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Yeah, let's bring in Eric Clark. He's chief investment officer of the ra Acuvest Global Advisors, about one point two billion dollars in assets under management, portfolio manager too of the Alpha Brand's logo ETF. He covers about two hundred consumer stocks, including Netflix. It's the eleventh biggest holding in the logo ETF. Eric joins us from San Diego, which I understand. It's like sixty nine degrees there. It's not like here, Eric, where the high today was twenty one degrees.
So don't rub it in. Yeah.
I don't even know.
Why you guys like watch Netflix in San Diego. You just should be playing outside all the time. A decline of four percent after hours right now, are you buying more Netflix?
I will buy more Netflix tomorrow, absolutely, because it's seventy five here by the way, Oh my bad.
Thanks, thanks very much for that. We're done with this interview. All right, So why are you going to be buying tomorrow?
Well, you know, bigger picture, nothing's really changed with the business. It's just that people have left Netflix stock because of the Warner Brothers the time that it takes to get a deal done like this. So people just say, I just don't want to have my money tied up in something that's going to be a little more uncertain than maybe quote dead money. That's the opportunity. So the stock's down over thirty percent and business is still doing really well.
And at this point where the stock is now, I don't even think it matters what the outcome of the Warner Brothers deal is. You're just getting the stock at a great price here, So we'll just have to be patient, that's all.
Are you?
Are you saying that the Warner Brothers Discovery deal will happen Netflix will get.
That That one is a little tough because there are the unknowns of the regulatory part. I think generally speaking, I agree with the concept that Netflix really is competing with all of our time, not just you know, other streamers, or cable. It's YouTube and TikTok and Instagram, et cetera. But within the streaming, within the quote, you know, kind of core cable TV viewing, they obviously are the dominant one. It's just there's much more than just streaming and and
there's room for every brand here. You know, Netflix is the first place that people generally start that gives them that pricing power, and then we bolt on the paramount for the landman and you know Mayor of Kingstown, et cetera. And you know, HBO, Max, et cetera. But you know, the assets and Warner are so powerful and they are in the best hands with Netflix. It's impossible to know about the regulatory stuff.
But Eric, what if Netflix doesn't get Warner Brothers, do you still like Netflix going forward or do you think then there is this would be a big loss. We've done some reporting. I think we've had some stories that say, you know, this is going to help shape Hollywood, you know, for years to come whoever gets this property. So I'm just curious. If they don't get it, Netflix does not get it, then what.
Well, I think they're just going to go back to the same playbook that has you know, driven seventeen percent annual subscriber growth for the last decade. I mean, they're just nobody can compete with them on the content spend. So they're just going to go back to doing the spending. Maybe they do some tuck in acquisitions. It's you know, it's it's hard to know, but you know, you have
to give management the benefit of the doubt. They've done, generally speaking, a pretty amazing job building this brand, and so you have to assume that they're going to continue making solid decisions and you're getting it. You know, a stock that's thirty percent off the highs with strong free cash flow. I know they will continue to grow margins, they will continue to grow subscriber growth, the ad teers growing like a weed. So there's just a lot to
like here. So I love this thing on a dip, you know.
I'm looking at the note the most the ten most to watch movies from the second half of twenty twenty five Carol k Pop, Demon Hunter is Happy, Gilmore Too, Frankenstein, My Oxford. I did not see one of these.
I know, I was just thinking movies. Wait, the Woman and caviin ten A House of Dynamite.
Those are movies not shows. Oh okay, okay, and even the top.
Ten shows didn't see a single one of them. Wednesday, Stranger Things, five, Untamed, Squid Games, Stranger Things, Eric. This is interesting the way that people watched the different seasons of Stranger Things in the second half of the year in anticipation for season five. In the second half of the year, Stranger with different different seasons of Stranger Things were three of the top ten shows most watched on Netflix. So is that an Is that an issue for Netflix
moving forward? That's it for Stranger Things?
No, I don't think so. They will continue to bring out other stuff. I mean, they're just so good at this concept. I mean, listen, if they get Warner that's even better because there's so much more that they can do to refresh that entire library.
Oh so you're saying, you're saying, like, okay, Happy Gilmore two was in there, so maybe like another version of a classic HBO show or another version of classic Warner Brothers movies.
