Speaker 1: Strap on your parachute. It's time for What Goes Up
Speaker 1: with Sarah Ponzick and Mike Reagan. Hello and welcome to
Speaker 1: What goes Up, a Bloomberg Weekly Markets podcast. I'm Sarah Ponza,
Speaker 1: reporter on the Cross Asset team, and I'm Mike Reagan,
Speaker 1: a senior editor at Bloomberg. This week on the show,
Speaker 1: the last time our guests joined us was in early March.
Speaker 1: The SMP five hundred had fallen a little bit more
Speaker 1: than ten percent at the time. We were all still
Speaker 1: in the office together and he said, in essence, belows
Speaker 1: aren't in until DC starts to panic, will stricter social
Speaker 1: isolation measures then took cold, stocks tumbled, and trillions and
Speaker 1: economic stimulus came from Washington and the Fed. Now the
Speaker 1: sp F DRED has risen more than fifty percent since,
Speaker 1: and we'll discuss what's next for markets, fiscal and monetary policy,
Speaker 1: and as always, will close out the episode with our tradition,
Speaker 1: the craziest thing I saw in markets this week? Now, Sarah,
Speaker 1: I was chatting with our chief Crazy Things correspondent, Vildonna
Speaker 1: Hirick before this show, and she's back to giving you
Speaker 1: exclusively all the craziest things she sees. I thought you
Speaker 1: were going to say that she gave you one. I'm
Speaker 1: going to say that she doubled up then and vil
Speaker 1: Donna just needs her own show that because she's just
Speaker 1: coming up with multiple a week. It's it's honestly pretty impressive.
Speaker 1: And she's very proud of this when she said she
Speaker 1: might be her best ever, So you guys should be proud.
Speaker 1: I'm want to say that I think she knows where
Speaker 1: her loyalty lives. Yeah, I'm just gonna break the news
Speaker 1: to you early though that mine's better. So all right,
Speaker 1: you proud as you want. But as you said, uh, Sarah,
Speaker 1: this guest this week was last on the show in March,
Speaker 1: and you know what I was thinking about recently. Do
Speaker 1: you remember your last handshake with someone before the virus lockdown?
Speaker 1: I really don't. Was our guest to your last hand show?
Speaker 1: I think he was. I think he was, and I
Speaker 1: remember when I met him and we both it's like
Speaker 1: a reflex, you both shake hands, and then I think
Speaker 1: we both were like, wait, maybe we shouldn't be shaking hands,
Speaker 1: but that was that was it. He might go down
Speaker 1: as my last hand shake ever. I'm not sure I'll
Speaker 1: ever be comfortable enough to shake it. I don't know
Speaker 1: if I even remember how to shake some I do
Speaker 1: like a right kind of like a little sleep. But anyway,
Speaker 1: very happy I'm back on the show. As you said,
Speaker 1: he made some great calls I think in the last
Speaker 1: time he was on in March. His name is novel
Speaker 1: Son Noula and he is the chief macro strategist at
Speaker 1: the hedge Fund e i A All Weather Alpha Partners NFL.
Speaker 1: Welcome back to the show. Thank you so much for
Speaker 1: having me again, Mike. And you know, it's always a
Speaker 1: pleasure that chat was the last person that you shok it.
Speaker 1: That's absolutely right. The other fun thing, yeah, it is.
Speaker 1: It's a very it's a very special bond. We also
Speaker 1: bonded over that episode by making fun of Luke Lukawa
Speaker 1: pretty vigorously in that I don't think we can do
Speaker 1: that again. He's not here to defend himself, so I
Speaker 1: don't know I would feel bad making fun of Luke
Speaker 1: next time. We'll try to get them back on here.
