Speaker 1: Scrap on your parachute. It's time for What Goes Up
Speaker 1: with Sarah Ponzick and Mike Reagan. Hello and welcome to
Speaker 1: What goes Up, a Bloomberg weekly markets podcast. I'm Sara Ponze,
Speaker 1: reporter on the Cross Asset team, and I'm Mike Reagan,
Speaker 1: a senior editor at Bloomberg. This week on the show,
Speaker 1: the growth stock selloff continues as a proxy Cathy Wood's
Speaker 1: archyt fel into a technical bear market as shares of
Speaker 1: companies like Tesla continue to head lower than NAZAC one
Speaker 1: hundreds now down from a high. And this, of course,
Speaker 1: as rates continue their trek higher, how long can it last?
Speaker 1: We'll discuss and uh, Sarah, I'm afraid. What we also
Speaker 1: have to discuss on this very special episode of What
Speaker 1: Goes Up is my embarrassing high school nickname. If you
Speaker 1: can't tell. Mike is really excited about this, But look, Mike,
Speaker 1: you did this to yourself. Mike a couple of episodes
Speaker 1: ago said look, if we get two hundred ratings on
Speaker 1: Apple podcasts, that he would go out and he would
Speaker 1: dole out his embarrassing high school nickname. He should have
Speaker 1: set the bar higher. But all of our listeners are
Speaker 1: clearly very loyal and everyone more than anything wants to
Speaker 1: know your nickname. So you delivered, you delivered? Do I miss?
Speaker 1: I miss priced this trade terribly. I thought two hundred
Speaker 1: ratings will never get there. I'm safe, but uh, but
Speaker 1: thank you for everyone who listened and left the rating.
Speaker 1: It's means a lot to us. You know, Sarah and
Speaker 1: I have a lot of various duties at Bloomberg, but
Speaker 1: I think, um, this this shows our baby, and uh
Speaker 1: we have we look forward to it every week, and
Speaker 1: it's it's good to see people uh, you know, listening
Speaker 1: and rating and reviewing, regardless of how much pain it
Speaker 1: may cause me. Actually, Sarah, I it's been kind of
Speaker 1: therapeutic for me because, um, I've I've hated this nickname
Speaker 1: for thirty five years, but I've kind of come to
Speaker 1: terms with it, uh through this hole. And I'll explain
Speaker 1: why at the end of the show when we get
Speaker 1: to that nickname. Because although uh, there are some who
Speaker 1: are listening only to hear my embarrassing high school nickname,
Speaker 1: I think more people are listening because we know we
Speaker 1: have a tradition here of having excellent, uh smart expert
Speaker 1: guests to explain the week in the markets, and once
Speaker 1: again we are very excited to have a guest who's
Speaker 1: going to do exactly that. She is the head of
Speaker 1: US equities at Aviva Investors in Chicago. Her name is
Speaker 1: Susan Schmitt. Susan, welcome back to the show. Thank you
Speaker 1: great to be here, and Susan, I think for this
Speaker 1: week the most important question, obviously is did you have
Speaker 1: any embarrassing nicknames in high school? Most important? Exactly exactly,
Speaker 1: But no, I have not made any miss priced ranger here.
Speaker 1: So no, I have not. I have nothing to disclose.
Speaker 1: The answer is yes, will she share it? No, Well,
Speaker 1: that's fine, I guess. I guess I. I made my
Speaker 1: own bed here. I have to ligne it. But Uh
Speaker 1: says and I mean obviously. Once again, this week the
Speaker 1: big story for equities is UH the sideshow of the
Speaker 1: bond market UH rates spiking up on Thursday again above
Speaker 1: one point five in the ten year UM. I suppose
Speaker 1: Jerome Pal did not give the market what he was
Speaker 1: hoping for. I don't know what exactly they were expecting
Speaker 1: out of him, maybe some sort of hint at a
Speaker 1: quote unquote operation twist or yield curve control but how
Speaker 1: do you sort of explain uh, what Pal did on
Speaker 1: Thursday and did he sort of missed the boat or
Speaker 1: I'm kind of about the opinion that taking a little
Speaker 1: froth out of the market is not necessarily uh something
Speaker 1: he's against. I mean, he can always go out and
Speaker 1: give give another speech next week if this one didn't work.
Speaker 1: But what do you think? What's your your take on
Speaker 1: rates and at Wes and Jerome pal speech this week? Well,
Speaker 1: what is happening with rates and equities? So we're seeing
Speaker 1: a lot of ankst and it's the push me, pull
Speaker 1: you market because rates go up, should equities go down?
Speaker 1: Is this a good thing or a bad thing? If
Speaker 1: rates are going up because we expect more growth, that's
Speaker 1: actually a really good thing. And so as we're seeing
Speaker 1: the tenure approach one point five percent and now safely
Speaker 1: they're all all of this week, I think the equity
Speaker 1: markets having a hard time figuring out whether that is
Speaker 1: going to suppress growth or if that just represents the
Speaker 1: optimism that the market has and the achievable optimism and
Speaker 1: goals that we have for the economy as it rolls
Speaker 1: out with the vaccine over the next eighteen months. I
Speaker 1: think Powell statement was pretty interesting because he has been
Speaker 1: so consistent in his messaging that he is going to
Speaker 1: support the economy throughout, and the market is always waiting
Speaker 1: for him to say something slightly different, take a new variation,
Speaker 1: take a new tact on that, take a new track
Speaker 1: on that, and he hasn't. And I think today was
Speaker 1: more of the same. He's still saying he's very important
Speaker 1: the economy. He's not doing any big changes. He's going
Speaker 1: to let this volatility continue at the high end of
Speaker 1: that long the high end at the long end of
Speaker 1: the curve isn't scaring him at all. He's not backing off,
Speaker 1: and the Fed's going to continue to stay the course.
