Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along
Speaker 1: with Jonathan Ferrill and Lisa Brownwitz Jay Lee. We bring
Speaker 1: you insight from the best and economics, finance, investment, and
Speaker 1: international relations. Find Bloomberg Surveillance, an Apple podcast, SoundCloud, Bloomberg
Speaker 1: dot Com, and of course on the Bloomberg Terminal. Joining
Speaker 1: us now one of the best on the streets. Steve Whiting,
Speaker 1: chief investment strategist and chief economist at City Global Wealth Investment. Steve,
Speaker 1: I want to start with a quote from Cathy Wood.
Speaker 1: The team and I were talking about this about five
Speaker 1: minutes ago, but Rita's follows. In our view, fears of
Speaker 1: inflation will give way to confusion and fears of recession
Speaker 1: during the next three to six months. If so, the
Speaker 1: rapid growth rates of truly innovative companies should be rewarded handsomely. Steve,
Speaker 1: your thoughts on that quote, Well, look, I think we're
Speaker 1: going to have some growth fears, which we should when
Speaker 1: we have faced a real threat, which is inflation. But
Speaker 1: I think it will come down and if it does,
Speaker 1: it's likely to help the expansion be sustained. It will
Speaker 1: be at a slower pace. We will not see a
Speaker 1: repeat of what we had in the last two years.
Speaker 1: You're all talking about these great returns. The COVID shock
Speaker 1: itself was extremely narrow and severe, and the policy medicine
Speaker 1: was incredibly widespread. It was destined to get us a
Speaker 1: powerful return in markets. It's been consistent with record high
Speaker 1: corporate profits for large firms. So therefore share prices did
Speaker 1: what they did. Uh, And when we look going forward,
Speaker 1: it's going to be a different environment. It's going to
Speaker 1: be an environment where we're trying to restrain all of
Speaker 1: the stimulus, and consequently, I think equity returns will slow
Speaker 1: as well. So the question will be both innovative companies
Speaker 1: um be rewarded in that environment, and they probably will
Speaker 1: over a longer period of time. But we're probably most
Speaker 1: importantly going to see investors need to focus in on
Speaker 1: generating income in portfolios. And that means again some of
Speaker 1: the more higher quality stable companies were not saying to
Speaker 1: take out any of the innovation portfolios, but definitely put
Speaker 1: in um a little bit of caution with inequity portfolios.
Speaker 1: How do you define quality, Steve Well, this would be
Speaker 1: earning stability, dived in growth, consistent income flows the firms
Speaker 1: again that are not necessarily taking moon shots, but have
Speaker 1: very very steady cash flows that they pay out to
Speaker 1: investors at a higher premium return than bond market deals.
Speaker 1: So not a lot of growth or do you think
Speaker 1: you can get quality growth as well? So I don't
Speaker 1: really think for example, growth and value metrics have been
Speaker 1: really really good ways to drive portfolios. We've really needed
Speaker 1: to look at cyclicals and defenses and what we wanted
Speaker 1: to do. You know, after having a period in which
Speaker 1: many of the cyclical shares have outperformed by double digits,
Speaker 1: where we think that we're at peak cyclical momentum, we're
Speaker 1: actually passing it, with factory orders, for example, near the
Speaker 1: highest levels we've ever seen. That. You want again think
Speaker 1: about some of the more stable industries. Our largest overweights
Speaker 1: are in healthcare shares. We think that consumer staples, which
Speaker 1: suffered the rise in commodity prices over the past year,
Speaker 1: will start to see that uh negative drag EBB, and
Speaker 1: they can catch up some in performance while paying some
Speaker 1: high dividends. Now, if we take a look beneath the
Speaker 1: surface again, we do think that there are unstoppable trends
Speaker 1: that have suffered from the rebound in cyclicals. In terms
Speaker 1: of relative performance, we think about alternative energy, or fintech
Speaker 1: or cyber security, these really long term performers which have
Speaker 1: a good performance over a few years, but weren't for example,
Speaker 1: energies or energy or banks in one which had the
Speaker 1: down effect that some of those shares again will probably
Speaker 1: outperform well, particularly if you can look at it in
Speaker 1: a five year return window. Steve, you're thinking about, you'll
