WEBVTT - Meta Veteran Steps Into COO Role (Podcast)

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<v Speaker 1>This is Bloomberg Business Week. I'm Carol Masser and I'm

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<v Speaker 1>Bloomberg Quick Takes Tim Stanibek. We're here every day bringing

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<v Speaker 1>pm Eastern Time on Bloomberg Radio or watch us on

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<v Speaker 1>YouTube search Bloomberg Global News. There is a new top

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<v Speaker 1>lieutenant in town at MET I don't know if you've noticed. Uh.

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<v Speaker 1>We got to find out who it is and what

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<v Speaker 1>it means for the company. This is a story by

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<v Speaker 1>Bloomberg News Technology Report of Kurt Wagner writing about it

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<v Speaker 1>for Bloomberg Business Week, which is online oft Bloomberg dot

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<v Speaker 1>com slash business Week also on the Bloomberg terminal. So

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<v Speaker 1>let's get the story from Bloomberg News Big Tech team

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<v Speaker 1>leader Sarah Fryar. She joins us on the phone in

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<v Speaker 1>San Francisco. Sarah, by the way, author of No Filter,

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<v Speaker 1>the inside story of Instagram. It's a great story for

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<v Speaker 1>a summer read. All right, Sarah, So, who is the

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<v Speaker 1>snow top lieutenant that we need to know about? He

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<v Speaker 1>is the most important person at Facebook. You've never heard

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<v Speaker 1>of um if you've heard of him at all. Actually,

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<v Speaker 1>it might be from the documents that came out of

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<v Speaker 1>congressional investigations or perhaps the Data league by Francis Hougan,

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<v Speaker 1>the whistleblower, the Facebook whistle blower. And that's because HEAVIERA Levan.

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<v Speaker 1>He's He's been involved in everything, every every big strategic move.

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<v Speaker 1>He was the head of growth, so all of the

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<v Speaker 1>big acquisition UM that mattered, the What's App acquisition, for

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<v Speaker 1>the Onavo acquisition, which is another very important acquisition that

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<v Speaker 1>UM allowed Facebook to track how competitors apps were being

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<v Speaker 1>used by people on their mobile phones, like a really

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<v Speaker 1>good tool for crushing the competition. All of that has

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<v Speaker 1>come to light in the antitrust hearings. How do your

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<v Speaker 1>early wanted? Essentially Mark Zuckerberg's favorite fixer of big problems,

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<v Speaker 1>and the biggest problem that always seems to matter to

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<v Speaker 1>Zuckerberg's the most is growth and UM. So now he

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<v Speaker 1>needs to come on as as Kurtwright and fix the

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<v Speaker 1>business as poo, the role vacated by Cheryl famber So

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<v Speaker 1>as Mark Zuckerberg's favorite fixer. What do you think is

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<v Speaker 1>number one in his priority list to fix right now?

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<v Speaker 1>It's it's really about the business model. Looks. Meta had

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<v Speaker 1>its first quarter of revenue decline ever as a public

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<v Speaker 1>company in this most recent quarter, and they have to

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<v Speaker 1>figure out how to get the advertising business back on

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<v Speaker 1>track UM. But they also have to figure out how

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<v Speaker 1>to make money off of this this pie in the

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<v Speaker 1>sky vision for the metaverse UM, which may or may

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<v Speaker 1>not happen, But it's where Zuckerberg pointing a lot of

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<v Speaker 1>the talent at Facebook, a lot of investment a Facebook,

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<v Speaker 1>he really needs the metaverse to work because that's the future,

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<v Speaker 1>the platform that um Mr Olivan works so hard to

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<v Speaker 1>build too incredible prominence around the world. Now it has

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<v Speaker 1>more than the world more than half of the world's

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<v Speaker 1>Internet connection population. There's really just not that much further

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<v Speaker 1>to grow. And it's not like Facebook can buy it's

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<v Speaker 1>way to more growth because of all the antitrust pressure.

