IMF, Western Alliance, ETFs, and Kurodanomics

at Bloomberg dot com slash podcast. I was thunderstruck in your speech and what your world economic outlook says about a five year vision of the International Monetary Fund of growth from three point eight percent down to three percent, a twenty one percent decline in the five year vision, are you modeling global recession? And dare I say global recession for five years? What permodelink is a period of slow growth that is being held back by a number

of factors. One is not so dramatic. Some of the fuzz growing economies like China or South Korea are growing fast no more. But you would expect that there would be others to pick up the torch of strong growth and this is not happening. What is holding growth back are three groups of factors. First, low productivity. We have been struggling with this phenomenon before the pandemic and we

continue to struggle with it. Second, it is fragmentation, the fact that the world economy does not enjoy the same impetus that comes from more to understand, we're going to spend this entire interview on trade for imitation. Give you the third point right now. And the third point is that countries that we would expect to add to growth from TM markets, low income country are in particularly difficult place because they have been innocent bystanders, repetitive shocks that COVID,

Russia's invasion. The fact that the world ecolling me as a whole, is now less able to support the weakest members. Why the piece divident is gone well, and we're through COVID, and it is a celebration of these meetings as we come beyond COVID, the assistance of you and other institutions in getting us beyond this pandemic. But you end your speech talking about the ropes that tie us together. The ropes between Washington and Beijing are afraid as you and

I haven't seen from our youth. How does the IMF tie the ropes between Beijing and Washington back together? Where we see an opportunity to do better is to identify very proud practically areas where cooperation is a must. Climate change cannot be fought by individual countries. The criticality of adjusting to more supply security at the lowest possible cost, engaging on securing areas of the world that have become

more fragile. It is in everybody's interest that we do not have more civil wars more comright, But in everybody's interest in the tone here and particularly in the Economist article of two or three days ago, is China doesn't want to participate. Now you've spoken your comments in your speech of the new practicality of the Premier of China, can you report that there's a new practicality out of

Beijing to help us with those ropes. Tie together what I hurt in our bilateral meeting, can also publicly from Premier Li Chang. Are three important messages. First, Chinese commitment to continue to open its economy for private investors from

all over the world. Second, China's commitment to play a constructive role in multi lateral institutions, including the IMAN, and third, Chinese commitment to support developing countries that are struggling with high that levels for making them China, the major A major sore so important here and this goes to our en Rehardens conversation with the Speaker of the House last

night in Los Angeles. But to take it away from the politics and go back to IMF one on one, the Chinese don't want to participate in the normal and historic IMF restructuring process. They don't want to exgeneration, they don't want to take a hair cut and bring down the interest rate. They don't even want to write down some of the debts that they were directly or indirectly involved in. I spoke to our Matthew Hill and Mozambique and Zambia today. Can Chinese help you with the challenges

of Zambia. What I am very mindful of is that China has been very slow to recognize that multilateral debt restructuring requires China to play by the rules that are already established. It is now the time for China to demonstrate that they are capable of playing by these rules. Yes, we have had very slow process on that restructuring on Chat, but we have completed it. We have now initiated a debt restructuring for Zambia, and I got the assurances from

the Chinese premier that China would play its role. They're the largest creditor to Zambia for Zambia to move to a more reliable path. The same applies to Sri Lanka, where China has taken a commitment to play by the international rules. The same applies to Ghana, Tree Ekiopia. We have created, together with the World Bank and India as G twenty Presidency, a new global sovereign that round table. China is participating, They're they're part of it. They're participating

fully and they're participating constructively. Where we need to continue to engage with China is on how we can achieve the same result for countries in terms of shrinking that that level that China can implement meant domestically given their

own internal domestic constraints. Direct haircut is the most straightforward way, but we can achieve the same shrinking of death through that reprofiling, in other words, extending by many more years the time of services trying to agree to that traditional methodology. They are not well. They have agreed in the case of chat We are now working on having them agreeing

in the case of Zambia. But look proof of the pudding is where it is in the meeting, so I can say we got reassurances from the Chinese leadership that they would play constructively. From now we need to eat the cake. Now we need to see China delivering on How urgent is it, as you said in your speech, as you start these spring meetings, this difficult climb. How urgent is it for President Biden to meet President to begin the path of practicality and the path towards the

huge tensions that we have now to improve those tensions. Well, this is for the leadership of the of these two countries to decide. What I can say is that when there is so much tension between the two largest economies, then the innocent bystanders are being hurt. We calculated the economic impact of the taris US impulsed on China for last year. This shrunk global growth by zero point four or you want to player, come on, it's a working paper the IMF and basically we're shrinking in Japan and

