July 1, 2025 • 43 mins
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Donald Trump’s $3.3 trillion tax and spending cut bill passed the Senate Tuesday after a furious push by Republican leaders to persuade holdouts to back the legislation and hand the president a political win.
Senators voted 51-50 to pass the bill, with three Republicans — Susan Collins of Maine, Thom Tillis of North Carolina and Rand Paul of Kentucky, defying Trump to oppose the legislation. Vice President JD Vance cast the tie-breaking vote. The package, which now goes to the House, combines $4.5 trillion in tax cuts with $1.2 trillion in spending cuts.
“This was a team effort,” Senate Majority Leader John Thune told reporters immediately following the vote on Tuesday. “In the end, we got the job done.”
The Bloomberg Dollar Spot Index climbed to a session high after the bill passed the Senate. It was falling for six months through the end of June.
The package — informally known as the “One Big Beautiful Bill” — includes the entirety of the president’s legislative agenda in a single package. Trump personally lobbied lawmakers to quickly move the legislation through Congress.
“It’s a great bill. There is something for everyone,” Trump told reporters on Tuesday. “And I think it’s going to go very nicely in the House. Actually, I think it will be easier in the House than it was in the Senate.”
Republicans say passing the bill will help them maintain their congressional majorities in the midterms. But polling suggests the bill is not particularly popular. A recent Pew Research survey found that 49% of Americans oppose the bill, while 29% supported it. Some 21% weren’t sure what to think.
The House is expected to vote on the bill this week, but success is not guaranteed. Only a few Republicans can vote “no” in the House for the bill to pass in the face of united Democratic opposition. Speaker Mike Johnson said the House “will work quickly” to pass the bill by July 4.
Today's show features:
- Terry Haines, Founder of Pangea Policy on the Senate passing a $3.3 trillion tax and spending cut bill
- Bloomberg Technology Co-Host Ed Ludlow and Bloomberg News Team Leader for the Capitol Influence Team Mike Dorning on Elon Musk’s renewed tensions with President Donald Trump, whether Musk still holds sway in Washington and what it means for Tesla
- Olaolu Aganga, US Chief Investment Officer for Mercer on businesses adjusting to pending legislation and the economic outlook
- Paisley Nardini, Managing Director and Head of Multi-Asset Solutions at Simplify Asset Management on diversified return streams for investor
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insights on the people, companies, and trends shaping
today's complex economy. Plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:33):
Carol Masser along with Matthew Miller here in our Bloomberg
Interactive Broker Studio. You know, another busy day out of DC.
President Donald Trump's three point three trillion dollar tax and
spending cut bill, passing the Senate earlier today after a
furious pushby Republican leaders to persuade holdouts to back the
legislation and hand the president of political When we did
see the Bloomberg Dollar Spot index initially climbed to a
(00:54):
session high after that bill passed the Senate, it was
falling for six months through the end of June. The package,
and formerly known as the One Big Beautiful Bill, includes
the entirety of the President's legislative agenda in one single package,
and we did see the President personally lobbying lawmakers to
quickly move the legislation through Congress.
Speaker 3 (01:13):
It's a great bill.
Speaker 2 (01:13):
There's something for everyone, is what President Trump told reporters earlier.
Speaker 3 (01:18):
So is it.
Speaker 2 (01:19):
Let's ask someone who provides us an international macro policy
and political forecasting for financial markets and prominent investors and
is definitely a well known voice to our Bloomberg audience
with us from Washington, Terry Haynes, founder of Penjae Policy. Terry,
good to have you here. So is it a great bill?
(01:39):
Is there something for everyone? In your view?
Speaker 4 (01:42):
Well, thanks for having me, Carol. I appreciate, and yeah,
there's so many things for so many people. But I
would take issue, and I know this is you're quoting
other people here, but I would argue, even with the
White House, that this is the entirety of the President's
agen because what they're going to want, you know, this
(02:03):
is a This makes a lot of important changes. It
makes permanent the twenty seventeen tax cuts. It's a big deal.
It creates new incentives for manufacturing and on shoring, very
big deal, including for defense. I think it all and
it deals with the debt ceiling, the dead limit problem,
(02:25):
which is a very big deal. So markets have anticipated
this and largely priced it in. But nonetheless, you know,
for markets, it's a very big deal because it provides
a great deal more economic certainty. That said, what you're
going to see is kind of the rest of the
story in the fall, when you're going to get spending bills,
(02:45):
fights and a bunch of other things that are going
to try to rationalize debt and death set a little
bit more and right size that which Secretary Besson says
is going to be a three or four year project.
Speaker 5 (02:56):
By the way, speaking of Secretary Best, and we had
him on yesterday and I was so hoping to ask him, like,
what happened to three three three? You think that was
just sort of campaign promises? Or does the Treasury Secretary
really believe that, you know, in his lifetime we're going
(03:17):
to get back to three percent deficits? Does he believe
that in this term we're going to get to three
percent growth or that we're going to produce three million
barrels more of oil a day.
Speaker 4 (03:30):
I think Best and I think would tell you all
those things are aspirational. But yes, he's very serious about it,
and they're very serious about the manufacturing as well. I mean,
one of the.
Speaker 5 (03:41):
This bill includes four and a half trillion dollars of
tax cuts and only one point two trillion dollars of
spending cuts. I mean, you don't need to have an MI, I,
T PhD to get that this is likely to add
to the deficit.
Speaker 4 (04:01):
Well, I think it probably does add to the deficit.
But I would take issue, and a lot of people
think would take issue, but not incidentally, Barack Obama with
the idea that taking a taking CBO scoring wholesale is
the only way to judge the yardstick. Here Ben would
Bessont would tell you whorry on right now that CBO
(04:25):
scoring this kind of the static model doesn't take into
account growth, it doesn't take into account revenue from tariffs,
it doesn't take into account and awful lot of things.
Wall Street Journal lead editorial today points out that using
CBO analysis of this legislation, the forty thousand dollars self
(04:45):
cap is actually a deficit reducer, which is about as
ridiculous as you can get. But it tells you kind
of the perverse incentives that are built into the model.
So you know, I tend to be and not for
any partisan reason, but I to be somebody who thinks, well,
you know, CBO's not got all the answers, and there's
an awful lot that's relevant that it's relevant to markets
(05:07):
that they're leaving out.
Speaker 5 (05:08):
That's fair, by the way, since you brought it up,
you have a lot of experience in Washington pointed by
the President to run things, and I think a couple
of congressional committees.
Speaker 3 (05:21):
You ran as well.
Speaker 5 (05:25):
In terms of the salt deduction. That's that was part
of US policy for like over a century. Because this
country there's a balance, right, we don't want undue federal
overreach into a state's autonomy to tax. And does anyone
(05:48):
care at all about states rights anymore? Or are we
all okay with like this centrally powered federal swamp.
Speaker 4 (06:01):
Well, you know, there's a there's a lot of different
ways that flashed through my mind to answer that question.
One of them is, if you're feeling like you want
to read a court case to uh look at a
look at a nearly century old Supreme Court case called
Wickered versus Philburn, in which the uh, the Supreme Court
essentially said that, uh, yes, federal government can use the
(06:21):
commerce clause to bigfoot anybody on anything at any time.
Pretty much it is state's rights have gotten a lot
less important over the years, and uh, and you see
that in this bill in a lot of different ways.
You see the yeah, and you you point out, I
think properly so about the balance, the old balance on
(06:42):
salt that doesn't really matter so much anymore, not only
because it's the blue versus red issue, but because it
was the revenue raising issue. But you also see things
like the uh, the AI uh moratorium on state regulation.
Speaker 6 (06:57):
Uh.
Speaker 4 (06:58):
That happens. And so there's a for a long time
now and there's a lot of streams into this, civil
rights being one of them, frankly, the federalization of rights.
And as a result of what state policies are aren't
yet a lot less important. Where they are important in
places like medicare, medicaid and the like. It's because there's
(07:20):
a defined role for the state, and there's a defined
role for the federal government in terms of the revenue
streams that go into creating the program.
Speaker 2 (07:30):
Terry, is this are these policies ultimately that will make
America great again?
Speaker 4 (07:41):
You know? The let me answered this way, and I'm
not going to duct the question but at all, but
I let's say, let's put it this way. What they hope,
what they intend is to have is to have an
economic policy that frankly serves the United States geopolitical policy
and maximizes US economic strength as part of US geopolitics.
(08:06):
So what they want in the short term here, this
is why the July fourth Bogue July four, July nine
Bogie is so important. What they want is they really
want a triple boost to the American economy through the
tax legislation, through bilateral trade deals, through showing that they're
not going to go crazy on reciprocal tariffs for example,
(08:27):
and then they'll start dealing with the spending the spending issue.
What they hope to do through all this and including
the manufacturing reshoring for what Secretary Vesent calls critical critical industries,
including defense, is that they think they think they are
(08:48):
reindustrializing and reorienting the American economy to make it much
stronger for the long geopolitical conflict that's following. So you know,
they think this is a way to make America greater. Certainly, yes,
do you think it is?
Speaker 2 (09:03):
And what about your clients and those folks that you advise.
Speaker 4 (09:05):
I think let me let me just put it this way.
Sitting on sitting on the status quoting. Sitting in the
status quo before twenty twenty five, I think was very
bad for the country for a lot of different reasons
and didn't serve us well and put us on the
back foot on a lot of things. So, you know,
what they're trying to do is put things on the
(09:26):
front foot. And you know, as a citizen, I support
some of it. I'm not crazy about some of it,
but you didn't have any on to talk about that.
The fundamentally, you know, they actually do have a plan,
they're actually trying to execute it. They've actually been reasonably
successful in executing it so far, and the markets seem
to be going along with it. Judging by what's happened
(09:48):
in the second quarter of this year.
Speaker 3 (09:49):
It is impressive that they're able to push this through. No,
I mean, considering the opposing forces.
Speaker 2 (09:55):
Yeah, is there something though? You know, only forty eight
percent of Americans have heard any thing about the so
called Big Beautiful Bill.
Speaker 3 (10:01):
I mean, where do they live under a rock?
Speaker 2 (10:04):
Well, I don't know, Terry, what does that also tell
us about Americans? And like what I don't know, Like
these are programs that.
