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Speaker 1: Welcome you, trilliance. I'm Joel Webber and I'm Eric Baltis.

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Speaker 1: Eric is great to be back in the booth with you.

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Speaker 1: I was away for a second. Things didn't go so well. Yeah,

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Speaker 1: I had to take over your role, and uh it

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Speaker 1: was harder than it looks. I gotta I gotta give

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Speaker 1: you credit. I don't think I'm gonna mock you anymore

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Speaker 1: after you go on what I call the downward spiral,

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Speaker 1: especially in the closeouts. First of all, those are incredibly

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Speaker 1: rare and you make a bigger deal than they are.

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Speaker 1: But you know, it's great to be back. I missed

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Speaker 1: I missed my Tony Romo. How was China? Uh? You know,

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Speaker 1: there's the conference. This Bloomberg New Economy Forum that we

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Speaker 1: do is really interesting huge, Uh turn out, some really

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Speaker 1: significant people and a lot of interesting topics that came up.

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Speaker 1: So it was an interesting place to go, especially right

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Speaker 1: now and in the midst of all the things that

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Speaker 1: are happening in the world. I thought it was really interesting.

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Speaker 1: And coming back though, I really wanted to have a

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Speaker 1: holiday party. So this episode of the podcast we said,

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Speaker 1: why don't We Talk to Our Friends? Is over at

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Speaker 1: What Goes Up? Podcast? Also here at Bloomberg, which is

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Speaker 1: co hosted by Sarah Ponzic and Mike Reagan. So we

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Speaker 1: decided let's bring them on and then let's actually like

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Speaker 1: talk about what's gone up this year. Yeah, the past

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Speaker 1: couple of our podcast episodes have been a little wonky,

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Speaker 1: non transparent active direct indexing platforms. So we thought this December,

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Speaker 1: let's wrap up what happened in the market where people

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Speaker 1: are investing, and that's their specialty. So um, we thought

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Speaker 1: we'd look at what went up and what might go

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Speaker 1: up next year. What kind of beverages do you serve

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Speaker 1: at holiday parties? I don't really have some two young kids,

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Speaker 1: so I parties are like nothing too crazy. I picture

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Speaker 1: Eric serving ETF That is holiday party. Like, here's some

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Speaker 1: t VIX for you, Uncle Joe, or metaphorically, t vix

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Speaker 1: would be like grain alcohol, different alcohols, each with a

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Speaker 1: sign spy. Pretty easy, it goes down. Well, yeah, yeah,

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Speaker 1: here's some o'duel's little voo for you. You You can't handle anything,

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Speaker 1: you know, I want some three X leveraged ets. My

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Speaker 1: question for you, I'm gonna turn the tables already. Sure,

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Speaker 1: I'm used to asking Eric the questions like ten times

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Speaker 1: a day over the incident messenger. But why aren't triple

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Speaker 1: X levered e t s the biggest thing in the world.

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Speaker 1: If you're gonna be a bowl on the market, go bigger,

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Speaker 1: go home, Right, I'm looking at the triple Q. How

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Speaker 1: do you how do the cool et f guys called

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Speaker 1: the triple Q or the t Q cu cu um,

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Speaker 1: the triple Q the q q Q yeah, yeah qq.

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Speaker 1: They must have called the cubes back in the day

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Speaker 1: when it was four. But I like the t q

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Speaker 1: q Q. Yeah. So that's the triple leveraged version of it,

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Speaker 1: which I think is up like four thousand percent since

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Speaker 1: it came out for the decade. Yeah. The problem with leverage,

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Speaker 1: um well, first of all, they do have a good audience,

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Speaker 1: but there's um the way they rebalance every day because

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Speaker 1: when new people come in, they didn't make sure their

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Speaker 1: leverage is reset for that day, and that resetting can

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Speaker 1: cause some corrosion and so your your triple leveraged. It

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Speaker 1: doesn't exactly in the long term, and that's why the

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Speaker 1: three X and negative three can be both down over

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Speaker 1: a year. But if something goes up in a nice direction,

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Speaker 1: you get compounding effect and actually you can get four

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Speaker 1: or five times. But it's a very um weird market

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Speaker 1: that has really got some wacky math. But other than that,

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Speaker 1: I agree with you. I think, um, you know, I

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Speaker 1: think if you talk to those companies, half their investors

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Speaker 1: are hardcore traders, small hedge fund types, and half our

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Speaker 1: retail day traders, like I think the new day trader

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Speaker 1: uses those kind of things, but you can tell from

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Speaker 1: the volume they're probably trading a short term with the

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Speaker 1: day this time on trillions. What went up? What else

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Speaker 1: went up? I want to start with the SMP five

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Speaker 1: because it's relentless, and you know, I call the utopia year,

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Speaker 1: but I think that year the market was up with

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Speaker 1: something like that. It's up more this year, So are

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Speaker 1: we like beyond utopia? Like isn't crazy, but it doesn't

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Speaker 1: quite feel like it, does it. I'm gonna let me

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Speaker 1: read you a little bit from this this uh column

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Speaker 1: I edited by our colleague. Ye. She literally everything went

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Speaker 1: up in two in this year two tho, I'm still

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Speaker 1: check so right right given away my age. So he

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Speaker 1: basically looked at every major asset class. Literally not only

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Speaker 1: did everything go up, but everything went up way more

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Speaker 1: than the average gains over the last year, and I

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Speaker 1: mean I'm talking everything from your haven's treasuries up more

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Speaker 1: than average e M debt, high yield, gold, everything. So

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Speaker 1: I don't know, to be honest, I don't know what

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Speaker 1: the takeaway is from that, other than there's just a

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Speaker 1: whole lot of money chasing returns this year. So I

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Speaker 1: have one theory on it, which is, and Sarah, you

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Speaker 1: correct me if I'm wrong. For the most part of

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Speaker 1: the year. The last month is an exception because I

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Speaker 1: think people just went all in bullish recently. But for

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Speaker 1: the first up through Halloween, I felt that there was

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Speaker 1: a Trump trade developing, which is, I'm gonna just hang

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Speaker 1: onto equities. I'm not gonna sell them, but I'm gonna

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Speaker 1: buy gold, treasuries or low ball because Trump's Twitter feed

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Speaker 1: bothers me a little bit. I'm a little nervous and

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Speaker 1: eighteen just happened, and I'm still a little spook from that.

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Speaker 1: So I think that's why you might have had everything

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Speaker 1: go up because people I didn't want to sell equities

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Speaker 1: because the FED was there, but they also felt nervous,

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Speaker 1: so they bought these other things. For the most part,

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Speaker 1: I would agree. I mean, you think about the first

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Speaker 1: half of the year, there were still a lot of

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Speaker 1: nervousness out there. There are a lot of concerns out there,

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Speaker 1: and that's why even within the equity market for months

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Speaker 1: you saw that defensive trade really take off. They see

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Speaker 1: people piling into consumer staples, you saw people piling into utilities,

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Speaker 1: real estate. Also because of the bond proxy side of

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Speaker 1: those trades. I mean yields coming down to one and

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Speaker 1: a half percent this year. US people last December, in

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Speaker 1: the beginning, what they would have thought yields were going

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Speaker 1: to do. I highly doubt anyone really would have told

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Speaker 1: you that yields were going to drop from uh till

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Speaker 1: one and a half on the ten years. So that

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Speaker 1: really drove the trade for a while. But now in

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Speaker 1: the back half of the year, the last couple of

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Speaker 1: months or so, now people are starting to question if

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Speaker 1: a lot of that was way overdone. So you have

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Speaker 1: started to see uh some faults in the bond trades.

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Speaker 1: You've seen it in gold as well. However, because they

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Speaker 1: had such a strong run up in the beginning of

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Speaker 1: the year, there's still up an extreme amount, and all

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Speaker 1: year long, you've just had risk assets inequities rebounding as well.