Speaker 1: converis your onnication exposure across the industries, focus through how
Speaker 1: you're thinking about exposed aroundication across regions, geographies beyond the
Speaker 1: United States. Well, at the moment it's a bit more
Speaker 1: overweight the US than other regions, and that's partly because
Speaker 1: of FED tightening. Now, I would contrast that a little
Speaker 1: bit with where we were in two thousand thirteen through
Speaker 1: two thousand eighteen. That period again with the onset of
Speaker 1: the end of QE FED tightening from two thousand fifteen
Speaker 1: explicitly at rate hikes nine rate hikes from fifteen to eighteen,
Speaker 1: that was a period in which the US dollar was
Speaker 1: extremely weak. At the starting point oil petroleum hundred dollars
Speaker 1: from many years while the US double oil output. We
Speaker 1: subsequently had a six dropping oil surgeon the dollar of
Speaker 1: the course of two thousand fourteen. That dynamic we think
Speaker 1: is not going to be as severe this time, partly
Speaker 1: because the dollar is much higher on a trade weighted basis,
Speaker 1: on an inflation adjusted basis, both against emerging markets currencies
Speaker 1: as well as UH developed markets currencies. Um if we
Speaker 1: take a look at China, for example, its emputy market
Speaker 1: was soaring into the start of FED tight. This time
Speaker 1: it's down at its low point as the FED begins tight.
Speaker 1: So it's a different set up here. I think that
Speaker 1: international non US dollar assets will hold it a little
Speaker 1: bit better, but we still biased ourselves a little bit
Speaker 1: here with the defensive growth industries within the US market. Well,
Speaker 1: Steve talking about FED policy, and we just ran through
Speaker 1: some f X commodities and of course equities as well.
Speaker 1: In the bond market, Can you take your assumptions about
Speaker 1: what the FED will do next year, where you think
Speaker 1: inflation or growth are going and make a call with
Speaker 1: conviction on where you think the tenure will endo. No,
Speaker 1: not with much conviction, but it's at a level, at
Speaker 1: a rate level that is offer ring negative real returnment's
Speaker 1: probably out for the decade. You can just take a
Speaker 1: look at the treasure inflation protected securities market. We do
Speaker 1: think that ten year average consumer price inflation will be
Speaker 1: on the order of two and a half percent. We're
Speaker 1: not really disagreeing with the bond market. The rise in
Speaker 1: inflation expectation that we've seen, we think is very realistic.
Speaker 1: The Federal Reserve and other central banks are not going
Speaker 1: to try to knock down the trend inflation rate by
Speaker 1: using recession again to opportunistically push down inflation. But even
Speaker 1: then we think that the rate of inflation will come down,
Speaker 1: that there were some unusual aspects to both demand and supply,
Speaker 1: stimulus and distortions in the past two years particularly, and
Speaker 1: some of that can come off. So in other words,
Speaker 1: we think that we can see modestly rising real yields,
Speaker 1: but this is not compelling enough to get us to
Speaker 1: really move into safer fixed income. We do have an
Speaker 1: overweight in tips. We've contemplated reducing it's um uh. It's
Speaker 1: really been well positioned to get these upward inflation surprises,
Speaker 1: but now the tips market is at a high valuation.
Speaker 1: Steve got to leave it there as always, buddy, thank you,
Speaker 1: thank for everything. This year and the Small Night Steve
Speaker 1: Wanting of City Global Wealth Investments. We're talking about this
Speaker 1: virus a lot. Let's do continue to do that with
Speaker 1: Debora Fuller, Professor of microbiology at the University of Washington
Speaker 1: School of Medicine. Deborah, since we last spoke, we have
Speaker 1: seen a change in guidance from the CDC from a
Speaker 1: ten day isolation period to five isolation days five days
Speaker 1: after that wearing a mask. That's if you yourself have
Speaker 1: tested positive. But for families across the country who have
Speaker 1: just gathered over the holidays, now no, they may have
Speaker 1: had direct exposure with someone who was positive, or are
Speaker 1: living in the same house as one and they don't
Speaker 1: test positive themselves. What does the science say that those
Speaker 1: people should do. Right? It really depends on if your
Speaker 1: vaccine needed or not. So there's two different sort of levels.
