Markets, Fintech, Cars, And Ice Cream

at least for their first four weeks, they were right. Here, we've got a vix north of thirty one, we've got read on the screen here today, let's check in uh and see what we can expect going forward. Liz Young, she's head of investment strategy at so Far. Liz, thanks so much for joining us here. I guess one of the big issues you know that this market is trying to discount is the Federal Reserve. We know they're gonna raise rates, but now the question is by how much?

How quickly? How do you guys think about that? Yeah? You know, I think first of all, you have to look at what the expectations are right now. And the reality of it is, we haven't moved yet, right. The Fed hasn't done anything yet, and they also haven't been all that clear about what they expect to have to do as far as rate hikes go. So it continues to be an uncertain and sort of convoluted picture, which is why the market is having so much trouble digesting

it on a day to day basis. I think what actually happens is that they start to hike rates in spring of this year, but they're going to have to wait and see how much it affects things like inflation expectations, how much it affects things like the bond market. I think everybody's really hung up on how it's going to

affect the equity market. But they're probably going to watch the bond market closer and then decide how much further they need to go with hikes through the rest of the year, so they'll remain basically data dependent UM, but I wonder how much they will care about they market. We were UM interviewing Greg Jensen from UM Bridgewater the other day and he said he thinks right now that's

really not their main concern. In fact, um, the equity market they're probably a lot of speculative bubbles that have been blown up there that the Fed wooden't mind seeing deflated a little bit. Yeah, you know, I don't know that they're tasked with necessarily worrying about the speculative bubbles, but I would agree that they're not seeing the equity market as their first priority. And I said this on

a show earlier this week. The Fed doesn't care about our feelings anymore, and I think that that's going to be the case. And you know, the equity market last year, we're looking at the SMP, it made seventy new all time highs. That's a pretty good place to come into the year on. So we can afford a pullback here. And the Fed's main mandate is to control prices, maintain stable prices, and maximum employment. So those are priorities number one and number two. The employment boxes all but checked,

and now we're on two prices. Obviously there's an inflation problem that they need to deal with. I think that they're going to let the equity markets see volatility and they're not going to react to that unless it starts to threaten financial stability, which again ends up actually being more about the bond markets and the equity market. So what do you think we might see that the ten years it's gonna hit two percent before it hits one

point five percent. How do you think about that, Liz? Yeah, you know, well, we've seen a huge run up in the ten year already this year, at thirty basis points since the beginning of the year, and that's pretty swift, which I think is another reason why the equity market is seeing so much of volatility. It has trouble with big spikes and yields. But I do think we could touch too. I think we could get above two and actually get even closer to two and a quarter before

things sort of level out. Now we might have a little bit of a pause here because now the interesting part is we're in this waiting period. We're not going to hear from the Fed again until March sixteenth, and that's when everybody expects the first rate hike to happen. So there's a long period of time between now and then where the market has to kind of tredge through this uncertainty, and we might bounce around in a range

on the tenure. But I think as we get closer and closer to rate hikes, you'll see the tenure get higher again, and I really do think that we can get above two in the first half of the year. Do you have any concern that we see I mean, I've looked back at rate hikes cycles for the last twenty years and you always get um the curve flattening,

sometimes inverting. Is that a concern here? And do you think we'll hit a recession in Well, we've seen flattening already in the curve since Poul's statements earlier this week, So I think that the spread went from somewhere in the eight basis point basis point range down to the low sixties. Still pretty far from inverting. But that is one of those measures that I think the feed is going to watch. They don't necessarily watch the two tens.

They might watch a shorter term measure versus the tenure, but they're not going to want the curve to invert, and they're very aware of that dynamic in the market. I don't think one or two rate hikes is going to invert the curve. But that's why I think, you know, the market suggesting that we're going to have five or more rate hikes this year is a little ahead of itself because that would probably cause an inversion, and I don't think the FET is going to do that, so

they're going to keep their eye on it. I don't see a recession coming. I think Jerome Powell has been very careful trying to thread this needle, and he's going to continue to be careful. The idea is to allow the recovery to continue. Uh. One of the ways that you allow it to continue is to make sure that inflation doesn't get in the way. Liz thirty seconds kind of what's your best idea for where to be here

in this rising interest rade environment? I mean you want to look at short duration assets that goes for equities, you know, thinking about UM, some of those cyclical sectors, some of the dividend payers that are going to do well here in the short term with volatility. I'd also look at health care for a long term idea. And in national I think this is the year where international investing has a revival, both in narrative and returns. Alright, Liz,