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Speaker 1: But you think about the return for the SMP. A

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Speaker 1: lot of people, when you say year today, the smps up,

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Speaker 1: they're gonna say, wait, wait, wait. But if you look

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Speaker 1: back towards the beginning of December, uh, it's not quite

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Speaker 1: that high. You have to really take into account the drop,

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Speaker 1: the meltdown that we did see at the end of

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Speaker 1: last year. Yeah, it's a it was a really weird phenomenon,

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Speaker 1: this roaring bowl market being led by defensives. I don't

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Speaker 1: I can't remember a time when I've seen that. You

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Speaker 1: saw what looked like out of textbook what they would

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Speaker 1: call crowded trades and these staples and utilities. I mean,

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Speaker 1: some the valuation is just going through the roof for

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Speaker 1: these really defensive sectors. So a strange year for sure.

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Speaker 1: And lately I've started to see some research to looking

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Speaker 1: at the latest rally that we have seen, talking about

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Speaker 1: the proverbial or really scary blow off top that you

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Speaker 1: get before a bear market, or that you get before

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Speaker 1: a recession. Uh. Some shops pointing out that as of

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Speaker 1: the end of November, if you had looked at stocks

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Speaker 1: on a one to four all the way through fifty

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Speaker 1: two week basis, the return was positive on all of

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Speaker 1: them saying that, Okay, maybe this is it, but you

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Speaker 1: continue to have investors in the majority I speak with,

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Speaker 1: say you think about the caution that is out there,

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Speaker 1: that being the makeup of what's driven returns for a

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Speaker 1: decent amount of the year, but also flows too. If

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Speaker 1: you look at so far this year, fixed income ets

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Speaker 1: have taken in more than equity ts for the first

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Speaker 1: time since two thousand nine, And a lot of people

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Speaker 1: keep talking about this cash on the sideline, which I

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Speaker 1: find interesting. Yes, you can look at mutual phone outflows. Uh,

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Speaker 1: there certainly is a lot of caution out there. But

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Speaker 1: ned Davis has another way of looking at it which

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Speaker 1: I've kind of taken to, and they look at cash

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Speaker 1: actually as a percentage of total market cap, because if

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Speaker 1: you look at the absolute level of cash right now

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Speaker 1: on the sidelines or cash in money markets, then sure

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Speaker 1: it's high. But if you actually look at it relative

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Speaker 1: to market cap, because obviously there's a lot more value

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Speaker 1: in the markets right now as a whole since two

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Speaker 1: thousand and nine, it's actually pretty low, which makes you think, sure,

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Speaker 1: on an absolute level, there's a lot of cash on

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Speaker 1: the sidelines, but not actually relative to the actual market

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Speaker 1: cap out there, and you know one headline that I

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Speaker 1: picked some headlines out that you guys wrote that you're

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Speaker 1: talking about that I think captured. The year is here.

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Speaker 1: It is sick with recession fever. Investors make power their drug,

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Speaker 1: and to me, UM, I felt like the FED has

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Speaker 1: been the drug for ten years. Was a year we

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Speaker 1: saw the patient off the drug and it spassed out.

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Speaker 1: Everything went down like that was the year everything went down.

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Speaker 1: But then beginning of this year, Powell came out reassured markets.

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Speaker 1: Trump's pressure on him I think is part of the deal. Um,

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Speaker 1: But it seems like recession impeachment. I track the mentions

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Speaker 1: of these words and they spike up, and they're scary words,

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Speaker 1: especially recession. But spy volume never really gets shaken, which

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Speaker 1: is a fear gauge. I use, nobody's really doing much.

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Speaker 1: I think there's headlines and sentiment gets crazy for a

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Speaker 1: week here and there, but people just I guess the

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Speaker 1: all comes back to the FED being their drug. As

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Speaker 1: long as they get that hit, Um, everything else will

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Speaker 1: be short lived. And is that really the case? And

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Speaker 1: how does this end? I think something that people are

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Speaker 1: going to be studying for years is what happened in

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Speaker 1: the repo market this year, and how the FED kind

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Speaker 1: of came in to rescue save the day by holding

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Speaker 1: these auctions repo auctions. Now everyone's saying it's not quantitative easing,

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Speaker 1: it's not quantity of easing, okay, But the Fed expan

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Speaker 1: of their bounce sheet by more than a quarter trillion

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Speaker 1: dollars within a few months. And a big reason why

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Speaker 1: I think you have to assume they did that is

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Speaker 1: because here we are running a growing economy and yet

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Speaker 1: we're blowing out the federal budget deficit to a trillion

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Speaker 1: dollars a year. Everyone got a tax cut, corporations got

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Speaker 1: a tax cut. So there is all this money chasing

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Speaker 1: all sorts of assets around right now. Extra money. So yes,

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Speaker 1: the FED did reverse course on rates and uh, you know,

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Speaker 1: started lowering rates. That's one part of it. But I

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Speaker 1: would not discount the effect of their moves in the

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Speaker 1: repo market because they kept by keeping those uh treasury

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Speaker 1: bill rates low. Um, you uninvert the yield curve, so

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Speaker 1: people stop worrying about that. All this would qualify under

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Speaker 1: the FED. Has the markets back, Yeah, absolutely, And I

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Speaker 1: would say even Trump wants to Fed to have the

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Speaker 1: markets back right. This is all speculation, but there are

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Speaker 1: a lot of people throwing around the idea that a

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Speaker 1: few weeks ago when Powell met with manution in Trump,

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Speaker 1: that maybe that was something they discussed. If they decided

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Speaker 1: to pull the plug on the trade war, do something unexpected,

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Speaker 1: will the FED have the markets back? And I've spoken

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Speaker 1: to a couple of people, including the head of asset

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Speaker 1: Allocation UH this week over for Pacific Life Investments, who

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Speaker 1: said that's part of the reason that we are seeing

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Speaker 1: this end of year rally continue. I spoke with another

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Speaker 1: investor at another point this week who said that he

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Speaker 1: sees the possibility that the FED could actually cut rates

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Speaker 1: on the first quarter of next year. Also part of

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Speaker 1: the reason that the market is continuing to gain, not

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Speaker 1: because they think we're going to fall into a recession,

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Speaker 1: but because if something unexpected does happen on the trade front,

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Speaker 1: or if you do continue to see some deterioration and

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Speaker 1: growth but that's not horrible, well, the FED has your back,

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Speaker 1: and the FED put is still there, the power put

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Speaker 1: is still there, and that's part of the reason we

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Speaker 1: continue to see this risk on attitude. There's people on

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Speaker 1: Twitter and they are very funny they'll see something like

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Speaker 1: I heard today, like somebody taped a banana to a

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Speaker 1: wall and it sold in an art exhibit for like

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Speaker 1: a d and the person will just say, FED definitely

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Speaker 1: has to cut rates or s andp hits all time five,

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Speaker 1: FED has to cut rates. They're making fun of like

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Speaker 1: it's the best market all time highs all the time.

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Speaker 1: Yet Trump's on the FED to cut rates, and I

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Speaker 1: kind of get it. I mean, it's almost become a joke. Sir.

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Speaker 1: You mentioned something about growth and value a second ago.

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Speaker 1: Can we dwell on that for a little bit, because

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Speaker 1: this has been actually been a kind of a remarkable

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Speaker 1: year for value of all things. So I'd say over

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Speaker 1: the last couple of months, if you still look over

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Speaker 1: the year, growth not so much in e t F

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Speaker 1: flows because we started have started to see a lot

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Speaker 1: of et F flows going into not so much just

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Speaker 1: value funds like low volatility funds, dividend funds, also those

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Speaker 1: bond proxy areas of the market. But if you look

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Speaker 1: at performance, I mean, gross had a pretty stilar year

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Speaker 1: from the beginning of the year as well. But what

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Speaker 1: happened and my colleague Lucawa wrote about it very very

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Speaker 1: early on after the steps that happened with Whee Work,

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Speaker 1: and he called it the we Work flu the idea

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Speaker 1: that all of a sudden, people are going to start

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Speaker 1: actually caring about profits again and stop throwing money at

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Speaker 1: companies that just have have very high growth prospects. And

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Speaker 1: we did see that play out for quite a while.