Germany out of the global system. Right Well, now, this is this is a separate issue. I'm talking specifically about the tariffs. Okay, the taris that have been impulse they reduce global GDP because the impact of trade restrictions. We know it from I'm running out of time. Are gonna make some news. Are you suggesting that President Biden should

eliminate or diminished the Trump tariffs? We think that getting on a path of less fragmentation in the world economy is good for everybody, including for middle class in the United States, because when we impose more costs, they trickled down and somebody pays. Who pays it is in the end consumers here, consumers everywhere. So less fragmentation in the world economy means the highest standard of living for people everywhere.

You're listening to the Team Cancer ALIGNE program, Bloomberg Markets We Jason ten A m Eastern Bloomberg dot Com, the r Heard radio app, and the Bloomberg Business app. We're listening on demand wherever you get your podcast. I want to talk about it. Now. We have an economist who has a PhD. Wow, that's big. I'm not that's University of Maryland. When you make the commitment for PhD, that is a huge commitment. I mean the masters I got my NBA is two years. I spent half of it

on the golf course. But when you go to get a PhD. You know, that is a commitment. Uh some more rigorous than an MBA. It's a little bit more rigorous. Yeah some. I have chief economists at Core Lodgist Joints this year. We want to talk about the housing market here, so Selma, give us a sense here. We've had these rates move up dramatically. That didn't stop me from diving into the real estate market. Well, and then, as Critti

pointed out, we've had rates then moved down dramatically. I mean the ten year was over four percent like what three weeks ago, and now we're at three twenty eight. Selma, is that like a concern? Um? Yes, Well, first of all, thank you very much for having me on the show. Um. Yeah, I mean we've we've been muddling through this transition in the housing market brought on by by Surgeon mortgage rates and and you know, we had a really miserable winter.

Homesales ended up with the thirty to forty percent lower activity at the end of the year than than at the end of twenty twenty one. But now mortgages have come down from the November peak. You know, after picking seven at seven percent, mortgage rates have been. You know, they even came down to six percent, went up to six and a half, coming back down towards six percent.

So um. You know, lower mortgage rates have definitely helped the home sales activity which has which was really really strong in the first couple of months of this year. And we are seeing is that the buyers are very very responsive to these low lower mortgage rates. Um and then as soon as mortgages start coming down, buyers jumped in. It's the only problem really at this point is inventory

that continues to be extremely scarce. And you know, the usually spring increase that we see for spring homebuying season, it's just not there this time. Run well, and also the question, you know, why our rates coming down so quickly. I mean, it's great to have lower mortgages, obviously more people can afford to buy a house, but if we're heading into a recession, that's got to concern you a little. Right.

If you look at the World to interest rate probability page on the Bloomberg Terminal, which is how we calculate what markets are forecasting for the FED, there was a seventy percent chance of a rate hike at the beginning of this week. Now it's only a forty four percent chance. So that means the market is really worried that the Fed is going to freak out a pause right right, absolutely, And and that's actually reflected in the mortgage ry spread,

you know it has. It's we've had one of the most volatil years in terms of mortgage ry spread, and we ended the year at three hundred basis points. It's over the ten year treasury from thirty year fixed. You know, this is almost double that that, you know, the long term average of a five hundred and seventy based points. It has come down and now again over the last month or so, it has jumped back to closer to

three hundred basis points. So he has mortgage right, volatility is huge, and I mean, imagine how difficult it is for potential homebuyers to plan in this environment because you don't know if you're going to be space six percent, if you're gonna bay seven percent. And for some folks that matters a lot in terms of how much they can afford. Well, I'm going to refinance my mortgage I just got into I'm gonna say twelve to eighteen months, and it's gonna have a four handle on the front.

That's my prediction. So you got a floating rate, Well, we'll see about that. Yeah, we got some we got some work going on there in the mortgage market. So I'm gona talk to us about the regionality of what's going on out there in the housing market. Is it as simple as everybody's moving down to the sun belt and that's good, and everybody's moving out of the coastal cities.

