Morgan Stanley Could Struggle Long-Term Without An ETF Solution

a revised stimulus package. This is coming from Larry Cuddler, who's speaking on Fox Business right now again. President Trump has approved a revised stimulus package. He spoke with Mark Meadows, the chief of staff on the Treasury Secretary, Steve Manuchien. Of course, we all know that he is just one of the people involved in all of this. Right, the Democrats also have to sign on to anything, and obviously the Republicans have to sign on, although presumably they would.

We don't know what's in this revised Tomla's package. We'll see how much comes out, but it does signal a willingness for President tomp to do a U turn on that idea that he was completely shutting down all stimulus package conversations A look a bit more of that in a moment, But while we are wait more details, let's

bring in Eric maltunas senior et F analyst for Bloomberg Intelligence. Eric, obviously this is changing the narrative for the day, but do talk to us about everything that's happened this week in terms of Morgan Stanley buying Eating Vance and also you know, Vanguard returning assets to China's state funds. There's a lot going on in the t F space. Yeah. No, this is giant asset managers doing big things, starting with

the Morgan Stanley. Um. This was a little bit of a shock apparently Eating Vance went to Morgan Stanley, which I don't blame them. If I'm running legacy mutual fund shop and I don't really have a strong et s game or passive game, I would look to go to merge with people get really big. That way, you have scale and you can lower fees and maybe compete more

aggressively get some extra distributions. So it makes sense that bistically, I do think that what Morgan Stanley was after with eat Advance was direct indexing, which is sort of like separately managed accounts that are for advisors. We think that demand is overstated. If you look, direct indexing maybe took in three four or five billion this year. ETS have taken in about three and fifty. So you know, it's going to be tough for Morgan Stanley to compete against

ets and traditional index funds with these ventures. But for now, it's I think a smart move by them because the bigger you get than it's easier to lower the fees, and that is really the name of the game. And where a lot of the flows are going is funds that are on the cheaper side. So that's the Morgan Stanley situation. So pretty good, but I think they'll struggle long term. But without that E t F solution. So you know, what is E t F solution for a big shop like a Morgan Stanley, d A BYDA build.

How do you really increase your share there? Here's what everybody's doing. They're basically buying the end customer. And so if you Morgan Stam has a bunch of advisors, if you have access in distribution we call captive audience, then you can pretty much give you have some control over what you give them. The question is even that captive audience. I just don't I don't know if they're going to want a Calvert mutual fund. A Calvert e s G mutual fund charges you know, let's say seventy to eight

basis points. You can get a Vanguard e s G E T S or black Rock one for ten to fifteen. And so the e t S is just so much cheaper. It's liquid there, it's tax efficient. So it's difficult even

with the captive audience to do that. But a lot of the issuers, Goldman, Vanguard, Swab, what they're doing is they have e t s and they can use their captive audience get some assets and flows, and then that brings people outside of the captive audience to those e t s. So that's the new name of the game is it's have some investors lined up, launch y e t f s, get assets in there, and try to attract retail investors outside of that. Morgan Stanley appears to

be doing something like that. They're just gonna try to use direct indexing and mutual funds to do it, and I just think it will be harder without the e t F. Yeah, it's so interesting how the landscape has changing I mean, I guess it always needs to change.

We have a great story on the Bloomberg today. But wealthy American families being told by their advisors they need to act now or risk losing millions of dollars in case Democrats win back the White House and Senate and all of the loopholes that President Trump ushered in in terms of state tax rules get reversed. How much does this impact the E T F space? Eric, I mean, are these people that sort of buy E T F?

