04:06,643 week prior in September eleventh is when the 115 00:04:06,722 --> 00:04:08,632 Cpi comes out for the month of August. 116 00:04:08,791 --> 00:04:10,325 So the bureau of labor, 117 00:04:11,444 --> 00:04:13,525 you know, Cpi numbers are always coming out 118 00:04:13,525 --> 00:04:15,525 to roughly 2 weeks into the following month, 119 00:04:15,685 --> 00:04:18,335 which that they're reporting on. So The August 120 00:04:18,415 --> 00:04:20,642 Cpi is gonna be reported in September eleventh. 121 00:04:21,199 --> 00:04:23,449 The August 20 23 122 00:04:23,665 --> 00:04:24,165 Cpi 123 00:04:24,793 --> 00:04:27,039 ran at about a 33.7 124 00:04:27,095 --> 00:04:29,555 percent clip. So it's a pretty high inflation 125 00:04:29,555 --> 00:04:30,055 number 126 00:04:30,666 --> 00:04:31,777 that's gonna roll off. 127 00:04:32,349 --> 00:04:34,345 And if inflation comes in line with what 128 00:04:34,345 --> 00:04:36,659 we've seen in recent Cpi reports, which right 129 00:04:36,659 --> 00:04:38,735 now looks like will be for what we 130 00:04:38,735 --> 00:04:40,730 see right now, this recording in late July, 131 00:04:41,623 --> 00:04:43,537 it looks like it'll probably still moderate that 132 00:04:43,537 --> 00:04:45,212 2 and a half percent. If that's the 133 00:04:45,212 --> 00:04:46,408 case, I think they have phone and see 134 00:04:46,408 --> 00:04:48,961 it's gonna get this relatively benign Cpi print, 135 00:04:49,359 --> 00:04:51,844 September eleventh. They release their 136 00:04:52,242 --> 00:04:54,628 interest rate changes. On the eighteenth 1 week 137 00:04:54,628 --> 00:04:55,661 later, I think they're gonna be under a 138 00:04:55,661 --> 00:04:56,616 bit of of pressure. 139 00:04:57,331 --> 00:04:59,001 Also, if you look at the June data, 140 00:04:59,319 --> 00:05:01,804 softening and slowing some So I think right 141 00:05:01,804 --> 00:05:04,701 now, there's a pretty high expectation. The market 142 00:05:04,760 --> 00:05:06,619 expects right now 3 cuts 143 00:05:06,998 --> 00:05:08,277 in the... Over the rest of the year, 144 00:05:08,516 --> 00:05:11,244 about 70 basis points is what futures markets 145 00:05:11,244 --> 00:05:11,563 expecting. 146 00:05:12,120 --> 00:05:14,509 Most economists, including our own at Northern Trust 147 00:05:14,509 --> 00:05:16,261 expect 2 cuts, 1 in September and 1 148 00:05:16,261 --> 00:05:18,824 in in December about 50 basis points cuts. 149 00:05:18,985 --> 00:05:20,824 I will probably go take the under and 150 00:05:20,824 --> 00:05:23,165 that, than the over. But if we have 151 00:05:23,305 --> 00:05:23,805 continued 152 00:05:24,105 --> 00:05:27,439 data that indicates moderating growth, and we have 153 00:05:27,639 --> 00:05:28,538 a relatively 154 00:05:28,995 --> 00:05:29,793 benign Cpi, 155 00:05:30,272 --> 00:05:31,787 update the... In August that comes out and 156 00:05:31,787 --> 00:05:33,543 the eleventh to September. I think the the 157 00:05:33,543 --> 00:05:35,310 fed gonna have a hard time cutting rates 158 00:05:35,310 --> 00:05:37,058 in September. So I think we're looking at 159 00:05:37,058 --> 00:05:39,125 potential cut. And I think that could also 160 00:05:39,125 --> 00:05:39,863 help this 161 00:05:40,317 --> 00:05:42,780 rotation that we're potentially going to see into 162 00:05:42,780 --> 00:05:43,598 small caps 163 00:05:44,148 --> 00:05:45,821 you know, into gold, we're still... We're seeing 164 00:05:45,821 --> 00:05:48,052 some buying into gold pick back up recently 165 00:05:48,052 --> 00:05:49,487 as well. So I think that could be 166 00:05:49,487 --> 00:05:51,320 AAAA bit of a pivot in the market. 167 00:05:51,894 --> 00:05:53,014 You mentioned Ai. 168 00:05:54,375 --> 00:05:56,694 Last week, Goldman came out with a report 169 00:05:56,694 --> 00:05:58,375 around Ai and essentially, 170 00:05:59,426 --> 00:06:01,893 stating that Ai man is is overblown, 171 00:06:02,847 --> 00:06:05,314 that it'll cost a lot more to implement 172 00:06:05,314 --> 00:06:07,223 some of these Ai solutions with the cost 173 00:06:07,223 --> 00:06:09,618 being where it is. Today, then we'll benefit 174 00:06:09,618 --> 00:06:11,123 that it's really not a good trade. Really 175 00:06:11,123 --> 00:06:12,629 at the end of the day. Curious to 176 00:06:12,629 --> 00:06:14,451 get your thoughts on that and and just 177 00:06:14,451 --> 00:06:16,695 in general, you see Ai in the market. 178 00:06:16,854 --> 00:06:18,210 And certainly, you mentioned some of the tech 179 00:06:18,210 --> 00:06:18,710 acts 180 00:06:19,486 --> 00:06:21,002 is what we saw with Nav nvidia in 181 00:06:21,002 --> 00:06:22,597 the last couple of weeks in terms of 182 00:06:22,597 --> 00:06:24,533 their stock price? Is that kind of relevant 183 00:06:24,591 --> 00:06:26,118 to this Ai man, 184 00:06:26,754 --> 00:06:28,026 kind of coming to head at this point. 185 00:06:28,503 --> 00:06:30,252 What Goldman a great piece and I think 186 00:06:30,252 --> 00:06:31,842 it's in the public domain. So if anyone 187 00:06:31,842 --> 00:06:33,670 wants to look it up. There's a 30 188 00:06:33,670 --> 00:06:35,990 semi odd page report Coleman produced and they 189 00:06:35,990 --> 00:06:38,137 have a number of folks that some interviewed 190 00:06:38,137 --> 00:06:40,124 in it. But it's something that, it, you 191 00:06:40,124 --> 00:06:42,508 know, our readers and and listeners can can, 192 00:06:42,667 --> 00:06:43,621 probably find the Internet. 193 00:06:45,143 --> 00:06:47,387 In a nutshell, their thesis is that 194 00:06:47,759 --> 00:06:50,954 Ai is going to be a trillion dollar 195 00:06:51,009 --> 00:06:53,889 investment and there's no trillion dollar problems that 196 00:06:53,889 --> 00:06:56,677 it solves right now, in essence. And I 197 00:06:56,677 --> 00:06:58,031 think there's a lot of degree in truth 198 00:06:58,031 --> 00:06:59,885 in that. We talked about the May podcast 199 00:06:59,943 --> 00:07:00,714 just to pure 200 00:07:01,074 --> 00:07:03,231 cost the energy that it's gonna require, 201 00:07:03,950 --> 00:07:06,746 and I don't know what type of solutions 202 00:07:06,826 --> 00:07:08,758 You, you know, if you're looking at, it 203 00:07:08,758 --> 00:07:11,792 using Ai to replace, you know, basic 6 204 00:07:11,792 --> 00:07:13,708 simple processes that you would use low age 205 00:07:13,708 --> 00:07:16,103 for. That's not a great investment to spend 206 00:07:16,103 --> 00:07:18,074 trillions of dollars in a tech solution to 207 00:07:18,194 --> 00:07:21,056 place, you know, a low wage workers who 208 00:07:21,056 --> 00:07:23,702 were, you know, doing the processes manually. So 209 00:07:23,997 --> 00:07:26,399 that's kind of the thesis. Now I still 210 00:07:26,399 --> 00:07:28,077 think you're going to see a lot of 211 00:07:28,077 --> 00:07:30,574 money being put into the 212 00:07:31,033 --> 00:07:33,191 infrastructure. And if you look at what's going 213 00:07:33,191 --> 00:07:35,044 on in the stock mark, right now. There's 214 00:07:35,044 --> 00:07:37,384 a difference between the Ai 215 00:07:37,764 --> 00:07:40,485 infrastructure stocks like Nvidia is still very strong, 216 00:07:40,644 --> 00:07:41,284 for example, 217 00:07:41,939 --> 00:07:43,375 There's another 1 Pure storage, 218 00:07:43,853 --> 00:07:46,246 which has had a nice run. They make 219 00:07:46,246 --> 00:07:49,197 flash storage devices, Ai so fast. You can't 220 00:07:49,197 --> 00:07:50,553 use traditional hard drive. You have to use 221 00:07:50,553 --> 00:07:51,431 flash storage for it. 222 00:07:52,404 --> 00:07:53,602 If you, you know look at, 223 00:07:54,321 --> 00:07:56,239 a ari to networks, for example that make 224 00:07:56,239 --> 00:07:58,157 these switches that are far faster than say 225 00:07:58,157 --> 00:08:01,040 what's even Cisco can produce those stocks are 226 00:08:01,040 --> 00:08:02,945 still at or close to their all time 227 00:08:02,945 --> 00:08:04,770 highs and are trading at rich multiples. 