US Waits on Iran to Confirm Talks as Ceasefire Winds Down

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This is the making the Sausage, folks. I have never forgiven leguard at Gorgieva for dropping the printing of the three books of the IMF World Bank Meetings in the spring. I would dutifully paw the airline would tilt to the left when I had them on the airline, and I would actually read these things, the Bluebook, the Green Book, the Brown Book, whatever. And the Green Book is on

Thanks so much, Tom for having me. Yeah, it's always fascinating to find out what the Straussian silences are. And there obviously everyone's focused on the war currently energy markets, fiscal response, monetary policy. People are not asking as you highlight on financial stability, which is often the most interesting report.

So I go to box one that the Paul what you do here cliff notes, Okay, executive summary boring. You go to box one point one, which is like the appendix of eighty four NERD PhD pages. Rising Japanese government bond yields could affect global asset allocation, which goes again too. These distortions in the yield bark the unspoken to.

Me one of so these imbalances. There was actually a fantastic panel on imbalances. The fiscal imbalances are are very clear. I would say that when we look though at where equity markets are, one of the reasons why we see the Nikke hitting historic high last week SMP as well is because of the fiscal We think.

Of the bonuses PwC has gotten in Seoul. I mean Korea's happened.

It did crash twelve percent right at the start of the conflict. The cosby yep, but it's coming back, it's coming back, but it's again. I think off the back of this fiscal impulse, where we are is that financial markets are expecting this bigots to open and we'll pay for that.

Down the line, Alexis.

We had another guest earned a week that was at the IMF and the World Bank Spring meetings, and they highlighted the maybe the disconnect between the concern they felt at those meetings about geopolitics, about globally economic risk. In fact, the markets are hitting all time highs here.

What do you make of that again?

I mean, I think if we look at when you've had shocks to demand, whether it was concerns on the initial waves of protectionism Trump. We know in twenty eighteen the sudden economic stops related to the pandemic Russia, Ukraine. Even in the wake of Liberation Day, governments have stood

Down the line, how about the sense of the US as a safe haven that took a big hit last year, have we removed that risk? Or how does the participants in that meeting, how did they view the US These days.

It's really fascinating to watch the performance of safe haven assets coming out of this conflict. So right at the start of the conflict, I would say yields on the tenure absolutely should have been falling more than they did. Dxy should have rallied and should continue to rally more than it has. The shekel hit a thirty year high against the dollar yesterday. So this debasement trade, the diversification trade,

But it just seems like the dollar, you know, certainly when we had the war kickoff, well the xy innx popped right back to one hundred from ninety six level, so it seemed like it had that safe haven. But now we're kind of bleeding off a little bit here in the dollar.

Yet again it is and if you look at where we are, if you look at a five year average, it's not as impressive. You came up nine hundred basis points right after the start of January twenty twenty five with the expectation.

Of drag et cetera.

So I would say it's it's not as impressive as one would think private credit.

How much of a concern is it to Global Wall Street here? I mean, we've had a lot of folks, including the banks that just reported saying it's not issue, even the regional banks that just report it not an issue. How did the folks at the IMF and the World Bank think about that?

Still, I think the consensus is not systemic because it is a slender part of the overall lending platform. It's not that jesibs are it's not a heavy part of their lending. But interestingly enough, you had several Central Bank deputy governors and governors saying, guess what, there were also moments in credit markets that were also a slender part of the credit market that had a contagion effect and had a runnable scenario, So we have to look out for that.

I would say.

The other thing that people were not talking about is dreg in the US traditional banking sector and the impact that that might have further down the line, you actually have the US jesibs having very healthy profitability not necessarily needing to reduce capital requirements, and that I think is something that was silent that should be spoken about.

Can I rip up the script? Rip okay? You darken the doors saying wandered down? I think it was Yeah, she played golf there. I tried, you tried. Do you have a favorite soccer team? Do you have a football team? I liked Liverpool, Liverpool they always when, they never when was the last day in Liverpool? I mean, they're always good.