Speaker 1: Isolation really means if you did test positive, then you
Speaker 1: need to self isolate for five days. So say that
Speaker 1: family member comes home and and they start to feel
Speaker 1: sick and go get tested and they become positive for
Speaker 1: COVID nineteen, they should self isolate within your home for
Speaker 1: five days and then after five days, uh, they can
Speaker 1: come out with their mask on and hang out with
Speaker 1: you that way. Now, if the rest of the family
Speaker 1: members are vaccinated, that means that you know, you were
Speaker 1: just exposed to somebody. Uh. If you're vaccinated, you do
Speaker 1: not need to quarantine, okay, but you do need to
Speaker 1: go around. If you go out and about, you need
Speaker 1: to wear your masks for a minimum of ten days.
Speaker 1: So that's that's sort of the recommendation. Now, if you
Speaker 1: become positive, now you are in the same boat of
Speaker 1: your as your family member and you need to self
Speaker 1: isolate well, and some of the other confusing messaging we've
Speaker 1: gotten out of the CDC. Rochelle Wallinski, who heads up
Speaker 1: that agency, was speaking yesterday saying that there isn't necessarily
Speaker 1: the science doesn't tell us exactly whether positive tests actually
Speaker 1: indicates your ability to transmit the virus, saying people shouldn't
Speaker 1: get PCR tests after they've test positive because it may
Speaker 1: tell you that you're still positive for weeks to come.
Speaker 1: What do we actually know about the connection between positivity
Speaker 1: and then giving that to other people, especially with a
Speaker 1: macron that is more contagious. Right. The PCR test is
Speaker 1: a test that actually measures the sequences of the virus. UH,
Speaker 1: and what can happen is that even after you have
Speaker 1: cleared the virus from your body, you can still have
Speaker 1: those sequences stick around for quite some time. And so
Speaker 1: what's happening is a PCR can potentially measure dead virus,
Speaker 1: so you can potentially come up positive by PCR for
Speaker 1: for weeks even after you have cleared it. UH. The
Speaker 1: energy and test is a little bit more specific in
Speaker 1: terms of it only comes up if you're really shedding
Speaker 1: some virus. But the difficulty there is that is not
Speaker 1: necessarily a sensitive as a PCR test. However, with the
Speaker 1: self home testing, if you can take that on say
Speaker 1: a daily basis, the repeated testing of it UH and
Speaker 1: repeated say coming up positive or coming up negative, that's
Speaker 1: going to provide much more assurance and confidence of whether
Speaker 1: you're positive or negative. It seems to me you should
Speaker 1: just use conservative common sense and then we'll all be okay.
Speaker 1: I mean, obviously exactly exactly, just spent the holiday season
Speaker 1: with somebody who tested positive. You should chill out for
Speaker 1: a while and probably wear a mask when you're out.
Speaker 1: And about I wonder about long COVID, Deborah, what do
Speaker 1: we know about people who UM suffer you know, infections
Speaker 1: or or or or or disease that might indicate infections
Speaker 1: that have gone beyond the respiratory system exactly. Yeah, this
Speaker 1: is the big unknown right now. There's just there is
Speaker 1: a lot of research going on right now to understand
Speaker 1: better what are the causes, what are the mechanisms underlying
Speaker 1: long covid. We do know that a virus infection does
Speaker 1: cause uh inflammation, and sometimes inflammation even long after the
Speaker 1: virus has cleared, the body can persist and can sort
Speaker 1: of has a feedback loop that can continue to cause
Speaker 1: uh inflammatory responses in any part of your body. Uh.
Speaker 1: And to some extent, we believe that that is related.