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Speaker 1: We saw it happen with certain companies after earnings. Twitter

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Speaker 1: comes to mind, for example. UM. But then we saw

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Speaker 1: if I focus on software companies one portion of growth,

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Speaker 1: we saw software start to perform pretty well. Again. One

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Speaker 1: thing in there is like we work being classified as

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Speaker 1: a tech company. Right, everybody came back to reality, Well,

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Speaker 1: everything is a tech company. But can I just go

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Speaker 1: over this one headline that is totally on this topic.

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Speaker 1: I think who wrote it? I think Sarah did. This

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Speaker 1: is UM after latest IPO setbacks, there's unicorn blood on

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Speaker 1: the streets. That was That was an early, early story.

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Speaker 1: That was a business week. Yes it was business people

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Speaker 1: get started. That was no problems. But the problem is

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Speaker 1: I I wasn't even aware because I've probably written something like, yeah,

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Speaker 1: that one was. That was the story. You know, when

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Speaker 1: we um a business week, we're thinking about the year

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Speaker 1: we did a cover story back in like March, I

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Speaker 1: think right as Uber basically listed in I p O

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Speaker 1: that we kind of wanted to mark that moment and

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Speaker 1: we did cover that had that was by both of

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Speaker 1: these guys, both Mike and Sarah about um, the moment

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Speaker 1: of private companies leaving Matt what Matt Levien calls the

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Speaker 1: enchanted forest of the private markets for the public markets.

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Speaker 1: And we marked that moment with a cover story that

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Speaker 1: had a Instead of a deer crossing a road, it

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Speaker 1: was a unicorn um, which I thought was fitting because

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Speaker 1: you know, deer get hit by cars all the time,

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Speaker 1: and like, some of these companies are not going to

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Speaker 1: make it to the other side of the road. Uh,

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Speaker 1: and they and they actually you know, for a long time,

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Speaker 1: a lot of them have struggled and I think will

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Speaker 1: continue to of them struggle, with Uber being one of

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Speaker 1: one of those examples. But later on in the year

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Speaker 1: we came back to it with another story which was

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Speaker 1: how bloody this this has been for all these companies, right,

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Speaker 1: and that really that headline relates exactly to that theme,

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Speaker 1: because man, we saw blood bath for a while and um,

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Speaker 1: just I want to go back to growth and value

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Speaker 1: because I feel like, and Michae will get this because

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Speaker 1: he's a sixers fan. Value is like when Ben Ben

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Speaker 1: Simmons hitting a jump shot because he's so bad, so

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Speaker 1: he hit a three pointer and the place why crazy,

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Speaker 1: Like they won the championship. Value was up this year.

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Speaker 1: Growth was up thirty like, just because value didn't lose

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Speaker 1: by more. It's like a big year for value. I

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Speaker 1: know what you mean. It seems like value had its

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Speaker 1: big year, but it's still trailed the market and it's

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Speaker 1: still lost to growth again. So it's just it's relative

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Speaker 1: to its it's relative because the past performance has been

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Speaker 1: I think value it's called a little bit because people

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Speaker 1: like it's so bad. I thought you were going to

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Speaker 1: go with the Marquel false example of Orlando getting stepping

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Speaker 1: up the biggest value stock in the NBA history. Um, yeah,

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Speaker 1: I was. Actually Joel has this list for Business Week

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Speaker 1: called the Jealousy List. Uh, And I was, you know,

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Speaker 1: scrambling around lookier than me. It's the Business Week Business

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Speaker 1: Week guest and and forthcoming. Still, Joel informed me he

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Speaker 1: was looking for submissions to this after the deadline already.

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Speaker 1: So I'm go scrambling around looking looking for examples, and

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Speaker 1: Josh Brown. You know, the Reformed Broker blog had a

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Speaker 1: really what I thought. I didn't submit it because and

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Speaker 1: I'll explain why. But it's definitely an honorable mention because

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Speaker 1: he it's before the value rotation started, and he's talking.

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Speaker 1: He basically tries to explain why growth is it, why

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Speaker 1: it has been for the last decade, and he does

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Speaker 1: this great job of it. You know, I actually have

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Speaker 1: in front of me. Is like an analysis of book

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Speaker 1: value captures things like plant and equipment and facilities and

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Speaker 1: hard money, real assets that corporations have managed to accumulate

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Speaker 1: over their lifetimes. We're saying, in an era of cheap,

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Speaker 1: free money, you don't value of those things anymore because

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Speaker 1: they're depreciating assets obviously, So what do you value? You

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Speaker 1: value this recurring revenue stream that you get from from

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Speaker 1: the dot com you know, your your Google's and your

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Speaker 1: facebooks and that's that sort of thing. But he makes

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Speaker 1: the point I might be calling the top here of growth,

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Speaker 1: you know, very self aware. But the reason I didn't

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Speaker 1: submit it is because he does give we Work as

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Speaker 1: an example of why growth. Everyone everyone loves growth. But

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Speaker 1: I will go out on a limb and say, uh,

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Speaker 1: the story is still true. I think growth is perennially perennially,

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Speaker 1: perennially perennially. Yeah, this is why, Sarah, we're halfway through

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Speaker 1: the party. I'm gonna just predict I don't think the

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Speaker 1: value rotation is gonna last forever. I mean, I think

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Speaker 1: growth is is what investors want going forward. Can you

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Speaker 1: pull his duels bies? You know. I think it's an

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Speaker 1: interesting take because after we did see those couple of

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Speaker 1: teks of immense value at performance, all of a sudden,

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Speaker 1: value managers or even people who aren't value managers but

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Speaker 1: aren't growth managers, are saying, Okay, this is values time.

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Speaker 1: They've been under performing for way too long. Uh, they've

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Speaker 1: got to come back on top at that point, right,

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Speaker 1: But they've said it so many times, but actually came

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Speaker 1: out right. So Cliff as News, he is known he

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Speaker 1: does not like to time the markets, and he actually

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Speaker 1: did put out an entire research paper talking about quote

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Speaker 1: unquote sinning a little and maybe timing the market a

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Speaker 1: bit and saying this could be the time for value.

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Speaker 1: But I find it interesting because in the beginning of

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Speaker 1: the year or the past couple of years, when you

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Speaker 1: talk to investors about the growth out performance. They say,

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Speaker 1: the fact of the matter is we are in a

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Speaker 1: glow growth environment, and that is when growth that performance

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Speaker 1: because people need to go look for growth. Well, if

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Speaker 1: you think about the economic environment for next year, how

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Speaker 1: is it any different with us GDP expected to be

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Speaker 1: one cent sub two percent or around two percent at least.

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Speaker 1: I mean, you're not saying that we have a very

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Speaker 1: high growth environment that value should outperforming technically, Yeah, And

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Speaker 1: I you know, I don't like to look at growth

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Speaker 1: and value as sort of these separate asset classes. I

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Speaker 1: think it's a matter of what stocks are considered value

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Speaker 1: at any given time. And this year it was those

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Speaker 1: very cyclical you know, banks, financial companies, UH, material commodity producers.

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Speaker 1: And again it's that that sense that everyone had sort

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Speaker 1: of recession fever earlier in the year, and those stocks

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Speaker 1: were just you know, unloved to the point where they

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Speaker 1: got ridiculously cheap in a lot of cases on a

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Speaker 1: relative basis, you know, cheap in a in a an

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Speaker 1: expensive market otherwise expensive market. So they're gonna kind of

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Speaker 1: mean revert back to a reasonable valuation. I don't know

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Speaker 1: if it necessarily signals this total regime shift where we're

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Speaker 1: gonna see a decade of value outperformance. We did you

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Speaker 1: know two thousand nine was a good year for value,

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Speaker 1: So I think if there's some kind of a sell off,

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Speaker 1: the rebound will be very good. By the way, interesting

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Speaker 1: factoid on how growth and value can be a blurry

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Speaker 1: apple isn't exactly fourteen value et f s and fourteen

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Speaker 1: growth each. I love about that. UM. So there's a

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Speaker 1: lot of stocks that you you know, well, you just

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Speaker 1: can't miss out on a stock that's up this year,

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Speaker 1: so you just gotta put them in everything. It looks

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Speaker 1: back again, and at this time of year, there are

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Speaker 1: a lot of different UH investment firms that start having

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Speaker 1: their outlook events and I was that one recently, and

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Speaker 1: I've also been reading a lot of outlooks, and it's

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Speaker 1: unbelievable how many firms right now for their expectations for

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Speaker 1: if you're just talking about equities US equities, you asked

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Speaker 1: some of stocks are likely going to go up? They

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Speaker 1: say yes, because stocks typically go up. You say how

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Speaker 1: much every single time? Load of mid single digits. No

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Speaker 1: one has high conviction about this rally that we saw

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Speaker 1: this year really continuing on with the force UH that

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Speaker 1: we've seen it. And part of that is because this

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Speaker 1: year you had such multiple expansion on the back of

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Speaker 1: the Fed cut rates, expectations for a trade deal, and

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Speaker 1: now at this point you really do need to get

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Speaker 1: growth in profits. And JP Morgan Asset Management really dived

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Speaker 1: into this and their outlook to help the market move higher.

