Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
We've been batting around a lot today. The rally in stocks definitely taking a breather today, Tim, market, though I thankstill heading toward.
Its best week in twenty twenty four.
A lot of it has to do with speculation that the Fed ultimately could be moving to cut rates as early as June. So that's giving certainly a lift to the trade.
All right, Drich, Yeah, Ryandytrike expected the US economy to avoid a recession last year. He also bet that inflation would cool sooner than the market was expecting. He added exposure to stocks during the banking turmoil last March and as the S and P five hundred sink in our October In hindsight, pretty good calls, and it's why Bloomberg included Ryan in a story about the stock optimists who nailed twenty twenty three, and that was back in December.
You get to wear that mantle for a little while longer. Ryan, let's get to the interview with us. Is Ryan Dietrocky's chief market strategist at the Carson Group. He's back with us from Cincinnati. Good to have you back with us. We have had quite a run. This could be the
best week that we've seen all year. Does it feel like, technically or even fundamentally in your view that we're getting a little frothy, that there's time that we need a little bit of a maybe correction or at least a little bit of a pullback.
Yeah, Carol, Tim, thanks for having me back. And as someone whose mom passed away last year due to cancer, obviously thinking about Princess Kate and the whole Row family and all of our friends over in England and London there with the UK, I guess with everything that just came out in the last hour or so.
Thank you for that.
But get yeah, yes, be getting to the question. There no easy way to transform from what we just talked about, but let's just do it. Listen. Yes, we are looking at maybe a twenty seven percent round in twenty one weeks since that late October low. That's one of the greatest twenty one week rallies ever. Today could be fingers crossed the twenty first all time high already this year for the S and P five hundred. If you extrapa late that out, guys, that's like over ninety What does
that mean? The previous record was seventy seven all time highs in ninety five, I meaning this could be one of the in theory, one of the best years we've ever seen. Yes, we think maybe we're due for a little pause. We've been overweight equities of come on with you for a while saying we're still bolish. We don't see a recession. We just have to be I guess be aware that what one final comment, what happened yesterday?
One hundred and eighteen stocks and the sm P five hundred made a fifty two week high, the highest number we've seen in three years. Okay, that can be sometimes a near term kind of I don't say blowof tops the right word, but at least need for consolidation. But rarely with that many stocks making a fifty two week high, does that mean the ultimate peak? This happened, you know, like March and April of twenty one. Remember what happened the rest of twenty one pretty good year last I checked.
So we're still bullish, but hey, maybe we're due for a little break.
When you say a little break, a little bit of a pullback, or that we're due for. What are you talking about, Ryan, what would be within your model?
Yeah?
I mean, you know, well, between five to seven percent will be perfectly perfectly normal, nothing abnormal. I mean for the SMP's like we talked about up ten percent for the year, up you know, twenty seven percent the last twenty one weeks. And again, what's happened? It's so impressive. And you guys have talked a lot about this. If you told me Apple will be doing what it's been doing, Tesla's doing what it's doing. Oh, and we kick back the idea of when the rate cuts will be and
how many there will be. But I just said, oh, you know what, market by being a little trouble, that's not what's happened.
Right.
What have we seen? Rotation? Rotation, rotation. You've got small caps and midcaps doing really well this week after the FED. But I'm more impressed, or we're more impressed with the industrial leadership, the cyclical leadership, your financials, your materials. The fact that those groups are doing well to us message of the market cyclical leadership says, hey, this is strong, and maybe we can just kind of have the baton
passed around. And we're still those are groups we've liked, we still like them.
Interesting, So, because I was just looking at some of the notes when we wrote the story. Bloomberg News put the story out back in December, you said small caps, in midcaps, and financials, those are three of your favorites. They continue to be three of your favorites. Recession that's not even in your playbook at all for twenty twenty four.
Well it's not. It actually wasn't in our playbook last year. That wasn't pretty popular what we said that last year. But no, still we still don't see a recession. I mean, earnings this year expected to be up ten to eleven percent, and I know those are estimates that can potentially change, but the bottom line, the consumer's still strong. Look at
those initial claims still around two hundred thousand. We know the big layoffs some of the big tech companies have had, but we're just not seeing that go into the consumer. I mean, consumer is still strong, still healthy, and final comment. You know, wages are like four to five percent this year, inflation's around three and a half percent. I mean, wager, you are still growing faster than inflation. That's normally a
positive sign. And we still think the consumer is going to lead this economy the rest of this year, maybe even further.