Is that kind of the story? Um, well, I don't know that it's as simple as that, but I mean that's actually what the data is reflecting at this point. You know, it's it's very the home price changes are varying so so much across the US. On the West coast, Mountain West, we've seen significant declines from last year's peaks, as much as ten to fourteen percent, so double digit declines. On the East coast, Southeast Texas, New England not as much. Home prices are down in very low single digits, up

to down three percent, So there is huge variation. But I think it's really it's it's about affordability. You know, Mortgage rates really took a huge chunk of the purchase budget for buyers, so it's about affordability, it's about lack of inventory. The areas that are doing much better are areas that do have new construction activity where builders have been able to compensate buyers for that and mortgage rates. So it's it's about more than just um sunshine. Right, Yeah,

it's taxes, It's all that kind of good stuff. Real quickly m thirty seconds. Some what's your expectation for where mortgage rates are going to go? Well, I think we're going to continue to see volatility in mortgage rates, but I think generally speaking, we're going to be uh driving a mortgagees are going to be coming lower. Um. You know when you look at the consensus forecast, it's all over the place. I mean, it's it's so uncertain and

wide ranging. Um. I think generally speaking, uh, we expect mortgage rates to come below six percent by the end of the year. Um. Some expect still in that six percent handle, but but I think we're going to be drifting lower to five and a half. All right, SMA, thank you so much. I'm again I'm holding out for something with a four handle on it, So see what you can do for me. Some have she's a chief economist at a core logic coming up and just moments. Yeah,

so I'm confused. Did you buy I actually asked, are you no? I haven't fixed or I have a fixed mortgage, but I'm gonna be financi that bad boy. Um oh, I see okay, yeah, okay. For a second, I suspected you just bought in cash and then you're waiting to no, I need that. I like the tax deduction. I didn't have that for a while. So you're listening to the tape Cancer Live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio tuning half, Bloomberg dot Com and

the Bloomberg Business Half. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty. You know, cars for the American market designed and built more quickly. Now, absolutely, this is a journey, Matt, So it would not be from one day to the next. It's not gonna happen tomorrow.

But I think by bringing digitalization engineering combined with the design, it will increase the amount of vehicles that we'll bring to the market, and it would decrease the amount of time. This would not be possible if we would not have the support from Bozai and in Germany. Yeah, I know that Oliver Bloom fully supports. They studied along with the board. Yeah, we have our non leads and we are also the

bd W brand CEO, Tomas Schaeffer. So everybody's supporting the strategy that we need to get more responsibility for the design on the developer of the vehicles. She in the US. I was just down in Mexico and I saw down there some of the original bugs, right, and my heart flutters a little bit. It's such an iconic design. I grew up partially in Germany, so for me, the golf is almost synonymous with car. Right. My mother has pined for a Volkswagen bus for the better part of my life,

and I'm old. Are these iconic nameplates gonna come back? I was worried when I heard the golf this may be the last generation of the Golf. Yeah, So going to your point, they will come back. I mean, we're going to maintain the DNA of the brand, the iconic products. For example, we are launching the ID bus in a couple of months here in the US. It will be a global launch. It will be in the beginning of June, and the launch of the product will be available in

twenty twenty four. So this type of vehicles, iconic vehicles, we will preserve the DNA of the brand. Going forward, there will be a next gen golf. We're gonna still see a golf in twenty thirty. We're gonna maintain the DNA of the brand, probably a golf. I cannot guarantee you, but I guarantee you that the DNA of the brand of these iconic products will remain in Let means you, yes, have to buy your mother one as sure. Okay, so

she's just getting on. So speaking of demand, what is your view on where the US is right now in terms of recessionary fears, et cetera. Yeah, So, first of all, let me tell you that on the first quarter of this year, the marker is growing nine percent, So despite the recession fears, despite inflation, and despite the interest rate the market, we mains strong and we have gained market share as VAW over the last three three months, so

that's very positive. How strong nine percent market growth is very strong, I mean, and we grew almost ten percent, so I think that, Yeah, there's inflation pressure. There's interest rates obviously, particularly on the least. When the consumers go to the dealer and they see that the least has you know, almost double, he has an impact. But he has not slowed down the industry. Now. I think the FED has made really good decisions on increasing the indust

rate to keep the interest rate under control. I think this strategy will pay off by the year end twenty twenty three, and I would expect that the interestry would start coming down slowly early next year. We've seen in the last couple of days a number of carmakers put out news about their own finance arms. Right, it's really important to have your own finance arm, especially in this kind of situation, a high prices, rising rates, How do

