Speaker 1: Hello, and welcome to What Goes Up a weekly markets podcast.
Speaker 1: My name is Mike Reagan, and I'm a senior editor
Speaker 1: at Bloomberg. And this week on the show, well, it
Speaker 1: kind of feels like someone pulled the rug out from
Speaker 1: under the reopening and reflation trade that so many investors
Speaker 1: were gung ho about. Treasury yields are sinking, banks, energy
Speaker 1: and travel companies have vanished from the leaderboards of the
Speaker 1: stock market, and those old usual suspects, the tech and
Speaker 1: internet mega cap stocks are back in the driver's seat.
Speaker 1: What should we make of it all? Well, we'll get
Speaker 1: into it with the chief investment officer for the America's
Speaker 1: at a major asset management firm. But first, apologies to
Speaker 1: Charlie Pellet fans, but this week's co host is no
Speaker 1: mystery to our listeners. It's our old friend, Katie Greifeld,
Speaker 1: the cross sass every reporter and co host of Take
Speaker 1: Stock on Bloomberg. Quicktake, Katie. Great to have you back
Speaker 1: on the show. Thanks for inviting me. I'm I was
Speaker 1: excited to get your invite. Oh good and no offense, Katie,
Speaker 1: But I think you might be our least mysterious co
Speaker 1: host when it comes to mystery cost like I can predict.
Speaker 1: I think I could predict your weekend already. Can I try? Yeah,
Speaker 1: go for it. I'm curious. Okay, So Friday we all
Speaker 1: know starts with the famous Friday tweet from you with
Speaker 1: with a cat and the milk bath. Then, of course,
Speaker 1: then something involving animals in the weekend, either a horse
Speaker 1: or turtles, anything like that on top sounds about right
Speaker 1: like most Fridays. I'm going to tweet the cat at
Speaker 1: about four pm, gonna ride out the rest of the day.
Speaker 1: Then I'm going to drive to New Jersey, stay at
Speaker 1: my parents house, and probably go horseback riding. Okay, I promised.
Speaker 1: I have a vibrant social life. I'm married, people love me.
Speaker 1: I just go to New Jersey every weekend. There's there's
Speaker 1: nothing wrong with that. Also, I wanted to ask you
Speaker 1: about you had a a very tremendous outing last week.
Speaker 1: I think it was the Olympic Trials, the Olympic track Trials.
Speaker 1: Tell me about that, did I'm so glad you asked.
Speaker 1: I'm dying to talk about it. I went to Eugene,
Speaker 1: Oregon to catch the Track and Field Olympic Trials. Since
Speaker 1: I don't think I'm going to Japan. I don't think
Speaker 1: I'm gonna make it to Tokyo. I don't think, yeah, no,
Speaker 1: I'll get stopped at the door. So, I mean, I'm
Speaker 1: a huge track fan. Obviously, track has been in the
Speaker 1: news quite a bit the past week with Shackery Richardson.
Speaker 1: But I did get to see her run before that,
Speaker 1: so right, and so you didn't know one knew one
Speaker 1: so afterwards that she was going to be suspended and
Speaker 1: not able to compete, right, she she did the trials,
Speaker 1: so you got to see her run. That's interesting. What's
Speaker 1: your take on all that? So I think the failed
Speaker 1: drug tests she tested positive for marijuana was on June,
Speaker 1: so it's a one month suspension. It's not a like
Speaker 1: a hefty band or anything. But because of the date
Speaker 1: that had happened, it disqualified her results from the trials.
Speaker 1: So even though she's our fastest woman at the one,
Speaker 1: she can't compete, and it's it's I think it's hard
Speaker 1: for Americans. I mean, it's hard for me to wrap
Speaker 1: my mind around it that marijuana is considered a performance
Speaker 1: enhancing drug and that she can't compete in the Olympics,
Speaker 1: because I mean, it's legal in so many states here,
Speaker 1: but we're talking about international rules here, so STANDI too different.
Speaker 1: My joke, of course, was that you know, marijuana makes
Speaker 1: you slow and lazy, so if you're caught, we're not
Speaker 1: going to let you go win medals at the Olympics.