Speaker 4 (10:12):
Well, you know, they get well they you know, they
get you and I particularly me, uh judging by hair color,
the uh you know, think about the legacy media more
than we should, no offense, but we do. We do.
And people get their information from lots of different ways,
(10:34):
and they get it. They get it in different piece
parts and kind of different shards. I think of it
as sharks. I've never heard that anywhere else, but different
shards than uh than you and I might you know,
almost meme like you.
Speaker 3 (10:46):
Know, che social media.
Speaker 4 (10:50):
Yeah, yeah, my daughter will tell you all about some
movie and she's not you know, but she's never seen
the movie. She's seen you know, parts of the movie
through memes or whatever. But like, oh yeah, that's you
know that, you know, that's from this or that or
the other movies, Like have you seen that movie?
Speaker 2 (11:03):
No, it's not a full picture, Terry, you know too quickly.
Speaker 5 (11:06):
I think the important question here and just in thirty
forty seconds, is this going to come back to bite
the Republicans in the midterms when those people who don't
watch the news realize they no longer have Medicare coverage,
are they going to vote against Republicans?
Speaker 4 (11:21):
Well, yeah, and you saw march on me a little
bit the answer. When I went to law school, I
learned there's only three things you learn in law school.
One of them is to say it depends as much
as possible. But thank you for laughing at my little joke.
But it actually does depend. I mean, if you know,
they've put their reputation on the line on, among other things,
making sure that the making sure that the healthcare programs
(11:45):
still work properly, so if they don't, that's going to
redown negatively to on them, just like it did after
the Affordable Care Act with Obama when they couldn't even
get a website.
Speaker 2 (11:55):
Listen't Terry so good that we could spend some time
with you? Terry Hanes, Founder of Pench Policies.
Speaker 7 (12:01):
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Speaker 2 (12:15):
Hey, listen our heads that are spinning a bit today
when it comes to Tesla news. We've got a long
time musk lieutenant leaving in a high profile departure. Tesla's
latest quarterly sales update that's coming this week too, and
then there's this great ongoing spat between the leader of
the free world and the world's wealth based individual. Although
I need to check on that we are talking about
Trump versus Musk. Yeah, earlier today, President Trump did say
(12:38):
he would look into deporting the billionaire and response to
a question about the ally turned critic of the President's
signature tax and spending legislation, I.
Speaker 3 (12:48):
Checked for you by might have to put doze Elan.
Speaker 8 (12:51):
You know you're not DOJ.
Speaker 3 (12:53):
DOJ is the monster that has that might have to
go back and eat.
Speaker 9 (12:56):
Elan will not be there.
Speaker 3 (12:58):
But I think what's going to happen is do just
gonna look at Musk, and if those looks at Musk,
We're gonna say.
Speaker 5 (13:03):
But fortune, Thank you very much, everybody here.
Speaker 3 (13:05):
I don't think you should be playing that game with leader.
Speaker 2 (13:08):
All right, That, of course is President Trump. Earlier today
and then about a week or so ago, talking about
Elon Musk. What did you say that I.
Speaker 3 (13:16):
Checked for you?
Speaker 5 (13:17):
I typed Rich go on the Bloomberg terminal, and he
is still the richest man in the world by over
one hundred billion dollars net worry three hundred and sixty
two point seven billion for Musk coming in at second
Mark Zuckerberg with two hundred and sixty billion.
Speaker 2 (13:30):
Not too shabby. Not too shabby, by the way that
it was President Trump all from earlier today commenting on
Elon Musk.
Speaker 3 (13:36):
All right, there's a lot of.
Speaker 2 (13:37):
Ways we could go here. What we wanted to really tackle, though,
is what the political fallout of the apparent relationship fallout
between President Trump and Elon Musk. So let's get into
it with us. As Ed Ludlow, he's co host of
Bloomberg Technology on Bloomberg TV. Catch him at eleven am
Wall Street time Monday through Friday. He's out in our
San Francisco bureau and then in our Washington, DC bureau
(13:58):
is Mike Dorning. He's Bloomberg News team leader for the
Capital Influence Team. I want to get to you Mike
in just a moment.
Speaker 5 (14:03):
Ed.
Speaker 2 (14:03):
First up, though, we do want hi. We want to
talk political influence. But I got to ask you. Tesla's
shares are down? What news is it on? Because there
is a lot going on with Tesla right now, So
just lay it out quickly for us.
Speaker 10 (14:16):
Yeah, it's a version of the Trump trade right that
prior to November's election, the Trump trade, is it related
to Tesla at least like the public proxy was that
close proximity to the administration would yield policy and regulation
results that would be to Elon Inc. But particularly Tesla's benefit.
But trades can go both ways, and you know, I
(14:37):
think that the market's super fixated on the idea that
a deteriorating relationship between the President of the United States
and Musk is not a good thing for that company.
Necessarily that the President also had specific commentary around electric
vehicles as it relates to the big beautiful bill, the
tax bill, and we can get into like that they're
shouting like two different things at each other, something really amazing,
(14:59):
Like if you allow me to just real quick, like
I'm not a credit guy, I don't really know the
credit markets, but we have this headline as well that
even Xai's bonds moving in the session day like a
few cents. But clearly, you know, if you're an investor
of some kind in an Elon Inc. Company, you're looking
at this and thinking is this a good thing or not.
Speaker 5 (15:19):
It's interesting to me that this kind of moves the
needle to some extent because you know, Joe Wisenthal had
Jim Chanos on his Odd Lots podcast yesterday and he
asked about, you know, the underlying fundamentals of the company.
Speaker 3 (15:37):
Listen to what Cheno's had to say. Do you have
a Tesla thought of the day?
Speaker 8 (15:40):
Nobody cares, that's my thought. Nobody cares.
Speaker 1 (15:43):
Yeah, you could.
Speaker 8 (15:44):
You know, you could see Elon, you know, robbing a
Brinks truck with a mask or whatever.
Speaker 3 (15:50):
That's Elon.
Speaker 8 (15:50):
It's a unique animal where people say, oh, well, of
course yes, but you know, Rosie the robot's going to
serve me my breakfast and it's going to Tesla trademark
on it, so you know it's worth the trillion dollars.
Speaker 5 (16:01):
I mean, nothing matters a dollar dream ed tomorrow. Tesla
comes out as sales figures, but it's not a trillion
dollar company on selling two million units a year, right.
Speaker 10 (16:13):
I go back to Carol's original question as well, like
this key man risk. The key man risk is codified
in Tesla's annual regulatory filings where they basically say Elon
Musk has a special value to this company and if
anything were to happen to him, that would be bad
for Tesla. What we reported, Carol to your question this
morning is that after the aftermath of reaching recent departures
(16:35):
from Tesla, Elon Musk now oversees sales in both the
United States and Europe. And that's really important because as is,
the data is expected to show sales are under pressure
right now, and we know we can get into the
political background of why. In Europe in particular, that's because
of musk relationship with Trump.
Speaker 2 (16:53):
Well, I want to get into the political fallout of
this apparent relationship fallout between President Trump and Elon. Mike
come on in on this because what Matt brought up
a good point too, like how significant could this be
for the GOP if indeed Elon backs off of his
financial support. We saw a big time in this last
(17:14):
presidential election, so.
Speaker 6 (17:17):
It could be significant, particularly if he were to go
and back other candidates with a lot of money. Remember
Elon Musk was the largest donor ever in US history
in the last election. But you can see today with
this Trump tax bill in Congress, it passed with no problem,
(17:41):
even though Musk was intensely criticizing it. They were still
able to get reluctant Republicans who had reservations about the
bill to side with President Trump. So that just shows
that for actual Republican lawmakers who are up for reelection,
they'd much rather be with Trump than with Elon.
Speaker 3 (18:01):
You know, I was reading.
Speaker 5 (18:03):
Eric Wasson's story today about the holdouts. Okay, Joni Ernst
eventually went for the bill, but she was concerned about
a reduction in solar and wind credits.
Speaker 3 (18:16):
That would hurt Iowa.
Speaker 5 (18:18):
And I thought, she doesn't necessarily have to cout out
to Donald Trump just to get his support, Like there's
someone else in town who could bankroll her re election campaign.
I'm not sure if she actually needs one, but you
understand my point, right, Mike Elon Musk. Being anti Trump
does give Republicans who no longer want to be like
(18:39):
sycophantic yes men for the rest of their careers and
alternative option.
Speaker 6 (18:45):
An alternative option, but one that's maybe not so attractive
if you've got to win a primary. Because the Republican Party,
particularly the people who are active enough to vote in primaries,
are increasingly just a Trump party. It's less more to
traditional Republican philosophy and the Trump worldview, and so Trump
(19:09):
has a lot of influence, especially with primary voters. Now,
whether that'll be the case in three years. We don't know,
but right now it sure feels like that to the
actual elected officials who may have to run for reelection soon.
Speaker 8 (19:24):
Ed.
Speaker 2 (19:25):
What have you heard about how much Elon liked being
in the Oval office and having such close proximity to
Donald Trump?
Speaker 10 (19:33):
Yeah, I mean what we consistently kept hearing, right, and
must said as much himself on the test aroundings called
prior to the start of DOGE that the whole point
was to kind of get some kind of benefit, right.
Robotaxis probably the easiest example where Musk was trying to
and we reported was literally himself lobbying on the passage
of legislation that would govern give a federal framework for robotaxis.
(19:57):
And he kind of went into the White House for
that and has come out without it so far. What
I find so astonishing about all of this is you
have to give credit where credits due, and actually Elon
Musk has been very consistent about all of this. He's
very worried about the national debt pile in the lead
up to November, you know, that was kind of what
he was on the road campaigning with Trump about to
(20:18):
a certain extent, but the President's commentary and post is
like Elon's upset about EV subsidies. Well, again, to his credit,
Elon Musk has been relatively consistent, saying, actually, if you
did away with particularly consumer facing credits or incentives, we'd
be fine with that because we feel Tesla is better
placed than other automakers in America if that environment didn't
(20:40):
exist anymore. So, you know, I again, it's not clear
like they're not speaking the same language here necessarily, but
what this specific point of grievance is with one another.
Speaker 2 (20:51):
Mike, I'm also curious how much President Job likes having
the world's richest man and his millions and billions nearby.