you plan to finance your growth? So we do have estric customers, so we do have a bank here in the US, a very solid bank. But again it goes back to the products. So let me give you an example of the eighty four, which when we started manufacturer in Chatauga in the state of Tennessee last year, it's our first electric vehicle manufacturing in the US. Today, for the first three months, we're number four in the rankings

in the electric vehicles. And then on top of that, we have a company called Electrify America which are charging stations, you know, three hundred charging stations, three thousand, five hundred superchargers. We're gonna duble that in two years. And the most important thing is that one percent of that comes from renewable energy. Yeah, and then we give the buyer of the i D four up to three years thirty minute charge for free, included in the package of a vehicle

which starts around thirty nine thousand dollars. So when you're a consumer and you look at the total picture, you're an affordable I D four with three energy renewal energy for the next three years on, you have some financing options. On top of that, you had the IRD credit. That's a company package. All right, Pablo, thank you so much. I really appreciate it. Matt also appreciate having a set

with me. Thank you for allowing me to come Pablo to see Volkswagen of America CEO and Bloomberg's Matt Miller. This is Bloomberg. You're listening to the Team Cancer Line program Bloomberg Markets weekdays at ten am Eastering on Bloomberg dot com. The I Heart Radio app and the Bloomberg Business app. We're listening on demand wherever you get your podcast. All right, let's bring in Herman Chan. He covers the

regional banks for Bloomberg Intelligence. He's been a busy, busy analyst over the last several weeks here, So Herman, I guess I'm just looking at Western Alliance. That's kind of the one of the banks I have on my screen to keep an eye on. Is maybe a potential at risk type of institution out there on the West coast. It's up five percent today. I don't know what to

make of it. What are we hearing from some of these banks or are we just waiting for earnings to really get a sense of how their balanceies are, how their deposit levels are. Is that kind of where we are? Yeah? I heard the segment earlier in terms of Western Alliance and how they positioned themselves over the last couple of days in terms of their update and lack of the

deposit disclosure. The disclosure that they subsequently came out with yesterday afternoon was actually pretty positive in the grand scheme of things. Deposits down and they finally gave that number. They didn't give that initial number in the in the Tuesday update, so that was a big consternation for them. Eleven percent pretty decent. I think some of the analysts were expecting something that was worse than that, So I think that's why you're seeing a bit of a relief

rally from Western. Liane. If I'm a banker and I've got like Western in my name, I'm gonna I've probably lost deposits, or i got some kind of Silicon Valley name in my name, I'm losing deposits. Well, right, what do I do if I'm a banker? Do I literally get on the phone and call these people up and say, take your money back from JP Morgan Chase, from Bank of America wherever you put it, and bring it back. Is we're okay? Is that what I'm doing? Yeah, that's

what you're doing. Uh, you're going, dude that listen, I give you a toaster. Although I'm perfectly happy with my bank, um full disclosure to bank, they have obviously no branches here, so it makes banking for me particularly difficult. Nonetheless, I have not changed my bank since I moved here from Ohio like thirty years ago. Right, I'm more likely to change my wife than my bank, right, I mean, it's

just something people don't do, right. She doesn't listen to radio, so um, I just can't imagine that people would change their bank and then change back, right, unless I mean, I'm also maybe extraordinarily lazy and disorganized. But you're a super loyal customer that I'm sure Huntington is glad to have you. But some of these other institutions, specifically technology and startup companies, have had this heard mentality where they don't want to operate within a regional bank structure because

they view them as less safe. So you've seen them jettison their deposits over to a larger, too big to fail banks. It's unfortunate, but the hope is that when things start to stabilize, and you've seen that a bit with SBB being acquired by for Citizens and the signature deal with New Your Community, it has quelled some of the concerns and specifically within regional banks that they are operating as as expected. So the hope is that the concern sort of goes away and then things can move

back to normal and deposits can come back to the regionals. Yeah, because I think the greater or wider economic concern is, Hey, if regional bank A has lost deposits, that bank is less likely to lend to my new little store I want to open up on main Street and that could impact you know, growth, economic growth GDP in this in this country. I mean, when the banks report numbers, how do I get a gauge of whether that's happening, whether they're getting credit is a lot tougher than it used

to be. Yeah, I think the analyst community will ask those questions and those the management teams will talk about that in terms of their guidance for long growth. The general expectation is that if funding costs and deposit costs are increasing because banks need to pay up to retain your deposits, and the availability of funding with deposits declining is weekend, then banks should have less appetite to land, and so credit underwriting will be tougher for for folks

that are looking to borrow. So you're going to see hiring bar and costs, You're going to be tougher underwriting standards, and that all can trickle through the economy and deliver some slower GDP growth. As you mentioned, So is that something that you'll see in the numbers, or that's just you're going to hear in a commentary from the companies. You're not going to see it quite in the numbers yet.

