1 00:00:13,560 --> 00:00:16,760 Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg Weekly 2 00:00:16,840 --> 00:00:20,600 Speaker 1: Markets podcast. I'm Sarah Pontac, a reporter on the cross 3 00:00:20,600 --> 00:00:23,319 Speaker 1: Asset team, and I'm Mike Reagan, a senior editor on 4 00:00:23,360 --> 00:00:26,120 Speaker 1: the Markets Team. This week on the show, the August 5 00:00:26,200 --> 00:00:29,479 Speaker 1: volatility has died down just a bit, but in the 6 00:00:29,560 --> 00:00:33,280 Speaker 1: meantime to portfolio managers from New Jersey have done a 7 00:00:33,360 --> 00:00:37,120 Speaker 1: lot of research on how economic imbalances between the US 8 00:00:37,200 --> 00:00:41,720 Speaker 1: and China will resolve themselves and how investors should position 9 00:00:41,840 --> 00:00:44,319 Speaker 1: for what's to come. And of course we'll close out 10 00:00:44,360 --> 00:00:47,000 Speaker 1: the episode with our tradition the craziest thing I saw 11 00:00:47,000 --> 00:00:49,600 Speaker 1: in markets this week, And if you're listening at home 12 00:00:49,680 --> 00:00:52,080 Speaker 1: and you notice something crazy, by all means, call our 13 00:00:52,159 --> 00:00:56,360 Speaker 1: hotline at six four six three to four three four 14 00:00:56,760 --> 00:00:59,240 Speaker 1: nine oh and leave us a voicemail about the craziest 15 00:00:59,240 --> 00:01:00,840 Speaker 1: thing you saw in Mark's or if you have a 16 00:01:00,960 --> 00:01:04,000 Speaker 1: question for the hosts or the guests, put that on 17 00:01:04,040 --> 00:01:06,120 Speaker 1: a voicemail too, and maybe we'll play it on air. 18 00:01:06,680 --> 00:01:09,880 Speaker 1: But as you said, we have two portfolio managers here 19 00:01:10,160 --> 00:01:15,640 Speaker 1: from Washington Crossing Advisors, which is a subsidiary of Steeple 20 00:01:15,760 --> 00:01:19,440 Speaker 1: Financial Corp. And Sarah as you mentioned to Jersey guys. 21 00:01:19,480 --> 00:01:22,680 Speaker 1: That makes three Jersey guys and you on the show. 22 00:01:22,840 --> 00:01:25,440 Speaker 1: So you know, warning things could get a little weird 23 00:01:26,040 --> 00:01:28,000 Speaker 1: if we start arguing about where to get the best 24 00:01:28,080 --> 00:01:30,920 Speaker 1: pork role. That's when yeah, we'll just edit that out, 25 00:01:30,959 --> 00:01:33,240 Speaker 1: lad here, or what the best rest stop is? Maybe 26 00:01:33,280 --> 00:01:34,680 Speaker 1: I don't know. There's a lot we can get into, 27 00:01:36,880 --> 00:01:39,760 Speaker 1: but here there, let's stas him now first from Washing 28 00:01:39,800 --> 00:01:43,960 Speaker 1: Washington Crossing Advisors. He started out what twenty eight years 29 00:01:44,000 --> 00:01:47,640 Speaker 1: ago at grunt Hole and Company. His name is Chad 30 00:01:47,640 --> 00:01:50,240 Speaker 1: Morgan Lander. Chad, welcome to the show. Well, thanks for 31 00:01:50,280 --> 00:01:52,920 Speaker 1: having me on. And I believe you started with our 32 00:01:53,040 --> 00:01:56,680 Speaker 1: other guests Kevin Karen around that same time at grunt All. Uh. 33 00:01:56,760 --> 00:02:00,640 Speaker 1: Now you're both at Washington Crossing Advisors. Uh. Kevin, welcome 34 00:02:00,680 --> 00:02:02,440 Speaker 1: to the show. Thank you for having me. Okay, so 35 00:02:02,480 --> 00:02:04,200 Speaker 1: twenty eight years you guys have known each other. There 36 00:02:04,240 --> 00:02:08,280 Speaker 1: must be some good stories to hear there is. We're 37 00:02:08,280 --> 00:02:12,880 Speaker 1: like an old married company. But tell us about the firm. Uh, 38 00:02:13,040 --> 00:02:15,880 Speaker 1: you guys are helping us run. Now. Basically from my understanding, 39 00:02:16,040 --> 00:02:19,480 Speaker 1: it's about three and a half billion in assets in 40 00:02:19,600 --> 00:02:22,240 Speaker 1: separate accounts and you have about with three or four 41 00:02:22,320 --> 00:02:24,920 Speaker 1: different strategies. Is that that sound about right? Sure, we 42 00:02:25,080 --> 00:02:27,359 Speaker 1: come in investing from a couple of different points of view, 43 00:02:27,520 --> 00:02:31,520 Speaker 1: and we look at the top down macro environment, and 44 00:02:31,560 --> 00:02:34,799 Speaker 1: we're also looking at individual stocks and bonds from bottom 45 00:02:34,880 --> 00:02:37,920 Speaker 1: up fundamental perspective, and we think that bringing all of 46 00:02:37,919 --> 00:02:40,440 Speaker 1: this together is a very good way to have a 47 00:02:40,560 --> 00:02:44,520 Speaker 1: holistic and comprehensive view of how to structure and put 48 00:02:44,560 --> 00:02:48,359 Speaker 1: together a portfolio. So we've hammered this these disciplines out 49 00:02:48,480 --> 00:02:52,200 Speaker 1: over the last thirty years more or less, and we've 50 00:02:52,400 --> 00:02:55,520 Speaker 1: think we've found some ways that we can really help 51 00:02:55,560 --> 00:02:58,280 Speaker 1: investors in a unique way to do things maybe a 52 00:02:58,280 --> 00:03:01,600 Speaker 1: little bit differently with their portfolio. So tell us about 53 00:03:01,680 --> 00:03:04,520 Speaker 1: this research you guys have been doing into China. I mean, 54 00:03:04,560 --> 00:03:09,840 Speaker 1: clearly the whole financial world is dead focused on China, 55 00:03:10,440 --> 00:03:13,840 Speaker 1: uh these days. What approach did you guys take and 56 00:03:14,120 --> 00:03:16,960 Speaker 1: sort of what are the main takeaways of the research 57 00:03:16,960 --> 00:03:20,960 Speaker 1: you've been doing. Yeah, So, the it's a big investment topic, obviously, 58 00:03:21,160 --> 00:03:25,600 Speaker 1: and it has is one that has become very much politicized. 