The Derivative - TIPS, Options & Rates. Increased Volatility environments with Nancy Davis

Episode Date: June 23, 2022

This week's guest may be new to Twitter (@nancy__davis), but she's certainly not new to the wide world of volatility in all its wonderous “fruit” forms, including of course rates and fixed income volatility. In this Derivative episode, Jeff sits down with one of the "100 Most Influential Women in U.S. Finance," Nancy Davis. Nancy, who started her career at Goldman Sachs, is the founder of Quadratic Capital, portfolio manager for the IVOL and BNDD ETFs, and a frequent finance commentator on Bloomberg and CNBC. In this engaging chat, Nancy is talking TIPS (inflation, duration exposure, plus real yields, and yield curve control), debit card vs credit card investing, why most bond investors are short mortgage calls, the purpose of IVOL, the day-to-day of running an ETF (the Vanguard of Convexity), a mother's love for options, what it takes to make it as a female in finance, why having a P&L is the key to meritocracy, and much more. Plus, we're playing two truths and a lie where we find out if she has a strong poker face or if that's just a reference to her doppelganger — SEND IT! Chapters: 00:00-01:29 = Intro 01:30-20:26 = Everything TIPS: a single inflation index, duration exposure, real yields & yield curve control 20:27-30:56 = Debit Card Investing: Risk Management budgets & Orders of Operation 30:57-47:31 = The Purpose of IVOL, Mortgage rates & Bond portfolios, & Rate Risk vs Spread risk 47:32-55:13 = Running an ETF: The Vanguard of Convexity 55:14-01:04:58 = Goldman’s not a Squid, A mothers love for Options & What it takes to make it 01:04:59-01:12:17 = Two Truths & a Lie: Gaga edition Follow Nancy on Twitter @nancy__davis and for more information on Quadratic Capital visit quadraticllc.com Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2, or LinkedIn , and Facebook, and sign-up for our blog digest. Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Welcome to The Derivative by RCM Alternatives, where we dive into what makes alternative investments go, analyze the strategies of unique hedge fund managers, and chat with interesting guests from across the investment world. Happy Thursday, everyone. I'm out in Napa meeting some clients and tasting some wine, but the show must go on. So we're recording a couple of good guests in the coming weeks, with a trend following crypto trader next week to sort through the carnage in that space, followed by some energy folks who will dish on just how high gas prices can go. Today's episode was a lot of fun, where we get to chat with Nancy Davis about

all things volatility and inflation, rates and spreads, what it's like to run an ETF, and debit versus credit card investing. Nancy's the founder of Quadratic Capital and manager of the iVol ETF with its unique way to approach fixed income and inflation. Come for the Vol talk, stay for the real talk about raising a family and needing a P&L for meritocracy. Send it. This episode is brought to you by RCM's VIX and volatility specialists and its managed futures group. We've been helping investors access volatility traders for years and can help you make sense of this volatile space. Check out the newly updated VIX and all white paper at rcmalt.com under the education menu, then white papers link. And now back to the show. Hello, we're here with Nancy Davis of the Ahsoka Avatar on our Jedi Evolve infographic. Welcome, Nancy.

Thanks for having me. Thanks for being here. Did you get your poster? I think we sent it out. Yeah, thank you so much. Are you a Star Wars fan or no? Oh, yeah. I think we sent it out. Yeah. Thank you so much. Are you a Star Wars fan or no? Oh, yeah.

Yeah. No, the whole my entire quadratic team. We all went to the premiere of Star Wars in Port Chester, which is right by our office in Greenwich, Connecticut. And we all dressed up, me included. Were you Ahsoka? Did I nail the avatar or no? No, I was not Ahsoka. No, nobody wants to be Ahsoka but it's okay I'll take it

who uh I gotta know now who you dressed up as well of course Princess Leia like that's and you had your hair going I'm a child of the 80s yeah I got a lot of hair so it works perfect in the the braided buns I love it um and have you been watching the OB1 series with little, little child Leia? No, I haven't. I don't have little children, so. No, it's an, it's adult content, but they, uh, part of it is about Leia as a child. Anyway, I haven't seen that yet. Um, so I want to just jump right in and talk about tips. I think I've been doing alts too long that I really don't get tips. So if we can just start and explain it to me like I'm five, what tips do, what they're

supposed to be doing, how you think about them. Start from there. So maybe just to give a brief history lesson, a lot of people look at like what happened in the 70s for, you know, what do they do now with all this realized inflation? Like, where do they go? What do they look at? And I think the big thing I'd keep in mind is TIPS didn't exist then. The TIPS market wasn't created until the late 90s. It was 1997 when the Treasury issued, they're called TIPS because they're Treasury Inflation Protected Securities, just an acronym for type of Treasury bond issued by the U.S. Treasury. And they didn't exist in the 70s. So I think a lot of people look at oil or gold or equities or real estate and say, oh, this is a great inflation hedge. They can't look at TIPS

because there's no data. And personally, I don't think tips are really going to work in an inflationary period because they're bonds, right? So because they're bonds, all tips have duration exposure. So whether it's a short dated tip or a long dated tip, it doesn't really matter. They still will lose money when real yields go higher based on their duration. And so I feel like short duration is a bit of a, you know, we've been in a period of very low interest rates for a very long time since the financial crisis. And I feel like people just need to be aware that short duration, it's almost like a fake name, you know, it's almost like a fake name you know it's not short anything it's just less long right you know it's still shorter duration shorter it's it's still long duration it's just less long um it's

not short anything like to me short means it does well it makes money when the thing goes down whatever that thing is and that's not the case with short duration. It's still and it's especially true with all the the Fed going from like think about it today is it's June 2022. Literally a year ago, before the June FOMC meeting, the Fed was not even remember the whole like not even thinking about thinking about raising rates like, whoa, what a what a crazy year it's been, right? We've gone from not even thinking about thinking about raising rates to having 150 basis points of actual policy hikes, plus another 190 expected in the next five months. So the other big problem with tips, which now that you got me on a roll, other big problem with tips is tips only reference one index. So I think the best comparison just to set the stage is like, if you are a, say an equity investor in the US markets, you would never buy, you know, the Dow Jones index or the Russell index

or the NASDAQ and say, ta-da, I have U.S. equities. There are actually more ETFs than stocks. So it should be a lot easier to measure the stock market than it is the ETF market. And the only way that tips are reset is with one index, which is the Consumer Price Index. And the consumer price index is a third of it. If you, you know, you can Google it, go to the Bureau of Labor Statistics. They're the ones who calculate the index and the BLS, a third of CPI is what they call