228 00:08:05,326 --> 00:08:06,992 On the flip side, if you look at 229 00:08:06,992 --> 00:08:09,651 the stocks of companies that are using 230 00:08:10,184 --> 00:08:12,328 Ai. Those stocks are not doing very well. 231 00:08:12,964 --> 00:08:14,155 Couple of examples, Ce, 232 00:08:14,870 --> 00:08:16,697 which is a company that uses Ai, 233 00:08:17,189 --> 00:08:19,423 to help design drugs in the test, 234 00:08:20,141 --> 00:08:22,535 do a kind of a theoretical test. That 235 00:08:22,535 --> 00:08:23,812 stocks way off its highs, 236 00:08:25,261 --> 00:08:27,091 you know, if you look at s, which 237 00:08:27,091 --> 00:08:30,114 is a, uses Ai to help automate warehouses 238 00:08:30,114 --> 00:08:32,023 as they... Are automating. I think all of 239 00:08:32,023 --> 00:08:33,318 all of the Walmart 240 00:08:33,868 --> 00:08:36,095 major distribution centers. That stocks also way off 241 00:08:36,095 --> 00:08:38,504 its size and is trend down recently. So 242 00:08:38,640 --> 00:08:41,027 the companies that are using Ai are not 243 00:08:41,027 --> 00:08:42,355 doing as well as the ones that are 244 00:08:42,474 --> 00:08:44,629 building the infrastructure. So I think you'll see 245 00:08:44,629 --> 00:08:47,262 that trade continue a bit. When you see 246 00:08:47,262 --> 00:08:50,077 the stocks like Cert and S, 247 00:08:50,866 --> 00:08:52,927 start to do better that are using Ai. 248 00:08:53,244 --> 00:08:54,512 I think that's when you know the Ai 249 00:08:54,512 --> 00:08:57,048 is starting to solve some real problems as 250 00:08:57,048 --> 00:09:00,514 opposed to make you know, Mundane and administrative 251 00:09:00,735 --> 00:09:02,574 processes more efficient. And that's gonna be the 252 00:09:02,574 --> 00:09:05,294 big payoff in Ai. Goldman point was generally, 253 00:09:05,454 --> 00:09:07,625 that's probably 10 years off. But we really 254 00:09:07,625 --> 00:09:08,814 see that that impact. 255 00:09:10,242 --> 00:09:11,908 Just kind of along the... And I know 256 00:09:11,908 --> 00:09:13,995 this isn't a tech podcast, but 257 00:09:14,384 --> 00:09:16,302 talk a little bit about just coming off 258 00:09:16,302 --> 00:09:17,042 of Ai 259 00:09:17,501 --> 00:09:19,259 and commodity trading. And I think it was 260 00:09:19,259 --> 00:09:20,937 in the May or June podcast. You talked 261 00:09:20,937 --> 00:09:23,070 a little bit about trading and energy and 262 00:09:23,189 --> 00:09:24,548 of the the flows and what we're seeing 263 00:09:24,548 --> 00:09:26,705 there, Anything certainly for me. On the hedge 264 00:09:26,705 --> 00:09:28,702 fund side and well reported that hedge funds 265 00:09:28,702 --> 00:09:31,754 are starting to gain more interest into trading 266 00:09:31,754 --> 00:09:34,415 commodity trading, and knowing the 267 00:09:35,274 --> 00:09:36,894 what it takes to 268 00:09:37,274 --> 00:09:39,915 to drive Ai from an energy perspective, 269 00:09:40,489 --> 00:09:41,228 just the 270 00:09:41,842 --> 00:09:43,991 obscene amount of energy that it takes to 271 00:09:43,991 --> 00:09:46,220 run a single chat Jb query, for example. 272 00:09:47,016 --> 00:09:48,767 I think, in that that in that podcast, 273 00:09:48,926 --> 00:09:51,889 you mentioned that the interest could be because 274 00:09:51,889 --> 00:09:52,606 the trades are cheap. 275 00:09:53,483 --> 00:09:55,317 Do you think it's coming back to the 276 00:09:55,317 --> 00:09:57,470 trade being cheap? Or do you think it 277 00:09:57,470 --> 00:10:00,196 is really this belief in you know, Ai 278 00:10:00,196 --> 00:10:02,110 is is here to stay and is the 279 00:10:02,110 --> 00:10:04,284 future and kind of investing in that underlying 280 00:10:04,502 --> 00:10:05,002 energy 281 00:10:05,379 --> 00:10:07,691 that's needed to drive the industry. It... So 282 00:10:07,771 --> 00:10:09,701 I think it's it's both. I think energy 283 00:10:09,701 --> 00:10:11,618 is very cheap right now. There hasn't been 284 00:10:11,618 --> 00:10:14,273 a lot of of, of, investment into energy 285 00:10:15,051 --> 00:10:17,765 into our, you know, distribution electricity. 286 00:10:18,179 --> 00:10:20,091 And even into the generation of it. And 287 00:10:20,251 --> 00:10:22,083 I also don't believe that the average person, 288 00:10:22,243 --> 00:10:23,438 and we talked about this in May. So 289 00:10:23,438 --> 00:10:25,031 of anyone that missed that podcast can go 290 00:10:25,031 --> 00:10:27,955 back and kind of understand some of the 291 00:10:28,551 --> 00:10:30,700 the the hurdles that you were going to 292 00:10:30,700 --> 00:10:32,633 face and expanding, expanding 293 00:10:33,486 --> 00:10:35,578 energy distribution as well as 294 00:10:36,289 --> 00:10:37,970 production. It's a it's a 2 pronged problem. 295 00:10:38,529 --> 00:10:40,850 So that's a big issue that we have 296 00:10:40,850 --> 00:10:42,610 to, you know, solve for, and I think 297 00:10:42,610 --> 00:10:43,970 there's a lot of money be made in 298 00:10:43,970 --> 00:10:46,214 that in the interim immediate and even far 299 00:10:46,214 --> 00:10:47,166 off into the future. 300 00:10:47,880 --> 00:10:49,864 The... There's... And there's other new technologies that 301 00:10:49,864 --> 00:10:51,530 are continuing to evolve too that we're starting 302 00:10:51,530 --> 00:10:52,823 to see some of our clients 303 00:10:53,609 --> 00:10:56,002 look at, like, the ability to produce 304 00:10:57,039 --> 00:10:59,352 energy with natural gas and essentially 0 emissions. 305 00:10:59,591 --> 00:11:01,585 There's a new initiative now. I just read 306 00:11:01,585 --> 00:11:04,014 about where people are actually looking to 9 307 00:11:04,232 --> 00:11:06,465 hydrogen trapped in the in the earth and 308 00:11:06,465 --> 00:11:08,938 using hydrogen is energy source as well, for 309 00:11:08,938 --> 00:11:11,012 example. So lot of things that are happening 310 00:11:11,012 --> 00:11:12,607 there that I think are interesting. This just 311 00:11:12,607 --> 00:11:14,930 haven't been invested for a while. Even if 312 00:11:15,009 --> 00:11:17,633 Ai doesn't come to fruition, the reality of 313 00:11:17,633 --> 00:11:20,098 it is, we continue is a, you know, 314 00:11:20,257 --> 00:11:22,404 is a society to use more and more 315 00:11:22,404 --> 00:11:22,722 electricity. 316 00:11:23,374 --> 00:11:25,846 And there's no expectation that that's going to 317 00:11:25,846 --> 00:11:27,781 go down. We've had a period where it's 318 00:11:27,919 --> 00:11:30,311 moderated through efficiency gains for the last 10 319 00:11:30,311 --> 00:11:31,906 to 15 years, which is why we've become 320 00:11:31,906 --> 00:11:34,470 complacent. In both production, distribution of energy and 321 00:11:34,470 --> 00:11:36,302 electricity. But you're gonna see, I think more 322 00:11:36,302 --> 00:11:37,019 and more of that, 323 00:11:37,736 --> 00:11:39,409 over time. That's the be reality is that 324 00:11:39,409 --> 00:11:41,241 as technology evolves, 325 00:11:41,734 --> 00:11:44,044 we end up using more energy not less, 326 00:11:44,283 --> 00:11:46,753 even if even if efficiency gains are are 327 00:11:46,753 --> 00:11:47,253 made 328 00:11:48,028 --> 00:11:50,020 through and through, we've actually continued to use 329 00:11:50,020 --> 00:11:51,789 more energy. So I think there's a don't 330 00:11:51,789 --> 00:11:54,024 do a play there is relatively inexpensive. If 331 00:11:54,024 --> 00:11:56,738 you look at energy stocks, they are, well 332 00:11:57,297 --> 00:11:59,133 outside of, I even think 2 standard deviation 333 00:11:59,133 --> 00:12:00,904 in terms of how cheap they are relative 334 00:12:00,904 --> 00:12:01,723 to the market 335 00:12:02,180 --> 00:12:03,479 in historic. So 336 00:12:03,856 --> 00:12:05,373 I think that's still playing out. And actually 337 00:12:05,373 --> 00:12:06,809 recently, I've seen some of the hedge fund 338 00:12:06,809 --> 00:12:08,979 clients that we represent kind of buying a 339 00:12:08,979 --> 00:12:11,214 little bit more into energy even recently. And 340 00:12:11,214 --> 00:12:13,289 even getting back to to some of our 341 00:12:13,289 --> 00:12:15,044 retail investors. Again, I was really keep close 342 00:12:15,044 --> 00:12:17,615 on these retail investors free aforementioned reasons we're 343 00:12:17,615 --> 00:12:18,735 starting to see them. And 1 of the 344 00:12:18,735 --> 00:12:20,654 big buys that we saw retail investors in 345 00:12:20,654 --> 00:12:23,134 the last quarter was utilities. So you're starting 346 00:12:23,134 --> 00:12:25,294 to see some of that even play out 347 00:12:25,534 --> 00:12:28,760 in in retail as well as more sophisticated 348 00:12:29,134 --> 00:12:30,961 institutional investors. Back to basics. That's right. 