59 00:03:25,680 --> 00:03:28,400 Speaker 1: There's a lot of um, there's a lot about this 60 00:03:28,520 --> 00:03:33,000 Speaker 1: topic because the economies are so big, so diverse, and 61 00:03:33,520 --> 00:03:37,600 Speaker 1: they've been the history of these of these imbalances, which 62 00:03:37,680 --> 00:03:41,840 Speaker 1: is really we're talking about the large sustained trade and 63 00:03:41,960 --> 00:03:46,120 Speaker 1: capital account balances between our two countries have been so 64 00:03:46,800 --> 00:03:49,040 Speaker 1: big for so long, we thought it would be really 65 00:03:49,040 --> 00:03:52,160 Speaker 1: good to take a step back, really try to just 66 00:03:52,240 --> 00:03:55,080 Speaker 1: look at the history of this without a political bias 67 00:03:55,120 --> 00:03:57,840 Speaker 1: to it, and try to just to unwind where we 68 00:03:57,920 --> 00:04:00,520 Speaker 1: came from and try to draw some investment in locations 69 00:04:00,600 --> 00:04:03,880 Speaker 1: about where we go forward and to the bottom line 70 00:04:03,960 --> 00:04:08,440 Speaker 1: of it for us is that debt levels have soared 71 00:04:08,560 --> 00:04:10,720 Speaker 1: as a result of this, and we want to be 72 00:04:10,840 --> 00:04:14,320 Speaker 1: very careful with owning companies that have lots of debt 73 00:04:14,320 --> 00:04:17,320 Speaker 1: on their balance sheets. And then secondly, we think that 74 00:04:17,360 --> 00:04:20,200 Speaker 1: this has had a significant influence on global interest rates, 75 00:04:20,440 --> 00:04:23,200 Speaker 1: and we want to be prepared in having a portfolio 76 00:04:23,320 --> 00:04:27,400 Speaker 1: that can respond to what we see as a eventual 77 00:04:27,480 --> 00:04:30,039 Speaker 1: period of rising interest rates around the world. You guys 78 00:04:30,080 --> 00:04:32,320 Speaker 1: wrote a three part series of research notes, and I 79 00:04:32,360 --> 00:04:35,640 Speaker 1: was fascinated by the first one and the title being 80 00:04:35,920 --> 00:04:39,200 Speaker 1: the U. S. China Trade mess How did we get here? 81 00:04:39,800 --> 00:04:43,400 Speaker 1: I mean, how did we get here? Actually? Tell us 82 00:04:43,400 --> 00:04:47,440 Speaker 1: what you guys found? Well forty years ago we had 83 00:04:48,360 --> 00:04:51,080 Speaker 1: we we had a China that was vastly different than 84 00:04:51,120 --> 00:04:54,320 Speaker 1: it was today. It was a very very backwards country 85 00:04:54,320 --> 00:04:57,440 Speaker 1: in a lot of ways. It was under invested um 86 00:04:57,480 --> 00:05:00,440 Speaker 1: in a lot of ways, and policies were put place 87 00:05:00,480 --> 00:05:02,880 Speaker 1: at that point which really removed a lot of restrictions 88 00:05:02,920 --> 00:05:05,760 Speaker 1: and allowed China throughout the nineteen eighties and early nineteen 89 00:05:05,839 --> 00:05:11,160 Speaker 1: nineties to begin to develop more towards its potential. That 90 00:05:11,240 --> 00:05:13,400 Speaker 1: was a very good period of growth for China, and 91 00:05:13,440 --> 00:05:16,560 Speaker 1: it really did help China and to really begin to 92 00:05:16,560 --> 00:05:19,479 Speaker 1: get some momentum. And then as we came into the 93 00:05:19,600 --> 00:05:24,360 Speaker 1: nineteen nineties, um that continued, but we started to see 94 00:05:24,440 --> 00:05:28,279 Speaker 1: China not making the transition to the kind of developed 95 00:05:28,320 --> 00:05:32,120 Speaker 1: country that most other developed countries are. Specifically, when you 96 00:05:32,200 --> 00:05:35,560 Speaker 1: look at the population, the average person in China earns 97 00:05:35,560 --> 00:05:39,400 Speaker 1: about ten thousand dollars a year, and the degree to 98 00:05:39,440 --> 00:05:42,680 Speaker 1: which those consumers are willing to spend is still very 99 00:05:42,760 --> 00:05:46,279 Speaker 1: very depressed, making China a bit of a contradiction. On 100 00:05:46,320 --> 00:05:49,240 Speaker 1: the one hand, China I would like to be considered 101 00:05:49,520 --> 00:05:51,640 Speaker 1: one of the largest countries on the planet, and by 102 00:05:51,680 --> 00:05:53,720 Speaker 1: some measures they are, but when you look at the 103 00:05:53,760 --> 00:05:56,279 Speaker 1: standards of living in the income for the average Chinese 104 00:05:56,279 --> 00:05:59,440 Speaker 1: person there nowhere is near where the United States is 105 00:05:59,720 --> 00:06:03,039 Speaker 1: or the many developed countries where incomes are anywhere from 106 00:06:03,320 --> 00:06:07,040 Speaker 1: fifty to sixty to seventy thousand dollars a year per capita. 107 00:06:07,440 --> 00:06:10,960 Speaker 1: So that was really kind of uh, that was a 108 00:06:11,000 --> 00:06:13,200 Speaker 1: big part of this. It was it had to do 109 00:06:13,240 --> 00:06:16,599 Speaker 1: with China not fully making the transition to an open 110 00:06:16,600 --> 00:06:20,800 Speaker 1: economy and having an economy that's very much based upon 111 00:06:21,400 --> 00:06:25,240 Speaker 1: domestically driven investment, but it has not been fully shared 112 00:06:25,279 --> 00:06:29,080 Speaker 1: by China's household sector, which is subsidizing a lot of 113 00:06:29,120 --> 00:06:33,760 Speaker 1: the investments that are generating the growth and ultimately not sustainable. 114 00:06:33,760 --> 00:06:36,240 Speaker 1: It's something that we're concerned about, right and it seems 115 00:06:36,320 --> 00:06:39,200 Speaker 1: like something that can't be fixed overnight, that it would 116 00:06:39,200 --> 00:06:42,720 Speaker 1: take decades years, if not decades, to to work. It's 117 00:06:42,960 --> 00:06:46,000 Speaker 1: its way through. I mean, um I Meanwhile, President Trump 118 00:06:46,040 --> 00:06:49,880 Speaker 1: is kind of operating on an election cycle timeline. Where 119 00:06:49,880 --> 00:06:52,560 Speaker 1: do you see it all? I mean, it will progress 120 00:06:52,680 --> 00:06:54,560 Speaker 1: be made? Do you think is are we putting the 121 00:06:54,640 --> 00:06:57,680 Speaker 1: right pressure? Is the US putting the right pressure on 122 00:06:57,800 --> 00:07:00,279 Speaker 1: China to sort of fix the issues? You're ing that 123 00:07:00,320 --> 00:07:04,160 Speaker 1: the consumer in China is not really at the at 124 00:07:04,200 --> 00:07:06,919 Speaker 1: the level it should be as far as UH income 125 00:07:07,160 --> 00:07:10,200 Speaker 1: and wealth. Well, the pressures are coming from not just 126 00:07:10,240 --> 00:07:12,600 Speaker 1: the United States and not just this administration. If you 127 00:07:12,640 --> 00:07:16,240 Speaker 1: think about where we've where we've come, you've had very 128 00:07:16,320 --> 00:07:19,720 Speaker 1: large capital flows coming from a developing nation into a 129 00:07:19,840 --> 00:07:24,240 Speaker 1: very developed nation the United States and the United States 130 00:07:24,960 --> 00:07:28,120 Speaker 1: got to a point where we had a tremendous buildup 131 00:07:28,160 --> 00:07:31,120 Speaker 1: of debt leading up to the Financial crisis, a doubling 132 00:07:31,320 --> 00:07:35,400 Speaker 1: of our national debt following the financial crisis that led 133 00:07:35,440 --> 00:07:38,520 Speaker 1: to a downgrade of our debt in two thousand eleven 134 00:07:38,600 --> 00:07:41,560 Speaker 1: by Standard and Pores. So we had a very significant 135 00:07:41,640 --> 00:07:45,600 Speaker 1: ramp up of debt, which has been a significant