This is my teenage day.

Coventry came up, which is they're coming up from the minor leagues. Uh, Wolver something was declined yesterday and the Tots are about ready to go down, which is unbelievable. What state of the United Kingdom? I mean, the King Charles was really emotional about the Queen's hundredth birthday. I think, are they still coming over to America?

I think so?

I mean, what is a state of your United Kingdom with all your brilliant academics there.

Well, it's benefiting from a little bit of an offset from the US. Right, You've had record numbers of US applications for seasonship in the UKA and residency. So it is still benefiting.

And you know what, Tom, it's.

Asset management that thrives and lives on. It's not the traditional investment banking, not traditional insurance, but asset management. Because hedge fund wives would prefer to live in London to Frankfurt, and so this is actually something it's actually quite robust that The difference here, and you're going to hate me for this, the difference here is that the conversation generally tends to be quite myopic in contrast with the rest

This is a basic question for Americans. If Roger becomes Prime minister, does he trumpify the United Kingdom?

What does that look like? We've talked about this in the.

Past, But does that mean, you know, an acceleration of the foundations and the institutions and questioning institutional integrity. I mean, I think that's that's one question mark. The other thing that we should think about is the rise of the right is not your dad's GOP.

The rise of the right.

Is not traditional obviously less fair uh free markets, and so what we work with our clients to think about, is where can the government actually intervene, even if you've been supportive of a government into your business, And how does your share price take a tumble off the back of that?

Can you get tickets for Paul to Royal Birkdale Golf Club July? Nice? Pretty sure?

Open Champion, the Open champ.

It's my favorite, isn't it like the worst? Like rough and all that. It's just weather.

It's just weather the United Kingdom. You know it's nay when it's nay golf, So that's how they do it.

It's going. I mean, is it a long walk from Saint Andrews to the fancy golf clubs?

I think it's like no, it's right there, it's right there, right there.

Yeah.

I mean, you shank your ball on number eighteen, you're right in front of the last class exactly.

Thank you so much for coming in today. Well you could make this like a three hour conversation here. What's going on? Is PwC optimistic on the American economy? Just as simple as.

That demand is strong? Right, demand is strong, and it's it's still teetering on that twin engine of AI related investment spend data centers, but also consumption. Consumption is strong across income.

You're seeing a productivity thing pop in. Whether it is or.

Is not a bad debate is still out for the highest skilled part of the income or for the highest skilled part of the skilled distribution. I have not seen the productivity impact thatmer from AI.

Correct.

I agree? I agree? Okay, Thank you, Rick. Alexis Crow always so much for being with us this morning air with PwC with some really really good perspective. Of course, her attendance at the IMF meeting's partner Chief Economists PwC us stay with us. More from Bloomberg Surveillance coming up after this.

You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten AM's durn Listen on Apple Karplay and Android Otto with the Bloomberg Business up, or watch us live on YouTube.

They're really good. Becha Wasser in here in Washington quickly here on the meetings to come up in Islam about as well. She is definitive on defense at Bloomberg Economics. Becca will the military representatives of Iran show up? Or is it basically the politicians and the theology that shows.

Up well, I think great now Iran is sending who it is that they can send. There has been significant changes in their leadership, to say the least, after US and Israeli strikes on keynodes of the Iranian system. So I think who they get is who they get. But you know, the US is sending the vice presidents, and so one would hope that they would come at a similar, if not comparable level.

Becca if there is no peace agreement.

We understand that the ceasefire, as per President Trump ends tomorrow Wednesday evening Washington time. Is the expectation that hostilities will resume if there is no extension.

I think if there is no extension of the ceasefire, we can expect to see the blockade continue. We can also expect to see additional strikes. President Trump himself has threatened that strikes would continue if a deal was not struck. This could be read as political pressure put on ran to get them to come to the negotiating table and capitulate to his demands and to make concessions in those

President Trump has recently tweeted that the blockade has been a tremendous success and that the US totally controls the Strait of Hoour moves is that the feeling in kind of wider circles there because it doesn't seem to be much oil flowing in around of the strait these days.