Hey, Ryan, we spoke to somebody yesterday. He's not necessarily on the same page. Look, this is what makes a market. But curious what you know, you'd say to her. Cheryl Smith over at Trillia Masset Management, she's an economist, she's a portfolio manager there. She thinks we're four to six months away from a recession. She's starting to see cracks or softness, she said, in many of the state unemployment figures, she's seeing credit card delinquencies going up. What say you of that data.
Yeah, we are starting to see some of that. Those delinquencies. I can't disagree. I mean, it is what it is. But again, when you look at those is it more normalized. We had historically low delinquencies this time two years ago, right with all the government giving people money and different things. Now we think it's more normalizing right now. And in the other side to that. I mean, listen, the interest rates are higher, there's a lot of debt out there.
People are paying a lot more interest on the debt that they have. People seem to forget though the other side of that, I mean six trillion dollars in money markets. I'm not so sure that's just going to lead money markets go to stocks will be very clear, but people
are comfortable getting their four to five percent. If you look what's happened the last three years, the money people are paying on interest for debt over here is actually offset by what they're getting on interest in their money markets. People don't always talk about that, and again, I know a lot of people are struggling, but just the truth, net welts at all time high. Net welt's actually growing faster. You know, assets are growing faster than the liabilities. Look
at the data from the FED. So it's not perfect, but again, I don't see a recession in six months.
Put it that way, Hey, Ryan, what's stronger the technical story for stocks to continue to move higher or the fundamental story for stocks to head higher?
Yeah?
I think the technical I mean a great question. I mean we've got a little bit of both, but I think it is a technical I just talked about all those new highs that we just saw. You know, we had the fiftieth trading day of the year last week, we were up more than five percent. As of the fiftieth trading day, curl, I took a look, what happens. It's a good start to a year. Let's be clear, twenty five times we had the fiftieth day were up at least five percent. The rest of the year was higher.
Ready for this twenty four out of twenty five times. I've grown with you guys a lot using stats like that, and I know they're just one stat don't invest blindly in anything in a one stat, but we've seen a lot of those. Factoring in the fact that what the Fed has said there's probably three cuts coming. The FED just up created their view on GDP. I mean, I hate to say it's like this perfect nirvana that we're living in right now, but it it really is. Things
are a lot better. And maybe what worries me though, guys, and this logical question what worries me the most. I'm looking around a lot of people that were bearish last year now bollish. Well, that's optimistic right now, that kind of worries me a little bit, right, what Patten say everybody's thinking of like somebody isn't thinking. I mean, maybe that's where that little well does their break could be needed because as a lot of Johnny Com lately bulls that they were yelling at me a year ago.
Bryan election year, that's one thing.
And then okay, so now you said too that we're kind of expecting the Fed to make three rate cuts if they don't do that, and then let's throw on the election year on top of it.
Those are two big things.
Does that in any way kind of change or could change your outlook your optimistic outlook here?
I mean it could change it a little bit. But honestly, you know what, we're looking for five or six cuts this time two months ago, and now we're looking at three cuts. Probably why because the economy has been stronger in twenty twenty two. The Fed was more hawkish, if you will, because now they're a little bit more hawkish than where they were two months ago because the economy
is strong. So we like that real quickly. On the election, A lot a lot of people have talked about this, but in an election year when you have a president up for re election like we do the last ten times, going back to the fifties with Eisenhower, the SMP five hundred was higher every single time, ten out of ten twelve percent on average. It's almost where we are now. But just because it's an election year, don't get overly
concerned or worried. History says election years do just fine, especially with an economy strong like this one.
Hey, Ryan, what changes your mind? What turns you bearish? What data would you need to see over the next few months in order to change your Viewah?
Yeah, great question there. So, as someone who looks at the market from a technical point of view, if we started to see leadership from areas like utilities, like staples, you know, a real estate, that would worry me that people forget this in late twenty twenty one, it is a great bowl market. Where was the leadership in the fourth quarter those more defensive areas And we all know what happened obviously in twenty twenty two, But fast forward
to right now. We're seeing real to strength low thing utilities and staples, So I'm not seeing that yet. So that's the first kind of crack to me. If the defensive things start to lead we're not seeing it. We're seeing cyclicals lead. So that's still a reason to be bullish.