burden 136 00:07:45,640 --> 00:07:47,720 Speaker 1: on the US economy. And at the same time, our 137 00:07:47,760 --> 00:07:52,040 Speaker 1: growth rate, particularly in manufacturing, has been much less than 138 00:07:52,120 --> 00:07:55,280 Speaker 1: it otherwise could have been. So what started out as 139 00:07:55,320 --> 00:07:57,680 Speaker 1: a good thing for the U S consumer lowering of 140 00:07:57,720 --> 00:08:02,280 Speaker 1: inflation rates the availability of cheap Chinese Chinese goods really 141 00:08:02,280 --> 00:08:05,160 Speaker 1: did help solve some of our inflation problems in the seventies, 142 00:08:05,920 --> 00:08:08,560 Speaker 1: and but it has now gotten to the point where 143 00:08:08,560 --> 00:08:11,880 Speaker 1: the pendulum has fully swung and what was originally a 144 00:08:11,920 --> 00:08:14,200 Speaker 1: good thing for both China and the United States has 145 00:08:14,200 --> 00:08:16,040 Speaker 1: now become a bit of a burden with a lot 146 00:08:16,120 --> 00:08:19,640 Speaker 1: of deadweight, loss and drag which is weighing on the 147 00:08:19,640 --> 00:08:22,320 Speaker 1: global economy in various ways. So some of this is 148 00:08:22,360 --> 00:08:25,480 Speaker 1: just a natural pushback against the process that's been many 149 00:08:25,560 --> 00:08:27,320 Speaker 1: years in the making. And some of the issues that 150 00:08:27,400 --> 00:08:30,600 Speaker 1: you have now is that China needs to readjust. Unfortunately, 151 00:08:30,640 --> 00:08:33,800 Speaker 1: the fragility of the economy there is as they readjust. 152 00:08:34,160 --> 00:08:37,080 Speaker 1: You can see it within their growth rates as well 153 00:08:37,120 --> 00:08:41,640 Speaker 1: as within the financial markets. Unfortunately, though, this also flies 154 00:08:41,679 --> 00:08:44,920 Speaker 1: in the face of communism UH and the political party. 155 00:08:45,200 --> 00:08:48,800 Speaker 1: They are unwilling to allow the free flow of capital 156 00:08:49,120 --> 00:08:52,079 Speaker 1: and by doing that has created this massive distortion that 157 00:08:52,160 --> 00:08:55,440 Speaker 1: Kevin's talking about. One thing I think pops out at me, 158 00:08:55,720 --> 00:08:58,559 Speaker 1: UH and correct me if I'm misinterpreting your guys work. 159 00:08:58,640 --> 00:09:04,080 Speaker 1: But you really believe that this UH global regime of 160 00:09:04,200 --> 00:09:07,680 Speaker 1: ultra low interest rates is not here to stay, that 161 00:09:07,760 --> 00:09:11,400 Speaker 1: it will reverse eventually, UH, sort of paraphrase from from 162 00:09:11,400 --> 00:09:15,600 Speaker 1: the trying to report um U ultra low interest rates 163 00:09:15,600 --> 00:09:22,960 Speaker 1: are unlikely to persist and the savings glut is unsustainable. UM. 164 00:09:23,000 --> 00:09:25,640 Speaker 1: I mean that's a big deal. I think. Obviously, we 165 00:09:25,720 --> 00:09:29,200 Speaker 1: have this aging population around the world contributing to this 166 00:09:29,559 --> 00:09:33,160 Speaker 1: massive savings glut, big reason why yields are so low 167 00:09:33,320 --> 00:09:37,200 Speaker 1: around the world. Um, what do you see that makes 168 00:09:37,200 --> 00:09:39,240 Speaker 1: you think that that will reverse and and sort of 169 00:09:39,280 --> 00:09:42,600 Speaker 1: what's the time timeline of that, well, the the globe. 170 00:09:42,920 --> 00:09:45,920 Speaker 1: We first of all, we're following very much in the 171 00:09:45,960 --> 00:09:48,880 Speaker 1: tradition of what Ben Bernanki laid out in the framework 172 00:09:48,920 --> 00:09:51,960 Speaker 1: of the global savings glut. But the reality is it's 173 00:09:51,960 --> 00:09:56,480 Speaker 1: not so much a global savings glut because at the 174 00:09:56,559 --> 00:09:59,280 Speaker 1: level of Planet Earth, the savings and investment do balance. 175 00:09:59,679 --> 00:10:02,240 Speaker 1: What you're seeing is a glut of savings in one 176 00:10:02,320 --> 00:10:06,440 Speaker 1: region of the world, particularly the emerging markets led by China, 177 00:10:07,160 --> 00:10:10,160 Speaker 1: in a that savings has to go somewhere, and it 178 00:10:10,200 --> 00:10:13,800 Speaker 1: has to go to uh the other to the developed 179 00:10:13,960 --> 00:10:17,800 Speaker 1: nations around the world, including the United States. So this 180 00:10:17,800 --> 00:10:22,000 Speaker 1: this is something that this is something that ultimately it 181 00:10:22,040 --> 00:10:26,160 Speaker 1: doesn't go on forever. And what ultimately we would expect 182 00:10:26,240 --> 00:10:29,280 Speaker 1: to have happened is we would have all of these 183 00:10:29,320 --> 00:10:32,000 Speaker 1: things that are happening, the financial crisis, the build up 184 00:10:32,040 --> 00:10:33,840 Speaker 1: of debt in the in the Western World, the build 185 00:10:33,880 --> 00:10:37,920 Speaker 1: up of debt within China, if those if those investments, 186 00:10:38,000 --> 00:10:41,520 Speaker 1: particularly in China that are being put to that are 187 00:10:41,520 --> 00:10:45,800 Speaker 1: being put in place, are not funded internally by jet 188 00:10:45,880 --> 00:10:49,800 Speaker 1: cash flows that they can generate. Then ultimately that's going 189 00:10:49,840 --> 00:10:54,079 Speaker 1: to lead to problems. Um credit growth that is not 190 00:10:54,320 --> 00:10:58,440 Speaker 1: that is not productive. There's no experience in history that 191 00:10:58,480 --> 00:11:00,840 Speaker 1: I know of that has has staining that kind of 192 00:11:00,840 --> 00:11:04,520 Speaker 1: growth indefinitely. So ultimately that tends to lead to problems. 