Well, I think it depends on what circles you are talking to. If you are talking to the US military. US Central Command has said that twenty seven ships have been disabled or diverted, but if you look at data, for example, from Lloyd's lists, they suggest that about twenty six ships have actually been able to make it through the blockade despite US enforcement. So at the end of the day, the question of is the straight open or closed?

Do we have any understanding And I've seen this way that way in the zeitgeist. Are we running out of missiles? Just as simple as that, I can't get a straight answer. What do you see?

So the answer is no, the United States is not running out of missiles. However, what it is doing is it is mortgaging its future in terms of security with missiles. There are sufficient stockpiles for today for what is needed, but what is dwindling is the rate of those stockpiles.

I was in Washington yesterday. I wonder at the office, you know, I mean looking for Becca. I can't find her. I mean, you know, she's just a player. She's deep and let you exactly. She's probably in some bunker somewhere and there's Tony Cabaco there. Becca. From where you sit, is the Pentagon communicating with the press upset that we have where the normal press is not invited into the press conferences? Are we getting the full picture?

I mean, I think we're getting a certain level of transparency with those continued press conferences that we've seen. Secretary of Defense Pete Hegseth and Chairman of the Joint Chiefs of Staff Dan Caine run But that doesn't mean that.

It's the full picture.

They're giving the good news story that they want to give, they're giving the data that they want to provide. The transparency is welcome, But until you have a free press who can actually question whether the statistics are real, whether they are getting the full story, that's when you know you're missing a critical step.

So what's your question to the Secretary of Defense right now?

Are you prepared for future crises? You can do what you need to do for today, but are you able to have the stockpiles, the readiness for what might happen potentially for higher and conflict in the Indo Pacific?

Are you ready?

Listen, when you go to brand Ice, you say, you don't say the Pacific Ocean, you say the Indo Pacific. That's the way they roll at Brandi's beck that what you're telling me is this trip of President Trump to China. I guess they're going to wander buy and see President g I mean, this is like a big deal, right, This is not like some you know, may distraction.

No, it's a huge deal. It's a huge deal, and it's something that frankly, President Trump has prioritized and made an equally big deal about, in part because he's tried to play both sides a conciliatory tone towards China that is a little bit different than what we've seen in previous administrations, will at the same time trying to be tough on China on certain issues. We've seen that initially

Beca should we be concerned or should we question the fact that Secretary of State Rubio and the State Department appear to be nowhere in sight as it relates to what's going on in ouran and then negotiations and I don't know Secretary stuff.

I think President Trump has decided who his point people are. He has been very, very dependent on Steve Whitcoff, on Jared Kush, as well as making Vice President jd Vance own part of this file so you know, I would probably say three is a crowd. If you add one

Are we going to have a final question? Backer are we going to have a budget shock because of all this? I mean, that's a hard of what you're doing for Annawang and all of economics. Are we just do we need to be stealed for a defense budget shock?

I mean, I just look at the request. It's a one point five trillion dollar request. Does the Pentagon expect to get that much? Probably not. It's a maximalist request at this point in time. But if you look at the enormous amount of missiles that have been expended just in the Iran conflict alone, if you look at the levels of readiness with double tap carrier deployment, you are going to expect to see a bill for that. And that's a bill that's going to come do later, not

Spectacular brief Beka Wasser, thank you, thank you, thank you. With Bloomberg Economics, they are on defense, answering a lot of the questions of Paul and I have because it's confusing.

Oh yeah, yeah, you know, that's all there.

Is to it. Stay with us. More from Bloomberg Surveillance coming up after this.

You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch us live on YouTube.