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<v Speaker 1>So that's why they have to build out the metaverse,

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<v Speaker 1>and they have not figured out how they're going to

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<v Speaker 1>make money off of it. They haven't figured out how

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<v Speaker 1>they're going to get people to want to use it,

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<v Speaker 1>So there's there's a lot of big questions looming for Meta. Meanwhile,

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<v Speaker 1>the stock has has lost more than half its value

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<v Speaker 1>UM and it's a it's just a critical time for

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<v Speaker 1>the company. So, Sarah, can we equate him to someone

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<v Speaker 1>else at either part over either at Microsoft or at Google,

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<v Speaker 1>like you know, or even Apple. I feel like we

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<v Speaker 1>didn't really know a ton about Tim Cook, you know,

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<v Speaker 1>for a long and all of a sudden, you know,

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<v Speaker 1>he's obviously been very key to what's been going on

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<v Speaker 1>in the company as the CEO. Now, but I mean,

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<v Speaker 1>is there somebody else's to look on valid that we

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<v Speaker 1>can liken this This guy too, I think maybe maybe

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<v Speaker 1>the most similar to and I say that only because

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<v Speaker 1>he's very much a data guy. He grew up in

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<v Speaker 1>in Facebook's engineering culture, and a lot of the decisions

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<v Speaker 1>that he has UM that he has put into motion

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<v Speaker 1>have come from understanding how UM people are using Facebook

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<v Speaker 1>products and using competitors products, and how they should adjust

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<v Speaker 1>their behavior UM to to fit to that. And another

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<v Speaker 1>reason that I'd compare him to soundar is just because

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<v Speaker 1>of his international background UM as a person from from Spain,

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<v Speaker 1>he who speaks many languages, by the way, not just Spanish. UM.

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<v Speaker 1>He has a sense of how people use Facebook products

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<v Speaker 1>or don't use them for that matter, around the rest

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<v Speaker 1>of the world. And he's really been key at pushing

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<v Speaker 1>the company into UM broader thinking about about how to

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<v Speaker 1>build UM you know, in places with load data UM

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<v Speaker 1>where people have to to purchase their their data unlike

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<v Speaker 1>in the US UM by by the minute or by

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<v Speaker 1>the bid. So so I think that he UM he

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<v Speaker 1>has pushed things like what's that in part because of

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<v Speaker 1>his personal experience talking to family internationally, understanding how people

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<v Speaker 1>UM you know live in non Facebook centric worlds and sir,

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<v Speaker 1>like you already said, we don't know much, we don't

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<v Speaker 1>We don't see him a lot Olivan and in the

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<v Speaker 1>story uh Kurt writes that Olivan rarely speaks publicly or

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<v Speaker 1>post to Facebook or Instagram, but he's had a hand

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<v Speaker 1>in all of Facebook's major competitive battles and acquisitions. What

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<v Speaker 1>has been his biggest stamp on the company thus far?

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<v Speaker 1>People always ask me, like, you know, they don't think

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<v Speaker 1>that facebooks are very innovative company, Like, what is Facebook

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<v Speaker 1>actually built? Like they they bought Instagram, they bought WhatsApp,

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<v Speaker 1>they copy snatch at the copy TikTok, TikTok. What are

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<v Speaker 1>they actually built? And my answer is their growth strategy.

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<v Speaker 1>That is the thing that has been innovative about Facebook,

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<v Speaker 1>this grow at all cost strategy. That that really Javier

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<v Speaker 1>Levan is the is the brainchild behind like he's He's

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<v Speaker 1>the person who pushed a lot of this UM aggressive

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<v Speaker 1>UM methods for making sure that people join Facebook UM

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<v Speaker 1>and and joined Facebook is an alternative to competitors and

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<v Speaker 1>make sure that if anything's ever broken in the app

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<v Speaker 1>that prevents people from staying there or spending more time there,

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<v Speaker 1>that they fix it quickly. UM and all of that

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<v Speaker 1>mechanisms of push notifications and UM getting people to to

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<v Speaker 1>really become so attached to these products. All those little

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<v Speaker 1>moves add up and they all come from this growth

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<v Speaker 1>team that he led for so long. But on his

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<v Speaker 1>agenda is growth, Right, he doesn't have to deal with

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<v Speaker 1>maybe the Washington stuff, the policy stuff. It's all about

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<v Speaker 1>making sure this company grows. Just got about twenty five

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<v Speaker 1>seconds left, right, and that's been the problem too. Right.