And also when it comes to the GOP comes to influence,
what areas or sectors of our economy, What in the
GOP world really has the most influence.
Speaker 6 (21:10):
Well, first off, President Trump loves having rich people around
him adoring him because he sees that as a as
a marker of success of how smart someone is. Really
he keeps score by how much money someone makes. And
for the richest man in the world to be kind
(21:33):
of like a dog coming around and being very happy
to be around Trump all the time is tremendously flattering
to him. Now, there are lots of wealthy people who
do back the Republican Party, and a lot of them
are going to be even happier now that they have
this tax bill today that is well on its way
(21:57):
toward getting passed. There's a lot of sectors of the economy,
particularly wealthy investors, who are going to benefit from this.
One industry that you can see has a huge influence
with the Republican Party is the oil and gas industry,
and you can see that in the tax legislation, which
(22:18):
essentially has really rolled back clean energy subsidies while doing
things like making coal clean energy benefit. So that's one
place where you can see a strong influence in the
Republican Party.
Speaker 5 (22:35):
Mike, President Trump talked about turning Doge, which he termed
a monster, against Elon Musk.
Speaker 3 (22:43):
It didn't seem.
Speaker 5 (22:45):
Very useful when it was used against the federal government.
Speaker 3 (22:49):
How much did Doge actually save?
Speaker 2 (22:50):
And Mike forgive us, we just have about thirty seconds.
Speaker 6 (22:53):
Okay, Well, it didn't save a lot of money, but
it sure crippled some regulatory agencies that you know, Elon
Musk and others might not like. For instance, the Consumer
Financial Protection Board, which could have regulated some of these
tech finance companies. And also it did pull back government
(23:13):
from some areas like four and eight. So it wasn't
a huge savings in terms of money, but it did
pull back the government in some areas.
Speaker 2 (23:22):
And Ludlow ten seconds, when do we get those sales
numbers from Tesla?
Speaker 11 (23:25):
Be quick?
Speaker 10 (23:25):
Well, I expect pre market tomorrow and it'll be pull
relative to the same period last year.
Speaker 1 (23:32):
This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 2 (23:51):
Carol Masser, Matt Miller here at Bloomberg Headquarters in New
York City. As you know, of the Senate passing that
three point three trillion dollar tax and spending cut bill
a fifty one to fifty vote vp JD vance casting
that tie breaking vote. The bill includes provisions to also
raise the debt limit, cut medicaid and other social safety
net programs. Provides also tax breaks. We talked about this
(24:12):
earlier for some groups but has been criticized for its
potential to increase the deficit and harm low income Americans.
We wanted to dig into maybe how companies are seeing
it and maybe some of the things that they might
have to do as a result. We welcome into our
studio alalu Aganga. She is US chief investment officer for Mercer.
If you're not familiar with the firm, it is in
(24:33):
terms of its US client base ranges from defined benefit
and define contribution retirement plans, healthcare asset owners, endowments, foundations,
wealth managers, and insurance companies. So that's the perspective. She
joins us right now in our studio. Welcome, Welcome, Nice
to have you here with us.
Speaker 12 (24:47):
Thank you so much, and thank you for giving the
introduction out Mercer.
Speaker 2 (24:51):
Really well, I think it's important to kind of understand
where you are coming from as we have this discussion.
So talk to us first of all about the massive
time spending bill. How is that impacting maybe the conversations
you guys are having with your clients and the strategy
that you are giving two Mercer clients.
Speaker 12 (25:09):
Thanks, I'll put one more advantage point there. Mercer is
a part of Marsh mcclennan and Marsh mcclennan has risk
and insurance services and then of course now the investment's part.
So if we're to combine both of them and go
back to the spending bill, right now, our client base
ranges all that you listed in Nowmon's foundation healthcare, and
I'll just stop on for a little bit, especially with
(25:30):
regards to Medicaid, Medicaid reimbursements, what that means for hospitals,
so hospital balance sheets. That has been a very very
big focus across the board because the investment portfolios and
the ability to either allocate to e liquid assets and
tie up capital. Now there's a bunch you have to rethink.
So the aspect of taxes, not just from the bill,
(25:52):
but the uncertainty around taxes has created a situation where
by very many of these clients, especially if you're an
operating entity, need the assets to be able to run
your organization. They've had to rethink private markets in the
composition and diversification around that.
Speaker 5 (26:07):
So what exactly, how exactly do you go about investments
as the chief investment officer, right you're not as worried
about the extent oraneous things, but really about making money,
I guess return on your investments and the return regardless
of the uncertainty and the chaos is there. I mean,
(26:30):
we're at all new record highs on the S and P.
If you own fixed income, you've been crushing it in
the first half. If you own bitcoin, I mean, micro
Strategy made fourteen billion dollars. So like assets, risk assets
have been.
Speaker 11 (26:47):
Risk assets have been on fire.
Speaker 12 (26:48):
If you think of institutional portfolios, and we manage money
for long term investments and longer time horizons, and it's
all objective based.
Speaker 11 (26:56):
So what are your objectives for your investment pool? Is
at income? Are you trying to build a building?
Speaker 8 (27:01):
Right?
Speaker 12 (27:02):
So you can't take that type of bitcoin volatility on
a pool of As we think of client objectives, the
focus is let's pin down the objectives so you eliminate
a lot of the noise. So depending on your category,
is your endowment pool? Are you a university endowment. If
(27:22):
you're a university endowment, do you have potential for looming
taxes and those things affecting what you're going to be
paying out? Are you an endowment that maybe has inflows
so that can offset maybe those types of increases. Then
we very much believe in broad diversified portfolios. If you
are holding US equities, for example, relative to international equity
markets this year, you wouldn't have done as well.
Speaker 11 (27:44):
Last year you did incredibly well.
Speaker 12 (27:46):
So broader diversification across public and private is very important.
But the time horizon and the returns that you need
from your pool allows us to stay steady and stay
the course.
Speaker 2 (27:56):
Are your university endowment clients, Faeling stressed.
Speaker 13 (27:59):
Yes, more so than usually, more so than usual, just
because a number of what's being discussed from a macro
policy standpoint and federal policy standpoint could affect their.
Speaker 11 (28:14):
How they think through portfolio construction.
Speaker 2 (28:17):
But help us understand, and I don't know how much
you can share about who those clients are. But you know,
some of these universities, especially within the IVY League, I
mean billion dollar endowments, massive endowments.
Speaker 3 (28:28):
Yeah, not all liquid, not at all.
Speaker 2 (28:30):
But I understand that. But there I could see someone
looking in and saying, why are we giving them a
syst Why are they why are they you know considered
you know, they get tax benefits or so considered nonprofit?
Speaker 3 (28:40):
The new Harvard got nine billion dollars.
Speaker 11 (28:43):
Very very very many of them.
Speaker 12 (28:46):
Well, actually not too many are in that really big bucket,
but research, scholarships, innovation, those types of things like where
is it coming from? For some of these institutions they
are known as research organizations. And then of course the
student body, master's degree, PhD. So the budget is a
very complicated thing with regards to university annownance.
Speaker 2 (29:08):
Well, companies have to step in and make up some
differences for some of their employees because of maybe some
of what's going on in the government.
Speaker 12 (29:15):
Depending on the companies and the type of insurance plans
that they're administrating that they're issuing perhaps, And that's what
we're going through right now. So the bill pass and senate,
what exactly is the composition? Who does it affect? What
do those reimbursements look like? So companies are doing a
whole reevaluation, institutional asset owners are doing a revaluation.
Speaker 11 (29:36):
It's pretty much everybody.
Speaker 2 (29:38):
Is it a bigger eval than we've seen under other administrations?
Or is it the same old if you had, I
don't know, pick your administration. I mean, this is the
stuff we get changes.
Speaker 11 (29:47):
It's probably bigger.
Speaker 12 (29:48):
It's probably fair to say that this is potentially wider
ranging because very many areas that had not been in
question before are in question. Who I really looked at
tax or those types of implications on not for profit
institutions and foundations and endowments. Yes, in twenty seventeen that
was a little bit of a tax, but now it's
(30:10):
pretty wide ranging. And then if you were to look
at this big, beautiful bill, it encompassed a wide.
Speaker 11 (30:16):
Range of things.
Speaker 12 (30:17):
Hence the debates and the negotiations and all that.
Speaker 5 (30:21):
So I want to ask, I want to ask quickly
about defense non US defense companies because you highlight them specifically,
and it does look like if he's doing anything, President
Trump is rearranging the global defense order. Yeah, so is
that a good investment for you? Does it have to
be a long term investment?
Speaker 12 (30:41):
So in this particular environment, whereby there's news that comes
out and then something else changes the next day or
the next week, you run a really big risk of
being whiplashed back and forth. We can see a pullback,
but now equity markets are back to the highs. We
tend to think about things in terms of not just
the strategic acid allocation, but longer term themes that can
withstand a lot.
Speaker 11 (31:02):
Of this back and forth.
Speaker 12 (31:03):
And one of the themes that plays into defense, we
call it the security of everything and security of everything.
It means really securing logistics and transportation, it means really
securing cybersecurity.
Speaker 11 (31:17):
Defense companies.
Speaker 12 (31:18):
There are a number of different sectors that fall into
that broader theme, which is broadly applicable in this environment
between geopolitics and what we're seeing across the board. So yes,
defense is one of the areas, and defense companies exist
here in the US and also globally.
Speaker 3 (31:32):
Yeah, by the way, do you guys you're both seven sisters.
Did you know that?
Speaker 2 (31:37):
I did not know that right?
Speaker 5 (31:40):
And you know what the schools produce fantastic.
Speaker 14 (31:50):
I want to argue of society.
Speaker 5 (31:53):
And you also know that I'm filling in here for
Tim Stenebeck. So normally I anchor a TV show called
Bloomberg Open Interest every day from nine to eleven.
Speaker 12 (32:01):
To steal you again on my show, I would love
to come on So America.
Speaker 11 (32:05):
You heard him, I'm there.
Speaker 3 (32:07):
That would be great.
Speaker 14 (32:07):
We got to run.
Speaker 2 (32:08):
This was so good. Olalu A Ganga She is us
chief investment officer for Mercer. Great guests, Seven Sisters.