Speaker 1: So I think the market has to absorb that there's
Speaker 1: so many moving parts in the equity markets right now
Speaker 1: that it's really hard to put all the pieces of
Speaker 1: the puzzle together. So, like you said, and Jerom Pell
Speaker 1: has said himself that what we are seeing in the
Speaker 1: bond market is a quote unquote statement of confidence in
Speaker 1: the growth outlook. And I find it interesting. On Thursday,
Speaker 1: when Powell was giving his speech, one of my colleagues,
Speaker 1: built on a Hirich, pointed out that on Twitter hashtag
Speaker 1: stock market crash was trending on Twitter, and it's almost
Speaker 1: a bit ironic because at that point in time, you
Speaker 1: looked at the S and p F punch over the
Speaker 1: past couple of days, what it was down three percent
Speaker 1: from a record. But of course there are areas of
Speaker 1: the market that are seeing significant pain. You look at
Speaker 1: a company like Test. High growth companies then set down
Speaker 1: ten percent, so well more and it depends in which
Speaker 1: companies you are really investing in. It's been said over
Speaker 1: and over that higher yields, well, that's bad for valuations
Speaker 1: or high valuation companies, or that's bad for high growth companies.
Speaker 1: Can you walk us through the actual reasoning for that.
Speaker 1: Why is it that when rates rise you see companies
Speaker 1: like this under pressure. I'm going to counter that with
Speaker 1: look at the Russell two thousand and look at where
Speaker 1: small caps are so well. Yes, these big tech names
Speaker 1: that did very well in twenty are down under pressure.
Speaker 1: At the same time, you're to date those Russell two
Speaker 1: thousand stocks that indexes up over ten percent. So it's
Speaker 1: a big conflict. And I think what you're seeing in
Speaker 1: the small cap names is the reaction to confidence in
Speaker 1: the forward growth and so suddenly these small caps are
Speaker 1: where people feel comfortable investing, when they feel comfortable about
Speaker 1: the economy going forward. We're seeing that in extra really well.
Speaker 1: We're seeing assets come out of those big cap names,
Speaker 1: which were the safe pavements for E twenty where people thought, Okay,
Speaker 1: I know I'm going to get through this with these
Speaker 1: tech heavy names. I'm going to stick here. Where's the
Speaker 1: biggest pressure When we see down days, it's in the
Speaker 1: nastac that tech out the index. So I think when
Speaker 1: people see rising rates, it's always interesting are they rising
Speaker 1: for the right reasons? What does that mean? And it
Speaker 1: has been a long time since we've seen rates rise
Speaker 1: in a gradual way where it hasn't led us into trouble.
Speaker 1: We had this happened when suddenly we had a pandemic.
Speaker 1: In the midstep before that was the FED maybe race
Speaker 1: rates a little too much, and the market had a
Speaker 1: conniption fit over that. So remember that the FED overshot
Speaker 1: slightly had been easing. Then we get to the pandemic
Speaker 1: and race had to drop to zero again. So now
Speaker 1: the markets adjusting to that. I think you have to
Speaker 1: look at the components of the market to see what's
Speaker 1: really moving. The fact that those small caps are doing well,
Speaker 1: tells me that optimism over that overall growth in the
Speaker 1: economy and rates at one point are actually positive. Rates
Speaker 1: are going up for the right reason, and that is
Speaker 1: the overall sentiment versus the other. You know. So one
Speaker 1: of the more interesting things I've read this week is
Speaker 1: UH City Group has some sort of model. Don't ask
Speaker 1: me what's in it. It's a model, alright, but no
Speaker 1: one no one really knows. But they somehow look at
Speaker 1: relative value um of cyclical value and value stocks versus
Speaker 1: that the growth and the big tech stocks that have
Speaker 1: led the way, and somehow they divine out a notion
Speaker 1: that the the equity market is pricing in basically a
Speaker 1: two point two tenure treasury yield um. And they're not
Speaker 1: necessarily saying the bond market is wrong. They're saying, maybe
Speaker 1: the equity market has gotten ahead of itself um with
Speaker 1: this rotation. And I think that's a that's something I
Speaker 1: think you always have to worry about in an environment
Speaker 1: like this. You know, you think, okay, last year, earnings collapsed,
Speaker 1: the economy collapsed, the stock market rose. What SMP rose,
Speaker 1: I mean is this payback? Now? You know, are we
Speaker 1: basically coming back to a rational analysis of the market now,
Speaker 1: especially given what valuations have done. Um and and it's
Speaker 1: the rotation, you know, those two ideas. I'm curious what
Speaker 1: you think about. Have we pulled forward the returns from
Speaker 1: from the earnings and economic rebound that we can expect
Speaker 1: this year? Did we pull them forward to last year?