Speaker 1: Long covid may be late related to this durable inflammatory response,
Speaker 1: but we really don't know for sure. Uh. And so
Speaker 1: that's really an area of ongoing study and we're gonna
Speaker 1: learn more and more about it. And certainly, uh, you know,
Speaker 1: one of the big reasons why I tell people you
Speaker 1: really do not want to get this virus. It's something
Speaker 1: that you don't know long term how that's going to
Speaker 1: impact your body. Although isn't it likely that we all
Speaker 1: are going to get this virus? I mean, especially now
Speaker 1: that we're seeing numbers approaching two million new affections globally
Speaker 1: in a single day. And we've seen that now three
Speaker 1: days in a row. Are we not all gonna get
Speaker 1: most of us going to get this? I mean I'm America,
Speaker 1: I remember and not only was she the Chancellor of
Speaker 1: Germany but also um a PhD In chemistry At the
Speaker 1: very beginning of said seventy percent of the population is
Speaker 1: going to get this? Yeah, yeah, especially with a macron
Speaker 1: being so widespread and and and uh so massively transmissible. Uh,
Speaker 1: there is an expectation the majority of us we'll get exposed.
Speaker 1: Uh will we all come up positive, I'll get COVID. Really,
Speaker 1: to a great extent, vaccination is going to make a
Speaker 1: huge difference there. We've seen that you know, when you
Speaker 1: get vaccinated, uh, that you're able to recover much more quickly. Uh,
Speaker 1: that there are a lot to higher chance of having
Speaker 1: uh if you're come a positive asymptomatic infection. So vaccination
Speaker 1: really does help to more effect to really clear that
Speaker 1: virus from the body and control that inflammatory response that
Speaker 1: typically arises in response to the infection. All right, Deborah Fuller,
Speaker 1: University of Washington School of Medicine, Thank you so much
Speaker 1: for sharing some time with us this morning. Jonas Now
Speaker 1: on the geopolitics as President Biden, President Pudina said to
Speaker 1: hold a phone call a little bit later today, Tina Fordham.
Speaker 1: They had a global political strategy Avon Hearst and Tina
Speaker 1: picking up on your line. The geopolitical trifecta of Russia, Ukraine, China,
Speaker 1: Taiwan and Iran all the more volatile given the perceived
Speaker 1: weakness of the West. Can you talk to me about
Speaker 1: that weakness? Tina, yes, absolutely well from where putting a
Speaker 1: sitting and engaging. They look at the West's response to
Speaker 1: the pandemic, very high death tools, um, the the vaccine skepticism,
Speaker 1: the kind of internal tensions and polarization, and have concluded
Speaker 1: that their pre existing pre pandemic narrative of a Western
Speaker 1: decline has been accelerated. And I think this is something
Speaker 1: that global investors have failed to appreciate, that there was
Speaker 1: this existing narrative that the West was in a kind
Speaker 1: of a slow decline, and that the pandemic as a
Speaker 1: as a crisis accelerating existing trends, has just sped that up.
Speaker 1: And so what I the point I want to make
Speaker 1: is that that possibly changes their political calculus when it
Speaker 1: comes to making mischief in geopolitics. When we talk about
Speaker 1: the West, Tina, are we primarily talking about the United States? Well,
Speaker 1: I mean, we used to have this term the international
Speaker 1: community in the olden days. Nobody talks about that so
Speaker 1: much anymore. But you know, we can say that G seven,
Speaker 1: that the advanced democracies UM and the notion that these countries,
Speaker 1: you know, even as recently as the global financial crisis
Speaker 1: got together in times of crisis and developed policy tools,
Speaker 1: we haven't had that in the pandemic. Many people might
Speaker 1: try to blame President Trump for this, but in fact, uh,
Speaker 1: this erosion of you know, working together on collective action
Speaker 1: problems predates Trump. UM. But it means that there is
Speaker 1: an opportunity, if you are a rogue or a challenger
Speaker 1: actor to try to UM test boundaries and when it
Speaker 1: comes to a military response or other ways of challenging
Speaker 1: the international status quo. You know, I look at your
Speaker 1: research and I see on your wall of worry slide
Speaker 1: supply chain and fuel price crisis right in the upper
Speaker 1: left corner. That's been the biggest problem for markets. That's
Speaker 1: been the biggest problem for UM. The economies of the
Speaker 1: world due to COVID. Do you see any recovery there? Well? So,
Speaker 1: I think inflation, supply chain issues and and the fuel
Speaker 1: price crises are clearly the main drivers of risk in markets.