Speaker 1: That that's the thing. It's like, Okay, her time is
Speaker 1: arguably more impressive knowing that you know she was smoking
Speaker 1: marijuana having it in some form beforehand, Like that's those
Speaker 1: are fast twitched muscles you need. Doesn't go hand in
Speaker 1: hand with cannabis. Now you must be you must be
Speaker 1: tempted to put strap on the track shoes and get
Speaker 1: get there and fill that spot. You know if my country,
Speaker 1: it's me all right, well we need to hear on
Speaker 1: the podcast and uh now we're going to introduce the guests.
Speaker 1: Really excited to have this guest. He is, as I said,
Speaker 1: the chief Investment officer for the America's at DWS. His
Speaker 1: name is David Bianco. David, welcome to the show. Hello, Mike,
Speaker 1: thanks for having me. Great that. Now, David, I want
Speaker 1: to talk about sort of what we uh flicked at
Speaker 1: in the introduction there, and it seems to me that
Speaker 1: this week, um and maybe the last two weeks there's
Speaker 1: kind of kind of been sort of a repricing in
Speaker 1: the market of what to expect from the economy. Maybe
Speaker 1: people are a little less gung ho as they formerly
Speaker 1: were about how strong and how long this this boom
Speaker 1: from the economic reopening will be. I'm curious what your
Speaker 1: take on that is. How are you you know, has
Speaker 1: anything changed materially for for the economic outlook? Is this
Speaker 1: kind of a just a growth scare we're going through.
Speaker 1: What's your what's your opinion? Well, Mike, I think the
Speaker 1: weather is changing, but not the climate. And what I
Speaker 1: mean by that is that this reflation of view and
Speaker 1: trade that people have been playing since the start of
Speaker 1: the year and about the reopening of the economy, the
Speaker 1: ref the reflation trade and the big inflation fears are
Speaker 1: blowing over, but the recovery is still with us. We
Speaker 1: still very much believe in a recovery, continued economic growth,
Speaker 1: even at an accelerated pace for the next couple of years.
Speaker 1: And what we think is happening is simply a return
Speaker 1: to the leadership of the digital and growth stock businesses
Speaker 1: in the equity market. So, whether it's changing but not
Speaker 1: the climate, it maybe a return to the normal situation
Speaker 1: of what we had within an economy and investment leadership
Speaker 1: prior to the pandemic, and so before we you know,
Speaker 1: really dig into you know, digital businesses and how you
Speaker 1: invest around that view. I want to talk a little
Speaker 1: bit more about this week because it's felt very um
Speaker 1: just very dramatic, and I'm curious, you know, when you
Speaker 1: look at what's happening with the bond market, with treasury yields,
Speaker 1: how that's bleeding through into equities. I mean, what is
Speaker 1: the trigger people really really concerned about the delta variant,
Speaker 1: for example, or is is this more positioning sort of
Speaker 1: wash out going on. It's a few things, and I
Speaker 1: guess they're each worth pointing out. What we've seen happen
Speaker 1: is a surprising decline uh in in long term treasury yields,
Speaker 1: as you said, from the about one point seven five
Speaker 1: percent back in March to one point three percent right now,
Speaker 1: even one and a quarter percent on an intra day basis.