Any new names for the upside or downside that it popped up on your radar, just got about forty five seconds left.
Well, I know individual names. Well, we like midcaps a lot. I mean, midcaps are that area. Everyboney talks about small caps, large caps. I mean midcaps are about eight nine percent for the year. Nobody's talking about it, right, I mean, I think that's an area that quietly could do very very well this year. As everyone argues about, you know, the Red Sox or the Yankees or small caps or large caps. We like midcaps a lot.
Carol, all right, kind of leave it on that note. I'm looking at the S and P five hundred MidCap four hundred index. It's up about seven point six percent so far here in twenty twenty four. Hey, Ryan, thank you so much, Really appreciate it. Ryan Dietrich joining US, Chief market strategist at the Carson Group, joining us once again from Cincinnati.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Apple car Play and ed Bright Auto with a Bloomberg business at or watch just Love I've on YouTube.
It's hard to believe it's been a little more than a year since a key lender in the world of technology and startups came undone, collapsing and requiring the US federal government to step in. That failure the second largest in US history, in the largest since the Financial Crisis of two thousand and eight. It wasn't alone in terms of troubles in the regional banking sector. Signature Bank, First Republic and the group continues to be on everyone's radar.
It does, indeed, and with one perspective and why we have heard a lot of senior execs in the banking sector talk about the value of being boring. Boring that is including our next guest with us now is none other than the chairman and CEO of PNC Financial Services, home to PNC Bank, Bill Demchek. He's joining us now from Pittsburgh.
Bill.
Great to have you here with us. And I got to ask, is that a Bloomberg behind you?
Of course it's a Bloomberg, right, So nobody sent nobody send Bill, and I.
Be right now. I am probably one of your earliest Bloomberg interesting way back to the early nineties on the trading flour.
All right, there are some stories there not only about that, but also about what you have seen.
Well, let's start there.
I mean, I really appreciate someone who has been within the financial industry and then the banking industry for a while. You've seen a fair amount of cycles, You've seen crises. What's the best word to describe today's banking environment and kind of business and economic environment and they don't have to be the same word.
Yeah, Look, I think banking is a little bit unique at the moment because we're in this uncertain period. You know, it's a function of pending regulation, you know, the impact of interest rates and when the fedscin ease or nineties, so it's a little bit different. I think the economy is kind of what you read about. It feels pretty healthy.
It's slowing at the margin from a rapid labor's good, you know, And least inside of P and C. We're largely on the same page with Sir Paul on his recent comments.
What can you tell us about your customers right now? And I asked, because we had a really interesting conversation with the President's CEO of Citizens Bank of Edmund. I mean this is a tiny bank in Oklahoma, one physical branch and they have an online business with a thousand customers, So I mean we're talking tiny. But Jill Castilla told us yesterday that she's never seen a better environment for her customers. Things are really really good right now.
It's Jill's actually a good friend. It's she's not wrong, you know it. On the corporate side, there's areas of weakness, but there's a lot of areas of strength, particularly as we kind of lean into manufacturing and on shoring. Again.
The consumer, yeah, varies by income level. We've obviously seen basic wages increase a lot, particularly at the lower level, but at the same time, we've seen the prices of their staple goods increase more compounded through time than and their wages have, even though in many instances wages of double. So you know, it varies well.
And you know, we kicked off here, you know, Bill getting into you that one year essentially a little bit more than one year since Silicon Valley Bank and the collapse of it.
Do you feel like we're out of that environment?
And I think one thing we have learned is right that not every bank, not every regional, is the same and in terms of their exposure.
But we're still kind of a little.
Concerned about commercial real estate, not sure that we've gotten through that. So when it comes to concerns within some of the banking sector, do you think that we could see more troubles still depending on their exposures.
At the margin, probably in smaller banks, most of which you will never have heard of. I think, first of all, as you know, I don't particularly like the term regional. It's not very descriptive of anything anymore, particularly in a digital age. But I'm not going to.
Call you a super regional, which people call you sometimes.