349 00:12:32,073 --> 00:12:33,820 You mentioned interest rates. So we talked about 350 00:12:33,820 --> 00:12:34,376 that a little bit. 351 00:12:35,330 --> 00:12:37,498 Yours curious on your thoughts just in terms 352 00:12:37,498 --> 00:12:39,253 of a rate cut and the impact that 353 00:12:39,253 --> 00:12:40,848 that might have on the housing market. 354 00:12:41,885 --> 00:12:44,118 So the housing markets at a bit of 355 00:12:44,118 --> 00:12:44,618 a 356 00:12:46,844 --> 00:12:49,076 intersection right now between where we're coming out 357 00:12:49,076 --> 00:12:51,388 of sort of a, a slower period and 358 00:12:51,388 --> 00:12:53,914 the second half of the Covid pandemic where 359 00:12:54,352 --> 00:12:55,784 you you had a lot of folks when 360 00:12:55,784 --> 00:12:57,932 interest rates started to to be raised in 361 00:12:58,409 --> 00:12:59,443 late 20 22, 362 00:13:00,636 --> 00:13:02,639 stop you know, didn't wanna move because they 363 00:13:02,639 --> 00:13:04,309 had a a great mortgage already locked in 364 00:13:04,309 --> 00:13:05,979 where they were living. Right now, 365 00:13:06,774 --> 00:13:09,080 as we record this podcast, active listings were 366 00:13:09,080 --> 00:13:10,353 up 18 percent year over year, 367 00:13:11,322 --> 00:13:13,230 pending sales are down 6 percent year over 368 00:13:13,230 --> 00:13:13,389 year. 369 00:13:14,105 --> 00:13:16,331 And then according to Red Fin, overall buyer 370 00:13:16,331 --> 00:13:18,160 demand they're seeing is down about 15 percent 371 00:13:18,160 --> 00:13:18,796 year over year. 372 00:13:19,765 --> 00:13:22,231 On the flip side, I saw a survey 373 00:13:22,231 --> 00:13:23,902 done by... I think it was the university 374 00:13:23,902 --> 00:13:25,811 of Michigan a consumer survey. 375 00:13:26,461 --> 00:13:28,921 And this blew my mind, 30 percent right 376 00:13:28,921 --> 00:13:30,294 now of of households 377 00:13:31,381 --> 00:13:34,159 currently have a house that's worth over 500000 378 00:13:34,159 --> 00:13:37,127 dollars. And 40 percent of mortgages or 40 379 00:13:37,127 --> 00:13:38,885 percent of homes right now are mortgage free. 380 00:13:39,045 --> 00:13:39,924 Have no mortgage on. 381 00:13:40,643 --> 00:13:43,040 So if you think about, okay, and if 382 00:13:43,040 --> 00:13:43,520 you've got 383 00:13:44,014 --> 00:13:45,448 you know, a home right now that you're 384 00:13:45,448 --> 00:13:47,042 looking to sell and move out of interest 385 00:13:47,042 --> 00:13:48,954 rates, mortgage rates are still in the upper 386 00:13:48,954 --> 00:13:49,273 sixes, 387 00:13:49,990 --> 00:13:52,380 and it's gonna be pretty expensive to upgrade 388 00:13:52,380 --> 00:13:54,067 that home move into a new 1. If 389 00:13:54,067 --> 00:13:55,417 rates start to come down, I think you're 390 00:13:55,417 --> 00:13:58,617 going to get a little bit more selling 391 00:13:58,673 --> 00:14:00,182 activity, I think that's gonna put 392 00:14:00,738 --> 00:14:02,326 a bit of a lid on housing prices, 393 00:14:02,485 --> 00:14:04,169 you might see a a little bit of, 394 00:14:04,567 --> 00:14:06,419 decline in housing prices, I don't see anything 395 00:14:06,555 --> 00:14:08,623 significant. But again, I think when the Fed 396 00:14:08,623 --> 00:14:11,024 does start to pivot to a interest rate 397 00:14:11,024 --> 00:14:12,932 decreases. You're going to see a number of 398 00:14:12,932 --> 00:14:14,443 rotations happen. And I think 1 of them 399 00:14:14,443 --> 00:14:16,509 is some life back into the housing market 400 00:14:16,509 --> 00:14:19,053 is is a homeowners and households right now 401 00:14:19,053 --> 00:14:21,539 that have decided not to move because they 402 00:14:21,539 --> 00:14:22,735 don't know where to move. They don't know 403 00:14:22,735 --> 00:14:24,330 what interest rates to. They're going to up 404 00:14:24,330 --> 00:14:27,441 paying, might consider it more. The bigger issue 405 00:14:27,441 --> 00:14:29,409 in my mind is so many folks are 406 00:14:29,529 --> 00:14:30,428 still anchored 407 00:14:30,885 --> 00:14:32,958 to a period that we've all come to 408 00:14:32,958 --> 00:14:34,792 over the last 20 years of declining in 409 00:14:34,792 --> 00:14:36,706 low interest rates. That's been a topic. We've 410 00:14:36,706 --> 00:14:38,561 talked about these podcasts. I don't absent 411 00:14:39,031 --> 00:14:42,045 massive recession. Don't see that happening again in 412 00:14:42,045 --> 00:14:44,344 the foreseeable future. And so I also think 413 00:14:44,344 --> 00:14:46,010 some of this is the more time that 414 00:14:46,010 --> 00:14:46,248 comes, 415 00:14:46,818 --> 00:14:48,570 and interest rates don't get down to 3 416 00:14:48,570 --> 00:14:50,321 and a half percent in or mortgage rates 417 00:14:50,321 --> 00:14:52,151 don't get that low again. You're also as 418 00:14:52,151 --> 00:14:54,141 people just wait they're gonna end up getting 419 00:14:54,141 --> 00:14:55,972 tired and go ahead and pull the trigger 420 00:14:55,972 --> 00:14:57,583 on a on a on a home sale. 421 00:14:57,982 --> 00:14:59,660 The other element to this is some of 422 00:14:59,660 --> 00:15:02,057 the homes you are seeing being built are 423 00:15:02,057 --> 00:15:03,975 actually slightly smaller in square footage in space. 424 00:15:04,389 --> 00:15:05,904 And there's a bit of a vault you're 425 00:15:05,904 --> 00:15:07,500 seeing in cities kind of around the country 426 00:15:07,500 --> 00:15:09,972 with these mega mansions. I think you're going 427 00:15:09,972 --> 00:15:11,408 to see homes built that are kind of 428 00:15:11,408 --> 00:15:13,402 more modern and sized than what we've seen 429 00:15:13,402 --> 00:15:15,327 in the past. And that's also a reflection 430 00:15:15,327 --> 00:15:16,916 of energy prices. I mean, again, we talked 431 00:15:16,916 --> 00:15:17,790 about the May podcast, 432 00:15:18,346 --> 00:15:20,673 electricity prices in the Us have essentially doubled 433 00:15:20,730 --> 00:15:22,001 in the last, I think it was 10 434 00:15:22,001 --> 00:15:22,636 or 12 years. 435 00:15:23,289 --> 00:15:25,524 And you're gonna can probably see that continue 436 00:15:25,524 --> 00:15:26,881 to go up as we invest back into 437 00:15:26,881 --> 00:15:28,557 it. So the cost of heating and cooling 438 00:15:28,557 --> 00:15:30,792 and maintaining a home that's, you know, much 439 00:15:30,792 --> 00:15:32,564 larger is gonna be much higher Do you 440 00:15:32,564 --> 00:15:35,521 think that the aging population and baby boomers 441 00:15:35,521 --> 00:15:36,799 have anything to do with the size of 442 00:15:36,799 --> 00:15:39,277 houses as well? Looking to downsize? Possibly, 443 00:15:39,676 --> 00:15:41,768 that said there's actually a little bit you 444 00:15:41,768 --> 00:15:43,359 look at demographics in the Us right now, 445 00:15:43,518 --> 00:15:44,791 there's a little bit of a spike right 446 00:15:44,791 --> 00:15:46,222 now in the early thirties from some of 447 00:15:46,222 --> 00:15:47,416 the millennials who were looking to get out 448 00:15:47,416 --> 00:15:49,340 and buy homes. If So I think that's 449 00:15:49,340 --> 00:15:51,090 going to starting to have kids. So I 450 00:15:51,090 --> 00:15:53,318 think you might see some offset there. You've 451 00:15:53,318 --> 00:15:55,148 kinda worked through the, you know, the Gen 452 00:15:55,148 --> 00:15:56,660 x. So if you look at the the 453 00:15:56,660 --> 00:15:59,144 age bracket, so that I'm in right late 454 00:15:59,144 --> 00:15:59,622 seventies, 455 00:16:00,020 --> 00:16:02,013 that was a low of burst, and then 456 00:16:02,013 --> 00:16:03,686 it's tinted back up the eighties, and, of 457 00:16:03,686 --> 00:16:05,200 course into the nineties, there was a pickup. 