Speaker 1: And this all occurred over the past several months. As
Speaker 1: most investors, including us, we're expecting interest rates to continue
Speaker 1: working their way upward. So why did interest rates um
Speaker 1: they collapse of the dramatic word, But why do they
Speaker 1: fall so much and so quickly when everybody was expecting
Speaker 1: the opposite. So yes, it may be people on winding
Speaker 1: a crowded bit of expecting interest rates to rise, but
Speaker 1: there's some good reasons for why this has happened at
Speaker 1: this moment, and that includes that. First, if you go
Speaker 1: back to the June fo MC meeting and and share
Speaker 1: Powell's press conference, he did a very good job of
Speaker 1: using his communication skills and communication tools. What he did
Speaker 1: was he acknowledged that inflation is uh running a bit hot,
Speaker 1: and he discussed that when the time comes, they will
Speaker 1: take their other tools to contain inflation, and and that
Speaker 1: that made the currency market a lot more comfortable that
Speaker 1: when the time comes, the FED will defend the dollar
Speaker 1: and keep inflation anchored close to its two two and
Speaker 1: a half percent expectation. So one, it started off with
Speaker 1: reassurances from the Fed that when the time comes, they'll
Speaker 1: take action and they've got the tools to take action,
Speaker 1: and we saw the dollar fine support and that was
Speaker 1: the first um trigger to bringing bond investors back with
Speaker 1: some confidence. Secondly, there's been these delays in new fiscal
Speaker 1: stimulus legislation many people figured there'd be an infrastructure package
Speaker 1: passed by the fourth of July, and then that has
Speaker 1: not happened, and there's fears that there may not be
Speaker 1: any legislation before the August recess. So we we still
Speaker 1: expect some stimulus packages, but probably a little bit later
Speaker 1: and a little bit more moderate and size than had
Speaker 1: been previously discussed UH back during the UH the elections,
Speaker 1: and and and afterward. And then third, yes, the delta
Speaker 1: variant this is this is with us, and it is
Speaker 1: a real threat to those in the world and those
Speaker 1: countries that don't have the vaccine. So it through as
Speaker 1: a wrinkle in the reopening story, certainly for the world
Speaker 1: as we're still struggling after all this time to fully
Speaker 1: return to normal UH in this in this pandemic UH.
Speaker 1: And then the idea that there would be tons of
Speaker 1: fiscal stimulus UH coming, we might have to wait longer,
Speaker 1: a little bit more moderate in size, And the FED
Speaker 1: has made it clear they're not going to let inflation
Speaker 1: run out of control in the coming years. For those reasons,
Speaker 1: tenure yields dropped UM because I think it's surprised everybody's expectations.
Speaker 1: But we do think that interest rates will grind upward
Speaker 1: over time, and our view here at THEWS as as
Speaker 1: a tenure yield, whether it be a year from now
Speaker 1: or not much longer than that, we do think the
Speaker 1: tenure yield will get back to above. It's interesting, you know,
Speaker 1: every time the bond market moves, it always seems like
Speaker 1: the stock market looks at the bond market as sort
Speaker 1: of the wiser older brother sister who knows something that
Speaker 1: you don't, and and stock market, you know, it takes
Speaker 1: its cues from that. David. Obviously, we're approaching sort of
Speaker 1: the beginning of earning season for the second quarter. Um,
Speaker 1: we're gonna get a fire hose of new information, uh,
Speaker 1: you know, not only reported results, but outlooks for the
Speaker 1: rest of the year. I guess the one kind of
Speaker 1: top of mind question I have is is there any
Speaker 1: concern about all these supply bottlenecks uh and and supply
Speaker 1: issues that that we're hearing about. Is that set the
Speaker 1: stage for possibly some some downward surprises and earnings in
Speaker 1: certain sectors? In your mind, I mean, are there some
Speaker 1: companies who because of these issues are not really able
Speaker 1: to participate in this booming rebound like they would otherwise
Speaker 1: if the supply chain was was functioning normally. Yes, there's
Speaker 1: challenges and meeting demand, and there's there's uh uh there
Speaker 1: there there's higher cost to many cases to to meeting demand,
Speaker 1: and part of that is because of a more lots
Speaker 1: sided nature of the demand. Everybody kind of ran to
Speaker 1: one side of the ship and wanted goods rather than
Speaker 1: the normal services that they would consume. During this pandemic,
Speaker 1: they went from their urban lifestyle to more of a
Speaker 1: suburban lifestyle, and they've turned their homes into their offices
Speaker 1: and their schools into their So the point is, yes,
Speaker 1: there's been demand ships, and there's been challenges in in
Speaker 1: responding to that demand. This is part of the reason
Speaker 1: why there there there are some signs of of inflation
Speaker 1: running hot right now. Um, And we'll talk more about
Speaker 1: inflation in a moment. But I think during earning season
Speaker 1: you will come across companies that point to not being
Speaker 1: able to achieve both the sales that they could have
Speaker 1: achieved owing to inventories being too light or their supply
Speaker 1: chains being bottlenecked. Um. But I actually think you're going
Speaker 1: to find more of those challenges at companies that are
Speaker 1: related to the reopening that are related to UH to
Speaker 1: goods demand. The funny thing is the digital side of
Speaker 1: the economy isn't having any trouble responding to demand. UM.