Speaker 1 (32:15):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
this listen on Applecarplay and Android Otto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 2 (32:31):
Carol Master Long with Tims Stanovik live here.
Speaker 3 (32:33):
No, I'm not Tim Stanevik.
Speaker 2 (32:34):
Oh shoot, sorry, see it's just I'm so sorry when
I go on remote, I am like.
Speaker 3 (32:41):
Here's the thing.
Speaker 5 (32:41):
Tim Stenovic just joined this company like a couple of
years ago.
Speaker 3 (32:45):
I have been here for twenty five years. You and
I anchored television shows together. I know, thes I know.
Speaker 2 (32:51):
I'm so sorry. I am so sorry. I'm Carol Master
along with Matthew Miller here at Bloomberg headquarters in New
York City. Let's drive to the clothes. You've got Paisley
and our managing director, head of multi asset Solutions at
Simplify Asset Management. They've got about seven billion in assets
under management. She joins us from Newport Beach, California. Paysley,
you're gonna have to save me. Good to have you here.
Speaker 14 (33:11):
I got you, good, good good.
Speaker 2 (33:15):
Let's start broad Macro. We're watching this stuff out of DC.
Any of the news, including on this big tax and
spending measure. Does it kind of change any of your
thinking about the investment environment, the financial market environment.
Speaker 14 (33:31):
Yeah, great question. Thanks first and foremost for having me.
Speaker 9 (33:34):
Guys a short week fourth of July holiday, so hopefully
everybody gets some time with family and friends. But to
answer your question more specifically, it does not change kind
of how we're thinking about opportunities and risks this year.
I love a good alliteration, and so as I think
about what we've encountered, it's been tariffs, now it's taxes.
Speaker 14 (33:52):
We've also dealt with some geoltical geopolitical.
Speaker 9 (33:55):
Tensions, and so as we take a step with a
lot of noise, a lot of entrend Yeah, a lot
of noise, a lot of things that can really knock
us off of our path, which is kind of those
long term objectives as it relates to investing and coming
into this year, we kind of had a feeling it
was going to be a bumpy ride. And I think
what I am most surprised by is just the resiliency
(34:16):
of markets and investors. And I think it's going to
take a lot for investors to be kind of knocked
off track. And as we've seen, we've had a pretty
meaningful rebound inequity prices, and today's news I think is
just more clarity around some of this uncertainty that's been
hanging over us.
Speaker 1 (34:33):
Yeah.
Speaker 5 (34:33):
I mean a lot of people have described what we've
seen since the loads of April as a melt up,
and I think City was out with a report showing
that there were just a massive amount of bullish of
call buys in the last week. A lot of this
has been retail, and it looks like institution that's had
to catch up the last couple of days, which is
(34:54):
why we hit brand new records. But everyone's ignoring the
big fat left tail. You know, that triple trap, that
triple threat that you mentioned. How do you protect against that?
Do you hedge or do you try and diversify more
than anyone has needed to in the last fifteen years.
Speaker 3 (35:16):
Do you go overseas? What do you do?
Speaker 14 (35:19):
Yeah? Great question.
Speaker 9 (35:20):
I would say We're always focused on diversification. If you
think about what Simplify Asset Management is doing is we're
bringing innovative solutions to the market so investors have access
to these diversified tools within their portfolio.
Speaker 14 (35:32):
With that being said, we're very.
Speaker 9 (35:34):
Constructive we're bullish, we're optimistic on kind of continued momentum
and what we've seen in equity prices. But for the
reasons you mentioned some of those left tails, how do
we think about diversifying away from that?
Speaker 14 (35:45):
And as we take a.
Speaker 9 (35:45):
Look back over the last few years, we've got some
really significant, strong historical returns within the equity portion of
our portfolios. How do we lock that in and feel
comfortable about staying in the market. So we're not suggesting
investors should kind of exit positions and run for cash,
but how can you trim some of those gains? How
can you think about diversifying risks that could be overseas,
(36:06):
that can be long short type strategies, Really looking at
ways to think about diversifying away from economic risk, meaning
traditional stocks and bonds and long short strategies allow you
to do that.
Speaker 14 (36:17):
As well as some kind of the more trend.
Speaker 9 (36:19):
Following type strategies, things that are dislocated from just the
continued move and some of this equity growth risk that
we've seen.
Speaker 2 (36:26):
Paisley, one thing I like to ask, especially when you
know you got you in terms of some of the
funds that you guys have, the ETFs you've got the
Simplify High Yield ETF, which I'm looking at performance and
it looks like it is up about ten percent year
to date. I'm looking at some of your other funds,
the Simplify Barrier Fund Barrier Income ATF interest income, so
(36:51):
it's bills, notes, bonds. You've got also the Simplify forgive
me as I kind of go through the Bloomberg Currency
Strategy ETF, You've also got the Simplify Managed Futures Strategy ETF.
Where's the investment money flowing into? Where's it flowing out of?
I'm always curious with investment flows.
Speaker 14 (37:11):
Yeah, what we've.
Speaker 9 (37:11):
Seen over the last few months is really a lot
of investors not throwing in the towel completely, but really
looking at ways to diversify from their bond risk.
Speaker 14 (37:21):
As we think about what the role of bonds is
in a.
Speaker 9 (37:24):
Portfolio, it's that ballast, and as we've seen, bonds have
not provided that ballast. There's been a lot of volatility
within interest rates, and so those various strategies that you
mentioned allow investors to kind of replace some of their
bond exposure. But I would say the other outcome oriented
nature of those strategies that you highlight is a little.
Speaker 14 (37:43):
Bit more diffinity.
Speaker 9 (37:44):
It's more clarity around these specific outcomes. And so, for example,
the high yield bond strategy that we managed that you
mentioned has downside risk, it has an embedded credit hedge
component which has provided a lot of those performance tailwinds.
Speaker 14 (37:58):
That we've seen here to date.
Speaker 9 (38:00):
The barrier strategies that you mentioned, there's more one of
our more recent strategies that we've launched which provides investors
high levels of income. And so as they're replacing some
of their bond allocations, there's a need to still produce income,
especially for kind of more the.
Speaker 14 (38:12):
Retiree part of the market.
Speaker 9 (38:14):
And so these are just unique, differentiated ways that allow
our investors to stay in the market and still achieve
those desired outcomes.
Speaker 2 (38:20):
So I'm sorry forget me so money flowing where or
money flowing out of like just give me an idea.
Speaker 9 (38:26):
Yeah, money flowing out of bonds and into some of
these more income producing, barrier oriented, more credit hedge component
of the high yield market. I think a lot of
investors are maintaining their equity allocations, maybe diversifying within them,
but we are seeing a lot of flows into the
more alternative sources of income away from traditional bonds.
Speaker 5 (38:48):
I wonder what you think about the outperformance that we've
seen overseas. It's been pretty remarkable, even in you know, Euros,
for example, how well those indexes have done. But if
you're a dollar investor, you've just absolutely crushed it. Right,
If you're a Euro investor, the DOX is up nineteen percent,
the IBEX thirty five is up twenty one percent, But
(39:10):
if you're a dollar investor, those games become thirty five
and thirty seven percent.
Speaker 3 (39:15):
Is can that continue? Does that still have legs?
Speaker 14 (39:18):
I think it could.
Speaker 9 (39:20):
I would say I'm a bigger picture investor. So if
we zoom out and you look at some of the
continued underperformance of international assets, I don't get too excited
by the kind of year to date rally that we've
seen a lot of It makes sense when we start
to think some of the depreciation and the dollar and
really coming into this year, the concentration that we had
in US equities, the investors looking for differentiated sources of
(39:42):
equity growth risk overseas. I do think that some of
that can continue, just given some of the deficit concerns
here in the US some of the continued weakness that
we've seen in the dollar, but I'm still pretty optimistic
on the role of US equities within a long term
investor portfolio, just given the innovation to chnology and growth
that we've seen from the corporate earnings here.
Speaker 5 (40:03):
What about you know, going back for a moment to
the fixed income conversation, when I type I N go
on my Bloomberg terminal, I just see what has been
an amazing year for fixed income indexes and especially for
things like US high yield.
Speaker 3 (40:22):
Right does that look like it? It has legs.
Speaker 5 (40:25):
We've seen such an incredible move in the in the
ten year treasury from getting near five percent back down
to like four and a quarter.
Speaker 9 (40:33):
Well, there's really two components that we like to remind
investors that drive any kind of corporate whether it's investment
greater or high yield bond returns. And that's the interest
rate risk, and that's your credit risk. And we saw
some pretty meaningful spread widening, and I think hyield spreads
went from about three hundred over treasuries out to four
point fifty, and some of that dislocation really hurt some
(40:53):
of the passive high yield bond investors.
Speaker 14 (40:56):
Going back to that strategy.
Speaker 9 (40:57):
I mentioned earlier, having an embedded credit hedge downside protection
has allowed our investors to really navigate that volatility. And
then that first component I mentioned, which is the interest
rate risk, I think investors have continued to be whip
sawed by rates. We saw rates be a tailwind at
the beginning of the first quarter and have been a
headwind I would say through much of the second quarter.
Speaker 14 (41:17):
So I think there's just.
Speaker 9 (41:17):
Continued uneasiness and whether that interest rate component of bonds
is going to.
Speaker 14 (41:22):
Show up for investors and provide that ballast.
Speaker 9 (41:24):
But at the end of the day, their equities have
redelivered for them after the balance that we saw in
kind of late April and May, and so I think
investors are less concerned about some of that interest rate
ball as their equities have shown up for their portfolio.
Speaker 2 (41:36):
Again, Paisley Yousud pretty confident and comfortable about kind of
the environment where we're going. Just got about thirty forty seconds.
What's the major risk out there for investors?
Speaker 9 (41:45):
Well, next week, we of course have hopefully some updated
news or certainty around tariffs. I think we're likely to
see that can kick down the road again. I think
the administration seeing kind of markets ease and relax a
bit with some of the pause, I think they'll want
to continue that growth trajectory within markets. Ultimately, the risks
I think that lay ahead or as it releads to
(42:07):
kind of the Fed's dual mandate around the employment data
and the inflation data. And so I think inflation continues
to ease. I don't see any imminent concerns there, but
I think all eyes in my perspective are on the
employment data in any weakening there that would drive FED decision.