458 00:16:05,774 --> 00:16:06,674 Those those 459 00:16:07,292 --> 00:16:09,210 you know, that that demographic is now at 460 00:16:09,210 --> 00:16:10,568 a point where they're having a family and 461 00:16:10,568 --> 00:16:12,965 they're having children. And I think that's going 462 00:16:12,965 --> 00:16:14,735 to pick up some of the selling for 463 00:16:14,735 --> 00:16:17,444 baby boomers. The big question is what size 464 00:16:17,444 --> 00:16:18,241 a home and what 465 00:16:19,038 --> 00:16:21,348 Geographic locations do they wanna buy in relative 466 00:16:21,348 --> 00:16:22,623 to where the baby boomers are selling. And 467 00:16:22,703 --> 00:16:24,629 I do think you're going to see certain 468 00:16:24,629 --> 00:16:26,720 areas of the country that are going to, 469 00:16:27,095 --> 00:16:29,721 either benefit or or not from those types 470 00:16:29,721 --> 00:16:31,949 of trends. Would be remiss not to bring 471 00:16:31,949 --> 00:16:32,666 up the elections. 472 00:16:33,397 --> 00:16:35,147 I think that the market has generally been 473 00:16:35,147 --> 00:16:36,203 pricing for 474 00:16:36,578 --> 00:16:39,044 a Trump win, the selection season, whether or 475 00:16:39,044 --> 00:16:40,411 not that happens. Who knows. 476 00:16:41,127 --> 00:16:43,831 But with Biden, opting out over this past 477 00:16:43,831 --> 00:16:46,614 weekend of of the race. Wanna get your 478 00:16:46,614 --> 00:16:48,259 thoughts just in terms of where we are 479 00:16:48,379 --> 00:16:49,679 and where we might be going 480 00:16:50,139 --> 00:16:52,139 in terms of the the democratic nominee, 481 00:16:52,860 --> 00:16:54,220 and what that might mean for the markets. 482 00:16:54,620 --> 00:16:56,620 So, yeah, fascinating time right now. Right? We... 483 00:16:56,779 --> 00:17:00,063 We've got Biden stepping down from from running 484 00:17:00,063 --> 00:17:00,961 as the nominee, 485 00:17:01,814 --> 00:17:02,848 all sorts of 486 00:17:04,280 --> 00:17:06,667 questions and and potential 487 00:17:07,556 --> 00:17:09,382 unknown still... Right? It's already been a pretty 488 00:17:09,382 --> 00:17:10,120 wild season 489 00:17:10,493 --> 00:17:11,923 for a variety of reasons good and bad. 490 00:17:12,954 --> 00:17:15,986 In election years, there are generally 4 trends 491 00:17:15,986 --> 00:17:18,050 that happen as it relates to capital Markets. 492 00:17:18,606 --> 00:17:22,099 Typically from July to November Vix, reps as 493 00:17:22,099 --> 00:17:24,266 a measure of of implied volatility goes up 494 00:17:24,266 --> 00:17:25,223 by 25 percent. 495 00:17:26,022 --> 00:17:29,533 Usually, you see investment grade spread widened before 496 00:17:29,533 --> 00:17:31,105 the election and then tighten after 497 00:17:31,463 --> 00:17:33,239 you tend to see equity selling 498 00:17:34,255 --> 00:17:36,886 before the election and then equity buying after 499 00:17:36,886 --> 00:17:40,609 the election. And you oftentimes see some folks 500 00:17:40,730 --> 00:17:43,289 parking money in and money funds and cash 501 00:17:43,289 --> 00:17:43,929 and treasuries. 502 00:17:45,369 --> 00:17:48,269 This year, you have seen Vix essentially 503 00:17:48,584 --> 00:17:50,422 klein up until last week, we had a 504 00:17:50,422 --> 00:17:52,020 pop, but it's already coming back down today. 505 00:17:52,180 --> 00:17:53,479 So Vix is not 506 00:17:53,938 --> 00:17:56,175 materially higher really and, you know, as we 507 00:17:56,175 --> 00:17:57,701 record this pie us. I think it's 15 508 00:17:57,701 --> 00:18:00,003 right now. So relatively benign and low. Some 509 00:18:00,003 --> 00:18:02,487 of that's the 0 days to expiry 510 00:18:03,177 --> 00:18:05,375 options that have kind of suppressed vix, but 511 00:18:05,653 --> 00:18:07,327 it's still relatively low and we haven't seen 512 00:18:07,327 --> 00:18:09,718 that pickup. Ig spreads have actually tightened since 513 00:18:09,718 --> 00:18:10,993 the beginning of the year, although they have 514 00:18:10,993 --> 00:18:11,551 widened very, 515 00:18:12,269 --> 00:18:14,839 a little bit recently, but you know, investment 516 00:18:14,839 --> 00:18:16,359 grade spreads are still a a little under 517 00:18:16,359 --> 00:18:17,799 a hundred basis points right now, which it's 518 00:18:17,799 --> 00:18:19,559 very tight. So we're not seeing that, 519 00:18:20,359 --> 00:18:21,570 play out at all. And again, we talked 520 00:18:21,570 --> 00:18:22,923 about the last podcast. I think some of 521 00:18:22,923 --> 00:18:24,834 this because corporate balance sheets are actually really 522 00:18:24,834 --> 00:18:26,983 clean and very strong. Corporate earnings are very 523 00:18:26,983 --> 00:18:28,257 strong right now as we talked about. 524 00:18:29,469 --> 00:18:31,946 There's been massive, buying of equities. So that 525 00:18:31,946 --> 00:18:33,725 has really booked the trend of years 526 00:18:34,104 --> 00:18:34,423 prior, 527 00:18:35,063 --> 00:18:36,981 and and I'll be curious to see if 528 00:18:36,981 --> 00:18:37,780 that continues. 529 00:18:38,434 --> 00:18:40,429 So you know, and there... We have seen 530 00:18:40,429 --> 00:18:42,425 money flowing into money funds. So of what 531 00:18:42,425 --> 00:18:44,261 you would normally expect in an election year, 532 00:18:44,501 --> 00:18:46,656 not surprisingly, we're not seeing those trends play 533 00:18:46,656 --> 00:18:47,295 out this year. 534 00:18:48,108 --> 00:18:50,103 And if what if I look forward. So 535 00:18:50,103 --> 00:18:52,736 from an outlook standpoint, going into the back 536 00:18:52,736 --> 00:18:54,970 half of the summer into into the fall, 537 00:18:55,463 --> 00:18:56,972 I think there's a few things to to 538 00:18:56,972 --> 00:18:59,197 keep in mind. I do expect there to 539 00:18:59,197 --> 00:19:02,708 be some moderation of of equity buying. I 540 00:19:02,708 --> 00:19:04,617 think it's just gonna be inevitable. 541 00:19:05,651 --> 00:19:07,163 If you look at some of the trends 542 00:19:07,163 --> 00:19:08,913 right now that I'm following in the market. 543 00:19:09,231 --> 00:19:11,275 1 of the biggest is, again, Come retail 544 00:19:11,473 --> 00:19:14,360 How retail investors invested right now. They are 545 00:19:14,894 --> 00:19:17,281 about as long in Us equity markets is 546 00:19:17,281 --> 00:19:19,524 historically they have ever been. And when that 547 00:19:19,524 --> 00:19:21,616 happens, you typically see 548 00:19:22,469 --> 00:19:24,776 short term bad sign. Right? That usually means 549 00:19:24,776 --> 00:19:25,992 there's some correction 550 00:19:26,382 --> 00:19:27,336 there's gonna be a little bit of a 551 00:19:27,336 --> 00:19:28,767 sell off long term, it's actually a good 552 00:19:28,767 --> 00:19:28,926 sign. 553 00:19:29,800 --> 00:19:32,661 That's 1, 2, the relative strength of the 554 00:19:32,741 --> 00:19:34,807 S and P 500 over every time period 555 00:19:34,966 --> 00:19:37,529 I could look at monthly, quarterly yearly. It's 556 00:19:37,529 --> 00:19:40,338 very, very strong. And I actually went back 557 00:19:40,475 --> 00:19:43,421 and looked at what does that mean historically. 558 00:19:43,914 --> 00:19:46,222 So when we have strong relative strength, and 559 00:19:46,222 --> 00:19:47,736 we have a very strong market. So the 560 00:19:47,736 --> 00:19:49,567 first half of the of the year, I 561 00:19:49,567 --> 00:19:51,000 think the s and p 500 is up 562 00:19:51,000 --> 00:19:53,480 over 14 percent. So if you look at 563 00:19:53,480 --> 00:19:55,466 the S and p 500, whenever it's up 564 00:19:55,466 --> 00:19:57,292 over 10 percent in the first half of 565 00:19:57,292 --> 00:20:00,390 a year. 1 month later, it's about a 566 00:20:00,390 --> 00:20:02,707 50 50, whether it's up or down from 567 00:20:02,707 --> 00:20:02,865 there. 