Troy Gaisky with us here, who on a ninety day basis looks at all the stocks he's losing money on. He's chief market strategies, future standard. I haven't asked this on air yet. Would you prefer twice a year or four times a year earnings report on amalgamated chin strap that you're you know, on way too many shares of Yeah.

Look, I would say one of the advantages we've seen for in one of the drivers of companies going private or staying private longer. We could talk about them re ipoing later has been you can focus more on medium to long term growth, right, because it's all about growth in the equity part of capital structure, you know, the continuous quarterly reporting. This put a lot of pressure on

Interesting to say. The least Paul's been talking about on morning is Troy Guyeski is streuture standard? Are you going to participate? Is this the right phrase? The musk ipo?

Oh, that's right, SpaceX, right, are we Yeah, yeah.

We'll look so through some of our our venture capital portfolios.

We have exposure on behalf of clients and so yes, there will be participation in that on the behalf of our clients. But in terms of taking a position in the IPO itself, the answer is no. You know, our liquid multi strategy really doesn't trade I pos out of the open and look, we wish the best for those late stage private offerings, but as you know, you know, as they get funded later and later, the valuations tend

Yeah, that's you know, say vertical. It's impressive, Troy.

We had to sell off in the market, you know, right around the beginning end of the Rand war, but then we had a sharp rebound here blinked you miss there? Right?

What do you make of that there?

Yeah, you know it's really crazy. You know when you go back in really, since the Eurozone crisis, every correction slash.

Bear market, mini bear market has been V shaped, with the exception of twenty twenty two, right, And you think about the reason that wasn't V shaped. Is it just took so long for markets to just to materially higher front end rates. And the Fed's going from zero to five and a quarter and they're draining money supply at the fastest pace since the Great Depression.

And that was an accident.

Obviously, this time was on purpose, you know when you think of the technicals behind that. So we talked about this in the past to some extent. Where you have a long only buyer base, or a retail buyer base that's been conditioned to never sell right, just hold through.

Then what happens is you get this seismic shift.

Tariffs, Iran war, The large multi strate hedge funds start selling more, selling down their lungs, putting on shorts.

The trend followers flip from either long or neutral. The negative.

The risk parity managers which manage their books to volatility. As volatility expands, they cut their risk, and you have this sharp decline. You reach a clearing level, your retail comes in, multistrats start to relever, and it reverses very, very rapidly. But this is a certain event of v shaped recovery for the ages. Yeah, I mean even more violent than Liberation Day.

Trey Gaski, where this future is up twenty six fourteen, they pulled back a little bit. The President still speaking over at the desk star with mister Kurr and a whole bunch of headlines off that we'll get to them here in a moment. We are advantage of Troy Gayski, Chief market Strategistic future standards. So you know, if you're at the Massachusetts Institute of Technology and you look at what researchers have done with extrapolation, they use lease squares,

You know, I've always said it's hard enough to look twelve to eighteen months forward, let alone twenty four to thirty six, right, So we used.

To routinely do three month guesses in the back of a research.

Report, exactly three months.

Right.

So the key I think now to remember for this year's earnings and early next year is you still have a relatively strong consumer. You still have massive AIAI infrastructure spends, which obviously feed the whole semiconductor complex and business fixed investment complex, and that makes it potentially achievable to grow revenue nine percent in SMP and earnings at seventeen. Right,

What metaversed? Remember the metaverse? It's like something say no, no, the meta remember the.

Metaverse that was That was you know, Zuckerberg's big plan to create an alternati reality. And there's seven seven seventy seven billion dollars gone.

No.

So so they sit down and they say, hey, like, we've spent more money than potentially we should.

We're not getting the AI R o I C. And they start to flatline their spends.

That would certainly be a correction cause of event and would suck a lot of GDP growth out of the economy.

So that's one of the most known risks, and I think you can say with confidence that's not going to happen the next twelve fifteen months. After that, you have to at least be aware.

Of nice nicely summarized.