Speaker 1: And the point that I want to make there is
Speaker 1: that there are also huge problems for incumbent governments and
Speaker 1: are going to cause a range of attempted policy responses
Speaker 1: and maybe even poor policy responses. And most investors haven't
Speaker 1: been in a situation of managing through this combination of factors,
Speaker 1: and I want to put geopolitical risks on top of it. Um,
Speaker 1: I'm not sure that I'm expecting resolution anytime soon because
Speaker 1: in many ways it it suits UM some of these
Speaker 1: challenger actors to have these levers. And that's where the
Speaker 1: Russia Ukraine UM crisis comes in, with troops massing on
Speaker 1: that border. Ultimately is that going to be about nord
Speaker 1: Stream too and fuel supplies to Europe? But that's certainly
Speaker 1: a big part of what's going on. Yeah, I always
Speaker 1: go back to that. I can't remember what network had
Speaker 1: a series called Occupied where I think Russia takes over
Speaker 1: Norway because Europe wants to keep the gas flowing. How
Speaker 1: strong is that lever? I mean, how much leverage does
Speaker 1: Vladimir Putin have in that he's supplying um, one of
Speaker 1: the most important civilizations in the world with natural gas.
Speaker 1: That's indispensable. Sure, well, I think we can. You know,
Speaker 1: we can characterize Russia's capacity in one word, and that
Speaker 1: is that it's a It's a spoiler and a disruptor. Right,
Speaker 1: Russia has many levers. Uh, the gas supply one is
Speaker 1: the most significant one for markets. But what I think
Speaker 1: people tend to forget is that all of these smaller
Speaker 1: things that are happening around the margins, like the weaponization
Speaker 1: of refugees coming from from Belarus, to the tensions with
Speaker 1: the Baltic States, Poland, et cetera, these are also about
Speaker 1: undermining European unity. And we can see that the new
Speaker 1: German government has in fact not signed off on nord
Speaker 1: Stream too, even though mercles government was was very much
Speaker 1: behind it. So you know, this, this ramping up of
Speaker 1: tensions with Ukraine you mentioned the phone call today between
Speaker 1: Biden and Putin is also a way of saying of
Speaker 1: Moscow saying, we have ways of making your lives difficult.
Speaker 1: We are forced to be reckoned with. We have real
Speaker 1: leverage in these discussions and don't forget about us. Atina.
Speaker 1: Wonderful to catch up with you through much of this year,
Speaker 1: and thank you for your contribution, not just this morning
Speaker 1: but through the forum there of Avon Hurst. Thank you
Speaker 1: very much. We're talking about whether or not monetary policy
Speaker 1: is going to get tighter, what that actually means, but
Speaker 1: what will the read through be to the equity markets. Amy,
Speaker 1: we still from an equity derivative star to just an
Speaker 1: RBC Capital Markets joining us now. Amy, we focus a
Speaker 1: lot on how easier money means kind of subdued volatility.
Speaker 1: In theory, that would mean that once you start to
Speaker 1: see that being pulled back, volatility will remain elevated. You
Speaker 1: see it instead normalizing though in two even further Why yeah,
Speaker 1: you know it's interesting. I'll just give you one data point.
Speaker 1: In two thousand and eight, we hit essentially the same
Speaker 1: volatility backs levels that we did during the pandemic. It
Speaker 1: took us four more years to normalize back the pre
Speaker 1: two thousand eight levels. We've already done it, Kaylee. Between
Speaker 1: there's been a five realized volatiley point drop in the
Speaker 1: averages we're seeing as this year closes, and I think
Speaker 1: that continues because even though we get pockets of realized volatility,
Speaker 1: the volatility market is essentially already gotten used to this
Speaker 1: new normal. And also we've seen this year and this
Speaker 1: comes back to easy money buying. The dip has worked
Speaker 1: every single time. It has been the can sistants behavior?