Is that what you're saying? I think there.
I think you know, you get a bunch of creative people in a room and they take something, let's say, let's say Sopranos for instance, what could we do to refresh sopranos in the same theme. There's just so many, so many things that they could potentially do.
Hard to see again, because you need the budget and nobody else has the budget. Does does Paramount Skuydance If they get the assets, do they have the creatives, do they have the budget to do?
I think they catalogue what you think Netflix could do. I don't think that they can compete with Netflix. And remember they get they're still going to have a metric ton of debt to deal with. So I look at this like a private equity owner. If I owned Warner and that was my baby, who would I love to be able to sell that library to that would put it in the best shape for the rest of time. And that's clearly Netflix. It is not Paramount Sky.
Okay, all right?
So top of mind on the call with analysts and investors, Eric like, what is it that you know we need to be asking this company right now or is it just really all about their pursuit of Warner Brothers.
Well, I just think that there's obviously just a lot of noise, and there's a lot of assumptions, there's a lot of assumptions and a lot of industries like AI too. But I think that if you widen the lens, nothing has changed. It's still an important part of people's consumption. It's still an absolute creak, easy, good value. Even at twenty five bucks. I mean, I go out to dinner in San Diego and you get a drink and a
half and it's twenty five bucks. I can watch an unlimited amount of content on Netflix, so's there's still a lot of value there. And you know, recurring revenue, business global in size and scope, you know, reaching kids as well as my mom at eighty three male female. I mean, like there's just a lot to love about a business like this. And I feel the same way about Spotify too. Similar you know, similar business, slightly different category, but for
the same reason. And Spotify is off thirty five percent too.
You know, it's interesting too they talk about you know, we've already begun to launch video podcasts from our partnerships with Spotify, The Ringer, iHeartMedia and Barstool Sports, and I've just announced two new original podcasts with Pete Davis in The Comedian and NFL read Legend Michael Irvin. So, like, you know, we talked too about just podcast taking off. Now it's not just audio anymore. It's video. So is this a big opportunity for this company or just a nice side business.
No, I think it's a big I think it's a big opportunity. I don't know about you guys, but I I can consume five, ten, ten times more content when I can listen to it in the car and you know, listen to it on a bike rider or whatever. It's not just about reading anymore. People want audiobooks, they want music,
they want videos, they want podcasts. There's just there's there's so much opportunity, and both of these brands have just a wild opportunity, you know, long term gathering subscribers and bolting on new opportunities that drive operating efficiencies, add AI to the to the mix, and in more engagement, better profitability.
There's there's just a lot of lot to like, and you don't often get a compounder on sale like both of these companies, So you should take advantage of it if you can look through some of the short term you know kind of noise.
Eric love Netflix.
Hey, before you go, I think we'd be remiss considering the day that we've had, we've seen selling, broad based selling, and we're trying to make sense of geopolitics, news out of the White House, Greenland. There's lots of stuff. We love talking to you, Amazon, Taiwan, Semi Apple, Alphabet Service now, Walmart, Liberty Media. These are among your top holdings anything in terms of how you think about the potential for opportunity
in this investment environment. Anything changing just quickly before we go.
Nothing's changing too much. It's still important for consumption as well as the consumption supply chain. You know, who's allowing all of this consumption to happen when you combine the two. That's the logo ETF and it's a pretty pretty interesting compounder type of portfolio that's still pretty concentrated at thirty thirty names.
All right, Eric, always good to see you.
Thanks for great to see you hanging out with this.
Going to come out here, yes, yeah, we will.
Side. I think the studio is about ten degrees.
We were out there last year and it was actually like kind of June gloom when we were out in San Diego. Was it kind of Oh it was, yeah, I don't know it was, but you know, I remember, you know.
I can't remember last week at this.
Point, Netflix shares. Let's stay on this. The company shares fell in the after hours as much as five point one percent this after it forecasts first quarter EPs below the average analyssessment. The company also plans deposits share buybacks in an effort to accumulate cash to fund the pending acquisition of Warner Brothers. I want to bring in Bloomberg Intelligence senior media analyst Getha Ranganoth, and she joins us
from Princeton, New Jersey, where Bloomberg Intelligence headquarters are. Getha, just your your takeaway from this report. The outlook is a concern spending on content. Got to tell you this is like an age old story for Netflix, right, the concern about, oh, you guys are spending way too much. We could have had this discussion a dozen years.