Speaker 1: Kind of like we pulled forward the tax cut gains
Speaker 1: to the previous year and it was a sort of
Speaker 1: a sell the news event when when we actually got them. Um,
Speaker 1: what you're thinking on that as far as the has
Speaker 1: the rotation got ahead of itself and did the market
Speaker 1: get ahead of itself last year? And sort of how
Speaker 1: that relates to how we can think of the rest
Speaker 1: of two thousand and twenty one. Well, I think it's
Speaker 1: the nature of the market to overshoot in both directions,
Speaker 1: and so certainly we saw a very strong year in
Speaker 1: also in so if you stack those numbers for the
Speaker 1: nastacks the nastacks, that's we're up almost When you look
Speaker 1: at that, you have to think that, all right, this
Speaker 1: is pretty frosty, especially when you're given a pandemic the
Speaker 1: back half of that time frame, and the market probably
Speaker 1: is due for a little bit of a settling period
Speaker 1: and a pullback. Is the equity market too far ahead
Speaker 1: of itself. That's hard to say. When you look at
Speaker 1: zero percent interest on the short end longer term, that
Speaker 1: is really supportive for businesses that should be supportive for
Speaker 1: their growth longer term, and that's a positive. The debate
Speaker 1: between growth and value I think really as another complexity
Speaker 1: to the equation. I think the old monikers of growth
Speaker 1: and value aren't necessarily accurate anymore, and so how the
Speaker 1: indices divide themselves up to be a benchmark for growth
Speaker 1: or a benchmark for value, I like to look through
Speaker 1: and look into the details of that. A lot of
Speaker 1: times if you're in the value besch, it's just because
Speaker 1: you're paying a dividend. You might not be making any money.
Speaker 1: So it's times as well. So it's a it's a
Speaker 1: complicated and messy situation. We're fundamental bottoms up investors. We
Speaker 1: like companies that generate cash flow. A lot of the
Speaker 1: companies that are in those value indicties or once that
Speaker 1: we wouldn't even consider it on. So when you look
Speaker 1: at the market overall, you've got a couple of things
Speaker 1: going on. Back to did we pull too much forward
Speaker 1: in equities or are we too fast in this rotation.
Speaker 1: We had a lot of emphasis on those safety play
Speaker 1: growth names last year. I think diversifying the portfolio is
Speaker 1: a natural progression of that, and so seeing money shift
Speaker 1: into more cyclical names is actually healthy for the market,
Speaker 1: and you're broadening out your base of what you're investing in. Right,
Speaker 1: more business models are acceptable to investors, So I don't
Speaker 1: think we're too far ahead in that diversification. Valuation is
Speaker 1: a completely different story, and I think that is driven
Speaker 1: by what are my alternatives? And when you have interest
Speaker 1: rates still at very low levels, equities are a compelling
Speaker 1: place to be. The issue I think we have in
Speaker 1: today's market is you've had cross currents with the Tenure
Speaker 1: eight going up to one point five acid allocators who
Speaker 1: I don't really look in a stock by stock, but
Speaker 1: overall asset classes, so fixed income or equities are now
Speaker 1: looking at that one percent rates. Saying you're fixed income
Speaker 1: actually is okay for me to move part of my
Speaker 1: investments back into fixingcome to get that secure rate. And
Speaker 1: they were almost all equity exposed as we went into
Speaker 1: your end twenty twenty. Where else are they going to go?
Speaker 1: So I think we're also seeing that shift in acid
Speaker 1: allocation happen along with the diversification of the portfolios beyond
Speaker 1: just the growth tech names. You get those two together,
Speaker 1: and I think that's what's crossing all of this noise
Speaker 1: in the market. We talked about this divergence that we've
Speaker 1: seen amidst this rotation, and I'm just looking at some
Speaker 1: of the numbers from the past month or so, just
Speaker 1: looking at sectors in the SMP energy Meanwhile, consumer discretionaries
Speaker 1: down close to ten percent, financials up six percent. I mean, massive,
Speaker 1: massive gaps between different industries, and then you so have
Speaker 1: pretty wide gaps within equities within the industries. And I
Speaker 1: know we hear this over and over again, and you
Speaker 1: guys are fundamental bottoms up stock pickers, but we've heard
Speaker 1: every year after year after year that this is going
Speaker 1: to be the year of the stock picker. And Bank
Speaker 1: of America put out a report the month of February
Speaker 1: was actually the best month for large cup active managers,
Speaker 1: active stock pickers since two thousand and seven. So would
Speaker 1: you say that what the shows is possibly the time
Speaker 1: is actually here and you can show the skill that
Speaker 1: you have. I definitely think that's the case, but you're right,
Speaker 1: we're active stock pickers. What else are we going to say?
Speaker 1: Some honesty? Finally, we'll be honest. We do have we
Speaker 1: believe that it's why we do what we do. But
Speaker 1: I do think that you're gonna see some of that
Speaker 1: come through because there's so much uncertainty in the market.
Speaker 1: And I do think if you go forward a couple
Speaker 1: of months, I can get a lot of economic noise.