568 00:20:03,897 --> 00:20:06,514 And then 6 months later, it's higher 83 569 00:20:06,514 --> 00:20:07,942 percent of the time. So very good sign 570 00:20:07,942 --> 00:20:10,337 long term, very bad sign short term. So 571 00:20:10,337 --> 00:20:11,928 as I think about the election and what's 572 00:20:11,928 --> 00:20:14,394 going on right now. I go, alright. We've 573 00:20:14,394 --> 00:20:15,747 got a lot of unknowns a lot of 574 00:20:15,747 --> 00:20:18,068 risk. Right? There's a several different trends here 575 00:20:18,068 --> 00:20:20,716 that I'm following indicate some short term softening 576 00:20:21,171 --> 00:20:22,125 but long term 577 00:20:22,921 --> 00:20:24,608 strength. And I think that's could play out 578 00:20:24,608 --> 00:20:25,726 here at the back half of the summer. 579 00:20:25,885 --> 00:20:26,923 And remember from about, 580 00:20:27,881 --> 00:20:28,200 you know, 581 00:20:29,477 --> 00:20:32,271 independence day weekend and until the end of 582 00:20:32,431 --> 00:20:34,279 August and really up until a Labor day. 583 00:20:34,598 --> 00:20:36,432 It's usually the quiet period of not just 584 00:20:36,432 --> 00:20:39,221 the Us markets but global markets. It doesn't 585 00:20:39,221 --> 00:20:40,816 take a lot of selling or buying. 586 00:20:41,388 --> 00:20:43,618 To have a material impact, you know, small 587 00:20:43,618 --> 00:20:45,689 impacts in a low vol and a low 588 00:20:45,689 --> 00:20:48,636 volume environment can have relatively profound impacts on 589 00:20:48,636 --> 00:20:51,282 the actual price direction So I'd be very 590 00:20:51,282 --> 00:20:54,156 cautious here over the next 2 months because 591 00:20:54,156 --> 00:20:56,072 we have had such high strength in the 592 00:20:56,072 --> 00:20:58,307 markets and we have these retail investors are 593 00:20:58,307 --> 00:21:00,477 very heavily invested. We've have a lot of 594 00:21:00,477 --> 00:21:01,914 unknowns in the market. A lot of things 595 00:21:01,914 --> 00:21:02,972 that are going on 596 00:21:03,670 --> 00:21:06,783 that that are both concerning, but also don't 597 00:21:06,783 --> 00:21:08,711 really have much of a con... Conclusion that 598 00:21:08,711 --> 00:21:10,541 we can predict right now. And I think 599 00:21:10,541 --> 00:21:11,974 the market's going to reflect that I think 600 00:21:11,974 --> 00:21:13,326 people are gonna back out a little to 601 00:21:13,326 --> 00:21:15,634 the election period. The last thing I'll mentioned 602 00:21:15,634 --> 00:21:17,328 the election is the options market 603 00:21:17,638 --> 00:21:20,924 is still predicting much higher volatility in October 604 00:21:21,061 --> 00:21:23,210 right before the election. So I think the 605 00:21:23,210 --> 00:21:25,852 futures Vix mark got an 18 a little 606 00:21:25,852 --> 00:21:27,204 little bit over an 18 estimate of what 607 00:21:27,364 --> 00:21:29,375 Bi is gonna be come October. So 608 00:21:30,148 --> 00:21:31,898 that'll be interesting to see. But that said, 609 00:21:32,057 --> 00:21:33,409 there's not a lot of hedging going in 610 00:21:33,409 --> 00:21:33,807 right now. 611 00:21:34,775 --> 00:21:36,759 I'm surprised we haven't seen a lot of 612 00:21:36,759 --> 00:21:39,932 options selling, right, either selling calls or puts, 613 00:21:40,329 --> 00:21:41,519 which is considered to be more of a 614 00:21:41,519 --> 00:21:42,392 low vol strategy. 615 00:21:42,963 --> 00:21:44,876 And you can right now, you can hedge 616 00:21:44,876 --> 00:21:46,969 a portfolio is is cheap 617 00:21:47,505 --> 00:21:49,519 as you probably ever can historically. 618 00:21:50,294 --> 00:21:53,017 I will say very recently we have had 619 00:21:53,017 --> 00:21:55,403 a few of our clients start to think 620 00:21:55,403 --> 00:21:55,960 about hedging, 621 00:21:56,994 --> 00:21:58,846 but still very, very minor 622 00:21:59,714 --> 00:22:01,626 you know, risk management at this point, most 623 00:22:01,626 --> 00:22:03,140 people are still very bullish in the direction 624 00:22:03,140 --> 00:22:04,335 of the market. I got, I think part 625 00:22:04,335 --> 00:22:05,689 of that's just the earnings that we're seeing 626 00:22:05,689 --> 00:22:07,840 very strong earnings. Do you have any any 627 00:22:07,840 --> 00:22:10,325 pricing concerns or risk that you're you're focused 628 00:22:10,325 --> 00:22:10,882 on right now? 629 00:22:11,838 --> 00:22:13,214 A few of them. So 630 00:22:14,228 --> 00:22:17,255 1, there's still a lot of amend and 631 00:22:17,255 --> 00:22:18,232 extend of 632 00:22:18,705 --> 00:22:19,205 both 633 00:22:19,585 --> 00:22:22,144 commercial real estate as well as leveraged loans. 634 00:22:22,865 --> 00:22:24,164 Last month in June 635 00:22:24,465 --> 00:22:26,244 was a record and and 636 00:22:26,557 --> 00:22:28,484 ref financing, I shouldn't say ref, 637 00:22:28,857 --> 00:22:32,767 really, pushing out the maturation of leverage loans 638 00:22:32,822 --> 00:22:36,117 without ref financing them. Mh. So these these 639 00:22:36,175 --> 00:22:38,801 these securities, whether they're commercial real estate or 640 00:22:38,801 --> 00:22:41,190 leverage loans or what have you, they are 641 00:22:41,190 --> 00:22:43,517 not able to... You know, refinance them in 642 00:22:43,517 --> 00:22:46,231 a traditional way. And so essentially, the the 643 00:22:46,231 --> 00:22:47,449 lenders and the borrowers 644 00:22:48,466 --> 00:22:51,021 have come to the table, numerous times and 645 00:22:51,021 --> 00:22:51,991 had to you know, 646 00:22:52,785 --> 00:22:55,405 return the the paper without a proper ref 647 00:22:55,405 --> 00:22:57,469 financing. So that's a that's a concern. So 648 00:22:57,469 --> 00:22:58,977 we're still not seeing normality, 649 00:22:59,628 --> 00:23:02,731 in some of these, fixed income markets outside 650 00:23:02,731 --> 00:23:04,641 of, corporate corporate credit. 651 00:23:06,073 --> 00:23:07,903 The other interesting thing is we've had a 652 00:23:07,903 --> 00:23:08,642 real pivot 653 00:23:09,349 --> 00:23:10,302 away from, 654 00:23:11,017 --> 00:23:12,922 higher inflation, which used to be the concern 655 00:23:12,922 --> 00:23:14,589 the last 2 years and really ended growth 656 00:23:14,589 --> 00:23:15,939 and worse growth gonna continue. 657 00:23:16,892 --> 00:23:20,249 And and geopolitical conflict is also raised a 658 00:23:20,249 --> 00:23:22,001 lot in profile in terms of the risk. 659 00:23:22,161 --> 00:23:25,108 So b aids, a global fund manager survey 660 00:23:25,108 --> 00:23:26,621 that they just conducted last month. 661 00:23:27,273 --> 00:23:29,659 For the first time in 3 years, high 662 00:23:29,659 --> 00:23:31,807 inflation, our 2 years, high inflation was not 663 00:23:31,807 --> 00:23:33,637 the number 1 risk that fund managers were 664 00:23:33,637 --> 00:23:35,546 focused on if was global conflict. 665 00:23:36,440 --> 00:23:38,599 We've also had the most bankruptcies, corporate wide, 666 00:23:39,720 --> 00:23:41,319 in the Us, and so I think 20 667 00:23:41,319 --> 00:23:42,599 11 for the first half of the year. 668 00:23:43,094 --> 00:23:44,920 So we're talking the most bankruptcy since the, 669 00:23:45,079 --> 00:23:46,746 you know, kind of the aftermath of the 670 00:23:46,746 --> 00:23:47,778 global financial crisis. 671 00:23:48,573 --> 00:23:50,717 That said, I do wanna bi kate here. 672 00:23:51,529 --> 00:23:54,970 The higher quality issuers very strong. So if 673 00:23:55,130 --> 00:23:57,390 I look at the investment grade 674 00:23:57,690 --> 00:23:58,190 universe, 675 00:23:58,984 --> 00:24:02,007 We're seeing very strong investment grade issuance. We're 676 00:24:02,007 --> 00:24:04,633 seeing strong demand. Actually, longer dated tenor are 677 00:24:04,633 --> 00:24:06,304 actually doing the best. They have the best 678 00:24:06,304 --> 00:24:07,497 demand in the new issue market. 