No, I don't know what we're national, but I know I know you are in that campaign in the second But you know, practically and you see the same numbers I do. Is banks get smaller, they tend to have
a higher concentration of real estate. Their concentration of real estate tends to be more fixed rate, medium term in length and B and C properties, you know, so permanent financing on older B and C properties, which is kind of the area that's going to get hit the most in a higher rate environment with you know, increased office vacancies.
But it's not a systemic issue, certainly for the for the banking industry, not for any of the names you will otherwise know, and we'll make our way through it.
Well, let's talk more broadly, just about about real estate and talk to us a little bit about your own exposure to real estate and commercial real estate. How can you characterize that for us?
You know, look, it's a small percentage of our total loans, that not a big percentage of our capital. We have, you know, plus or minus eight and a half billion, I guess in total what you would define his office. And that is where all the spotlight is starting to shine on multi family. But we're not seeing stress and multifamily at the moment, notwithstanding you know, news that you might see out of New York and affordable in other places.
Generic multifamilies do and just fine. But inside of office, you know, say we have that eight and a half billion, there's there's about four and a half billion to five billion that is multi tenant, and that's where the problem is, and we expect problems there and we're reserved quite a high level against it as far as we've cycled through you know, these projects that go not performing. We've actually been conservative and what we've been reserving, so we feel
okay about it. We're heavily reserved today. It's gonna be you know, most of our stuff comes due over the next year, so you know it's kind of project based. They come online, so we're gonna we're going to know the answer to this pretty quickly.
I suspect interesting.
Hey, listen, we also said that boring is something that you guys are tapping into. We've got a great chart that we can share with those who are watching right now that our producer Elizabeth is going to share out with everybody. But it talks about bank management, not just your own, but others using boring on calls this year, quarterly update calls and earnings calls.
It is up a lot. Boring not a bad thing.
And you guys have an advertising campaign that you are stressing that we do.
I mean, I'll make a couple of points. I think if you look back and hit history, I've talked about our bank and banking in general is kind of three yards in a cloud of dust, and you grow, you know, with GDP and if and if you're good at it, you can outpace that but we are by our very nature as in industry, when you see outliers so that there tends to be something going on underneath that. And and and when we think about you know, we use
the word boring. I don't necessarily like to think of myself as important person, but banking auto be I get it, but boring. You know, banking shouldn't be drama for our clients. It ought to be predictable, consistent, stuff works. They know their money's safe. They don't have to read about us in the headlines. That that's who we are. That's how we define ourselves. You know. We we to the core of this company, to the very best of our ability.
We try to do right by all of our constituents every day, and when we screwed up, we fix it.
We're gonna leave on that note, but I hope we can get you back here real soon. Bill Demchek, he's CEO at PNC Bank, joining us from Pittsburgh. You are listening and watching Bloomberg Business Week.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business ad You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.
Big Was it big week for IPOs? Reddit raised nearly seven hundred and fifty million dollars pricing shares at the top end of the range. Shares surged in their debut, closing higher by more than a forty eight percent yesterday. The other big tech IPO of the week is the semiconductor based connectivity company Stera Labs A, surging seventy two percent in its debut and continuing to climb higher in
subsequent days, Carol. In fact, about nine point one billion dollars has been raised this year via IPOs on US exchanges. That's according to data compiled by Bloomber gets an increase of around one hundred and sixty percent compared to this point.
Yeah last year.
So does that mean we're seeing a thought?
It's a good question right in the IPO market, Don okay.
Kelly Rodriquez says his finger on the pulse of what's going on with pre IPO companies. He's the CEO of Forge Global. It's a company that gives investors access to shares of privately held companies and gives employees of those companies the opportunity to sell those shares. So if you want to buy shares of open Ai or Anderil, for example, accredited investors can do just that on Forge. Kelly, good to have you on the program. You've got a great view into the IPO market. Are we all good?
Now?
Is the thaw happening?
Yeah, it's happening. It's a question of how quickly is it happening. As we're seeing IPO start to gain traction, buyers are coming back to the private market, which is a good indication.
Where you so, how different is it then last year, for example, at this time, like give us some numbers about who's coming back and how much they're coming back.