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Speaker 1: And even if we don't get those ten EPs growth

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Speaker 1: in the SMP five hundred stocks next year, that's fine,

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Speaker 1: but you need to have some growth and right now

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Speaker 1: that's the expectation. And can you talk about these calls? Um?

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Speaker 1: You know, people out there, I don't know how many

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Speaker 1: regular people read these calls, but they're in the financial

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Speaker 1: media a lot. Goldman says this, and to me, it

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Speaker 1: just seems like they packaged the last three or four

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Speaker 1: months and and put the future tents on it, like

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Speaker 1: it's kind of a cop out, Like nobody ever makes

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Speaker 1: any really legitimate calls. Um. You know, the biggest one

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Speaker 1: that I remind was reminded of is in right late

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Speaker 1: Jamie Diamond of JP Morgan, who would know more than

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Speaker 1: just about anybody, right, basically, didn't he make a rate

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Speaker 1: call that they could go up to like four point

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Speaker 1: five percent? And they didn't exact opposite. Um, how much

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Speaker 1: to these calls just to feel content versus people trade

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Speaker 1: off of them? You know, I think when you look

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Speaker 1: at those year end targets that that bank strategists put out, Um,

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Speaker 1: the intended audience for those things is us. It's the media,

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Speaker 1: you know, and you bite every time. It's like a

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Speaker 1: juicy worm. Think about it. Who who really invests based

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00:22:19,800 --> 00:22:22,720
Speaker 1: on a December thirty one? Yeah, you gotta you gotta

430
00:22:22,760 --> 00:22:25,719
Speaker 1: be done by that. And off the record, I think

431
00:22:25,760 --> 00:22:28,359
Speaker 1: a lot of them will confess that to us. But

432
00:22:28,400 --> 00:22:30,800
Speaker 1: if you really dig into the notes further and you

433
00:22:30,840 --> 00:22:33,600
Speaker 1: get their their sort of sector calls and and there,

434
00:22:33,840 --> 00:22:37,080
Speaker 1: you know different stuff like that, there is value there,

435
00:22:37,080 --> 00:22:40,399
Speaker 1: and there's value I think into knowing what Goldman is

436
00:22:40,440 --> 00:22:45,120
Speaker 1: expecting right, um. And you know, if you can bring

437
00:22:45,119 --> 00:22:48,000
Speaker 1: yourself to disagree with them, if your analysis says differently,

438
00:22:48,680 --> 00:22:51,040
Speaker 1: then you know, to to know that you're betting against

439
00:22:51,040 --> 00:22:55,000
Speaker 1: Golden I think gives you, uh, you know, to go

440
00:22:55,040 --> 00:22:57,000
Speaker 1: against the consensus is kind of what everyone wants to

441
00:22:57,000 --> 00:22:58,760
Speaker 1: do in Wall Street. You want to be that contrarian.

442
00:22:59,240 --> 00:23:01,280
Speaker 1: Uh So, I don't know, I none of us have

443
00:23:01,359 --> 00:23:04,280
Speaker 1: done sort of the back test of all their calls

444
00:23:04,320 --> 00:23:07,360
Speaker 1: and and tested them to see who's the most accurate

445
00:23:07,720 --> 00:23:12,120
Speaker 1: year every year? We probably should start start. I can

446
00:23:12,160 --> 00:23:15,520
Speaker 1: feel it. I can feel like I feel like they're

447
00:23:15,560 --> 00:23:18,240
Speaker 1: like active managers, tend to beat the s and p

448
00:23:18,440 --> 00:23:20,200
Speaker 1: a third of them do. I feel like about a

449
00:23:20,240 --> 00:23:21,800
Speaker 1: third of the calls are right. I feel like more

450
00:23:21,920 --> 00:23:26,200
Speaker 1: are you know, wrong than not? UM, But they provide context,

451
00:23:26,280 --> 00:23:28,400
Speaker 1: they give you something to talk about that a lot

452
00:23:28,400 --> 00:23:30,240
Speaker 1: of the data is very interesting. UM. They don't have

453
00:23:30,280 --> 00:23:32,160
Speaker 1: to be right every time, but it would be cool

454
00:23:32,200 --> 00:23:34,760
Speaker 1: to have their batting average like a baseball player like

455
00:23:34,760 --> 00:23:37,119
Speaker 1: this this this person who made this call is batting one.

456
00:23:37,320 --> 00:23:39,560
Speaker 1: D Okay, well listen to that guy. You can get

457
00:23:39,640 --> 00:23:43,520
Speaker 1: the ticker and then track it. I always feel bad

458
00:23:43,520 --> 00:23:45,840
Speaker 1: for them with the the year end call. You know,

459
00:23:45,840 --> 00:23:47,920
Speaker 1: it's like imagine you're a weatherman and they're like, what's

460
00:23:47,960 --> 00:23:50,760
Speaker 1: the forecast for next few year's day? You know, it's

461
00:23:50,760 --> 00:23:54,320
Speaker 1: like how cold? I think where you get value? And

462
00:23:54,359 --> 00:23:56,560
Speaker 1: I think even you'll read these outlooks and a lot

463
00:23:56,600 --> 00:23:58,080
Speaker 1: of them will be focused on the year ahead, so

464
00:23:58,119 --> 00:24:00,639
Speaker 1: we'll be focused on But if you speak with the

465
00:24:00,680 --> 00:24:04,080
Speaker 1: strategists actually behind the forecast, I'm writing the forecast. They'll

466
00:24:04,119 --> 00:24:06,320
Speaker 1: say to you, yes, this is our view on what's

467
00:24:06,359 --> 00:24:09,479
Speaker 1: likely to happen in but many of them have much

468
00:24:09,560 --> 00:24:12,000
Speaker 1: higher conviction further out. A lot of their investors are

469
00:24:12,040 --> 00:24:14,000
Speaker 1: not just positioned for the year, so they want to

470
00:24:14,000 --> 00:24:16,560
Speaker 1: have a sense on where things are going next year,

471
00:24:16,600 --> 00:24:19,240
Speaker 1: but also in the future. And if you get the

472
00:24:19,320 --> 00:24:22,280
Speaker 1: logistics of wrong, but you're still on the right trajectory

473
00:24:22,320 --> 00:24:24,800
Speaker 1: for the next five ten years, then nods are I mean,

474
00:24:24,840 --> 00:24:26,639
Speaker 1: you're in a good place, Sarah. Can you give me

475
00:24:26,720 --> 00:24:29,840
Speaker 1: a call on US equities next year? My own call?

476
00:24:30,040 --> 00:24:32,880
Speaker 1: Why would you want that? But just again, just want

477
00:24:33,000 --> 00:24:34,800
Speaker 1: I want to hear. Yeah, let's just get it on

478
00:24:34,840 --> 00:24:37,160
Speaker 1: paper right now. I predict the year will end with

479
00:24:37,240 --> 00:24:39,880
Speaker 1: thirty stocks in the Dow Jones. Oh, there we go.