shelter, which is actually owner occupied rent. So it's just not, I think, a sufficient way to think like even the Fed doesn't use CPI as much as they use other indices. So it's just, it's really important to say like, tips are okay, but we really haven't had runaway inflation with the exception of now since they started. And there's nothing to look at in the 70s. So I don't, people don't really realize how much they're not going to work, in my opinion. And how does it work in practice that the, how does the CPI adjustment work? Their Fed or the Treasury just adds to your principal? So they reset the principal at the maturity. So you can have, like, if you have, let's take an extreme example, a 30 year, you can wait a lot of

time to get that principally reset, but they're set every semi-annually. So it's a, they're actually pretty complicated instruments because in the US, at least, this isn't the case in Canada, but in the U.S. they kick out actually shadow income, like phantom income. So you're supposed to pay taxes on the income that the CPI is generating. And so the nice thing about, no, I'm not a tax advisor, right? So I'm not allowed to give tax advice, but the nice thing about 40-act funds, which are mutual funds and ETFs are both 1940-act funds. The nice thing about 40-act funds is they, I would say clean the distribution. So the monthly distribution that you get from the ETF is sweet and easy,

comes on a 1099 into your brokerage statement. And so you don't have to do these estimated taxes. But it's a little weird. Say there was only one huge investor, had a hundred billion in tips and the treasury would have to basically print money, right? To get you your CPI adjustment. So it's like,

we're going to print more money to protect you against inflation seems counterintuitive um it seems weird and but in practice you're saying they'll that gets marked to market every year as the adjustment happens but then you get you get the actual adjustment at the end of the term of the of the security yeah um we can get into uh whether we should mark the market for taxes there. Yeah, it's, they're complicated instruments. I think, you know, a lot of, they are just treasuries, but they're not like, I think a lot of people don't understand tips. It's a pretty widely not understood market. And I think the other thing that people generally don't understand is that, you know, there are no tips and things like the Barclays Ag Index, right? Yeah. Just think about the ag is like a really,

really, really old index. It used to be the Lehman Ag. Before that, it had a different name than it was a Barclays Ag. Then it was a Bloomberg Barclays Ag. And now it's just the Bloomberg Ag. But the ag index, a lot of people own that or own managers that are benchmarked to that to get their core fixed income. But the problem with the ag is it has only nominal treasuries, meaning regular treasuries. It has no inflation protection in it at all. So, you know, if people only own the ag, they might not be as diversified in core fixed income as they might think. So you mentioned a lot of people don't understand. So what percent of investors who are worried about inflation and bought tips to protect them,

right? We don't know for sure, but just what's your guess of what percent of investors are actually happy with their tips purchases? Investors I'm talking to, they're like, these things are terrible. We've had inflation, I bought the tips and I'm down. So they didn't understand the bond component of it. You know, I think the most frustrating was probably the first quarter of 2021, when inflation expectations were actually ripping and tips were down, you know, pretty substantially because of their duration. Because we had, remember the, the 10 year, like ticked up a little bit to like 175 and tips lost money, like quite a bit of money, even though inflation expectations were increasing. So I think that's where I've all comes into play. We were up, you know, about 311 basis points in Q1, 2020, Q1, 21,

when tips by themselves were losing money. And that 400 basis points of outperformance was from the options component. And so I guess that's a good point. For tips, it's not that you're going to be plus 10 when the ag is down 10, almost impossible, right? It's going to be just a little incremental, potentially incremental better when there's an inflation print, when the CPI is higher.

Well, I think the thing about the ag is there's no tips in the ag. So it tends to be not related. I would say it's complimentary to the ag. Like the ag's fine, but the ag is not diversified or complete. So I think a lot of people are using TIPS or they're using the Ivol ETF to take that core ag portfolio and make it more diversified. So it's like it's like a ag needs a little tweak because it's just such an old index and the TIPS market is a new market. So I think a lot of people just don't realize that the ag doesn't have any inflation protection. Let me ask another way of how much inflation protection would I actually need to have like this year erase the entire bond loss? It couldn't be one-to-one coverage on the CPI. It'd have to be multiples of that, right?

Well, tips, you have to think of like nominal yields and then tips have real yields plus inflation. So generally right now, the Fed has been very aggressive with their forward guidance as well as their actual policy hikes. So inflation expectations have been decreasing. Real yields have been increasing this year. And that's everybody was talking about really negative real yields last year. But but tips have positive real yields to keep in mind that there's, you know, real yields is what matters for tips, not nominal yields. Um, so basically since they're bonds, you want lower real yields, just like in a regular bond, you want lower yields for higher prices. Or if you have a bond with credit risk, you want credit spreads, tighter yields, lower to do well.

If the bond, uh, like a, whether it's an investment grade or high yield bond. Did you ever think you were going to be this bond inflation person? Because your background was a little bit more of like cross asset and multiple assets, right? No, I'm glad you asked that question because when I started my career in the late 90s at Goldman Sachs, it was right when the U.S. Treasury invented the tips market. And so I'd say this has been actually a career-long passion of mine to be like, wow, that's so not going to work. To only use the CPI index, I think,

it doesn't make any sense to have so much of it be owner-occupied rent. A third is rent. And then tips are bonds, which are long duration. So I feel like it's actually really plays to my strengths well, because we're taking a product that people don't know it's broken because we haven't really had runaway inflation. They will know, backward looking. But because tips didn't exist in the 70s, people don't realize how only using CPI and having long duration is not necessarily the best thing.

Well, to me, it looks broken this year so far. Yeah. Well, it's interesting because we've had the rates market is very, it's all forward looking, like all markets are forward looking. So it's not what's priced in now, it's what does the market expect in the future, the same with the equity markets, the same with the credit markets, all markets work that way. And the interesting thing about the rates market is the rates market thinks the Fed hiking rates is going to slow inflation, right? The market is very much priced in for this. You know, the Fed might have retired the word transitory, but the rates market has not. The rates market believes the Fed's going to hike.

Let me just pull up my Bloomberg so I can see right now and quote it. We have, you know, over, like the Fed's only hiked 75 and then another 75. So 150 has been actual realized hikes, but the market is pricing in another 75, another 75, and then another 25 plus in the next five months before the end of 2022. So the rates market is really fully priced in these hikes and the rates market thinks the Fed hiking rates is going to slow inflation. And I think that's where the opportunity lies, because it's all about buying low, selling high, right? All investing and asset allocation and inflation, future inflation expectations are, let's talk in vol terms. So you're, because I know you have a lot of vol people.