Or is that not even in their sphere of vision? Um. So, you know Obama before he left, he had tried to put through the fiduciary rule. The Trunk dismantled that fiduciary rule if Biden were to win and reinforce that, Um, which we think is a pretty good rule, basically just says if you're a wealth manager and you're advising clients, you need to keep their best interests at heart. Um. It's really sad they need a rule for that, but anyway,

they that's the rule. And so essentially that would mean that the best interest would mean cheap and you possibly could be sued or gailed at if you put somebody in say a mutual fund because you've got to you know, a commission on it or something. So the more that fiduciary rule is in play, the better it would be for E T F and passive. Now if they put taxes on trading or capital gains, um, I don't know, maybe that would hurt everybody at the same time, and

ets to be part of that. The other thing is a Biden administration. Mike mcgloan was just writing, and I agree with them. Could be better for a bit poin ets to be launched. We think that that's ultimately positive too so, but Biden, unlike Bernie, is pretty moderate, so I don't see a ton changing. I just I think that d O the d L rule. Otherwise it was the fiduciary rule is probably the main thing to keep your eye on if Biden wins. Hey, Erica saw a

story on the Bloomberg. Uh, Vanguard returning twenty one billion dollars in assets to China's state funds. What's going on there? Yeah, this is a unique Uh honestly didn't know they managed that much for the Chinese government. Um. You know, when we look at Vanguard, their international exposure is pretty weak compared to other issuers like black Rock, because mostly in other places there's a commission based system UM, and they haven't moved to that fee based fiduciary system, which is

mostly happening in the US anyway. UM. For all intents and purposes, what happened here is they're just giving back a twenty one billion that they managed for institutions. That is a tough business. Institutions wants you to do all this work for like one basis point, and it's just a lot of efforts. So they want to give that back and put their focus on what I call the holy grail, which is the retail investor in China. You know,

there's a billion people there. It's like three Americas. And what they've done is teamed up with a financial and a robo advisor, and they're hoping that they can do what they did here over there, because that would the robo advisors fee based right up their alley. So I think they're just streamlining their focus away from institutions onto retail. Interesting. Eric, thank you so much for joining us. We always loved talking about the E T F business. Nobody better on

the street to do with an Eric Baltunus. He's been doing the E t S since I think the beginning of the E t F business for Bloomberg Intelligence, he's a senior et F analysts and Fannie. It's it's just interesting here as we think about the E t F business. The feed differential is so key, and it's such an attractive vehicle for retail investors. Yeah, for sure, and some of them not last very long and some of them are around forever. So definitely you know an area to

study if you're again getting involved in them. But Paul, I just want to return to the stimulus headline. I mean, this changes the dynamic going into the weekend once again. If the President is willing for talks to go ahead, does suddenly Nancy Pelosi become more willing to reach a deal or was it was it fine that that we weren't going to have a deal before the election for

the Dems. Will see, but stocks certainly moving higher. The International Council of Shopping Center is this Holiday shopping Intentions survey is out? It's hard to believe it's coming close. We're already in the middle of October, and so let's welcome Tommy, President and Chief Executive Officer of the I C. S. C. And Tom. There's a lot unpacking here. You represented a sample of one thousand and four US respondents, but your

members of number over seventy thousand. So before we get to what seems to be rosier than you might expect, outlook, talk to us about how your members are faring right now, how many are open, how many are losing money? Well, good morning, and thanks for having me on. You know,

I think we're in a very uncertain environment. Obviously, you know the our industry is that the epicenter of the pandemic and stay at home orders and other safety requirements, and so I think it varies depending upon where you are in the country, and obviously you know the nature of retail um that you offer. But I think generally speaking, our members have done a good job of managing through

a unprecedented period of time. We are looking forward to the holiday season and expected to be I would say solid for a variety of reasons, um most most significantly because I think consumers spending over the course of this past year has been less than you know, we would have hoped for given the pandemic, and people will lean in more significantly into the holiday as a result. So Tom, just give us a sense, UM's kind of mall traffic. I guess if you will. I'm not sure how you

guys really measure it. Small traffic this year, how how down is it? Well? I think it clearly clearly traffic will be down this year for obvious reasons. I mean there's you know, obviously occupancy restrictions. I mean, clearly consumer is concerned about safety and security. I think a lot of the malls have done a lot obviously to try to alleviate those concerns, everything from mass requirements to you know, putting up one way aisles and contact barriers, and the