480
00:24:41,600 --> 00:24:43,320
Speaker 1: You know what, by the end of the year, something's

481
00:24:43,320 --> 00:24:47,840
Speaker 1: gonna happen. It's funny. So we're doing a big et

482
00:24:47,920 --> 00:24:50,360
Speaker 1: F event next week and I'm giving my predictions and

483
00:24:50,760 --> 00:24:54,879
Speaker 1: they're all like this. I say, inflows will happen, and

484
00:24:54,920 --> 00:24:56,800
Speaker 1: then I'm like, and then if the last one is

485
00:24:57,000 --> 00:24:59,720
Speaker 1: something will happen. It's very it's very vague, but I

486
00:24:59,760 --> 00:25:02,720
Speaker 1: do go into some things that are somewhat college. But um,

487
00:25:02,760 --> 00:25:04,960
Speaker 1: I I it's very tough to know the future. You've

488
00:25:04,960 --> 00:25:07,000
Speaker 1: seen it happen, what you think is going to happen.

489
00:25:07,040 --> 00:25:11,000
Speaker 1: The opposite, does um mid to low single digits digits.

490
00:25:11,040 --> 00:25:14,240
Speaker 1: I fit right in the general count. That's the safe

491
00:25:14,560 --> 00:25:18,239
Speaker 1: the safe space because there's a lot of people. They

492
00:25:18,280 --> 00:25:20,400
Speaker 1: wouldn't call you all at at once. You know, it's

493
00:25:20,440 --> 00:25:23,600
Speaker 1: the person who says markets going or down that is

494
00:25:23,640 --> 00:25:26,720
Speaker 1: taking the real risk. Well, i'll tell you one. Cameron

495
00:25:26,800 --> 00:25:29,600
Speaker 1: christ Are Macroman columnist, is one of the smartest guys

496
00:25:29,640 --> 00:25:33,000
Speaker 1: I know, and he's written a few times about now

497
00:25:33,200 --> 00:25:38,240
Speaker 1: valuations are high. It's very almost impossible to time on market.

498
00:25:38,240 --> 00:25:41,400
Speaker 1: Based on valuations, they can keep going higher and surprise

499
00:25:41,440 --> 00:25:44,760
Speaker 1: everyone you know, you can approach dot com valuations for

500
00:25:44,800 --> 00:25:47,520
Speaker 1: all we know. Again, but what he said is the

501
00:25:47,600 --> 00:25:51,320
Speaker 1: longer you look into the future, the higher valuations are,

502
00:25:51,359 --> 00:25:53,880
Speaker 1: that the weaker the long term returns are. And he's

503
00:25:53,880 --> 00:25:56,320
Speaker 1: had a couple of columns saying that both bonds and

504
00:25:56,359 --> 00:26:00,200
Speaker 1: equities that ten year horizon is pitiful right now out

505
00:26:00,240 --> 00:26:03,040
Speaker 1: because of the high valuations in both. So I hate

506
00:26:03,280 --> 00:26:05,760
Speaker 1: to be the downer at the holiday party, but give

507
00:26:05,800 --> 00:26:11,480
Speaker 1: him I will add in a recent research note, Nicolas,

508
00:26:11,520 --> 00:26:13,720
Speaker 1: we had him as a guest on our podcast once

509
00:26:14,000 --> 00:26:16,439
Speaker 1: what's the name of that podcast? What goes up for

510
00:26:16,480 --> 00:26:20,680
Speaker 1: all of you who are not aware? But Nichols data track.

511
00:26:20,760 --> 00:26:22,840
Speaker 1: He sent out a recent note and the title was

512
00:26:22,840 --> 00:26:25,640
Speaker 1: how to make smart predictions. I'll read you what he writes.

513
00:26:25,640 --> 00:26:28,840
Speaker 1: He says, for example, ninety years of spurn data shows

514
00:26:28,880 --> 00:26:31,679
Speaker 1: the index gains in average of eleven point four percent

515
00:26:31,720 --> 00:26:34,080
Speaker 1: a year, and the odds of a twenty plus percent

516
00:26:34,200 --> 00:26:38,000
Speaker 1: gain are three times the chances of a ten percent decline.

517
00:26:38,400 --> 00:26:42,280
Speaker 1: So it's really difficult for someone to make a bearish

518
00:26:42,320 --> 00:26:45,679
Speaker 1: bed on the SMP or just US equities at large

519
00:26:45,680 --> 00:26:48,440
Speaker 1: when history just tells you the odds are much higher

520
00:26:48,520 --> 00:26:52,679
Speaker 1: for you to have a significant gain. Right, Well, I

521
00:26:52,680 --> 00:26:55,159
Speaker 1: mean the market generally will give you about eight nine, right,

522
00:26:55,160 --> 00:26:57,840
Speaker 1: that's what you'd expect. But it's been double and even

523
00:26:57,880 --> 00:26:59,879
Speaker 1: more over the years. So I think that's what people like,

524
00:27:00,040 --> 00:27:02,800
Speaker 1: we're like kind of over our due date for something

525
00:27:02,800 --> 00:27:05,440
Speaker 1: that you know. But then again, in the market was

526
00:27:05,480 --> 00:27:08,160
Speaker 1: down I think four or five percent if you include dividends,

527
00:27:08,440 --> 00:27:11,520
Speaker 1: and it felt like we had gotten like kill, Like

528
00:27:11,600 --> 00:27:15,800
Speaker 1: everybody was so miserable and it almost seemed like, um,

529
00:27:15,840 --> 00:27:18,640
Speaker 1: it made me feel like a child that was spoiled, like, oh,

530
00:27:18,680 --> 00:27:20,560
Speaker 1: you were down four percent, You've been up two d

531
00:27:20,680 --> 00:27:23,159
Speaker 1: and fifty. So in these days when the market goes

532
00:27:23,200 --> 00:27:24,879
Speaker 1: down two or three percent, it just seems like people

533
00:27:24,920 --> 00:27:28,000
Speaker 1: freak out, like it's okay, Like you're up three hundred

534
00:27:28,080 --> 00:27:30,560
Speaker 1: since the financial crisis. You're getting way more than you should.

535
00:27:30,960 --> 00:27:34,560
Speaker 1: How much? Are just investors just too coddled? I think

536
00:27:34,600 --> 00:27:38,040
Speaker 1: advisors try to do the best that they can for

537
00:27:38,080 --> 00:27:41,000
Speaker 1: their own clients to tell them this is normal, it's

538
00:27:41,040 --> 00:27:44,200
Speaker 1: actually okay if we get a bit of a draw down,

539
00:27:44,240 --> 00:27:48,720
Speaker 1: if we get some consolidation. Um. But I will say

540
00:27:48,760 --> 00:27:51,399
Speaker 1: that some advisors that I speak with, they tell me

541
00:27:51,480 --> 00:27:55,520
Speaker 1: how their clients outwardly say to them, why shouldn't I

542
00:27:55,640 --> 00:27:58,840
Speaker 1: just go buy the SMP five t F. It's cheaper

543
00:27:58,880 --> 00:28:02,280
Speaker 1: and it always goes up, And it's something that's very

544
00:28:02,359 --> 00:28:04,800
Speaker 1: difficult for them to try to explain because they try

545
00:28:04,840 --> 00:28:08,400
Speaker 1: to show that they can add value, especially in volatile times.

546
00:28:08,440 --> 00:28:11,960
Speaker 1: But for years, really this entire bowl market, you would

547
00:28:11,960 --> 00:28:16,400
Speaker 1: have been fine if you just bought a passive product.

548
00:28:16,560 --> 00:28:19,399
Speaker 1: Well that's um buffets. We called the buffet ets special

549
00:28:19,440 --> 00:28:20,960
Speaker 1: In his one of his letters, somebody said, what can

550
00:28:21,000 --> 00:28:23,399
Speaker 1: I do as an individual investor? Is like, do what

551
00:28:23,440 --> 00:28:26,719
Speaker 1: I'm doing in my will. My will is to go

552
00:28:26,760 --> 00:28:29,000
Speaker 1: into a Vanguard index fund and then ten percent in

553
00:28:29,080 --> 00:28:32,720
Speaker 1: short term treasury bonds UM. And you know, if if

554
00:28:32,840 --> 00:28:34,919
Speaker 1: that's what he says, and if you do it, that's, um,

555
00:28:35,200 --> 00:28:37,479
Speaker 1: you know, a five basis point trade and that's how

556
00:28:37,520 --> 00:28:38,880
Speaker 1: much it wuld. I was going to say, going to

557
00:28:38,960 --> 00:28:47,240
Speaker 1: that triple leverage t q Q that's yeah, I'm not

558
00:28:47,280 --> 00:28:49,920
Speaker 1: messing around with un leverage. And that's actually a modest

559
00:28:49,920 --> 00:28:52,000
Speaker 1: transition to another thing that we wanted to hit on,

560
00:28:52,000 --> 00:28:54,640
Speaker 1: which is fixed income. It's like what I did there.

