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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business

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Speaker 1: Wait inside from the reporters and editors who bring you

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Speaker 1: America's most trusted business magazine, plus global business, finance and

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Speaker 1: tech news. The Bloomberg Business Week Podcast with Carol Messer

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Speaker 1: and Tim Stenebeck from Bloomberg Radio.

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Speaker 2: We're kind of getting the band back together, as we

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Speaker 2: like to say, a voice that Matt and I have

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Speaker 2: leaned on a lot over the years during moments of

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Speaker 2: stress in various market cycles. He's got a great perspective

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Speaker 2: on the rallies and the selloffs that make a market cycle.

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Speaker 2: Back with us is Joe Saluzy, partner co head of

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Speaker 2: equity trading at Themis Trading, joining us from New Jersey.

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Speaker 2: How are you.

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Speaker 3: I'm great, Carol. Good to get the band back here.

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Speaker 3: Like you said, quite the reunion tour of for the years.

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Speaker 2: We've had a lot of fun over the years.

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Speaker 4: Yeah, yeah, you know. I mean one of the things

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Speaker 4: that I always love to talk to you about, Joe

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Speaker 4: is market structure and trying to figure out what exactly

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Speaker 4: is happening. So that's why I thought of you instantly

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Speaker 4: this morning when we saw the Nick Hay down, you know,

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Speaker 4: twelve percent overnight, and it was limited down a number

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Speaker 4: of time, circuit breakers were tripped, and then this morning,

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Speaker 4: you know, futures were hit much harder than the market

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Speaker 4: had been on Friday, and we opened off more than

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Speaker 4: four percent on the S and P more than five

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Speaker 4: percent on the Nasdaq. And I'm just trying to wrap

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Speaker 4: my head around what happened. Is this from the Bank

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Speaker 4: of Japan because that happened on Wednesday and we didn't

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Speaker 4: have a sell off then. But we're starting to hear

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Speaker 4: about carry trains being unwound and it sounds very mechanical.

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Speaker 4: On the other hand, there's a growth scare, right, So

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Speaker 4: what is it? By the way, I'm looking at the

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Speaker 4: wrong camera. Well, I have two cameras here and this is.

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Speaker 2: Not the right one. Matt, let's Joe talk.

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Speaker 3: You guys have all the reasons I've heard. I've been

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Speaker 3: listening to the show during the day. They're all out there.

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Speaker 3: People got a million reasons why. But you know, I

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Speaker 3: think it's also liquidity shoo. And it's always been a

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Speaker 3: liquidity issue when you get volatility like this and you know,

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Speaker 3: bids disappear. We've talked about this years ago. When bids

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Speaker 3: disappear and you know, sellers come in. And for instance,

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Speaker 3: I was training a couple of small caps today for

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Speaker 3: some clients, and I was buying, and you would think

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Speaker 3: it would be relatively easy to buy, and it's not.

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Speaker 3: It really isn't. It's still you know, the players into stocks.

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Speaker 3: They're not necessarily individual stocks anymore. It's ETFs, it's indices,

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Speaker 3: its futures, it's options, it's derivative based products. And I

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Speaker 3: think that really is the problem. It exacerbates these moves

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Speaker 3: really quick, and you get days like today when the

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Speaker 3: bottom falls out for you know, any one of several reasons.

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Speaker 3: And you know, it scares people at panics, people even

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Speaker 3: a vix at sixty five pre opening and you're kidding me.

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Speaker 3: I mean that was ridiculous. I think we closed like

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Speaker 3: thirty eight. But I think it's people just get nervous,

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Speaker 3: and it's that derivative leveraged effect that really drives it down.

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Speaker 2: I'm so glad you went there. I was looking at

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Speaker 2: a Bloomberg Big Take story back in July about the

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Speaker 2: twenty four hour stock trading and how it's booming and

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Speaker 2: wall streets rattled. You were quoted in that store, and

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Speaker 2: you said, and this was basically looking at retail investors

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Speaker 2: and how they're making trades basically twenty four hours a day,

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Speaker 2: five days a week, and you said, We're only going

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Speaker 2: to have trouble in the middle of the night when

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Speaker 2: things are so ill liquid. So okay, does that continue?