Well, first, let me let me just remind everybody you know, we run the Leading from Private Securities marketplace and we track a lot of data, and so we just put out our private market update and here's we're seeing. What we're seeing. We're seeing a shift. For sure, by interest has exceeded sell interests for the first time in over two years. The bid ask spread and the private sector has reduced to ten point eight percent, and we're seeing year to date, March is hinting at a potential recovery
on the horizon. But we saw this begin really at the beginning of last year. But we're pretty optimistic about what we're seeing. I think people are going to watch these IPOs and see how they fare. There are a lot of companies that still want to get out and they're watching what happens with redditeast e.
And is that why you think it's happening?
I mean, you say, by interest exceeding sell interest, why do you think it's happening? Is it, you know, expectations of a lower rate environment and an easier environment for either new issues, if you will, or just kind of the equity universe overall, Like, why is it?
Well?
I think what we saw and this is where it needs to be understood. We call this period in the private market the great reset after the twenty twenty one exuberance. Bear in mind, the private markets lack lag the public markets considerably, and so there's been disrupted fundraising dynamics in play questions about have we hit the bottom and whether
or not the IPO window is closed. A lot of that sentiment has caused the private markets to freeze, and so the thawing really started later than what you saw in the public markets. And what we look for is a sustained amount of data that tells us that it's coming back. And so what we're seeing now is a convergence of some of that data, example being the seventy five most liquid names are in the Forged Private Market Index that declined last year twenty percent, while the SMP
was up over twenty percent. But now given where we sit this year, year to date, we're seeing the first increases in the index in the private market. That's an indication that people are getting more active coming in and they're watching the IPO window. So think of it as the IPO window opens, and that's an indication that private
market investing will start again. And companies that were gonna go public back in twenty one and didn't and couldn't go out in twenty two or twenty three are lining up to watch and see what happens here with Redd at Nestera.
Hey, Kelly, how is this playing out on the marketplace right now? In that are you seeing a lot of employees who have equity tied up in these privately held companies? Are you seeing a willingness on their part to part with that equity, and what's the price in general, what's the premium that you're seeing there.
Okay, so we have seen two years of unprecedented sell side pressure. Holders of these securities, not just employees but investors that came in early, have been trying to sell or looking to sell for two years. That's why when we track the bid ask spread for the last couple of years, it's been in the mid twenties to low thirties. The fact that it's come down means people are now able to start selling. But bear in mind just a
little bit of valuation metrics that are going on. If you look at the market today, seventy five percent of the fundraising or transactions that are happening are happening at or below the last fundraising levels.
Yeah, the so called down rounds.
Yes, I mean seventy five percent of the market is trading below the twenty five that's trading above. You've got a pretty steam premium actually at the top ten percent of the market. So that top ten percent of the market's being driven a lot by the AI craze, and the AI craze has brought, you know, some energy back into the market. There's byside interest across the entire spectrum of AI players, scale, AI figure, AI perplexity rock, So
there is some activity happening there. And yes, there's a lot of sellers that are now finding buyers for their shares and are willing to sell at whatever the discount that's required to get that liquidity. It is improving though, That's.
What I was going to ask you, though, how much is it AI companies AI related? I'm also curious about where crypto kind of falls into this interest or has that really you know, we saw Bitcoin certainly and a lot of other cryptocurrencies on a run. We've seen a little bit of a pullback, But I'm just curious the types of companies that you're seeing where there's interest.
So, you know, we trade at any given time and about two hundred active names. AI's at the top of the list. Obviously, Crypto is one of these cyclical sectors that when it's hot, people want to buy it and and it sort of tracks accordingly. I'd say overall, if a company is performing well, if there's growth and there, and they're putting up numbers that are essentially turning the market towards more reasonable valuations, they're still going to see
premiums in the share price that they're getting. I mean, yesterday we announced, for example, the launch of forged Pro. This is really geared towards the institutional investors that are now coming back into the space and are looking for a combination of a trade settlement system with all of the data and pricing information that would inform their re
entry back in the market. The market is still pretty discounted, I'd say there they are very good deals that are trading now at that are at fifty percent of their last round valuations. But at the top of the market, you're definitely seeing valuations go back up and players enter the market and watching the IPO space. And if this continues, I think we'll see more IPOs in twenty in twenty twenty four and even bigger volumes coming.