The difference between implied and realized is massive. It's a huge difference between implied and realized. And that's because realized inflation is super high and future implied inflation expectations is much lower. Which is basically the market saying the Fed's going to do it. They're going to control it. Yeah. The market has a lot of conviction that the Fed hiking policy rates is going to control it. Yeah, the market has a lot of conviction that the Fed hiking policy rates is going to slow inflation. And to me, that's an opportunity because I don't see how the Fed hiking policy rates is going to make the geopolitical risks simmer down or create less supply side issues or fix the labor market shortage. It's really none of those. It's hitting the demand side, but it's not really going to impact the supply side. And what do you mean by

policy rates real quick? Oh, I mean, the Fed sets a policy rate. So that's the only thing, you know, you can look at Fed fund versus the market rate. Well, all central banks set policy rates, right? So the Fed or the ECB or the Bank of Japan, they set the policy rate, but the curve, the interest rate curve, just like a vol curve think it was the fall 2019. Do you remember the fall 2019, the repo market was exploding, right? Repo rates were like 6% overnight, even though policy rates from the Fed were extremely low. And my fellow long blonde haired Lael Brainard was coming out talking about yield curve control. But I think what she was really talking about was forward yield curve control, not like

Japan style, but more like what Australia ended up doing in the heights of the pandemic. They did front ended yield curve control because at the end of the day, the Fed only sets the policy rates, but the market sets the term structure of interest rates or the term premium is set by market participants. That's not set by central banks. And what are your thoughts on that they essentially set it by kind of telegraphing what they want to do and then the market follows suit, right? So they can, I guess that's a game of chickens a little bit. Like I can tell you what I think I'm going to do, move the curve, but it's just expectation-based, not policy-based. Well, it's often wrong.

I think that's really important to keep in mind. Let's just take Chairman Powell, for instance. In 2018, going into 2019, the rates market had priced in three hikes. Three hikes was expected in 2019. Then the December 18 meeting came out and Powell was getting these aggressive tweets. Let's call them that. Remember, hey, Jay, hey, Jay from a different he whose name shall not be said. But anyway, so he was getting all these aggressive tweets about, hey, Jay, hey, Jay. And Powell, instead of hiking rates three times in 2019, like what was expected in December 18, at the December meeting, he turned dovish suddenly, and he ended up cutting rates three times.

And there was no inflation, no pandemic, no election, like literally nothing was going on. So I think it's very important for the market to keep in mind that a lot of this is theatrics, right? A lot of this forward guidance is convincing people that you're credible. And I think right now we're at peak credibility because the market believes the Fed's going to hike. I see over 180 basis points, about 185 basis points of additional hikes priced in in the next five months with midterms. Think about that. It's more than what they've already hiked. They've hiked 175. Which people are like, it's the end of the world. They've hiked 175. And they're going to do more than that.

More than the amount of hikes they've already priced in, the market's pricing in literally before the end of 2022. I have a graph for this that I just drew. I can't see that. Can you see the little squiggly lines, right? If you've seen those online, like there's the 30 years of rates and these were the expectations always, right? They were like, just kept the expectations. Always rates are going up, rates are going up, rates are going up. And guess what? For 30 years, they never did.

So I can't see that graph. Maybe we need to edit it and get a better one. Yeah, I'll find the actual one somewhere and put it in the show but it was just grabbing like the actual movement of rates versus the expectations which were always sloping up and we we know that it was not always sloping up yeah switching gears a little bit uh i got my header here, vol metaphors. So my friend Jason Buck over at Mutiny Funds has been known to borrow your line calling options debit card investing. So talk a little bit what you mean about that. I love it. Well, dig into that a little.

Yeah, sure. So derivatives generally have a really bad reputation for a really good reason. Right. They are, I think Warren Buffett and I think it was O2 called them financial weapons of mass destruction. And I think the problem with options is they get, they get lumped into derivatives are like, you know, it's like fruit, right? There are a lot of different types of derivatives, just like there are a lot of different types of fruit. You wouldn't say, oh, this apple is just like this banana, right? They're both fruit, but they're pretty different. And so most of the universe, especially in fixed income uses linear derivatives. So these are sometimes called one delta derivatives. Derivatives, all it means is they go up a dollar, they go down a dollar.

So like futures, up a dollar, down a dollar. Swaps, up a dollar, down a dollar. Forwards, up a dollar, down a dollar. All linear derivatives. And the problem with linear derivatives is funding, right? It's all like a credit card where you spend a little bit, you put up a little initial margin, you might have some variation margin, but you get to buy something or sell something more than what you put up for, right? So it's leverage. It's like call a spade a spade. All derivatives that are linear derivatives are levered vehicles and they can have funding obligations at any point in time. Like the exchange can have intraday margin calls. You can have counterparties have margin calls. Like think about every, every single big blow up that I can think of in my career, starting with long-term capital in the late nineties has been funding. It's all linear

derivatives. So the problem with those is it's like a credit card where you don't really pay for something or, you know, have the capital to cover the short, but you get exposure to more than you pay for. So I think of it like a credit card where you're paying, you know, maybe you're paying, you know, whatever, 10% or 6%, but you have a lot more exposure. Options depends on how you use them, right? So options are non-one delta. So they're asymmetric products, meaning they have deltas less than one. So option delta, very simply, it can be zero or it can be one. If it's one, it's completely in the money and at expiration.

And anything less than one, you know, the further out of the money you go, the lower your delta is. So like a wingy option, sometimes they're called teenies, like, you know, teenagers, I guess, little, little Delta options. Like those are really, really high or low strike options, very far away from whatever, you know, whatever the market is. And it could be oil, or it could be gold, or it could be interest rates, or I know the VIX gets a lot of love, because, you know, it's easy to see, but there are a lot of different volatility markets, and anything that has an options market has a vol market. And so the thing that I really like with long options, and it's not the case, selling options is a different story. I'm not talking about selling options. But if you buy an option, I think of it like a debit card because you can never, you know, you, you stop loss of position,

right? You, there's never going to be a funding obligation above and beyond what you pay for the option. And you have the asymmetric payout, which is not, it's not, I'd say it's financial leverage, but it's not borrowing money leverage. So the nice thing about it is, especially in an ETF, you don't have, you know, the ETF, you have every 15 seconds, the NAB prints, right? You have intraday liquidity. And so if you have a big market move with linear derivatives, you might need to sell, you know, quickly whatever the fund owns to raise cash to meet those margin calls. With a linear derivative, you always have that risk. And linear derivatives are all over the place

in fixed income, like everywhere. It's actually astonishing to me that some of these ETFs and mutual funds can have these very G-rated names and investment objectives, like saying, you know, we're principle protected or principle protected and, you know, income focused. But a lot of them have a lot of structured credit and linear derivatives inside of them that can have a funding obligation at any time. So it's just really important if you're to know what you own, and to understand not just in name only, right? You can't just look at a strategy and say, oh, it's a short duration fund. It's like a money market. You know, there is there's a huge spectrum of things that can be in short duration, you can have all governments, which is, you know,

can lose money, I think about how much the Fed moved their rate hike expectations. There's nothing in the world of investing that doesn't involve risk. Everything is risky. It's just understanding what those risks are and creating a portfolio with different risks so everything doesn't look exactly the same. So if I want to go on that Hawaiian vacation, it's $50,000. I only have $5,000, right? I can go on my credit card, but eventually that bill's going to come due. And you're saying, no, I'm only going if it's a $5,000, the options, right? The options are like,

nope, I'm only paying my 5,000. That's all I've got. And if I lose that, so be it, but I'm not, I'm not going to risk that $4,500 additional or that $45,000 additional. I think of it as stop lossing to me. It's like, when you use fully funded options, you can, you can, I think the whole, especially in the macro community, like everybody, CTAs, whatever macro funds, they all talk about tight stop losses and stop losses for risk management. To me, it's all kind of backward stuff because think about like, let's just break down for a second. Like what does a stop loss mean? It means, you know, first that fund manager loses your money, right? That happens first. First they lose your money.