Ago, I know.
And yes, content spending, so it was up about seven percent sent in twenty twenty five. They're projecting about a ten percent increase in content spent going into twenty twenty six. And then of course you have the cost related to the Warner Brothers deal. And I think it's not just the cost site right, yes, operating margin, the guidance of tim looks a little bit light. It's below thirty two percent. I think the street was looking for something like closer
to thirty three percent. But also the ad revenue, you know, definitely not bad, but not gangbusters. So this is the very first time that they've actually reported advertising revenue. They said it was about a one and a half billion dollars in twenty twenty five. They expect to double that
in going into twenty twenty six. Again, definitely not bad given that you know, this company made its foray into adds just a few years ago versus all of the other media giants, but again, not really a number to kind of get too too thrilled about.
Was So that's not an I was just going to ask, is that in line or below or above the expectations that you've been making of late. I mean, a nice to get some new data from the company, especially yeah, in the recent quarters that you know, they're not doing the same sort of disclosures they have in the past.
No, absolutely, I mean, so really twenty twenty so you know, as we kind of zoom out and we just take a look at Netflix, So twenty twenty four was all about subscriber growth, right, they had about forty two million new subscribers. Twenty twenty five was all about pricing, right, huge price increases. Again, pretty stable subscriber growth. They obviously
did add close to almost twenty five million subscribers. But in twenty twenty six, as we kind of looked at twenty twenty six, here was like the big head scratcher, right, what is the big growth catalyst for this company going into twenty twenty six, And that's really where people were wondering, whether you know, that's why they had to buy Warner. And of course one of the big things that everybody
was looking for was AD revenue. Again, it has gotten off to I would say, an okay start, but slightly on the lower side than I think people were expecting. People who were probably expecting something closer to about two to two and a half billion dollars in twenty twenty five. So definitely I think fell slightly lower than general expectations.
You know, I always think about Giza, like what's the next markets or how much more is they're out there? And in their company release they talk about, you know, we relish competition, work to earn more of our consumer's attention, and they say despite our success over the years, our share of TV time remains below ten percent in the
major markets in which we operate. And then they said, for example, according to Nielsen in December, our share of US TV time reached an all time high nine percent point five points year every year, yet linear TV still comprises over forty percent of US TV screen time. You know, is this just blowing smoke or is it really that there is still a lot out there for either Netflix or Amazon or some others to still grab when it comes to screen time.
Oh.
Absolutely, there is still a lot more room for streaming to grow, and I think it absolutely will. So I think one of the big things that we've seen, especially towards the end of twenty twenty five and going more into twenty twenty six, is that, you know, most of the Marquee Sports properties are now moving to streaming. So obviously you have the big launch of ESPN.
Uh.
You know, for the very first time in the history of television, all of the Marquet sports are now available for people to watch on streaming. They don't have to subscribe to a PATV bundle anymore, and I think that makes a huge difference. You know, consumer behavior is changing it's changing rapidly, and so obviously there is you know, a lot more room for a Netflix, for an Amazon, as you pointed out, but also equally for a YouTube
to grow. And this is where you have this whole, this whole debate with AI, right, because as AI comes in and kind of democratizes content creation, you have more and more user generated content. Are people going to be spending more time on YouTube and less time with like premiere platforms like a Netflix, like and hbos.
I've just seen junk is obsessed with YouTube.
Yeah, but but not with the AI junk. I mean social feeds. Have you seen anything good? I mean good, nothing creative?
It's like the junk with AI you're talking, You're not talking, you too, like.
The junkiest junk You.
Cannot out there? Not yet, Tim, But I think just give it about a year or two and I think soon we're going to be seeing pretty high quality stuff come out. I mean, I know some of the industry experts have basically projected that that, you know, another two to two and a half years you will see the first high quality, fully AI generated movie you know, come out. So again have to wait and watch, but definitely a possibility and definitely something Netflix is preparing for.
I wonder what that looks like.
I wonder I've watched some stuff that felt like it was written by Chad GBT.
That's why I.