Speaker 1: You know, you're over your comparisons aren't going to make
Speaker 1: any sense because a year ago things were nowhere, We
Speaker 1: close down the economy, we put everything on pause. And
Speaker 1: so I think that is somewhat what JAIRMYN. Powell was
Speaker 1: alluding to on Thursday. He's saying that, you know, he's
Speaker 1: not going to be distressed by some really wacky numbers
Speaker 1: because that may not necessarily be the true picture as
Speaker 1: you roll forward into what's happening. And I think that's
Speaker 1: where investors need to remember, you're over your data and
Speaker 1: some of these top headline numbers. You really need to
Speaker 1: look into the componentry of it, because those top headline
Speaker 1: numbers may not be revealing the true picture of things left.
Speaker 1: And by honesty, I mean for that phrase of the
Speaker 1: year of the stock picker. I think it's been the
Speaker 1: year of the stock picker every year I've been doing
Speaker 1: to this, which is longer than I care to remember.
Speaker 1: I will tell you I think the year after John
Speaker 1: Bogel came out with that first index fund, someone was like,
Speaker 1: that's good, but this is the year of the stock
Speaker 1: picker this year. But I want to go back to
Speaker 1: what you guys are looking at right now, because you
Speaker 1: mentioned earlier on in the show that when you look
Speaker 1: at some broad value indices they include some com means
Speaker 1: that you guys wouldn't even be interested in investing in.
Speaker 1: And right now it seems as though we are seeing
Speaker 1: energy rise at least one percent every single day. Financials
Speaker 1: also getting a boost as we see yields rise as well.
Speaker 1: Would you say, though, that it's not as easy as
Speaker 1: just saying, all right, I want to buy energy companies
Speaker 1: at large, because of course, I mean, energy is a
Speaker 1: sector that that's had a lot of hardship of late.
Speaker 1: Energy is a boom or bust sector. You either love
Speaker 1: you hate it, and it really just depends on the day.
Speaker 1: And so it's it's tough to be out of energy
Speaker 1: when it's working because it works well, aggressively well, and
Speaker 1: when it's terrible, it's really terrible. You don't want to
Speaker 1: be anywhere near it. So in the market today, what
Speaker 1: you're seeing is a lot of control going on in energy.
Speaker 1: The OPAC announcement that came out on Thursday is interesting, right,
Speaker 1: because it's telling you that there is still going to
Speaker 1: be suppression of supply, there's going to be control in
Speaker 1: that supply demand balanced and so you're seeing a lot
Speaker 1: of prey support and I think that that is what
Speaker 1: has been encouraging the market. At the same time, even
Speaker 1: before this came into play with with Thursday's decision, you
Speaker 1: saw the market recognizing that there's going to be future growth.
Speaker 1: Therefore we're going to have increased demand for energy, and
Speaker 1: that baseline price of oil has been rising, so all
Speaker 1: of those you know, I think in this case, I
Speaker 1: mean the swing and energy which is working in the
Speaker 1: right direction, and as an investor, you want to have
Speaker 1: some exposure to that. At the same time, always in
Speaker 1: the back of your mind, when energy is working, you
Speaker 1: have to be thinking about when does this stop, because
Speaker 1: it will quickly reverse and go the other way right,
Speaker 1: and perhaps if it goes too high, it becomes the
Speaker 1: headwinds your your consumer and retail UH stocks now. And
Speaker 1: I wonder how I mean because we talk about a
Speaker 1: dramatic move and will UH not as dramatic as last
Speaker 1: year when I went negative. But you know, I don't
Speaker 1: know how you compute the year over year change from
Speaker 1: a negative number. I'll have to. I'll get one of
Speaker 1: my daughters who's starting calculus to figure that out for me.
Speaker 1: But but brings up the whole notion of commodity inflation.
Speaker 1: I mean oils front center. But we've seen lumber go nuts,
Speaker 1: you know, the the industrial metals, um that all sort
Speaker 1: of input pricing to a lot of stocks out there. Um,
Speaker 1: how do you separate the good inflation from the bed
Speaker 1: UH in an environment like this? I mean could could? Yeah?
Speaker 1: The you know, the yields are up because of the
Speaker 1: the outlook for growth, Um, but could inflation bite some sucktors?
Speaker 1: Do you think this year? Well? Is it short term
Speaker 1: inflation or long term inflation? Because I think that this
Speaker 1: year that's what you have to worry about. We've certainly
Speaker 1: got some supply constraints, and I think those supply lines
Speaker 1: are what is going to feel some what will feel pressure.
Speaker 1: We have issues where again you're comparable is a pandemic.
Speaker 1: People actually shut down. We asked everyone to go on pause.
Speaker 1: Inventory lines have been depleted, and so if people ramp
Speaker 1: back up, these businesses come back to life, they do
Speaker 1: need raw materials being pulled through the pipeline, and they're
Speaker 1: not always readily available. We're also seeing a boom in
Speaker 1: certain industries at lumber, look at housing, so you know
Speaker 1: we've had this great boom and housing suddenly where everyone
Speaker 1: wants to find a house, we don't have enough houses,
Speaker 1: and so they're working on supply. That's an issue for lumber.