193 00:11:04,559 --> 00:11:07,440 Speaker 1: If it was Latin America in the seventies and eighties 194 00:11:07,559 --> 00:11:10,720 Speaker 1: or Japan, Ultimately that reverses. And there's two ways for 195 00:11:10,760 --> 00:11:13,120 Speaker 1: that to happen. It can either be a period of 196 00:11:13,160 --> 00:11:16,320 Speaker 1: a slow process of very low growth in China where 197 00:11:16,320 --> 00:11:19,680 Speaker 1: they rebalance, growth comes down, consumer growth picks up. You 198 00:11:19,760 --> 00:11:21,800 Speaker 1: begin you have a rise of a consumer class in 199 00:11:21,880 --> 00:11:24,440 Speaker 1: China perhaps ten years from now, very different than where 200 00:11:24,440 --> 00:11:28,760 Speaker 1: it is today. Or at some point if this continues, 201 00:11:29,240 --> 00:11:33,320 Speaker 1: then those imbalances and the amount of non productive credit 202 00:11:33,600 --> 00:11:35,800 Speaker 1: becomes a problem, and then you eventually have some kind 203 00:11:35,840 --> 00:11:37,440 Speaker 1: of debt problem that we have to contend with. So 204 00:11:37,520 --> 00:11:39,480 Speaker 1: can either happen slowly or can happen all at once. 205 00:11:39,800 --> 00:11:42,800 Speaker 1: So the point is is that interest rates aren't going 206 00:11:42,960 --> 00:11:46,680 Speaker 1: higher overnight. Over the course of next three to six months, 207 00:11:46,880 --> 00:11:49,800 Speaker 1: you still have to go through this glide path, and 208 00:11:49,920 --> 00:11:54,480 Speaker 1: if they decide not to at least acclimate themselves to normalcy, 209 00:11:54,600 --> 00:11:59,280 Speaker 1: then you're going to see potentially that China dislocation that 210 00:11:59,440 --> 00:12:02,640 Speaker 1: China bey think about. We're hoping that that won't occur, 211 00:12:02,760 --> 00:12:05,439 Speaker 1: that over a longer period of time of five, ten, 212 00:12:05,600 --> 00:12:09,640 Speaker 1: fifteen years, they're going to start rebalancing their economy. Overall 213 00:12:09,679 --> 00:12:12,560 Speaker 1: interest rates right now are going to stay lower for 214 00:12:12,600 --> 00:12:15,280 Speaker 1: this period of time, So if you're a long only 215 00:12:15,640 --> 00:12:18,520 Speaker 1: portfolio manager, you still want to continue to be in bond. 216 00:12:18,960 --> 00:12:21,160 Speaker 1: So to me, it seems like when people talk about 217 00:12:21,240 --> 00:12:23,920 Speaker 1: risks right now, when people think about the situation in China, 218 00:12:24,280 --> 00:12:27,800 Speaker 1: they think about it as something separate from the idea 219 00:12:27,960 --> 00:12:32,080 Speaker 1: of extremely low interest rates, low bond yiells. You have 220 00:12:32,120 --> 00:12:34,400 Speaker 1: an inverted yield curve. We saw it once again this week. 221 00:12:34,600 --> 00:12:37,160 Speaker 1: People think of them as separate situations. Would you say 222 00:12:37,280 --> 00:12:39,520 Speaker 1: that's kind of wrong in a way, you can intertwine 223 00:12:39,520 --> 00:12:41,760 Speaker 1: the two and say one is related to the other. 224 00:12:43,280 --> 00:12:46,440 Speaker 1: Certainly um that that you cannot look at things today 225 00:12:46,600 --> 00:12:50,040 Speaker 1: as they were in the past. And we're very aware 226 00:12:50,040 --> 00:12:52,560 Speaker 1: of the inverted yield curve and the historical record of 227 00:12:52,559 --> 00:12:54,960 Speaker 1: the inverted yield curve. But you've got some very different 228 00:12:55,000 --> 00:12:57,480 Speaker 1: things that you have, different different market structures. You have. 229 00:12:57,960 --> 00:13:01,000 Speaker 1: You haven't the existence of negative yield elsewhere in the world, 230 00:13:01,000 --> 00:13:04,320 Speaker 1: which we've never had before. You've had very repressive interest 231 00:13:04,400 --> 00:13:06,800 Speaker 1: rate regimes around the world, and you still have the 232 00:13:06,880 --> 00:13:11,679 Speaker 1: savings glut that exists. So it's too it's it's too 233 00:13:11,679 --> 00:13:15,640 Speaker 1: easy just to say history will repeat. But the in 234 00:13:15,840 --> 00:13:19,520 Speaker 1: the inverted deal curve is something that we as portfolio 235 00:13:19,559 --> 00:13:23,120 Speaker 1: managers have to be sensitive to because it does change 236 00:13:23,120 --> 00:13:25,880 Speaker 1: to a certain extent the incentives to borrow and lend, 237 00:13:26,360 --> 00:13:29,680 Speaker 1: and there is this this historic tendency for it to 238 00:13:29,679 --> 00:13:32,600 Speaker 1: be a precursor of recessions. In many cases, we just 239 00:13:32,640 --> 00:13:36,240 Speaker 1: need to see other things begin to get worse in 240 00:13:36,280 --> 00:13:38,960 Speaker 1: the data that we're looking at. We haven't seen that yet. Yes, 241 00:13:39,080 --> 00:13:41,680 Speaker 1: the foreign data in many cases doesn't look so good, 242 00:13:41,880 --> 00:13:44,080 Speaker 1: but here in the United States data looks pretty good. 243 00:13:44,160 --> 00:13:48,120 Speaker 1: And therefore we're remaining overweight in our allocation to US 244 00:13:48,160 --> 00:14:07,200 Speaker 1: equities versus overseas. But no big changes yet. So you 245 00:14:07,240 --> 00:14:10,040 Speaker 1: guys have uh what you call the w C a 246 00:14:10,160 --> 00:14:15,240 Speaker 1: fundamental conditions barometer. And for a good chunk of the year, 247 00:14:15,320 --> 00:14:19,400 Speaker 1: let's see from November to April, UH, it was at 248 00:14:19,400 --> 00:14:21,960 Speaker 1: a level blow fifty, which you say is a heightened 249 00:14:22,320 --> 00:14:25,840 Speaker 1: risk of recession. UM. Now in August it's back up 250 00:14:25,840 --> 00:14:29,280 Speaker 1: to sixty two, so above that sort of you know, 251 00:14:29,360 --> 00:14:32,760 Speaker 1: fifty dividing line. UM. What are sort of the inputs 252 00:14:32,840 --> 00:14:35,640 Speaker 1: of this indicator and and why is it doing so 253 00:14:35,680 --> 00:14:38,440 Speaker 1: well right now compared to earlier in the year. So 254 00:14:38,560 --> 00:14:41,160 Speaker 1: we have a thirty inputs that go into it. Ten 255 00:14:41,320 --> 00:14:46,640 Speaker 1: are credit indicators UH, US domestic, ten are international as 256 00:14:46,680 --> 00:14:50,960 Speaker 1: well are as ten are US economic and right now 257 00:14:51,000 --> 00:14:54,280 Speaker 1: actually UH, the barometers have been around fifty, so we're 258 00:14:54,320 --> 00:14:58,240 Speaker 1: equally weighted between stocks and bonds at this point from 259 00:14:58,240 --> 00:15:01,880 Speaker 1: our last reading. Over All, UH, we're looking at things 260 00:15:02,000 --> 00:15:06,760 Speaker 1: like credit spreads, indicators of that nature UM, US economic 261 00:15:06,840 --> 00:15:10,080 Speaker 1: auto sales, economic activity here. And what we're seeing is 262 00:15:10,080 --> 00:15:13,800 Speaker 1: that the US economy is doing okay, I should decelerating, 263 00:15:13,840 --> 00:15:16,400 Speaker 1: and we're looking at a two percent handle on GDP 264 00:15:16,600 --> 00:15:19,080 Speaker 1: to two and a quarter of the pressure is coming 265 00:15:19,480 --> 00:15:23,840 Speaker 1: from international economic data points from international as well as 266 00:15:23,920 --> 00:15:29,040 Speaker 1: credit UH, that are the ones that are showing some 267 00:15:29,120 --> 00:15:33,240 Speaker 1: softness at this at this point. But overall, our global 268 00:15:33,280 --> 00:15:36,600 Speaker 1: GDP expectation is that it's going to continue to decelerate. 