Hey, Kelly, I do want to just talk briefly. We only have about a minute left, but you're to date Forge Global down over thirty percent, close to thirty four percent, down more than ninety percent from all time highs back in twenty twenty two. What's in your opinion, is the market missing about the valuation of your own company that is publicly traded.
I think you know you can. You can never predict the sentiments of public investors fully. But we left twenty twenty one with spectacular numbers, and the market's been recovering, and our revenue has been down on low volumes for two years. I think, like everything else, our last couple of quarters have demonstrated steady improvement. We've got our earnings call on Tuesday, and we think the markets, particularly the institutional investors that have looked at Force, love the story
of what we're doing. They're waiting for the performance of the market to come back, and we're working diligently on building technology that will enable the market at scale, and I think the combination of that investment in the performance that we see going forward will put us in a position to be judged by the market accordingly in twenty twenty four. So we remain optimistic.
Kelly, appreciate you taking the time in joining us. That's Kelly Rodriguez, CEO of Forge Global, joining us from California. Thanks so much, Kelly, really appreciate it.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern listen on Applecarplay and and brout Auto with a Bloomberg Business app, or watch us live on YouTube.
All right, let's get to it. As stocks areheaded for the best week of the year. Time for a drive to the closed guest Data.
Dioria is back with us CO chief Investment Officer over An Investments. They are a tech company provides a software platform for the wealth management industry. They've got about one hundred and eight thousand advisors on their platform with a total they those advisors have a total of about five point eight trillion dollars in assets, so a nice little vantage point that she certainly has.
Tim Dana, how are you good to have you with us.
This afternoon.
Here?
Thanks for having me.
Yeah, okay, So I want to talk a little bit about what you're seeing on the platform right now. You're in a unique position of having an overview from so many different of so many different financial advisors around the country. You work with so many different people. Carol mentioned some of the stats there one hundred and eight thousand advisors. Give us an idea about what you're seeing on the platform right now.
Sure, Well, we look at flows obviously, and you know which asset classes are gaining the interest I think not, you know, not surprisingly, we've seen a lot of interest in short term fixed income in the last you know, year, and even recently. You know, you've seen obviously morning market assets ballooning, and you know, the platform's kind of seeing the same thing. US equities as well have been an area of you know, just in terms of the overall allocation.
If you if you take the average allocation across the different programs, US equity, short term fixed income, those are areas that have been gainers.
Okay, So how is that different than where we were, let's say, a year ago. I mean, Carol and I've talked about this quite a bit. We're up close to thirty percent right now in the S and P five hundred, not quite there since those October lows of just a few months ago. How is the activity different than what you saw a year ago when there was so much concern out there that the US would be in a recession imminently.
Yeah.
I think there was definitely a lot of you know, there was a lot of around, hey, we need to shore up fixed income positions and make sure we're rebalanced properly into fixed income, and that I would say is probably the big difference. I mean, of course, you know, you're to be clear, right, We're a platform with advisory assets that are across asset allocated models, So these are incremental changes that we're going to see, right, most people
are you know, fully allocated. But those are the big ones, i'd say, are the differences between what we saw a year ago and where there was.
Maybe more interest in some of the different fixed income than there is.
Any sentiment out there.
Like we were talking earlier data that all of a sudden, it seems like the pessimist are also now turning optimists, and people are kicking up their targets for the s and P five hundred. When everybody gets optimistic, I'm like, it doesn't make me feel good, But tell me what you're seeing in terms of sentiment indicators and maybe what it tells you about the outlook here.
Yeah, certainly we sit at the junction of a lot of different research and you're absolutely right, you know, it's hard to be bear in this market, but we're about two years after the start of the tightening cycle, and ironically, you know now is when you might want to be shoring things up. Traditionally for the expectation of potentially not getting that soft landing.
So I would say that there's not.
A lot of bears, you know, and there is you know, obviously discussion around this bull market versus other bull markets, small caps versus large But I do think, you know, at the end of the day, there are plenty of people who recognize that, yes, I should still have ballast in the portfolio, right and and nobody's kind of moving away from that.
And yes, you know, we're not going to get probably as.
Many interest rate decreases all SEQL what we know today that as maybe we thought we would, and we're not necessarily completely out of the woods. So you know, hard, hard to hard to be moving out of markets, and certainly we're not recommending that people do.