Speaker 1: Short term is that supply long going to continue to
Speaker 1: be constrained, probably for a couple of months. But I
Speaker 1: think longer term, I actually think you have to watch
Speaker 1: how those supply channels come back online. If they're functioning
Speaker 1: normally longer term, you shouldn't see that kind of constraint,
Speaker 1: and therefore your short term inflation actually can ease out
Speaker 1: into consistent long term growth. You know, I was really
Speaker 1: curious about what the terminal would say about that percent
Speaker 1: change in oil MIC. So if you pull up a
Speaker 1: chart on the terminal, there's a way that you could
Speaker 1: annotate the chart and you basically just draw a line
Speaker 1: from one point to an accident will tell you either
Speaker 1: their percent gain or the percent. It just says gain
Speaker 1: in parentheses numbers, So the Bloomberg terminal won't even calculate
Speaker 1: it for you. I guess, yeah, exactly exactly. But put
Speaker 1: this all together for us, then where do you guys
Speaker 1: actually see opportunity then? Right now, well back to the
Speaker 1: great lineup. It's a stock pickers market. Go back to fundamentals.
Speaker 1: We are looking for a big reopening trade, and I'm
Speaker 1: looking for opportunity in names that are going to benefit
Speaker 1: from that. It's interesting because even anecdotally, you can look
Speaker 1: across and I'm sure everyone has friends who have been
Speaker 1: cooped up this entire time and are itching to go out. Right.
Speaker 1: I'm based in Chicago. Chicago restaurants have opened up there
Speaker 1: at twenty percent capacity. But you can go out and
Speaker 1: go to a restaurant. You can even sit outside and
Speaker 1: go to a restaurant. In mind, you we're in Chicago
Speaker 1: and it's the winter, so people are still willing to
Speaker 1: do that. If you want to go out, you can't
Speaker 1: get a reservation. Things are booking up and maybe you
Speaker 1: can eat it five pm or you can eat at
Speaker 1: nine pm, but there's nothing in between. It's the same
Speaker 1: in New York. People want to get out and I
Speaker 1: think that shows you there's this pent up demand and
Speaker 1: back to the fteen hundred dollar check that's going in
Speaker 1: consumers pockets. Consumers have a very strong balance sheet right now,
Speaker 1: and so when you look at it, they have stored
Speaker 1: that up, saving three through at all time highs. They've
Speaker 1: been very good about managing to get through this pandemic.
Speaker 1: And I think once things open up, I think you
Speaker 1: are going to see a big flurry of consumer activity
Speaker 1: and with that, I think you get opportunity and looking
Speaker 1: for the company's name services especially that are going to
Speaker 1: benefit from that. Yeah, the personal savings rate was just
Speaker 1: through the roof there for for many months. I mean, it's, uh,
Speaker 1: it's a fascinating set up, but you know it's not
Speaker 1: obviously I think everyone is still bush. Maybe not everyone,
Speaker 1: but um, it makes a lot of sense to still
Speaker 1: be bullish on that reopening trade, I think. But then
Speaker 1: you look at that stay at home trade and there's
Speaker 1: some of the just I think over the long term,
Speaker 1: really some of the most intriguing stocks. Uh, you know
Speaker 1: around Facebook's not going anywhere, Google is not going anywhere,
Speaker 1: Netflix Zoom, Uh, you know, it's not going anywhere. When
Speaker 1: do you sort of know when to go, when to
Speaker 1: revert back to the darlings of of the you know,
Speaker 1: former era of the of the bullmarket. You know what,
Speaker 1: what would you sort of look forward to to ring
Speaker 1: that bell and say, okay, everyone switched partners again and
Speaker 1: go back to the to the big tech companies. Well,
Speaker 1: the market is always looking forward, and so I think
Speaker 1: once you get into the true full on belief that
Speaker 1: the reopening is coming and it's here, as we're starting
Speaker 1: to see that, then I think once again investors are
Speaker 1: looking for the next opportunity and where we'll growth be
Speaker 1: priced in and they're trying to even themselves out. And
Speaker 1: at that point, and we always this flow of money
Speaker 1: chasing areas that they think are going to are going
Speaker 1: to work in the future, but might right now be
Speaker 1: under invested in. And so you're gonna see that swing
Speaker 1: back because as we go towards the reopening, everyone's looking
Speaker 1: at the cyclicals. As we get to the reopening, people
Speaker 1: are going to go back to growth at a reasonable price.
Speaker 1: What's going to do well. I think the pandemic was
Speaker 1: most interesting because it took a lot of those market
Speaker 1: darlines and stocks that weren't necessarily market darlines but might
Speaker 1: have been in the tech space in some way and
Speaker 1: push them to the forefront because the pandemic forced this
Speaker 1: adoption of technology and means of operating that to to
Speaker 1: a new level where the uptake was much higher than
Speaker 1: it would have been otherwise. So a lot of these
Speaker 1: technologies got pulled into every household that might not have
Speaker 1: happened without the pandemic circumstance. For another decade, my grandparents
Speaker 1: are using Amazon to shop. They had no idea what
Speaker 1: that was year ago, and now they think they're the
Speaker 1: coolest thing ever. It's interesting to see that because it
Speaker 1: did allow a lot of those companies to leak frog
Speaker 1: forward and get traction in society and actually become part
Speaker 1: of people's normal behaviors, so that they're now entrenched. And
Speaker 1: I think we'll see, of course, that's being rewarded as
Speaker 1: the world shifts back to normalcy, and you're gonna have
Speaker 1: some new players that have moved into the normal day
Speaker 1: to day Mike, I am. I'm happy to say I
Speaker 1: know you are not happy to hear me say that.