Then only after they've lost their money, your money, do they start to manage the risk of the portfolio. And they do that by covering the things that they like to short. They're buying them back higher. And the things that they like to own, they're selling them lower, right? It's really a negative gamma strategy. So I have a big bone or beef, I guess is the right word, a beef with CTAs who use linear derivatives. Most of them use futures and they say they're long vol. I'm like, I don't know. You're trying

to replicate options, but you're really short gamma because when your risk management comes in, especially if they're big jumps and it's not a trend, it's a surprise. The CTA is really buying high and selling low because of their risk management. So I'm not saying what we do is better, right? I'm not like some elitist and saying that's stupid. It doesn't make any sense. That's worked for, you know, those strategies have been around really since the eighties. I just think there are other ways to think about risk management. And that's why I like using long options to stop loss when you set the investment, right? I always know with our options what we can lose. I think of it as like debit cards because there's never an obligation on the fund above what we spend and

the mark to market is every single day. And how do you, do you have a budget? Hey, we're going to spend X percent of the right on just this debit card investing to, to provide our hedges. So we have a lot of, I'd say risk management budgets. We have, you know, internal, well, those are all, you know, proprietary about the OTC Greek risk management, like how much gamma we want, how much, you know, role risk management, like how much gamma we want, how much role we want, how much time decay we want, how much theta, how much vega. And all of that changes because it's an actively managed strategy. But in our prospectus, you can see that the premium limit, the market value of the options.

And again, the options, anybody can come into the fund, right? You can buy it this morning, you can sell it this afternoon. We have no idea who's coming in. It's not like a private fund where you say, all right, this capital is locked up for a year, right? You always have to have the mark to market. And so we typically manage our options to have a market value under 15% of the overall funds now. But in our prospectus, you can see that we say that we have at least 80% of the fund in treasuries or cash. So we don't always have to be at that limit. That's also allowing for, you know, with long options, you can have ball spikes. So the mark to market can go up very quickly because it's asymmetric,

right? That's the point's asymmetric, right? That's the point of owning them, right? Yeah, that's the whole point of owning them. And so our risk management is all about profit taking, right? It's all about when the options make money, we then roll our strikes or sell some of the existing positions to reduce the risk. So I think of it as like, you know, I think that's, to me, it makes a lot more sense to risk manage the profits rather than stop loss losses. Like, I think, I think the whole, you know, it's like a math equation. Remember in school, you were learning like the order of operation. Like, what do you do? You see the equation, the teacher tries to trick you.

They put addition first and division later, multiplication later in the equation. You have to know the order of operation. And to me, the whole macro community all uses the same order of operation, which is they say it's long ball, but it's really short gamma. So that's the, you know, yes, maybe over the trend, it replicates options, but it really is reliant on A, market liquidity being there to implement stop losses, B, not having jump moves, C, the whole strategy is buying high, selling low when they do risk management. Whereas for us, we stop loss with the debit card,

like having our defined downside and then risk managing when we make money. This is just different. So talk a little bit about why you're buying these options and what the purpose is inside of iVol. So going back to when the treasury created the tips market in the late 90s. We're trying to fix those two issues. And just to reiterate what the two issues are, the one issue is the only way tips get reset is one single index, which is the consumer price index. So we're trying to capture inflation expectations in the future, not measured by CPI. So we have this core treasury portfolio, like the fund is a inflation protected bond, it owns at least 80% in treasuries or cash, then the options are trying to get exposure to another measure of inflation expectations, and also solve the issue of tips being bonds and

having duration, like even short duration has duration. So instead of, you know, think about being less long duration, you're still guaranteed to lose money if real yields go higher, right? You're just going to lose less money. So our goal is to actually profit from higher long term rates, or lower front term rates. And that that's kind of cool because it's not just an inflation strategy. It's also a pretty unique potential risk-off. Like if you look at March 2020, just to pick a date, that was a very risk-off time with the pandemic and tips lost money, right? Because tips are inflation, right? Tips capture, you know, when you have periods of risk off, tips will go down because like remember oil is trading negative, break

evens fall and there's no, inflation is a really risk on asset costs. Like there, it's not like buying a stock where it can only go to zero. Inflation can actually go negative. You know, look at 2008 and the financial crisis, break evens, they can go to no zero bound. And we didn't cover that before real quick. So they're going to adjust the treasury either way, positive CPI and negative CPI. Well, you're protected against deflation at maturity. Unlike in Canada, you actually have the deflation risk, but you still have to hold it for whatever the bond maturity is to get your principal back.

So you can have a lot of mark to market as you're waiting for that to happen. So Ivol has inflation in the name and it is tips, plus we try to solve the problem of another measure beyond CPI and how to actually profit if long dated yields go higher, instead of losing less money, we actually try to make money. And like first quarter of 2021, but it's also, I see it as a lower ball tips fund, because we can also benefit from lower front dated yields and a rise in fixed income volatility. And those things tend to happen when people want bonds in their portfolio, right? When you want your bonds is when your equities is losing money, when your credit spreads are widening, when the portfolio is kind of in a

tough time, like March, 2020, you can see a lot of short duration fixed income lost substantial amounts of money in March 2020. And that's because they have a lot of credit spread risk, right? So when equities sell off, credit spreads widen. When equities sell off and the markets are in risk off, typically inflation expectations will fall because bad stuff is happening. So I-Vol is also long vol, right? So we can benefit from an increase in implied volatility. And then we also have a way to benefit from lower Fed hike expectations, which is the way to say it today. Back then you would say negative yields, negative policy rates, because there is no zero. So it's really a spread trade. So we either want lower front dated yields and that's less Fed hikes in today's environment, which I think is a nice,

you know, I think it's a nice fade the Fed trade because I don't know if the Fed's going to hike an additional, you know, 190 basis points by the end of the year, in addition to the 150 that they've already hiked. But it seems pretty asymmetric that that's already built in and you can benefit from less fed hikes or higher long-term rates. And I think that's kind of cool. Seems for sure they're not going to do 390 or something. Who knows?