retailers as well. But you know, this holiday season, you know, e commerce will continue to grow. I think the trends that we've seen over the course of the pandemic will continue to be front and center use of e commerce. But those retailers that really merge their e commerce platforms

with their physical retail platforms will do the best. You will see a continuation of things like curbside pick up and click and collect, etcetera be front and center, um, particularly during the holiday season, where there'll be significant you know, there'll be significant tension in just the delivery system given the you know, the volume that will take place, and people will want the comfort of going and doing curbside pick up to make sure that they have the goods

in place. I also think I would not you know, I wouldn't read to my into this year as it relates to a future trend. I mean, it's hard to know how all of these things will impact, you know, the long term nature the way people's shop in retail. I do know right now, Um, you know, certainly the consumer is going to put safety front and center, and they're much more efficient in their shopping. I mean, they're

much more purposeful. If you go to a store, you're much more likely to know exactly what you want to purchase, you're gonna go purchase it, and you're gonna leave. And and that's again back to safety and a focus upon that. So, Tom, your outlook forecasts increased spending with a longer holiday shopping season, hoping out in that regard, that's a rosy outlook. Does it depend on stimulus And if we don't get stimulus,

will this forecast change entirely? Yeah? I think there's obviously it's a very difficult year to make a forecast, and so I think when we look at um at one point percent spending increase, you know, it assumes that things like stimulus would take place that it certainly is assumes that the unemployment picture remains stable. Uh. And certainly you know that we've managed the pandemic has managed effectively over

the course of the next number of months. If government stimulus does not come through, which I think is critical not just for our industry but for the overall economy, to be perfectly honest with you, uh. And there's significant spikes in the virus, obviously that's going to have a

negative impact upon our forecast. You know what's driving our forecast, quite frankly, is if you look at people are spending a lot less on things that they traditionally spent things it's spent money on going out to eat, for example, entertainment for example. And so that we believe that some of that money that would have historically been spent in those things will be contributed to holiday spending. And and I think you know, family uh is highly important right now.

Uh And and parents with kids will likely invest in the holiday to try to help kids that are obviously going through a challenging period of time. As well through the pandemic. Tom, just give us a sense here. We hear that the US is still way overstored that shopping uh, that these retailers need to cut their store count. How do you view that? Yes, well, I think it's hard to measure that right now, because you don't really you know, again, we're in the midst of kind of an unprecedented period

of time. I think what I would generally say is that those retailers that went into the pandemic in you know, relatively stable shape with a strong balance sheet, are going to emerge from the pandemic um you know, Okay, those retailers that went into the pandemic where they were suffering from a declining, declining revenue and did not have a strong balance sheet. Obviously, we've seen the ramifications of it, and we've seen you know, a lot of store closures.

It's hard for me to predict, you know, how what the long term impact of that will be once we emerge in the pandemic. I'm quite confident of of really two things. One, I think, you know, the industry has gone through lots of shocks in the past, and I think like this, but it's going through lots of shops and it will emerge from this. But and I think retailers are very entrepreneur in data, and I think that they will they will adapt as well. Hey, Tom, thanks

so much for joining us. We really appreciate your thoughts. Tommy Gee, President, Chief Executive Officer of the International Council of Shopping Centers, giving us his thoughts about the retail holiday shopping season coming up. Well, President Donald Trump is planning to get back on the campaign trout. The question is is that wise for someone who has recently been diagnosed with COVID nineteen UH. To get the answers to that and other questions, we welcome Lauren Sour, Assistant Professor

of Emergency Medicine the John Hopps JOHNS. Hopkins School of Medicine, and should note that the Bloomberg School of Public Health is supported by Michael Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies, as well as this radio and TV operation. Dr Sour thanks so much for joining us here. So again, President Trump is itching to get back on the campaign trail,

potentially having a rally. I guess tomorrow is that wise for someone who again has recently been diagnosed with COVID nineteen no, in fact that it actually violates the CDC

guidelines about self isolation. And I think a lot of people saw the UM interview that he had with Sean Hannity where he was coughing, and we've seen him, you know, having these challenging breathing processes on video in both his return from Walter Reid but also in more recent videos, and anyone who sees that can see that he is still experiencing symptoms of COVID nineteen and should definitely be