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<v Speaker 1>He has built this company to the to the point

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<v Speaker 1>where it has these incredible blind spots because of its

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<v Speaker 1>size and maybe didn't think about those things while growing. Yeah,

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<v Speaker 1>it's a really it's a really good point. Hey, Sarah,

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<v Speaker 1>thank you so much. Sarah Fryer, she's big tech team

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<v Speaker 1>leader at Bloomberg News. Check out our book No Filter,

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<v Speaker 1>The inside story of Instagram. This story written by Bloomberg

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<v Speaker 1>News technology reporter Kurt Wagner from Bloomberg Business Week, which

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<v Speaker 1>you can find online on the Bloomberg terminal, so be

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<v Speaker 1>sure to check it out. You're listening to Bloomberg Business

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<v Speaker 1>Week with Carol Masher and Bloomberg Quick Takes Tim Stinovic

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<v Speaker 1>on Bloomberg Radio. Well on the Bloomberg Today is a

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<v Speaker 1>story about how Ether is surgery and anticipation of a

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<v Speaker 1>groundbreaking software upgrade to its blockchain. This is something you've

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<v Speaker 1>been following, right, like all that's going on? Yeah, yeah,

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<v Speaker 1>it's interesting. So Ether, Uh, it's the Ethereum blockchain is

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<v Speaker 1>the second most popular blockchain, second of course to Bitcoin,

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<v Speaker 1>and the token attached to the etherium blockchain. Ether has

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<v Speaker 1>absolutely been on fire since about mid June because everyone's

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<v Speaker 1>waiting for the merge. The long awaited merge basically moving

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<v Speaker 1>from proof of work mining, which is very, very energy intensive.

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<v Speaker 1>You've heard a lot of that criticism centered around Bitcoin

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<v Speaker 1>moving from proof of work to a proof of steak,

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<v Speaker 1>which would require a lot less energy. Okay, so this

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<v Speaker 1>is a big deal. Bottom. It's a big deal to

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<v Speaker 1>Katie because she understands this stuff all right. So in

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<v Speaker 1>our weekly crypto segment, Natalie Brunel is a journalist, podcaster,

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<v Speaker 1>adjunct Professor of Advanced Communication and Visual Storytelling at the

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<v Speaker 1>University of Southern California Annenburg School for Communication in Journalism.

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<v Speaker 1>She joins Katie and myself on the phone from San Diego.

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<v Speaker 1>Is also host of Hard Money. So Natalie, good to

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<v Speaker 1>have you here with Katie and myself. UM, talk to

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<v Speaker 1>us a little bit about you know, Katie was talking

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<v Speaker 1>about ether and Ethereum. We follow the crypto markets on

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<v Speaker 1>a regular basis. Um, what's top of mind for you? Hi? Well,

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<v Speaker 1>thank you so much for having me. Top of mind

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<v Speaker 1>always for me is a bitcoin and making sure I

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<v Speaker 1>can educate as many people as I can about the

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<v Speaker 1>power of this rising computer network and and the savings

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<v Speaker 1>technology potential in a world where you can look at

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<v Speaker 1>you know, consumer spending and saving. Spending is in an

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<v Speaker 1>all time high when it comes to credit and saving

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<v Speaker 1>is at an all time low. And we really need

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<v Speaker 1>a form of money that can't be manipulated, It can't

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<v Speaker 1>be inflated the way that our current monetary system works.