Speaker 1: Do you think that will change in the year ahead?
Speaker 1: I actually think it will not. I think we're going
Speaker 1: to get another you know, game stop, a mc meme
Speaker 1: slash yolo situation again this year. You know, unfortunately I
Speaker 1: cannot predict what stock will be the target, but you know,
Speaker 1: we tracked that very closely through skewing versions, looking at
Speaker 1: these called demand levels compared to put demand levels. And
Speaker 1: I think it's going to be very correlated to what
Speaker 1: we see happen with the cryptocurrency path this coming year,
Speaker 1: especially with regulatory uh, you know, items coming down the line.
Speaker 1: What do you look back at um to help you predict?
Speaker 1: I mean, do you compare the COVID pandemic to the
Speaker 1: global financial crisis to the Internet bubble verset? How do
Speaker 1: you how do you gather the experience necessary to look forward? Yeah,
Speaker 1: that that's exactly right. That's a big part of it.
Speaker 1: We look get seasonality changes sliced up both through realized
Speaker 1: and applied volatility levels, you know, back essentially as far
Speaker 1: as we can go even to UH. And one of
Speaker 1: the really interesting facts is during the pandemic, we hit
Speaker 1: volatility levels that actually surpassed seven as well as the
Speaker 1: other crises you mentioned. And so the fact that we've
Speaker 1: come down to pre pandemic levels within the last two
Speaker 1: years compared to all the other situations where it took
Speaker 1: four to five years and normalize just kind of tells
Speaker 1: you how resilient the market has been overall and how
Speaker 1: that has led down into the volatility markets as well.
Speaker 1: In terms of volatility, we still have UM a lot
Speaker 1: of elevated UH indicators. For example, if I look at
Speaker 1: UM price earnings ratios, we're still at twenty six. I
Speaker 1: think historically UM the level is around seventeen to twenty.
Speaker 1: What do you see. How long do you see this
Speaker 1: market taking to get really back to normal from the pandemic.
Speaker 1: You know, I think it happens next year. One thing
Speaker 1: I would point to is the way we're going to
Speaker 1: see disparity, particularly in options, is going to be within
Speaker 1: the different subsectors and factors. So you know, as interest
Speaker 1: rates rise, you're going to start to see that distinction
Speaker 1: between value between growth and so I think you'll see
Speaker 1: pockets of volatility difference between an IWM or queues or
Speaker 1: a spy, But that overall level, I think when we're
Speaker 1: sitting here at the end of UM, you know, we
Speaker 1: will probably be at at a twelve where eleven handle
Speaker 1: in terms of realized volatility. It's certainly a sub twenty
Speaker 1: level in the VIX. I mean, I want to come
Speaker 1: back to the retail investor because you mentioned game stop,
Speaker 1: and I cannot believe that that was a phenomenon that
Speaker 1: began almost an entire year ago. In some ways, it
Speaker 1: feels like it was just last month. But when I
Speaker 1: think about the factors that were driving that activity on
Speaker 1: the part of retail traders, we had had massive government stimulus,
Speaker 1: they had more money in their pockets, and you obviously
Speaker 1: had ample liquidity provided by the Federal Reserve. If those
Speaker 1: two things are normalizing, why would retail activity not be
Speaker 1: more subdued as a result. I think that's a great question,
Speaker 1: and I think part of the answer is that probably Well, however,
Speaker 1: you know, look, the person who is on robin Hood
Speaker 1: and trading game stop options is really the same person
Speaker 1: who's also owning bitcoin and ethereum and you know that
Speaker 1: whole suite of things. And so look, if we go
Speaker 1: into two and we get a massive rise in cryptocurrencies,
Speaker 1: you're going to see that wealth effect I think, uh
Speaker 1: spread over into the options again. You know, we know
Speaker 1: that this investor is both savvy in both pockets. And
Speaker 1: the other thing I think is interesting is, I don't
Speaker 1: know if you recall back in November when we kind