Speaker 1: But uh, but now let's start with the big news
Speaker 1: of the week. It was obviously Jerome Pal's speech at
Speaker 1: the Virtual Jackson Hole summit of the Federal Reserve. Any Basically,
Speaker 1: the headlines were that the Fed appears to be willing
Speaker 1: to let both inflation run a little hotter than two
Speaker 1: percent and also for the to allow the job market
Speaker 1: to sort of get a little bit hotter. They're not
Speaker 1: worried about the Phillips curve and sort of the the
Speaker 1: strength of the job market, how that will affect inflation
Speaker 1: as much as they once were. What are your sort
Speaker 1: of main takeaways, uh from the Chairman pal speech and
Speaker 1: sort of how it's, if at all it will influence
Speaker 1: the way you're looking at markets going forward. Now, you
Speaker 1: know what, if you don't mind, I'll start by taking
Speaker 1: us back to our last podcast actually and when you know,
Speaker 1: the view I kind of presented was social distancing is
Speaker 1: going to be a big deal to well economic momentum,
Speaker 1: and it's gonna require massive fiscal and monetary coordination in
Speaker 1: order to reflate assets to kind of provide the the
Speaker 1: income replacement and the market backstops um. So for for
Speaker 1: the for the global markets to weather the storm, however
Speaker 1: long it takes. We definitely got exactly that. You know,
Speaker 1: we got trillions of dollars of fiscal spending, and we
Speaker 1: had a FED that you know, was already along its
Speaker 1: path of its strategic policy review. That motivation behind that
Speaker 1: in the first place was to rethink, to rethink, are
Speaker 1: we short circuiting recoveries without necessarily needing to? And I
Speaker 1: think that the market had already been starting to condition
Speaker 1: towards that. COVID, like I did with a lot of
Speaker 1: other trends, really accelerated it and kind of pulled it
Speaker 1: all forward, and we got to a point where, you know,
Speaker 1: curves are very flat, very little yield left, and you know,
Speaker 1: the market basically saying, you know, the Fed's not gonna
Speaker 1: get gonna get in front of this or get ahead
Speaker 1: of this. They're gonna let it run. I consider that
Speaker 1: kind of chopping off the left tail of the distribution
Speaker 1: of both inflation and just generally growth. However, the question becomes,
Speaker 1: can be FED also open up the right tail. We've
Speaker 1: chopped off the left hail and distribution, we've limited deflation risk,
Speaker 1: we've we've prevented market crashes, and we've provided an income
Speaker 1: replacement from the substitution. But can it actually ignite at
Speaker 1: the right tail? Can it open up the right tail?
Speaker 1: I think that this seat by a chair. Powell at
Speaker 1: Jackson Hole was kind of just more so the codification
Speaker 1: of what the trend that's been kind of being priced
Speaker 1: in over the course of the last several months, if
Speaker 1: not even longer than that. And so now I think
Speaker 1: that this is kind of an event where a lot
Speaker 1: of folks like me are saying, Okay, I can kind
Speaker 1: of book my fed trades, I can kind of you know,
Speaker 1: that trade is kind of over, and now my my
Speaker 1: narrative shifts towards what can open up the kit. So
Speaker 1: then what can possibly open the right tail? And I
Speaker 1: think just the fact that we are talking about right
Speaker 1: tail risk right now at the point of where we
Speaker 1: are and what we've seen happen in markets over the
Speaker 1: last couple of months is just pretty amazing. Yeah, you know,
Speaker 1: it's funny because I've had of you for a long
Speaker 1: time that a lot of our economic outcomes are ultimately
Speaker 1: follows the choices because the things that typically would constrain
Speaker 1: massive discial spending, massive redistribution, massive subsidies, all these types
Speaker 1: of things typically what constrains as inflation. So if you're
Speaker 1: in a structurally disinflation disinflationary regime, as we have been
Speaker 1: in for decades, perhaps like the lion share of my life,
Speaker 1: how you fat it really is up being a policy choice,
Speaker 1: Like you can decide if you want, if you want
Speaker 1: freepers unemployment, there's a policy cocktail I can get you
Speaker 1: there three four seven employment. So the idea is that
Speaker 1: the in order to open up the right tail, you
Speaker 1: continue to do what we've been doing. Everyone's kind of surprised,
Speaker 1: um that the combination of the Cares Act plus the
Speaker 1: FED promising it wouldn't use the CARES as a reason
Speaker 1: to short circuit the recovery of the Cares Act, the
Speaker 1: fact that we have monetary christal coordination and fiscal dominance,
Speaker 1: it's not surprising to me that it was able to
Speaker 1: reflate the economy, and a surpris us so well, Um,
Speaker 1: there's a lot of places where it could have done
Speaker 1: much better, and there's a lot of big issues that remain,
Speaker 1: and you know, the whole k shaped recovery idea I
Speaker 1: think as alien, but generally speaking, I think it succeeded.