self isolating for a minimum of two weeks. Is there a point beyond which from de severere and x metho zone and whatever else he's taking stops becoming useful. All of these drugs have different periods of utility and are given it at different times, and it's important to remember that they're all still experimental for the treatment of COVID nineteen or or infection with stars covie too, so we don't actually know the full breadth of um of how

and when the drugs are useful. I think rem Desiviere we have a lot of information on this UM, you know, ten five and tender course of of them, oftentimes administered in the hospital. They're almost exclusively administered in the hospital with regeneron we you know, you want to see in these monocola antibodies, the patients being monitored, their auntibody levels routinely being checked um and and honestly, we don't often discharge people so quickly with steroids like the President was

with deem xizone and UM. So that is a is a concerning sort of development in how that drug was administered and then how he's monitored post administration. So, Professor, this treatment how or is that something that you think is going to be widely deployed for patients. I'm just wondering how the President Trump's doctors kind of zeroed in on that as potential treatment. Um and it appears at

least to be successful in the President's case. Yeah, I think we can't really know if it was successful in the President's case because we don't have a lot of data in a nice, well designed clinical trial. And so, you know, there's so many factors that go into the President's medical care. He is getting the best of the best medical care, and so one of the reasons we use clinical trials is to weed out some of those

confounding factors. Um, you know, standard of care, the other things he's been given, the supportive care, he got, the fluids, all of those other things when he made it his way into the hospital. So while it is probably UM, you know, we'll probably learn a lot more about these UH, these monoclonal antibodies soon as they go through this clinical trial protocol. UM, we can't really stay explicitly. We can guess that they helped, but we can't say explicitly that

they did. UM. We use monoclonal antibodies and monoclonal antibody cocktails in many other situations and they are effective. UM, and we know their utility, which is I'm sure why we're general and many other UH pharmaceutical companies have gone down the path of creating them for COVID nineteen. But until we have that good clinical trial data, we just can't make any generalizations from this one very specific, very high level of care case. Yeah, doctors, our is physical

exertion detrimental beyond a certain point. So we know the doctors recommend that you stay active and that you try and keep all of your bodily functions as functioning as possible during this it's not really helpful to rest in fact of anything, It just gives the virus a better chance. But beyond a certain point, you have to ask the question, if the resident is getting better, is there a chance that he'll relapse by exerting himself so much, going on rallies,

being on TV every nice and every morning. Yes, it's absolutely a risk. And you know he's on dexim foflon or was when he was discharged, And so steroids can make you feel better in the moment a lot better in the moment um, and so he does have the potential to sort of overdo it um and overexert and possibly cause challenges to his breathing and his recovery UM

and and potentially do more harm to himself. So you know, I'm not a physician, so I am, and I'm not on his clinical care team, but I will say that there we have seen in our data, at least from Hopkins, but also I think more broadly across the globe that people do have these short term recoveries and then um get a lot worse. So if you overdo it in that short term recovery space, you have the potential to get a lot worse um and and not recover as as effectively as you did that first go around. So

just real quickly, dr um. I think President Trump is going to get a medical exam on top of Carlson tonight on by the Fox Doctor. What should we be looking for there? You know, I'm honestly not sure there's much to look for there. I think it's seems from everything I've heard like it will be a publicity stunt. Um. We have seen this doctor who is going to be examining him push misinformation about hydroxychloric quin and about um, the the risks associated with coronavirus and how it was

not much difference than the flu um. So I think a lot of it is going to be a narrative that the President potentially is pushing, and that you know, the findings are not going to actually tell us much about his medical status. There's medical care certainly, um. He would not let anything go out that that says that anything beyond the narrative that he's controlling about his recovery and his wellness. So I think that we're going to get very limited information about how well he is doing.