Speaker 1: of had that volatility freak out, uh, you know, with
Speaker 1: vix kind of really ramping up plus six percent that month,
Speaker 1: you actually saw the retail cohort owning puts, which is
Speaker 1: something that they hadn't done the entire pandemic, but they're
Speaker 1: clearly capable of doing um. So it may not even
Speaker 1: be that they're trying to own upside groupcalls. If they
Speaker 1: see this market going down, that you might actually see
Speaker 1: that put option volume really spreading as well. To let
Speaker 1: the record show retail traders can be barish on some occasions. Aimy,
Speaker 1: you mentioned to tie to with the cryptocurrencies, and we
Speaker 1: talk a lot about active equity volatility. There was a
Speaker 1: narrative out there that crypto volatility was going to start
Speaker 1: to become, you know, much more subdued as you have
Speaker 1: institutional adoption, as you have the introduction of a kind
Speaker 1: of formal mechanisms like a crypto et F. We did
Speaker 1: get those things this year, and yet you're seen just
Speaker 1: as much volatility. Do you have any reason to expect
Speaker 1: that that will change? I think, look in the kind
Speaker 1: of the overarching you know, decade, ten thousand foots level,
Speaker 1: sure that institutional adoption, all those themes you mentioned will
Speaker 1: eventually cause volatility to kind of normalize. I don't think
Speaker 1: we're anywhere close to that. UM. I think the large
Speaker 1: part will be regulation. The second half of next year
Speaker 1: will also be a big catalyst for the Etherorium network
Speaker 1: when they go from proof of work to proof of steak.
Speaker 1: And you know, all these things are still really in
Speaker 1: their infancy. So I think that cryptocurrency continues to behave
Speaker 1: like a risk asset. And you know, when you just
Speaker 1: kind of say top ten biggest draw downs in crypto,
Speaker 1: what did SMP? Do you know the correlation levels over
Speaker 1: kind of a wonder two year time frame is still
Speaker 1: only thirty percent. I think that has a long way
Speaker 1: to go in terms of how that behaves as regulation
Speaker 1: comes down the line. Herely and me, as we look
Speaker 1: back and assess the year one, it was about twelve
Speaker 1: months ago when we started the game stop mania, the
Speaker 1: main mania, people talking about the apes, etcetera, etcetera. Amy.
Speaker 1: What frustrated Tom and at the time is how many
Speaker 1: people look down their nose at some of these investors,
Speaker 1: this so called new entrant into financial markets. I mean,
Speaker 1: what's your lesson because you talked about, just briefly then
Speaker 1: the sophistication of some of these individuals in this market,
Speaker 1: and I think, Amy, that's still overlooked twelve months later,
Speaker 1: what have you learned about that? It's been an absolutely
Speaker 1: fascinating ride for me as someone you know, look, I've
Speaker 1: been in derivatives for twenty years, and from most of
Speaker 1: that time, it was just this niche thing. No one
Speaker 1: ever knew, you know what I did, Mom and dad,
Speaker 1: you know, thinks I'm a stock record that kind of thing. Um.
Speaker 1: And then and then you know, you look at Reddit
Speaker 1: and they're talking about gamma squeezes, which is which is
Speaker 1: something that you know, you can't really know unless you've
Speaker 1: had kind of a more savvy introduction into the industry.
Speaker 1: You know that these investors knew that they were causing
Speaker 1: these momentum, you know, dealer based overhedging in the market,
Speaker 1: and that was causing a lot of the action that
Speaker 1: you're seeing. And that's why we actually, you know, separately
Speaker 1: track now the activity of skewing versions and something like
Speaker 1: a Tesla or game stock or AMC, and we split
Speaker 1: that up from the more I guess, you know, blue
Speaker 1: chip parts of the market because we know this activity
Speaker 1: is something that can continue to be a phenomenon. I mean,
Speaker 1: thank you, thank you for everything this year. Amy bue Silverman,
Speaker 1: just the wonderful Amy Bluosilverman of Abbis Sake. This is
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