679 00:24:08,228 --> 00:24:10,376 Where we have concerns and where their risk 680 00:24:10,376 --> 00:24:11,569 is on that lower end of the high 681 00:24:11,569 --> 00:24:14,964 yield market. So right now, the ccc c 682 00:24:15,084 --> 00:24:18,339 credit relative to b. Right? Not that far 683 00:24:18,339 --> 00:24:20,427 in terms of of credit profile 684 00:24:20,801 --> 00:24:22,707 differentiation both considered high yield junk bonds. 685 00:24:23,596 --> 00:24:25,187 That's the widest spread that those have been 686 00:24:25,187 --> 00:24:26,857 in and gosh at least 5 or 6 687 00:24:26,857 --> 00:24:29,426 years since I've been watching those. So there's, 688 00:24:29,562 --> 00:24:32,198 you know, some concern on the lower end 689 00:24:32,198 --> 00:24:35,216 of, you know, smaller and and lower end 690 00:24:35,216 --> 00:24:37,598 of the credit side. But, again, I think 691 00:24:37,598 --> 00:24:39,046 these are healthy signs for the market. Right? 692 00:24:39,205 --> 00:24:40,183 The fact that there's 693 00:24:40,559 --> 00:24:41,516 differentiation going on here, 694 00:24:42,313 --> 00:24:43,827 is a good sign. People aren't just hitting 695 00:24:43,827 --> 00:24:46,072 the by, you know, the buy but and 696 00:24:46,549 --> 00:24:47,049 ind 697 00:24:47,741 --> 00:24:49,410 without really understanding what's going in the market. 698 00:24:49,648 --> 00:24:52,828 So good good trends. That it, those are 699 00:24:52,828 --> 00:24:54,576 where the gaps I think, right now, the 700 00:24:54,576 --> 00:24:56,181 crack are gonna come from. And, of course, 701 00:24:56,340 --> 00:24:58,565 we've talked a lot about fiscal spending. That's 702 00:24:58,565 --> 00:25:00,393 not an issue it's gonna read itself up 703 00:25:00,393 --> 00:25:02,872 overnight. That's probably a longer term concern. That's 704 00:25:02,872 --> 00:25:05,175 why I really focus in on what's going 705 00:25:05,175 --> 00:25:07,001 on with lower credit profile, 706 00:25:07,636 --> 00:25:09,621 smaller and more regional Us banks, which, by 707 00:25:09,621 --> 00:25:12,505 the way are also seeing worsening liquidity ratios 708 00:25:12,665 --> 00:25:14,182 relative to the bigger banks too. Do you 709 00:25:14,182 --> 00:25:15,539 see private markets playing a role? 710 00:25:16,656 --> 00:25:19,450 Yeah. Private markets are tricky right now? There 711 00:25:19,450 --> 00:25:19,904 is 712 00:25:20,585 --> 00:25:22,424 if you actually look at private equity, this 713 00:25:22,424 --> 00:25:25,305 is interesting, private, equity multiples right now are 714 00:25:25,305 --> 00:25:27,224 getting close to what we see in the 715 00:25:27,224 --> 00:25:28,265 pry... In the public market. 716 00:25:29,400 --> 00:25:31,480 I mentioned the podcast last time around some 717 00:25:31,480 --> 00:25:33,559 of the private equity firms are starting to 718 00:25:33,559 --> 00:25:34,859 get into buying 719 00:25:35,319 --> 00:25:38,040 companies relatively high multiples where you may not 720 00:25:38,040 --> 00:25:39,335 be getting quite the, 721 00:25:39,709 --> 00:25:42,570 you know, the the same return that you 722 00:25:42,570 --> 00:25:43,206 that you might. 723 00:25:44,179 --> 00:25:45,457 But it's hard to say how that's gonna 724 00:25:45,457 --> 00:25:46,096 play out. I mean, 725 00:25:47,055 --> 00:25:49,452 you know, private credit right now has been 726 00:25:49,452 --> 00:25:52,261 a really good opportunity. A lot of... Because 727 00:25:52,261 --> 00:25:53,857 of the weakness in the bank. So when 728 00:25:53,857 --> 00:25:56,010 you used to go finance a a property, 729 00:25:56,250 --> 00:25:57,845 banks prior to the, 730 00:25:58,483 --> 00:26:00,557 pandemic would oftentimes give you 65 cents and 731 00:26:00,557 --> 00:26:01,250 the dollar 732 00:26:01,926 --> 00:26:03,437 in terms of a loan. Now you hard 733 00:26:03,437 --> 00:26:04,789 pressed to get more than 50 cents and 734 00:26:04,789 --> 00:26:07,414 the dollar. So coming up with that 15 735 00:26:07,414 --> 00:26:10,095 percent, you know, between the equities side and 736 00:26:10,213 --> 00:26:11,959 and the in the borrowing of the or 737 00:26:11,959 --> 00:26:14,339 the credit side is where a lot of 738 00:26:14,339 --> 00:26:16,719 private capital investors are are stepping in, and 739 00:26:16,719 --> 00:26:18,519 we're seeing a lot of interest there. So 740 00:26:18,799 --> 00:26:20,075 it'll be... It'll be curious to see how 741 00:26:20,075 --> 00:26:22,148 that all plays out. I I think there's 742 00:26:22,148 --> 00:26:23,983 more opportunities right now in private credit than 743 00:26:23,983 --> 00:26:25,897 there is private equity. So, Grant, you've talked 744 00:26:25,897 --> 00:26:28,862 a lot about retail investors, institutional investor the 745 00:26:28,862 --> 00:26:30,533 things that you're seeing. Can you talk a 746 00:26:30,533 --> 00:26:32,522 little bit more about any of your other 747 00:26:32,522 --> 00:26:34,351 clients, hedge funds and and the like, 748 00:26:35,147 --> 00:26:37,075 and after managers and things that you're seeing 749 00:26:37,075 --> 00:26:38,989 in that space? Yeah. So firstly, we are 750 00:26:38,989 --> 00:26:41,324 still seeing a lot of interest in listed 751 00:26:41,382 --> 00:26:43,855 options trading that continues to pick up, 752 00:26:44,652 --> 00:26:45,942 especially to to 753 00:26:46,658 --> 00:26:49,760 express long views. So our options business is 754 00:26:49,760 --> 00:26:51,828 continuing to grow, and we're still seeing a 755 00:26:51,828 --> 00:26:52,328 lot 756 00:26:52,797 --> 00:26:55,892 of activity there. So that's 1 area. And 757 00:26:55,892 --> 00:26:58,930 as I mentioned, even amongst institutional investors 758 00:26:59,700 --> 00:27:00,835 being able to play 759 00:27:01,620 --> 00:27:04,321 the, the, Russell 2000 trade, 760 00:27:05,512 --> 00:27:07,816 the last couple weeks has been has been 761 00:27:07,816 --> 00:27:09,405 done a lot through the expression of ops, 762 00:27:09,659 --> 00:27:11,099 so we're still seeing a lot of options 763 00:27:11,099 --> 00:27:11,599 volume 764 00:27:12,299 --> 00:27:13,819 that takes... That's that's going on there. 765 00:27:14,539 --> 00:27:15,919 Gold an interesting 1 766 00:27:16,220 --> 00:27:18,299 very recently for the first time, we've actually 767 00:27:18,299 --> 00:27:20,233 released and seen some investors buying into gold. 768 00:27:21,272 --> 00:27:23,909 If you remember from the prior podcast and 769 00:27:23,909 --> 00:27:25,428 some of the trends that we've seen in 770 00:27:25,507 --> 00:27:27,186 Gold, most of the gold buying has been 771 00:27:27,186 --> 00:27:29,355 by big Central banks, We haven't seen a 772 00:27:29,355 --> 00:27:31,586 lot of investors in the Us really invest 773 00:27:31,586 --> 00:27:31,984 in gold. 774 00:27:32,621 --> 00:27:34,931 And that's starting to change. In particular, I'm 775 00:27:34,931 --> 00:27:36,922 seeing some hedge funds start to express positions 776 00:27:36,922 --> 00:27:39,399 in gold. I think kind of anticipation of 777 00:27:39,399 --> 00:27:41,303 interest rates going up when interest rates rise. 778 00:27:41,700 --> 00:27:44,238 You normally see gold do well. The pause 779 00:27:44,238 --> 00:27:45,610 we saw in gold pricing 780 00:27:45,999 --> 00:27:48,306 in June was because China is not buying 781 00:27:48,306 --> 00:27:50,455 as much or hasn't been. I'll be curious 782 00:27:50,455 --> 00:27:52,922 to see how that that trend changes. 