561
00:28:55,200 --> 00:28:57,720
Speaker 1: I took treasuries and turned into we're going for triple

562
00:28:57,760 --> 00:28:59,600
Speaker 1: leverage tech to fix. Then come, I mean talk about

563
00:28:59,600 --> 00:29:02,560
Speaker 1: a down. Yeah, but it's on your list of things

564
00:29:02,560 --> 00:29:04,480
Speaker 1: you wanted to talk about. Yeah, I mean, well this

565
00:29:04,560 --> 00:29:07,480
Speaker 1: gets is into rates. I mean obviously fixed income flows.

566
00:29:07,480 --> 00:29:11,520
Speaker 1: You talked about a lot of that function of rates falling. Um.

567
00:29:11,560 --> 00:29:13,560
Speaker 1: You know, look, you wrote an article. I have a

568
00:29:13,560 --> 00:29:16,760
Speaker 1: headline here that I think was from Mike, which is, uh,

569
00:29:16,880 --> 00:29:18,920
Speaker 1: this is how yields could go negative in the near future.

570
00:29:18,920 --> 00:29:22,200
Speaker 1: Now we've heard about negative yields overseas. Could that happen?

571
00:29:22,240 --> 00:29:24,760
Speaker 1: Could we like turn into like a future Japan where

572
00:29:25,280 --> 00:29:27,239
Speaker 1: I mean, what's going on here with this? Before Mike

573
00:29:27,400 --> 00:29:28,640
Speaker 1: is of take I've got to say that was the

574
00:29:28,640 --> 00:29:32,280
Speaker 1: title of our podcast. That wasn't Yeah, I just want

575
00:29:32,320 --> 00:29:35,680
Speaker 1: to I just want to your bio page and picked

576
00:29:35,680 --> 00:29:38,480
Speaker 1: out headlines that kind of like just you know, stood out.

577
00:29:38,720 --> 00:29:41,160
Speaker 1: I love the crossover. By the way, it's this is

578
00:29:41,200 --> 00:29:43,800
Speaker 1: like it's like when Fonzi shows up on the Verne,

579
00:29:45,840 --> 00:29:48,400
Speaker 1: the Globetrotter's Land on Gilligan's Island. You have to define

580
00:29:48,440 --> 00:29:50,000
Speaker 1: those shows now, by the way. You can't just say

581
00:29:50,040 --> 00:29:55,320
Speaker 1: that beyond that. Have you ever seen one episode of

582
00:29:55,360 --> 00:29:58,920
Speaker 1: Gilligan's Island? No? Yeah, see it's we're getting old man.

583
00:29:59,000 --> 00:30:04,200
Speaker 1: It wasn't like it was when I stayed home on

584
00:30:04,200 --> 00:30:06,960
Speaker 1: a day and that no longer. Okay, what was the

585
00:30:07,040 --> 00:30:10,400
Speaker 1: question for again, um, negative yields? Could we go there?

586
00:30:11,520 --> 00:30:15,160
Speaker 1: Most people don't think that in the US we're going

587
00:30:15,240 --> 00:30:19,680
Speaker 1: to get negative rates. It's possible, and we had Lauren

588
00:30:19,720 --> 00:30:22,640
Speaker 1: Goodwin on our podcast. She talked about how we could

589
00:30:22,640 --> 00:30:25,240
Speaker 1: get there, and a large part of us getting there

590
00:30:25,240 --> 00:30:27,840
Speaker 1: would be that the US has to go into a

591
00:30:27,880 --> 00:30:31,560
Speaker 1: recession and that the FED would be cutting rates lower.

592
00:30:31,760 --> 00:30:35,480
Speaker 1: But many members of the Federal Reserve have come out

593
00:30:35,520 --> 00:30:38,240
Speaker 1: and said that they have no interest at the moment

594
00:30:38,240 --> 00:30:41,720
Speaker 1: a negative interest rates, and they don't see that happening

595
00:30:41,760 --> 00:30:44,360
Speaker 1: in the US. They don't want it to happen after

596
00:30:44,400 --> 00:30:48,160
Speaker 1: seeing some of the repercussions that have happened another geography

597
00:30:48,720 --> 00:30:51,560
Speaker 1: cases of the world. Right, it's it's very very difficult.

598
00:30:51,640 --> 00:30:54,840
Speaker 1: And President Trump might say over and over and over

599
00:30:54,840 --> 00:30:57,520
Speaker 1: again that he would love negative interest rates, but I

600
00:30:57,520 --> 00:31:01,160
Speaker 1: would say, at the current standpoint, negative rates next year

601
00:31:02,200 --> 00:31:05,120
Speaker 1: very very very rare. Call well, and I think it's

602
00:31:05,160 --> 00:31:07,840
Speaker 1: important to define what you mean by negative rates. We

603
00:31:07,880 --> 00:31:11,920
Speaker 1: have seen T bill rates go negative in the US.

604
00:31:11,960 --> 00:31:14,920
Speaker 1: Many bank depositors out there. Guess what you're You're getting

605
00:31:14,920 --> 00:31:17,560
Speaker 1: a negative rate on your savings, especially if you use

606
00:31:17,600 --> 00:31:18,960
Speaker 1: the eight tem a lot you're paying those a t

607
00:31:19,120 --> 00:31:22,000
Speaker 1: M feast. They're easily gonna overwhelm your zero point zero

608
00:31:22,080 --> 00:31:24,959
Speaker 1: zero one percent interest you're getting. So you know, if

609
00:31:24,960 --> 00:31:27,640
Speaker 1: you're talking about the FED funds rate or the tenure Treasury,

610
00:31:27,760 --> 00:31:31,200
Speaker 1: I don't I don't see it either. But again, if

611
00:31:31,200 --> 00:31:33,880
Speaker 1: the President wants it sometimes. Uh. You know, the bully

612
00:31:33,920 --> 00:31:35,520
Speaker 1: pulpit is a is a big thing. But I do

613
00:31:35,560 --> 00:31:37,600
Speaker 1: think there's a bit of confusion over where. I say

614
00:31:37,640 --> 00:31:39,400
Speaker 1: you just focus on the tenure. Where the tenure goes

615
00:31:39,400 --> 00:31:41,240
Speaker 1: from here. We've been in this range between one and

616
00:31:41,240 --> 00:31:44,560
Speaker 1: a half to like one point nine percent for much

617
00:31:44,600 --> 00:31:47,360
Speaker 1: of a year. Uh, and a lot of calls I've

618
00:31:47,400 --> 00:31:50,440
Speaker 1: seen either put it a tiny bit above that range,

619
00:31:50,440 --> 00:31:52,280
Speaker 1: maybe a little bit above two percent, or say for

620
00:31:52,320 --> 00:31:54,320
Speaker 1: most of the year. The fact is we're going to

621
00:31:54,360 --> 00:31:56,480
Speaker 1: be range bound because at this point in time, the

622
00:31:56,520 --> 00:31:58,880
Speaker 1: FED has said that they are on hold. Who knows

623
00:31:58,920 --> 00:32:01,200
Speaker 1: what will happen next year. Things can be very different.

624
00:32:01,240 --> 00:32:03,800
Speaker 1: We know how things changed from last year. But if

625
00:32:03,800 --> 00:32:07,400
Speaker 1: the FED is truly on hold, what's the driver that

626
00:32:07,480 --> 00:32:11,200
Speaker 1: takes the tenure out of that one point five to Well,

627
00:32:11,240 --> 00:32:13,200
Speaker 1: I'll go over that, which is the bully pulpit. I

628
00:32:13,200 --> 00:32:15,680
Speaker 1: think Trump is gonna run on the SMP at all time.