Speaker 1: I think it's that time of the show stand clearer
Speaker 1: of the craziest things we saw in markets this week?
Speaker 1: All right, all right, well it is that time. Let's
Speaker 1: do the crazy things before we get to my crazy nickname,
Speaker 1: I'm I'm procrastinating up. You won't get away without sharing
Speaker 1: it today. Well, I'll kick it off on the crazy
Speaker 1: things here. Um, this crazy thing combines two of my
Speaker 1: favorite things. For one thing. Sure, I'm starting to think
Speaker 1: that people are just out there doing things in hopes
Speaker 1: of getting featured in the crazy Things segment. I might
Speaker 1: be a little narcissistic on my part, but I'm sure
Speaker 1: there's some truth to that. If you can come up
Speaker 1: with a better explanation for non non fungible tokens that
Speaker 1: I'll hear it. But until I hear otherwise, I think
Speaker 1: they are just trying to get featured in this segment.
Speaker 1: So this one, this is a story courtesy is CBS
Speaker 1: news dot com, and it combines two of my favorite
Speaker 1: crazy things uh n f T non fungible tokens and
Speaker 1: ridiculously overpriced modern art. Um And one of my favorite
Speaker 1: modern artist is this guy Banksy I don't know if
Speaker 1: you're familiar with him. He's most famous him on the
Speaker 1: show before Yeah, I've got it. We we get We
Speaker 1: get to him a lot. He's was famous for selling
Speaker 1: the painting that self shredded the minute the auctioneer hit
Speaker 1: hit the gavel down, which is one of my all times,
Speaker 1: was of all time, would have actually ben if they
Speaker 1: had a camera facing how he could have done that better? Right,
Speaker 1: if he had a camera in the frame facing the
Speaker 1: audience to watch everyone. My favorite part was I forgot
Speaker 1: what auction house. It was Christie's or some other bees
Speaker 1: are one of them. And they said to the person, look,
Speaker 1: will refund you your money, and the person was like,
Speaker 1: no way, this thing's worth even more now that it's shredded.
Speaker 1: So that that's amazing that he was getting into. So
Speaker 1: enter into this story. A blockchain company known as Injective Protocol.
Speaker 1: They bought not a back to the original a print
Speaker 1: assigned print for dollars and they immediately burned it on Twitter.
Speaker 1: And the reason they did that is because they had
Speaker 1: made a digital replication of it, which they had turned
Speaker 1: into a non fungible token on the blockchain, presumably making
Speaker 1: it worth much more than the nine thousand they paid for.
Speaker 1: What what multiple do you get if you turn a
Speaker 1: bank see photograph for art piece into an n f T.
Speaker 1: We need no offense to use, Susan, but we need
Speaker 1: an n f T picker to to to come on
Speaker 1: the trap. Yea to that one. That makes no sense
Speaker 1: to me at all. That's pretty good. But I will
Speaker 1: say this, I would not mess with Banksy. You know,
Speaker 1: when he hears about this, his next you know, thing
Speaker 1: might be to burn down the blockchain as as his
Speaker 1: next as his next feat. So I h that's that's
Speaker 1: my craziest thing, Susan, you got anything for us? Well,
Speaker 1: my after that? What can compete with that? But that really,
Speaker 1: I think that really takes the cake. I did hear
Speaker 1: I got a couple of things, so you know, there
Speaker 1: was some price action and racket mortgage that I thought
Speaker 1: was really interesting. When you see the reddit crowd getting
Speaker 1: up on when you see the reddit crowd getting up
Speaker 1: on the small cap names like game Stop, where you
Speaker 1: can get those meadows all grouping together to make a way,
Speaker 1: then makes sense to me. But when you get into
Speaker 1: something like rocket mortgage, where the market cap is much
Speaker 1: much higher and yet you see some wave happened that
Speaker 1: shoots the price up and had causes this dislocation and
Speaker 1: the shares. That was really surprising to me, and so
Speaker 1: I think it's a warning that the mechanism is out there.
Speaker 1: You can see volatility, short term volatility in a lot
Speaker 1: of places that you didn't expect. So keep that in
Speaker 1: the back of your mind when you start to see
Speaker 1: some really irrational price movement. And then given how much
Speaker 1: those guys like the rocket emoji, I think that that
Speaker 1: was inevitable. I mean that checking myself for not seeing
Speaker 1: that one coming. Yeah, I I just looked a call
Speaker 1: volume and rocket, So more than a million, more than
Speaker 1: one point one million call options traded that day that
Speaker 1: we thought the spike before that, the previous high was
Speaker 1: not even three hundred seventy five thousand. So really really
Speaker 1: one other thing to throw in front of you, which
Speaker 1: is uh an e t F that was launched that
Speaker 1: I heard about called the Buzz e t F, which
Speaker 1: I think is is great, but it it really shows
Speaker 1: you how important social media has become. And so here's
Speaker 1: this e t F that is going to track the
Speaker 1: performance of stocks as the stacks that are most mentioned
Speaker 1: in social media right on the web. And and so
Speaker 1: I think that basically says it all about where Americans
Speaker 1: are spending their time and a different way to really,
Speaker 1: you know, take a creative way to take a look
Speaker 1: and think about tracking consumer preferences. That's pretty good. Yeah,
Speaker 1: the famous Davy Day trader, Dave Portnoy, who would have
Speaker 1: thought he'd be the most influential exactly who would have thought?