783 00:27:53,414 --> 00:27:54,924 The other thing that we are starting to 784 00:27:54,924 --> 00:27:56,674 see in the hedge fund space is we 785 00:27:56,674 --> 00:27:59,218 are starting to see a little bit of 786 00:27:59,218 --> 00:28:00,888 a pivot out of some of the tech 787 00:28:00,888 --> 00:28:03,050 names. And again, that's why I'm starting to 788 00:28:03,050 --> 00:28:05,914 really pay attention to the rotation that may 789 00:28:05,914 --> 00:28:09,134 be happening here because these trends tend last 790 00:28:09,192 --> 00:28:10,948 15 years or less and we're right at 791 00:28:10,948 --> 00:28:13,341 15 years. So from a timing standpoint, from 792 00:28:13,341 --> 00:28:15,176 everything going on the market of the presidential 793 00:28:15,176 --> 00:28:17,341 election. It the the pivot out of this 794 00:28:17,341 --> 00:28:19,092 low interest rate environment into a higher 1, 795 00:28:19,251 --> 00:28:21,002 but, you know, possibly with some interest rates 796 00:28:21,002 --> 00:28:22,912 coming down a little bit. You're starting to 797 00:28:22,912 --> 00:28:24,424 wonder okay. Is this gonna be the time 798 00:28:24,424 --> 00:28:27,299 that you might see small caps emerge, non 799 00:28:27,537 --> 00:28:30,154 Us which look at earnings even in developed 800 00:28:30,154 --> 00:28:30,654 markets 801 00:28:31,027 --> 00:28:33,509 outside the Us, very, very strong and emerging 802 00:28:33,509 --> 00:28:35,346 markets are starting to catch back up very 803 00:28:35,346 --> 00:28:36,306 few exceptions to that. 804 00:28:37,504 --> 00:28:39,103 So I think that's what's going to happen 805 00:28:39,103 --> 00:28:40,781 it. And then I think from the the 806 00:28:40,781 --> 00:28:41,900 hedge fund side as well, 807 00:28:43,111 --> 00:28:45,741 probably a little bit less equity exposure that 808 00:28:45,741 --> 00:28:47,893 than I've seen. But I'd love to ask 809 00:28:47,893 --> 00:28:49,088 you a couple of questions while we have 810 00:28:49,088 --> 00:28:50,775 a few more minutes here Okay. And your 811 00:28:50,775 --> 00:28:52,761 background been working a lot with our hedge 812 00:28:52,761 --> 00:28:55,304 fund clients, and and we've built a big 813 00:28:55,304 --> 00:28:55,701 business, 814 00:28:56,178 --> 00:28:58,483 you know, with our fund admin business supporting 815 00:28:58,483 --> 00:28:59,934 hedge funds. I'd love to hear a little 816 00:28:59,934 --> 00:29:01,932 bit about what we do for hedge funds 817 00:29:01,932 --> 00:29:04,169 on the on the hedge fund administration side 818 00:29:04,169 --> 00:29:05,448 of things. Maybe if you could give some 819 00:29:05,448 --> 00:29:05,948 context 820 00:29:06,327 --> 00:29:08,085 there, and then my follow question of that 821 00:29:08,085 --> 00:29:10,254 as well. Will be what trends you have 822 00:29:10,254 --> 00:29:12,007 seen, over that time? Sure. 823 00:29:12,884 --> 00:29:15,594 So for us, hedge fund administration is really 824 00:29:15,594 --> 00:29:18,242 middle office services back office services. So we 825 00:29:18,242 --> 00:29:20,240 pick up after our clients trade and kind 826 00:29:20,240 --> 00:29:21,518 of see things all the way through. 827 00:29:22,716 --> 00:29:23,776 Very fortunate 828 00:29:24,249 --> 00:29:26,480 in and I say that with with a 829 00:29:26,480 --> 00:29:28,095 little bit of a grain salt and that 830 00:29:28,392 --> 00:29:30,861 we seem to play really well with complex 831 00:29:30,861 --> 00:29:31,839 funds. So 832 00:29:32,216 --> 00:29:33,411 obviously, we have clients are trade. 833 00:29:34,223 --> 00:29:36,000 Short equity and what have you, but 834 00:29:36,697 --> 00:29:39,808 we have trading in catastrophe swaps, and we 835 00:29:39,808 --> 00:29:41,085 talked a lot about energy. 836 00:29:41,980 --> 00:29:42,299 Really, 837 00:29:42,859 --> 00:29:44,619 anything that you can think of, our clients 838 00:29:44,619 --> 00:29:46,380 have probably dabble and or talked about, 839 00:29:47,500 --> 00:29:48,619 think post Covid, 840 00:29:48,954 --> 00:29:51,194 things have evolved a bit in the market 841 00:29:51,194 --> 00:29:51,694 where 842 00:29:51,994 --> 00:29:54,474 a lot of the established managers, large managers, 843 00:29:54,634 --> 00:29:55,835 that's where we're seeing a lot of capital 844 00:29:55,835 --> 00:29:56,394 flows come in. 845 00:29:57,048 --> 00:29:59,199 And that continues to be the case. Institutional 846 00:29:59,199 --> 00:30:02,146 investors are really looking at. Those managers for 847 00:30:02,146 --> 00:30:03,421 their strong track record, 848 00:30:03,913 --> 00:30:06,142 had incredible returns. The market's been strong, 849 00:30:06,858 --> 00:30:08,609 and that's translated to a lot of growth. 850 00:30:09,564 --> 00:30:11,648 What that has also led to they've a 851 00:30:11,648 --> 00:30:13,242 lot of managers looking at how they can 852 00:30:13,242 --> 00:30:13,959 deploy capital. 853 00:30:14,596 --> 00:30:16,269 You can only get so big at at 854 00:30:16,269 --> 00:30:18,579 some point. Right? And so, we've really seen 855 00:30:18,579 --> 00:30:20,650 a trend in terms of multi manager platforms. 856 00:30:21,302 --> 00:30:23,053 Across our clients and across the industry as 857 00:30:23,053 --> 00:30:24,269 well where you have 858 00:30:24,804 --> 00:30:27,135 large managers who are seeding other managers. 859 00:30:27,988 --> 00:30:30,238 And I think that trend continue. Sometimes those 860 00:30:30,238 --> 00:30:32,395 managers are in house. Sometimes they're outside, 861 00:30:33,035 --> 00:30:34,713 but it's really been an effective way to 862 00:30:34,713 --> 00:30:37,031 kind of deploy that that capital that that 863 00:30:37,031 --> 00:30:38,070 wants to be put to work. 864 00:30:38,964 --> 00:30:40,482 The other thing we're seeing and you talked 865 00:30:40,482 --> 00:30:42,879 a lot about retail investors is this interest 866 00:30:42,879 --> 00:30:44,877 in the hedge fund industry to look at 867 00:30:44,877 --> 00:30:46,235 a different type of investor base. 868 00:30:46,970 --> 00:30:50,109 And so it has historically been institutional investors, 869 00:30:50,730 --> 00:30:53,289 high net worth right, but really looking at 870 00:30:53,289 --> 00:30:54,589 some of these more 871 00:30:55,697 --> 00:30:58,320 wealth channels looking at where maybe they can 872 00:30:58,320 --> 00:31:00,307 plug in to retail networks in a different 873 00:31:00,307 --> 00:31:01,816 way than has been done historically. 874 00:31:02,850 --> 00:31:05,244 And in my 25 years in in the 875 00:31:05,244 --> 00:31:07,463 hedge fund space, I think that we're really 876 00:31:07,463 --> 00:31:09,920 at this point where from an investment perspective, 877 00:31:10,079 --> 00:31:10,817 the complexity 878 00:31:11,524 --> 00:31:15,040 volumes are getting to incredible levels that that 879 00:31:15,040 --> 00:31:16,958 we never would have seen, right, when I 880 00:31:16,958 --> 00:31:19,276 started my career in this industry. But then 881 00:31:19,276 --> 00:31:21,127 certainly looking at where you can kind of 882 00:31:21,127 --> 00:31:23,507 put capital to work and bring capital into 883 00:31:23,507 --> 00:31:25,570 these funds that that may not have existed 884 00:31:25,570 --> 00:31:27,315 in the past. It's it's kind of an 885 00:31:27,315 --> 00:31:29,791 interesting time. How how did... Kind how did 886 00:31:29,791 --> 00:31:32,737 the made off situation change things too? When 887 00:31:32,737 --> 00:31:34,829 you had a hedge fund that had clearly, 888 00:31:35,443 --> 00:31:36,898 you know, misled investors 889 00:31:37,528 --> 00:31:39,517 how do that change things for hedge funds 890 00:31:39,596 --> 00:31:41,028 And how do that change things in your 891 00:31:41,028 --> 00:31:42,779 world? We'll assume all of our listeners are 892 00:31:42,779 --> 00:31:44,711 of the age of where they remember 893 00:31:45,722 --> 00:31:45,882 situation. 894 00:31:46,771 --> 00:31:48,862 It completely changed things. So 895 00:31:49,872 --> 00:31:52,178 investors very much expected independence, 896 00:31:53,132 --> 00:31:55,610 and demanded it. And so for us, that 897 00:31:55,610 --> 00:31:57,459 really opened up our business 898 00:31:58,705 --> 00:32:00,158 to a complete 899 00:32:00,611 --> 00:32:02,833 complete change kind of a transformation within the 900 00:32:02,833 --> 00:32:03,071 markets. 