Speaker 1: And if that type of fiscal impulse would return into
Speaker 1: something that was a little bit more durable, something that
Speaker 1: was a little a little bit more not necessarily contingent
Speaker 1: upon crisis, and the FED continued to establish it's an
Speaker 1: implemented promise to not short circuit uh those impulses. And
Speaker 1: then I don't see why we couldn't open up the
Speaker 1: right tail. I don't anticipate us being able to open
Speaker 1: up inflationary risk to the point where its spires on itself.
Speaker 1: In my opinion, getting to you know, three or four
Speaker 1: percent inflation uh seven eight percent nominal girth to me
Speaker 1: um is likely to be just basically a politic choice.
Speaker 1: And and and that's why I think that these markets
Speaker 1: are so politically driven, They're so connected to politics that
Speaker 1: they used to be, because policy is driving everything. And
Speaker 1: we may have kind of crossed the rubicon um in Nicona.
Speaker 1: You know, it seems like we have seen a little
Speaker 1: bit of steepening in the treasury yield curve even before
Speaker 1: the Jackson whole speech, picking up somewhat after that. Is
Speaker 1: it a no brainer to think that steepening trend is
Speaker 1: gonna continue, or you know, will the FED to have
Speaker 1: something to say about that down the road at some point?
Speaker 1: I mean, is I guess is the notion of potential
Speaker 1: yield curve control from the Fed? Is that idea dead
Speaker 1: right now? Do you think or do you think it
Speaker 1: could be a topic we're talking about again in the future.
Speaker 1: So everyone I talked you think I'm crazy with my
Speaker 1: answer to this, But the idea is, especially on the show,
Speaker 1: I've been talking about yield for control type of policy sinceeding,
Speaker 1: before the boj Ample bent to the I always kind
Speaker 1: of brought it back to the World War Two for
Speaker 1: the fifties analog in the United States, and I think
Speaker 1: it's still remains salient. Um. The way I would frame
Speaker 1: my answer to your question would be to say that
Speaker 1: I think it's likely that if this type of dawn
Speaker 1: market action were to continue and persist, I wouldn't be
Speaker 1: surprised if the FED in September Epilepsy decided to do
Speaker 1: something along the lines of saying, either we're gonna upsize
Speaker 1: QUI or we're going to shift the composition of QUI
Speaker 1: toward long end purchases. You know, what's the point of
Speaker 1: buying the two years? What's the point of a point
Speaker 1: of buying the five year when you know those are
Speaker 1: you know, the Defense Promising Unit, they're basically just trading
Speaker 1: as funds, right, So UM, I would be surprised to
Speaker 1: see them come in with some sort of balance sheet
Speaker 1: policy to signal to the market that nope, you know,
Speaker 1: we're even even the little bit that we've stepen. No,
Speaker 1: we're not going to allow it to I think in
Speaker 1: order to get a yield care control type of policy,
Speaker 1: or yield caps or anything along those lines, I think
Speaker 1: the impetus for that, and then the backdrop required for
Speaker 1: that would be a structural shift that the market used
Speaker 1: as a as a reason to challenge the Fed. Stands.