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Speaker 2: What is I mean, how do you think about where

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Speaker 2: the momentum goes from here or does this moment of continue?

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Speaker 3: Sure on that twenty four seventh thing, I think it's

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Speaker 3: ridiculous by the way that individuals now there are certain

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Speaker 3: areas you could start trading at ten o'clock at night

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Speaker 3: on a Sunday night, individual stocks, which I think is

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Speaker 3: absurd because there really is no liquidity and you're just

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Speaker 3: looking for trouble at that point. You know, there are

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Speaker 3: some caps of twenty percent I think up and down,

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Speaker 3: but you know, for individuals. And here's the way I

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Speaker 3: look at it. Also, the crypto market, which I made

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Speaker 3: fun of for many, many years and I thought it

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Speaker 3: was a joke, and I'd still think it's a joke.

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Speaker 3: The equity market and the crypto market are starting to

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Speaker 3: emerge together in this style of training. In this hey,

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Speaker 3: let's just been it. Trade whenever we want, and we'll

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Speaker 3: just zip it in and out. That's not the way

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Speaker 3: it's supposed to work, at least not in the equity market.

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Speaker 3: If the crypto guys want to do that, good look,

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Speaker 3: But the equity market, you're supposed to have an opening

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Speaker 3: and the clothes and there are these liquidity events throughout

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Speaker 3: the day which helps set price, and you just don't

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Speaker 3: have that right now.

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Speaker 4: What uh? In terms of what we've seen the unwind

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Speaker 4: of the carry trade, and I've heard a lot about

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Speaker 4: margin calls this morning as well, how long does that

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Speaker 4: take to play out? How long do we expect this

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Speaker 4: kind of volatility to stay in this in the equity

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Speaker 4: market show?

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Speaker 3: I think today was excessive. I don't think you get

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Speaker 3: to see that sixty five vix again. I not for

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Speaker 3: this week. Unless we see some new news, you know,

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Speaker 3: you'll get this. I don't think we're at the bottom

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Speaker 3: here on this little correction. I'm going to call it

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Speaker 3: a correction because I think that is what it is.

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Speaker 3: I think these are normal corrections when you had a

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Speaker 3: market that's been up so much throughout the year on

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Speaker 3: kind of sketchy details. You know, let's talk about AI, right,

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Speaker 3: I mean what's really going on there, right, But I

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Speaker 3: think you got a correction. It will come down. You're

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Speaker 3: not going to see that super volatility that you saw today.

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Speaker 3: But you know, it's gonna take some time for this,

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Speaker 3: you know, to kind of smooth out, and then we'll

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Speaker 3: get the FED later on in the month of Jackson

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Speaker 3: Hall and Brother May September and things will stabilize. So

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Speaker 3: I'm not really thinking that this is a big downtrend coming.

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Speaker 3: I think it's certainly something to be aware of and

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Speaker 3: to be cautious of, but it's not nothing to panic about.

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Speaker 3: Like Jeremy Siegel was this morning.

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Speaker 4: Yeah, I was gonna ask what about the emergency meeting, Joe,

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Speaker 4: aren't you aren't you convinced that the Fed's gonna rush

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Speaker 4: in and in a panic cut basis point cut rates

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Speaker 4: by seventy five basis points.

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Speaker 3: They only do that when Wall Street banks are in trouble.

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Speaker 3: We know that, Matt, right right now, I don't think

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Speaker 3: you have that. You know, the banks are fine. It

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Speaker 3: didn't seem like there's anything going on there. You know,

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Speaker 3: when you're calling for emergency rate cuts, it's when there

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Speaker 3: was a global financial crisis, right the GFC. We don't

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Speaker 3: have that right now. We don't have anything like that

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Speaker 3: right now. Everything's actually fine. We had one unemployment number

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Speaker 3: which looked a little bit worse than expected. So no,

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Speaker 3: there's no need to cut seventy anytime I think before

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Speaker 3: the next meeting, I wouldn't be The Fed would look nervous.