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<v Speaker 1>And so I'm very passionate about bitcoin, and so i've

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<v Speaker 1>been I've been happy about the recent rally, you know,

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<v Speaker 1>it's shot up about in July, but I still think

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<v Speaker 1>that there's going to be more choppinus volatility and pain

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<v Speaker 1>ahead as the said tries to aggressively, you know, hike,

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<v Speaker 1>race and fight and inflation. So I I don't see

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<v Speaker 1>if reaching our all time highs any anytime soon, but

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<v Speaker 1>I do think it's the best long term bet that

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<v Speaker 1>we have out there. Why do you think that? Because,

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<v Speaker 1>I mean, I really enjoy following the crypto markets. I

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<v Speaker 1>speak to a lot of people within the crypto industry,

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<v Speaker 1>but I feel like bitcoin is kind of lost its

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<v Speaker 1>narrative in terms of it being of inflation, hedge being

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<v Speaker 1>a store of value. I'm wondering what you see is

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<v Speaker 1>very exciting about this moment. Yeah, So two things I'll

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<v Speaker 1>say about that, As far as the inflation hedge, you

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<v Speaker 1>really have to step back and think about the time

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<v Speaker 1>frame you're examining bitcoin from, because over the last ten

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<v Speaker 1>years is outperformed every stock index with outperformed precious metals gold,

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<v Speaker 1>um and so and and really outperformed real estate as well.

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<v Speaker 1>So it's pretty much been the best performing asset as

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<v Speaker 1>it grows in adoption and awareness. So in the short

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<v Speaker 1>time frame when when everything's falling, we have major stocks falling, industries, falling,

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<v Speaker 1>real estate. Now finally to drawing, all right, I've got

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<v Speaker 1>to jump in because stocks have actually bounced back. And

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<v Speaker 1>I think many would say, including a lot of people

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<v Speaker 1>you know, within the crypto industry, that we are so

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<v Speaker 1>early in on this that it's like the very very

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<v Speaker 1>early days of the Internet. So I feel like Internet,

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<v Speaker 1>excuse me. So I feel like, well, we talk about,

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<v Speaker 1>you know, investors getting involved in this, we have to

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<v Speaker 1>be cautious. That's why we recommend something called dollar cost averaging, Right,

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<v Speaker 1>we don't want people to sit there and risk their

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<v Speaker 1>entire life savings on something that they're not familiar with.

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<v Speaker 1>Bitcoin requires a lot of study and it's difficult to

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<v Speaker 1>explain it in a sound bite, but what it's trying

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<v Speaker 1>to ultimately fix is what is broken in the monetary system,

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<v Speaker 1>this manipulation of money that leads to capital being allocated

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<v Speaker 1>really to the people at the top at the expense

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<v Speaker 1>of everybody else. The money printing, that the fact that

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<v Speaker 1>we are so far in debt and we have nothing,

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<v Speaker 1>We have no alternative other than bitcoin that can solve

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<v Speaker 1>a lot of these issues. So if you think that

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<v Speaker 1>there's even a one to five percent chance that bitcoin could,

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<v Speaker 1>um you know, become an asset that overtakes, say a

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<v Speaker 1>potentillion dollar market cap like gold or even more, then

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<v Speaker 1>it's something that you might think about allocating one to

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<v Speaker 1>five percent of your portfolio to. Um you know that

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<v Speaker 1>this isn't something would like to like that, Natalie, we

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<v Speaker 1>don't have much time left. So I want to jump

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<v Speaker 1>in and ask why bitcoin, Because if we further this

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<v Speaker 1>internet sort of tech boom of the early two thousand's metaphor,

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<v Speaker 1>there was Amazon and there was pets dot com. So

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<v Speaker 1>why bitcoin when you look across the entire landscape of

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<v Speaker 1>all the different coins and tokens out there. Sure so

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<v Speaker 1>bitcoin is the decentralized, secure and scalable blockchain, whereas things

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<v Speaker 1>that you mentioned Amazon, tech dot com ultimately those are

0:12:47.320 --> 0:12:51.040
<v Speaker 1>centralized forces. Bitcoin is like the Internet. It's a protocol.

0:12:51.160 --> 0:12:53.480
<v Speaker 1>It's in the same way. I believe it's going to

0:12:53.559 --> 0:12:56.320
<v Speaker 1>be as revolutionary in terms of freedom and the ability

0:12:56.360 --> 0:12:59.840
<v Speaker 1>to gain prosperity as the Internet was. Um you can

0:13:00.000 --> 0:13:02.120
<v Speaker 1>send value from one part of the world to another,

0:13:02.160 --> 0:13:05.240
<v Speaker 1>it settles almost instantly with no third party, and it

0:13:05.320 --> 0:13:07.560
<v Speaker 1>gives access to eight billion people to have a form

0:13:07.559 --> 0:13:12.800
<v Speaker 1>of digital property wha for example. Well, so there are

0:13:12.840 --> 0:13:14.760
<v Speaker 1>a lot of questions that remain as far as the

0:13:14.920 --> 0:13:19.440
<v Speaker 1>long term consensus model in terms of how how are

0:13:19.520 --> 0:13:22.600
<v Speaker 1>these tokens going to be released, what is going to

0:13:22.640 --> 0:13:24.679
<v Speaker 1>be the supply, what are the rules surrounding that? There

0:13:24.679 --> 0:13:28.000
<v Speaker 1>are so many unanswered questions. Whereas Bitcoin has been proven

0:13:28.040 --> 0:13:31.040
<v Speaker 1>for the last thirteen years to be a decentralized and

0:13:31.120 --> 0:13:34.800
<v Speaker 1>secure network that is secured by energy um the difficulty

0:13:34.840 --> 0:13:38.880
<v Speaker 1>adjustment that the brilliancy of the programming that's to Toshi invented.

0:13:39.240 --> 0:13:42.240
<v Speaker 1>It has never been hacked, and it is the one

0:13:42.400 --> 0:13:45.920
<v Speaker 1>form of I would say, you know, hard money that

0:13:46.120 --> 0:13:48.920
<v Speaker 1>comes in a digital format that people can start to

0:13:48.960 --> 0:13:52.559
<v Speaker 1>allocate their savings to and watch it grow over time. Right, Well,

0:13:52.640 --> 0:13:54.680
<v Speaker 1>I feel like this is a conversation will continue to have,

0:13:54.760 --> 0:13:57.200
<v Speaker 1>certainly for a long time. Natalie Brunell, thank you so much.

0:13:57.240 --> 0:14:00.319
<v Speaker 1>A Jack professor over at University of Southern California, host

0:14:00.760 --> 0:14:09.600
<v Speaker 1>of Hard Money. I'm rolling journal. Yeah, but you let

0:14:09.600 --> 0:14:15.720
<v Speaker 1>me drive? No, no, all right, please, I'll do gravels.

0:14:16.760 --> 0:14:25.160
<v Speaker 1>I want to try. It's the question drive in the

0:14:25.440 --> 0:14:32.080
<v Speaker 1>ride to the Clobell on Bluebird Radio. All right, everybody,

0:14:32.120 --> 0:14:35.160
<v Speaker 1>just about ten and a half minutes left in today's

0:14:35.160 --> 0:14:38.960
<v Speaker 1>trading session. We are getting ready to wrap up the

0:14:39.080 --> 0:14:42.000
<v Speaker 1>trading day and the trading week. A lot of news

0:14:42.320 --> 0:14:45.880
<v Speaker 1>coming out of certainly Washington. Conton continue to track the

0:14:46.080 --> 0:14:48.480
<v Speaker 1>unceiling or it looks like the release of that warrant

0:14:48.840 --> 0:14:51.880
<v Speaker 1>that led to the search, the FBI search of former

0:14:51.920 --> 0:14:54.480
<v Speaker 1>President Donald Trump's home, so we'll continue to track that.

0:14:54.560 --> 0:14:56.960
<v Speaker 1>In the meantime, the markets, we've really seen a risk

0:14:57.040 --> 0:14:59.560
<v Speaker 1>trade on. So great to have back with us once again.

0:14:59.600 --> 0:15:02.240
<v Speaker 1>Doug ram mc chief investment officer of the Luther Group.

