June 4, 2025 • 18 mins
The narrative all year was "sell America" yet the stock market is positive on the year and flirting with all time highs after coming back from a brutal Q1. Like COVID this is a rally few predicted although this time the market didn't have the Fed's help. What happened? Why was everyone was so wrong?
On this episode of Trillions, Joel and Eric talk about the wide gap between narrative and price and why US investors are simply not giving up on US stocks. They are joined by Athanasios Psarofagis of Bloomberg Intelligence and Isabelle Lee of Bloomberg News.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
What can a chins, I'm Chuil Webber and Americ Belcunas
Eric anything of note been happening in markets of late
What a year?
Speaker 2 (00:15):
What a year this day has been but whiplash, Yeah yeah,
COVID like whiplash.
Speaker 1 (00:21):
You know.
Speaker 2 (00:21):
The whole year it was sell America, the sell America trade,
uron stocks, Europe is the place to be and uh
well that didn't turn out to be true. The us
rallied back. Now it's positive on the year. I'd say
even that just blew away much of the negativity and
expert analysis out there. It's a little I think it's
(00:43):
one of those moments that's baffling for a lot of people.
But so instead of you know, selling America, everybody bought it,
and here we are back in what feels like twenty
twenty four again, it feels like we're kind of like
back to normal, which is sort of like, as somebody
on this podcast is going to say, is comfortably bullish,
comfortably bolish.
Speaker 1 (01:04):
Okay, Well, to help us walk through some of those
headlines and what's happening in markets and bonds, we're gonna
be joined by Isabelle Lee Process, a reporter with Bloomberg
News as well as Athanasios, Sarah Vegas ETF analyst with
Boomberg Controjans Beast time on Trillions. Bye bye America, Athanasios,
(01:28):
welcome back to Trillions, Isabelle, thanks for being here. See
what I did there? Good bye bye.
Speaker 3 (01:32):
I heard it.
Speaker 1 (01:33):
It was good. So let's I want to set this
up with you because you've been writing some interesting notes
right now. What have you been seeing on sort of
like just a metal level of how things have transpired.
Speaker 4 (01:46):
Yeah, well, Eric kind of alluded to it, but it's
the bounce back in the US market, And looked at
what happened in the beginning of April. It was a
lot of negative sentiment. It was the US acceptavision is
over time to rotate into Europe, move away out of it.
Speaker 2 (02:00):
Uh.
Speaker 4 (02:00):
But one thing that was interesting with THETF flows, they
never really fully bought into the Europe story, right, so
you heard everyone coming up with, well, it's time to
rotate into Europe. The flows didn't really bite. They were
still sort of buying the US even during that dip
in the beginning of April. They continued to buy. And
now that's paid off because the market's bounced back so far.
So maybe across the world. Yeah, Europe was a little
(02:23):
bit more negative on the US, but if we didn't
look in like Asia, they were actually buying US stocks
like pretty aggressively. So you know, you if you weren't buying,
you missed out on this massive, really rapid rebound, I.
Speaker 2 (02:35):
Mean, one of the phenomenons. And you know we saw
this during Trump one point zero two. There does seem
to be like a little bit of a wider gap
between negativity and the headlines and like the reality in
the market. And I know that probably because you know,
the president can be polarizing, and I think sometimes that
gap is almos.
Speaker 1 (02:55):
Remember I had that guy on here.
Speaker 2 (02:57):
I know, I'm trying to make a metric out of
it between the flows and the price and then the headlines,
and it's almost like a factor where there's some kind
of a gap there. It reminds me of that guy
we had on who talked about intangible value of a stock,
where it's like dark matter. You can't quite see it
or measure it, but you know it's there. And I
think it's something people have to be careful of. But
(03:18):
it seems to me the money doesn't care what the
headlines are they're just simply buying.
Speaker 1 (03:24):
They wants more money.
Speaker 2 (03:25):
Money wants more money, and that's kind of cool that
in all this, like, you know, all this political warfare
and headlines going back and forth on both sides, that
you know, money just wants to make money. And I
think when it saw some pullback on the tariffs, it
was immediately in because it generally has real faith in
(03:46):
US stocks, likes to be in US stocks, doesn't want
to not be in there. And I think that was
something we saw this year and something will probably continue
to see. So I think in a way sometimes the
headlines need a little bit of an adjustment factor, you know,
for the next three years.
Speaker 1 (04:01):
We'll see.
Speaker 2 (04:02):
But that's something we've noticed and I think other peoples have.
There just definitely was like a disconnect between flows and
prices and the headline and the sort of vibe out
there coming on every little thing that was going on.
Speaker 3 (04:13):
Macrowise, so said media here in New York Face. But
I think the headline was an attack on us.
Speaker 1 (04:19):
No, it's true.