It's definitely, it's been a wild year. If you think about a year ago, we were not even thinking about thinking about raising rates and here we are. And so the options, it seems it's a steepener trade, right? So you're betting on those options that the curve's going to steepen, that either the short end's going to go down or the long end's going to go up. Yeah. Sometimes I think it's, you can call it, some people call it steepener, but I feel like that sounds, you know, a lot of people don't understand what that means. So I think of it, like if you think about buying a bond with credit risk, right? Any investment grade, high yield, what do you want? You want the credit spread tighter and yields lower, right? That's

what you want with any kind of any type of bond with corporate credit risk, levered loans, high yield investment grade, credit spreads tighter, yields lower. For us, we have tips. So we want real yields lower. And then we want the spread between short and long dated rates to widen, right? We want a widening of the spread. And I think that might be, you know, it's really a different strategy. It's not something, it's not another me too strategy where everybody else is doing this. I think it's always helpful to compare it to stuff that people know. It's like if we didn't have the internet and you've never been to Africa and I say to you,

what's a giraffe? You wouldn't really be able to describe it without comparing it to other things that people are more familiar with like oh it has spots and it's kind of big like an elephant and i don't know what we'd compared well i've been to the science and industry museum or the uh the field museum in chicago i'm always like this well how does this thing still exist because of the internet right they have like stuffed models of all these animals but back in the day that's how you had to go learn about so i feel like people don't really people can compare it better when they're like all right i get it if i own credit i'm making a spread

bet that spreads are going to tighten for us we're making a spread bet too that spreads are going to widen and it doesn't really matter. It's not corporate spread risk, right? It's not. And that's a big thing that people need to keep in mind, especially with inflation running really hot. And, you know, companies having like, if we have a stagflationary environment, right? Like look at the start of 2022, we've had bonds sell off, credit spreads widen, equities sell off. So if you have a portfolio of stocks and bonds, but you have a lot of credit spread risk, even if you have a lot of short duration funds, most of them are taking mostly credit spread risk. And corporates

have a rough go, whether it's higher labor costs or consumer confidence is in the toilet, less consumers buying or supply side disruptions or whatever that makes that corporate not able to meet their multiple that's priced in the future, you're gonna have credit spreads widen and equity sell off together. And so a lot of people, it's funny

because I feel people are always like, how do we size Ivol? And the people that have Ivol bigger in their portfolios are the ones who are just like, we don't want credit. We want another type of spread trade to get return and a potential enhanced monthly distribution above governments. But we don't want to take more credit spread risk. We'd rather take that corporate beta and equities, get rid of our credit and mortgages, especially mortgages with the Fed reducing their balance sheet and have this as another type of spread trade. And you mentioned mortgages. I've heard you talk before, which I like, which is the flip side of

debit card investing, right? That these mortgage investors, mortgage-backed securities or however you're investing in them, they're selling the call option, right? So they're short options. So that got me thinking, now that mortgage rates are up though, no one with a 3% 30-year is going to prepay or roll out of that, right? It's almost like free money at this point. So how do you think about that of eventually the rates get to a point where they're not as short the option, right? It locks in the optionality there a little bit.'re not as short the option, right? Like it locks in

the optionality there a little bit. Yeah. I think that's one thing, you know, the VIX gets a lot of attention and people focus a lot on equity of all, but that's the thing I try to really educate people that like any place in your bond portfolio that you have the ag, ag is a third mortgages. Any place you have an actively managed manager benchmark to the ag, they're probably going to have mortgages. And there's structured credit, which is levered mortgages all inside these short duration, not all ETFs and mutual funds, but a lot of the ones that have short duration, they take spread risk, right?

There's only two types of bond risk. There's rate risk and there's spread risk. And spread risk includes credit spread risk, interest rate spread risk, agency spread risk. There's rate risk and there's spread risk. And spread risk includes credit spread risk, interest rate spread risk, agency spread risk. And with mortgages, just think about like an option. The homeowner in the US is long the option to prepay. If you own the financial mortgage, you're short options to homeowners. And whenever you're short options, you're short ball. So actually most people are short fixed income volatility in their bond portfolio. And they don't, I feel like I want to be like, don't you remember the financial

crisis? Cause that prepayment risk is a model thing. And since interest rates are higher and consumers are not prepaying as much prepayments are down and volatility is higher. So mortgages are short ball. It's model-driven vol in a single QSEP. So it's harder to unpackage. But I think of us as like, it's like a mirror image, right? Of what is a mortgage? A mortgage is an agency bond coupled with short options if you own it. Ivol is a treasury bond coupled with long options. So it's literally opposite. And so in this current environment, though, has the rate risk outpaced the credit risk? No, credit spreads have not really widened very much.

That's what I'm saying. The rates have gone way more than the credit spreads. Yeah. Credits widened a little bit, but we're not having, you know, you know, this is not like the 2008 right now where credit spreads are gapping out. This is more of just policy rates trying to fight inflation. And the rates market very much believes the Fed's going to hike and it's really priced for less future inflation. That's really the key thing. It's are forward-looking. And the rates market now, if you look at the breakeven curve, it's massively downward sloping. If you look at the swaps curve, it's actually fully inverted. The market thinks the Fed's going to hike and it's going to slow growth and create this disinflationary environment.

And why not try and... So you were saying there's two risks when you buy a bond, the credit risk and the rate risk. Why not try and protect? Spread risk generally. Spread risk can be credit spread risk, agency spread risk, in our case, interest rate spread risk. There are lots of different types of, again, spread risk is like fruit and there are a lot of different shades of spread risk, but most people have credit spread risk. I've always trying to consider the credit spread risk. Why not try and consider both the credit spread risk and the rate risk too expensive, like too pricey to put on.