901 00:32:03,642 --> 00:32:06,184 So really looking at independence in terms of 902 00:32:06,184 --> 00:32:07,876 trade management and trade processing, 903 00:32:08,329 --> 00:32:11,603 looking at independent verification, things like striking an 904 00:32:11,603 --> 00:32:13,592 nav and net asset value of the funds, 905 00:32:14,467 --> 00:32:16,932 and it's evolved from there, to not just 906 00:32:16,932 --> 00:32:18,300 be kind of that check the box and 907 00:32:18,300 --> 00:32:19,971 what you need to do, but also looking 908 00:32:19,971 --> 00:32:23,394 at where managers can focus on generating alpha, 909 00:32:23,633 --> 00:32:24,906 generating those returns, 910 00:32:25,479 --> 00:32:27,073 and where maybe they're just not best suited 911 00:32:27,073 --> 00:32:28,668 in doing certain things in house. So kind 912 00:32:28,668 --> 00:32:31,299 of went from a must do to now 913 00:32:31,777 --> 00:32:33,951 It like to do because you have providers 914 00:32:34,422 --> 00:32:36,012 that can do things in a more effective 915 00:32:36,012 --> 00:32:38,478 and scalable way. So it's really evolved and 916 00:32:38,478 --> 00:32:40,625 change where we're supporting clients in terms of 917 00:32:40,625 --> 00:32:44,062 regulatory filings worked obviously managing investor flows and 918 00:32:44,062 --> 00:32:45,017 things of that nature. 919 00:32:45,893 --> 00:32:47,406 But, you know, picking things up from when 920 00:32:47,406 --> 00:32:49,397 the trade is done all the way through 921 00:32:49,397 --> 00:32:49,897 to 922 00:32:50,273 --> 00:32:52,040 seeing the book Closed, right at the end 923 00:32:52,040 --> 00:32:54,351 of the period. But it made off completely 924 00:32:54,351 --> 00:32:57,001 transformed the fund administration and 925 00:32:57,377 --> 00:32:57,776 outsourcing, 926 00:32:58,573 --> 00:32:59,869 within that space 927 00:33:00,579 --> 00:33:03,296 lately. That makes sense when people had no 928 00:33:03,296 --> 00:33:04,894 idea what their positions were and then they 929 00:33:04,894 --> 00:33:06,193 were being accounted for 930 00:33:06,572 --> 00:33:09,059 reconciled internally, it opens up to heal ability 931 00:33:09,059 --> 00:33:11,781 for abuse. 1 more question for you. Where 932 00:33:12,233 --> 00:33:14,693 where do you expect hedge funds to evolve? 933 00:33:14,851 --> 00:33:17,410 What are we doing at Northern to to 934 00:33:17,410 --> 00:33:19,730 support that evolution? Where's the where is the 935 00:33:19,730 --> 00:33:20,130 industry headed? 936 00:33:21,490 --> 00:33:21,990 We 937 00:33:22,289 --> 00:33:24,690 really pride ourselves within... 938 00:33:25,104 --> 00:33:27,327 Hedge fund services on looking at not just 939 00:33:27,327 --> 00:33:29,233 what our clients have done historically, But where 940 00:33:29,233 --> 00:33:30,583 are they going? And what are they doing? 941 00:33:31,218 --> 00:33:33,124 We have a platform, very fortunate to have 942 00:33:33,124 --> 00:33:34,369 a platform that was built 943 00:33:34,887 --> 00:33:36,480 to support 1 of the largest hedge funds 944 00:33:36,480 --> 00:33:38,073 in the world and has now kind of 945 00:33:38,073 --> 00:33:41,259 grown and expanded from there to support multiple 946 00:33:41,259 --> 00:33:43,662 clients that are on the platform, but it... 947 00:33:43,900 --> 00:33:45,646 The intent is that it's fit for purpose 948 00:33:45,646 --> 00:33:47,711 across these different products. So not kind of 949 00:33:47,711 --> 00:33:49,933 bolt on different pieces of software and what 950 00:33:49,933 --> 00:33:52,253 have you not process stub trades and things 951 00:33:52,253 --> 00:33:54,162 of that nature. It's really important for us 952 00:33:54,162 --> 00:33:55,378 to have a fully 953 00:33:56,151 --> 00:33:58,552 mapped out trade, for example, It really starts 954 00:33:58,552 --> 00:34:00,541 there and kinda seeing it from there. So 955 00:34:00,620 --> 00:34:03,007 I would say from an evolution perspective, it's 956 00:34:03,007 --> 00:34:04,757 looking at where we can continue to do 957 00:34:04,757 --> 00:34:04,836 that. 958 00:34:05,728 --> 00:34:07,722 Most recently. We've worked to build out a 959 00:34:07,722 --> 00:34:09,397 lot more in the energy space in the 960 00:34:09,397 --> 00:34:12,427 commodity space. Where trading, you know, was not 961 00:34:12,427 --> 00:34:13,805 as heavy as it was 962 00:34:14,262 --> 00:34:16,032 at 1 point and and we're seeing that 963 00:34:16,032 --> 00:34:16,670 renewed interest. 964 00:34:17,547 --> 00:34:19,302 And then different products that our clients might 965 00:34:19,302 --> 00:34:20,977 be trading. So really looking at how we 966 00:34:20,977 --> 00:34:22,354 can support that holistically, 967 00:34:23,210 --> 00:34:25,099 and ultimately, just making sure that we're positioned 968 00:34:25,300 --> 00:34:27,059 for success to continue to be an extension 969 00:34:27,059 --> 00:34:28,980 of our clients business. And at the end 970 00:34:28,980 --> 00:34:31,059 of the day, that they're partnering with the 971 00:34:31,059 --> 00:34:33,220 right person that can do that. And we're 972 00:34:33,220 --> 00:34:34,986 very fortunate to have his broad network at 973 00:34:34,986 --> 00:34:37,291 northern and where as our clients fund dom 974 00:34:37,291 --> 00:34:40,551 missiles have expanded into different international, 975 00:34:42,476 --> 00:34:45,746 regions as their fun complexity has changed as 976 00:34:45,746 --> 00:34:47,442 they've expanded their trading products 977 00:34:47,819 --> 00:34:49,733 that we've been able to kind of grow 978 00:34:49,733 --> 00:34:52,295 with them. And expand our capabilities with them. 979 00:34:52,772 --> 00:34:55,317 Well, that's interesting. I appreciate those insights and 980 00:34:55,317 --> 00:34:56,988 hedge funds. Thanks, and thanks for doing this 981 00:34:56,988 --> 00:34:59,788 today with me. Thank you. Anything else that 982 00:34:59,788 --> 00:35:01,618 you wanna touch on before we close? No. 983 00:35:01,777 --> 00:35:03,369 I mean, I I think I think, you 984 00:35:03,369 --> 00:35:04,642 know, the next couple of months or something 985 00:35:04,801 --> 00:35:07,284 I just encourage investors to really keep close 986 00:35:07,284 --> 00:35:08,882 eye out with everything going on. We talked 987 00:35:08,882 --> 00:35:10,320 about. There's a lot of signs that we 988 00:35:10,320 --> 00:35:12,817 could have some potential weakness over the next 989 00:35:12,876 --> 00:35:15,204 couple of months. But I'm pretty optimistic when 990 00:35:15,204 --> 00:35:17,275 we get the the election behind us, 991 00:35:18,231 --> 00:35:19,984 you know, I think whichever president gets elected, 992 00:35:20,143 --> 00:35:23,355 they're gonna be fiscal stimulating the economy for 993 00:35:23,355 --> 00:35:24,635 better or worse in the long term, 994 00:35:25,434 --> 00:35:26,795 but I think the next couple months are 995 00:35:26,795 --> 00:35:28,815 ones that I would encourage our listeners 996 00:35:29,207 --> 00:35:31,508 and viewers just to be cautious on and 997 00:35:31,508 --> 00:35:33,175 to be really careful. There's not a lot 998 00:35:33,175 --> 00:35:34,206 of volume in the market at the back 999 00:35:34,206 --> 00:35:35,713 half of the summer, So it's not gonna 1000 00:35:35,713 --> 00:35:37,956 take a a lot of shifts to to 1001 00:35:37,956 --> 00:35:39,547 have some big impact on the market, and 1002 00:35:39,547 --> 00:35:42,094 we're seeing some signs that this recent rally 1003 00:35:42,094 --> 00:35:43,606 is maybe a little long in the tooth. 1004 00:35:43,765 --> 00:35:45,596 But again, I still don't see anything that 1005 00:35:45,675 --> 00:35:48,470 I would be overly concerning right now, but 1006 00:35:48,947 --> 00:35:51,250 you definitely wanna be prudent through the, next 1007 00:35:51,250 --> 00:35:53,871 few months. Great. Thank you, Grant. Thanks, Nadia. 1008 00:35:54,284 --> 00:35:56,125 And as always, thank you to our listeners, 1009 00:35:56,284 --> 00:35:58,175 and we'll see you on the next of 1010 00:35:58,295 --> 00:35:59,565 get pulse by faster forward.