Speaker 1: And pushing e ts named buzz right and and and
Speaker 1: they've probably gone with pizza or that's pretty good. I
Speaker 1: like both of those. Those are good. Those are good.
Speaker 1: How about you? Sorry, what do you You got some
Speaker 1: stiff competition this week? I do, I do. I'm gonna
Speaker 1: bring it back to stack world because really, at the
Speaker 1: midst of the cell up we've been seeing SPACs have
Speaker 1: really been tied up in it. If you look at
Speaker 1: a spack index, it's down about now from the high.
Speaker 1: But what's crazy to me were some numbers that were
Speaker 1: put out by Golden Sacks and I'll just read them
Speaker 1: to you. So in the first two months of this year,
Speaker 1: a hundred seventy five SPACs sold I p o s
Speaker 1: are roughly five deals per trading day. Well now in February.
Speaker 1: So just last month alone, nineties SPACs race thirty two
Speaker 1: billion dollars, which was a monthly record, and should the
Speaker 1: pace of issue ones persist, this year's offerings will surpass
Speaker 1: the full year of before the end of this month
Speaker 1: and was a obvious a record here for SPACs. So
Speaker 1: the fact that we are going to pass that within
Speaker 1: the first three months is pretty crazy. What's your take
Speaker 1: on specs Susan Well recently in recent days, I think
Speaker 1: it gives you a good indicator of how much froth
Speaker 1: was in that market, and it does seem to be
Speaker 1: the new craze. From a company's perspective, it actually is
Speaker 1: a nice convenient way to backdoor into being publicly traded.
Speaker 1: But from an investor's perspective, you're taking a huge bet
Speaker 1: if you're moving into us back where you did. It's
Speaker 1: basically just air. I'm giving you a blake check. Go
Speaker 1: for whatever you want. You don't know what they're gonna buy,
Speaker 1: you don't know which direction it's going in, and you
Speaker 1: hope that they end up buying something that is equivalent
Speaker 1: with the strength of the management team or the leadership
Speaker 1: that they have around this back they don't have to
Speaker 1: and I think we've seen examp fools aware they could
Speaker 1: go into something completely different than you expect because it's
Speaker 1: not going to behoove them to give you your money back. Yeah,
Speaker 1: if that portnoy guy doesn't start a spack is a
Speaker 1: big missed opportunity here. It's like pizza, pizza and meme acquisition. Uh,
Speaker 1: the stool stack. I don't know if that sounds so great?
Speaker 1: But what's Sarah with that said? I think that's it
Speaker 1: for today. I think that's everything we have to talk. No, no, no,
Speaker 1: I don't hasn't Susan's holding you to it. It's not
Speaker 1: me alright, alright, well drumroll please, I guess if we'll
Speaker 1: have the producer out of drum all? All right? So,
Speaker 1: as I hated this, this nickname was like my more
Speaker 1: flattering nickname was granted to me on the basketball court,
Speaker 1: and so I went, I went, I have to give
Speaker 1: you a long backstory for this, I'm afraid, but I
Speaker 1: think the six sixty people that raided the show to
Speaker 1: deserve the full street. So I went to a public
Speaker 1: grade school, but then I went to a Catholic high
Speaker 1: school which had a good basketball reputation. It's not like
Speaker 1: one of these basketball factories today. But they had won
Speaker 1: a state championship, so I was excited to play. I
Speaker 1: made the team, but I was here. I was this
Speaker 1: public school guy coming on the team, and basically of
Speaker 1: the Catholic grade schools that fed into the team, the
Speaker 1: starting five from that best team was like, we're the
Speaker 1: team for high school. We don't need this new guy
Speaker 1: from from public school. So there's a bit of hazing
Speaker 1: that went on. Um and again, I'm like fifteen years old,
Speaker 1: this is nineteen eighty something, and uh, I did something dorky.
Speaker 1: I don't know what it is. And one guy on
Speaker 1: the team who was wearing a retainer, I will I
Speaker 1: will point out, and you know how hard it is
Speaker 1: to get bullied by a kid with a retainerult for you. Yeah,
Speaker 1: And he said, oh, he's a dork something like that,
Speaker 1: except he was wearing trainer and it sounded like he
Speaker 1: said he's a stork and Sarah the so that some
Speaker 1: guy other guy on the team said, did you call
Speaker 1: him stork? And sorry? This is where your your lack
Speaker 1: of old man movie knowledge comes into play, because there's
Speaker 1: a character in the in a Great Old Man movie
Speaker 1: called Animal House, which you probably haven't seen you've seen
Speaker 1: Animal House, all right, So Animal House, you know it
Speaker 1: was meant to be a comedy, But for guys of
Speaker 1: my generation, it was like a how to video, like
Speaker 1: this is how we thought life in college was supposed
Speaker 1: to be lived. So if you're ever wondering why like
Speaker 1: me and Chris Nage and your boss Jeremy aren't quite
Speaker 1: as sharp as your generation, that that explains it all.