So what is the from your perspective, the AI play now, Because at least in the first two or three years, it was that's just throw money at this thing, and anybody who was throwing money the stocks were really rewarded if you could get AI into your story somehow. Yeah, now it seems like the markets a little bit more discerning here.

Yeah, look, I think you know, joking Lee, you're at that stage in some cases where companies at AI and their share price goes up and then you know, the guys that short look at that and laugh and then they kind of bury it within a day or two.

I ask you with us and we continue the Chief Market Strategy's future standards. A nice lung conversation, valuable conversation. Within this morning we said good morning. The way you choose to listen to us, thank you so much, major shout out ninety nine to one FM, Nathan and Hagar Radio.

Oh.

I like Amy Marsh She's my DC content and she's you know, be you hockey and all that. She's the University of South Carolina.

Which it's good to be down there yesterday to see mister Hager. He was clearly was shutting down his day. You know, he was heading for the door when I walked in.

Yeah, lunchtime as time, you.

Know, hey, Adam Sotel, whole thing. We said good morning to Washington on up to Boston, Good morning, serious exempt Channel one twenty one on YouTube. We are humbled by the distribution, Thank you so much. The way to do that is to sign up it Bloomberg Podcasts and we are live to you and then tape later at some point Jake haven't figured out yet, but we're there on YouTube as well, the Vics nineteen point zero two. Right now, Troy, I look at the entire setup here and the backdrop.

Yeah.

So when you think again about maybe more obvious risks that Tom, even you and I can figure out right is the deaf situation is to some extent unsustainable. Right, we're issuing let's call it, five point eight to six point two percent of all the treasuries ever issued in the history of the country.

That's a big number.

Part of the reason why the Fed really will have pressure to bring the front end down faster to control that back at the end of the yell curve. But if you think about on the future, right, if there becomes a situation where markets at least back a little bit, if financing the back end the curve, that turns again into one of those classic scenarios where you have a bear steepener. Maybe not right, Barrish move from two to tens, which in turn causes multiple impression. So think about what

The equity market.

So we had a rotation Troy kind of starting late last year in out of some of the higher growth, high multiple stuff into maybe some of the more cyclical, maybe even smaller mid caps. I saw a little bit of reversal back into some of the big cap tech names.

How do you think about that casion?

Yeah, So it's funny.

So in middle market private equity we always talk about growth at a reasonable price. It's been really really hard to find in public markets really since q E three. You go back to q E three, it was really more of a asset inflation exercise than a way to really break a disinflationary cycle.

You know, you started to see you know, hyperscalers.

You know, let's call it the mag seven minus Tesla top ten Tesla at waterline growth at a reasonable price levels, so lowest multiples they've been in quite some time, still very tremendous growth in the near term. And so it's logical that once you hit that clearing point and you start to rally back, that some flow goes back to what are clearly some of the greatest companies mankind's ever seen at some of the lowest multiples they've been at in quite some time.

Sure to ask you, this is going to wrap up. Here is the future standard. I'm going to do a massive audible here. Nice when you were doing Kemy and Mite, did you even speak to the mechanical engineers like Kevin.

Warsh Well, you know, of course two it's not course ten, but yes we did, we did. Did you hear that shit?

Am?

So the future chure?

I did that one for you, Tommy.

You know, it's just, folks, what we're talking about here, there's a whole cottage industry and engineering A massive, massive shade between a mechanical engineer. Gayski is a legit chemical engineer. I studied, I did not graduate. I studied aerospace. I mean you look at the aerospace of the double le's like children, right, we're sliding through.

I mean, so what's called course six nony T they argue is as challenges as chemi at most places because the competition to get in bends the curve higher.

But back to you, you're we call that foreign students, Is that right? Can you say that? Tom?

So?

If you think about, you know, mechanical engineering very challenging discipline, and we had a lot of guys in our fraternity that were in mechanical engineering, so have tremendous respect for them.

But you know, yeah, Kevin Worrish is showing up like some dude that took English literature somewhere and wanted through NBA and married into a silver spoon. Yeah, he's a mechanical engineer from Pennsylvania. That's not small potatoes.

Yeah, his IQ's clearly well by the bahs. You know, let's closes.

Are Michael barscoing this is too much nerd patrol thermodynamics. I'm sitting there. There's a common feature of all of engineering. Chris is of course ten and Mi I t ten point two one three. That's the first three of absolute terror of thermodynamics. That's where it gets hard, you know.

So to be to give mechanical engineering credit, they have to take it as well, right, yeah, and not ten two on three, But obviously they're they're version for me though, Tom, You're right, thermodynamics is usually the like punch in the face moment. I don't even remember why, but I took fluid mechanics before them damics, and that was the punch in the face moment for me.

Like you think you got everything locked down, No you don't. Now you're now you're taking real process.

Tell you exactly where I was sitting in Boulder, Colorado. I think it was after a hockey trip. I'm on the tower, which is a physics tower, and I'm in quantum mechanics doing Schroderger equations, and I'm like, why am I sitting here?

What is going on?

It's really humbling, and you know, it's a nice reminder for markets too. I mean, whenever you get through these periods of challenge and uncertainty, you know, as an asset manager, you have to be humble, right, You have to understand that you don't have perfect predictive power, and that's why it's so important to focus on that risk award discipline.

How much can you lose it get wrong?

That's just a new CEO of Apple Turgis mechanical engineers.

Well, let's give Kevin than not too man. He's like a smart guy, you know, but.

The new CEO and Apple folks took it the hard way, like true guy guy asking trug guy asking you his future standard. Thank you so much. Stay with us. More from Bloomberg Surveillance coming up after this.

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Seem likely joins US Global cohead Fixed Income at Blackrock. I came out of moynand last night and it was one of your black Rock Day forty two buildings at Midtown yep in Blackrock symbol at the eighth night. The other I can't remember. And you know the bottom line is we're all enviously Europe, and it could be Zerioka, it could be Milan or it could be what they've done at Heathrow and that we're doing that in our own American way, and we're doing that with bonds, aren't.

We We are?

Yeah, bon bonds are really racing right now. We're our lows this year or fifty percent higher.

Than the same time last week.

Did Blackrock You guys got to be this first, second third call on any bond. I'm looking at the point ahnd miracle here in New York. It could be Laguardi, it could be Kansas City's new outport, and it's not like one bond, it's like six seven eight creative complexities of getting a billion dollar project done. How does Black Rocks sift through that? Well?

I mean as far as municipal finance, I mean, yeah, there's there's complexity and there's a lot of back and forth on how to structure those deals. We've actually seen really solid demand for munis. I mean we've taken in I think that's probably our fourth or fifth largest category this year, so several billion in well mixed sense. I mean, I think investors are looking at the yield environment and investors, especially in high tech states, are very attracted to munis.

Right now, what do you make of the Is it fixing them call in twenty twenty six clipping coupon or can I do something more than that?

Now I'm going to ban not a fad living right, No, it's not, it's not.

You know, a vast majority of the universe is still well above four percent.

We are.

We are seeing demand just off the charts right now for fixed income. I think, you know, the big messages, all of the geopolitical risk, a lot of the you know, headline volatility.

You have to look through it because.

These supply shocks can be sharp, they can be really powerful, but eventually they received, they'll result one way or another. And so I think our investors are actually reflecting that they they are looking through it.

They are allocating.

Then they're allocating very strongly, and the flows have been mostly you know, the majority of our flow is probably over half for treasures, but that's you know, between you have you have of course ESCUB, which again is the largest flowing bond e TF this year, but also after that it's the Broad Fund g o VT. So you know, yes, some some people are sheltering in the front end of the curve, but others are allocating more towards durations.

So how about you U versus non US. Where do you see the flows there? So it was a trade there for a while to you know, really go out.

It's interesting I was looking at I mean, so vast majority is still US, yeah, but I was looking at returns, strongest returns this year. Inflation protected securities are doing well, but local em was doing really well. Now again that's a dollar trade though, and so that's gone back and forth.

So you just have to I think, if.

You're going to do local EM or or you know, international development, you just have to have a currency view on that.

So all right, I'm just getting you to notes.

Twenty twenty five was a record for inflows into your I share stuff. Off to another strong star for twenty twenty six. Where's the money coming from? Is it money coming out of am I selling my x y Z mutual fund and putting it into your wrapper because it's a better rapper. Where's that money coming from?

There's some money that is migrating from mutual funds. You've you've all heard the headlines around conversions, and then you know, I do think the active complex has really grown quite a lot, right, and so I think the interest in active ets fixed income ETFs.

Has been very, very strong.

That's that's how power growth in the last couple of years in a way that it wasn't before. It was mostly index you know, you get back three years now a lot of it's active.

Where are fees for bond funds if we bondmed is that it or can you actually drive a t tick tick lower? Well?

Look, I think in terms of index products, I think there's a you know, well established, you know, market dynamic there and that that's sort of played out active space, you know it. You have a lot more variation in the strategies, and you have a lot of different use cases depending on the strategy. So I think you could see a more significant variation in fees and the active complex than you do in indexing.

Tom.

I mean, listen to this one point two trillion dollar shares bond ETF platform.

It's actually close to one to three almost.

I mean, what do you guys do with that stuff?

I mean, what do you investig to Paul's.

Serious question, cal you guys two three four in your good competitors, you're the market, right.

I mean we're still as an industry, we're still about three percent of the entire bond market.

So there's people don't know that.

I think they think Lawrence Fink is twenty two of the market. In terms of ABBY in Boston, Good Morning Abbey. Abby in Boston is another twenty two percent.

In terms of bond ETFs, the industry is about three percent of the market, and so you know, there's a lot more runway. I think the industry right now is around three point six. We were saying it's going to get to six training by.

The end of the decade.

I think we'll get there pretty easily, and maybe well before that. So there's just a lot more runway. I mean, you look at the curve of equity ETF adoption and and bonditfs will follow that.

Steve Lentley on the marketing stuff that I read, I mean barons of you know, Saturday Mornings, got all this stuff. But basically there's you know, Paul Sweeney playing vanilla passive ETFs pretty much plane vanilla active ETFs, and then there's all this fancy hedged add on stuff. Is there any track record that hedging works or is it a shell game where it works and then once every six years, once every seven years doesn't work well?

So it depends on what you're hedging. I mean, I think we have a suite of interest rate hedge products. On our most popular products, like LQD, there's an l QD H H y G, there's an H y.

G H et cetera.

Those do work well in rising rate environments by definition, following rate environments not so well. So I think you know, what we've seen investors do is allocate to those when they're worried about rising rates, and then the flows do come out when when things reverse. So we've tried to just build a robust toolkit for different environments. Investors tend to behave that way.

How about just in terms of credit risk, are you seeing your client's embracing credit risk these days?

Are not so much?

It's interesting, I mean, ig investment grade is definitely, you know, among our larger flows this year, high yield is mixed, and I think you know reflects sort of this I think angst over where we're sitting right now in terms of volatility.

So but but investment grade has been strong.

L QD twelve months trailing seven point eight percent. Yeah, it's like, how do you do that? Cleaning your three percent fee.

LQDPE is not three percent, it's fourteen.

But yeah, but no, I think investment grade overall has has seen, you know, pretty consistent flows. It's it's really down the capital structure where people have been had a little more of a mixed view.

It's a little more nuanced because of all the volatility.

We're out of time. I forgot to ask him about private credit. Oh, they're not worried. Seven handlers are looking at me. Yeah, you can do that next Steve. We'll do it next time. Steve Global, cohead of ice Shares fixed Income at Blackrock.

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