Speaker 3 (04:20):
I mean, the headline risk is real. I've actually we
talked to money managers all the time and they also
say that the concerns are there but most of them
are actually staying put also because many reasons, long term
investment strategies, or because they're just trying to write it out,
because if you move, you move to what I mean,
we were just talking about this earlier, Joel, that one
tweet or one truth could change a lot of things,
(04:43):
and it's hard to have conviction. That's what they tell me,
because then if you have conviction on one tweet, what
will happen to the others. The data that jumps out
to me is that disparity between soft data and hard data.
Back of America had this really interesting graph that showed
that the gap between those two is that it's wide
since at least twenty five years. So what do you
(05:03):
look at these days? And then we have a lot
of money managers looking at alternative data like cargo or
like foot traffic to stores or pizza deliveries because they
can't rely on our data anymore, the traditional one solely
at least.
Speaker 1 (05:16):
So it's like anything that helps me feel like I
can get a read on what's happening and gives.
Speaker 3 (05:21):
Me an advantage, yes, or even Uber deliveries. One person
was telling me because he was like, you don't order
out if you feel like there's a recession coming interesting.
Speaker 2 (05:31):
And Isabelle this is a great thing to riff off
of for Athanasios, which is that where else can you go?
I think this is something that's underrated. So this idea
of American exceptionalism in markets, in markets, I do think
it's stronger than it's given credit for, because you've found
that the poll to invest here, even if you don't
like what's going on. You look at the stocks in
(05:53):
the Nasdaq one hundred or the S and P, and
then you fire up the European ETF and you look
at those stocks. I'm sorry, you're not leaving, You're you
gonna stay in America.
Speaker 4 (06:04):
Yeah, I mean, I think it's right about what alternative
there is, and it's really hard to give it up,
you know, and with Trump and all that, like, I
get it, Yeah, he's kind of messing with the markets now,
But if you take all that out, we're still just
these companies are really good at just making money right,
way better than Europe, way better than some other kind.
And so when you just look at what is the
(06:26):
best alternative, I find it really hard to get money
to pry away from the US and be like, Okay,
I'm gonna go fully into Europe. I just feel like
this might not age well. Not saying that they can't
do well, but a lot of times when europe stocks
do well, US is also doing really well too. I
can't really see a scenario where we're doing really poorly
and they're like crushing it. But you know, I think
(06:47):
it's just And even if you look at Europe, most
of their money is invested in the US, right, So
I think almost in a way, like our greatest export
here is like our returns, our market returns, because so
much of the world has benefited off of like just
the growth in the SP five hundred. It's not just US,
it's like a global phenomenon.
Speaker 1 (07:04):
What else in the data have you been evaluating specifically
around Europe?
Speaker 4 (07:10):
Could say two things, right, they'd say, there's US investors
trying to buy European funds. Here there's there's barely any movement,
right and even this is Europe doing really really well
this year, they just haven't really allocated to it. Then
there's the European investors investing in the US and then
their local markets. So there you've seen that they definitely
turned more bearish on the US in April. They were
(07:32):
cutting down their allocations and were staying more domestic, but
with that they missed this massive rebound. But if you
still look at the way they're positioned, there's still mostly
overweight the US. So they're invested more in the US,
at least three tfs more in the US than they
are even in their own local market. So I think
they understand it too. It's like, yeah, I live here,
Europe's a great place, but for investing in stocks, just
(07:54):
the US just offers a way better alternative than some
of the local ones that I'm getting.
Speaker 2 (07:58):
But you also looked at the times when Europe outperforms
the US. It's like a rower band, right, Yeah, and
it got to its like sort of widest length that
it ever gets to, which is what like seventeen eighteen percent?
And what happens next?
Speaker 4 (08:14):
Yeah, and things mean revert, right, So you know, Europe
was outperforming the US quite a bit this year, and
mean mean reverted in April. Then the other thing we
always kind of joke about European summers and how Europe
like takes off the entire summer summer is actually a
bad time to rotate into Europe. On a relative basis,
US usually always does better over the summer than Europe.
But you know, it's probably to say that maybe the
(08:35):
ourperformance is a little bit stretched from European over the US,
so that just tends the meaner vert a little bit.
So I think there's a lot of all like narratives
now to support a little bit of rotation back into
the US. I bet you we could see European investors
rotate back into the US even locally.
Speaker 1 (08:59):
Okay, another thing that's been wiplash inducing has been the
bond market. Is well, you wrote about that recently. What
is that story about.
Speaker 3 (09:08):
It's about TLT. So it's I shares twenty plus year
bond ETF. It's the biggest long bond ETF, and it's
known as a widow maker. So widow maker in market
terms means that it's a trade that could lead to
potentially catastrophic losses. And I must credit Athanasius here because
he did write a note about TLT that made me
realize that, you know what it did actually see in
(09:28):
a one week time horizon, the most inflows over one
week out of all the more than six hundred ETFs
fixed income ETFs that Bloomberg track. So you follow the flow,
at least for us, because price tells you a different thing.
But flows show conviction. And then it's interesting because people
have really been piling into this trade even if but.
Speaker 1 (09:46):
You got to get the timing right otherwise it'syeah, widow.
Speaker 3 (09:48):
Maker, yes, and it hasn't been right for them until
one day when we saw really the bonds rallied and
so that was a rare payday for those investors. And
so for that time, at least for this brief moment,
TLT wasn't a widow maker those.
Speaker 1 (10:02):
Long dated bonds at the Nastia's like, what else have
you all been watching on that front?
Speaker 4 (10:07):
The thing that I find really interesting with TLT, I
feel like it's a very institutional vehicle. So I don't
know if it's just this mindset of like trying to
fight the FED and like outsmart the FED and there's
like something about that.
Speaker 1 (10:18):
But there is.
Speaker 4 (10:19):
Fifty billion or so in the CTF and it's done
nothing for like three years.
Speaker 1 (10:24):
It's just sort of treaded water.
Speaker 4 (10:25):
So you have like fifty billions sitting in the CTF
that hasn't really moved a lot.
Speaker 1 (10:30):
But it's one of those things.
Speaker 4 (10:31):
I think people want to get it right, and this
is why they've literally been trying for three years. And
most of the flows have come in the last three years.
It was only about fifteen billion or so in twenty
twenty two, and now it's fifty, like I mentioned. But
I think it's even just a bigger story about bonds
and like what they've sort of done for you in
the last couple of years. Nothing, yeah, nothing, yeah? And
does it make sense to keep allocating to them?
Speaker 1 (10:54):
Right?
Speaker 4 (10:54):
We always talk about sixty forty and whatnot, and you're
earning the same yield as you would in like a bill,
which is really short term treasury ETF. Obviously you're not
getting the price movement if the FED cuts or whatnot.
But I think it just opens up a much bigger
question about what, you know, what a bonds do for you.
Speaker 3 (11:10):
I think TLT fell around forty in the past five years,
but it gathered like fifty billion of endflows.
Speaker 2 (11:17):
This to me, this ETF is for people who like
to overthink things, like you're playing forty chess with the Fed.
You're like, no, but then we're gonna get an economic number.
It's gonna say this the Fed will have to blink.
Rates will go down, TLT goes up. And it's like
that meme with Zach gal Galfanakis with all the formulas.
To me, that's who buys TLT. Okay, it's not regular people.
(11:41):
Regular people are buying es GOV, which is so much
more of a no brainer, basically, no duration risks. You're
at one one to three month treasuries yields the same almost,
so you must We'll clip that coupon with no duration risk.
But that's again the TLT people are playing like a
whole game. It's like a risk or something on it
thing going on over there. It's like the further out
(12:03):
on the curve you go the bigger brain that.
Speaker 3 (12:05):
People get nice image. But to your point, bond investors
have actually been demanding extra compensation for the risk of
holding long duration bonds. I think Bloomberg usually refers to
the US ten year term premium, so an inch closer
to one percent. That's the highest level in at least
a decade.
Speaker 1 (12:22):
And the issuance of those long dated bonds have been
falling off too. Haven't been seeing that.
Speaker 2 (12:28):
But again, this is another thing where again I feel
like the media kinda was like Oh my god, Moody's
downgraded the US. It's all over, see what's happening? And
like honestly, yields when up for a minute like and
that then they fell again, like they've been around five
percent four percent for like a long time. Nothing, there's
nothing really going on.
Speaker 3 (12:49):
The media is just here, Eric, I know, well I was.
Speaker 2 (12:52):
I was talking to other colleagues earlier. I used to
work at a derivatives monitor my first job out of school,
and I remember the guy'd be like, I had to
call traders and like's find out what happened that day.
And I'd be like, okay, like the something move like
twenty basis points and he's like, well why, and I'm
like they don't know, and he's like, you, there has
to be a reason. So there's like this pressure to
(13:13):
like come up with a reason for everything, and you know,
you gotta get the clicks. I get it.
Speaker 1 (13:19):
But if you can tell the story of the market
through one etf right now, what do you think it is?
Speaker 2 (13:25):
Vou sixty four billion dollars year to date, it's kind
of that's the influence. Yeah, Because I do find this
juxtabsition interesting and I've always found it interesting. And this
is well beyond Trump or the president, but just in general,
when something bad happens and there's like this, because again,
let's face it, when there's negative news, you get more
clicks on your stuff. It's just like, it's just the fact.
(13:48):
It's like the Weather Channel when there's a hurricane. You
know how they pump up hurricanes.
Speaker 1 (13:52):
Hurricane seasons basically upon us.
Speaker 2 (13:54):
Yeah, but I get it. I do it too. I'm
guilty as well. But at the same time, the VU
investor doesn't care. And it's interesting to see this immovable
object against this big force of the headlines, and they're
just like, you cannot shake these VU investors. And this
year VU is on track to break the old record
(14:15):
by fifty percent, which is set last year. So VU
being this steamroller of like I don't really care what
you're saying, or what anybody's saying, even the President. I'm
just gonna buy us thoughts like nothing can scare me,
is fascinating to me. That's a big story. Not every
single thing on earth bought like VOO did, but VU
(14:35):
is symbolic. I thought of this idea of I think
a lot of investors would come up with a couple
truths that they just truly believe in. Number One, they
think they can't time the market. They've tried and they failed,
and they're like, I can't do it. No one can,
even the experts fail, So I'm not gonna do it.
Number two, they're like, I can never get a better
deal than VU three basis points for the entire US market,
(14:56):
so I don't need to change funds, So I'm not
getting out for that reason. And number three, the US
stock market kicks ass. I'm not going to trade in Amazon, Apple,
and Microsoft for like HSBC and Nesley, No thanks, And so.
Speaker 1 (15:12):
Those eslie chocolate does taste better? I agree with you.
Speaker 2 (15:15):
I think a lot of them have maybe ten percent
in international, like they don't. They're not devoid international, But
this idea of like selling America or the end of
the exceptionalism, I just think that those three things I
just said are truths that create the immovable object of
those flows, and I think they're underrated by people who
are trying to call the markets. And I think a
(15:36):
lot of people have gotten to that point with their investing,
and this year it's just going to embolden that because
the rally back just reminded them I did the right
thing by not panicking.
Speaker 3 (15:48):
Voo is hard to beat, actually, but I was a
small part of me was preparing for you to say ibit,
because not only do you tweet about it every day,
but also I think the ibit is just indicative of
the this staunchness or the conviction of traders to really
just plow money into this new bitcoin fund or I
guess it's not so new now anymore. And recently we
(16:10):
saw everything whiplash, but Crypto was the adult in the room,
so that was the story.
Speaker 2 (16:14):
We also wrote real quick on ibit. It is the
second flow getting ETF in the past six weeks after
Voo nine billion. It's on a crazy run. Interesting about ibit,
in my opinion. I was on stage with Robbie Mitchnick
from Blackrock in Dubai at a thing called Token twenty
forty nine. Fifteen thousand people at this thing, average age
(16:35):
Joal twenty eight. Like I was like the old grandpa
the ors. My kid would say, unk, that's the new
term for old head. Anyway, I'm unking out there and
I'm on stage with other unks right with the trad
five panel, and Robbie says that when bitcoin decoupled and
went like a different direction than spy, he got incoming
calls from big fish, big institutions. So I think bitcoin's
(16:56):
in this nice place right now with regulatory headwinds gone,
and as it starts the lower in volatility and get
more less correlated than to the market, it will get
bigger investors who are more stable, which will ultimately help
it look more like gold too.
Speaker 1 (17:10):
He says.
Speaker 2 (17:10):
These giant investors are not interested in tech stock returns.
They want like digital gold. So everybody's kind of waiting
for bitcoin to kind of mature and act more like
an adult and not like a teenager. And as it is,
and you can see it in the ball coming down,
they're going to get bigger investments. And IBIT, to me,
is the one that bit the big fissues. So the
fact that ibit has taken ninety percent of the hall
(17:32):
of all the other bitcoin ETFs, normally it takes in
two thirds tells me that the institutional incoming is pretty serious.
Not to mention all the corporations you see adding it
to the balance sheet, a couple governments, it could get
pretty crazy. I think we're entering this like true financialization
of Bitcoin. There will be a point where it peaks
out and then maybe it goes down. I don't know what,
but there feels like there's like three or four positive
(17:55):
narratives and not a lot negative. And especially with the
stock market being placid, it's hard to see much in
the way. But we have a phrase on the team.
I just don't see the bear case, which is like
famous last words. So I say that knowing that that's
probably a bad side.
Speaker 1 (18:13):
I think that's a fitting place to end. So, Isabelle,
thanks for joining us at trillions.
Speaker 4 (18:19):
Yeah, thanks for having me on.
Speaker 3 (18:20):
Thank you that was really fun.
Speaker 1 (18:27):
Thanks for listening to Trillions until next time. You can
find us on the Bloomberg terminal, Bloomberg dot com, Apple Podcasts, Spotify,
or wherever else you'd like to listen. We'd love to
hear from you. Hit us up on social I'm at
Joel Weber Show, He's at Eric Pulcini's. Trillions is produced
by Magnus Hendrickson. Brendan Newman is our executive producer. Sage
Bauman is the head of Bloomberg Podcast
What can a chins, I'm Chuil Webber and Americ Belcunas
Eric anything of note been happening in markets of late
What a year?
Speaker 2 (00:15):
What a year this day has been but whiplash, Yeah yeah,
COVID like whiplash.
Speaker 1 (00:21):
You know.
Speaker 2 (00:21):
The whole year it was sell America, the sell America trade,
uron stocks, Europe is the place to be and uh
well that didn't turn out to be true. The us
rallied back. Now it's positive on the year. I'd say
even that just blew away much of the negativity and
expert analysis out there. It's a little I think it's
(00:43):
one of those moments that's baffling for a lot of people.
But so instead of you know, selling America, everybody bought it,
and here we are back in what feels like twenty
twenty four again, it feels like we're kind of like
back to normal, which is sort of like, as somebody
on this podcast is going to say, is comfortably bullish,
comfortably bolish.
Speaker 1 (01:04):
Okay, Well, to help us walk through some of those
headlines and what's happening in markets and bonds, we're gonna
be joined by Isabelle Lee Process, a reporter with Bloomberg
News as well as Athanasios, Sarah Vegas ETF analyst with
Boomberg Controjans Beast time on Trillions. Bye bye America, Athanasios,
(01:28):
welcome back to Trillions, Isabelle, thanks for being here. See
what I did there? Good bye bye.
Speaker 3 (01:32):
I heard it.
Speaker 1 (01:33):
It was good. So let's I want to set this
up with you because you've been writing some interesting notes
right now. What have you been seeing on sort of
like just a metal level of how things have transpired.
Speaker 4 (01:46):
Yeah, well, Eric kind of alluded to it, but it's
the bounce back in the US market, And looked at
what happened in the beginning of April. It was a
lot of negative sentiment. It was the US acceptavision is
over time to rotate into Europe, move away out of it.
Speaker 2 (02:00):
Uh.
Speaker 4 (02:00):
But one thing that was interesting with THETF flows, they
never really fully bought into the Europe story, right, so
you heard everyone coming up with, well, it's time to
rotate into Europe. The flows didn't really bite. They were
still sort of buying the US even during that dip
in the beginning of April. They continued to buy. And
now that's paid off because the market's bounced back so far.
So maybe across the world. Yeah, Europe was a little
(02:23):
bit more negative on the US, but if we didn't
look in like Asia, they were actually buying US stocks
like pretty aggressively. So you know, you if you weren't buying,
you missed out on this massive, really rapid rebound, I.
Speaker 2 (02:35):
Mean, one of the phenomenons. And you know we saw
this during Trump one point zero two. There does seem
to be like a little bit of a wider gap
between negativity and the headlines and like the reality in
the market. And I know that probably because you know,
the president can be polarizing, and I think sometimes that
gap is almos.
Speaker 1 (02:55):
Remember I had that guy on here.
Speaker 2 (02:57):
I know, I'm trying to make a metric out of
it between the flows and the price and then the headlines,
and it's almost like a factor where there's some kind
of a gap there. It reminds me of that guy
we had on who talked about intangible value of a stock,
where it's like dark matter. You can't quite see it
or measure it, but you know it's there. And I
think it's something people have to be careful of. But
(03:18):
it seems to me the money doesn't care what the
headlines are they're just simply buying.
Speaker 1 (03:24):
They wants more money.
Speaker 2 (03:25):
Money wants more money, and that's kind of cool that
in all this, like, you know, all this political warfare
and headlines going back and forth on both sides, that
you know, money just wants to make money. And I
think when it saw some pullback on the tariffs, it
was immediately in because it generally has real faith in
(03:46):
US stocks, likes to be in US stocks, doesn't want
to not be in there. And I think that was
something we saw this year and something will probably continue
to see. So I think in a way sometimes the
headlines need a little bit of an adjustment factor, you know,
for the next three years.
Speaker 1 (04:01):
We'll see.
Speaker 2 (04:02):
But that's something we've noticed and I think other peoples have.
There just definitely was like a disconnect between flows and
prices and the headline and the sort of vibe out
there coming on every little thing that was going on.
Speaker 3 (04:13):
Macrowise, so said media here in New York Face. But
I think the headline was an attack on us.
Speaker 1 (04:19):
No, it's true.
Speaker 3 (04:20):
I mean, the headline risk is real. I've actually we
talked to money managers all the time and they also
say that the concerns are there but most of them
are actually staying put also because many reasons, long term
investment strategies, or because they're just trying to write it out,
because if you move, you move to what I mean,
we were just talking about this earlier, Joel, that one
tweet or one truth could change a lot of things,
(04:43):
and it's hard to have conviction. That's what they tell me,
because then if you have conviction on one tweet, what
will happen to the others. The data that jumps out
to me is that disparity between soft data and hard data.
Back of America had this really interesting graph that showed
that the gap between those two is that it's wide
since at least twenty five years. So what do you
(05:03):
look at these days? And then we have a lot
of money managers looking at alternative data like cargo or
like foot traffic to stores or pizza deliveries because they
can't rely on our data anymore, the traditional one solely
at least.
Speaker 1 (05:16):
So it's like anything that helps me feel like I
can get a read on what's happening and gives.
Speaker 3 (05:21):
Me an advantage, yes, or even Uber deliveries. One person
was telling me because he was like, you don't order
out if you feel like there's a recession coming interesting.
Speaker 2 (05:31):
And Isabelle this is a great thing to riff off
of for Athanasios, which is that where else can you go?
I think this is something that's underrated. So this idea
of American exceptionalism in markets, in markets, I do think
it's stronger than it's given credit for, because you've found
that the poll to invest here, even if you don't
like what's going on. You look at the stocks in
(05:53):
the Nasdaq one hundred or the S and P, and
then you fire up the European ETF and you look
at those stocks. I'm sorry, you're not leaving, You're you
gonna stay in America.
Speaker 4 (06:04):
Yeah, I mean, I think it's right about what alternative
there is, and it's really hard to give it up,
you know, and with Trump and all that, like, I
get it, Yeah, he's kind of messing with the markets now,
But if you take all that out, we're still just
these companies are really good at just making money right,
way better than Europe, way better than some other kind.
And so when you just look at what is the
(06:26):
best alternative, I find it really hard to get money
to pry away from the US and be like, Okay,
I'm gonna go fully into Europe. I just feel like
this might not age well. Not saying that they can't
do well, but a lot of times when europe stocks
do well, US is also doing really well too. I
can't really see a scenario where we're doing really poorly
and they're like crushing it. But you know, I think
(06:47):
it's just And even if you look at Europe, most
of their money is invested in the US, right, So
I think almost in a way, like our greatest export
here is like our returns, our market returns, because so
much of the world has benefited off of like just
the growth in the SP five hundred. It's not just US,
it's like a global phenomenon.
Speaker 1 (07:04):
What else in the data have you been evaluating specifically
around Europe?
Speaker 4 (07:10):
Could say two things, right, they'd say, there's US investors
trying to buy European funds. Here there's there's barely any movement,
right and even this is Europe doing really really well
this year, they just haven't really allocated to it. Then
there's the European investors investing in the US and then
their local markets. So there you've seen that they definitely
turned more bearish on the US in April. They were
(07:32):
cutting down their allocations and were staying more domestic, but
with that they missed this massive rebound. But if you
still look at the way they're positioned, there's still mostly
overweight the US. So they're invested more in the US,
at least three tfs more in the US than they
are even in their own local market. So I think
they understand it too. It's like, yeah, I live here,
Europe's a great place, but for investing in stocks, just
(07:54):
the US just offers a way better alternative than some
of the local ones that I'm getting.
Speaker 2 (07:58):
But you also looked at the times when Europe outperforms
the US. It's like a rower band, right, Yeah, and
it got to its like sort of widest length that
it ever gets to, which is what like seventeen eighteen percent?
And what happens next?
Speaker 4 (08:14):
Yeah, and things mean revert, right, So you know, Europe
was outperforming the US quite a bit this year, and
mean mean reverted in April. Then the other thing we
always kind of joke about European summers and how Europe
like takes off the entire summer summer is actually a
bad time to rotate into Europe. On a relative basis,
US usually always does better over the summer than Europe.
But you know, it's probably to say that maybe the
(08:35):
ourperformance is a little bit stretched from European over the US,
so that just tends the meaner vert a little bit.
So I think there's a lot of all like narratives
now to support a little bit of rotation back into
the US. I bet you we could see European investors
rotate back into the US even locally.
Speaker 1 (08:59):
Okay, another thing that's been wiplash inducing has been the
bond market. Is well, you wrote about that recently. What
is that story about.
Speaker 3 (09:08):
It's about TLT. So it's I shares twenty plus year
bond ETF. It's the biggest long bond ETF, and it's
known as a widow maker. So widow maker in market
terms means that it's a trade that could lead to
potentially catastrophic losses. And I must credit Athanasius here because
he did write a note about TLT that made me
realize that, you know what it did actually see in
(09:28):
a one week time horizon, the most inflows over one
week out of all the more than six hundred ETFs
fixed income ETFs that Bloomberg track. So you follow the flow,
at least for us, because price tells you a different thing.