You'll see potentially slowing loan growth, But more in focus for us is the commentary and the guidance in terms of what loans will look like for the full year, and i'd expect those the guidance for that to come down. Generally, loans growth mirrors GDP growth, so you could potentially see that decline for at least the regionals because of all

the funding issues that they're facing. When when is the tide going to turn so that these banks can make money like net interus margin money, old school bank banking money, right, So what we are expecting is that it's going to be tough for them because margins are tightening for for across the regional banks, space funding costs are rising and your loan yields aren't going to go up as fast, so you need a competition to raise They got to pay more right to depositors, so they got to pay

more for depositors to keep them in the door. And what you need from a macro perspective is the FED to cut rate so they can lower their deposit costs by by cutting what they're paying out, So that that's what can drive margin expansion going forward. Number though, because you know now that investors that depositors, I'm sorry, have gotten used to actually making money, um by giving it to banks, and uh, they've gotten mobility right now, Depositors are like, oh, I can move my money out of

bank A and into bank B. Um. They're going to be doing so with more frequency, right um, So it's going to be hard for banks to go back to getting you know, money for nothing. The good thing, at least from a bank perspective, is that you have a lot of price reactivity wants interest rates to do cuts.

So the differential you mentioned banks can see their depositis go to other places where're focused on what's going on in the muddy market mutual fun complex, which is seeing very strong inflows over the past several weeks after the SBB fallouts. You know, the attractive of that sort of asset class world diminished once we see some FED rate cuts, so that differential should narrow and that's only going to be positive for the banks. So Herman if I'm a

regional bank investorate. I might just mind banks in Texas and Florida and Nashville or something. Yeah, I think that's that's the right perspective. Folks that are in Middle America and Ohio, like Huntington, aren't going to be affected by the fallout with with SBB and signature. These are all sort of coastal markets in California and New York and so I'm sure out of the folks in Columbus probably

haven't even heard of SBB. So that's actually a good thing, and we'd expect more stability from some of the smaller banks that operates in the Midwest or the southeast real quickly. There are worldly people in Columbus, Ohio, you know, Ohio State University. It's not like we're these provincial you know, We're not a town of farmers. We're pretty advanced. What's pretty advanced. We can play football. You can play football and get great all right, Herman Chen real quick scale

one to ten. How's your experience at Penn State Back in the day, Penn State was great. Go Lion's got a great football team, gonna be potentially in the playoffs next year. So really looking forward to the seas ago like a little Penn State plug in their Hermit Chin senior analyte covers the regional banks in fintech for Bloomberg Intelligence. Proud graduate of the Penn State University. Here looking at the markets here, kind of unched here, not much a little bit of red on the tape, but not a

whole lot going on. You're listening to the tape. Catch our line program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio. Tune in ALF, Bloomberg dot Com and the Bloomberg Business ALF. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg eleven thirty. Let's talk ETFs again, I mean

again just in my career. This is one of the most amazing growth stories that I've seen in my career, just the growth of ETF some money coming out of mutual funds into ETFs, just extraordinary when you think about all the funds flows into ETFs. We welcome Amanda Robello. She's had a passive sales US on shore for DWS Group. Man. Thanks for joining us here on a Bloomberg Interactive Broker studio. You get a gold star today for showing up. It's more than we can say about most of our people here.