Speaker 1: For example, if we were to get a very big
Speaker 1: fiscal package with signs that it would be quite durable
Speaker 1: and not just you know, a one time thing turning
Speaker 1: into a two time thing, but like this is the
Speaker 1: new normal, you know, the first thing traders would do
Speaker 1: is they would sell the long in the market, you know,
Speaker 1: of the bond market and um. If they were to
Speaker 1: do that enough, then the Fed likely step in and say, actually,
Speaker 1: we're going to make sure that all this spending is
Speaker 1: finance at a specific level. The other potential scenario along
Speaker 1: these lines would be if we got some sort of
Speaker 1: um surprise on the vaccine front. There's a lot of
Speaker 1: political impulses occurring on both sides right now, so you know,
Speaker 1: there's probably higher than usual risk of UM kind of
Speaker 1: like a politically finessed vaccine headline to hit prel action,
Speaker 1: so you know, a big fiscal package or a vaccine,
Speaker 1: both of those things could be the impetus for folks
Speaker 1: in the market to just sell the long end and if, if,
Speaker 1: if it were to feed on itself. That's the window
Speaker 1: and that's the preconditions I think required for the FED
Speaker 1: to step in with something like yielder control, because that's
Speaker 1: the moment where it's most needed, that's the moment where
Speaker 1: it's the most effective, and that's the moment where the
Speaker 1: FED is establishing the most credibility with that policy without
Speaker 1: taking the risk of you know, we're preempting it and
Speaker 1: by the time we need it, we have to do
Speaker 1: it again, and we have to kind of establish some
Speaker 1: sort of novel credibility and you know that, you know,
Speaker 1: mon tery policy is a weird gain. It's similar, you know,
Speaker 1: it's similar to just like how money works for generally,
Speaker 1: it really depends on credibility and signaling. I disagree with
Speaker 1: the way some folks frame you know, credibility and inflation
Speaker 1: fighting or whatever. If you have structurally distiflationary regimes, the
Speaker 1: credibility needs to be on the other side. But if
Speaker 1: we see a backup and yields, that's that's significant, and
Speaker 1: it's driven by some sort of regime ship, whether it's
Speaker 1: fiscal quality or a vaccine, that would be the type
Speaker 1: of window where I think that we could see yield curtetical.
Speaker 1: I do think that the FED would ultimately signal a
Speaker 1: willingness to go down that route if we were to
Speaker 1: see the bond market back up that part. So you
Speaker 1: mentioned fiscal but clearly, at least of now, we don't
Speaker 1: have a fiscal four package yet. The FED has made
Speaker 1: it very very clear that they're on the market side
Speaker 1: lower for longer, they'll let both inflation in the labor
Speaker 1: market run hot. How much pressure then does that put
Speaker 1: on the fiscal side of the equation, And how do
Speaker 1: you think about those risks or the risk that maybe
Speaker 1: we don't get another trillion dollar fiscal package, or is
Speaker 1: that outcome just so far fetched that people just won't
Speaker 1: even believe that that won't happen. The way the FED
Speaker 1: has realigned and recalibrated its policy has essentially been a
Speaker 1: move a move away from being kind of a shock
Speaker 1: absorber or counter say focal to being procyclical, by which
Speaker 1: I mean this usually if stocks go down, real yields
Speaker 1: will fall because folks are expecting the fat. You know, ease,
Speaker 1: if socks go up, real yelds go up. So sorry
Speaker 1: about my dog left, because you know, folks are expecting Okay,
Speaker 1: this reflects possibility for the FAT to start tightening policy
Speaker 1: because we are in like a clause I tagged environment
Speaker 1: and nominally yields. It becomes the case that the FED
Speaker 1: policy becomes procyclical because as markets rise and as growth
Speaker 1: increases break even as an inflation rise, which means real
Speaker 1: yields fall, which means that effectively, as things are good
Speaker 1: in the economy and markets, financial conditions become even looser.
Speaker 1: And they actually they further feed that welcome for the
Speaker 1: first time. In the show novels Dog he got a
Speaker 1: new puppy, everyone, classic quarantine purchase. I'm gonna get my
Speaker 1: dog down here to bark back at them. Sorry about that, guys,
Speaker 1: but yeah, So you know, as markets and as upside
Speaker 1: outcomes occur in markets and the economy, financial conditions actually
Speaker 1: become a looser. And the same thing works in rehearse
Speaker 1: where if there are downside risks to the markets or
Speaker 1: the economy, break even small and it really yields tightened,
Speaker 1: they go up, which tightens financial conditions. So really the
Speaker 1: FED is in a position where it's become more of
Speaker 1: a post cyclical driver, and it becomes very important for
Speaker 1: fiscal policy to utilize that space, because if we have
Speaker 1: fiscal cliffs and such, and you know, people start selling
Speaker 1: break even and start betting on lower equation, then real
Speaker 1: borrowing costs actually rise, which exacerbates the issue. And to
Speaker 1: the question of what's going to happen and how do
Speaker 1: the markets that do it? I think the way the
Speaker 1: market have been thinking through it is you know, look,
Speaker 1: you know personally at COVID, which really moved the odds
Speaker 1: for the presidential election odds um and pull ing, and
Speaker 1: then we have these protests and some interesting actions by
Speaker 1: certain police departments, which then coincided with the odds for
Speaker 1: the Senate shifting as well. And you know, now everyone
Speaker 1: that talks about blue wave right like because of that,
Speaker 1: I think that the markets basically saying, even if they
Speaker 1: want to play games on fiscal polity right now, we'll
Speaker 1: basically get the hero's Act in February much so, you know,
Speaker 1: it's just like a window of uncertainty. But like, because
Speaker 1: there's something on the other side to look at, I'm
Speaker 1: gonna be buying in depth, which means that deep of
Speaker 1: a depth to buy when I think can change that.