Can't wait till like pretty bad something and put you know, Tim and K Pop Demon Hunters or something. Wouldn't that be fun?
Are on Dancing with the Stars challenge?
It'd be great. It like just taking an AI generated Tim and putting, Yeah, my kids love the America's Top Model.
All right, we got to go either.
Ranging Ath and senior media analyst at Bloomberg Intelligence. Stay with us more from Bloomberg BusinessWeek Daily coming up after this.
You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five East during Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Great to add back with us on all this and more. Bob Michael He's Chief investment Officer and head of Global fixed Income, Currency and Commodities at Japan Morgan Asset Management, also co chair of the Asset Management Investment Committee, a member of the Asset and Wealth Management Operating Committee, and the Asset Management Operating.
Committee joint for you dude in the studio.
Perfect Data have you, whether we're talking about Japan, whether we're talking about what's going on in Europe. I kind of want to start uh with the President's latest assaults on European allies and market reaction that we are seeing. Is the talk actually turn into something that our allies are concerned about?
I think?
So it feels very chaotic again. So bess And is right to refer back to April of last year when there was a panic. I know last night I went to bed in a panic and woke up in one and it didn't get any better because of Japan, because of so many things. We thought the President was going to Davos to talk about housing and credit card affordability. Suddenly now it's become about greenland affordability. How are we
going to buy or take it? And how are the European countries going to finance us or are we going to re tararf them? And it seems crazy, except that things have a way of happening which people didn't think would happen. So you have to back away and do you risk a bet Japan. I don't know if that necessarily came out of the blue. But we're now faced with that where the bond markets become unanchored because they're going to be snap elections and everyone's going to compete
for fiscal stimulus. If we're looking at the bond markets and assessing all of these things, it feels that the fiscal austerity which everyone embraced after the Great Financial Crisis is out the window. It's now borrow and spend. There seems to be plenty of capital around to finance it, and a backup in yield may not be so bad. So, yeah, things are a bit chaotic, and the markets do feel a bit panicked.
So Bob, you know, there's chaos, there's chaotic moves, there's de risking, and then there's de risking. So is this like a short term think Until we really figure out how much of what the president is saying is just rhetoric or the first negotiating ploy or something that sticks around longer and impacts the investment landscape longer, it's.
Hard to know. I would have liked to have heard something at one o'clock. Instead, it's sounding like a domestic victory lap. Then bord Air Force one and head to Davos and deal with a whole international array of problems. And my guess is the administration is going to put everyone on their heels and negotiate the best deal. Whether it's Greenland, whether it's Venezuela, whether it's tariffs, whether it's with China.
Who knows.
Should the President be taking a victory lap based on what you've seen in the past year.
If I'm purely objective and sit here in January and say we're heading into twenty twenty six with some momentum. We closed out the fourth quarter pretty strong. We're expecting somewhere either side of two and a half percent for GDP and inflation in the US. The US is collecting some tariffs, the effective rates about sixteen, so that's a source of revenue. The markets are at highs, and that momentum looks like it's going to continue. So yeah, I think you can claim that if you want to.
A chance though, that the bond market and you know, perhaps even the equity market are overreacting that the president. You know, for much of last year there was the taco trade, the idea that what the President said wasn't necessarily what ended up happening and I think you know that so called Liberation Day tariffs are a perfect example.
Of that we're entitled to overreact. I think we've been pretty well behaved for a while. Volatility metrics have been abnormally low. We're allowed to throw our toys out of the prem every so often. I think this is a message from market participants to the administration. We can only go so far, and they've got to figure out where
the line is. I think what Beson forgot to include was, yeah, the market had to fit in April, and then they backed off of a lot of things and then calm ensued, we need to hear some of the same kinds of things.
We should know.
The President is still making comment of the press conference. We'll go back to it when he does take questions from the press. You can see it right there on the screen, and also check it out on Live Go on the Bloomberg terminal. You mentioned the reaction back in April. I believe the technical term the President used was the bond market got a bit yippy. Is the bond market yippie now?
Not yet? If you look at Japan, Japan has a whole host of domestic things to deal with, so that's become unanchored when I look at the US market, Yeah, we've backed up a little bit, but you know what, We've got a FED funds rated at about three and five eighths the two years within touching distance of that. You've got somewhat of a normal steepness to the yolker from FED funds to two's to the ten year and the thirty year. It all feels pretty orderly now, a
bit of a pause. So I actually think things feel okay.