thanks so much for joining us. A pleasure having you on and UM it's exciting to see what's going on at so far as well. So great to get your take this morning. Liz Young there, she is the head of investment strategy for so Far, and that is a business that it's growing. We saw them um get more licensed bank over the last week and so um they're offering uh, just a huge platform full of products. Uh and I guess the kids. It's just it's not just

the kids anymore. I don't think so. I think I'm seeing a lot more about it, and uh, I think it's a certainly great option financial services. No, Matt, we talk a lot about fintech, financial technology, we talk a lot about crypto, but it's just it just seems to me that some of the traditional financial institutions are just slow to embrace the whole fintech thing. It just feels that way to me. I'm not sure that's look at look at the so Far exactly right. We're just talking

to the so Far analyst. But you know, I saw the news recently that UBS agrees to buy robo advisor wealth Front, uh, kind of a fintech player, for at one point four billions. So that kind of gets your attention. But I'm gonna get a sense of how some of these traditional financial institutions are thinking about embracing and investing in financial technology. You can talk about that with Robin Vince, vice chair and CEO of Global Market Infrastructure for B

and Y. Melon. Robin, you've been in the financial services industry for decades. You've seen it evolve. Do you feel like the traditional banks, financial institutions are fully embracing kind

of fintech, crypto, some of the new changes in financial services. Well, first, it's great to be with you today, Paul and Matt um here here are being why Melon, We love the show and I'm speaking you to you today from our headquarters here in downtown New York City, which is really one of the centers of innovation that we've seen in the financial world over the course of our history of two and thirty seven years. But look to the point of old firms versus new we don't see it in

that binary way. We just view our position at the very harder financial infrastructure allowing us to really be an innovator. Look, we touch one fifth of the world's investible assets, We service a super majority of global institutions, and so we're super well positioned at that exact intersection of the trust that we have from our franchise and that gives us the ability to innovate, and you can see that in a in a whole bunch of different things that we've

been doing. We announced a crypto custody effort at the beginning of last year, the effort into e bills that we're doing with Verizon. There's just a whole long list of things that we're doing. And frankly, we think it's a strength to have the established franchise that we do today along with that innovation. Sure. I mean, I was gonna say in a lot of ways, b n Y Melon is on the cutting edge of this stuff. And

you have been UM leaders. Tom Keane would probably say something like on the avant garde, UM, but you don't see that much enthusiasm from the rest of the street compared to UM where you see it in the city, where you see it in Miami. Um, what do you think we're gonna we're gonna end up with here? I mean, it's not gonna be just old Wall Street banks running our finances in the future. So uh, it's going to

be a best of both worlds. And we welcome the competition and frankly, the push that all of these fintech and new industry players are really providing into the space. But for us, it's about taking that client franchise, we've got the trust that we enjoy with our clients and then innovating. So let me give you an example. So we we announced late last year the industry first collaboration with Verizon on real time e builds and payments for

US retail clients. Now we're America's oldest bank, but we're the first bank to do real time payments and real time request for payments, which is enabling for the first time, real direct, real time payments from a consumer to a business, cutting out the interchange fees, cutting out the inefficiency, cutting out the environmental negative footprint of paper and fuel. And so that's a great example of exactly that type of innovation. And I'm gladn't to Fintake that did it. It was us.

I'm glad you mentioned the environmental aspect because E s G has been kind of a buzzword and I'm sure there's going to be a lot of greenwashing. But you're also pushing for more diversity, to include women in your higher ranks to advanced junior bankers. Tell us about that push because it's really taken on a lot of meaning this year or last year. Yeah, and it really is a critical point. We have one of the most diverse boards in the industry and we're super proud of that.

For the fifteenth consecutive year, we received a score of a hundred on the Human Rights Campaign Foundations Corporate Equality Index. It's the fifth year in the row that BN Y Melons included in the Bloomberg Gender Equality Index, and we're really proud to be named as one of those firms.