Speaker 1: I'm sure that's the reason. But Stork was like the
Speaker 1: nerdiest character, like predated Revenge of the Nerds, another old
Speaker 1: man movie. He had the tape on his glasses, y
Speaker 1: had like two lines, and he was clearly the dirkiest
Speaker 1: character in film history up to that point. Um, and
Speaker 1: so that nickname. Only the guys on the basketball team
Speaker 1: would call me that. And like if some girl in
Speaker 1: the lue room overheard this, she'd be like, why do
Speaker 1: they call you Stuirk? And I'd say, well, it's kind
Speaker 1: of embarrassing, but but I've been known to steal the
Speaker 1: ball and go coast to coast, and I fly to
Speaker 1: the basket like a beautiful Birdy I laid the ball
Speaker 1: in the net the same way as Stuerk. Gently lays
Speaker 1: a baby in the cradle and then yeah, this is
Speaker 1: really didn't work because then some other guy from the
Speaker 1: team would show up and say that's not true. That's
Speaker 1: not But here's what's so I finally googled this character.
Speaker 1: I was like, who played this character anything? What's what's
Speaker 1: the deal with this guy? Fascinating story about the guy
Speaker 1: who played it? Um, which really is redeemed. It this
Speaker 1: nickname for me, and I'm fine with it now because
Speaker 1: he's actually the guy who wrote the movie. His name's
Speaker 1: Douglas Kenny. Yeah. He founded the mag see National Lampoon,
Speaker 1: which was like a huge steal old guys like me
Speaker 1: back in the day, a really funny magazine. He also
Speaker 1: wrote Caddy Shock, helps writed him and Harold Ramos, another actor,
Speaker 1: helps to write Caddy Shock and Animal House. Uh. Sadly,
Speaker 1: he died a tragic death where he fell off of
Speaker 1: a mountain in Hawaii. But before that he was he
Speaker 1: was he was pretty good, So I'm all right with that.
Speaker 1: You know. It's one of the most influential characters in
Speaker 1: writers in the old man movie genre, which back then
Speaker 1: we just called the movies, but they are. Yeah, I
Speaker 1: don't think the other players on the basketball team. We're
Speaker 1: really thinking that through when they called these stars, great
Speaker 1: turnaround on your part. Life life is like that, and
Speaker 1: that is if only you've known that when you were
Speaker 1: talking to the girls in the lush room, gave me
Speaker 1: after this guy, and look at how much he did.
Speaker 1: I know I wouldn't have to take my sister to
Speaker 1: the prom after all. Now, honestly, my stork is an
Speaker 1: honorable nickname. Everyone who rated to hear this nickname, I'm
Speaker 1: sure they'll be really happy to hear it. Thank you
Speaker 1: for sharings are that are out there. They now have
Speaker 1: earned every word written because look at the information that
Speaker 1: that brought forth. But Sarah, let's practice here though. If
Speaker 1: someone hears about this nick nickname but hadn't listened to
Speaker 1: this episode, how are you how are you going to
Speaker 1: explain how I got that nickname that Mike used to
Speaker 1: fly to the hoop when he played basketball. That's it,
Speaker 1: That's why you're that's why you're my favorite, of course, colleague, Sarah.
Speaker 1: Thank you, of course. Oh wow, I'm gonna have to
Speaker 1: tell everyone you just said that. Okay, I won't tell,
Speaker 1: but now we're gonna have to come up with something else.
Speaker 1: To get ratings on the show. Season's nickname under Wrap,
Speaker 1: So I'll also put out there if if anyone listening
Speaker 1: to the podcast says anything that they want to know
Speaker 1: about the podcast, the show about Mica l I let
Speaker 1: us know. Maybe we'll make that the next gimmick, as
Speaker 1: Mike would call it, But Susan Schmidt, We're gonna have
Speaker 1: to leave it there. Thank you so much for coming
Speaker 1: on the show today. Thank you for having me. I
Speaker 1: always great to talk to you guys What Goes Up.
Speaker 1: We'll be back next week. Until then, you can find
Speaker 1: us on the Bloomberg Terminal, website and app, or wherever
Speaker 1: you get your podcasts. We'd love it if you took
Speaker 1: the time to rate and review the show on Apple
Speaker 1: podcast so more listeners can find us. And you can
Speaker 1: find us on Twitter, follow me at at Sarah Ponzack,
Speaker 1: Mike is that Rea Anonymous, and you can also follow
Speaker 1: Bloomberg Podcasts at podcasts. Also thank you to Charlie Pellett
Speaker 1: of Bloomberg Radio and the voice of the New York
Speaker 1: City Subway System. What Goes Up is produced by Tofur Forehead.
Speaker 1: The head of Bloomberg Podcast is Francesco Levie. Thanks for listening,
Speaker 1: See you next time. The Four