Speaker 1: Their growth is occurring and and they're keeping up with
Speaker 1: the demand very well with very low sometimes no incremental costs. Yeah,
Speaker 1: turn on another server in the cloud somewhere and it's
Speaker 1: aneviable business. I was trying to find the stat but
Speaker 1: Bank of America had a great statu last earning seasons
Speaker 1: that if you look at the number of mentions of
Speaker 1: inflation on earnings called it had gone up something like.
Speaker 1: That's not an exact number, so don't quote me, but
Speaker 1: I'm curious, David, I do want to hear about your
Speaker 1: expectations for this coming earnn's earning season. And also something
Speaker 1: I think about, uh, you know, every three months, is
Speaker 1: how much do earnings really matters? That really, uh, the
Speaker 1: most important signal for the stock market. It's supposed to be,
Speaker 1: but is it actually short answer, it is certainly one
Speaker 1: of the very most important aspects UH earnings, not just
Speaker 1: earnings today, but the earnings outlook of course, but earnings
Speaker 1: and interest rates, and then on certainty around earnings and
Speaker 1: interest rates, thus the risk premium, your discount rate. Those
Speaker 1: are the three things that drive the equity market. UM.
Speaker 1: So any insights we get on an important driver like
Speaker 1: earnings now and and for the outlook, yes, it's very important.
Speaker 1: And second quarter earning season is upon us. UM. We
Speaker 1: are going to go through this ritual of we all
Speaker 1: know that the companies are going to beat the analyst expectations.
Speaker 1: It happens every single quarter, other than when there's economic
Speaker 1: shocks that come on suddenly and then the earnings missed
Speaker 1: and it's part of a recession beginning UH. Other times,
Speaker 1: the aggregate earnings beat is usually about three percent, and
Speaker 1: usually two thirds of companies UH beat on the earnings estimates.
Speaker 1: What's happened in the recent quarters, including the first quarter,
Speaker 1: more than the companies beat the estimates. And in the
Speaker 1: first quarter the beat was and aggregate it was tremendous.
Speaker 1: We went into the first quarter earning season saying the
Speaker 1: numbers are too low, they're going to be beaten by
Speaker 1: at least ten percent, and we're saying the same thing
Speaker 1: for the second quarter right now. The analyst bottom up
Speaker 1: number for the SMP five aggregate earnings just forty five
Speaker 1: dollars per share. We expect that to be beaten by
Speaker 1: at least ten percent. That if we're gonna get fifty
Speaker 1: or higher of earnings in Q two, what I would
Speaker 1: tell you is what's ahead is a whole bunch of
Speaker 1: you know, beat reports from companies, But it is entirely
Speaker 1: expected from the equity market that if we don't have
Speaker 1: at least a ten percent, at least a double digit
Speaker 1: type of beat, that will be a disappointment. UM investors
Speaker 1: are basically valuing the SMP right now on the idea
Speaker 1: that there's at least two hundred dollars of annualized earnings power,
Speaker 1: and we saw very very close to that in the
Speaker 1: first quarter of this year forty nine per Sure, some
Speaker 1: things like lone loss reserve at leases helping to boost
Speaker 1: the earnings, but with the economic growth that we've seen
Speaker 1: during Q two, US real GDP growth should be eight
Speaker 1: uh growth on an annualized basis. That and even just
Speaker 1: the seasonality of second quarter earnings being stronger than first quarter,
Speaker 1: we expect in there and we very much believe there
Speaker 1: will be over fifty dollars of earnings out of out
Speaker 1: of the season. I've said a lot, but what I
Speaker 1: want to tell you, really, what I think would be
Speaker 1: interesting is if, on a sequential basis, the digital stocks,
Speaker 1: the tech communications, and the growth stocks in general, if
Speaker 1: they can keep pace with the same type of growth
Speaker 1: rates sales earnings as the big cyclical reopening place, if
Speaker 1: they have similar growth rates, If this is the moment
Speaker 1: for deep cyclicals to shine, and yet such of the
Speaker 1: growth stocks still have earnings of growth, that's pretty comparable.