It's really driving the equity and inclusion, and we're doing it at the top, and we're doing it through the organization, and it's the only way to be competitive over the course of the coming years, as well as being the

right thing to do. Yeah, Robin, I worked on Wall Street for a long time and what I found in my experience and then even managing a business here at Bloomberg is you know you can bring in if you look at the entering analysts class at any investment bank, any financement institution UM over the last decade plus, it will look very representative of the marketplace. It will have a proper diversity UM. But then when you get up

to the managing director ranks, the partner ranks. That's where the you know, the real glaring disparities you kind of show themselves. How do you think if an institutions can do to kind of improve that trend? Were You're right that that is the challenge. Being able to hire full range of diversity at the entry level is obviously sort of table stakes at this point. It's about development and

retention and what what goes into development and retention. That's ultimately about opportunity training, giving people not only the pay but also the interesting problems to solve, and that for us is one of the things that we're very proud of. We have forty six trillion dollars worth of assets under custody.

We touched twenty percent of the world's investible assets. We put ten trillion dollars of US treasuries through our platform every day, and we have this incredible franchise where we're proud to call fortune companies, uh, you know, our clients and of the top one hundred banks. And so when you have that type of relevance and you have interesting opportunities and problems for people to solve, that's how you

retain great people through the life of their careers. Can I can I just get your take on the health of New York City? UM to finish up, because you're involved in civic service here in New York as well, and you mentioned at the top, do you think New York City is bouncing back from this pandemic with strength? With a bank of New York, We're never going to

bet against New York City. And you know, I sit here in our office today in downtown New York and of course we're having to all deal with the challenges that Macron has presented to us all. But I'm excited for the fact that we're going to be welcoming our people back to the office in due course. And I'm a believer in the fact that the world has changed and it won't be five days a week, every day,

everyone in the office all the time. We're going to take advantage of all these learnings that we've had over the course of the past couple of years. We're going to be a more hybrid organization that's going to go back to your prior point about retention. It's going to be important for that. But at the same time, being in the office some of the time at least together and contributing to the vibrancy of the city, but also contributing to that sense of culture and community, developing people,

making them excited to be here. That's ultimately what our future looks like. All right, Robin, thank you so much for taking the time to join us. To really appreciate getting your perspective. Uh boy, long time at Goldman Saxon. Now at the Bank of New York, Melon, Robin Vince, Vice Chair and CEO of Global Market Infrastructure at b n Y Melon, and you know, a good broad perspective of financial services, um, and the pivot towards the I guess,

the embracing of financial technology and in the office. Yeah, and in the office, I mean I think you know, the city is going to be coming back pretty aggressively over the next several weeks and months. We are going to talk a little bit about robots, and I will uh well, bringing Laura right right now. Um. She is a reporter slash producer, UM woman about town out of London and uh a friend of mine, I will say. Also, one of my good friends from San Francisco is going

to join us, Ed Ludlow. He covers all things tech plus Tesla and Rivian for us. So the e V sector, I guess that includes Lucid and Nicola And looking at the stocks are they've been under pressure here, boy, they have been. And um, why don't we kick it off first with Laura because Tesla came out with earnings and they were a bit disappointing. Um in that UM, I guess the numbers themselves weren't so bad. Um, but the production plan doesn't seem to be anywhere near where we

thought it should be, right Laura, Yeah, that's right, Matt. Well, the operational factories in Fremont, California and Shanghai, we learned that they've been under producing. The nightmare supply chain crunch that Elon Musk tweeted about at the end of last year has seemed to become a reality. So we knew going into these results right that Tesla had achieved record deliveries. It was a record profit in spite of the supply chain difficulties that will be ahead. Tesla did, however, maintain

that delivery target of fi annual growth. And one interesting note from Morgan Stanley. They believe the bull case narrative hasn't really changed, but it wasn't a spectacular results, as we might have hoped, would change the balls minds on Tesla. I mean Tesla balls minds cannot be changed, so whatever. Um. The interesting juxtaposition to this ed, I think in a way is the story that you broke on Rivian now compares Rivillian Rivan's current production to that of Tesla when

they first started. But the idea is these guys have it together in a slightly more I guess organized way. Yeah, I mean the stocks under pressure. It just hit fifty bucks. The more Stark has been crushed, but it's still fifty billion dollar company, which in me is shark right, and it's largely pre revenue, right. They just started booking revenue revenue of these things. But what sources tell me is that the end of fourth quarter was tough. You know,

there were COVID outbreaks at the plant. They had an all hands on deck kind of scenario to get these pickup trucks, which I'm starting this scene now by the way in San Francisco on the streets. Um. And then they try to introduce a new product onto the assembly line, which they share an assembly line, and you know, production

really slowed down. So what they did new year's day, Boom shut down the assembly line altogether fixed the problems restarted on January the nine, and since then they're ramping up like massively. You know, it's almost two trucks a week um, which is what are they making. They're making the R one T and the R N S is the S, but the R N S very modest volumes. In fact that the company's only publicly discussed that the CEO R J. Scarynge and the CFO claim mcdonna have one.

No one else's publicly, you know, taking delivery of one yet. But I'm told they are building sailable vehicles. Sources say it's like, you know, a negligible number. So, Laura, what's the feeling in the EV marketplace as to boy the compety the competitive landscape is really beginning to change chairs. We have some of the you know, the big O E. M. S is, whether it's Volkswagener or Forward or General Motors

really ramp up their EV game. What's the feeling about how the market share might shake out over the next several years. There is a feeling that competition is ramping up, and that poses questions long term for Tesla's volume and it's and its share price right. Focusing on Europe a little bit, Voxwagen. When we think of their total car sales, only five of fully electric. There's been a lot of hype about Ford recently they're pushing into electrification market shares

surpassing one billion dollars for the first time. But Tesla is still by far the market leader for evs and for back trees. So the cyber truck, which I know Matt Miller will want to come onto that. What's concerned Initially that the new batteries which are more efficient used in the cyber truck that was the reason behind the delay. Turns out the batteries are fine and tells us planning to use those more efficient batteries across all their models.

So it still has that competitive advantage with technology. I mean, the thing is five isn't very little, right. Volkswagen makes ten million cars a year, so that's different than Tesla, although they really ramped up their production right there. What was it add like nine hundred thirty six thousand um for the for the full year. That's doing what they're doing well and in that sense, but Laura mentions the truck, what a huge disappointment on so many levels. I mean,

first he breaks the window with the bowling ball or whatever. Remember, so embarrassing, and but I thought they were going to come out with it eventually. Now Ford is going to beat them, Rivan is beat them. Looks like Chevy's gonna beat that. Everyone's beating the market with the truck. Well, look, they just find it that supply chain issues are disrupting

current production of Model Y Model three. Right, the cash cows the profitable vehicles, so they can't justify a product launch if they're not able to service and get the parts that they need to build volume on existing vehicles. Um, but this is a comms issue. Guys like think about earning season broadly across the SMP. Beating on the top and bottom line hasn't really counted for much the streets looking for how strong is the current core to how

strong is the year? Elon must tweets going into this earnings having sort of spectacular announced he doesn't want to do Earny schools anymore because he's too busy that he'll outline a product roadmap. He goes on the cool and does not outline a product roadmap. In fact, he does the opposite. Sorry, guys, these products are all on the back burner because of supply chain issues. Um, it's a comms issue, all right. Ed Ludlow, thanks so much for

joining us. Ed Lulow, West Coast correspondent for Bloomberg News and Bloomberg TV. Produce a law right joining us from London, getting the latest on e VS the secrets under some pressure here, lots of pieces supply chain issues, competition, but you know that Matt Miller's all over it. And I'm Nathan Hagar in the Bloomberg room in Washington. We do all scream for ice cream and we're very excited to bring in the CEO of Dryer's Grand ice Cream, Kim

Pedal regum with us this morning. Kim, thanks for being here. I got the long straw because I'm probably the biggest fan of ice cream there is. You don't think so. I don't believe that anyone eats more ice cream than me. If I eat, are gonna throw down over this a pint a night. My wife thinks I'm a diet Yeah, I admit I split the pints with my wife. Kim, I gotta ask though. You know we're we're coming up to this northeaster here, we're racing for a lot of snow.

What advice do you have for ice cream fans like us as we're digging in for the old here? Same is perfect for any weather, any occasion. I firmly believe that. So I don't think you need to temper it because it's cold outside. Uh, you know, put it on vanilla hogandah on top of a dessert item might be a wonderful way to spend a cold evening. So, um, you know, be creative. I've always wondered, you know, I've always wanted

to start my own ice cream shop. And I could use dryers or you know, um, I could be you know, I could be a vendor for you What what would I do in the winter because people just don't go into ice cream shops as much in the winter. And I've always wondered, do I do ice cream in the summer and then like bagels in the winter or coffee in the winter, ice cream in this summer? What do you what do you typically see people do with small town shops? We see, I mean people eat ice cream.