Speaker 8 (42:21):
Yep.
Speaker 2 (42:22):
We get that on Thursday, so we'll be breaking that
down here at Bloomberg. Hey, Paisley, thank you so much,
really appreciate it. Paisley Nardini, Managing director, head of multi
asset Solutions at Simplify Asset Management. You've got about seven
billion dollars in assets under management joining us from Newport Beach, California.
Speaker 5 (42:37):
She would be a great guest on my television show
Boomberg Open Interest weekdays from nine am to eleven.
Speaker 2 (42:43):
Paisley, don't do it, don't do it, don't do it.
I'm just going to say, you can't steal all of
our guests. You can come and guest hosts.
Speaker 3 (42:49):
You get some pretty good guests on this show.
Speaker 2 (42:51):
Actually, we turn out to be actually pretty good here.
I'm just telling you, don't steal them all. He's like,
can I have the email? Can I have this?
Speaker 7 (42:59):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
(43:19):
and always on the Bloomberg terminal
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insights on the people, companies, and trends shaping
today's complex economy. Plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:33):
Carol Masser along with Matthew Miller here in our Bloomberg
Interactive Broker Studio. You know, another busy day out of DC.
President Donald Trump's three point three trillion dollar tax and
spending cut bill, passing the Senate earlier today after a
furious pushby Republican leaders to persuade holdouts to back the
legislation and hand the president of political When we did
see the Bloomberg Dollar Spot index initially climbed to a
(00:54):
session high after that bill passed the Senate, it was
falling for six months through the end of June. The package,
and formerly known as the One Big Beautiful Bill, includes
the entirety of the President's legislative agenda in one single package,
and we did see the President personally lobbying lawmakers to
quickly move the legislation through Congress.
Speaker 3 (01:13):
It's a great bill.
Speaker 2 (01:13):
There's something for everyone, is what President Trump told reporters earlier.
Speaker 3 (01:18):
So is it.
Speaker 2 (01:19):
Let's ask someone who provides us an international macro policy
and political forecasting for financial markets and prominent investors and
is definitely a well known voice to our Bloomberg audience
with us from Washington, Terry Haynes, founder of Penjae Policy. Terry,
good to have you here. So is it a great bill?
(01:39):
Is there something for everyone? In your view?
Speaker 4 (01:42):
Well, thanks for having me, Carol. I appreciate, and yeah,
there's so many things for so many people. But I
would take issue, and I know this is you're quoting
other people here, but I would argue, even with the
White House, that this is the entirety of the President's
agen because what they're going to want, you know, this
(02:03):
is a This makes a lot of important changes. It
makes permanent the twenty seventeen tax cuts. It's a big deal.
It creates new incentives for manufacturing and on shoring, very
big deal, including for defense. I think it all and
it deals with the debt ceiling, the dead limit problem,
(02:25):
which is a very big deal. So markets have anticipated
this and largely priced it in. But nonetheless, you know,
for markets, it's a very big deal because it provides
a great deal more economic certainty. That said, what you're
going to see is kind of the rest of the
story in the fall, when you're going to get spending bills,
(02:45):
fights and a bunch of other things that are going
to try to rationalize debt and death set a little
bit more and right size that which Secretary Besson says
is going to be a three or four year project.
Speaker 5 (02:56):
By the way, speaking of Secretary Best, and we had
him on yesterday and I was so hoping to ask him, like,
what happened to three three three? You think that was
just sort of campaign promises? Or does the Treasury Secretary
really believe that, you know, in his lifetime we're going
(03:17):
to get back to three percent deficits? Does he believe
that in this term we're going to get to three
percent growth or that we're going to produce three million
barrels more of oil a day.
Speaker 4 (03:30):
I think Best and I think would tell you all
those things are aspirational. But yes, he's very serious about it,
and they're very serious about the manufacturing as well. I mean,
one of the.
Speaker 5 (03:41):
This bill includes four and a half trillion dollars of
tax cuts and only one point two trillion dollars of
spending cuts. I mean, you don't need to have an MI, I,
T PhD to get that this is likely to add
to the deficit.
Speaker 4 (04:01):
Well, I think it probably does add to the deficit.
But I would take issue, and a lot of people
think would take issue, but not incidentally, Barack Obama with
the idea that taking a taking CBO scoring wholesale is
the only way to judge the yardstick. Here Ben would
Bessont would tell you whorry on right now that CBO
(04:25):
scoring this kind of the static model doesn't take into
account growth, it doesn't take into account revenue from tariffs,
it doesn't take into account and awful lot of things.
Wall Street Journal lead editorial today points out that using
CBO analysis of this legislation, the forty thousand dollars self
(04:45):
cap is actually a deficit reducer, which is about as
ridiculous as you can get. But it tells you kind
of the perverse incentives that are built into the model.
So you know, I tend to be and not for
any partisan reason, but I to be somebody who thinks, well,
you know, CBO's not got all the answers, and there's
an awful lot that's relevant that it's relevant to markets
(05:07):
that they're leaving out.
Speaker 5 (05:08):
That's fair, by the way, since you brought it up,
you have a lot of experience in Washington pointed by
the President to run things, and I think a couple
of congressional committees.
Speaker 3 (05:21):
You ran as well.
Speaker 5 (05:25):
In terms of the salt deduction. That's that was part
of US policy for like over a century. Because this
country there's a balance, right, we don't want undue federal
overreach into a state's autonomy to tax. And does anyone
(05:48):
care at all about states rights anymore? Or are we
all okay with like this centrally powered federal swamp.
Speaker 4 (06:01):
Well, you know, there's a there's a lot of different
ways that flashed through my mind to answer that question.
One of them is, if you're feeling like you want
to read a court case to uh look at a
look at a nearly century old Supreme Court case called
Wickered versus Philburn, in which the uh, the Supreme Court
essentially said that, uh, yes, federal government can use the
(06:21):
commerce clause to bigfoot anybody on anything at any time.
Pretty much it is state's rights have gotten a lot
less important over the years, and uh, and you see
that in this bill in a lot of different ways.
You see the yeah, and you you point out, I
think properly so about the balance, the old balance on
(06:42):
salt that doesn't really matter so much anymore, not only
because it's the blue versus red issue, but because it
was the revenue raising issue. But you also see things
like the uh, the AI uh moratorium on state regulation.
Speaker 6 (06:57):
Uh.
Speaker 4 (06:58):
That happens. And so there's a for a long time
now and there's a lot of streams into this, civil
rights being one of them, frankly, the federalization of rights.
And as a result of what state policies are aren't
yet a lot less important. Where they are important in
places like medicare, medicaid and the like. It's because there's
(07:20):
a defined role for the state, and there's a defined
role for the federal government in terms of the revenue
streams that go into creating the program.
Speaker 2 (07:30):
Terry, is this are these policies ultimately that will make
America great again?
Speaker 4 (07:41):
You know? The let me answered this way, and I'm
not going to duct the question but at all, but
I let's say, let's put it this way. What they hope,
what they intend is to have is to have an
economic policy that frankly serves the United States geopolitical policy
and maximizes US economic strength as part of US geopolitics.
(08:06):
So what they want in the short term here, this
is why the July fourth Bogue July four, July nine
Bogie is so important. What they want is they really
want a triple boost to the American economy through the
tax legislation, through bilateral trade deals, through showing that they're
not going to go crazy on reciprocal tariffs for example,
(08:27):
and then they'll start dealing with the spending the spending issue.
What they hope to do through all this and including
the manufacturing reshoring for what Secretary Vesent calls critical critical industries,
including defense, is that they think they think they are
(08:48):
reindustrializing and reorienting the American economy to make it much
stronger for the long geopolitical conflict that's following. So you know,
they think this is a way to make America greater. Certainly, yes,
do you think it is?
Speaker 2 (09:03):
And what about your clients and those folks that you advise.
Speaker 4 (09:05):
I think let me let me just put it this way.
Sitting on sitting on the status quoting. Sitting in the
status quo before twenty twenty five, I think was very
bad for the country for a lot of different reasons
and didn't serve us well and put us on the
back foot on a lot of things. So, you know,
what they're trying to do is put things on the
(09:26):
front foot. And you know, as a citizen, I support
some of it. I'm not crazy about some of it,
but you didn't have any on to talk about that.
The fundamentally, you know, they actually do have a plan,
they're actually trying to execute it. They've actually been reasonably
successful in executing it so far, and the markets seem
to be going along with it. Judging by what's happened
(09:48):
in the second quarter of this year.
Speaker 3 (09:49):
It is impressive that they're able to push this through. No,
I mean, considering the opposing forces.
Speaker 2 (09:55):
Yeah, is there something though? You know, only forty eight
percent of Americans have heard any thing about the so
called Big Beautiful Bill.
Speaker 3 (10:01):
I mean, where do they live under a rock?
Speaker 2 (10:04):
Well, I don't know, Terry, what does that also tell
us about Americans? And like what I don't know, Like
these are programs that.
Speaker 4 (10:12):
Well, you know, they get well they you know, they
get you and I particularly me, uh judging by hair color,
the uh you know, think about the legacy media more
than we should, no offense, but we do. We do.
And people get their information from lots of different ways,
(10:34):
and they get it. They get it in different piece
parts and kind of different shards. I think of it
as sharks. I've never heard that anywhere else, but different
shards than uh than you and I might you know,
almost meme like you.
Speaker 3 (10:46):
Know, che social media.
Speaker 4 (10:50):
Yeah, yeah, my daughter will tell you all about some
movie and she's not you know, but she's never seen
the movie. She's seen you know, parts of the movie
through memes or whatever. But like, oh yeah, that's you
know that, you know, that's from this or that or
the other movies, Like have you seen that movie?
Speaker 2 (11:03):
No, it's not a full picture, Terry, you know too quickly.
Speaker 5 (11:06):
I think the important question here and just in thirty
forty seconds, is this going to come back to bite
the Republicans in the midterms when those people who don't
watch the news realize they no longer have Medicare coverage,
are they going to vote against Republicans?
Speaker 4 (11:21):
Well, yeah, and you saw march on me a little
bit the answer. When I went to law school, I
learned there's only three things you learn in law school.