Speaker 1: There's a few things I can change that. And I
Speaker 1: think the closer we get to the election without without
Speaker 1: a deal, I think the bigger the risk becomes along
Speaker 1: these lines. But yeah, you know, if if fiscal policy
Speaker 1: doesn't follow through, then you know, a lot of what
Speaker 1: the FED is doing isn't really gonna be able to
Speaker 1: be effective. A lot of the Fed's effectiveness comes from
Speaker 1: accommodating fiscal policy. It is necessarily igniting effectiveness of it zone.
Speaker 1: So without that fiscal polity, the potency and efficacy of
Speaker 1: the FEDS decisions is much lower. And actually the strategic
Speaker 1: shift could actually work a reverse because of this protocolcality
Speaker 1: element I'm talking about. Do we get that, I don't know.
Speaker 1: I've always kind of been like, internally, we've been have
Speaker 1: of the view that it's likely to be the case
Speaker 1: that President Trump would prefer to have a big fiscal
Speaker 1: package that's much better time for the election Um, you know,
Speaker 1: and I think that how Speaker Felosi recognized that and
Speaker 1: that was part of the cocktail reasons why she passed
Speaker 1: the Heroes Act in the House in May, and you know,
Speaker 1: very early on, aiming for a late summer deal that
Speaker 1: gets through the Center as well. And then we had
Speaker 1: these you know, the Executive Action and like all this
Speaker 1: fiscal drama and games and back and forth. But ultimately,
Speaker 1: I do think, you know, everyone has an incentive to
Speaker 1: get something done. Um, and well we probably will see
Speaker 1: something get done. Is it the case that, so, Sarah,
Speaker 1: you asked me, does what Jeff Powell is saying does
Speaker 1: defense approach? Do all these things pressure Congress into acting fiscally? Maybe?
Speaker 1: I think that probably what pressures Congress a lot more
Speaker 1: than that would be the markets on the electoral cycle.
Speaker 1: So you know, if if we if the market decides,
Speaker 1: you know, my friend marked out one of his favorite
Speaker 1: phrases that he uses, which I think is very salient
Speaker 1: and insightful, is the market is very prone to quote
Speaker 1: belated overreactions. So if we get a belated overreaction to
Speaker 1: these kind of rolling fiscal cliffs, the market can go
Speaker 1: probe for a fiscal foot strike. I'm sure it will
Speaker 1: find it and then we'll get the deal. Otherwise it
Speaker 1: becomes a game of electoral politics. And so you know,
Speaker 1: I wouldn't be surprised if you know, I don't know
Speaker 1: where we see a random pre election vaccine pump at
Speaker 1: the same time as around my stimulus package, you know,
Speaker 1: like and like just like a very well juiced pump
Speaker 1: into the election. Fascinating what you said, because I think
Speaker 1: a lot of people and myself included, as we got
Speaker 1: into August, you know, it became sort of vacation season
Speaker 1: in Washington, d C. And then we had the political
Speaker 1: conventions where you knew nothing was going to get done.
Speaker 1: I had really expected sort of a tantrum in markets
Speaker 1: over the fact that there wasn't a physical package ready
Speaker 1: to be signed. So you're you're thinking, is that the
Speaker 1: markets sort of looking through that into a blue sweep,
Speaker 1: a blue wave, and that we will get that Heroes Act,
Speaker 1: which is what it's like three times the size of
Speaker 1: what the latest GOP fiscal package was. That three you know,
Speaker 1: three trillion verses one trillion. That's fascinating to me. I
Speaker 1: wonder though, you know, it's a long time between November
Speaker 1: and inauguration time in January, and I wonder what could
Speaker 1: go wrong in that period, you know, is is it
Speaker 1: safe to assume some political theater that could possibly create
Speaker 1: some volatility? Do you think? Just similar to you, I
Speaker 1: was sitting there in July and August being like, really,
Speaker 1: the market just don't care about this, you know, I
Speaker 1: certainly I was certainly positioned for them to care about it,
Speaker 1: and you know, we have to make um some adjustments,
Speaker 1: and thankfully, you know, we were disciplined to our process
Speaker 1: and it worked out um quite well. But yeah, like
Speaker 1: I was also very surprised about that. And and by
Speaker 1: the way, because of that, I run the risk inherently
Speaker 1: of of ex post front to rationalize the market move.
Speaker 1: But I do think that there's something to the notion
Speaker 1: of why do I care if I know that we're
Speaker 1: going to get a massive package coming in February and
Speaker 1: if that goes well, then like what's to stop them
Speaker 1: from continuing this? And that's an utter regime ship, you know.
Speaker 1: So I think I probably played at least a little
Speaker 1: bit of a role to your matter question. You know,
Speaker 1: how quickly we normalized post pandemic and how quickly and
Speaker 1: how long and how durably we're able to maintain this
Speaker 1: new fiscal regime. Whether President Trump is re elected or not,
Speaker 1: whoever on the losing side will, in different ways and
Speaker 1: in different magnitudes have some sort of feeling of contesting
Speaker 1: the election. And if it does end up being a
Speaker 1: lane duck period, I think it's an even bigger political
Speaker 1: risk because you know, there's a lot of things that
Speaker 1: can be done, especially on the geopolitical front, that might
Speaker 1: not be you know, the typical normal handover period during
Speaker 1: a late duct period between election inauguration, the distribution of
Speaker 1: probabilities changes so much, you know, especially if we get
Speaker 1: a fiscal package or a vaccine before the election, irrespective
Speaker 1: of how effective it is, or irrespective of it if
Speaker 1: it won't through the right regulatory channels. You know, if
Speaker 1: Maderna wants to get a vaccine now and says they
Speaker 1: got to phase three and President Trump's administration wants to
Speaker 1: do an emergency use authorization, I mean, I don't know
Speaker 1: if that's like koshert but like they'll probably try, and
Speaker 1: that will probably matter to the markets, to the rather discourse.
Speaker 1: And then the reason I bring that up, it's because
Speaker 1: if we get this well timed fiscal package were a
Speaker 1: well timed vaccine headline, then I'm sure folks will start
Speaker 1: re calibrating the the electoral odds of President Trump as
Speaker 1: well as the GOP the Senate. And you know, if
Speaker 1: that were to occur, then suddenly a lot of things
Speaker 1: start changing. Do we get a President Trump and a
Speaker 1: Democratic Senate? Do we get a blue sweep? Do we
Speaker 1: get a red sweep? The point being there that the
Speaker 1: distribution of probabilistic outcomes, why it is, we have more
Speaker 1: outcomes that are that are within the range of probably plausible,
Speaker 1: and in that scenario that's like definitionally higher volatility. There's
Speaker 1: there's more scenarios that need gonna be considered. Um So
Speaker 1: I absolutely believe that, Like you know, again, it's the
Speaker 1: sequencing is kind of like get to the point where
Speaker 1: the where the FED is understood and priced in, then
Speaker 1: you shift to the regime of fiscal and MACS, and
Speaker 1: then you shift to the regime and narrative of political
Speaker 1: risk and what can happen in that window. I don't know.
Speaker 1: I mean, it's you know, I can try to be imaginative,
Speaker 1: but the broader point is like we all need to
Speaker 1: be imaginative about that window irrespective of like what things
Speaker 1: you're looking like going into the election or even coming
Speaker 1: out of it, and so, and that means it's likely
Speaker 1: to be the case of vultility. The electoral vultility extends
Speaker 1: past the election, unlike most times. And that's one of
Speaker 1: the reasons that, like, if you look at the term
Speaker 1: structure of the VIX, you know you have the typical
Speaker 1: electoral king election king quote unquote, where you know, the vix,
Speaker 1: the implied Ford vix pops in November and then kind
Speaker 1: of starts to come back down because of the election risks.
Speaker 1: But unlike most years, it remains a little bit elevated
Speaker 1: even past the election. I think that makes sense. In fact,
Speaker 1: I would argue that that window between the election inauguration.
Speaker 1: I would actually argue that Ford volatility is cheap because
Speaker 1: there's just so many scenarios that can materialize in that window.
Speaker 1: And some of them are great, you know, um like uh,
Speaker 1: there's a right tail too, not just the left til
Speaker 1: right um. And some of them are really bad. And
Speaker 1: so the uncertainty along those lines, I think that's going
Speaker 1: to be where all the all the focus ships to
Speaker 1: the moment we get a fiscal package and or a
Speaker 1: vaccine pump, because that will be the moment where everyone
Speaker 1: who's been trading in anticipation for these things is like, Okay,
Speaker 1: it's baked in. I'm gonna do what the Fed traders
Speaker 1: did on Jackson whole day. I'm gonna book by trades,
Speaker 1: i gonna book by Fed trades, I'm gonna book by
Speaker 1: Fiscal trades, and a book by VACS trades, and and
Speaker 1: just the price action because of that can start to read,
Speaker 1: you know, narratives follow price, so that can start to
Speaker 1: recalibrate and reframe the narratives in the market towards this
Speaker 1: political risk. And I do think that that window is
Speaker 1: going to be rite with political risk and likely also
Speaker 1: rife with marketing autility, probably the likeliest window for us
Speaker 1: to see real market of all autility. Since Koder sounds
Speaker 1: like a fun end of the year, right, yeah, fun,
Speaker 1: it's fun. It's fun for me and fun for you
Speaker 1: because I'm a trader and you either journalists, but hey,
Speaker 1: everybody else. But it's that time, I believe. Is it
Speaker 1: that time? It is that time? Stand clear of the
Speaker 1: craziest things we saw in markets this week. Alright, Sarah,
Speaker 1: what did you and vill Donna come up with this week.
Speaker 1: Well vill Donna came up with it. But I'm really
Speaker 1: going to have to amp this up to make it
Speaker 1: seem crazier maybe than it is. It is pretty crazy, though,
Speaker 1: I will say so. The AP reported that KFC Kentucky
Speaker 1: Fried Chicken is temporarily suspending its tagline. It's very popular
Speaker 1: tagline known as quote unquote finger looking good. And the
Speaker 1: reason that they're doing this I kild you not is.
Speaker 1: They say it is quote the most inappropriate slogan for
Speaker 1: end quote due to the coronavirus um. So because of
Speaker 1: the coronavirus, they don't want people licking their fingers after eating.
Speaker 1: Kentucky Fried Chicken completely changed their slogan, at least for
Speaker 1: the time being. And of course Young Brands is the
Speaker 1: owner of CAF So what is It's like, wipe on
Speaker 1: your shirt? Good, now, wipe your fingers on your What
Speaker 1: are you supposed to do? Not? Not even wipe on
Speaker 1: your shirt. It's like run to the nearest bathroom, wash
Speaker 1: your hands for twenty seconds, singing the ABC all right,
Speaker 1: that's pretty good, that's pretty good. I'll give you mine.
Speaker 1: Kind of funny, I believe not ful? Is is striking
Speaker 1: out on crazy things. But in your honor not I've
Speaker 1: got one, uh for you. I think you'll like this
Speaker 1: one as a hip hop Before you continue, Mike, before
Speaker 1: you continue. You know when you asked me, like, what's
Speaker 1: crazy a the market right now, it's like, you know,
Speaker 1: give me a shark, give a ticker. I'll tell you.
Speaker 1: You know, it's the whole thing. That's true. That's true.
Speaker 1: It's hard to differentiate anymore from from the normal things
Speaker 1: in the But please continue, Mike, and I love I
Speaker 1: love the segue on about hip hop. You know for sure.
Speaker 1: Yea sonos hip hop aficionado and Southern bees. Sarah will
Speaker 1: tell you why. When I look at market stories, I
Speaker 1: like all the alternative asset classes and this is about
Speaker 1: as alternative as it gets. Southebys in September is gonna
Speaker 1: hold its first auction of hip hop related memorabilia and
Speaker 1: items and sort of the main attraction of this auction is,
Speaker 1: if you remember back, it's way back in Biggie Smalls.
Speaker 1: It was just a few days before he died. He
Speaker 1: did a photo shoot, uh for Rap Pages magazine in
Speaker 1: which the photographer wanted to portray him as the King
Speaker 1: of New York. So somewhere he got this really cheap
Speaker 1: plastic crown and put it on Biggie's head. Some pretty
Speaker 1: famous photos came out of it. He did, he said
Speaker 1: he it made him look like the Burger King. He
Speaker 1: didn't like it anyway. This is the highlight of Southeby's
Speaker 1: first hip hop auction in September. And he guess, Sarah, not,
Speaker 1: what would you guess that the estimated sale price of
Speaker 1: this crown is no. If I'm gonna let you go first,
Speaker 1: h I might go higher. Yeah, I might up it
Speaker 1: to two fifty Why not you you're like prices, right,
Speaker 1: You're gonna go hundred and fifty one. They're saying they're
Speaker 1: putting a ballpark estimate of two hundred to three hundred
Speaker 1: thousand dollars for this crown. It is signed on the
Speaker 1: inside by both Biggie and the photographer. But here's what
Speaker 1: I think is crazy. Elsewhere in this auction twenty two
Speaker 1: handwritten and signed love letters from none other than a
Speaker 1: sixteen year old Tupac Shakur to a woman named Kathy
Speaker 1: Lowe who was his high school sweetheart back in Baltimore
Speaker 1: back in the day. So two handwritten love letters, including
Speaker 1: one It's It's adorable, it says Tupac hearts Cathy with
Speaker 1: the heart you know, all signed, all all original, Some
Speaker 1: include some verses, some poetry from Tupac. What do you
Speaker 1: think higher? Lower than Biggie's Crown? I personally, I would
Speaker 1: say lower. I could see you doing much more with
Speaker 1: Biggie's crown than just twenty two love letters. I'll be
Speaker 1: there from Tupac lying around, but I'd have to say low.
Speaker 1: But you're but you'd like to wear the crown out
Speaker 1: on the town and stuff stars obviously, how about you?
Speaker 1: What what's your what's your price? Is right? Bid for
Speaker 1: for Tupac letters? You know, I would guess lower, But
Speaker 1: if it were lower, I would try arbitrage in the difference,
Speaker 1: because that's it's much lower than estimating love letters at
Speaker 1: sixty thousand to eighty thousand. I think there's a little
Speaker 1: East Coast bias going on in the pricing here from Southebes,
Speaker 1: you know what, Like, I think we need to hit
Speaker 1: up South Beast because I wonder how much my high
Speaker 1: school jazz and hip hop instrumentals would go for right now.
Speaker 1: I hope they would get a little bit close to
Speaker 1: the love letters at least maybe I could. Maybe I
Speaker 1: could pay for my Blue matterminal for a year or something.
Speaker 1: You know, let's do it. Let's get them in the auction.
Speaker 1: We'll get him in the auction. I expect you to
Speaker 1: bid in this auction. Novel. I next thing, you know,
Speaker 1: Mike's gonna see. Mike's gonna see a headline. It's gonna
Speaker 1: say your name wins out the auction at Stubbs. The
Speaker 1: next time we have you on, yes, you will be
Speaker 1: uh wearing the crown and reading. I would love that
Speaker 1: more than anything. And by the way, last saw real
Speaker 1: quick my puppy that I recently got that we were
Speaker 1: talking about. His name is Nas, named after Nas, the
Speaker 1: rapper from Queensbridge who has a who has an album
Speaker 1: came out which came out this week. So, you know,
Speaker 1: much respect to my East Coast rappers as well. But
Speaker 1: where's the love for tuplock right now? But I think
Speaker 1: they need a West Coast auction house for handle well.
Speaker 1: I feel like we could talk about hip hop for days.
Speaker 1: I don't know if you definitely could, but not ful Sonala,
Speaker 1: thanks us so much for joining us on the show
Speaker 1: this week. Always a pleasure. Guys, thank you so much
Speaker 1: for having me until next time. What Goes Up will
Speaker 1: be back next week. Until then, you can find us
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