Speaker 1: It may be again the reason why that reflation trade
Speaker 1: is whether that's fading away. So David, Uh, can you
Speaker 1: break it down for us, UH as far as kind
Speaker 1: of what what the house view is at THEWS, as
Speaker 1: far as allocation. You know, it sounds like you're pretty
Speaker 1: bullish on sort of the fang type of names that
Speaker 1: the digital uh, you know, heavy internet type of stocks. Uh,
Speaker 1: let me know if that's fair to say. And sort
Speaker 1: of what else, you know, where else in the market
Speaker 1: are you looking for opportunities and what are you kind
Speaker 1: of underweight at the moment. Yes, we are bullsh tech,
Speaker 1: We are bullish growth stocks, UM. But our biggest message
Speaker 1: since the start of this year, late last year was
Speaker 1: stay diversified. It's an uncertain environment. It's still the early
Speaker 1: years of a new expansion, new policies, UM, new investment trends,
Speaker 1: some of the some some of the same trends digitalization
Speaker 1: E s G, but some new ones to UH, what
Speaker 1: exactly we're gonna do if on the clean energy front
Speaker 1: out front faster we're gonna move toward that, UM, what's
Speaker 1: going to happen to the disrupted businesses versus the disruptors?
Speaker 1: Point is, UM, we don't want to uh take any
Speaker 1: oversized UM macro risks. What we are doing is we
Speaker 1: are moderately overweight equities UH, equity allocation versus normally for
Speaker 1: our moderate risk portfolios and ask an allocation were moderately
Speaker 1: overweight equities, moderately underweight fixed income the same about five points.
Speaker 1: And then within equities UH. Right now, since the start
Speaker 1: of the year, we've been overweight foreign equities both Europe
Speaker 1: and and Asia. UH. And then within the United States,
Speaker 1: we started the year overweight small caps. Now we're equal weight.
Speaker 1: The rest of our allocation in the United States is
Speaker 1: tilted toward growth, and our our idea was it was
Speaker 1: better to find value opportunities energy industrial materials abroad, such
Speaker 1: as in Europe. UH. And we stuck with the growth stocks,
Speaker 1: but plus banks in the United States, we've been underweight
Speaker 1: US energy industrials and materials companies. And so I'm curious
Speaker 1: to hear your FED expectations UH specifically both in terms
Speaker 1: of you know, when they actually uh move off of zero,
Speaker 1: but also obviously there's been a lot of taper chatter
Speaker 1: in the past few months. We had the talking about
Speaker 1: talking about meeting UH from the FED in June. How
Speaker 1: do you factor taper like the potential of a taper
Speaker 1: into your asset allocation view is right. So our view
Speaker 1: on what monetary policy is likely to be over the
Speaker 1: next few years is that is about using communication tools
Speaker 1: and that's a very powerful tool and share Powell did
Speaker 1: a good job of it at the f OMC media
Speaker 1: in in the press conference in June, as I said,
Speaker 1: but we do not think uh they taper until two.
Speaker 1: They may lay out a plan UH for when they
Speaker 1: do it UH in late one, but we don't believe
Speaker 1: they actually reduced the one billion dollars of purchases a
Speaker 1: month until and then they'll taper over the course of two,
Speaker 1: probably bring it to to zero or close to zero
Speaker 1: over a twelve month period, and then the lift off conversation,
Speaker 1: what will the Fed do with rates? We believe the
Speaker 1: Fed will not high rates until three UM about communications
Speaker 1: two about tapering, about h aiking rates, we don't think
Speaker 1: they hike until but how fast they hike and ultimately
Speaker 1: what rate they hike to is an uncertainty and one
Speaker 1: that ties back to inflation. So we are we would
Speaker 1: say no hikes for now, but there you know, a
Speaker 1: couple of years away, and when they come, we're not
Speaker 1: entirely sure where they plateau. But if fiscal policy is
Speaker 1: right sized, then the Fed probably doesn't need to go
Speaker 1: too far above two in order on the overnight rate
Speaker 1: to keep inflation close too. And David, obviously, one of
Speaker 1: the the sort of Fed watcher events this week was
Speaker 1: there had been a lot of speculation that maybe the
Speaker 1: Fed would start tapering their mortgage backed security purchases before
Speaker 1: before the treasury purchases. That notion seems to have been
Speaker 1: squashed this week by the Minutes and some other communications. UM.