629
00:32:15,760 --> 00:32:19,040
Speaker 1: Has that's one of his like four pillar campaign, So

630
00:32:19,080 --> 00:32:21,239
Speaker 1: he has what eleven twelve months to run on that,

631
00:32:21,720 --> 00:32:24,040
Speaker 1: and I think if you need low rates for that

632
00:32:24,080 --> 00:32:26,640
Speaker 1: to happen. Um, which brings me to the election, right,

633
00:32:27,280 --> 00:32:29,960
Speaker 1: you wrote a story which resonated with me, Obama will

634
00:32:30,000 --> 00:32:33,160
Speaker 1: kill stock market, No Trump will, no Warren will, and

635
00:32:33,200 --> 00:32:35,800
Speaker 1: this solves the politics and the presidency. We had um

636
00:32:35,840 --> 00:32:38,800
Speaker 1: our two dad's on one time, and my dad he

637
00:32:38,840 --> 00:32:41,800
Speaker 1: actually bought t vix because he asked me what will

638
00:32:41,800 --> 00:32:43,800
Speaker 1: go up the most when the stock market crashes? Because

639
00:32:43,800 --> 00:32:46,440
Speaker 1: he thought Hillary would win and the market would crash.

640
00:32:46,560 --> 00:32:49,640
Speaker 1: So he got both wrong and then he forgot to

641
00:32:49,680 --> 00:32:51,880
Speaker 1: sell t vix, which is another adding insult to injury,

642
00:32:51,880 --> 00:32:54,760
Speaker 1: which I won't go into that, but um, I think

643
00:32:54,800 --> 00:32:57,120
Speaker 1: a lot of people kind of think that politics are

644
00:32:57,160 --> 00:32:59,400
Speaker 1: connected to the market. It does feel like Trump has

645
00:32:59,440 --> 00:33:01,040
Speaker 1: a lot of sway over the market. Can you talk

646
00:33:01,080 --> 00:33:04,720
Speaker 1: about what if Trump loses in Warren wins that scenario.

647
00:33:04,800 --> 00:33:07,000
Speaker 1: What are people saying. Do you think that's gonna be

648
00:33:07,080 --> 00:33:09,080
Speaker 1: something that could shock the market into a massive sell

649
00:33:09,120 --> 00:33:12,479
Speaker 1: off if Trump wins, loses, if Trump loses in war

650
00:33:12,800 --> 00:33:15,360
Speaker 1: like a Warren or Bernie. Okay, So I'll tell you

651
00:33:15,520 --> 00:33:18,040
Speaker 1: right away that that story we got a lot of

652
00:33:18,040 --> 00:33:20,520
Speaker 1: praise on it. We also got a lot of backlash

653
00:33:20,560 --> 00:33:25,800
Speaker 1: on it, depending on what many readers political beliefs are

654
00:33:26,000 --> 00:33:29,520
Speaker 1: or where they stand. There's multiple people who viewed, that

655
00:33:29,600 --> 00:33:32,160
Speaker 1: story is pretty accurate. The idea that in the past,

656
00:33:32,880 --> 00:33:37,479
Speaker 1: UH pundits strategists always make forecasts on what the market

657
00:33:37,560 --> 00:33:40,440
Speaker 1: is going to do if a certain candidate wins. Uh.

658
00:33:40,480 --> 00:33:45,320
Speaker 1: The reality being that typically the president actually doesn't have

659
00:33:45,760 --> 00:33:50,560
Speaker 1: as much control over the entire economy or the stock

660
00:33:50,640 --> 00:33:54,400
Speaker 1: market as some might think. Um. Now, if you think

661
00:33:54,440 --> 00:33:58,960
Speaker 1: about President Trump versus and Elizabeth Warren or Bernie Sanders,

662
00:33:59,000 --> 00:34:01,000
Speaker 1: for example, there are a lot of people out there

663
00:34:01,000 --> 00:34:05,880
Speaker 1: who have said that if Warrnt wins, the market will crash. Uh.

664
00:34:06,120 --> 00:34:09,080
Speaker 1: She's a socialist, she doesn't care about the stock market.

665
00:34:09,800 --> 00:34:15,000
Speaker 1: But it really depends on which policies actually will make

666
00:34:15,040 --> 00:34:20,359
Speaker 1: it through uh and actually get imposed. Because I mean,

667
00:34:20,360 --> 00:34:22,239
Speaker 1: in the lead up to the election, you can talk

668
00:34:22,280 --> 00:34:25,680
Speaker 1: all you want about healthcare or breaking up big tech,

669
00:34:25,800 --> 00:34:28,440
Speaker 1: and recently she did propose this new bill that's going

670
00:34:28,480 --> 00:34:30,759
Speaker 1: to try to roll back some mega mergers. Yeah, that

671
00:34:30,800 --> 00:34:33,680
Speaker 1: will absolutely affect certain stocks if they are imposed. If

672
00:34:33,719 --> 00:34:36,839
Speaker 1: it actually happens. Uh. But the problem is a lot

673
00:34:36,880 --> 00:34:40,400
Speaker 1: of these really extremist policies, I wouldn't say it's a

674
00:34:40,400 --> 00:34:46,040
Speaker 1: problem they don't actually get through as advertised during the election,

675
00:34:46,280 --> 00:34:52,440
Speaker 1: especially if you have a Senate and it and right right, right, yeah, yeah,

676
00:34:52,480 --> 00:34:55,520
Speaker 1: anyone who bought shares of wall building stocks, for example,

677
00:34:55,680 --> 00:34:59,800
Speaker 1: might be uh, talk about that. One thing under Obama

678
00:34:59,800 --> 00:35:01,719
Speaker 1: would was fascinating to me is that I read an

679
00:35:01,800 --> 00:35:03,719
Speaker 1: article was in like Yahoo or something or in two

680
00:35:03,800 --> 00:35:06,080
Speaker 1: thousand and when did he win two thousand eight? So

681
00:35:06,160 --> 00:35:08,800
Speaker 1: two thousand seven it said, um, how to play the

682
00:35:08,880 --> 00:35:11,520
Speaker 1: Obama presidency And it was basically like buy a bunch

683
00:35:11,520 --> 00:35:15,960
Speaker 1: of clean energy. Clean energy stocks were flat, defense and

684
00:35:16,120 --> 00:35:19,080
Speaker 1: banks double the market. I mean, it makes no sense sometimes.

685
00:35:19,239 --> 00:35:21,040
Speaker 1: Well that's also what I find interesting in a lot

686
00:35:21,080 --> 00:35:25,040
Speaker 1: of people talking about Warren. People were pointing to healthcare obviously,

687
00:35:25,160 --> 00:35:27,920
Speaker 1: which was under performing for part of the year. No

688
00:35:27,960 --> 00:35:32,239
Speaker 1: one was really bringing up energy, which is pretty big

689
00:35:32,280 --> 00:35:35,279
Speaker 1: part of her platform. So it was interesting. Yeah, it's

690
00:35:35,320 --> 00:35:38,399
Speaker 1: a very ambitious platform that I agree. I don't think

691
00:35:38,840 --> 00:35:42,000
Speaker 1: the real drastic stuff we'll ever see the light of day.

692
00:35:42,000 --> 00:35:44,520
Speaker 1: We'll make it through Congress. That said, I I look,

693
00:35:44,600 --> 00:35:47,960
Speaker 1: I could see some turbulence, Yeah, it come the primaries.

694
00:35:48,000 --> 00:35:50,400
Speaker 1: If she starts taking the lead. I you know, I

695
00:35:50,440 --> 00:35:52,560
Speaker 1: do think we'll see some volatility in the markets for sure.