0:15:02.840 --> 0:15:04.800
<v Speaker 1>His core investment found up about four percent in the

0:15:04.800 --> 0:15:08.040
<v Speaker 1>past month, nearly six percent on average annually over the

0:15:08.040 --> 0:15:10.880
<v Speaker 1>past five years. He's based in Minneapolis, and he joins

0:15:10.960 --> 0:15:13.400
<v Speaker 1>us on the phone from there. Doug good to have

0:15:13.520 --> 0:15:15.680
<v Speaker 1>you here with us. I do want to talk markets,

0:15:15.720 --> 0:15:18.240
<v Speaker 1>that's your world. But I gotta ask you all this

0:15:18.480 --> 0:15:23.760
<v Speaker 1>news um regarding the FBI search former President Donald's home

0:15:23.760 --> 0:15:28.720
<v Speaker 1>in Florida, Uh, the investigations. How how does political news

0:15:28.760 --> 0:15:32.800
<v Speaker 1>are the upcoming midterms factor into your thinking about investment

0:15:32.840 --> 0:15:38.880
<v Speaker 1>strategy if at all? Uh? Well, from time to time, UH,

0:15:39.000 --> 0:15:43.600
<v Speaker 1>political developments can influence our analysis. And I think, uh

0:15:44.320 --> 0:15:47.080
<v Speaker 1>to use the president in question, I mean the Trump

0:15:47.080 --> 0:15:54.920
<v Speaker 1>bump back in the fall of upon his election was incredible. Uh.

0:15:55.240 --> 0:15:59.760
<v Speaker 1>Just I mean the bounce in business confidence associated with

0:16:00.160 --> 0:16:04.320
<v Speaker 1>I think more so UH pro business rhetoric maybe in

0:16:04.400 --> 0:16:08.440
<v Speaker 1>some cases than policy. It was enormous. As I recall,

0:16:08.520 --> 0:16:12.880
<v Speaker 1>the Russell two thousand was up about two in a

0:16:12.960 --> 0:16:16.400
<v Speaker 1>month following that election, and it really did usher in

0:16:16.600 --> 0:16:20.160
<v Speaker 1>sort of a new uh phase of you know, what

0:16:20.320 --> 0:16:24.160
<v Speaker 1>had been a pretty slow economic expansion. So that's you know,

0:16:24.320 --> 0:16:28.360
<v Speaker 1>one very clear example in my career that I can

0:16:28.400 --> 0:16:30.640
<v Speaker 1>think of. But something like this is just a little

0:16:30.640 --> 0:16:33.840
<v Speaker 1>bit more noisy now in terms of uh, the mid

0:16:33.960 --> 0:16:38.080
<v Speaker 1>term year, there there is a very strong historical tendency

0:16:38.120 --> 0:16:40.280
<v Speaker 1>for mid term years to be difficult, and this year

0:16:40.280 --> 0:16:44.160
<v Speaker 1>has been no exception, and especially like the middle the

0:16:44.200 --> 0:16:47.640
<v Speaker 1>middle six months of a mid term year have been

0:16:47.720 --> 0:16:52.040
<v Speaker 1>host to just I mean a statistically out of line

0:16:52.360 --> 0:16:55.800
<v Speaker 1>number of major market lows. UM. Now the good news

0:16:55.880 --> 0:16:58.120
<v Speaker 1>is and again, and this is a pattern I've seen

0:16:58.160 --> 0:17:02.760
<v Speaker 1>throughout my career, began right around that mid term election

0:17:02.840 --> 0:17:07.240
<v Speaker 1>time in early November. You flip from a very negative

0:17:08.760 --> 0:17:11.879
<v Speaker 1>historical pattern to a very positive one. So who knows,

0:17:11.960 --> 0:17:14.800
<v Speaker 1>you know, maybe markets get smarter over time, and maybe

0:17:14.800 --> 0:17:19.800
<v Speaker 1>they're anticipating that strong seasonal pattern that's due to arrive

0:17:20.119 --> 0:17:22.520
<v Speaker 1>later this year. We'll tell us a little bit about

0:17:22.520 --> 0:17:26.920
<v Speaker 1>that strong seasonal pattern because as you know, probably better

0:17:26.960 --> 0:17:30.919
<v Speaker 1>than most, it's been a pretty rocky vaultl year so

0:17:31.000 --> 0:17:37.240
<v Speaker 1>far for the SP five and most financial asset classes. Uh,

0:17:37.520 --> 0:17:40.280
<v Speaker 1>it has been and I think, uh, you know, the