You'd be surprised people have ice cream all year round, um, which we love for the you know loyalists, we absolutely love them are Hogan Dash shops. UM see consumers all years round, and so we have you know, seasonal flavors. What I would say is, UM, in the winter months, try things like Hagan Dash peppermint, bark flavors like that. We have pumpkin pie UM flavors with our dryers and eat these brands. And in the summer go through a drumstick,

take your cone and you know, take a walk outside. UM. But there is a product for every time of year, for sure, Dryer's Grand ice Cream. If I look across the portfolio, we've got something for everyone and every occasion. Have you thought about UM selling more alcoholic beverages because I love a boozy milkshake. UM. I can't remember where I first tried a Hummer. I think I was at a wedding in Detroit, and uh, delicious way to imbibe. But you don't see it much at ice cream shops,

you don't. We have it. Hogan Dust brand has a spirit's collection, so we do have some alcohol infused flavors. UM. You know, ice cream is a product, so Dryer's Grand ice Cream. When I look at the portfolio and who buys our products and loves our products. It's across all ages, so you know there's families, kids, older consumers, and so we do have spirits products, um. And you can certainly

mix and make your own. If you look online and Pinterest, you'll find lots of recipes for Outshine fruit bars in Champagne. They're just delicious. Um. So if that's what you're interested in, there their recipes and all. If that's where, that's where. Um. All right, So Kim, if I go to a store and I go to the ice cream, all am I going to find product? There? Are you guys seeing supply chain issues like seemingly every other business is. So I will say we I'll start with kind of a broad statement,

but I really mean it. We have no plans of flowing down at dryers Grand ice Cream. So while the world around us, you know, there are supply chain challenge us for sure, we have spent the last year to two years really making contingency plans, backup plans to make sure that we can still deliver ice cream to our customers,

so to our retailers and consumers no matter what. And so we have in in the last three months we've opened up three new um selling locations for retailers to source products from, so hold storage locations across the country and what that allows us to do is move inventory there be closer to the warehouses of some of our our biggest and best customers so that we can get product to them faster. Right as there are distribution challenges, the closer proximity you are, the easier it is to deliver.

We have made huge investments, i will say, in our factories. So we have four factories across the in the United States. We have announced in the last twelve months fifteen new production lines across those factories. We are building out walls, facilities in every location and that's all around being able to produce more product so that it is on shelf when you go into your store. I'm thrilled, I'm pleased with every single employee in our manufacturing facilities, in our

distribution network. That is what they're focused on. And what I would say is it's our results in the marketplace are showing that those investments in the infrastructure production capability. Because we know that the challenges are likely to continue for a while, we are poised and ready and doing everything we can to meet growing demand for ice cream. And I will say ice cream demand is going up. I wonder about pricing. UM, surely you felt massive inflation

for your on the input side. Are you able to pass it off? We are, so we are seeing inflation on our cost structure, right, UM, like everybody is. We've been trying to find creative ways around having to impact consumers as little as possible on that. So trying to find places where there might have been inefficiency in our organization and our operations to use, you know, any savings to be able to cover those costs. We think some of the costs over time, you know, we'll come back down. UM.

And and we're really looking hard at that. Certainly in some areas, UM. You know you see prices going up everywhere and UM, but we're doing everything in our power to minimize that. We're leveraging our global network of our ice cream global company UM to source products UM or ingredients for things where we can't get them locally, to be able to source them and make them available UM, and trying not to impact consumer pricing. Just thirty seconds left here, Kim, But I miss the full half gallon.

I mean, right, I mean when you think about the pricing. You can't make the packaging any smaller poster for kids exactly. We have plenty of large sized products UM, big containers, half gallons. We also, you know, what we're seeing is real growth in snack products, so cones and sticks and sandwiches, and we're making lots of different multi packed versions of that to get at you know, the volume you're looking for, UM at a price point that you will also feel

good about. Thanks so much for joining us. I think we're all excited to talk about ice cream. Even in uh January, it just snow, it started snowing. I agree. I agree with Kim. It isn't it is never too cold to eat ice cream. Yeah, I'm with you, So we'll see. But that was fun to get Kim on talking about the ice cream business. The way, if you're wondering about the hummer the recipe, a little khlua, some light rum and some vanilla ice cream, Kim would probably

recommend some kind of bourbon vanilla from Hoggendoss. Mix that up and you're good to go. And uh, but don't drink too many because they go down, they go down real easy, and then you don't realize until later that it may have been too much. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews of Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three.

Pet On Fall Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio