YouSaid · the spoken record

Scott Rubner

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16
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2020-06-18
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2020-06-18
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  1. “The narrative wrong, and that there is a commitment, and again, that has happened again now. So, like, we're seeing both fiscally and from the ECB, we're seeing a lot of support for the union and more mutualization. And so I think that investor sentiment is now shifting more towards Europe given the actions that we've seen. Again, it will be limited by the fact that some of those companies are not as growthy. And then I think the other thing that we're beginning to see is if you look at currency markets, I think the US dollar has exhibited some weakness and obviously most international investors think about their returns in dollar terms. And so if you see continued dollar weakness, then maybe Europe, if you're seeing a 5-10% potential dollar weakening, then maybe Europe will look more”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  2. “I think there's a few things, right? So Europe has underperformed, the European equity markets have underperformed, the US equity markets, but I would say the biggest driver of that underperformance is probably due to the fact that Europe and actually the rest of the world has a much lower tech component. So if you look at technology, they make up probably like 60, 70% less in Europe than they do in the US. And obviously the US has been very, like the equity markets have been very much driven by software and technology companies. So I think that's one big difference, but that's also just meant that when you're looking at Europe and you're looking thinking to be an investor in Europe, I think you realize that the companies are just lower growth because there's less technology. And then at the same time, you need to become an expert on European politics. And so every, it seems like every two to four years now, we're basically, there's a question around the commitment to the European project. And I think Europe then proves”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  3. “So you mentioned at the outset, Philip, that you've spent the vast bulk of your career, two decades or so in European markets, and we've mostly been focused on the U.S. here. Talk a little bit about what you're seeing in Europe right now where interest rates are hovering at zero or sometimes negative, how the equity markets responding there”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  4. “Back of the fact that part of their like two billion dollars was missing from their balance sheets and again this was something that has been well publicized in the press and people who spend a lot of time looking at fundamentals and companies basically thought that there were issues with accounting and so I think what's interesting is obviously there is a very big role for fundamental analysis there's a big role for active and I think at the point where you're at inflection points where kind of some of the trends of globalization has shifted potential election outcomes has shifted I think there's clearly a role for active and there's been some outperformance but I think that given the cost advantages of passive we're going to continue to see flows into passive and I think we're going to continue to see active managers I think probably do well and those who outperform continue to gather assets.”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  5. “Levered means if you have two times leverage and the market goes down, you need to sell on the way down. And if the market goes up, you need to buy. So effectively, all these levered ETFs, and we've seen it in oil and we've seen it in the VIX, are basically in a way constructed that ultimately they will lose money for investors because they buy on the way up and they sell on the way down. So if we exclude that, because I think that is a trend where it's an active trading and speculative instrument at the moment, but it's difficult to see huge long-term growth given what I said is a drag on performance. And so then if you're focusing on active and passive, and something we need to make sure like, or maybe instead of using passive, we can use indexation, I think that active has seen better performance over the last six months. I think that given everything we spoke about, uncertainty, and also kind of like accounting matters today, WireCard, which is a German tech darling, dropped 65% on”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  6. “So, you know, maybe it's probably helpful to split it into three parts, right? So, I think you have the active management mutual funds, hedge funds, so you have active managers, you have passives, which obviously has seen spectacular growth in my expectations, you'll continue to see growth given the proliferation of low-cost ETFs and indexation, which I think is a great theme for investors. And then maybe the third bucket, which has always been there, but I think that this kind of ties back into retail speculation, then there's leverage index ETFs. And so what's essentially interesting, if you look at levered ETFs, I think Robin Hood holdings have gone up by 250% on those instruments. And I'll start with those, because I think those are purely speculative and are probably not very useful in terms of long-term wealth accumulation, because effectively anything that's levered, and this is also exacerbating some of the volatility given that it's a lot of retail, anything that's”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  7. “Around 34 and a half million. So we've clearly seen a very large increase in the number of accounts. I think that May may have been the second largest monthly edition of accounts on record. So that tells you that there's been a lot of activity, a lot of accounts being added. And so then the question is, what's the impact that that's generating? And so I think there are different ways to look at it, but obviously I think there's one aspect of if you Robin Hood publishes actually most of the online brokers publish the most active shares by their community. And so if you look at the most active shares in the retail community, that basket is up 23%.”