Speaker 1: But to rewind a little bit to what you were
Speaker 1: saying about that hot housing mark, it I gotta say, boy,
Speaker 1: for any of us around back in oh six oh seven, UM,
Speaker 1: in the in the whole boom and bust cycle of
Speaker 1: the housing market. Um, it's hard not to have a
Speaker 1: bit of a flashback. I mean, obviously the structure of
Speaker 1: the you know, structured finance world is not as vulnerable
Speaker 1: I hope anyway, knock on wood as it was back then. UM.
Speaker 1: But still you gotta wonder about this super hot housing
Speaker 1: market and you know what that means going forward? Um,
Speaker 1: it's not a risk, it's sort of an overheating of
Speaker 1: the housing market, or risk in your mind has it
Speaker 1: overheated already? And how do we sort of how should
Speaker 1: we sort of think about housing going forward from here?
Speaker 1: I think the best way to think about housing is
Speaker 1: it is cyclical. Um. It is a long cycle UM. Industry,
Speaker 1: sector of the economy. UM. And sometimes it's something you
Speaker 1: just can't fight too much. And and yes, you know,
Speaker 1: we all have views on and when markets get overheated, UM,
Speaker 1: And sometimes we turn to policy centers to try to
Speaker 1: adjust things. But you know, the FED would quickly make
Speaker 1: the point that their tools are blunt tools and there's
Speaker 1: only so much they can do. And should they really
Speaker 1: change their asset purchase program because some people think the
Speaker 1: housing market is is too hot in terms of price UM.
Speaker 1: So I think it's one thing for them to comment
Speaker 1: about it carefully, um, but probably stay the course on
Speaker 1: their plans, you know, and responding to broader things like
Speaker 1: the labor market and inflation measures broadly before they change
Speaker 1: any of their big policy tools like asset purchases and
Speaker 1: and so forth. And and then you have more to
Speaker 1: your your your your question. Though my view on the
Speaker 1: housing market is, um, it's sending a very valuable price
Speaker 1: signal right now. It is saying we need more housing.
Speaker 1: It is haying that part of the pandemic has been
Speaker 1: that people are using homes as more than a place
Speaker 1: to hang their hat. H It is it is their office,
Speaker 1: that is their school, It is their sanctuary, is their oasis.
Speaker 1: And in these times, I think the pandemic might have
Speaker 1: been one of these life experiences where people say, I'm
Speaker 1: just gonna live for the moment, and if there's this
Speaker 1: car or boat or home I wanted they make, might
Speaker 1: be moving more quickly to do it. Certainly, the interest
Speaker 1: rates are low, and so a lot has come together
Speaker 1: to make a special moment for housing, and that doesn't
Speaker 1: mean it will last forever. I have argued that things
Speaker 1: like home prices, car prices commodity prices. These are the
Speaker 1: kind of things where I think we should be pretty
Speaker 1: comfortable with. The idea may take some Timeally, in the
Speaker 1: case of housing, that high prices will help fix high prices,
Speaker 1: there will be a supply side response. I don't see
Speaker 1: those things as persistent sources of inflation. UM. So I
Speaker 1: mean to answer your question, I do think the housing
Speaker 1: markets a little overcooked, but not that it's unhealthy. I
Speaker 1: don't expect to collapse in prices. Again, this ties back
Speaker 1: to interest rates. Um. But I do also think there
Speaker 1: will be a supply response. And then it's not as
Speaker 1: easy as it wasn't the US to do it, but
Speaker 1: there will be a supply response. Don't forget it's you know,
Speaker 1: it's easier for workers to be wherever they want to
Speaker 1: be and for new housing stock to be placed wherever
Speaker 1: you can place it versus, you know, next to city
Speaker 1: centers in the past. Right that that makes a lot
Speaker 1: of sense. David uh and Katie's David said, the housing
Speaker 1: markets sending a signal that we need more housing. I'm
Speaker 1: gonna send a signal that we need more crazy things.
Speaker 1: That's that's I was wondering where we were going with
Speaker 1: that it's usually I'm not very mysterious either. You can
Speaker 1: you can spot a segue for me. Come come into MILEA.