And in fact, I think he's creating a false that he is not infectious and safe and healthy. Um that how's the potential to do some detriment to the broader understanding of how we manage UM post hospital discharge. It would be funny, except a lot of people will be watching, and so it's not at all funny. Dr Lawrence Ours, thank you very much, show Assistant Professor Emergency Medicine at Johns Hopkins. Well, we have some deal activity in the chips business. A M. D In talks about arrival Zilenx

for thirty billion dollars. To break down the details, we welcome On and Trinivaston's senior semiconductor and hardware analysts for Bloomberg Intelligence. He is one of the top chip analysts on the street and we appreciate getting some of his time. So On and big number here, thirty billion dollar deal. What do you make of it? Yeah, it's hey, Paul,

good morning, Thank you for having me. So this is in our view of both an offensive as as well as a defensive deal for MD. If you look at what's happening in the computing space, I mean this have used this ice cream shop analogy before, which is that computing has been evolving from an ice cream shop that contains mostly vanilla, strawberry and chocolate into a remarkably diverse

ice cream shop with multiple flavors. You have general purpose GPUs that m Video make, you have fp t a s that xy links and Alterra make, and all of these ice cream buckets if you may have been expanding inside and expanding in use because of the different kinds of workloads who've been seeing, which in turn is being driven by the clouds. So Intel has this wide library of assets um and, but they haven't been able to put it together. So simply put, their ice cream machine

is broken. What is in video doing? In Video has been able to put together specialty ice cream buckets in terms of melanox and in terms of general purpose GPUs very effectively, and with the ARM deo, it is now gramatically expanding into the even love strawberry and chocolate main mainstave flavors. So a m D was up until this point doing really well in vanilla strawberry chocolate, taking share

from Intel, but it's specialty flavors are weak. So this Zielenk steal gives them access to wider array of specialty ice cream buckets as well as being able to play in the mainstap flavors. So the computing market is changing, and uh D is responding partially to accelerated share games from Intel and partially to have an alternative to both the Intel platform and the video platform for the next decade. ZILENX on mixed programmable ships for wireless networks, does it

want to get acquired? Look, okay, at this point we've talked about this in the semiconductor industry. Um is that scale matter, platforms matter, Right, So if you look at what Intel's capability is, it's been able to put together or has attention on paper, the ability to put together

these different ice cream sundays for specialty workloads for cloud computing. Right. So, if you were a specialty ice cream flavor and you're saying I'm only going to make the topic or only the sprinkles or only the hard flood said you have, you run the risk of being marginalized. Versus if you are a part of a big ice cream shop, then your tompics are going to be my more widely used

your specialty ice cream flavor. He's going to be a part of vast number of ice cream sundays rather be ending we're talking about chips, right, Yes, but the ice creamility comes in handy, don't you think. So I talked to us about valuation here. I'm looking at the Bloomberg Intelligence research and I see zylenx here at forty times uh earnings. Seems like a big multiple to me. What's that mean for m D? Yeah? So m D is going to have to use a lot out of its

stock currency for them. So we think that you know, roughly two third stock one third cash, and that will maximize their leverage. We think, um, you mean, if you look at what Broad comes at four times, but we think that they could do this deal. Was that two third two third equity one third that that that driven cash? So that's the way we're thinking that the deal might be structured. Either way, there's going to be a lot of stock in Voltimus deal. Are they getting a better

price because we're in pandemic times? Or I mean, is there an actual extra premium because these companies have what we need right now? Yeah? So, shockingly enough, the pandemic hasn't um sort of dramatically altered the vector of computing.

If anything, it's accelerated it. So we've heard this from all the cloud services companies, all the changes that you were expecting over the next few years have just been dramatically accelerated as a result of the pandemic and pushed or pulled forward right, And these are the building blocks that tower those changes. So you resoom call that you're on six hours today is being powered by these chips. So the fact that there's demands there means that there's

landscape changes beneath the herd. If you may all right on and keep us honest and not to date, you know you will be following this throughout the day and into next week on a swing. US and a senior semiconductor and hardware analyst for Bloomware Intelligence ice cream Analysts exactly have been talked to you for me. Thanks for listening to the Boomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform

you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonny Quinn and Paul Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio. H uh uh u