But flows show conviction. And then it's interesting because people
have really been piling into this trade even if but.
Speaker 1 (09:46):
You got to get the timing right otherwise it'syeah, widow.
Speaker 3 (09:48):
Maker, yes, and it hasn't been right for them until
one day when we saw really the bonds rallied and
so that was a rare payday for those investors. And
so for that time, at least for this brief moment,
TLT wasn't a widow maker those.
Speaker 1 (10:02):
Long dated bonds at the Nastia's like, what else have
you all been watching on that front?
Speaker 4 (10:07):
The thing that I find really interesting with TLT, I
feel like it's a very institutional vehicle. So I don't
know if it's just this mindset of like trying to
fight the FED and like outsmart the FED and there's
like something about that.
Speaker 1 (10:18):
But there is.
Speaker 4 (10:19):
Fifty billion or so in the CTF and it's done
nothing for like three years.
Speaker 1 (10:24):
It's just sort of treaded water.
Speaker 4 (10:25):
So you have like fifty billions sitting in the CTF
that hasn't really moved a lot.
Speaker 1 (10:30):
But it's one of those things.
Speaker 4 (10:31):
I think people want to get it right, and this
is why they've literally been trying for three years. And
most of the flows have come in the last three years.
It was only about fifteen billion or so in twenty
twenty two, and now it's fifty, like I mentioned. But
I think it's even just a bigger story about bonds
and like what they've sort of done for you in
the last couple of years. Nothing, yeah, nothing, yeah? And
does it make sense to keep allocating to them?
Speaker 1 (10:54):
Right?
Speaker 4 (10:54):
We always talk about sixty forty and whatnot, and you're
earning the same yield as you would in like a bill,
which is really short term treasury ETF. Obviously you're not
getting the price movement if the FED cuts or whatnot.
But I think it just opens up a much bigger
question about what, you know, what a bonds do for you.
Speaker 3 (11:10):
I think TLT fell around forty in the past five years,
but it gathered like fifty billion of endflows.
Speaker 2 (11:17):
This to me, this ETF is for people who like
to overthink things, like you're playing forty chess with the Fed.
You're like, no, but then we're gonna get an economic number.
It's gonna say this the Fed will have to blink.
Rates will go down, TLT goes up. And it's like
that meme with Zach gal Galfanakis with all the formulas.
To me, that's who buys TLT. Okay, it's not regular people.
(11:41):
Regular people are buying es GOV, which is so much
more of a no brainer, basically, no duration risks. You're
at one one to three month treasuries yields the same almost,
so you must We'll clip that coupon with no duration risk.
But that's again the TLT people are playing like a
whole game. It's like a risk or something on it
thing going on over there. It's like the further out
(12:03):
on the curve you go the bigger brain that.
Speaker 3 (12:05):
People get nice image. But to your point, bond investors
have actually been demanding extra compensation for the risk of
holding long duration bonds. I think Bloomberg usually refers to
the US ten year term premium, so an inch closer
to one percent. That's the highest level in at least
a decade.
Speaker 1 (12:22):
And the issuance of those long dated bonds have been
falling off too. Haven't been seeing that.
Speaker 2 (12:28):
But again, this is another thing where again I feel
like the media kinda was like Oh my god, Moody's
downgraded the US. It's all over, see what's happening? And
like honestly, yields when up for a minute like and
that then they fell again, like they've been around five
percent four percent for like a long time. Nothing, there's
nothing really going on.
Speaker 3 (12:49):
The media is just here, Eric, I know, well I was.
Speaker 2 (12:52):
I was talking to other colleagues earlier. I used to
work at a derivatives monitor my first job out of school,
and I remember the guy'd be like, I had to
call traders and like's find out what happened that day.
And I'd be like, okay, like the something move like
twenty basis points and he's like, well why, and I'm
like they don't know, and he's like, you, there has
to be a reason. So there's like this pressure to
(13:13):
like come up with a reason for everything, and you know,
you gotta get the clicks. I get it.
Speaker 1 (13:19):
But if you can tell the story of the market
through one etf right now, what do you think it is?
Speaker 2 (13:25):
Vou sixty four billion dollars year to date, it's kind
of that's the influence. Yeah, Because I do find this
juxtabsition interesting and I've always found it interesting. And this
is well beyond Trump or the president, but just in general,
when something bad happens and there's like this, because again,
let's face it, when there's negative news, you get more
clicks on your stuff. It's just like, it's just the fact.
(13:48):
It's like the Weather Channel when there's a hurricane. You
know how they pump up hurricanes.
Speaker 1 (13:52):
Hurricane seasons basically upon us.