269 00:15:37,080 --> 00:15:40,720 Speaker 1: Uh US economic activity we believe going into two thousand 270 00:15:40,800 --> 00:15:44,920 Speaker 1: and twenty will continue to decelerate, but we're seeing a 271 00:15:45,080 --> 00:15:49,960 Speaker 1: modest increase, probably modest probability of a recession a little higher, 272 00:15:50,240 --> 00:15:52,640 Speaker 1: but overall we're not calling for recession at this point. 273 00:15:52,760 --> 00:15:55,200 Speaker 1: That's interesting. So this report was like in mid July, 274 00:15:55,240 --> 00:15:57,160 Speaker 1: I think it was like sixty two. Then it's it's 275 00:15:57,560 --> 00:15:59,960 Speaker 1: it's come down pretty quick to about fifty, say so 276 00:16:00,080 --> 00:16:06,720 Speaker 1: I would say so about fifty. It's been pretty clear 277 00:16:06,760 --> 00:16:09,080 Speaker 1: that we've seen a slowdown in the manufacturing sector and 278 00:16:09,120 --> 00:16:11,800 Speaker 1: people have been looking at the services numbers saying is 279 00:16:11,840 --> 00:16:14,920 Speaker 1: this going to potentially bleed over? Well, this past Thursday, 280 00:16:14,960 --> 00:16:17,080 Speaker 1: we did get some market p m I data. You 281 00:16:17,120 --> 00:16:19,800 Speaker 1: saw the manufacturing numbers coming at forty nine point nine, 282 00:16:19,880 --> 00:16:23,520 Speaker 1: so slightly in contractionary territory, and you saw services slip 283 00:16:23,560 --> 00:16:27,720 Speaker 1: as well to really just of fifty. Yeah. I mean 284 00:16:27,760 --> 00:16:29,680 Speaker 1: you could say it's one number, you can't look at 285 00:16:29,680 --> 00:16:32,040 Speaker 1: it in a vacuum, but does something like this put 286 00:16:32,120 --> 00:16:35,000 Speaker 1: you on edge at all? Well? As Chad just mentioned 287 00:16:35,080 --> 00:16:37,720 Speaker 1: in the in the last month or so, our barometer 288 00:16:37,800 --> 00:16:41,040 Speaker 1: has come down just a little bit towards the first 289 00:16:41,080 --> 00:16:43,600 Speaker 1: downtick in several months as a matter of fact, and 290 00:16:43,720 --> 00:16:47,440 Speaker 1: it is manufacturing tied to the global economy that is 291 00:16:47,720 --> 00:16:50,280 Speaker 1: driving that. On the other side of that, when you 292 00:16:50,320 --> 00:16:52,920 Speaker 1: look at the U s consumer remains very strong. So 293 00:16:53,040 --> 00:16:54,760 Speaker 1: we look at retail sales, we look at income, we 294 00:16:54,800 --> 00:16:59,200 Speaker 1: look at spending. That data all looks very solid, and uh, 295 00:16:59,280 --> 00:17:02,040 Speaker 1: that's why where we are where we are, we do 296 00:17:02,160 --> 00:17:04,879 Speaker 1: still continue to think that the United States is relatively 297 00:17:04,960 --> 00:17:09,240 Speaker 1: good and the dollars should hold up relatively well. We 298 00:17:09,400 --> 00:17:11,760 Speaker 1: want to focus here in the United States where we 299 00:17:11,840 --> 00:17:14,560 Speaker 1: see a more stable situation versus the rest of the 300 00:17:14,560 --> 00:17:19,399 Speaker 1: world where things seem to be getting um difficult, particularly 301 00:17:19,480 --> 00:17:22,280 Speaker 1: in manufacturing. As you point out, want to be very 302 00:17:22,400 --> 00:17:25,680 Speaker 1: cautious about that. One note. We created the barometer as 303 00:17:25,720 --> 00:17:30,639 Speaker 1: a non biased way of investing and and tactically overweighting 304 00:17:30,640 --> 00:17:34,439 Speaker 1: our underweighting risk within our portfolios. And what what we 305 00:17:34,520 --> 00:17:37,280 Speaker 1: do here is we're just watching and observing the data 306 00:17:37,280 --> 00:17:40,200 Speaker 1: points when they're coming in. And obviously you can tell 307 00:17:40,600 --> 00:17:44,800 Speaker 1: that the Europeans as well as as China. More importantly China, 308 00:17:44,840 --> 00:17:48,040 Speaker 1: which has been the engine of growth global growth, that 309 00:17:48,240 --> 00:17:51,840 Speaker 1: is is starting to decelerate. That's having a washback effect 310 00:17:52,200 --> 00:17:55,959 Speaker 1: on on Europe as in particular Germany. UM, and that 311 00:17:56,119 --> 00:17:59,240 Speaker 1: is really what's driving and pulling down the diffusion index 312 00:17:59,320 --> 00:18:02,080 Speaker 1: at this point. So U since you guys focus a 313 00:18:02,080 --> 00:18:04,840 Speaker 1: lot on acid allocation, and this was a candidate from 314 00:18:04,960 --> 00:18:07,760 Speaker 1: one of my craziest things, but i'll spit it out early. 315 00:18:07,960 --> 00:18:10,800 Speaker 1: Is I think it was last week we had a 316 00:18:10,840 --> 00:18:14,880 Speaker 1: story looking at money market mutual funds, which I think 317 00:18:14,880 --> 00:18:17,560 Speaker 1: when I I edited the story, the yield on like 318 00:18:17,600 --> 00:18:21,120 Speaker 1: the big federated one was something like two point ten, 319 00:18:21,440 --> 00:18:26,000 Speaker 1: you know, percent um. At that point, a money market 320 00:18:26,040 --> 00:18:28,920 Speaker 1: yield was above the thirty year treasury yield, which I 321 00:18:28,960 --> 00:18:30,680 Speaker 1: don't know if you guys have ever seen that happen, 322 00:18:30,760 --> 00:18:33,680 Speaker 1: but I imagine as an asset allocator, that's the type 323 00:18:33,680 --> 00:18:38,800 Speaker 1: of thing you have a nightmare about. After how do 324 00:18:38,800 --> 00:18:42,360 Speaker 1: you how do you look at that sort of opportunity 325 00:18:42,400 --> 00:18:47,120 Speaker 1: set where cash is yielding more than thirty year bonds? 326 00:18:47,160 --> 00:18:48,760 Speaker 1: It's okay, it's a couple of a couple of things 327 00:18:48,760 --> 00:18:50,720 Speaker 1: on the on the short end, and this is one 328 00:18:51,680 --> 00:18:56,320 Speaker 1: this is one of the important drivers where the forward 329 00:18:56,359 --> 00:18:59,760 Speaker 1: path of interest rates are. We would expect to have 330 00:19:01,280 --> 00:19:05,360 Speaker 1: lower short term rates over the next number of months. 