0:17:40.280 --> 0:17:44.960
<v Speaker 1>Fed policy turn along with maybe the fiscal policy turn

0:17:45.040 --> 0:17:50.040
<v Speaker 1>that's been unappreciated, uh, to swing from I think, you

0:17:50.080 --> 0:17:53.679
<v Speaker 1>know what, the extreme and we had a deficit that

0:17:53.760 --> 0:17:57.560
<v Speaker 1>was close to g d P and uh it's now

0:17:57.600 --> 0:17:59.920
<v Speaker 1>down to a little over four percent. So the dull

0:18:00.119 --> 0:18:03.800
<v Speaker 1>to not just in monetary policy, but in fiscal policy

0:18:03.880 --> 0:18:07.280
<v Speaker 1>this year is enormous. And you know, I am impressed

0:18:07.320 --> 0:18:10.639
<v Speaker 1>with the way that you know, after sliding through the

0:18:10.640 --> 0:18:13.439
<v Speaker 1>first five months of the year, Uh, we've had this

0:18:13.480 --> 0:18:16.680
<v Speaker 1>impressive bounce back. Now that being said, I mean, if

0:18:16.680 --> 0:18:18.840
<v Speaker 1>we close where we are, well, it's only five minutes,

0:18:18.880 --> 0:18:21.919
<v Speaker 1>so I bet pretty uh heavily on that we'll be

0:18:22.000 --> 0:18:25.360
<v Speaker 1>up about sixteen and a half percent. Here the average

0:18:25.359 --> 0:18:29.440
<v Speaker 1>bear market rally of any bear market that's had one,

0:18:29.600 --> 0:18:32.520
<v Speaker 1>not all bear markets even have a bear market rally,

0:18:32.600 --> 0:18:35.280
<v Speaker 1>but the average bear market rally more than ten percent

0:18:35.800 --> 0:18:39.840
<v Speaker 1>has been fifteen and a half percent unfolding in forty

0:18:40.000 --> 0:18:42.480
<v Speaker 1>trading days. Well, this one is about sixteen and a

0:18:42.520 --> 0:18:45.960
<v Speaker 1>half percent in thirty nine trade days, so you're right

0:18:46.080 --> 0:18:49.840
<v Speaker 1>on the average. So so well, I don't know, this

0:18:49.880 --> 0:18:53.000
<v Speaker 1>one's been very impressive, and you know, we are certainly

0:18:53.000 --> 0:18:56.679
<v Speaker 1>one to look at what the charts are doing, and

0:18:56.720 --> 0:19:00.360
<v Speaker 1>I think, uh, today's close. You know, it'll go while

0:19:00.400 --> 0:19:02.600
<v Speaker 1>to get these numbers, but I think we look at

0:19:03.200 --> 0:19:06.680
<v Speaker 1>uh two or three, Well, let's surrounded up to three

0:19:06.840 --> 0:19:09.960
<v Speaker 1>breadthrust measures that we've done a lot of work on

0:19:10.119 --> 0:19:12.640
<v Speaker 1>and have come to trust. I think at least one

0:19:12.680 --> 0:19:17.000
<v Speaker 1>of those is going to trigger with today's action, which

0:19:17.080 --> 0:19:22.320
<v Speaker 1>is provocative because um, these signals are almost never seen,

0:19:23.080 --> 0:19:28.320
<v Speaker 1>uh during an ongoing bear market. So in terms of magnitude, um,

0:19:28.359 --> 0:19:30.600
<v Speaker 1>you know, we've seen these bear market rallies of this

0:19:30.760 --> 0:19:35.320
<v Speaker 1>size and length before, but in terms of its internal strength, um,

0:19:35.320 --> 0:19:38.920
<v Speaker 1>this one is is standing out. So bear market rally,

0:19:39.040 --> 0:19:43.760
<v Speaker 1>no new boat market or or continuation with the pandemic

0:19:43.880 --> 0:19:49.200
<v Speaker 1>being a major blip. Well, we are Look, we've I mean,

0:19:49.240 --> 0:19:52.879
<v Speaker 1>because we run longs and shorts in our tactical fund