One of them is to say it depends as much
as possible. But thank you for laughing at my little joke.
But it actually does depend. I mean, if you know,
they've put their reputation on the line on, among other things,
making sure that the making sure that the healthcare programs
(11:45):
still work properly, so if they don't, that's going to
redown negatively to on them, just like it did after
the Affordable Care Act with Obama when they couldn't even
get a website.
Speaker 2 (11:55):
Listen't Terry so good that we could spend some time
with you? Terry Hanes, Founder of Pench Policies.
Speaker 7 (12:01):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (12:15):
Hey, listen our heads that are spinning a bit today
when it comes to Tesla news. We've got a long
time musk lieutenant leaving in a high profile departure. Tesla's
latest quarterly sales update that's coming this week too, and
then there's this great ongoing spat between the leader of
the free world and the world's wealth based individual. Although
I need to check on that we are talking about
Trump versus Musk. Yeah, earlier today, President Trump did say
(12:38):
he would look into deporting the billionaire and response to
a question about the ally turned critic of the President's
signature tax and spending legislation, I.
Speaker 3 (12:48):
Checked for you by might have to put doze Elan.
Speaker 8 (12:51):
You know you're not DOJ.
Speaker 3 (12:53):
DOJ is the monster that has that might have to
go back and eat.
Speaker 9 (12:56):
Elan will not be there.
Speaker 3 (12:58):
But I think what's going to happen is do just
gonna look at Musk, and if those looks at Musk,
We're gonna say.
Speaker 5 (13:03):
But fortune, Thank you very much, everybody here.
Speaker 3 (13:05):
I don't think you should be playing that game with leader.
Speaker 2 (13:08):
All right, That, of course is President Trump. Earlier today
and then about a week or so ago, talking about
Elon Musk. What did you say that I.
Speaker 3 (13:16):
Checked for you?
Speaker 5 (13:17):
I typed Rich go on the Bloomberg terminal, and he
is still the richest man in the world by over
one hundred billion dollars net worry three hundred and sixty
two point seven billion for Musk coming in at second
Mark Zuckerberg with two hundred and sixty billion.
Speaker 2 (13:30):
Not too shabby. Not too shabby, by the way that
it was President Trump all from earlier today commenting on
Elon Musk.
Speaker 3 (13:36):
All right, there's a lot of.
Speaker 2 (13:37):
Ways we could go here. What we wanted to really tackle, though,
is what the political fallout of the apparent relationship fallout
between President Trump and Elon Musk. So let's get into
it with us. As Ed Ludlow, he's co host of
Bloomberg Technology on Bloomberg TV. Catch him at eleven am
Wall Street time Monday through Friday. He's out in our
San Francisco bureau and then in our Washington, DC bureau
(13:58):
is Mike Dorning. He's Bloomberg News team leader for the
Capital Influence Team. I want to get to you Mike
in just a moment.
Speaker 5 (14:03):
Ed.
Speaker 2 (14:03):
First up, though, we do want hi. We want to
talk political influence. But I got to ask you. Tesla's
shares are down? What news is it on? Because there
is a lot going on with Tesla right now, So
just lay it out quickly for us.
Speaker 10 (14:16):
Yeah, it's a version of the Trump trade right that
prior to November's election, the Trump trade, is it related
to Tesla at least like the public proxy was that
close proximity to the administration would yield policy and regulation
results that would be to Elon Inc. But particularly Tesla's benefit.
But trades can go both ways, and you know, I
(14:37):
think that the market's super fixated on the idea that
a deteriorating relationship between the President of the United States
and Musk is not a good thing for that company.
Necessarily that the President also had specific commentary around electric
vehicles as it relates to the big beautiful bill, the
tax bill, and we can get into like that they're
shouting like two different things at each other, something really amazing,
(14:59):
Like if you allow me to just real quick, like
I'm not a credit guy, I don't really know the
credit markets, but we have this headline as well that
even Xai's bonds moving in the session day like a
few cents. But clearly, you know, if you're an investor
of some kind in an Elon Inc. Company, you're looking
at this and thinking is this a good thing or not.
Speaker 5 (15:19):
It's interesting to me that this kind of moves the
needle to some extent because you know, Joe Wisenthal had
Jim Chanos on his Odd Lots podcast yesterday and he
asked about, you know, the underlying fundamentals of the company.
Speaker 3 (15:37):
Listen to what Cheno's had to say. Do you have
a Tesla thought of the day?
Speaker 8 (15:40):
Nobody cares, that's my thought. Nobody cares.
Speaker 1 (15:43):
Yeah, you could.
Speaker 8 (15:44):
You know, you could see Elon, you know, robbing a
Brinks truck with a mask or whatever.
Speaker 3 (15:50):
That's Elon.
Speaker 8 (15:50):
It's a unique animal where people say, oh, well, of
course yes, but you know, Rosie the robot's going to
serve me my breakfast and it's going to Tesla trademark
on it, so you know it's worth the trillion dollars.
Speaker 5 (16:01):
I mean, nothing matters a dollar dream ed tomorrow. Tesla
comes out as sales figures, but it's not a trillion
dollar company on selling two million units a year, right.
Speaker 10 (16:13):
I go back to Carol's original question as well, like
this key man risk. The key man risk is codified
in Tesla's annual regulatory filings where they basically say Elon
Musk has a special value to this company and if
anything were to happen to him, that would be bad
for Tesla. What we reported, Carol to your question this
morning is that after the aftermath of reaching recent departures
(16:35):
from Tesla, Elon Musk now oversees sales in both the
United States and Europe. And that's really important because as is,
the data is expected to show sales are under pressure
right now, and we know we can get into the
political background of why. In Europe in particular, that's because
of musk relationship with Trump.
Speaker 2 (16:53):
Well, I want to get into the political fallout of
this apparent relationship fallout between President Trump and Elon. Mike
come on in on this because what Matt brought up
a good point too, like how significant could this be
for the GOP if indeed Elon backs off of his
financial support. We saw a big time in this last
(17:14):
presidential election, so.
Speaker 6 (17:17):
It could be significant, particularly if he were to go
and back other candidates with a lot of money. Remember
Elon Musk was the largest donor ever in US history
in the last election. But you can see today with
this Trump tax bill in Congress, it passed with no problem,
(17:41):
even though Musk was intensely criticizing it. They were still
able to get reluctant Republicans who had reservations about the
bill to side with President Trump. So that just shows
that for actual Republican lawmakers who are up for reelection,
they'd much rather be with Trump than with Elon.
Speaker 3 (18:01):
You know, I was reading.
Speaker 5 (18:03):
Eric Wasson's story today about the holdouts. Okay, Joni Ernst
eventually went for the bill, but she was concerned about
a reduction in solar and wind credits.
Speaker 3 (18:16):
That would hurt Iowa.
Speaker 5 (18:18):
And I thought, she doesn't necessarily have to cout out
to Donald Trump just to get his support, Like there's
someone else in town who could bankroll her re election campaign.
I'm not sure if she actually needs one, but you
understand my point, right, Mike Elon Musk. Being anti Trump
does give Republicans who no longer want to be like
(18:39):
sycophantic yes men for the rest of their careers and
alternative option.
Speaker 6 (18:45):
An alternative option, but one that's maybe not so attractive
if you've got to win a primary. Because the Republican Party,
particularly the people who are active enough to vote in primaries,
are increasingly just a Trump party. It's less more to
traditional Republican philosophy and the Trump worldview, and so Trump
(19:09):
has a lot of influence, especially with primary voters. Now,
whether that'll be the case in three years. We don't know,
but right now it sure feels like that to the
actual elected officials who may have to run for reelection soon.
Speaker 8 (19:24):
Ed.
Speaker 2 (19:25):
What have you heard about how much Elon liked being
in the Oval office and having such close proximity to
Donald Trump?
Speaker 10 (19:33):
Yeah, I mean what we consistently kept hearing, right, and
must said as much himself on the test aroundings called
prior to the start of DOGE that the whole point
was to kind of get some kind of benefit, right.
Robotaxis probably the easiest example where Musk was trying to
and we reported was literally himself lobbying on the passage
of legislation that would govern give a federal framework for robotaxis.
(19:57):
And he kind of went into the White House for
that and has come out without it so far. What
I find so astonishing about all of this is you
have to give credit where credits due, and actually Elon
Musk has been very consistent about all of this. He's
very worried about the national debt pile in the lead
up to November, you know, that was kind of what
he was on the road campaigning with Trump about to
(20:18):
a certain extent, but the President's commentary and post is
like Elon's upset about EV subsidies. Well, again, to his credit,
Elon Musk has been relatively consistent, saying, actually, if you
did away with particularly consumer facing credits or incentives, we'd
be fine with that because we feel Tesla is better
placed than other automakers in America if that environment didn't
(20:40):
exist anymore. So, you know, I again, it's not clear
like they're not speaking the same language here necessarily, but
what this specific point of grievance is with one another.
Speaker 2 (20:51):
Mike, I'm also curious how much President Job likes having
the world's richest man and his millions and billions nearby.
And also when it comes to the GOP comes to influence,
what areas or sectors of our economy, What in the
GOP world really has the most influence.
Speaker 6 (21:10):
Well, first off, President Trump loves having rich people around
him adoring him because he sees that as a as
a marker of success of how smart someone is. Really
he keeps score by how much money someone makes. And
for the richest man in the world to be kind
(21:33):
of like a dog coming around and being very happy
to be around Trump all the time is tremendously flattering
to him. Now, there are lots of wealthy people who
do back the Republican Party, and a lot of them
are going to be even happier now that they have
this tax bill today that is well on its way
(21:57):
toward getting passed. There's a lot of sectors of the economy,
particularly wealthy investors, who are going to benefit from this.
One industry that you can see has a huge influence
with the Republican Party is the oil and gas industry,
and you can see that in the tax legislation, which
(22:18):
essentially has really rolled back clean energy subsidies while doing
things like making coal clean energy benefit. So that's one
place where you can see a strong influence in the
Republican Party.
Speaker 5 (22:35):
Mike, President Trump talked about turning Doge, which he termed
a monster, against Elon Musk.
Speaker 3 (22:43):
It didn't seem.