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Speaker 3: They would look like they were panic, and that's the

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Speaker 3: wrong signal. Now they can get out there, start jaw

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Speaker 3: boning and doing what they normally do and have a

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Speaker 3: few speakers come out and say one thing or another.

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Speaker 3: That'll be fine for the market, and they'll get going

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Speaker 3: from there.

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Speaker 2: Joe, what would tell you that there is some stress

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Speaker 2: in the market? Is it you know, watching financial market conditions?

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Speaker 2: What are you know, credit conditions? What are you watching?

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Speaker 3: Yeah, when you look at some of those spreads and

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Speaker 3: you know, Jill Good junk bond yields, things like that,

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Speaker 3: and you're looking for particular spikes out there, really out

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Speaker 3: of the ordinary, like that VIC spike. Nothing but to

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Speaker 3: be honest, that was that was a bit scary in

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Speaker 3: the morning. But you don't have that right now. So yeah,

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Speaker 3: credit things are really the problems. Let's look back at

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Speaker 3: two thousand and seven. Two thousand and eight, two thousand

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Speaker 3: and nine, Right, that was all credit. It was all

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Speaker 3: about the commercial mortgage backs. People have talked about it,

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Speaker 3: but nothing really seems to be going on there. So

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Speaker 3: I think at this point, yeah, there was some excessive

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Speaker 3: valuations when it comes to equities, and some of the

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Speaker 3: pees were getting a little bit stretched, which is why

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Speaker 3: a correction is healthy. And but by the way, uh,

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Speaker 3: the guy's over at Burinian Associates, they put up some

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Speaker 3: good numbers and they wrote the average correction since nineteen

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Speaker 3: eighty is thirteen and a half percent, and that lasts

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Speaker 3: about ninety days. So you know, we're down about what

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Speaker 3: he percent off the highs or whatever it might be.

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Speaker 3: We're in a normal correction right now. So I'm not

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Speaker 3: really worried if we start getting a little bit more

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Speaker 3: fueled from there. But right there, I think we were okay.

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Speaker 4: And a rotation. Do you think people are done buying

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Speaker 4: these megacap tech stocks and are gonna now look for

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Speaker 4: you know, dividend paying stocks or smaller cap stocks.

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Speaker 3: That had started last week or a couple of weeks ago,

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Speaker 3: which I thought was you know, it was underway. We

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Speaker 3: were getting going, you know, the small caps the Russell

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Speaker 3: was was finally moving. It's taken forever for that Russell

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Speaker 3: two thousand and get some action, and you saw some

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Speaker 3: money coming out, but you know, it kind of failed.

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Speaker 3: It was nice to see that they did it. Bounce

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Speaker 3: off the loads today, so you know, that was a

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Speaker 3: bit scary when they were down there. But we bounced

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Speaker 3: nice and we closed okay, which was important, I thought so.

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Speaker 3: And you didn't get that. A lot of people were

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Speaker 3: expecting what we call a dump at the end of

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Speaker 3: the day, and you didn't get the dump at the

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Speaker 3: end of the day. You kind of just stabilized where

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Speaker 3: you were, So that to me is positive. I just

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Speaker 3: noticed the overnight actually after our reaction was a little

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Speaker 3: bit positive in the UNC So let's see. I think,

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Speaker 3: let's not panic, but I don't think that, you know,

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Speaker 3: let's not get food can place in either. We still

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Speaker 3: got to worry a little bit.

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Speaker 2: Don't tell the rest of the guests, but we saved

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Speaker 2: the best for last. But don't tell anybody, all right,

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Speaker 2: Jesse Lucy, you're the best, of course, co head of

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Speaker 2: equity trading over at them is Trading. This is Bloomberg, Joe,

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Speaker 2: thank you.

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