696
00:35:52,880 --> 00:35:56,000
Speaker 1: So we've spent a lot of time being US centric,

697
00:35:56,120 --> 00:35:58,879
Speaker 1: let's like talk about something other than the US, maybe

698
00:35:58,920 --> 00:36:04,160
Speaker 1: emerging markets, So China, Brazil, I'll stick with China. How

699
00:36:04,200 --> 00:36:07,160
Speaker 1: about that. I'd say, if if you think about emerging

700
00:36:07,200 --> 00:36:10,880
Speaker 1: markets and even China, it's almost part of the value trade,

701
00:36:10,880 --> 00:36:13,839
Speaker 1: the idea that what's underperformed the last decade is going

702
00:36:13,880 --> 00:36:16,279
Speaker 1: to eventually have to turn and it's going to have

703
00:36:16,360 --> 00:36:19,400
Speaker 1: its moment in the sun. But a big part of

704
00:36:20,320 --> 00:36:23,600
Speaker 1: the China trade is everything going on with US China

705
00:36:23,600 --> 00:36:27,960
Speaker 1: trade negotiations. Well, just give me a second, give me

706
00:36:28,000 --> 00:36:29,640
Speaker 1: a second. What I'm gonna say is, yes, the U

707
00:36:29,680 --> 00:36:31,239
Speaker 1: s comes into it, but the idea of being that

708
00:36:32,120 --> 00:36:35,120
Speaker 1: if this really does get resolved, that China should perform

709
00:36:35,280 --> 00:36:38,000
Speaker 1: better than the US likely that that's a very popular

710
00:36:38,080 --> 00:36:40,640
Speaker 1: take for emerging markets. What you're going to need to

711
00:36:40,680 --> 00:36:43,480
Speaker 1: see largely is you're eventually going to see weakness in

712
00:36:43,520 --> 00:36:45,160
Speaker 1: the dollar. And there are a good amount of people

713
00:36:45,200 --> 00:36:48,239
Speaker 1: who do believe that we will see weakness in the dollar,

714
00:36:48,320 --> 00:36:50,160
Speaker 1: bringing it back to the US once again, but the

715
00:36:50,200 --> 00:36:51,880
Speaker 1: dollar is a really big factor when it comes to

716
00:36:51,880 --> 00:36:54,440
Speaker 1: emerging market returns. Yeah, and since you mentioned Brazil, I

717
00:36:54,480 --> 00:36:56,840
Speaker 1: did notice a lot of banks are very bullish on

718
00:36:57,080 --> 00:37:02,479
Speaker 1: Brazil going into um, I don't know that they finally

719
00:37:02,480 --> 00:37:07,359
Speaker 1: had pension reform a couple of years. Yeah. Well that's

720
00:37:07,360 --> 00:37:10,360
Speaker 1: the thing though, is the politics in ladd m Is

721
00:37:10,680 --> 00:37:13,279
Speaker 1: is pretty dicey right now. Extremely well, it seems like

722
00:37:13,440 --> 00:37:16,040
Speaker 1: these single countries as long as the person because I've

723
00:37:16,080 --> 00:37:18,840
Speaker 1: seen it in ETFs. If the person that's looking like

724
00:37:18,880 --> 00:37:22,120
Speaker 1: they're gonna win is a very right leaning pro business

725
00:37:22,320 --> 00:37:26,160
Speaker 1: like it happened with Moti in India, the brazil guy. Um,

726
00:37:26,239 --> 00:37:28,200
Speaker 1: you'll see that's things starts to go up. So I

727
00:37:28,200 --> 00:37:30,120
Speaker 1: always say that, but then there's often a LT town

728
00:37:30,160 --> 00:37:32,440
Speaker 1: after these Absolutely, yeah, there's a build up. It's I

729
00:37:32,480 --> 00:37:35,200
Speaker 1: saw the news type of Argentina. Yeah. Yeah, I'm not

730
00:37:35,200 --> 00:37:37,920
Speaker 1: saying but you definitely tend to see that. Or the

731
00:37:37,920 --> 00:37:40,080
Speaker 1: opposite can happen. If somebody's coming in, it's going to

732
00:37:40,200 --> 00:37:43,960
Speaker 1: really just go the other direction. You'll see it sell off. Okay,

733
00:37:44,000 --> 00:37:45,480
Speaker 1: So this is the favorite question that we like to

734
00:37:45,480 --> 00:37:47,680
Speaker 1: ask people. I haven't asked them for a while. We're

735
00:37:47,680 --> 00:37:50,680
Speaker 1: a little scared, Uh Sarah, what is your favorite et

736
00:37:50,800 --> 00:37:55,759
Speaker 1: F ticker? Uh? Mill, That's it's a popular one, Like

737
00:37:56,480 --> 00:37:59,840
Speaker 1: there's a gold ETF that's like nugs Nugget and you

738
00:38:00,040 --> 00:38:03,160
Speaker 1: gt it's a triple leverage back to your triple leverage. Yeah,

739
00:38:03,320 --> 00:38:07,400
Speaker 1: triple leverage. Gold miner on marijuana didn't bring it, should it?

740
00:38:08,320 --> 00:38:10,960
Speaker 1: Golden marijuana? There's a weed e t F Right, Yes,

741
00:38:11,800 --> 00:38:16,680
Speaker 1: I'm want to switch to the Tokas instant mount rushmore

742
00:38:16,800 --> 00:38:20,880
Speaker 1: level in my opinion, um UFOs up there. By the way, Nugget,

743
00:38:21,480 --> 00:38:26,560
Speaker 1: the standard deviation on Nugget is just for perspective, I

744
00:38:26,600 --> 00:38:28,200
Speaker 1: can tell you what spy is. I think it's probably

745
00:38:28,200 --> 00:38:32,480
Speaker 1: like yes, seventeen, so Nugget Nugget should come with his

746
00:38:32,520 --> 00:38:36,839
Speaker 1: xan X. I love how triple levered products are so

747
00:38:37,000 --> 00:38:40,080
Speaker 1: ingrained in Mike that he picked triple lever ticker without

748
00:38:40,080 --> 00:38:42,040
Speaker 1: even knowing here that's right, I know. I want to

749
00:38:42,040 --> 00:38:43,840
Speaker 1: make all the e t F list's just like that

750
00:38:44,080 --> 00:38:47,560
Speaker 1: streaming man. You all like kind of like pretend that

751
00:38:47,600 --> 00:38:51,360
Speaker 1: these triple levered products don't exist. That it's it's like

752
00:38:51,360 --> 00:38:54,279
Speaker 1: like we've we've done this on the show before. No,

753
00:38:54,880 --> 00:38:57,480
Speaker 1: I like he's going because it's a great top. There's

754
00:38:57,520 --> 00:39:00,000
Speaker 1: a lot of virtues signaling on triple leverage. People are like,

755
00:39:00,040 --> 00:39:03,960
Speaker 1: how are these things? Twit You finding you're going the

756
00:39:04,040 --> 00:39:05,959
Speaker 1: other direction. You're saying, how are these things not put

757
00:39:05,960 --> 00:39:08,359
Speaker 1: more popular? I love them. I think you're just being

758
00:39:08,360 --> 00:39:13,880
Speaker 1: more honest threshing Mike, Sarah, thanks for joining us, centralizing,

759
00:39:14,400 --> 00:39:22,400
Speaker 1: thanks for having us, Thank you. Thanks for listening to

760
00:39:22,440 --> 00:39:24,480
Speaker 1: Trillions until next time. You can find us on the

761
00:39:24,480 --> 00:39:28,879
Speaker 1: Bloomberg terminal, Bloomberg dot com, Apple podcast, Spotify, or wherever

762
00:39:28,920 --> 00:39:31,040
Speaker 1: else you'd like to listen. We'd love to hear from you.

763
00:39:31,560 --> 00:39:34,839
Speaker 1: We're on Twitter, I'm at Joel Webber Show. He's at

764
00:39:35,000 --> 00:39:37,960
Speaker 1: Eric Call Tunes. You can find Sarah and Mike at

765
00:39:38,120 --> 00:39:43,440
Speaker 1: Sarah Plantec and at Reaganonymous. Trillions is produced by Magnus Henrickson.

766
00:39:43,840 --> 00:39:46,360
Speaker 1: Francessica Leaving is the head of Bloomberg Podcast