0:19:53.640 --> 0:19:57.680
<v Speaker 1>um we have I mean our net equity exposure. We've

0:19:57.760 --> 0:20:02.560
<v Speaker 1>let it right up alongside uh, this rally. I mean

0:20:02.600 --> 0:20:08.399
<v Speaker 1>that being said, we're still pretty defensive at net equity exposure,

0:20:08.480 --> 0:20:11.399
<v Speaker 1>but it's been powerful enough that we've decided just to

0:20:11.520 --> 0:20:14.880
<v Speaker 1>let it ride. And I'm still not inclined, even though

0:20:14.880 --> 0:20:18.879
<v Speaker 1>I do think ultimately this is a cyclical bear market

0:20:19.000 --> 0:20:24.800
<v Speaker 1>that's got further room to run. Um. You know, maybe

0:20:24.840 --> 0:20:29.560
<v Speaker 1>we'll hold off on trimming in equity exposure yet for

0:20:30.400 --> 0:20:33.320
<v Speaker 1>a few more weeks, just given the power of this thing.

0:20:33.359 --> 0:20:35.920
<v Speaker 1>And it really gets back to the likelihood that policy

0:20:36.400 --> 0:20:41.320
<v Speaker 1>remains tight even with inflation very likely to have peaked. Well, Doug,

0:20:41.400 --> 0:20:43.280
<v Speaker 1>take this a little bit cross asset for us and

0:20:43.280 --> 0:20:45.639
<v Speaker 1>wrap in the yield curve, which, of course the twos

0:20:45.720 --> 0:20:48.960
<v Speaker 1>tends yield curve deeply inverted. At this point we only

0:20:48.960 --> 0:20:53.400
<v Speaker 1>have about forty seconds. But what is the signal there? Uh,

0:20:53.400 --> 0:20:58.320
<v Speaker 1>it's an early pre recession signal. What we've found in

0:20:58.400 --> 0:21:02.280
<v Speaker 1>terms of economic forecast team is that using a shorter

0:21:02.480 --> 0:21:07.000
<v Speaker 1>term yield uh, like the three months rather than the

0:21:07.040 --> 0:21:10.560
<v Speaker 1>two year, and comparing that to the tenure that spread

0:21:10.600 --> 0:21:15.040
<v Speaker 1>the tenure minus three months is a much better economic forecaster.

0:21:16.040 --> 0:21:19.399
<v Speaker 1>So we haven't seen that invert yet. It's gotten close,

0:21:19.480 --> 0:21:23.240
<v Speaker 1>but to us that's really when the recession countdown would begin.

0:21:24.200 --> 0:21:26.480
<v Speaker 1>Um and then there's usually a lag time between that

0:21:26.680 --> 0:21:30.520
<v Speaker 1>inversion in the ten versus three months and the actual recession.

0:21:30.600 --> 0:21:33.960
<v Speaker 1>So this could be an opportunity for someone who's very

0:21:34.040 --> 0:21:38.080
<v Speaker 1>fleet footed and uh maybe has more risk tolerance than

0:21:38.119 --> 0:21:40.840
<v Speaker 1>we do on our core fund to chase this world

0:21:40.920 --> 0:21:44.959
<v Speaker 1>for a while. But again that's not my recommendations. All right,

0:21:45.000 --> 0:21:47.199
<v Speaker 1>we gotta run. Hey listen, Doug, have a great weekend.

0:21:47.240 --> 0:21:51.240
<v Speaker 1>Doug Ramsey, chief investment Officer of the Loophole Group. Thanks

0:21:51.240 --> 0:21:54.520
<v Speaker 1>for listening to Bloomberg Business Week. Download the podcast on iTunes,

0:21:54.520 --> 0:21:57.320
<v Speaker 1>SoundCloud or Bloomberg Dot com and you can also listen

0:21:57.359 --> 0:21:59.960
<v Speaker 1>to our radio show at two pm Eastern on Bloomberg Radio,

0:22:00.119 --> 0:22:03.639
<v Speaker 1>or watch us on YouTube search Bloomberg Global News m