331 00:19:05,760 --> 00:19:07,879 Speaker 1: It just seems to us that policy is heading in 332 00:19:07,920 --> 00:19:11,760 Speaker 1: that direction all over the world. So that short number, 333 00:19:11,800 --> 00:19:14,520 Speaker 1: that two number, we would expect that to come down 334 00:19:14,560 --> 00:19:18,080 Speaker 1: over the next several months funds rate, I guess to 335 00:19:18,119 --> 00:19:20,600 Speaker 1: some degree, right. And then the other part of it, 336 00:19:20,640 --> 00:19:23,439 Speaker 1: the longer end of the curve, which is uh, you know, 337 00:19:23,480 --> 00:19:27,639 Speaker 1: between the ten and thirty. That's a little bit unusual too, um, 338 00:19:27,680 --> 00:19:31,240 Speaker 1: but also reflecting a lot of the pressures around the 339 00:19:31,240 --> 00:19:35,680 Speaker 1: world emanating from weak weaker growth in all of these 340 00:19:35,720 --> 00:19:38,320 Speaker 1: rate cuts around the world to see rates all along 341 00:19:38,359 --> 00:19:42,440 Speaker 1: the curve come down. Um. So ultimately we would our 342 00:19:42,600 --> 00:19:46,239 Speaker 1: our guests at this point is that the long end 343 00:19:46,280 --> 00:19:50,120 Speaker 1: sort of stabilizes short rates come down somewhat and so 344 00:19:50,160 --> 00:19:53,919 Speaker 1: that the global so the US YELD curve remains flat 345 00:19:53,960 --> 00:19:57,480 Speaker 1: to relatively you know, some little slope in it by 346 00:19:57,480 --> 00:19:58,879 Speaker 1: the time we get to let's say, the end of 347 00:19:58,920 --> 00:20:02,720 Speaker 1: the year. If however, things get worse, which will show 348 00:20:02,840 --> 00:20:05,720 Speaker 1: up in our barometer in the data that flow that's 349 00:20:05,720 --> 00:20:08,200 Speaker 1: comes in, we're going to have to cut from that 350 00:20:08,320 --> 00:20:10,840 Speaker 1: point of view. So our base case is that we 351 00:20:10,920 --> 00:20:14,919 Speaker 1: restore some upward slope to the curve. But we're also 352 00:20:14,960 --> 00:20:18,440 Speaker 1: cognizant of there's weaker things coming in from overseas which 353 00:20:18,720 --> 00:20:20,879 Speaker 1: might cause to change our tune on that. We just 354 00:20:20,920 --> 00:20:23,679 Speaker 1: haven't pulled that trigger yet. So also on the outset 355 00:20:23,760 --> 00:20:27,960 Speaker 1: allocation side, I saw you also recently raised gold to overweight. 356 00:20:28,040 --> 00:20:30,320 Speaker 1: I mean, is that where that comes in keeping track 357 00:20:30,400 --> 00:20:35,800 Speaker 1: of the global economy and the buffers that we could see, Yeah, 358 00:20:35,840 --> 00:20:38,399 Speaker 1: that that's exactly what what we did was we wanted 359 00:20:38,440 --> 00:20:40,720 Speaker 1: to take a little bit of risk off off the 360 00:20:40,800 --> 00:20:44,359 Speaker 1: table within the portfolio. We upped our gold allocation. We 361 00:20:44,440 --> 00:20:47,600 Speaker 1: did have gold in the portfolio for the last several years, 362 00:20:47,600 --> 00:20:50,640 Speaker 1: so now we're overweight gold, and as well we took 363 00:20:50,920 --> 00:20:54,480 Speaker 1: high yield down to an underweight as well as reets 364 00:20:54,480 --> 00:20:56,520 Speaker 1: we took down to an underweight, which I know has 365 00:20:56,560 --> 00:20:59,040 Speaker 1: been a popular trade. Our belief is that you don't 366 00:20:59,040 --> 00:21:01,760 Speaker 1: want to be income Benie right now that have a 367 00:21:01,760 --> 00:21:04,440 Speaker 1: lot of debt on their balance sheet based off of 368 00:21:04,480 --> 00:21:07,720 Speaker 1: what Kevin and has been talking about, and how often 369 00:21:08,000 --> 00:21:10,840 Speaker 1: do you sort of rebounced the portfolios. Is it a 370 00:21:10,840 --> 00:21:14,439 Speaker 1: monthly thing or or every every every month. We go 371 00:21:14,520 --> 00:21:17,240 Speaker 1: through and we look at our long term capital market assumptions, 372 00:21:17,720 --> 00:21:20,480 Speaker 1: we look at what's happening in terms of what the 373 00:21:20,560 --> 00:21:23,200 Speaker 1: data flow is telling us through the lens of our barometer. 374 00:21:23,600 --> 00:21:25,239 Speaker 1: If we see that things are going in a way 375 00:21:25,320 --> 00:21:28,560 Speaker 1: that's pointing towards recession or more cautious and more cautious 376 00:21:28,560 --> 00:21:34,200 Speaker 1: postures is justified, will make those changes monthly um. If 377 00:21:34,200 --> 00:21:36,360 Speaker 1: it's going the other way, obviously we're willing to put 378 00:21:36,400 --> 00:21:40,280 Speaker 1: on risk and that's been something that barometer has been 379 00:21:40,359 --> 00:21:43,880 Speaker 1: very helpful in helping us guide the portfolio tactically through 380 00:21:43,920 --> 00:21:46,280 Speaker 1: good times and bad going all the way back to 381 00:21:46,400 --> 00:21:49,240 Speaker 1: two thousand five when we began working with the E 382 00:21:49,320 --> 00:21:53,399 Speaker 1: t f S and tactical acid allocation. So barometer must 383 00:21:53,440 --> 00:21:56,440 Speaker 1: make it a little bit more difficult, that's right. That's 384 00:21:56,520 --> 00:21:59,000 Speaker 1: right that in the case stay balanced. You're at a 385 00:21:59,040 --> 00:22:02,080 Speaker 1: low rate rate in a low return environment. And what 386 00:22:02,200 --> 00:22:04,160 Speaker 1: makes us fairly unique is that we do our own 387 00:22:04,200 --> 00:22:07,720 Speaker 1: long term forecast and returns and volatility on each asset class. 388 00:22:08,160 --> 00:22:11,080 Speaker 1: So that's where we should be right now. So Chad 389 00:22:11,440 --> 00:22:15,240 Speaker 1: printed out for me the numbers on the the dividend 390 00:22:15,480 --> 00:22:18,360 Speaker 1: rising dividend portfolio. So so this is your biggest strategy, 391 00:22:18,359 --> 00:22:20,080 Speaker 1: I guess right is uh? It was about one point 392 00:22:20,119 --> 00:22:22,159 Speaker 1: eight billion. You said in the strategy, it's about one 393 00:22:22,160 --> 00:22:24,359 Speaker 1: point seven one point eight billion that Kevin and I 394 00:22:24,960 --> 00:22:31,399 Speaker 1: manage alongside Matt Adapaglia. Uh, it's had a fairly a 395 00:22:31,440 --> 00:22:35,600 Speaker 1: fairly stable type of kind of companies that we're looking for, 396 00:22:35,920 --> 00:22:39,800 Speaker 1: the companies that are consistently growing, consistently profitable. The general 397 00:22:39,880 --> 00:22:42,520 Speaker 1: thematic here, which makes us fairly unique, is that we 398 00:22:42,560 --> 00:22:44,320 Speaker 1: don't like companies that have a lot of debt on 399 00:22:44,359 --> 00:22:48,199 Speaker 1: their balance sheet. So you're not going to see overweight 400 00:22:48,320 --> 00:22:52,520 Speaker 1: within financials and for a value manager or or divid 401 00:22:52,720 --> 00:22:56,920 Speaker 1: rising dividend manager. Uh, most dividend managers are value managers, 402 00:22:57,160 --> 00:23:02,800 Speaker 1: are overweight Uh, financials, m LPs or whatnot. Speaking of debt, 403 00:23:03,080 --> 00:23:05,840 Speaker 1: I will say. Goldman Sachs put out a research note 404 00:23:06,280 --> 00:23:08,840 Speaker 1: earlier this week pointing out that net leverage for the 405 00:23:08,960 --> 00:23:11,400 Speaker 1: SMP five D is now at a record high, So 406 00:23:11,880 --> 00:23:16,040 Speaker 1: all the more reason to really be thinking about that. Yeah, well, well, 407 00:23:16,320 --> 00:23:20,840 Speaker 1: we we think we agree with with their assessment. Everywhere 408 00:23:20,880 --> 00:23:24,280 Speaker 1: we look, debt has increased, and debt has increased in 409 00:23:24,320 --> 00:23:28,320 Speaker 1: the financial system globally. When I began in the business 410 00:23:28,640 --> 00:23:32,800 Speaker 1: in the early ninety nineties, debt was less than global GDP. 411 00:23:32,920 --> 00:23:36,680 Speaker 1: Now it's significantly more than global GDP, and that creates 412 00:23:36,720 --> 00:23:40,280 Speaker 1: some of fixed costs all around the world, which can 413 00:23:40,320 --> 00:23:43,480 Speaker 1: create some volatility. And in the SMP, you're gonna be looking. 414 00:23:43,480 --> 00:23:45,960 Speaker 1: We're gonna be looking for businesses that are very consistent, 415 00:23:46,119 --> 00:23:48,399 Speaker 1: going to be able to get through whatever the world 416 00:23:48,400 --> 00:23:50,720 Speaker 1: throws at us in the years ahead. And also we 417 00:23:50,760 --> 00:23:53,359 Speaker 1: want to know that those businesses are conservatively financed so 418 00:23:53,400 --> 00:23:56,120 Speaker 1: that they survive difficult times to be able to get 419 00:23:56,160 --> 00:23:57,960 Speaker 1: through to the other side. Or I think we're about 420 00:23:57,960 --> 00:24:00,120 Speaker 1: to get through to the other side of the pod 421 00:24:00,160 --> 00:24:03,720 Speaker 1: cast to the craziest thing we all saw in markets 422 00:24:03,800 --> 00:24:05,120 Speaker 1: this week? Was that a good That was a good second, 423 00:24:05,160 --> 00:24:08,680 Speaker 1: it was a really good Sarah kick it off. What's 424 00:24:08,720 --> 00:24:12,679 Speaker 1: the craziest thing you saw in uh this week? Alright, 425 00:24:12,840 --> 00:24:16,200 Speaker 1: I will kick it off. This is just kind of strange. Um, 426 00:24:16,240 --> 00:24:19,280 Speaker 1: there's a headline of an article and it says this 427 00:24:19,400 --> 00:24:22,840 Speaker 1: ham just sold for one million dollars at the Kentucky 428 00:24:22,880 --> 00:24:25,400 Speaker 1: State Fair. Oh wait, all right, I'm gonna I'm gonna 429 00:24:25,400 --> 00:24:29,920 Speaker 1: go out this week. But it gets even better because 430 00:24:30,400 --> 00:24:33,480 Speaker 1: when you read through the article, there's actually a regional 431 00:24:33,560 --> 00:24:37,440 Speaker 1: bank out in Kentucky called Central Bank. But the way 432 00:24:37,480 --> 00:24:41,439 Speaker 1: the article reads is saying that a chief at the 433 00:24:41,480 --> 00:24:46,040 Speaker 1: central bank bought a ham for a million dollars. So 434 00:24:46,200 --> 00:24:47,919 Speaker 1: I had to double check. Mature. There was actually a 435 00:24:47,920 --> 00:24:50,320 Speaker 1: regional bank out in Kentucky called central Bank. No, it 436 00:24:50,440 --> 00:24:55,560 Speaker 1: was not anyone on the federal reserve. Um, but quite interesting. 437 00:24:55,600 --> 00:24:58,240 Speaker 1: But still, I mean, the most expensive ham, it must be. 438 00:24:58,400 --> 00:25:01,240 Speaker 1: I think I want a sandwich show of that's a 439 00:25:01,280 --> 00:25:08,560 Speaker 1: good good hands all right, I think next, let's play. 440 00:25:08,640 --> 00:25:10,880 Speaker 1: We did get a good call from our own Dave 441 00:25:10,920 --> 00:25:13,600 Speaker 1: Wilson of Bloomberg Radio, and so the what goes up hotline, 442 00:25:13,600 --> 00:25:17,040 Speaker 1: So let's give that a listen. Here's something crazy. You 443 00:25:17,119 --> 00:25:20,080 Speaker 1: go back to last September and take a look at Tilbray, 444 00:25:20,359 --> 00:25:25,520 Speaker 1: the Canadian cannabis grower. The shares reached three hundred dollars 445 00:25:25,560 --> 00:25:28,959 Speaker 1: in US trading. Well, now you can lop a zero 446 00:25:29,119 --> 00:25:32,160 Speaker 1: off of that and you're pretty much where the shares 447 00:25:32,240 --> 00:25:36,120 Speaker 1: are now. Just this past week they dropped below thirty dollars. 448 00:25:36,359 --> 00:25:41,080 Speaker 1: Simple math tells you that's to climb. As it happens. 449 00:25:41,160 --> 00:25:45,280 Speaker 1: Whitney Tilson, who is a one time fund manager now 450 00:25:45,359 --> 00:25:49,520 Speaker 1: in the investment newsletter Business, talked about last September how 451 00:25:49,520 --> 00:25:53,800 Speaker 1: he expected the stock to drop, and sure enough it did. 452 00:25:54,119 --> 00:25:55,919 Speaker 1: It's a little late for him to be able to 453 00:25:55,960 --> 00:25:59,720 Speaker 1: make money off the decline, but nonetheless it's definitely one 454 00:25:59,800 --> 00:26:02,760 Speaker 1: for the books, Uhain. And you could say it was 455 00:26:02,800 --> 00:26:05,679 Speaker 1: a stock that was high and then came down in 456 00:26:05,720 --> 00:26:09,640 Speaker 1: a big way. No one wants to hear that. No 457 00:26:09,680 --> 00:26:13,000 Speaker 1: one wants that. When you guys started at Grunnel in 458 00:26:13,000 --> 00:26:15,439 Speaker 1: the early nineties, would it ever would you ever have 459 00:26:15,520 --> 00:26:18,320 Speaker 1: dreamed that we'd be talking about pot stocks one day 460 00:26:18,560 --> 00:26:22,880 Speaker 1: and we were talking about a O L and internet 461 00:26:22,920 --> 00:26:27,920 Speaker 1: stocks at that point, right, But I will I will 462 00:26:27,960 --> 00:26:30,400 Speaker 1: add speaking of a Canadian pot stock, I will give 463 00:26:30,480 --> 00:26:34,080 Speaker 1: you back our hot line number. And we did get 464 00:26:34,160 --> 00:26:38,439 Speaker 1: some heat on Twitter from one of our podcast followers 465 00:26:38,440 --> 00:26:42,600 Speaker 1: and listeners that we never say that the U. S 466 00:26:42,640 --> 00:26:45,040 Speaker 1: actually has an international code, which is one. So I 467 00:26:45,080 --> 00:26:47,880 Speaker 1: will say this time as one six or six three 468 00:26:47,920 --> 00:26:52,040 Speaker 1: two four three for zero. Right. He gave us a 469 00:26:52,080 --> 00:26:56,640 Speaker 1: hard time for American exceptionalisms there not. So alright, guys, 470 00:26:56,640 --> 00:26:59,240 Speaker 1: you're in the hot seat. Now, what's