Anytime I feel like Bob, we pull up geopolitics and people are like, well, who holds US treasuries? And we've got a story on the Bloomberg that talks about European countries holding trillions of dollars of US bonds and stock, some of which sit with public sector funds. And so there's you know, the speculation that could our allies or even folks like China or something like sell US debt? Is there really any alternative into US debt?
Realistically, No, there is not, And we did this about a year ago. We went through this in March April May. We spent a lot of time talking to our clients, particularly our non US clients. They looked at everything and came back to when you look at the US debt markets, which includes governments, but it's corporates, it's securitized, no other marks. Markets have the depth and the breath. They have confidence
in the country. They're not willing to abandon it. They see the presidency as to two year terms when you throw in the midterm election elections, so they're willing to ride through it. I don't think there will be wholesale selling of US treasury debt.
So you're referring to the Danish pension fund academic or pension, Yes.
That's and that's a small but I just in general, like I think about we've talked about it in terms of China, just any you know that this is a great lever that foreign investors or foreign governments could pull against the US. But the reality is they're not likely too because there kind of is no alternatives.
We had a lot of very large non US clients look at alternatives and line up plans if we were to sell this, this is where we would go, and they paused putting more money into US bonds, but they didn't take any out, and by the end of the summer they were putting money back in again.
We're speaking with Bob Michael, chief investment officer, head of the Global Fixed Income, Currency and Commodities Group for JP Morgan Asset Management. The President still speaking at the White House. We do expect him to take questions too in just a little while. Back to this pension because Anders Sheldy cited this is the fund. Chief investment officer cited Trump's talk of taking over Greenland, concerns about fiscal discipline and
a weaker dollar for reasons for the decision. You don't buy the fiscal discipline and the weaker dollar part of this. You think this is just political.
Is there?
Where is their fiscal discipline now? It's hard to find it, Like go to the old stalwarts Germany not there. Look at what Japan could and couldn't do. That seems to have been abandoned now. The US for sure will see who the next fed share is, but it sure ain't going to be the next Paul Volker walking in. So I think fiscal discipline is a thing of the past, and there is a feeling that deficits can be financed. In Japan is kind of telling us you can get to three hundred percent life still good.
So when do we pay the piper on this global lack of fiscal discipline? I think about Andrew Russorkin, who was just on to talk about his book nineteen twenty nine, and we talked about, you know, crises in particular in general, and that leverage and debt. Right, these are the things that get us into trouble, whether we're an individual, a company,
or a country or ken. So is that potentially the next crisis, just the lack of fiscal discipline globally or do we just kind of continue to go along here?
So I read nineteen twenty nine very engrossing. I don't see the problems that existed then here today. I don't see the rampant leverage throughout the system which is becoming problematic. It can't be it can't be served as it's being written.
Even on a government or software level.
Yeah, it's not happening at the government or sovereign level. And that new tool called QUE allows that to perpetuate.
Right.
Well, that's but that's the point. Like I think about years ago, I remember not doing an interview, a business news interview or markets interview without talking up about the US government debt and then it went away and now we are back again. So like I guess, I think we kind of continue to try and find out when is it really a problem. Certainly as rates go higher, it becomes more expensive to service, certainly here in the US. But I'm just wondering, like when I.
Think when it gets thrown away. I started the business in eighty one, I work through the twin deficits. I was taught the US will never be allowed to finance itself below ten percent again, and we promptly drop from sixteen percent to three tents of a percent, and in the Clinton era, suddenly you know, the deficit was gone. We look at where the money is being spent, and we may not always agree where it's being spent, but it does create some productivity. We talk to all the
municipalities that are accessing the various programs they can. They're actually going in taking capital, they're hiring people, they're consuming resources, and they're investing in their townships or their states, or their cities or whatever it can be. Ultimately, that generates activity that gets taxed, and I think that's what we saw in the late eighties into the early nineties.