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  8. “I'd also just like to thank there are lots of people within the Global Markets Division who do work on this. And I think Scott Rubner in equities and John Marshall and I research division has written a lot of that. And if any listeners have any further questions, they can reach out to me or them. And I'm sure there's a lot more granular detail that we have. So look, we have seen a resurgence in retail activity given most people are working from home. And this period has been compared to textiles in 1999, to the China A shares in 2014 to Bitcoin in 2017. And so I think the one thing that we can track. So I think it's difficult to track how many users Robin Hood has attracted because I think they've clearly been a platform that's been geared more towards the younger audience and retail day traders. But if you look at Ameritrade, Swab, E-Trade, Interactive Brokers, they have added, I think, four and a half million accounts year to date. And so now accounts are”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  9. “Which tells you there's more uncertainty, the market is basically saying there's no change in any policy. And so we're seeing a lot of clients put on baskets around potential changes in policy, tax rates or focus on any potential new government. And so both in research and Snyder has put out a lot of research on that or in our equities division at Gelber. So there are a lot of baskets and thematic trades that we're seeing. And I think I would say the high tax versus low tax baskets, so the ones that we're seeing most traction with.”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  10. “That trade. And so you can see that November is pricing much higher volatility than either October or December. But I think then the most interesting point, and this is a lot of activity, the most interesting point is that then when you look at potential changes and policies, and I think a good one is tax policy. So we have our securities division, our global markets division has basically put together baskets that looks at high tax companies and low tax companies from pre- the 2016 election. And high-tax companies went from a 32% average tax rate to a 20%. And low tax companies went from 18 to 21%. And what you saw is you saw a 20% outperformance of high tax rate to low tax rate. So basically the election repriced the high tax rate, even though tax rate has been cut. And that basket has barely moved in the last three months. So although you're seeing betting markets changing odds, and although you're seeing higher probability of a large move,”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  11. “Yeah, again, that's been high on our investors' priorities and things that are looking at. So I would start saying that I have no view on the outcome of the elections, but I think that the two most pertinent observations are, one of them is obviously if you look at bedding markets, they've clearly shifted odds over the last two months. So I think that you're definitely seeing a shift in sentiment and potential outcomes for the elections. But then I think also something that most people on this podcast probably can't observe is if you look at how much risk is being priced in for that one day, in the options market, you actually can back out how much the market is expected to move on the election. And I can say that the amount of move is now around 3% from 2%. And again, it's a very noisy time series, but clearly the market is pricing in a lot more risk over the election now than they did six months ago or 12 months ago. I think that's partially due to the shifted odds. And you can see the same in the VIX where the VIX has futures contracts.”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  12. “So before COVID, if you can imagine back that far, there was a ton of focus on the U.S. election. Now that the monetary and fiscal responsive have come in and things have stabilized a little bit, the elections back in focus, how do you think the U.S. election is factoring into in the views of market participants?”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  13. “Getting tighter than they were pre crisis. Equities may be the best place to put money. And so I think there's a lot of questions over what are the flows going to be of kind of balanced bond equity funds? Are they going to position themselves more towards equity? So I just think that you've seen a slight contraction of liquidity. So if you look at like top of book depth for, let's say, futures, there's much less liquidity now than there was in the past three, four years. And so I think that you're seeing moves exacerbated given slightly less liquidity. And basically most investors I speak to think equities are expensive, but maybe relative to bonds. They're less expensive.”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  14. “The low in March, we have clearly seen a very, very strong snapbock in all risk assets. And I'll say that mainly is from the fact that the Federal Reserve and the other central banks around the world have been extremely proactive in how they've responded to the crisis. And I also think on the fiscal side, there's been upside surprises from more cooperation in Europe and the stimulus paycheck support packages that you saw in the US. So I think all that, basically what it means is during that period of high volatility, you saw lots of money going into corporate bond funds and money market funds. Now the Fed has basically told us you should price out any sort of rate hike for the next two to three years. And I think then the question is, although equities are generally riskier given their higher volatility, it clearly given the slightly better data that you're seeing and the fact that it looks now more to be a V-shaped recovery in a zero interest rate world and where IG corporate credits are not sure.”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  15. “Okay, sure. I mean, I can just give a quick narrative and kind of where we are now, because I think the biggest question is, why are equities where they are? And so I think that's a question that we keep getting. And I would say it's maybe not the most hated rally that I've seen, but I think that a lot of people scratching their heads. And I think hopefully we can get into retail participation later on, because I think that's, I think that may be part of the culprit, although it probably is much smaller than people expect. So look, I think what happened is we saw massive increased volatility in March around the coronavirus. I think there was clearly a lot of uncertainty around what it would mean, what sort of recovery will we get. And so you clearly saw forced liquidation in certain parts of the market. And then I also think you had a very large uncertainty around the type of policy response we're going to get, both fiscal and monetarily, and then also in terms of regionally, like where will you get the response and how aggressive will they be? I think...”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT

  16. “Thanks. So I joined the firm as an analyst in 1998, and I've done various roles across equities since then, both in our investing businesses and our trading businesses, and then most recently I'm COO of Equities. And also most of my experience is from Europe where I spent the first 20 years in Europe and I moved to New York City a year ago.”

    2020-06-18 · Goldman Sachs Exchanges · Markets Update: The Rise of the Retail Investor · IDENTIFIED FROM THE TRANSCRIPT