But you guys recently announced the listening of X trackers MSCI USA Climate Action Equity ETF. Oh boy, what is that. That's a mouthful, that's a big one. Tell us about this ETF. Yeah, absolutely, thanks very much for KAM has the chance to do that. So it is tracking the MSCI USA Climate Action Index. And so what we're looking to do is with this product invest in US equities which are on a strong trajectory towards minimizing or reducing

their carbon emissions. Have there any changes? I mean, MSCI recently said they're going to change their way they grade I guess other funds. Yeah, are they making changes to their index as well? So as far as we know, they're not making changes to their indices. The data universe is always evolving for them, so as they kind of update all of their individual data points and then this then feeds in when we have the index rebalances, which

then get executed inside the funds. But great news, actually, I think in terms of them further enhancing their ESG rating methodology for funds. But I think this only helps investors more. Is ESG? I mean, it was such a huge draw for a while, and then there has been backlash recently, at least in the US. I'm not sure if it's backlash against ESG specifically, but against that as an investment product. Is it coming back? I mean, is

it here this day? I think in the long run it is here to say, when we look at, you know, where markets are, I think maybe it's not at the forefront of investor's mind like it was before. They're more concerned with generating returns, generating yield, reducing volatility in their pose things should be aligned, though, Yeah, And the thing

is actually, in reality they are. So I think that what we're seeing more and more is that clients start to use, especially that governance piece in ESG, for risk reduction, for drawdown reduction. So it's good. It's funny because actually we were just talking about this the due diligence sessions that we do with some of the largest investors globally. Beforehand, ESG would be like a little ten minutes segment in that kind of one day agenda, And now it's intrinsic

and pretty much all of the different segments. Yeah, I want to follow on when Matt was going the pet Matt was going down because you know here in the US we have seen some pushback and I probed some of our European colleagues that are based in our London office and they say no, in Europe it is the ESG push is as strong as ever and if and they particularly called out Finland, Swedeland, you know, the Nordic countries.

And I see here in your launch you had a big support from the fund in Finland talked to us about this h this etf you launch and in the investment by uh this Finish firm. Yeah. Sure, So we were working together with a very good client of US, il Marin and it's in the public domain and they are, um,

you know, we've worked with them previously. We launched a fund for them four years ago, and with them and also with a number of the other large investors in Europe and also where the regulation is heading, everyone has become more kind of precise in terms of what EESG is going to mean for them. So then we further fine tune their exposure with this new product. I want to ask about your job, okay, um, the title head of passive sales. Yes, and your parents must be like,

do you don't not do anything? I just around exactly, But no, to be more serious, active is getting so important, right, I mean we talk about that on the ETF show all the time. The interesting active has just really climbed. Um, can you take on that part of ETFs as well? Yeah, actually my job possible. My titles change is now extract of sales have refle But secondly, m yeah, you know what the beauty of the ETF wrapper is that is providing transparency access. You know, you don't need to think

about setting up an account with the transfer agent. You can just buy things on exchange right with an ETF. So um, yeah, this trend and we strongly believe it at DWS as well that the mutual fund sadly is not as relevant as it used to be, but the ETF is exactly that's fantastic for you, right, I think of everyone. I wonder if we had a story in the Bloomberg today about assets going into you know, mutual

funds and ultrashort treasury ETFs. I mean I think Barkley's expects one and a half trillion dollars of assets to go there in the next ten years or so. What kind of flows are you seeing and you know, is there any future for the mutual fund? I mean, I guess it still has a place in four o one ks, but everyone is turning to an ETF. Yeah, we do still think that there's a time and the face for that.

Some clients don't need to pay, don't need to have liquidity, They might have favorable share classes, for example, which are cheaper so they don't need to pay for all of the benefits. And then definitely from some tax consideration wrapper consideration perspectives, it's still relevant. But I think for those clients that you want to be more tactical and also just it's very It seems to be much easier as well to launch GTF, so we have way more exposures

than you do on the mutual fund side. Choice is provided there. But also as the markets are moving, when we think that we're in this kind of part of the cycle that we've not seen for around fifteen years, right that then what was needed in the last fifteen years is not what's needed for the next fifteen years necessarily, So I would imagine that even more ETFs get launched two and we see in terms of trends like a lot of searching for yields. So probably our most popular

fund this year has been our HDF product. It's international equity dividends, So international equities typically yield more than the SMP stocks kind of for four and a half percent versus one point five two percent, and then if you then look at a dividend focused strategy on that asset class, then that's even more juice around five point two percent.