Speaker 5 (22:45):
Very useful when it was used against the federal government.
Speaker 3 (22:49):
How much did Doge actually save?
Speaker 2 (22:50):
And Mike forgive us, we just have about thirty seconds.
Speaker 6 (22:53):
Okay, Well, it didn't save a lot of money, but
it sure crippled some regulatory agencies that you know, Elon
Musk and others might not like. For instance, the Consumer
Financial Protection Board, which could have regulated some of these
tech finance companies. And also it did pull back government
(23:13):
from some areas like four and eight. So it wasn't
a huge savings in terms of money, but it did
pull back the government in some areas.
Speaker 2 (23:22):
And Ludlow ten seconds, when do we get those sales
numbers from Tesla?
Speaker 11 (23:25):
Be quick?
Speaker 10 (23:25):
Well, I expect pre market tomorrow and it'll be pull
relative to the same period last year.
Speaker 1 (23:32):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Apple, Corflay,
and Android Auto with 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.
Speaker 2 (23:51):
Carol Masser, Matt Miller here at Bloomberg Headquarters in New
York City. As you know, of the Senate passing that
three point three trillion dollar tax and spending cut bill
a fifty one to fifty vote vp JD vance casting
that tie breaking vote. The bill includes provisions to also
raise the debt limit, cut medicaid and other social safety
net programs. Provides also tax breaks. We talked about this
(24:12):
earlier for some groups but has been criticized for its
potential to increase the deficit and harm low income Americans.
We wanted to dig into maybe how companies are seeing
it and maybe some of the things that they might
have to do as a result. We welcome into our
studio alalu Aganga. She is US chief investment officer for Mercer.
If you're not familiar with the firm, it is in
(24:33):
terms of its US client base ranges from defined benefit
and define contribution retirement plans, healthcare asset owners, endowments, foundations,
wealth managers, and insurance companies. So that's the perspective. She
joins us right now in our studio. Welcome, Welcome, Nice
to have you here with us.
Speaker 12 (24:47):
Thank you so much, and thank you for giving the
introduction out Mercer.
Speaker 2 (24:51):
Really well, I think it's important to kind of understand
where you are coming from as we have this discussion.
So talk to us first of all about the massive
time spending bill. How is that impacting maybe the conversations
you guys are having with your clients and the strategy
that you are giving two Mercer clients.
Speaker 12 (25:09):
Thanks, I'll put one more advantage point there. Mercer is
a part of Marsh mcclennan and Marsh mcclennan has risk
and insurance services and then of course now the investment's part.
So if we're to combine both of them and go
back to the spending bill, right now, our client base
ranges all that you listed in Nowmon's foundation healthcare, and
I'll just stop on for a little bit, especially with
(25:30):
regards to Medicaid, Medicaid reimbursements, what that means for hospitals,
so hospital balance sheets. That has been a very very
big focus across the board because the investment portfolios and
the ability to either allocate to e liquid assets and
tie up capital. Now there's a bunch you have to rethink.
So the aspect of taxes, not just from the bill,
(25:52):
but the uncertainty around taxes has created a situation where
by very many of these clients, especially if you're an
operating entity, need the assets to be able to run
your organization. They've had to rethink private markets in the
composition and diversification around that.
Speaker 5 (26:07):
So what exactly, how exactly do you go about investments
as the chief investment officer, right you're not as worried
about the extent oraneous things, but really about making money,
I guess return on your investments and the return regardless
of the uncertainty and the chaos is there. I mean,
(26:30):
we're at all new record highs on the S and P.
If you own fixed income, you've been crushing it in
the first half. If you own bitcoin, I mean, micro
Strategy made fourteen billion dollars. So like assets, risk assets
have been.
Speaker 11 (26:47):
Risk assets have been on fire.
Speaker 12 (26:48):
If you think of institutional portfolios, and we manage money
for long term investments and longer time horizons, and it's
all objective based.
Speaker 11 (26:56):
So what are your objectives for your investment pool? Is
at income? Are you trying to build a building?
Speaker 8 (27:01):
Right?
Speaker 12 (27:02):
So you can't take that type of bitcoin volatility on
a pool of As we think of client objectives, the
focus is let's pin down the objectives so you eliminate
a lot of the noise. So depending on your category,
is your endowment pool? Are you a university endowment. If
(27:22):
you're a university endowment, do you have potential for looming
taxes and those things affecting what you're going to be
paying out? Are you an endowment that maybe has inflows
so that can offset maybe those types of increases. Then
we very much believe in broad diversified portfolios. If you
are holding US equities, for example, relative to international equity
markets this year, you wouldn't have done as well.
Speaker 11 (27:44):
Last year you did incredibly well.
Speaker 12 (27:46):
So broader diversification across public and private is very important.
But the time horizon and the returns that you need
from your pool allows us to stay steady and stay
the course.
Speaker 2 (27:56):
Are your university endowment clients, Faeling stressed.
Speaker 13 (27:59):
Yes, more so than usually, more so than usual, just
because a number of what's being discussed from a macro
policy standpoint and federal policy standpoint could affect their.
Speaker 11 (28:14):
How they think through portfolio construction.
Speaker 2 (28:17):
But help us understand, and I don't know how much
you can share about who those clients are. But you know,
some of these universities, especially within the IVY League, I
mean billion dollar endowments, massive endowments.
Speaker 3 (28:28):
Yeah, not all liquid, not at all.
Speaker 2 (28:30):
But I understand that. But there I could see someone
looking in and saying, why are we giving them a
syst Why are they why are they you know considered
you know, they get tax benefits or so considered nonprofit?
Speaker 3 (28:40):
The new Harvard got nine billion dollars.
Speaker 11 (28:43):
Very very very many of them.
Speaker 12 (28:46):
Well, actually not too many are in that really big bucket,
but research, scholarships, innovation, those types of things like where
is it coming from? For some of these institutions they
are known as research organizations. And then of course the
student body, master's degree, PhD. So the budget is a
very complicated thing with regards to university annownance.
Speaker 2 (29:08):
Well, companies have to step in and make up some
differences for some of their employees because of maybe some
of what's going on in the government.
Speaker 12 (29:15):
Depending on the companies and the type of insurance plans
that they're administrating that they're issuing perhaps, And that's what
we're going through right now. So the bill pass and senate,
what exactly is the composition? Who does it affect? What
do those reimbursements look like? So companies are doing a
whole reevaluation, institutional asset owners are doing a revaluation.
Speaker 11 (29:36):
It's pretty much everybody.
Speaker 2 (29:38):
Is it a bigger eval than we've seen under other administrations?
Or is it the same old if you had, I
don't know, pick your administration. I mean, this is the
stuff we get changes.
Speaker 11 (29:47):
It's probably bigger.
Speaker 12 (29:48):
It's probably fair to say that this is potentially wider
ranging because very many areas that had not been in
question before are in question. Who I really looked at
tax or those types of implications on not for profit
institutions and foundations and endowments. Yes, in twenty seventeen that
was a little bit of a tax, but now it's
(30:10):
pretty wide ranging. And then if you were to look
at this big, beautiful bill, it encompassed a wide.
Speaker 11 (30:16):
Range of things.
Speaker 12 (30:17):
Hence the debates and the negotiations and all that.
Speaker 5 (30:21):
So I want to ask, I want to ask quickly
about defense non US defense companies because you highlight them specifically,
and it does look like if he's doing anything, President
Trump is rearranging the global defense order. Yeah, so is
that a good investment for you? Does it have to
be a long term investment?
Speaker 12 (30:41):
So in this particular environment, whereby there's news that comes
out and then something else changes the next day or
the next week, you run a really big risk of
being whiplashed back and forth. We can see a pullback,
but now equity markets are back to the highs. We
tend to think about things in terms of not just
the strategic acid allocation, but longer term themes that can
withstand a lot.
Speaker 11 (31:02):
Of this back and forth.
Speaker 12 (31:03):
And one of the themes that plays into defense, we
call it the security of everything and security of everything.
It means really securing logistics and transportation, it means really
securing cybersecurity.
Speaker 11 (31:17):
Defense companies.
Speaker 12 (31:18):
There are a number of different sectors that fall into
that broader theme, which is broadly applicable in this environment
between geopolitics and what we're seeing across the board. So yes,
defense is one of the areas, and defense companies exist
here in the US and also globally.
Speaker 3 (31:32):
Yeah, by the way, do you guys you're both seven sisters.
Did you know that?
Speaker 2 (31:37):
I did not know that right?
Speaker 5 (31:40):
And you know what the schools produce fantastic.
Speaker 14 (31:50):
I want to argue of society.
Speaker 5 (31:53):
And you also know that I'm filling in here for
Tim Stenebeck. So normally I anchor a TV show called
Bloomberg Open Interest every day from nine to eleven.
Speaker 12 (32:01):
To steal you again on my show, I would love
to come on So America.
Speaker 11 (32:05):
You heard him, I'm there.
Speaker 3 (32:07):
That would be great.
Speaker 14 (32:07):
We got to run.
Speaker 2 (32:08):
This was so good. Olalu A Ganga She is us
chief investment officer for Mercer. Great guests, Seven Sisters.
Speaker 1 (32:15):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
this listen on Applecarplay and Android Otto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 2 (32:31):
Carol Master Long with Tims Stanovik live here.
Speaker 3 (32:33):
No, I'm not Tim Stanevik.
Speaker 2 (32:34):
Oh shoot, sorry, see it's just I'm so sorry when
I go on remote, I am like.
Speaker 3 (32:41):
Here's the thing.
Speaker 5 (32:41):
Tim Stenovic just joined this company like a couple of
years ago.
Speaker 3 (32:45):
I have been here for twenty five years. You and
I anchored television shows together. I know, thes I know.
Speaker 2 (32:51):
I'm so sorry. I am so sorry. I'm Carol Master
along with Matthew Miller here at Bloomberg headquarters in New
York City. Let's drive to the clothes. You've got Paisley
and our managing director, head of multi asset Solutions at
Simplify Asset Management. They've got about seven billion in assets
under management. She joins us from Newport Beach, California. Paysley,
you're gonna have to save me. Good to have you here.
Speaker 14 (33:11):
I got you, good, good good.
Speaker 2 (33:15):
Let's start broad Macro. We're watching this stuff out of DC.
Any of the news, including on this big tax and
spending measure. Does it kind of change any of your
thinking about the investment environment, the financial market environment.
Speaker 14 (33:31):
Yeah, great question. Thanks first and foremost for having me.
Speaker 9 (33:34):
Guys a short week fourth of July holiday, so hopefully
everybody gets some time with family and friends. But to
answer your question more specifically, it does not change kind
of how we're thinking about opportunities and risks this year.
I love a good alliteration, and so as I think
about what we've encountered, it's been tariffs, now it's taxes.
Speaker 14 (33:52):
We've also dealt with some geoltical geopolitical.
Speaker 9 (33:55):
Tensions, and so as we take a step with a
lot of noise, a lot of entrend Yeah, a lot
of noise, a lot of things that can really knock
us off of our path, which is kind of those
long term objectives as it relates to investing and coming
into this year, we kind of had a feeling it
was going to be a bumpy ride. And I think
what I am most surprised by is just the resiliency
(34:16):
of markets and investors. And I think it's going to
take a lot for investors to be kind of knocked
off track. And as we've seen, we've had a pretty
meaningful rebound inequity prices, and today's news I think is
just more clarity around some of this uncertainty that's been
hanging over us.
Speaker 1 (34:33):
Yeah.
Speaker 5 (34:33):
I mean a lot of people have described what we've
seen since the loads of April as a melt up,
and I think City was out with a report showing
that there were just a massive amount of bullish of
call buys in the last week. A lot of this
has been retail, and it looks like institution that's had
to catch up the last couple of days, which is
(34:54):
why we hit brand new records. But everyone's ignoring the
big fat left tail. You know, that triple trap, that
triple threat that you mentioned. How do you protect against that?
Do you hedge or do you try and diversify more
than anyone has needed to in the last fifteen years.
Speaker 3 (35:16):
Do you go overseas? What do you do?
Speaker 14 (35:19):
Yeah? Great question.
Speaker 9 (35:20):
I would say We're always focused on diversification. If you
think about what Simplify Asset Management is doing is we're
bringing innovative solutions to the market so investors have access
to these diversified tools within their portfolio.
Speaker 14 (35:32):
With that being said, we're very.
Speaker 9 (35:34):
Constructive we're bullish, we're optimistic on kind of continued momentum
and what we've seen in equity prices. But for the
reasons you mentioned some of those left tails, how do
we think about diversifying away from that?
Speaker 14 (35:45):
And as we take a.
Speaker 9 (35:45):
Look back over the last few years, we've got some
really significant, strong historical returns within the equity portion of
our portfolios. How do we lock that in and feel
comfortable about staying in the market. So we're not suggesting
investors should kind of exit positions and run for cash,
but how can you trim some of those gains? How
can you think about diversifying risks that could be overseas,
(36:06):
that can be long short type strategies, Really looking at
ways to think about diversifying away from economic risk, meaning
traditional stocks and bonds and long short strategies allow you
to do that.
Speaker 14 (36:17):
As well as some kind of the more trend.
Speaker 9 (36:19):
Following type strategies, things that are dislocated from just the
continued move and some of this equity growth risk that
we've seen.
Speaker 2 (36:26):
Paisley, one thing I like to ask, especially when you
know you got you in terms of some of the
funds that you guys have, the ETFs you've got the
Simplify High Yield ETF, which I'm looking at performance and
it looks like it is up about ten percent year
to date. I'm looking at some of your other funds,
the Simplify Barrier Fund Barrier Income ATF interest income, so
(36:51):
it's bills, notes, bonds. You've got also the Simplify forgive
me as I kind of go through the Bloomberg Currency
Strategy ETF, You've also got the Simplify Managed Futures Strategy ETF.
Where's the investment money flowing into? Where's it flowing out of?
I'm always curious with investment flows.
Speaker 14 (37:11):
Yeah, what we've.
Speaker 9 (37:11):
Seen over the last few months is really a lot
of investors not throwing in the towel completely, but really
looking at ways to diversify from their bond risk.
Speaker 14 (37:21):
As we think about what the role of bonds is
in a.
Speaker 9 (37:24):
Portfolio, it's that ballast, and as we've seen, bonds have
not provided that ballast. There's been a lot of volatility
within interest rates, and so those various strategies that you
mentioned allow investors to kind of replace some of their
bond exposure. But I would say the other outcome oriented
nature of those strategies that you highlight is a little.
Speaker 14 (37:43):
Bit more diffinity.
Speaker 9 (37:44):
It's more clarity around these specific outcomes. And so, for example,
the high yield bond strategy that we managed that you
mentioned has downside risk, it has an embedded credit hedge
component which has provided a lot of those performance tailwinds.
Speaker 14 (37:58):
That we've seen here to date.
Speaker 9 (38:00):
The barrier strategies that you mentioned, there's more one of
our more recent strategies that we've launched which provides investors
high levels of income. And so as they're replacing some
of their bond allocations, there's a need to still produce income,
especially for kind of more the.
Speaker 14 (38:12):
Retiree part of the market.
Speaker 9 (38:14):
And so these are just unique, differentiated ways that allow
our investors to stay in the market and still achieve
those desired outcomes.
Speaker 2 (38:20):
So I'm sorry forget me so money flowing where or
money flowing out of like just give me an idea.
Speaker 9 (38:26):
Yeah, money flowing out of bonds and into some of
these more income producing, barrier oriented, more credit hedge component
of the high yield market. I think a lot of
investors are maintaining their equity allocations, maybe diversifying within them,
but we are seeing a lot of flows into the
more alternative sources of income away from traditional bonds.
Speaker 5 (38:48):
I wonder what you think about the outperformance that we've
seen overseas. It's been pretty remarkable, even in you know, Euros,
for example, how well those indexes have done. But if
you're a dollar investor, you've just absolutely crushed it. Right,
If you're a Euro investor, the DOX is up nineteen percent,
the IBEX thirty five is up twenty one percent, But
(39:10):
if you're a dollar investor, those games become thirty five
and thirty seven percent.
Speaker 3 (39:15):
Is can that continue? Does that still have legs?
Speaker 14 (39:18):
I think it could.
Speaker 9 (39:20):
I would say I'm a bigger picture investor. So if
we zoom out and you look at some of the
continued underperformance of international assets, I don't get too excited
by the kind of year to date rally that we've
seen a lot of It makes sense when we start
to think some of the depreciation and the dollar and
really coming into this year, the concentration that we had
in US equities, the investors looking for differentiated sources of
(39:42):
equity growth risk overseas. I do think that some of
that can continue, just given some of the deficit concerns
here in the US some of the continued weakness that
we've seen in the dollar, but I'm still pretty optimistic
on the role of US equities within a long term
investor portfolio, just given the innovation to chnology and growth
that we've seen from the corporate earnings here.
Speaker 5 (40:03):
What about you know, going back for a moment to
the fixed income conversation, when I type I N go
on my Bloomberg terminal, I just see what has been
an amazing year for fixed income indexes and especially for
things like US high yield.
Speaker 3 (40:22):
Right does that look like it? It has legs.
Speaker 5 (40:25):
We've seen such an incredible move in the in the
ten year treasury from getting near five percent back down
to like four and a quarter.
Speaker 9 (40:33):
Well, there's really two components that we like to remind
investors that drive any kind of corporate whether it's investment
greater or high yield bond returns. And that's the interest
rate risk, and that's your credit risk. And we saw
some pretty meaningful spread widening, and I think hyield spreads
went from about three hundred over treasuries out to four
point fifty, and some of that dislocation really hurt some
(40:53):
of the passive high yield bond investors.
Speaker 14 (40:56):
Going back to that strategy.
Speaker 9 (40:57):
I mentioned earlier, having an embedded credit hedge downside protection
has allowed our investors to really navigate that volatility. And
then that first component I mentioned, which is the interest
rate risk, I think investors have continued to be whip
sawed by rates. We saw rates be a tailwind at
the beginning of the first quarter and have been a
headwind I would say through much of the second quarter.
Speaker 14 (41:17):
So I think there's just.
Speaker 9 (41:17):
Continued uneasiness and whether that interest rate component of bonds
is going to.
Speaker 14 (41:22):
Show up for investors and provide that ballast.
Speaker 9 (41:24):
But at the end of the day, their equities have
redelivered for them after the balance that we saw in
kind of late April and May, and so I think
investors are less concerned about some of that interest rate
ball as their equities have shown up for their portfolio.
Speaker 2 (41:36):
Again, Paisley Yousud pretty confident and comfortable about kind of
the environment where we're going. Just got about thirty forty seconds.
What's the major risk out there for investors?
Speaker 9 (41:45):
Well, next week, we of course have hopefully some updated
news or certainty around tariffs. I think we're likely to
see that can kick down the road again. I think
the administration seeing kind of markets ease and relax a
bit with some of the pause, I think they'll want
to continue that growth trajectory within markets. Ultimately, the risks
I think that lay ahead or as it releads to
(42:07):
kind of the Fed's dual mandate around the employment data
and the inflation data. And so I think inflation continues
to ease. I don't see any imminent concerns there, but
I think all eyes in my perspective are on the
employment data in any weakening there that would drive FED decision.
Speaker 8 (42:21):
Yep.
Speaker 2 (42:22):
We get that on Thursday, so we'll be breaking that
down here at Bloomberg. Hey, Paisley, thank you so much,
really appreciate it. Paisley Nardini, Managing director, head of multi
asset Solutions at Simplify Asset Management. You've got about seven
billion dollars in assets under management joining us from Newport Beach, California.
Speaker 5 (42:37):
She would be a great guest on my television show
Boomberg Open Interest weekdays from nine am to eleven.
Speaker 2 (42:43):
Paisley, don't do it, don't do it, don't do it.
I'm just going to say, you can't steal all of
our guests. You can come and guest hosts.
Speaker 3 (42:49):
You get some pretty good guests on this show.
Speaker 2 (42:51):
Actually, we turn out to be actually pretty good here.
I'm just telling you, don't steal them all. He's like,
can I have the email? Can I have this?
Speaker 7 (42:59):
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You can also watch us live every weekday on YouTube
(43:19):
and always on the Bloomberg terminal
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