Uh.
But at the same time, keeping that forty in your sixty four is still important.
Hey, data without opening up kind of the safe on the track, the amount of information that you can see from all of those investment advisors that are that are on your platform.
But you do.
One of the reasons we like and I've said this before and I or Tim we both feel this way that you know, one of the reasons we like talking to you is because you do have so many advisors on the platform and there's a lot of information and data flow and I I do you know, I'm hearing what you're saying in terms of Europe the broad macro thing. But I mean, are there any interesting new trends in terms of what investors are doing? Is it moving money
more into equity? Is it moving market and you know, money into alternative out Like what is it that you're seeing in particular, and also like with the treasury trade and what it tells you about kind of expectations from the FED longer term.
Yeah, it's not it's not at the at the aggregate level, it's not a ton of tactical I will tell you. Interestingly, we're we're monitoring bitcoin and the new spot ETFs there
pretty closely. We have you know, obviously gray scale on the platform, and is there going to be you know, movement from gray scale into some of the bitcoin ETFs you've seen in the Spot Bitcoin ETFs kind of just explode within literally a month, you know, at an industry level, and so that's kind of something we're watching, and we're seeing assets starting to flow that way as we would expect.
I think it's an interesting place.
If you're, you know, a financial advisor, perhaps your clients were doing their crypto trades outside of what you oversaw. Now you've got vehicles where you as the advisor, if the client wants to do it, it's a speculative trade, no question about it.
But if your client.
Is doing you know, bitcoin, would you like that to be something that you at least oversee that you can at least offset from a tax perspective, or you know, kind of monitor and keep discipline around the sides of the position. So I think that's one, you know, in terms of just kind of popping things that that's one area that I would point to.
How would you characterize the interest overall on the platform in it as an asset that people actually want in their portfolios?
You know, I will say to you that the managers are kind of they're they're stepping carefully on this. What's interesting about it, I think is that certainly you've seen the fund big asset managers come out with these funds. But I would say that to a certain extent that sort of d risks maybe what people were already doing.
If I wanted access to spot bitcoin, I can get it now in a vehicle that's backed by these very large asset managers, and so to a certain extent that might d risk if I was already going to be in it. I think what's interesting to watch what the
asset managers is. You know, when do some big asset managers start putting this into and or if they start putting it into big asset allocation models, because that now brings in clients who would not on their own otherwise have gone, you know, and it kind of legitimizes it in a very different sense. And so in a sense brings the risk into the model. You know, depending on
what you think you know as a reasonable risk. There is re search out there that you know, the upside potential is so high, and people like that Lotto payoff that small allocations one to three percent.
Are you know, aren't an outrageous idea.
But at the end of the day, does that belong in you know, a fully acid allocated model that's there for the client's retirement. So I think that's going to be the interesting thing to watch. We haven't seen any big model management doing that yet.
Hey, what data is a smart conversation around small caps versus large caps versus maybe mid caps. We talked with Ryan Dietrich earlier and he's got some interest in the in the mid cap space. He was smart on calls last year. But I'm just curious, when you start to break down the market among the different market cap sizes, what's the smart conversations that you are hearing from some of your investment advisors.
Yeah, the thing about that is that it's really hard to get away from large cap. You know, whether you're passively managed, you're in an index solution, or even if you're actively managed, it's very hard for active managers on the platform and anywhere right to be taking massive tracking error risk to this market and missing out on, you know, the drivers of return, which I've been those as you.
Know, ultra large growth stocks.
So you know, any amount of tilting towards small cap I think helps alleviate some of that concentration risk.
Obviously you've been talking about.
Apple and you know, making no statement one way or the other on it, but just kind of does highlight the fact that you know, the concentrated market does bring with it a certain amount of risk that we've ignored, you know, and it's become you know, megacap has become quality synonymous with quality, but it is a concentration risk. And so I think there is an effort and an interest in you know, where the breadth in the market and having you know, an allocation that includes these these
non megacaps. And I you know, on a personal note, small value has outperformed over time. So I think, you know, to the extent you could take a little tracking error going there is not a bad idea.
All right, we got to run halothen to have a great weekend. Danda Dioria. She's co chief investment officer at Investment.
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