Last question, I'm going to make you push ahead to our conversation with Robert Kaplan Vice Cheric Goldman, and we're going to be hearing from him in just a few minutes. On the FED, polymarket has Kevin Warsh as the favorite for the nomination. In fact, Rick Reader is now number two, which is interesting to see. Who has the bond market priced in as the next FED chair.
I don't think the bond market has a great idea. Reader's number two. For me. I've known him for close to forty years. I think he'd be an excellent fetchair. I think he'd be somebody very different. Let's get a true bond markets practitioner in there who's had to live with the aftermath of FED decisions. So I'm certainly a supporter of his, But he's number two behind Bessant is still my number one. I think the President is still stalling and trying to negotiate with Besson. I don't see
worsh too hawkish. Hassett's got to be removed because of the DJ and Waller. I don't know that the administration feels they can control Waller. So you know, Rick Rick is the you know, shining night that comes in out of left field, smart guy will do the right thing, but I still think it's best was the number one.
Not expecting to hear that thing.
Whether it's best at a reader or whomever will be independent or that depends.
I've never fully believed that they're independent because they're political appointees, so they get appointed for their core views. I believe when they're in office that they always try to do the best thing. But some believe that fiscal austerity is the best policy, and other beliefs that a lower cost of funding and economic activity and monitorism will help stimulate the economy.
That discussion around the table right means something right, and all those different voices. Your voice always means a lot to us.
Thank you so much, really happy to be here, A great day for it.
We thought that on our planning call, We're like, we're so glad he's here today. But Michael B Well, we really appreciate Chief Investment Officer, head of Global Fixed Income, Currency Commodities over at JP Morgan Asset and Management.
Stay with us.
More from Bloomberg Business Week Daily coming up after this.
You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from two to five eas during this listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Hey one of the stories and not stories but reality in terms of the global trade borrowers venturing back into Europe's marketplace for debt today, though some companies staying away amid the tensions with the US of a Greenland. And that's after we saw global bond sales having their biggest ever start two year as borrowers of every stripe seized
on investors insatiable appetite for risk. US alone, that first full week of the year was one of the busiest for US corporate debt sales on record, and risk premiums we saw staying low even amid heavy issuance, but the amount of bonds cheetering on the brink of junk surging last year. That's according to JP Morgan Chase. They put this out a little bit more than a week ago at least, and we included it in our reporting. So we want to kind of dig a little bit deeper into this market.
It's time now for a weekly Women, Money and Power, where we speak with some of the most influential women from across the business world. We've got Joanna Diegos with US, co founder of bond Blocks. It's the ETF issue focus on fixed income, more than seven billion dollars in assets under management. We spent a lot of time in sort of the first forty five minutes of the program today talking about what's happening overseas and US Treasury market reaction. I want I want to focus a little bit on
corporate credit and the outlook in twenty twenty six. Carol mentioned some of the sort of the busyness that we've seen already this year, But what is the outlook on corporate credit right now?
Yeah, I think we would say it's the same red thread we've seen over the last three years in corporate credit, and that is the resiliency of American companies and the depth that they're issuing, even all the way down onto high yield. You're seeing you know, lower or average default rates. People can count on the fundamentals of these firms year over year. So these these companies have started you know, pre pandemic with really good foundations and their fundamentals, and
that's continued. So the resiliency of the economy, of the strength is actually the story when you see those tight spreads. What we focus on at bomb blocks is your ability to trade or your ability to access different points of income for risk across all the acid classes and fixed income.
We'll talk to us about flows in apt that you've seen, maybe as you wrapped up the end of last year, and then what you've seen as we kicked off twenty twenty six as we did. Was it Mike who said that folks have been saying it's like already felt like a decade here in twenty twenty six, So give us a little comparison.
Yeah, I think twenty twenty five, you know, more record years in my space, in my industry, tfs are an incredible tool for people to access fixed income markets. It just continues to grow.
But where did they Where did you see most of the money coming in? You're still last year and then lot what's changing this year?
Kard of strength, It's sort of a familiar story, a ton of strength in shorter duration assets. People look for, you know, the most attractive yield and risk combination they can and it's shorter duration has been a huge category for ETFs and it can it needs to be so really strong growth in corporates your previous too, commentators talked about how you know, towards the middle and the end of the year, people were still looking at the strength of corporate debt. In EHFS, it was the same story.