Speaker 2 (13:54):
Yeah, but I get it. I do it too. I'm
guilty as well. But at the same time, the VU
investor doesn't care. And it's interesting to see this immovable
object against this big force of the headlines, and they're
just like, you cannot shake these VU investors. And this
year VU is on track to break the old record
(14:15):
by fifty percent, which is set last year. So VU
being this steamroller of like I don't really care what
you're saying, or what anybody's saying, even the President. I'm
just gonna buy us thoughts like nothing can scare me,
is fascinating to me. That's a big story. Not every
single thing on earth bought like VOO did, but VU
(14:35):
is symbolic. I thought of this idea of I think
a lot of investors would come up with a couple
truths that they just truly believe in. Number One, they
think they can't time the market. They've tried and they failed,
and they're like, I can't do it. No one can,
even the experts fail, So I'm not gonna do it.
Number two, they're like, I can never get a better
deal than VU three basis points for the entire US market,
(14:56):
so I don't need to change funds, So I'm not
getting out for that reason. And number three, the US
stock market kicks ass. I'm not going to trade in Amazon, Apple,
and Microsoft for like HSBC and Nesley, No thanks, And so.
Speaker 1 (15:12):
Those eslie chocolate does taste better? I agree with you.
Speaker 2 (15:15):
I think a lot of them have maybe ten percent
in international, like they don't. They're not devoid international, But
this idea of like selling America or the end of
the exceptionalism, I just think that those three things I
just said are truths that create the immovable object of
those flows, and I think they're underrated by people who
are trying to call the markets. And I think a
(15:36):
lot of people have gotten to that point with their investing,
and this year it's just going to embolden that because
the rally back just reminded them I did the right
thing by not panicking.
Speaker 3 (15:48):
Voo is hard to beat, actually, but I was a
small part of me was preparing for you to say ibit,
because not only do you tweet about it every day,
but also I think the ibit is just indicative of
the this staunchness or the conviction of traders to really
just plow money into this new bitcoin fund or I
guess it's not so new now anymore. And recently we
(16:10):
saw everything whiplash, but Crypto was the adult in the room,
so that was the story.
Speaker 2 (16:14):
We also wrote real quick on ibit. It is the
second flow getting ETF in the past six weeks after
Voo nine billion. It's on a crazy run. Interesting about ibit,
in my opinion. I was on stage with Robbie Mitchnick
from Blackrock in Dubai at a thing called Token twenty
forty nine. Fifteen thousand people at this thing, average age
(16:35):
Joal twenty eight. Like I was like the old grandpa
the ors. My kid would say, unk, that's the new
term for old head. Anyway, I'm unking out there and
I'm on stage with other unks right with the trad
five panel, and Robbie says that when bitcoin decoupled and
went like a different direction than spy, he got incoming
calls from big fish, big institutions. So I think bitcoin's
(16:56):
in this nice place right now with regulatory headwinds gone,
and as it starts the lower in volatility and get
more less correlated than to the market, it will get
bigger investors who are more stable, which will ultimately help
it look more like gold too.
Speaker 1 (17:10):
He says.
Speaker 2 (17:10):
These giant investors are not interested in tech stock returns.
They want like digital gold. So everybody's kind of waiting
for bitcoin to kind of mature and act more like
an adult and not like a teenager. And as it is,
and you can see it in the ball coming down,
they're going to get bigger investments. And IBIT, to me,
is the one that bit the big fissues. So the
fact that ibit has taken ninety percent of the hall
(17:32):
of all the other bitcoin ETFs, normally it takes in
two thirds tells me that the institutional incoming is pretty serious.
Not to mention all the corporations you see adding it
to the balance sheet, a couple governments, it could get
pretty crazy. I think we're entering this like true financialization
of Bitcoin. There will be a point where it peaks
out and then maybe it goes down. I don't know what,
but there feels like there's like three or four positive
(17:55):
narratives and not a lot negative. And especially with the
stock market being placid, it's hard to see much in
the way. But we have a phrase on the team.
I just don't see the bear case, which is like
famous last words. So I say that knowing that that's
probably a bad side.
Speaker 1 (18:13):
I think that's a fitting place to end. So, Isabelle,
thanks for joining us at trillions.
Speaker 4 (18:19):
Yeah, thanks for having me on.
Speaker 3 (18:20):
Thank you that was really fun.
Speaker 1 (18:27):
Thanks for listening to Trillions until next time. You can
find us on the Bloomberg terminal, Bloomberg dot com, Apple Podcasts, Spotify,
or wherever else you'd like to listen. We'd love to
hear from you. Hit us up on social I'm at
Joel Weber Show, He's at Eric Pulcini's. Trillions is produced
by Magnus Hendrickson. Brendan Newman is our executive producer. Sage
Bauman is the head of Bloomberg Podcast
Popular Podcasts
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.