Speaker 1: So stand clear of the craziest things we saw in
Speaker 1: markets this week, David, we have a attrition. Some make
Speaker 1: including myself, may call it a gimmick here, but it's
Speaker 1: a lot of fun. We call it the craziest thing
Speaker 1: I saw in markets this week. Katie, let's start with you.
Speaker 1: I'm curious what your craziest thing is. Okay, so this
Speaker 1: this story. So there's this. It's sir goal. It's an
Speaker 1: issuer of a stable coin, a stable coin for people
Speaker 1: not in the crypto weeds. It's digital currency. It's peg
Speaker 1: to another asset sometimes that's the US dollar anyway, Circle
Speaker 1: which issues the U s DC stable coin. It's going
Speaker 1: public via a spack in a four point five billion
Speaker 1: dollar deal. And this is crazy to me because it
Speaker 1: feels very much like a January February one story. Like
Speaker 1: I thought we were over crypto. I thought we were
Speaker 1: over spacked. So this was to see this headline was
Speaker 1: kind of a blast from the past. That's pretty good.
Speaker 1: If you can marry crypto to a spack, I think
Speaker 1: we've reached peakslow for Yeah, yeah, I thought we were
Speaker 1: past the peak, and I don't know, maybe we never
Speaker 1: got off the mountain. It keeps getting more and more
Speaker 1: every day. Yes, you never know when that peak is.
Speaker 1: Really of of crazy things like that, that's pretty good one.
Speaker 1: I agree, I and uh, I kind of missed a
Speaker 1: boat on that. I had wanted to write a story
Speaker 1: just on the notion of stable coins. And it's tremendously
Speaker 1: harder than it sounds to get a crypto to actually
Speaker 1: trade it that one dollar price. It's it's an interesting phenomenon.
Speaker 1: I mean, I'm so obsessed with tether and the fact
Speaker 1: that it's it's just a money market fund. It just
Speaker 1: owns commercial paper. But that's a whole another podcast. That's
Speaker 1: a great way to think about it. And also you
Speaker 1: can think about it when a money market fund does
Speaker 1: break the buck, how traumatic that can be for markets.
Speaker 1: So so something keep an eye on for sure. How
Speaker 1: about you, David, what's the craziest thing you've seen recently? Well,
Speaker 1: maybe on a serious note, I mean, the crazy thing
Speaker 1: in markets over the past week was the surprising decline
Speaker 1: in interest rates, and yet the most of the Bonafi
Speaker 1: bond substitutes and the equity market. The utility sector didn't
Speaker 1: really budge it's interest rates are this low and and
Speaker 1: felt recently you tell what you should be doing better.
Speaker 1: Another disconnect was just the way we see these big
Speaker 1: cap tech names in the United States keep climbing to
Speaker 1: the sky and a lot of people running for the
Speaker 1: hills when it comes at least Americans anyhow. With with
Speaker 1: with Chinese technology stocks, Uh, well, there's some reasons for that,
Speaker 1: but uh, these are these are great companies, Eastern technology,
Speaker 1: Western technology, great companies. I I think, uh, there's some
Speaker 1: opportunities in those those Chinese stocks and technology stocks. Um.
Speaker 1: I don't know. It was fourth of July not so
Speaker 1: long ago. That was a wild time. I think for
Speaker 1: a lot of people is getting back out outdoors and
Speaker 1: uh enjoying themselves, uh without masks. Uh. I'm from Long
Speaker 1: Island Port, Washington. There's a fifty boat raft up out there,
Speaker 1: big party, a lot of fun. But you know what,
Speaker 1: I think there's gonna be a lot of boats for
Speaker 1: sale at the all right, that's got that's good. I
Speaker 1: wouldn't mind picking up a cheap boat here in New Jersey.
Speaker 1: I'll keep keep my eye out for that. But it's
Speaker 1: a great point about the China stocks trade in the US.
Speaker 1: I mean, I think they would call that a rug
Speaker 1: poll in the in the crypto world. What happened with
Speaker 1: and I confess I don't know do you pronounce a
Speaker 1: D D or diety the I've been saying d D.
Speaker 1: No one's corrected me. But yeah, I mean it's nuts.
Speaker 1: I think it's it's just fallen. Not every day since
Speaker 1: it's ipl but pretty much. And that was just last week. Yeah, yeah,
Speaker 1: I think that's a story. Uh, this China crackdown on
Speaker 1: Chinese company trading in the in the US, I think
Speaker 1: that's a story to watch. That's an interesting Uh all right,
Speaker 1: I'm gonna go with mine. As listeners know, I like
Speaker 1: the alternative st class and I really love for some reason,
Speaker 1: I don't ask me why, but I love antique documents
Speaker 1: as an asset class. So this story is courtesy of
Speaker 1: the Belfast Telegraph and very timely with the the euro
Speaker 1: Football Championship going on. But a copy of the earliest
Speaker 1: printed rules of Football will be auctioned later this month. Um.
Speaker 1: It was one of two surviving copies of the first
Speaker 1: rules printed in eighteen fifty nine by the World first
Speaker 1: football club, which was Sheffield in northern England. So it's
Speaker 1: time to play prices, right, David and Katie. Um, And
Speaker 1: this hasn't gone talction yet, but they listed some of
Speaker 1: these listed in expected bid for the first printed rules
Speaker 1: of football. And I will put out pretty interesting that
Speaker 1: some of the rules have survived all these years. The
Speaker 1: indirect free kick, the corner kick and stuff like that.
Speaker 1: We're in these original rules in eighteen fifty nine. So Katie,
Speaker 1: what's your bid for the original rules of football? Okay? Sorry,
Speaker 1: just to clarify, we're talking about like American football, soccer,
Speaker 1: soccer soccer. Okay, alright, I thought we were in England
Speaker 1: for a moment. Okay, so so soccer. I have no idea.
Speaker 1: I'm just gonna embarrass myself and say fifty grounds. I
Speaker 1: don't know, all right, I'm gonna I'm gonna keep a
Speaker 1: poker face on that. Um. Okay, prices right, rules are
Speaker 1: in effect. So you you could go under fifty grand
Speaker 1: or or you could go fifty thousand and one. Uh,
Speaker 1: I'd go over fifty thousand. UM. I often asked myself,
Speaker 1: you know, what is it? What would this be worth
Speaker 1: to who? And what does it means to those people
Speaker 1: to pay. If it was the NFL would be worth
Speaker 1: probably a little bit more than this, you know, than
Speaker 1: than European football soccer. But yeah, I'm gonna go with
Speaker 1: over fifty thousand. Hopefully it's on some nice parchment, so
Speaker 1: you'll so you'll go, uh, fifty one dollar. I gotta say,
Speaker 1: I'm stumped here. I don't know who to anoint the winner,
Speaker 1: because the answer is fifty thou pounds exactly. So I won,
Speaker 1: So Katie said fifty grand, she didn't denote the currency,
Speaker 1: and David said over, So I think I think you're
Speaker 1: both winners. I think, well, you guys, yep, you split
Speaker 1: the whatever prices, right, Uh it's a new car. That's
Speaker 1: always the big prize on the prices, right. But uh good,
Speaker 1: that's a great guest, Katie. Usually you're you're a high bidder.
Speaker 1: Usually you're you're you're above you know, and I try
Speaker 1: not to be. I just have I mean, after the
Speaker 1: whole n f T craze, I have no idea how
Speaker 1: much anything as well, who knows what anything's worth anymore?
Speaker 1: It's it's who knows, it's it's whatever the you know,
Speaker 1: the greater fool theory is in full effect and a
Speaker 1: lot of these things. But speaking of greater fools, I
Speaker 1: think that's time for me to say goodbye and thank
Speaker 1: you both Katie and David. Really great conversation. David, I
Speaker 1: really enjoyed here in your thoughts and uh, hopefully we'll
Speaker 1: get you back again to talk about markets once again.
Speaker 1: That'd be great. Thanks Mike, thanksty What Goes Up. We'll
Speaker 1: be back next week and so then you can find
Speaker 1: us on the Bloomberg Terminal website and Apple or wherever
Speaker 1: you get your podcast. 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 Bring Anonymous. Katie
Speaker 1: greyffeldt is at a greifeld can also follow Bloomberg Podcast
Speaker 1: at podcast. I think you to Charlie Pall of Bloomberg
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Speaker 1: What Goes Up is produced by Top of Forehead. The
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Speaker 1: To see you next time.