And then we're seeing on our desk we talk a lot to clients about public versus private debt and how to access that. So a lot of conversations, a lot of interest in how to compliment existing bomb portfolios with other sources of yield, or looking for a way to enhance yield on.
The public side of the ten year yield getting our attention at least today four twenty nine where it is right now. You were shocked to see it that.
High, well, hitting you know, four point three percent right on the tenure. I was a little surprised. I mean, it could be five percent and we have you know, but I was kind of surprised.
Yeah, the recent move higher that we've seen, why has that been.
I think that you know, in all these bouts of volatility. Again, as we've looked over the long term, we've seen the tenure approach five percent a few times, and it just represents the concern and look, you know, hopefully structurally the yeld curve is changing towards your rates being higher in the long end and shorter on the short and lower on.
Which makes more sense. But you kind of get yeah, in terms of the short term volatility that we continue to see, whether it's a white house strategy that is certainly upending.
Yeah, I mean that that is embedded. You know, there's there's going to be you know, the terrafs are now embedded in the outlook in twenty twenty six. For investors, volatility is always on now and in the equity markets, what we like to call people's attention to is that a year like last year, if you aren't looking at fixed income and you aren't looking at bonds and how to add more income into your portfolios to offset volatility, like you're missing out on these huge cushions.
Which was like I feel like it's been the talk for the last year or so or a couple of years right where you think about what you can get on a US treasury right in terms of yield and return and lock it in, Like why wouldn't you, especially if you're thinking longer term. A lot of your offerings obviously are within the US treasury market. You guys do do some emerging market right, Yeah, what kind of activity have you seen right now? I'm looking I think five point.
Emerging market as a category, and fix income was the best performing category across fixed income last year, so a lot of interest in dollar denominated debt and then also just getting non US exposure was.
A trade last year.
So what we think is important across fix income is just understanding how you position your bet or how you position the way you think about that. And one thing about emerging market debt is is typically very very long dated debt, So there's an implicit two things going on. There's a relationship to the US dollar, and then there's also just the duration risk in there and and interest
rate risk. So what we try to do is like update that space because people really do want to be shorter, and that's something that I think.
So it's active in terms of the change in terms of composition, well it's an index, it is, it's just.
A shorter draation.
I think that appeals to people to think about, like how do you think about a forty year exposure and should you be dialing that back? In these markets this is a simple one to ten year exposure, And I think that's that's what's going on in fixed income markets
as they relate to equity markets in your portfolio. Is now people really understand the maybe pain of interest rate risk and what can happen when raids zoom up, and what you're anticipating for this year if rates continue to go down, but we think that's going to be very moderate this year.
We're going to be speaking with them like grafeo Bloomberg News process or reporter in just a few minutes, and she's written a lot about ETFs and how competitive the space is. I mean, it's just I don't have to tell you or anyone watching or listening. There's so many ETFs out there. Do you plan to launch any new ETFs this year?
Yeah, we have some in registration.
Where's the white space, like where's that? Where the areas where that hadn't be covered?
Well? I think like a.
Big innovation from last year was private credit and Emily's family is written it a ton on private credits, you know, And and the reason is is because ETFs someme to touch places that you need more transparency in, you want to have access in and liquidity, and so those are the spaces that people put time and effort in terms of innovation, and I don't think that that's done. I think that the important work in how you can access
alternative yields. Alternative returns is important to ETF investors because ETFs are used in big, broad swaths of wealth portfolios and they need to be more precise. Markets are more precise, the modern markets are more precise, and so adding an ability to add private credit has been has been the talks. She's written a lot about it. Is it private credit?
Is not private credit? Our product, Our private credit product PCMM was the first to give you access to middle market exposures and you know completely, So it's a pure approach and that's what clients are really buzzing about when we're talking to them about what to do next.
Am I right?
In terms of assets about one hundred and eighty.
Eighty seven million? Yeah, And it's surprisingly like that's the leader in the category in terms of like adoption, and that's sort of I think the next frontier is improving people's exposure to that in their portfolios and improving their perception of what is in a private credit ETF.
All right, gott to leave it there, Johanna thank you so much, Johanna Goyaugos. She is co founder at Bond Blocks. They've got about seven billion in acids under management. Joining us right here in our studio.
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