the craziest thing 471 00:26:59,520 --> 00:27:02,960 Speaker 1: that Shington crossing advisors that scene this week? So for me, 472 00:27:03,240 --> 00:27:06,919 Speaker 1: it's the merger and acquisition of other countries into the 473 00:27:07,000 --> 00:27:11,800 Speaker 1: United States. I've got someone and the M and a 474 00:27:11,920 --> 00:27:16,000 Speaker 1: deals of small little countries. Right, Well, you figured it 475 00:27:16,040 --> 00:27:18,480 Speaker 1: could be a creative to GDP. We can avoid that recession, 476 00:27:18,560 --> 00:27:20,520 Speaker 1: just tack on a few other countries. You know, no 477 00:27:20,560 --> 00:27:22,240 Speaker 1: one said it had to be organic growth, right, just 478 00:27:22,280 --> 00:27:23,800 Speaker 1: as long as you don't buy it with that, it 479 00:27:23,960 --> 00:27:27,760 Speaker 1: is pretty unbelievable. It seems like there's something new every 480 00:27:27,800 --> 00:27:30,040 Speaker 1: single week, and this week it just happened to be Greenland. 481 00:27:30,440 --> 00:27:32,560 Speaker 1: All right, that's a good one, chat Viny. My craziest 482 00:27:32,560 --> 00:27:34,600 Speaker 1: thing would be the fact that the Danes didn't actually 483 00:27:34,640 --> 00:27:39,240 Speaker 1: even consider the offers. There's there's half the population, there's 484 00:27:39,240 --> 00:27:42,080 Speaker 1: half the size of Edison, New Jerseys, and they could 485 00:27:42,160 --> 00:27:44,240 Speaker 1: they could have done pretty well with this, actually at 486 00:27:44,320 --> 00:27:47,359 Speaker 1: least looked at the deal. I mean, it's not the 487 00:27:47,400 --> 00:27:51,320 Speaker 1: craziest idea in the world, actually, you know, is it? No? Well, well, 488 00:27:51,640 --> 00:27:55,480 Speaker 1: I think through history, I think there was other offers 489 00:27:56,119 --> 00:28:00,359 Speaker 1: that the United States has made to actually get green Inland. 490 00:28:01,520 --> 00:28:05,840 Speaker 1: I think right back in the day. Oh boy, all right, well, 491 00:28:05,920 --> 00:28:08,600 Speaker 1: I'm gonna I'm gonna steal mine from a Twitter guy too. 492 00:28:08,640 --> 00:28:11,399 Speaker 1: I couldn't. I couldn't come up with one that top 493 00:28:11,480 --> 00:28:14,440 Speaker 1: this Twitter user who goes by the initials j MT. 494 00:28:15,280 --> 00:28:18,719 Speaker 1: His profile says he's a bond trader. So, uh, if 495 00:28:18,760 --> 00:28:22,120 Speaker 1: you believe Twitter profiles, then he's a bond trader. I'll 496 00:28:22,119 --> 00:28:25,080 Speaker 1: take him out of sere. And he says anything related 497 00:28:25,119 --> 00:28:27,920 Speaker 1: to Trump is assumed to be crazy and occurs every day, 498 00:28:28,160 --> 00:28:32,000 Speaker 1: let alone every week. Alright, fine, but he goes, But 499 00:28:32,080 --> 00:28:35,120 Speaker 1: I'd go with the Porsche Type sixty four Nazi car 500 00:28:35,200 --> 00:28:38,200 Speaker 1: clown show auction at Southeby's. I read that and I 501 00:28:38,240 --> 00:28:39,600 Speaker 1: had no idea what he was talking about. I had 502 00:28:39,600 --> 00:28:41,920 Speaker 1: to look this up. It's insane. I saw the headline 503 00:28:41,960 --> 00:28:44,000 Speaker 1: earlier this week, but I didn't look at the details 504 00:28:44,080 --> 00:28:47,120 Speaker 1: until recently. And my understanding of it was it was 505 00:28:47,200 --> 00:28:51,360 Speaker 1: a botched auction basically, and this the car was supposed 506 00:28:51,400 --> 00:28:53,840 Speaker 1: to go for an awful lot in the auction, and 507 00:28:53,880 --> 00:28:57,560 Speaker 1: it was yeah, it was. So it said nineteen thirty 508 00:28:57,680 --> 00:29:04,080 Speaker 1: nine Type sixty four worsh uh believe to be actually 509 00:29:04,720 --> 00:29:09,320 Speaker 1: the first Porsche written by Ferdinand Porsche himself, and they 510 00:29:09,360 --> 00:29:12,080 Speaker 1: had a Dutch auction near and no one could understand 511 00:29:12,120 --> 00:29:15,320 Speaker 1: his accent. So He's meant to say bidding starting at 512 00:29:15,360 --> 00:29:19,360 Speaker 1: seventeen million, and instead he said seventy million, and the 513 00:29:19,360 --> 00:29:21,880 Speaker 1: whole crowd got up and everyone went crazy. They're clapping 514 00:29:21,880 --> 00:29:23,560 Speaker 1: and taking pictures like, oh my gosh, this car is 515 00:29:23,560 --> 00:29:26,360 Speaker 1: gonna sell for at least seventy million. And then he said, wait, no, 516 00:29:26,440 --> 00:29:28,520 Speaker 1: I got that wrong. In seventeen million in the place 517 00:29:28,600 --> 00:29:30,479 Speaker 1: there's it sounds like there was almost a riot. They 518 00:29:30,480 --> 00:29:32,760 Speaker 1: all got up and started booing him and left, so 519 00:29:32,760 --> 00:29:35,320 Speaker 1: they had to cancel the auction. So that's pretty good. 520 00:29:35,840 --> 00:29:39,360 Speaker 1: Absolutely so thanks to our our Twitter guy j MT 521 00:29:39,840 --> 00:29:44,000 Speaker 1: for that one. But with that said, bad auction, but 522 00:29:44,080 --> 00:29:47,640 Speaker 1: hopefully good podcasts. Hope you enjoyed it anyways. Kevin Garrett 523 00:29:47,840 --> 00:29:50,240 Speaker 1: Chad Morgan Lander thinks so much for joining us A 524 00:29:50,320 --> 00:29:52,800 Speaker 1: bad German bund auction two this week too, so they 525 00:29:52,840 --> 00:29:55,480 Speaker 1: I don't know the tour related, but it's a bad 526 00:29:55,520 --> 00:30:05,360 Speaker 1: week for German aug same guy. Maybe what goes up. 527 00:30:05,400 --> 00:30:08,160 Speaker 1: We'll be back next week. Until then, you can find 528 00:30:08,200 --> 00:30:11,280 Speaker 1: us on the Bloomberg Terminal website and app or wherever 529 00:30:11,360 --> 00:30:13,920 Speaker 1: you get your podcasts. We'd love it if you took 530 00:30:13,960 --> 00:30:15,960 Speaker 1: the time to rate and review the show on Apple 531 00:30:16,000 --> 00:30:19,239 Speaker 1: podcasts so more listeners can find us, and you can 532 00:30:19,280 --> 00:30:22,480 Speaker 1: find us on Twitter, follow me at at Sarah Ponzack, 533 00:30:22,920 --> 00:30:26,600 Speaker 1: Mike is at reag Anonymous, and Washington Crossing Advisors is 534 00:30:26,640 --> 00:30:30,560 Speaker 1: at steeple w c A. You can also follow Bloomberg 535 00:30:30,640 --> 00:30:34,960 Speaker 1: Podcasts at podcasts. What Goes Up is produced by Tobrah Foreheads. 536 00:30:35,160 --> 00:30:38,480 Speaker 1: The head of Bloomberg podcast is Francesco Levie. Thanks for listening, 537 00:30:38,600 --> 00:30:39,400 Speaker 1: See you next time.