So what's your pipeline look like? I mean, you don't even have to imagine, you probably know if more ets, well, we're definitely going to How does twenty three look like? I mean, because twenty twenty two was a huge year for bringing ETFs to market, I don't know if it's even reasonable to expect to match that again. So we're going to be keeping busy this year. Definitely, we're hoping to launch ten new funds. Thematics is an area that

we think is really important in the market. So I think, you know, it's you can look at sectors, but also maybe thematics are better tool for tapping into broader megatrends, and I think especially where we are in the market at the moments good at buying opportunities for those kinds of things. Additionally, as well, we have some strong active strategies on our DWS side and so look to bring

them into the ETF wrapper. Two. Also thinking as well about kind of shorter dated fixed income as well, and then I would say the last block of where we're building is going to be going further down the yield trend like for fixed income. So breaking news here, I know exactly you stuck coming. I mean, there's so many ETFs out there for you guys at DWS. What's kind of a minimum size that you want to have? I

see like this on this one you just launched. You had two billion come in on the first day, which is just monstrous. But what's kind of a minimum It's worth your time. So I think the intention is always to have a fund that by the end of twelve months is going to be a billion or more. But depending on the on the exposure, it's not always easy to get that day one investment. Others are maybe more relevant trends for like a more retail kind of investor, and so you need to get ticket by ticket by

your investors in your tfs. Typically we're very lucky that we are basically doing business with everyone, so retail platforms, wirehouses, IBDs, ria's other asset managers, pension fund sovereign wealth funds. When you have a big institutional interest DW, when does this train end? I mean, it's been how long has the ETF business been on this trajectory and how long is it going to continue? Do you think? I think that's a great question to ask. I think we need to

we can't be complacent. So I think things that we start to think about as well at DWS is the ETFs did so well because they are a great way to invest in something quickly. Right. Blockchain technology is also very interesting when you start to think about, for example, operational aspects of the Ledger and everything, tokenization, valization of assets, and so on. So expect some things here from I mean, let me put the question this way. I have an ETF show right now. It's a weekly program at one

pm on my invitation. You are invited, for sure, But the thing is should we make it? Should we make it a full hour? Should we should we make it an everyday show? In the future? Is that going to be the case. I think the frequency will be important yeah. Um, we see yeah, because we see more and more types of investors using them now as well. It's not just about the AUM, it's also about who's using them as well. I don't think I own an EF. Are you sure

you don't. I don't know if the check because you also have probably fun managers working for you that use ETFs as part of their strategy. It's an important part of building your portfolio in a lot of cases. I'll take a look. I got the app. I'll take a look to see what I got there. I got a lot of New Jersey municipals. John t Her over there, he's laughing. I want to I want a bond ETF that's in the market for that, so you can have many time infrastructure MEUNI so cash back to menis there

you go see. Amanda Robello, thanks so much for joining us. Amanda Rebello, her title now is Head of xtrack Sales US on Shore, Head of x Tracker Sales on Shore US on shore US on Shore at DWS Group and RVNU is the ticker she pointed out for you, John, that's the X Trackers Municipal Infrastructure Revenue Bond Fund. You're listening to the tape cancer Live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app,

Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty. So newscooking out at Japan the back of Japan Governor Kuroda. He is stepping aside. It served two terms ten years in total. What does this mean for Japan? What does it mean for the global economy? To get a sense of that, we walk in Kathleen. Hey, she is the host of Bloomberg News. She joins us here in our

Bloomberg Interactive Broker studios. So she gets a gold star for showing up, not phoning it in, Kathleen. So big changes for Japan. What does that mean for Japan? What does that mean for kind of the global market? Well, you know, the Bank of Japan is there's there's the big three of global central banks, and that's a Federal Reserve,

European Central Bank, and the Bank of Japan. And remember, uh, that's Japan with one hundred and twenty people, one hundred five million people, is still the third largest economy in the world. Okay, so, and and it's uh, it's it's investors, you know, uh send a lot of capital out of the country. They attract a lot of the capital in Japan is quietly powerful on that stage. They have been

through a long period of abeonomics, which became corononomics. Abe, of course, the one of the most long serving successful prime ministers in Japan's history recently deceased, started to see in the last year and Governor Krota two terms. He's the longest serving boj governor in there one hundred forty year history. So we're it's, you know, a crux. We're

at a point, maybe not a turning point. He got the yield curve control, which is kind of the main thing I think that markets, maybe people participants that don't know as much about the bankas fan as you. That's that's what they kind of grasp onto as the thing that could change. Right well, they do. And remember when Krota Abe came back in office in twenty twelve and twenty thirteen, there was a he dragged in Kuroda or got, you know, to stimulate the economy. The previous governor had

been slow to do that. Cautious. No, he wanted quota to fire it up. So they did quantitative and qualitative easing. They said, where're gonna get to two percent inflation within as soon as we could, And then they said within two years fast forward. Things went up and down. Uh, and in it was twenty sixteen when inflation had been rising but mostly oil prices, and it started falling back again.