I've all doesn't take any corporate credit spread risk, right? We have counterparty risks because we have OTC options, but we, we have interest rate spread risk. It's just, it's not, I'm not saying it's better. It's just different. It's not what everybody who has a bond portfolio that's not governments is taking either, you know, some type of spread risk and most of like 99% of the risk out there, whether it's private credit, direct lending, you know, it's corporate risk, right? Whether a company is private or public, it still has people costs and revenues and

profitability, hopefully, a lot of these companies don't, but it's all the same, you know, company risk. And so we don't take any corporate spread risk. We take interest rate spread risk. So it's just a different type of spread risk. So I'll rephrase. So why not also hedge against the rate risk? So you do a little bit, but not outright, right? We're not trying to hedge the rate risk. We're actually trying to profit when long dated yields go higher or profit when front dated yields go lower. So, Ivol has had less downside than TIPS alone, because TIPS, inflation's a risk on asset class, right? So, Ivol's, I think it's really cool, because it's not just an inflation, it's got inflation in the name, but it also has interest rate volatility, and it can also benefit from less Fed hikes. So, that can, you know, the funds only

got about a three-year track record. But if you look back over three years, you can see like March, 2020, we had positive performance when tips alone were down, you know, 150, 175 basis points for the same passive index. And even though 85% of our strategy was invested in tips, we had positive performance. And that's because of less lower front dated yields and an increase in vol. So it's kind of cool, because you can get the inflation's risk on, you can get that solve the problems with tips by themselves in a risk on inflationary environment, you can get the you know, what are bonds supposed to do, in my opinion, they're there to provide, you know, monthly distributions, and they're there to diversify equities, period. You know, we do that in a different way.

Instead of taking credit risk, we take interest rate spread risk. And that can benefit when equities sell off and credit spreads widen, especially when we have so many Fed hikes priced in. You can see this in, you know in 2022 periods that we've had really big equity down days. The market, the eyeball tends to be not always, but sometimes up those days. And that's because of rising volatility and also the market saying, oh, the Fed's not going to hike an additional 200 basis points going into the end of the year in addition to the 150 they've already hiked. So it's kind of cool because you get the equity risk off potential, you get the inflation. And then I think the really neat thing is the stagflationary risk. Like obviously,

eyeball tips, none of this stuff existed in the 70s, right? So people look at the 70s and they're like, what worked? And every model is backtesting, but the interest rate markets weren't really developed in the seventies. So you can't really look at anything like tips weren't even done it until the late nineties. But if you think about it, I think tips would outperform nominal treasuries. I think they would definitely outperform credit in a stagflationary environment. I think the curve would likely widen. It would probably first be from less Fed hikes, because if the market's pricing in a low growth, like we've already had

one negative GDP print in the US. If we have a low growth environment, maybe the Fed's going to be like, ooh, we got to use our balance sheet more to reduce the money supply and reduce the tightened policy that way to combat inflation instead of killing the economy, creating a recession and just hiking to hurt the demand side of the equation. So we can also and then also, I think, in a stagflationary environment, imagine if models suddenly make stocks and bonds less correlated. What if it goes to correlated, like hold on to your horses, right? Like all these risk parity models, yeah, risk parity all over the places that these public pension funds and institutional investors where they buy stocks and they buy government bonds, thinking they're going to diversify each other. What if that correlation in the model changes

and stocks and bonds actually become correlated and go down together like what we've seen this year? That should make fixed income volatility go a lot higher. So I think all three of those ways could potentially be good for us in a stagflationary environment. Switching topics. What's it like running an ETF? What's your day-to-day? Is it automated? I hear all these beeps on your Bloomberg. That's just my Bloomberg. So give us a little insight into what it's like, how big is your team? All that good stuff. Yeah. So it is very, we're running a 1940 act fund. So it is very straight through processing and systematic because think about it. Unlike a private, you know, private fund, like a hedge fund, for instance, has typically

monthly or quarterly subscriptions, redemptions, and then they only give the price of the fund once a day, right? For us, our NAV is ticking every 15 seconds. There's a bid offer always in the ETF. People can come and go. There's no lockups, no liquidity, no incentive fee, no sending your passport and all your KYI to the Cayman Islands. You just buy it. It trades on exchange. So it definitely has to be very, very institutional in terms of the infrastructure and the state through processing, because you have to handle that liquidity. It's great for investors, right? No incentive fee,

full liquidity. It's an active ETF. So you can always see what the portfolio owns. So I think of it as like an SMA, people like that. So they can see what the manager is doing. I feel like we have the transparency of an SMA. We have the liquidity of a treasury fund, a bond fund. So investors can come and go based on their capital needs. And then we also have no incentive fees. So I think it's really good for clients and it's been a lot of fun. And so do you sometimes wish you'd stick with the private fund or no?

For all the reasons you just listed and had that incentive fee? No, I feel very, very good about giving a long convexity bond fund to investors. I sleep well at night. It's, it's been, I feel like being, I've been an entrepreneur for almost 10 years, right? I worked at Goldman for about 10 years, and then a couple other, you know, places in between. And I was actually a stay athome mom for three and a half years, which I'm proud of. But I've been running my own business for about a decade. And I feel like the nice thing about being an entrepreneur is you can really try to solve problems for people and innovate. Nobody had done this before. Nobody had thought of this. It was really taking an idea that is, I think, a solution for investors and giving them some of the, we have actually a lot of Australian investors and they, I love this nickname. It's awesome.

They call us the quadratic, my firm, the vanguard of convexity because we're the low cost provider of positive convexity and like long only options, right? If we're always long options, like the debit card, going back to that, like, why would you charge an incentive fee if you're long only? So I feel really good about what we're doing by giving access to this market, doing it in a way that's very, you know, fee, you know, it's cheap fees for what it is. It's an actively managed portfolio with real-time great risk management. And the access is a market that most people are only short because of their mortgage exposure. Do you sometimes wish you knew the clients better, right? Do you see like big

flows out and like, oh, if I could have only talked to them and explain what happened yesterday or something like that? The nice thing is, is people can come and go. It's like, if people want to get to know us, there's no, you know, call my phone, send us an email, like we're here, we're accessible. But some people don't want to talk to the portfolio manager, they want to make their own decisions, they want to come and go when they want, they don't want to be, you know, coming to me and explaining why they're redeeming to buy some, you know, make some capital call to some private equity fund they, you know, invested in five years ago and need money for, you know, it's like, it's kind of nice because I think it gives clients a lot of freedom. You know,

they are welcome to talk to us and we are welcome, you know, happy to have relationships. And we have a lot of great relationships with clients, but they don't have to come and, you know, send us a fax to the Cayman Islands to get their money back and then wait for the audit to get their audit callback back. They can just take their money, buy and sell whenever they want. And I think that freedom is something that I think is really, really important for institutional portfolios too, because so much of like, take an insurance company. If you had an insurance company's general account, like 70% of these portfolios are privates, right? Whether it's private equity, direct lending, private credit, it's all this view that having a illiquidity premium gives you more return.

But just like anything else, you want a portfolio to be diversified. And liquidity, I think, is something that institutional portfolios haven't really thought about diversifying because we haven't had this liquidity need within private. Money's been flowing. There's been too much money. I get emails every day being like, do you want a business loan? You know, it's like, I get like three of them a day from different private direct lending firms. Like that market is so frothy in my, it's just like, same thing as 08, instead of getting letters in the mail to say, Hey, do you want a home loan?

You know, no questions asked. Now I'm getting, Hey, do you want a home loan? No questions asked. Now I'm getting, hey, do you want a business loan? No question asked. It's the same access. And I feel like everybody looks at private credit as this magic unicorn, non-correlated strategy. And I want to grab them and be like, it's not different. You're investing in a company, whatever they do, whether it's, you know, whatever it is, it has costs, it has revenue, and it has profit. It's all the same economics. And there's nothing magical about that asset class. You just don't really see how much it moves. And so I think I'm very excited about giving a non-correlated strategy in a liquid wrapper, because I think because so much of the portfolios

have gone private, there's actually going to be a lot more volatility in the public markets, because the public markets are the only place that you can get liquidity. Since so much capital is tied up in these illiquid assets, especially the ones that have capital calls. So example, March 2020, when the bond ETFs were, everyone was worried they were dislocating, but they were just providing liquidity, right? Yeah. The only thing that's trading, the treasury market was completely broken. And the treasury market is supposed to be one of the world's most liquid markets. Like private credit, just in the month of March, most private credit strategies lost 25%. And they weren't really fully marked to market.

It was just snapshot here, snapshot there. So it's not some non-correlated strategy. It's the same investing in businesses, investing in companies, investing in... It's the same thing to me. But these institutional investors have so much allocation to privates that I think it'll make public markets much more volatile. And in a weird way, I think it'll feed on itself for allocators to say, oh, privates are such a great place to be because they're low vol, because it's not marked.

So you mentioned Goldman. What's your take? take vampire squid or great place or somewhere in between I love Goldman I had a this is my amazing experience there awesome yeah I've had a few Goldman people on and I love asking this right because the perception out there is kind of like they'll steal your children and cut your throat no, I had both my children when I was working at Goldman. So two pregnancies, two births, two maternity leaves. I was very fortunate, I think, to be, I spent most of my time on, it used to be called the risk arbitrage desk. It was later called the principal strategies group, but it was essentially Goldman's prop business. So I didn't have any, like no, no external clients, no salespeople. Like it was a very much like very nuclear group. And so I think I was very fortunate to be on such a great team. And I look, I've definitely heard, you know, no firm is

perfect, right? At the end of the day, it's's all what is your team? Who are the people that you work with? But for me, I had an amazing experience at Goldman. I only left because I was recruited by the world's largest hedge fund at the time. It was J.P. Morgan's hedge fund. And I remember, you know, telling, telling the founder, like, I'm not interested. I I'm very happy. I've been running the desk at Goldman. I was the head of credit driven OTC trading for over five years at the firm. I was like, I'm not interested in leaving. And he leaned over, like, he got really close to me at, we were at the fourth season. He leaned over, he looked me in the eyes and he's like, what in your life could be better? And I said, well, I really love to see my kids

more. And he said, where do you live? And I said, Greenwich. And he's like, we will open a Greenwich office for you. You can work four days a week. And I was like, whoa, okay. I'm like, that's a, you know, I never worked four days a week there. I, I did, you know, but I did take, you know, I did schedule doctor's appointments for my kids and my kids were babies. Like they were literally, neither of them were in school. They were, I had like a super, super baby and then a toddler. And so it was, I think a nice step for me to realize that I really wanted to be home with my kids in that zero to three period and make the investment in them. So I think in a weird way, having that baby step was like, what gave me

a lot of confidence to say, you know, I really want to be a stay at home mom. I don't want to be a stay at home mom forever. I love investing. And the funny thing is I actually, I think you really find out what you love when you are not working and it's not a job anymore. Because I used to drop my kids off at preschool when they got a little older. I would go to the Greenwich Library where they had two Bloomberg terminals that were free. And I would invest. I would trade. I did a lot of secondary market trading of structured products.

So breaking out zero coupon bonds with the various option components. But it was like, you kind of know, you're like, when I do this in my spare time for fun, and I'm not at, you know, I'm not playing pickleball or, you know, going shopping or whatever, whatever stay at home moms do. And they're like two and a half hours a day. I'm trading options because I love it. It's like, it was a really good, like, I actually like this. This wasn't some random thing that I fell into. It's something I do in my free time and I'm passionate about it. So I think it really helped me go down that entrepreneurial path to be like, I love what

I do and I don't want to use any linear derivatives. I hate linear derivatives, but that's weird being a derivative person because derivative people get bucketed as like, oh, you do all derivatives. I hate linear derivatives, but that's weird being a derivative person because derivative people get bucketed as like, oh, you do all derivatives. And I'm super not, I'm all asymmetry. I love options. That's it. That would have been a fun flex. Like you're walking in the stroller with the other moms, what'd you guys do this morning? Well, I was at the Bloomberg terminal doing some swaptions. I still have a lot of really good friends from my stay-at-home mom days. Because I was also like, you know, it was such a little dynamo.

So I was like doing all the PTA stuff and doing this committee, that committee. So I have a lot of friend moms who know what I did in my spare time. And they think it's awesome. You know, It's a great story. So what advice would you give for some young woman listening to this podcast of how did they get ahold in this male dominated industry? How do they, how did they, how'd you do it? What's your, what were your secrets?

Was it hard? No, I think, you you know in the finance industry you really want to be a revenue producer like i think that is i think a lot of women go into finance but then they find themselves in support roles like whether it's compliance or legal or operations things that don't make money that are costs um so very simply, I think the ultimate meritocracy is having a P&L, right? Having a number next to your name. It doesn't matter what you look like. It doesn't matter who you're friends with. It doesn't matter how you sound, where you're from. You know, you make money, you got something to show. And if you're a support, you know, you're a cost.

And so I think going, you know, being in the driver's seat, so to speak, where you have revenue that you're bringing in, and a number next to your name makes it the ultimate meritocracy, right? It's like, it's very, like the Goldman practice, it was either like, yeah, they don't care if you're from Mars, if you got a P&L, come on in. If you lost money, I remember one of my old colleagues colleagues we had a lot of japanese nationals on the prop desk when i first joined and i remember one day like walking watching some trader being escorted off the floor by one of the senior partners and i'm like what happened what happened you know i was like leaning over to be like what what is going on and he says i shouldn't do it in his

japanese accent he's like he's a professional trader. He lose money, he get fired. And so it was, it was kind of a zero one. Like if you did well, you got promoted and, you know, continued in your career. And if you sucked, you got fired and you found a new career. So it was kind of a very, very efficient market, I would say. And I love my time there. But I also wasn't on, you know, I wasn't dealing with the the bureaucracy of being, you know, I wasn't in sales ever. I wasn't on the sell side. It was a very, very, very good place to be. That begs the question again of like, how do I get a seat in order to have a P&L? Right. That's a whole nother conversation of like, well, it's not a meritocracy to try and get to that seat.

You feel that was like the school you came out of or intern program or just what? Well, I am like the proof is in the pudding that it doesn't really you know, there are a lot of different ways to get a seat because I didn't come from the school that Goldman recruited from. I didn't have, you know, I really earned it, I would say. I got in the door. But I think, you know, a lot of times people think they have to go to a certain, like I look at my friends who are going through the college process with their kids, and it's just like, they're going crazy about the name of the school. And I think it's really, what do you do when you're at the school? And also when you get to the job, a lot of these kids that I, you know, I hired plenty of kids from these great Ivy League schools, and they were like, born doing Excel, right? They're so easy to hire as employees because they're like plug and play, right? They're like, they know finance really, really well. But a lot of times it's also how do you handle failure and having that grit and that ability to say, you know, this is not working, let me change and do something else, right? So I think having that mindset of really being a growth mindset is super important for whatever you're,

you know, wherever you go to college, wherever you're coming out, making sure that you can take criticism and say, thank you. Be like, thank you for telling me. I always ask for feedback. I am not perfect. I screw up things all the time.

And I always want to know from people, what could I do better? And that helps me grow, right? It's not perfect. I screw up things all the time. And I always want to know from people, what could I do better? And that helps me grow, right? It's not criticism. It's helping me develop myself. And so I think having that mindset, whatever industry you're in, whatever job you go into, you know, be open when somebody tells you that you did something wrong, or you could have done something better, be open to it. Say, thank you. I really appreciate it. Tell me, you know, thank you for, for making me aware of this. I think it's, it's really more about not where you go to school, but being a learner. Cause a lot of people, I think when they come out of these, like they have perfect grades, they have the perfect schools on their resume. And then they're told on the trading desk, you know, the markets tell them you lost money

and they won't change, right? They don't have enough humility or enough ability. They think, oh, that's going to make me not smart. Or, oh, I'm not, you know, super great at math because I screwed up. You know, I didn't make money on this. So I think having that ability to grow is super important. I think that's, that's probably the number one thing I would tell people.

Yeah. And we see the prop firms here in Chicago, hire like online professional poker players and like things like they know how to think in real time and know how to pivot and be dynamic. Let's play a little game of two truths and a lie then we'll let you go tell me uh three things one of which is not true and i'll see if i can suss out what is what all right so um i love shoes especially jimmy chews and and you're a poet and you didn't know it yeah i love shoes especially jimmy chews okay okay um i have um been detained by Russian law enforcement. Whoa.

Okay. Recently. Can't say. Okay. Number three. I routinely get mistaken for Lady Gaga. In Greenwich. I could believe it. In Vegas. I would say mostly in Vegas.

You could use that to your advantage. I'm going to go with mistaken for Lady Gaga. True. Is that true? I got the nose. It's all in my nose. True. Hey, I wouldn't mind that. I'm going to go detained in Russia.

True. True. Then, right. The shoes and Jimmy Choo's was too cliche for a Greenwich hedge fund woman, right? Like, so. I actually hate shoes. I'm not, I'm not, I'm wearing a slippers, orthopedic slippers, by the way, they're not very sexy, but yeah, I'm not a

shoe person at all. I just, I don't get it. I don't understand the like love for, uh, heels in particular. I'm like, like flip flops and slippers. So I need the name of those orthopedic slippers. I've, I've had feet problems and I'm like, I can't, I can't walk around on the hardwood floors without some sort of foot protection. Yeah. These are awesome. They have a lot of arch support. What, who makes them? Um, let me see. My son actually brought them for me. It's called, um, ergo cool. Ergo cool. All right. They're a mother's Day present. This episode is brought to you by Ergo Cool. Awesome.

We'll let you go. And just because we were talking kids for a minute there, I took my daughter, my son to camp on Sunday and my daughter to camp today. This morning, we dropped her on the bus for three and a half weeks. I'm like, no, everyone thinks it's good. Oh, your kids are out of the house. I'm like, I'm going to miss them. Three and a half weeks is too long, right?

It'll go by fast. I don it's i don't know it's all good uh well thanks so much nancy this was fun um hopefully we go on a panel together sometime soon that we'll forget about in 10 years well it's really nice to see you again thank you so much for the opportunity and uh yeah it's uh keep fighting the good fight. Enjoy your your three weeks. Will do. And we'll put your links to get it all, you know, go through all the compliance channels to record it and, you know, do all the, it took a while to kind of get that all set up and then got the okay to, you know, so my first tweet was May 6th and it's been, it's been a learning experience. Like I'm, I'm learning all sorts of new words.

Like I now know what spaces are. I know what the nest is. I'm like, you know, I'm having all sorts of new words. Like I now know what spaces are. I know what the nest is. I'm like, I'm having a lot of fun with it. Um, so. It's fun. Uh, well, we enjoy it. What, give them your handle there. me they have davis with a i think it's a i a lowercase i and l i'm sorry i said i so mine is nancy double underscore davis d-a-v-i-s but the i you have to be careful for because there is someone in person with i think it's a l like a lowercase l it kind of looks like a i but they have it's kind of freaky they actually have my image and my face and they're like reaching out to people saying they're me. I actually changed my Twitter picture this weekend just because of the scammer. But I was super annoyed with Twitter because I keep, I've sent in my photo ID. I've

sent in a picture of my face next to my photo ID. I've submitted the form to say I have a scammer and I keep getting the same stupid automated message back from them saying, you know, we're unable to verify your identity. And I'm like, I've done everything you say. I've filled out the form. I've sent in a picture. I've sent in a picture of my driver's license next to my face. I'm like, here I am. I don't understand like who's running that place. And then the other really annoying thing is a whole verification process. Cause I was like, at least I could try to get myself verified. So people know this is the real me and not somebody using my name, likeness and image and saying

they're me. But Twitter has told me that they're not doing new verifications. Like I've gotten several emails saying we're not doing any new verifications, but that's not the case because I see other people like Derek Jeter, you know, he's newer to Twitter than me and he got a blue check immediately. Now, I'm not saying I'm the same as Derek Jeter, but I'm kind of like as a public corporate in today's like world of governance, at least have the same policy. Like you can't discriminate between one person versus another. You're either not doing verifications or you are doing verifications. So anyway, I am not verified.

I'm with you and you're quoted in magazines and newspapers, right? Like it should be pretty easy to verify. I'm going to say you're the Derek Jeter of publicly available rates convexity. All right, Nancy, thanks so much. We'll look you up next time we're in New York. Awesome. Thank you so much. Have a great day. You too. Thanks. Thanks. Bye. You've been listening to The Derivative. Links from this episode will be in the episode description of this channel.

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