That's where they came up. They they had an almost an all night meeting on a forty five vote, they put in yield curve control and that's when they tied the ten year j JGB to to zero and then and gave it a little bit of a range on both sides. And over time they kind of had to pull that out, but they bought trillions and trillions of

yen to keep their ten year JGB anchored. I was gonna say, does anybody else own jgbs besides the Bank of Japan, Well, they own something like ninety percent of the ten year jgbs and over fifty percent of all the outstanding government bonds. Well, hey, it's it's it's like what a quantitative easing by the FED and the European Central Bank taken to like a whole other level. Has it worked well there there's kind of a two percent plus inflation now, but is it going to stay there?

But not because of that, right having nothing to do, the whole world is facing rising inflation. I mean, yeah, they've only gotten there without doing anything very lately. Will you never know for sure? Will we if they if they did absolutely nothing, Because they did, they did get Japan up to about consistently above zero Okay, not in deflation. And you're right now a lot of the gain has been in commodity prices, but right now they're almost a

four percent. They're starting to pull back a bit. But no, this is a big deal for the rest of the world because if the Japanese have already started repatritating some of their bonds from overseas, and if they continue to do that, they this is going to be a major upward pressure potentially on global bond deals. And they have Sorry, I just have a million questions. I love getting you in the studio because we hardly ever gets talked to you. I wonder about how much treasuries do the Japanese own.

They used to be a huge holder of US debt right, well, yeah, and they still own a lot. And I wonder about what happens if yield control is a way they're going to go away from yield control? Are you gonna do it slowly? Okay? The way there is the new Bank of Japan governor. Right. He's at the Bank of Japan from nineteen ninety eight to two thousand and five. He at the time was one of the few when they decided to cut rates when they shouldn't have. Who voted

a race rates I should say, voted against it. So here you got this man an academic over the years, knows everybody. He's about seventy. He's been around for a long time. I think the bet right now is eventually he'll have to do something and they may start signing them. But they're not going to move around right away. So I mean, what do people think of yended? This ten year career for Krota? Did he do a good job? Will you miss him? You interviewed him a lot. Well,

oh yeah, I'm a fan. Um he will people miss him? I think? Or was he successful? Well? We had a poll, had a pole I think fifty six percent said he was a success and forty four percent saying no, and the people say no, it's it's your argument, okay that uh, well you didn't. The yeld curve control and all that

didn't really get you sustainably there. But I would say, look, if he's leaving office with inflation at coming down to about three percent year over yere from four percent with the boj at his last outlook update on the economy and inflation saying well, it's going to be one point nine percent by the end of the year, and then it's but you know that's two percent. Okay, that's a rounding area, you guys. So he leaves office with two

percent inflation. The Shuntel the spring wage negotiations, who do that every year, came out on the stronger side, not super strong, but strong enough to give a sense, well, maybe there's there's a shift, a shift in the country where the companies are realizing they have to pay people more. The people are are wanting to see all that. They're they're ready for a little more inflation, right, And that was his biggest One of his biggest obstacles was deflationary mindset.

Japanese don't want to pay more for anything. That's their culture, seriously, but now that seems so shifted to It's the biggest problem though, is getting out of it, Getting out of ye curve control when you own so many bonds? How do you do that gracefully? And oh and another big

one more thing I forgot to throw in politics. They've got a big budget deficit ruling Democratic party there there there are a lot of old aubeonomics people and two hundred and sixty four percent of GDP or something like that, and so not surprising a lot of politicians. Hey, don't get away from yel curve control too quickly. We don't want our financing costs to go up. So that's another thing go and wait is going to have to face. But I think it's pretty much inevitable that they'll be

gradual adjustments. They'll go from point five on either side of zero, and they'll gradually widen that out to get a more a kind of a gradual shift that the rest of the world financial markets can deal with, can deal with, all right, Kathleen Hasty, great stuff, Thank you very much for coming into our Bloomberg Interactive studio. Kathleen Hayes, a host of Bloomberg next time. Later, we should have Kathleen off for like a half hour because I have

a million still half a million. Yeah, you guys make me think. My god, see, there's really challenging. That's exactly good. Stove all right, Kathleen, thanks so much for joining us here. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller nineteen seventy three. I'm fall Sweeney. I'm

on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio