1 00:00:13,680 --> 00:00:17,040 Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast. 2 00:00:17,200 --> 00:00:20,360 Speaker 1: I'm my freaking a senior editor at Bloomberg, and this 3 00:00:20,400 --> 00:00:22,360 Speaker 1: week on the show, I guess you could call it 4 00:00:22,400 --> 00:00:25,680 Speaker 1: a dot plot bombshell, with the shifting of a few 5 00:00:25,720 --> 00:00:29,040 Speaker 1: dots on a chart of what various Federal Reserve policymakers 6 00:00:29,160 --> 00:00:32,440 Speaker 1: expect for their benchmark interest rate, as well as Chairman 7 00:00:32,479 --> 00:00:35,680 Speaker 1: Pal's acknowledgement that it's time to at least start talking 8 00:00:35,680 --> 00:00:39,519 Speaker 1: about talking about tapering outset purchases. Well, the markets are 9 00:00:39,560 --> 00:00:41,920 Speaker 1: coming to grips with the idea that the Feds ultra 10 00:00:42,000 --> 00:00:45,519 Speaker 1: loose monetary policy maybe tightening a little bit sooner than 11 00:00:45,600 --> 00:00:48,360 Speaker 1: previously thought. What does that all mean for how you 12 00:00:48,360 --> 00:00:50,839 Speaker 1: should allocate your investments? We'll get into it with a 13 00:00:50,920 --> 00:00:55,319 Speaker 1: chief investment strategist in Milwaukee, but first, Charlie Pellett tell 14 00:00:55,360 --> 00:00:59,040 Speaker 1: us who this week's mystery co host is. This week's 15 00:00:59,120 --> 00:01:03,200 Speaker 1: mystery co host is Katie Greifeld. Katie is a cross 16 00:01:03,280 --> 00:01:07,039 Speaker 1: asset reporter and co anchor of take Stock on Bloomberg 17 00:01:07,120 --> 00:01:10,880 Speaker 1: Quick Take. She's an animal lover at heart and celebrates 18 00:01:11,000 --> 00:01:15,240 Speaker 1: every Friday by tweeting a picture of a hairless cat 19 00:01:15,600 --> 00:01:19,160 Speaker 1: in a milk bath. No need to rewind. You heard 20 00:01:19,200 --> 00:01:24,080 Speaker 1: that right, A hairless cat in a milk bath? You know, Katie, 21 00:01:24,080 --> 00:01:26,280 Speaker 1: would you actually say the words hairless cat in a 22 00:01:26,319 --> 00:01:29,720 Speaker 1: milk bath? It makes it sound a lot more kind 23 00:01:29,720 --> 00:01:31,640 Speaker 1: of weird than it really is, I think is I 24 00:01:31,680 --> 00:01:34,600 Speaker 1: hope I would direct people to my sort of page. 25 00:01:34,600 --> 00:01:38,480 Speaker 1: It's not as profane as it sounds. I promise. It's 26 00:01:38,520 --> 00:01:43,840 Speaker 1: just a very relaxed cat enjoying some self care. It's 27 00:01:43,880 --> 00:01:46,280 Speaker 1: some self care, some self as we all should on 28 00:01:46,319 --> 00:01:50,919 Speaker 1: Friday nights. It's a very soothing image. Again express verbally 29 00:01:50,960 --> 00:01:53,040 Speaker 1: it sounds a little weird, but it is a soothing image. 30 00:01:53,040 --> 00:01:55,720 Speaker 1: It always makes me feel like Friday is here. As 31 00:01:55,720 --> 00:01:57,560 Speaker 1: I know does the show for a lot of people, 32 00:01:57,560 --> 00:02:00,480 Speaker 1: which publishes on Friday afternoons. But Katie talked to us 33 00:02:00,480 --> 00:02:02,880 Speaker 1: a little bit about quick take. How's it going? You're 34 00:02:02,920 --> 00:02:06,520 Speaker 1: answering what noon? So one pm these days noon to 35 00:02:06,680 --> 00:02:10,880 Speaker 1: twelve thirty. We actually just had our one month anniversary 36 00:02:11,120 --> 00:02:14,560 Speaker 1: launched on May seventeenth, so the last month has been 37 00:02:14,639 --> 00:02:16,919 Speaker 1: kind of a blur. But it's a daily market show 38 00:02:17,080 --> 00:02:21,600 Speaker 1: and we're really aimed at retail and individual investors. Um 39 00:02:21,639 --> 00:02:24,160 Speaker 1: so a little bit of a different flavor from Bloomberg 40 00:02:24,160 --> 00:02:28,760 Speaker 1: Television for any Bloomberg television watchers out there. We we 41 00:02:28,840 --> 00:02:32,240 Speaker 1: definitely try to keep it more geared towards, you know, 42 00:02:32,320 --> 00:02:36,040 Speaker 1: the individual rather than the institution. Hey, uh, well, those 43 00:02:36,080 --> 00:02:39,080 Speaker 1: retail traders, as we all know, are the lords of 44 00:02:39,120 --> 00:02:42,440 Speaker 1: the market now, so you can imagine what we've been 45 00:02:42,480 --> 00:02:44,560 Speaker 1: spending our time on. It's a lot of a lot 46 00:02:44,639 --> 00:02:49,880 Speaker 1: of memes, a lot of game games. The half hour 47 00:02:49,919 --> 00:02:51,799 Speaker 1: of memes, it should just be all memes. I think 48 00:02:51,800 --> 00:02:54,000 Speaker 1: that that would be. We should call it take stock. 49 00:02:54,200 --> 00:02:59,120 Speaker 1: We've joked about that stock. Well, let's get into it 50 00:02:59,639 --> 00:03:02,680 Speaker 1: with the markets, uh discussion here with our guests. Actually, 51 00:03:02,680 --> 00:03:04,639 Speaker 1: before we do that, one more thing, I've been very 52 00:03:04,680 --> 00:03:08,080 Speaker 1: remiss in reminding people that we love to hear from you. 53 00:03:08,160 --> 00:03:10,120 Speaker 1: If you want to give us a call on the 54 00:03:10,120 --> 00:03:14,640 Speaker 1: Bloomberg Podcast hotline and leave us a voicemail, the number 55 00:03:14,680 --> 00:03:17,919 Speaker 1: is six four six three to four three four nine 56 00:03:17,960 --> 00:03:19,960 Speaker 1: oh and by all means, call in and tell us 57 00:03:19,960 --> 00:03:22,360 Speaker 1: what the craziest thing you saw in markets this week was, 58 00:03:22,400 --> 00:03:24,520 Speaker 1: and maybe we will play your voicemail on the show. 59 00:03:25,240 --> 00:03:27,280 Speaker 1: But let's get to that market's talk. We're very happy 60 00:03:27,320 --> 00:03:29,240 Speaker 1: to have on the show this week. He is the 61 00:03:29,320 --> 00:03:34,320 Speaker 1: chief investment strategist at Northwestern Mutual Wealth Management. As I said, 62 00:03:34,320 --> 00:03:37,560 Speaker 1: he's in Milwaukee City, running pretty hot with the bucks 63 00:03:37,600 --> 00:03:40,200 Speaker 1: these days. Uh don't don't add me if you're a 64 00:03:40,200 --> 00:03:43,600 Speaker 1: Brooklyn Nets fan, but but they're looking pretty good anyway. 65 00:03:43,640 --> 00:03:47,000 Speaker 1: His name is Brent. Shoot you, Brent, Welcome to the show. Well, 66 00:03:47,040 --> 00:03:49,480 Speaker 1: thanks for having me. Yeah, Brent. I wanted to get 67 00:03:49,520 --> 00:03:52,040 Speaker 1: into it a little bit at first with this FED 68 00:03:52,120 --> 00:03:57,920 Speaker 1: meeting that we saw on Wednesday. UM, and I reflecting 69 00:03:58,000 --> 00:04:00,160 Speaker 1: back to a note you guys had out I think 70 00:04:00,200 --> 00:04:02,080 Speaker 1: it was a month or two ago that sort of 71 00:04:02,120 --> 00:04:06,200 Speaker 1: details your your asset allocations, some some changes you made. Um. 72 00:04:06,280 --> 00:04:09,160 Speaker 1: Still bullish on equities, but a little bit less bullish 73 00:04:09,200 --> 00:04:11,880 Speaker 1: than than say the double fisted buying. Uh, you might 74 00:04:11,920 --> 00:04:14,480 Speaker 1: have recommended that at this time last year. But I 75 00:04:14,520 --> 00:04:16,440 Speaker 1: want to read just one quote from this because I 76 00:04:16,480 --> 00:04:19,200 Speaker 1: think it's it's pretty pertinent this week. Uh, you're in 77 00:04:19,240 --> 00:04:22,839 Speaker 1: your colleagues wrote, you know, while we believe there's ample 78 00:04:22,880 --> 00:04:25,839 Speaker 1: time left in the economic cycle, we must also be 79 00:04:25,880 --> 00:04:29,120 Speaker 1: aware that we are progressing at a quick pace, especially 80 00:04:29,160 --> 00:04:31,719 Speaker 1: in the US. And here's the important part. While the 81 00:04:31,720 --> 00:04:35,159 Speaker 1: Federal Reserve will have a high tolerance for rising inflation. 82 00:04:35,680 --> 00:04:38,480 Speaker 1: Their comfort could wear thin. And boy, I can't help 83 00:04:38,520 --> 00:04:40,960 Speaker 1: but look at the dot plot this week and see 84 00:04:41,000 --> 00:04:45,360 Speaker 1: now the medium projection for two rate increases in three 85 00:04:45,839 --> 00:04:50,039 Speaker 1: and UH greater likelihood not yet the median projection, but 86 00:04:50,240 --> 00:04:53,800 Speaker 1: a higher likelihood of perhaps a rate increase UH next 87 00:04:53,880 --> 00:04:58,040 Speaker 1: year in twenty two. UM. But to me, I think 88 00:04:58,160 --> 00:05:02,080 Speaker 1: what the dots really signify. UM, I'm not sure the 89 00:05:02,120 --> 00:05:05,560 Speaker 1: market is freaking out so much about two hikes in 90 00:05:06,320 --> 00:05:08,680 Speaker 1: three instead of one, but rather the idea that the 91 00:05:08,760 --> 00:05:12,479 Speaker 1: tapering UH might come a little bit sooner than what 92 00:05:13,040 --> 00:05:16,000 Speaker 1: people were expecting. That perhaps, you know, this Jackson Hole 93 00:05:16,080 --> 00:05:18,080 Speaker 1: meeting in August will be a sort of a live 94 00:05:18,080 --> 00:05:19,760 Speaker 1: event where we're gonna have to be on the lookout 95 00:05:19,800 --> 00:05:23,480 Speaker 1: for possible a a greater signal that tapering is coming. 96 00:05:23,520 --> 00:05:25,080 Speaker 1: I don't know by the end of the year. We're 97 00:05:25,120 --> 00:05:27,160 Speaker 1: the beginning of the year. But I'm curious what your 98 00:05:27,160 --> 00:05:31,720 Speaker 1: takeaway is from the statement and from Chairman Pal's press conference. 99 00:05:31,839 --> 00:05:35,160 Speaker 1: UM didn't move the needle at all for you as 100 00:05:35,200 --> 00:05:38,039 Speaker 1: far as what you're expected, and given what I read 101 00:05:38,279 --> 00:05:41,520 Speaker 1: from your your note, you kind of were expecting a 102 00:05:41,600 --> 00:05:44,039 Speaker 1: little bit of sort of cold feet from the FED 103 00:05:44,160 --> 00:05:46,839 Speaker 1: at least some FED members as we watch these inflation 104 00:05:46,920 --> 00:05:51,360 Speaker 1: numbers go higher. Um, a little bit of uh, concerned 105 00:05:51,400 --> 00:05:54,640 Speaker 1: that maybe transitory isn't as transitory as we thought. We'll 106 00:05:54,680 --> 00:05:58,000 Speaker 1: walk us through your reaction to the FED this week. Yeah, So, 107 00:05:58,160 --> 00:06:00,240 Speaker 1: I mean, in many ways, UM, this was right along 108 00:06:00,600 --> 00:06:02,440 Speaker 1: why we've actually made the change that we made, because 109 00:06:02,440 --> 00:06:04,280 Speaker 1: we knew this was coming at some point. And no 110 00:06:04,320 --> 00:06:06,919 Speaker 1: matter how many times people tell you the market looks 111 00:06:06,960 --> 00:06:10,680 Speaker 1: forward and expects things, I think traders still react. Uh. 112 00:06:10,680 --> 00:06:14,360 Speaker 1: And so our base case is that this doesn't change anything. Um, 113 00:06:14,440 --> 00:06:16,799 Speaker 1: So I will say that the Federal Reserve, I believe 114 00:06:16,880 --> 00:06:18,920 Speaker 1: is still who I think they are. That famous quote 115 00:06:18,960 --> 00:06:21,520 Speaker 1: I think from Dennis Screen if I recall correctly, Um, 116 00:06:21,560 --> 00:06:24,240 Speaker 1: they are going to let the cycle run hot. But 117 00:06:24,440 --> 00:06:26,080 Speaker 1: people are going to worry more and more about the 118 00:06:26,080 --> 00:06:28,000 Speaker 1: comment that you made that the cycle is going to 119 00:06:28,200 --> 00:06:30,880 Speaker 1: end prematurely. And I still believe it won't. But that 120 00:06:30,920 --> 00:06:32,760 Speaker 1: doesn't mean that it won't have an impact on markets. 121 00:06:32,760 --> 00:06:34,480 Speaker 1: And certainly the other reason we took down the equity 122 00:06:34,560 --> 00:06:37,560 Speaker 1: ratio is because we actually had some pretty explosive returns 123 00:06:38,080 --> 00:06:40,120 Speaker 1: and just going forward to expect those to moderate quite 124 00:06:40,120 --> 00:06:42,640 Speaker 1: a bit more. The Federal deserved it something Wednesday, which 125 00:06:42,640 --> 00:06:44,400 Speaker 1: I'm not for sure they planned to, but it looks 126 00:06:44,400 --> 00:06:47,039 Speaker 1: pretty brilliant. And so what they did is they really 127 00:06:47,240 --> 00:06:50,760 Speaker 1: didn't change anything with taper expectations. They bought themselves time 128 00:06:50,800 --> 00:06:53,560 Speaker 1: and flexibility actually to keep the pedal to the metal, 129 00:06:53,600 --> 00:06:57,160 Speaker 1: so to speak. But they tamp down inflation expectations, which 130 00:06:57,160 --> 00:07:00,719 Speaker 1: are a big determinant of intermediate to long term inflation. 131 00:07:01,360 --> 00:07:03,960 Speaker 1: So think about it this way. They're gonna keep a 132 00:07:04,160 --> 00:07:09,160 Speaker 1: policy accommodative. They bought themselves flexibility to stay accommodative even 133 00:07:09,240 --> 00:07:12,400 Speaker 1: as inflation rises in the near term because guess what 134 00:07:12,680 --> 00:07:14,960 Speaker 1: the market believes now that they're still worried about longer 135 00:07:15,080 --> 00:07:17,840 Speaker 1: term inflation. And so that actually tamped those down. You saw, 136 00:07:17,960 --> 00:07:21,160 Speaker 1: you've seen the break even curve come down. But they 137 00:07:21,240 --> 00:07:24,920 Speaker 1: didn't say anything with regards to tapering, so to speak. Droom, 138 00:07:25,120 --> 00:07:28,360 Speaker 1: Jerome pal actually said that there's still a long way 139 00:07:28,440 --> 00:07:33,160 Speaker 1: away from their labor market goals. And so you know, 140 00:07:33,240 --> 00:07:35,040 Speaker 1: I'm not for sure anything changes. And if you look 141 00:07:35,080 --> 00:07:37,520 Speaker 1: back at the dot plot um, when Jerome Palace says, 142 00:07:37,560 --> 00:07:39,160 Speaker 1: take it with a grain of salt. I encourage you 143 00:07:39,200 --> 00:07:41,360 Speaker 1: to look back on your Bloomberg terminal at the old 144 00:07:41,440 --> 00:07:43,920 Speaker 1: dot plots in two twelve and thirteen and see what 145 00:07:43,920 --> 00:07:46,200 Speaker 1: they thought rates would be by now, or see when 146 00:07:46,200 --> 00:07:48,440 Speaker 1: they thought with liftoff was going to be. They missed 147 00:07:48,600 --> 00:07:51,680 Speaker 1: the mark on more than one occasion. And I keep 148 00:07:51,720 --> 00:07:54,480 Speaker 1: coming back to the Fed is still outcome based, not 149 00:07:54,600 --> 00:07:57,840 Speaker 1: outlook based. And so take the dot plot with a 150 00:07:57,840 --> 00:08:01,360 Speaker 1: grain of salt um. And right now the taper is 151 00:08:01,400 --> 00:08:04,600 Speaker 1: not yet coming. And the FED bought themselves time to 152 00:08:04,680 --> 00:08:08,960 Speaker 1: not taper even if inflation rises, because the market actually 153 00:08:09,000 --> 00:08:14,760 Speaker 1: took down their inflation expectations. I mean, you mentioned that 154 00:08:14,800 --> 00:08:18,360 Speaker 1: they were able to actually tamp down inflation expectations, and 155 00:08:18,440 --> 00:08:21,320 Speaker 1: you did see a big move lower and break evens 156 00:08:21,400 --> 00:08:24,560 Speaker 1: on Thursday, And you also saw a huge flattening in 157 00:08:24,640 --> 00:08:28,360 Speaker 1: the yield curve, particularly the five dirties curve. I think 158 00:08:28,400 --> 00:08:31,360 Speaker 1: at one point, I mean, it's it's the biggest move 159 00:08:31,440 --> 00:08:36,640 Speaker 1: since late February. Could you walk me through that market reaction, 160 00:08:36,679 --> 00:08:39,000 Speaker 1: I mean, does that just go hand in hand with 161 00:08:39,000 --> 00:08:41,840 Speaker 1: what you're saying that you're seeing such a big rally 162 00:08:42,040 --> 00:08:45,160 Speaker 1: in the long end of the treasury curve just because 163 00:08:45,559 --> 00:08:48,320 Speaker 1: the FED was able to do some fantasy footwork and 164 00:08:48,360 --> 00:08:52,079 Speaker 1: managed to bring down those inflation expectations. Yeah. So, I 165 00:08:52,080 --> 00:08:53,480 Speaker 1: mean the crazy thing to me, and I know you're 166 00:08:53,480 --> 00:08:54,679 Speaker 1: gonna ask me that at the end of the show, 167 00:08:54,880 --> 00:08:56,600 Speaker 1: but the crazy thing to me is that traders are 168 00:08:56,600 --> 00:08:58,080 Speaker 1: trading as if this is the end of the cycle. 169 00:08:58,840 --> 00:09:01,200 Speaker 1: And we're talking about two thousand and twenty three for 170 00:09:01,200 --> 00:09:05,360 Speaker 1: the first rate hike. Consider that two years away. This 171 00:09:05,440 --> 00:09:07,880 Speaker 1: is much much different than the FED tightening the economic 172 00:09:08,320 --> 00:09:11,720 Speaker 1: environment into a recession. We're just talking about taper, talking 173 00:09:11,720 --> 00:09:14,560 Speaker 1: about talking about tapering, uh, and we're not talking about 174 00:09:14,600 --> 00:09:17,480 Speaker 1: the first rate hike to two three uh. And So 175 00:09:17,880 --> 00:09:21,200 Speaker 1: to me, um, you know, the Fed um got what 176 00:09:21,240 --> 00:09:23,560 Speaker 1: they wanted. They brought inflation expectations down, but they're able 177 00:09:23,600 --> 00:09:26,559 Speaker 1: to keep policy extremely accommodative. And the crazy thing is 178 00:09:26,559 --> 00:09:28,640 Speaker 1: that traders are trading it as if we are now 179 00:09:28,679 --> 00:09:30,240 Speaker 1: at the end of the cycle, which kind of back 180 00:09:30,280 --> 00:09:32,320 Speaker 1: to Mike's comments in the opening. I don't think we're 181 00:09:32,320 --> 00:09:34,880 Speaker 1: there yet, um, but the traders are reading the playbook, 182 00:09:34,920 --> 00:09:36,719 Speaker 1: and that says by long bonds, I think this will 183 00:09:36,760 --> 00:09:38,840 Speaker 1: be long forgotten in a couple of months. I do 184 00:09:38,920 --> 00:09:42,840 Speaker 1: think you'll see UH rates move higher. I do think 185 00:09:42,840 --> 00:09:45,360 Speaker 1: you will see cyclical stocks move higher. And I think 186 00:09:45,360 --> 00:09:47,960 Speaker 1: the defensive stocks that are rallying are that rallied in 187 00:09:47,960 --> 00:09:51,679 Speaker 1: the past week based upon the fed perceived U turn 188 00:09:52,520 --> 00:09:56,320 Speaker 1: will actually um uh not be the market leaders. Yeah, 189 00:09:56,320 --> 00:09:59,080 Speaker 1: it's interesting. I think the most traumatic reaction, at least 190 00:09:59,080 --> 00:10:01,000 Speaker 1: on Thursday, the day for the FED, was just this 191 00:10:01,080 --> 00:10:04,240 Speaker 1: massive flattening of the of the yield curve, which you know, 192 00:10:04,640 --> 00:10:07,080 Speaker 1: in theory should take some of the wind out of 193 00:10:07,120 --> 00:10:10,920 Speaker 1: the sales of the stars of the cyclical trade, the financials. 194 00:10:10,920 --> 00:10:12,959 Speaker 1: But it sounds to me like, do you think it 195 00:10:13,040 --> 00:10:17,320 Speaker 1: was just a sort of a positioning washout that we 196 00:10:17,360 --> 00:10:20,040 Speaker 1: saw this week and and we'll, like you said, we'll 197 00:10:20,080 --> 00:10:21,960 Speaker 1: forget about it in a few weeks. Or is it 198 00:10:22,360 --> 00:10:24,800 Speaker 1: an overreaction where how do you make sense of what 199 00:10:24,800 --> 00:10:27,760 Speaker 1: we've seen this week? Both of the above. I think 200 00:10:27,760 --> 00:10:30,600 Speaker 1: it's a positioning wash out as well as UH an overreaction. 201 00:10:31,640 --> 00:10:33,480 Speaker 1: I don't think much change with the FED. To me, 202 00:10:33,600 --> 00:10:36,360 Speaker 1: there's still outcome based, not outlook based. I think they 203 00:10:36,360 --> 00:10:39,240 Speaker 1: want to keep monetary policy as easy as possible UH 204 00:10:39,440 --> 00:10:41,640 Speaker 1: as long as they can. I think they bought themselves 205 00:10:41,679 --> 00:10:44,280 Speaker 1: some time with this in an ironic way. But to me, 206 00:10:44,320 --> 00:10:46,560 Speaker 1: the FED shifted last year. Um, the Fed that I 207 00:10:46,640 --> 00:10:49,480 Speaker 1: knew for the prior years of my career was lurching 208 00:10:49,480 --> 00:10:50,960 Speaker 1: in that way, and last year they put it more 209 00:10:50,960 --> 00:10:54,320 Speaker 1: in stone, um, where they're actually going to target inflation 210 00:10:54,360 --> 00:10:59,120 Speaker 1: above two pc. The mandate post was one mandate that 211 00:10:59,160 --> 00:11:04,520 Speaker 1: was inflation. Employment was secondary. Now we've swapped those. Employment 212 00:11:04,600 --> 00:11:07,599 Speaker 1: is first, inflation is secondary, and the Federal Reserve is 213 00:11:07,640 --> 00:11:10,079 Speaker 1: not going to stop until they get everything they possibly 214 00:11:10,120 --> 00:11:12,280 Speaker 1: can out of the labor market, even if that means 215 00:11:12,360 --> 00:11:15,280 Speaker 1: risking higher inflation. And so to me, the backdrop from 216 00:11:15,360 --> 00:11:18,679 Speaker 1: both monetary and fiscal policy is still highly accommodtive in 217 00:11:18,720 --> 00:11:21,320 Speaker 1: the future. Uh, And that meeting didn't shift that in 218 00:11:21,360 --> 00:11:31,840 Speaker 1: my belief that. So I want to dig in more 219 00:11:32,000 --> 00:11:35,520 Speaker 1: on um, what the read through for equities is. I mean, 220 00:11:35,559 --> 00:11:39,800 Speaker 1: you mentioned that you know, you're still optimistic on cyclical stocks. Uh. 221 00:11:39,880 --> 00:11:43,320 Speaker 1: You know this move into defensives that we're seeing maybe 222 00:11:43,440 --> 00:11:46,920 Speaker 1: is overblown. Where do tech stocks fit into all this? 223 00:11:47,080 --> 00:11:50,839 Speaker 1: And particularly the things I mean I read a lot 224 00:11:50,880 --> 00:11:55,160 Speaker 1: of commentary on Wednesday after the FED meeting that this 225 00:11:55,240 --> 00:11:58,480 Speaker 1: isn't good for you know, the speculative corners of tech. 226 00:11:59,400 --> 00:12:04,520 Speaker 1: But what about just those you know, cash cow companies Apple, Amazon, 227 00:12:04,600 --> 00:12:06,960 Speaker 1: What does it mean for those blue chip companies that 228 00:12:06,960 --> 00:12:10,440 Speaker 1: are probably going to make money in any environment. Yeah, 229 00:12:10,600 --> 00:12:13,000 Speaker 1: I think there's still opportunities there. I agree with you. 230 00:12:13,000 --> 00:12:15,080 Speaker 1: And one of the ironic things last week was that 231 00:12:15,200 --> 00:12:17,720 Speaker 1: those hope streams and themes tech stocks actually did rally 232 00:12:17,760 --> 00:12:20,440 Speaker 1: post the FED meeting based upon I guess the view 233 00:12:20,440 --> 00:12:21,880 Speaker 1: that lower rates are going to help them and that 234 00:12:22,080 --> 00:12:24,559 Speaker 1: that's where you have to go for potential or earnings growth, 235 00:12:24,840 --> 00:12:27,520 Speaker 1: which I still think the cyclicals if you believe my 236 00:12:27,559 --> 00:12:30,000 Speaker 1: story that we're still in a cyclical upswing, that the 237 00:12:30,040 --> 00:12:34,240 Speaker 1: economy hasn't even peaked yet, um, and that it still 238 00:12:34,320 --> 00:12:36,160 Speaker 1: has time to run for some time. I still think 239 00:12:36,160 --> 00:12:38,840 Speaker 1: cyclicals have room to run. Now. The thang stocks, the 240 00:12:38,920 --> 00:12:41,760 Speaker 1: older technology stocks, um, you know, there's probably still some 241 00:12:41,840 --> 00:12:43,920 Speaker 1: value there, But I think, you know, from the standpoint 242 00:12:43,920 --> 00:12:46,680 Speaker 1: of where we're focused, it's more towards the value segments 243 00:12:46,679 --> 00:12:49,560 Speaker 1: of the market, the cyclical segments, and increasingly more so 244 00:12:49,880 --> 00:12:53,200 Speaker 1: places like the Eurozone, which benefit from a cyclical growth 245 00:12:53,520 --> 00:12:56,920 Speaker 1: upswing around the globe, which I think is occurring as 246 00:12:57,000 --> 00:13:01,560 Speaker 1: COVID restrictions come off in some of those economies. Also interesting, Brent, 247 00:13:01,720 --> 00:13:05,440 Speaker 1: you guys, you're only overweight in the US recommendation? Is 248 00:13:05,559 --> 00:13:07,840 Speaker 1: is US small caps? Which you know, I assume it's 249 00:13:07,840 --> 00:13:09,920 Speaker 1: it's part of the makeup of the indexes, A lot 250 00:13:10,000 --> 00:13:12,839 Speaker 1: of banks, a lot of uh, sort of more cyclical 251 00:13:13,240 --> 00:13:17,840 Speaker 1: UM type of companies less obviously no megacap tech, but 252 00:13:17,840 --> 00:13:21,440 Speaker 1: but even less you know, tech in general. You know, 253 00:13:21,679 --> 00:13:25,120 Speaker 1: is it all sort of the industry makeup? Or is 254 00:13:25,160 --> 00:13:28,560 Speaker 1: that the primary driver of where you're finding value around 255 00:13:28,559 --> 00:13:31,920 Speaker 1: the world? Um? But or is it for say, US 256 00:13:31,960 --> 00:13:34,600 Speaker 1: small caps? Is is there embedded in that sort of 257 00:13:34,600 --> 00:13:38,560 Speaker 1: a call on risk tolerance? Um? And with Europe too, 258 00:13:38,600 --> 00:13:43,920 Speaker 1: I mean obviously European banks, uh, you know, famously sort 259 00:13:43,960 --> 00:13:46,679 Speaker 1: of risky. Um. You know, is is it kind of 260 00:13:46,760 --> 00:13:50,440 Speaker 1: an animal spirits call as much as it is cyclical 261 00:13:50,679 --> 00:13:53,280 Speaker 1: and and sort of what is it makes up the 262 00:13:53,280 --> 00:13:56,040 Speaker 1: majority of the weights and these indexes, absolutely, I mean, 263 00:13:56,040 --> 00:13:58,240 Speaker 1: there is something about what makes up the what weight 264 00:13:58,360 --> 00:14:00,240 Speaker 1: makes up the weights in these indexes. But you know, 265 00:14:00,280 --> 00:14:02,719 Speaker 1: typically small caps do well in the beginning to mid 266 00:14:02,760 --> 00:14:04,760 Speaker 1: part of an economic cycle. And I think we're still 267 00:14:04,760 --> 00:14:06,920 Speaker 1: there even though, as you mentioned, the question that we 268 00:14:06,960 --> 00:14:09,360 Speaker 1: have is how quickly do we progress? Um. I still 269 00:14:09,400 --> 00:14:12,240 Speaker 1: think we have time. We're early on. Valuations are cheaper 270 00:14:12,280 --> 00:14:15,679 Speaker 1: relative to large cap from the standpoint of real interest rates. 271 00:14:16,240 --> 00:14:19,520 Speaker 1: Small cap stocks really like negative interest rates and I 272 00:14:19,560 --> 00:14:21,120 Speaker 1: think we're going to continue to have those for some 273 00:14:21,160 --> 00:14:25,000 Speaker 1: period of time. Uh. And uh, you know, I think 274 00:14:25,040 --> 00:14:27,440 Speaker 1: everybody wants to run back to the safety of large 275 00:14:27,480 --> 00:14:29,800 Speaker 1: cap growth, or the perceived safety of large cap growth, 276 00:14:30,000 --> 00:14:31,720 Speaker 1: because they did feel well for the past couple of 277 00:14:31,800 --> 00:14:34,440 Speaker 1: years and maybe even longer than that. But I just 278 00:14:34,440 --> 00:14:36,600 Speaker 1: think this economic cycle is gonna be different in the past, 279 00:14:36,880 --> 00:14:39,600 Speaker 1: and then this one you're gonna worry more about upside 280 00:14:39,680 --> 00:14:43,440 Speaker 1: risk to growth, upside risk to inflation, not downside. And 281 00:14:43,480 --> 00:14:46,160 Speaker 1: I think you have you know, go back to risk tolrens. Um, 282 00:14:46,240 --> 00:14:49,400 Speaker 1: you have a federal reserve that you know, I know 283 00:14:49,440 --> 00:14:52,080 Speaker 1: what happened the other day, But the stutter reserve needs 284 00:14:52,080 --> 00:14:54,360 Speaker 1: the market to move higher. The markets in the economy 285 00:14:54,360 --> 00:14:57,920 Speaker 1: are connected. They've done that by doing quee. Uh. And 286 00:14:57,960 --> 00:15:00,400 Speaker 1: I just think you have a risk backdrop that aporable 287 00:15:00,400 --> 00:15:02,800 Speaker 1: first small caps for some period of time. You know. 288 00:15:02,840 --> 00:15:05,920 Speaker 1: I think if you look back historically, Um, the explosive 289 00:15:05,960 --> 00:15:09,760 Speaker 1: move is probably over in small caps, cyclicals and value. UM. 290 00:15:09,800 --> 00:15:12,640 Speaker 1: But I think everyone gets it wrong about how long 291 00:15:12,680 --> 00:15:15,680 Speaker 1: this typically last. If I look historically, those types of 292 00:15:15,680 --> 00:15:20,240 Speaker 1: things continue to outperform until the FED starts aggressively raising 293 00:15:20,320 --> 00:15:24,280 Speaker 1: rates or the yield curb inverts. And I don't think 294 00:15:24,320 --> 00:15:27,000 Speaker 1: we're anywhere near that yet, and so I think you 295 00:15:27,040 --> 00:15:29,800 Speaker 1: still have time to run in that trade. Now. We 296 00:15:29,800 --> 00:15:31,400 Speaker 1: did take a bit of it off because I could 297 00:15:31,440 --> 00:15:33,480 Speaker 1: be wrong, and part of this job is realizing that 298 00:15:33,520 --> 00:15:35,320 Speaker 1: you have to have be humble and that you're playing 299 00:15:35,360 --> 00:15:38,040 Speaker 1: trade offs. UM. But UM, I still think it has 300 00:15:38,040 --> 00:15:39,280 Speaker 1: time to run. And I think if you look at 301 00:15:39,280 --> 00:15:42,200 Speaker 1: Europe and where Europe is, they're a bit behind the curve. 302 00:15:42,240 --> 00:15:45,440 Speaker 1: They had negative GDP in the first quarter, UM, and 303 00:15:45,480 --> 00:15:49,040 Speaker 1: they're just emerging from COVID lockdowns. And that back to 304 00:15:49,040 --> 00:15:52,720 Speaker 1: your index composition. Their indexes are really cyclical in nature, 305 00:15:53,000 --> 00:15:55,720 Speaker 1: and they really benefit when global growth ticks higher, which 306 00:15:55,760 --> 00:15:57,640 Speaker 1: I think we're moving from more of a US centric 307 00:15:57,840 --> 00:16:00,680 Speaker 1: to now the globe being much more in the growth 308 00:16:00,680 --> 00:16:03,040 Speaker 1: mode and that should favor international equities. And I think 309 00:16:03,040 --> 00:16:05,520 Speaker 1: the euro Zone is primed UH to be a part 310 00:16:05,520 --> 00:16:09,600 Speaker 1: of that. Right, you brought up index composition, and uh, 311 00:16:09,760 --> 00:16:12,160 Speaker 1: this is one of my favorite topics, and I have 312 00:16:12,320 --> 00:16:15,520 Speaker 1: to bring in the meme stocks at some point. And 313 00:16:15,560 --> 00:16:17,600 Speaker 1: when you look at the Russell two thousand, the small 314 00:16:17,640 --> 00:16:21,760 Speaker 1: cap index, it's biggest weights are a MC and game 315 00:16:21,840 --> 00:16:24,760 Speaker 1: stop right up there. And I mean, if you really 316 00:16:24,800 --> 00:16:28,040 Speaker 1: dissect a lot of the performance, I think both of 317 00:16:28,080 --> 00:16:33,520 Speaker 1: those stocks are still the biggest contributors to the indexes. Game. 318 00:16:34,080 --> 00:16:38,560 Speaker 1: I mean, as a manager, how do you invest around 319 00:16:38,640 --> 00:16:43,040 Speaker 1: that that you you do have these stocks totally disconnected 320 00:16:43,040 --> 00:16:47,280 Speaker 1: from fundamentals sort of just ballooning in these indexes. I mean, 321 00:16:47,320 --> 00:16:49,760 Speaker 1: do you just try to ignore it or how do 322 00:16:49,800 --> 00:16:52,320 Speaker 1: you factor that in? No, so I think you tear 323 00:16:52,320 --> 00:16:53,760 Speaker 1: apart the performance and you look and you see that 324 00:16:53,800 --> 00:16:55,440 Speaker 1: there's a lot of other things in the indexes. And 325 00:16:55,680 --> 00:16:57,880 Speaker 1: we use the SNP six so it's a bit different 326 00:16:57,880 --> 00:17:00,360 Speaker 1: of the composition than Russell two thousand. But look and 327 00:17:00,400 --> 00:17:03,120 Speaker 1: you realize that that is a decent sized part of it, 328 00:17:03,320 --> 00:17:05,560 Speaker 1: but there certainly are other parts to it. The other 329 00:17:05,600 --> 00:17:08,639 Speaker 1: thing that I'd say is that active management could have 330 00:17:08,800 --> 00:17:12,080 Speaker 1: the ability to add value above and beyond, just because 331 00:17:12,400 --> 00:17:15,919 Speaker 1: sometimes performance is created by avoiding certain things, not just 332 00:17:16,000 --> 00:17:18,560 Speaker 1: what you buy, um and so I think there's a 333 00:17:18,600 --> 00:17:21,440 Speaker 1: couple of messages there, and I've made reference this in 334 00:17:21,760 --> 00:17:24,520 Speaker 1: prior interviews that I do think this reminds me a 335 00:17:24,520 --> 00:17:27,080 Speaker 1: lot of late nine uh. And I should add that 336 00:17:27,119 --> 00:17:31,480 Speaker 1: postd uh that a lot of stocks that hadn't done 337 00:17:31,480 --> 00:17:34,080 Speaker 1: well or that weren't overbid actually did very well during 338 00:17:34,080 --> 00:17:37,600 Speaker 1: that supposed last decade. Uh. And active management also did 339 00:17:37,720 --> 00:17:40,560 Speaker 1: very well during that time period because the market broadened 340 00:17:40,600 --> 00:17:42,359 Speaker 1: out beyond just a few names moving each and every 341 00:17:42,359 --> 00:17:43,640 Speaker 1: one of the indussy is kind of what we've seen 342 00:17:43,640 --> 00:17:46,840 Speaker 1: over the past couple of years, you know, Brett, I'm curious, 343 00:17:46,880 --> 00:17:50,280 Speaker 1: just anecdotally, what it's like working for a firm like 344 00:17:50,440 --> 00:17:53,880 Speaker 1: yours in this era of the meme stock craziness. I mean, 345 00:17:54,040 --> 00:17:56,360 Speaker 1: you guys have a lot of advisors out there who were, 346 00:17:56,840 --> 00:18:01,000 Speaker 1: you know, in in contact with individual retail investors, you 347 00:18:01,000 --> 00:18:04,119 Speaker 1: know daily. You know, it's it's the phone ringing off 348 00:18:04,160 --> 00:18:06,920 Speaker 1: the hook with people asking about why can't I get 349 00:18:06,920 --> 00:18:09,439 Speaker 1: dose coin or should I but you know, should I 350 00:18:09,480 --> 00:18:12,720 Speaker 1: buy AMC calls? That does it change the mindset of 351 00:18:12,720 --> 00:18:15,280 Speaker 1: of your clients when all this stuff is going on? 352 00:18:16,600 --> 00:18:19,040 Speaker 1: You know, I certainly have heard a lot about cryptocurrency, 353 00:18:19,720 --> 00:18:24,239 Speaker 1: So that's been although a lot less lately. UM. Not surprisingly. UM. 354 00:18:24,280 --> 00:18:26,280 Speaker 1: The meat stocks I haven't heard too much about, although 355 00:18:26,280 --> 00:18:28,600 Speaker 1: I'm sure the advisors are answering questions. You know, I 356 00:18:28,880 --> 00:18:31,199 Speaker 1: think we're we're a firm that's focused much more on 357 00:18:31,440 --> 00:18:33,960 Speaker 1: blocking and tackling and overall asset allocation and the importance 358 00:18:34,000 --> 00:18:36,560 Speaker 1: of planning in that aspect rather than what's the hot 359 00:18:36,560 --> 00:18:38,760 Speaker 1: stock of the day. UM, and our advisors do a 360 00:18:38,760 --> 00:18:41,879 Speaker 1: great job of planning, combining insurance and investments. Uh. And 361 00:18:41,920 --> 00:18:45,000 Speaker 1: so I'm sure those conversations are happening, but they certainly 362 00:18:45,040 --> 00:18:48,479 Speaker 1: haven't filtered through too much to me, although you know, 363 00:18:49,040 --> 00:18:53,359 Speaker 1: I do. I suppose here a bit about cryptocurrencies, and 364 00:18:53,400 --> 00:18:57,240 Speaker 1: certainly we've heard a bit about AMC and and GameStop, 365 00:18:57,520 --> 00:19:01,240 Speaker 1: but more from the perplexing common terry not necessary, I 366 00:19:01,280 --> 00:19:04,119 Speaker 1: want to buy this. They're trying to make sense of it, 367 00:19:04,200 --> 00:19:06,200 Speaker 1: and and is this something they need to be doing? 368 00:19:06,280 --> 00:19:08,960 Speaker 1: And I think the answer has been for the most 369 00:19:08,960 --> 00:19:11,919 Speaker 1: part no, uh. And I think that's acceptable for our clients, 370 00:19:11,920 --> 00:19:13,840 Speaker 1: just because they're more ground in the fundamentals of how 371 00:19:13,880 --> 00:19:16,399 Speaker 1: you actually grow well, which is more along the blocking 372 00:19:16,400 --> 00:19:20,280 Speaker 1: and tackling of saving investing in a diverse, bied portfolio. Uh, 373 00:19:20,560 --> 00:19:23,440 Speaker 1: and protecting your assets. Um, you know from the bad 374 00:19:23,440 --> 00:19:25,960 Speaker 1: things that happen in life, you know, Brent. One thing 375 00:19:26,080 --> 00:19:30,159 Speaker 1: I found interesting in your allocation note, uh that was 376 00:19:30,200 --> 00:19:34,199 Speaker 1: out recently, Um is the discussion of emerging markets. Um. 377 00:19:34,280 --> 00:19:37,240 Speaker 1: Because at first, Blush, I think, well, if if you're 378 00:19:37,240 --> 00:19:41,520 Speaker 1: bullish on inflation, uh, if you're bullish on cyclical and 379 00:19:41,680 --> 00:19:44,879 Speaker 1: value stocks, that you'd probably be bullish on EM. I mean, 380 00:19:44,920 --> 00:19:47,280 Speaker 1: just looking at the the E M E T F 381 00:19:47,320 --> 00:19:49,960 Speaker 1: A is a proxy real heavy waiting to banks and 382 00:19:50,000 --> 00:19:55,000 Speaker 1: financial services, decent sides, waiting to energy commodities, that sort 383 00:19:55,000 --> 00:19:57,800 Speaker 1: of thing. And as far as tech, a big waiting 384 00:19:57,840 --> 00:20:01,080 Speaker 1: to two chip makers. UM. You know obviously Korean and 385 00:20:01,400 --> 00:20:04,639 Speaker 1: Shine and whatnot. Um. But you're you guys are a 386 00:20:04,680 --> 00:20:08,880 Speaker 1: bit more cautious about emerging markets, um. Uh in an 387 00:20:08,880 --> 00:20:12,760 Speaker 1: inflationary environment. So walk us through why that is why? Um, 388 00:20:12,880 --> 00:20:15,119 Speaker 1: is this not really the best place to be in 389 00:20:15,480 --> 00:20:19,680 Speaker 1: this type of cyclical possibly inflationary environment. Yeah, And that's 390 00:20:19,680 --> 00:20:21,840 Speaker 1: it's it's it's kind of a base case discussion versus 391 00:20:22,200 --> 00:20:25,760 Speaker 1: what I discussion. Uh. And so UM, if you think 392 00:20:25,800 --> 00:20:28,560 Speaker 1: about emerging markets of inflation were to be more persistent, 393 00:20:28,600 --> 00:20:32,440 Speaker 1: they would probably be hit hardest and first just because 394 00:20:32,440 --> 00:20:34,840 Speaker 1: a lot of those countries don't control their monetary policy 395 00:20:34,840 --> 00:20:37,440 Speaker 1: per se, and they often times have to raise rates 396 00:20:38,000 --> 00:20:41,040 Speaker 1: uh when inflation rises and money starts flowing out of 397 00:20:41,080 --> 00:20:43,480 Speaker 1: their economies, and that actually harms them. You can actually 398 00:20:43,480 --> 00:20:46,080 Speaker 1: have a currency crisis. And so you know, we still 399 00:20:46,119 --> 00:20:48,359 Speaker 1: do have a modest overweight, a very minor overweight t 400 00:20:48,440 --> 00:20:50,840 Speaker 1: e M. It's much less um So I guess that 401 00:20:50,960 --> 00:20:53,280 Speaker 1: that trade was two fold. We took midcaps down to 402 00:20:53,440 --> 00:20:55,800 Speaker 1: decrease or actor ratio, and then essentially we moved some 403 00:20:55,800 --> 00:20:58,520 Speaker 1: of our emerging market overweight into the Eurozone, thinking that 404 00:20:58,600 --> 00:21:01,119 Speaker 1: they had much more control of their monetary policy than 405 00:21:01,119 --> 00:21:04,080 Speaker 1: some of those emerging economies do. And so again I 406 00:21:04,160 --> 00:21:05,760 Speaker 1: bring it back, and I think people think this job 407 00:21:05,840 --> 00:21:08,200 Speaker 1: is all about trying to get everything right all at once. 408 00:21:09,520 --> 00:21:12,560 Speaker 1: It's kind of the opposite. In many cases, we're managing risk, uh. 409 00:21:12,600 --> 00:21:14,800 Speaker 1: And so while I may have some risk on one side, 410 00:21:15,040 --> 00:21:16,760 Speaker 1: I may want to actually take it off on the 411 00:21:16,840 --> 00:21:18,760 Speaker 1: other side or figure out where I can get the 412 00:21:18,800 --> 00:21:21,280 Speaker 1: same exposure with less risk. And so I think of 413 00:21:21,280 --> 00:21:23,399 Speaker 1: it that way. It's just more of the anoledg acknowledgement 414 00:21:23,480 --> 00:21:26,240 Speaker 1: that I do think this a bout of inflation that 415 00:21:26,240 --> 00:21:30,600 Speaker 1: we're having right now is more transitory, but I do 416 00:21:30,680 --> 00:21:33,199 Speaker 1: think it could become more permanent. Uh. And if that 417 00:21:33,240 --> 00:21:35,800 Speaker 1: were to be the case and it would run away, um, 418 00:21:35,840 --> 00:21:38,800 Speaker 1: I think emerging would be amongst the first, you know, 419 00:21:38,880 --> 00:21:40,919 Speaker 1: to be hit, and to be hit pretty hard. And 420 00:21:40,920 --> 00:21:42,399 Speaker 1: so we wanted to take some of those chips and 421 00:21:42,400 --> 00:21:45,240 Speaker 1: move them more towards developed international markets which have a 422 00:21:45,280 --> 00:21:47,480 Speaker 1: lot of the same characteristics and are tied to global growth. 423 00:21:48,400 --> 00:21:51,240 Speaker 1: But actually have you know, the European Central Bank who 424 00:21:51,240 --> 00:21:53,400 Speaker 1: can choose more so to do what they want rather 425 00:21:53,440 --> 00:21:56,760 Speaker 1: than be forced to tighten because the fet is tightening 426 00:21:56,800 --> 00:22:16,119 Speaker 1: or something of that nature. And Brent, I want to 427 00:22:16,240 --> 00:22:17,919 Speaker 1: shift gears a little bit and ask you about real 428 00:22:18,000 --> 00:22:20,840 Speaker 1: estate because it also caught my eye, uh, in your 429 00:22:20,920 --> 00:22:25,080 Speaker 1: investment allocation that you are unfavorable on real estate. And 430 00:22:25,119 --> 00:22:27,639 Speaker 1: this is a market I know very little about, just 431 00:22:27,720 --> 00:22:30,600 Speaker 1: to be completely honest, but I mean, it's been hard 432 00:22:30,680 --> 00:22:34,520 Speaker 1: to miss headlines about just how hot the housing market is. 433 00:22:34,640 --> 00:22:38,520 Speaker 1: You know, it feels like there's just zero housing supply 434 00:22:39,160 --> 00:22:42,679 Speaker 1: and everything it takes to build a house also costs 435 00:22:42,680 --> 00:22:45,800 Speaker 1: a lot. UM. So I mean, walk me through your 436 00:22:45,840 --> 00:22:48,160 Speaker 1: call there. I mean, is that market just too hot 437 00:22:48,240 --> 00:22:51,000 Speaker 1: to touch? Yeah, So real estate is much more than 438 00:22:51,040 --> 00:22:54,440 Speaker 1: the housing market is. Certainly office reads, storage reads, things 439 00:22:54,480 --> 00:22:56,199 Speaker 1: of that nature, and so there's a lot more to 440 00:22:56,240 --> 00:22:59,040 Speaker 1: it than the housing market. And certainly, you know, to me, um, 441 00:22:59,080 --> 00:23:00,920 Speaker 1: and I'm just back in office for the first week 442 00:23:00,960 --> 00:23:03,359 Speaker 1: this week, I mean, to me, real estate was the 443 00:23:03,359 --> 00:23:05,520 Speaker 1: asset class that had the most COVID tail to it. 444 00:23:06,040 --> 00:23:08,240 Speaker 1: And so how do companies react in the future. What 445 00:23:08,400 --> 00:23:11,119 Speaker 1: does the world look like? Do people go back into offices? 446 00:23:11,160 --> 00:23:13,159 Speaker 1: Do we need the same amount of office properties that 447 00:23:13,200 --> 00:23:17,080 Speaker 1: we had in the past? Um, rent abatements, what happens there? 448 00:23:17,760 --> 00:23:21,560 Speaker 1: And so we were actually max underweight read going into COVID. 449 00:23:21,680 --> 00:23:25,119 Speaker 1: That was lucky UM, and that was a different call UM. 450 00:23:25,200 --> 00:23:28,040 Speaker 1: And then we recently, so the acid allocation that you're 451 00:23:28,080 --> 00:23:30,120 Speaker 1: reading the one before that in January, we actually opt 452 00:23:30,119 --> 00:23:34,560 Speaker 1: our reats from max underweight to UM slightly underweight. UM. 453 00:23:34,600 --> 00:23:37,760 Speaker 1: But to me reads UM, you know, they certainly rallied recently. UM. 454 00:23:37,800 --> 00:23:39,119 Speaker 1: They are more of an income play and if you 455 00:23:39,119 --> 00:23:42,239 Speaker 1: look historically, they trade almost based like long bonds, at 456 00:23:42,280 --> 00:23:43,760 Speaker 1: least in the past four or five years when the 457 00:23:43,760 --> 00:23:48,000 Speaker 1: FED is really tied this to UH to the to 458 00:23:48,440 --> 00:23:50,879 Speaker 1: you know, keeping rates low. And this is where I 459 00:23:50,880 --> 00:23:53,240 Speaker 1: guess tourist investors who are looking for income went there 460 00:23:53,440 --> 00:23:56,240 Speaker 1: and whenever the yields would rise, they would bail. And 461 00:23:56,280 --> 00:23:58,800 Speaker 1: so you know, think of it this way. If you 462 00:23:58,800 --> 00:24:01,679 Speaker 1: look back you're worried about a taper tantrum, you want 463 00:24:01,720 --> 00:24:05,800 Speaker 1: to the asset classes sold up the most reads, They 464 00:24:05,840 --> 00:24:08,600 Speaker 1: felt a lot, and that's just because they trade as 465 00:24:08,600 --> 00:24:12,120 Speaker 1: if they're long bonds and they trade based upon yields. Um. 466 00:24:12,160 --> 00:24:14,640 Speaker 1: I could show you a chart that shows you the SMP, 467 00:24:14,760 --> 00:24:16,680 Speaker 1: for example, divided by reads, and you can overly attend 468 00:24:16,680 --> 00:24:19,159 Speaker 1: your treasury and they're almost moved exactly alike for the 469 00:24:19,160 --> 00:24:22,320 Speaker 1: prior three or four five years. And so um, you know, 470 00:24:22,359 --> 00:24:24,400 Speaker 1: we're we've warmed more to reads that we did buy 471 00:24:24,440 --> 00:24:27,320 Speaker 1: them back in January. The one area that I think, 472 00:24:28,480 --> 00:24:30,520 Speaker 1: and I think I've made mention that I think yields 473 00:24:30,520 --> 00:24:33,160 Speaker 1: could rise more. But one of the things that could 474 00:24:33,160 --> 00:24:35,440 Speaker 1: happen over the summer, I think think about the euro Zone, 475 00:24:35,440 --> 00:24:37,720 Speaker 1: think about government debt all around the globe, think about 476 00:24:37,720 --> 00:24:41,080 Speaker 1: negative yields in Germany, if the euro Zone starts recovering, 477 00:24:41,520 --> 00:24:44,919 Speaker 1: might those yields in Germany move higher, which would allow 478 00:24:45,359 --> 00:24:48,720 Speaker 1: UM some US yield movement higher. UM And our thinking 479 00:24:48,800 --> 00:24:50,679 Speaker 1: is if that were to occur, possibly that would be 480 00:24:51,040 --> 00:24:53,800 Speaker 1: an attractive point to re enter reads because they are 481 00:24:53,800 --> 00:24:55,600 Speaker 1: so incomsensive. I would imagine they would sell off on 482 00:24:55,640 --> 00:24:59,240 Speaker 1: that scenario. Well, uh, Brett, one thing we are very 483 00:24:59,320 --> 00:25:02,439 Speaker 1: much overw on in the show is the crazy things 484 00:25:03,080 --> 00:25:05,920 Speaker 1: that that we've all seen this week. So I hope 485 00:25:05,960 --> 00:25:08,919 Speaker 1: you can't prepared. I know they warned you about this. Uh. 486 00:25:09,080 --> 00:25:12,639 Speaker 1: Are crazy things segment stand clear of the craziest things 487 00:25:12,760 --> 00:25:16,000 Speaker 1: we saw in markets this week. But let's just get 488 00:25:16,040 --> 00:25:18,359 Speaker 1: started with Katie. Katie, I have high hopes for your 489 00:25:18,400 --> 00:25:20,440 Speaker 1: crazy thing. What's the craziest thing you saw this week? 490 00:25:20,920 --> 00:25:25,040 Speaker 1: All right? So this is crazy. I don't totally understand 491 00:25:25,040 --> 00:25:28,320 Speaker 1: it because it has to do with defy UM. But 492 00:25:28,680 --> 00:25:33,600 Speaker 1: this is a blog already, the centralized finance. It's like, 493 00:25:33,920 --> 00:25:35,879 Speaker 1: I've got so many people to explain it to me, 494 00:25:35,920 --> 00:25:39,080 Speaker 1: it still won't quite click in my brain. But um, 495 00:25:39,119 --> 00:25:44,560 Speaker 1: there's this token to defy titanium token. It was trading 496 00:25:44,760 --> 00:25:48,560 Speaker 1: around sixty dollars now at zero But the crazy thing 497 00:25:48,680 --> 00:25:51,639 Speaker 1: is that Mark Cuban had put out this blog post 498 00:25:52,040 --> 00:25:54,560 Speaker 1: about how excited he was about defy, how he was 499 00:25:54,840 --> 00:26:00,320 Speaker 1: providing liquidity to the Titan this token. Um so it 500 00:26:00,359 --> 00:26:04,160 Speaker 1: wasn't it wasn't that he necessarily held it. I hope 501 00:26:04,160 --> 00:26:07,600 Speaker 1: I'm understand this correctly. But he would could collect a 502 00:26:07,760 --> 00:26:11,679 Speaker 1: fee on the volume. But now it's a zero um 503 00:26:11,720 --> 00:26:13,919 Speaker 1: so that's pretty amazing. It's just I feel like this 504 00:26:14,080 --> 00:26:19,360 Speaker 1: perfect little illustration of how cookie the cryptospace can get. Yeah, yeah, 505 00:26:19,400 --> 00:26:22,760 Speaker 1: I read about that. Yeah, there's some arb between arbitrage 506 00:26:23,040 --> 00:26:26,840 Speaker 1: trade that's automated between that token and some other token. 507 00:26:26,880 --> 00:26:28,960 Speaker 1: I don't understand it either, and I think that the 508 00:26:29,040 --> 00:26:32,360 Speaker 1: real world the story is Mark Cuban didn't understand it clearly, 509 00:26:33,160 --> 00:26:35,280 Speaker 1: and so but when I saw it went to zero, 510 00:26:35,440 --> 00:26:37,320 Speaker 1: I was like, okay, I'm a buyer. I'll take all 511 00:26:37,320 --> 00:26:44,440 Speaker 1: of it. I'll take it all. But it must be 512 00:26:44,520 --> 00:26:47,080 Speaker 1: like not quite zero. It's got to be zero point 513 00:26:47,200 --> 00:26:50,000 Speaker 1: zero zero. There must be one in the decimal place, 514 00:26:50,080 --> 00:26:53,000 Speaker 1: something there that I would imagine, because who's sounded for zero? 515 00:26:53,040 --> 00:26:56,240 Speaker 1: I don't know. Amazingly, I can't get a price for 516 00:26:56,280 --> 00:26:59,159 Speaker 1: it on the Bloomberg terminal. They haven't put that in 517 00:26:59,200 --> 00:27:01,359 Speaker 1: there yet. I don't think we got I don't think 518 00:27:01,400 --> 00:27:05,199 Speaker 1: we have dogs either. Still, no, you don't, there's no 519 00:27:05,280 --> 00:27:09,400 Speaker 1: dog in there. I've looked forward a couple of times. Yes, Yeah, 520 00:27:09,440 --> 00:27:11,080 Speaker 1: I don't know if that's a good or bad idea 521 00:27:11,119 --> 00:27:13,920 Speaker 1: on our part. I've leaning towards a good idea, I guess, 522 00:27:13,920 --> 00:27:18,880 Speaker 1: but uh, Brent, I don't know. Katie came pretty big there. 523 00:27:18,920 --> 00:27:21,199 Speaker 1: That's a good one. You have something that's crazier than that. 524 00:27:21,240 --> 00:27:23,560 Speaker 1: I know, you tease something for us at the beginning. Yeah, 525 00:27:23,600 --> 00:27:25,440 Speaker 1: I know. I just think I mean, that's more tame 526 00:27:25,520 --> 00:27:27,240 Speaker 1: probably than I don't know if it's crazy, but I 527 00:27:27,280 --> 00:27:29,639 Speaker 1: think it's crazy. I mean it's crazy to me that, Um, 528 00:27:30,040 --> 00:27:31,760 Speaker 1: every meeting that we go into the FED, people say 529 00:27:31,760 --> 00:27:34,480 Speaker 1: it's the biggest FED meeting ever, and then people choose 530 00:27:34,520 --> 00:27:36,879 Speaker 1: to trade it. Uh, and then you know, a few 531 00:27:36,920 --> 00:27:38,640 Speaker 1: weeks later we'll forget about in the next meeting will 532 00:27:38,640 --> 00:27:40,679 Speaker 1: be the big one. Yeah. And I just think it's 533 00:27:40,680 --> 00:27:42,760 Speaker 1: crazy that people are trading the end of an economic cycle. 534 00:27:42,760 --> 00:27:44,840 Speaker 1: When you think about the dots being moved forward and there, 535 00:27:45,200 --> 00:27:48,879 Speaker 1: their record historically is not very good. Um. I just 536 00:27:48,920 --> 00:27:51,840 Speaker 1: think that's kind of crazy, I guess, Um. I certainly 537 00:27:51,840 --> 00:27:54,600 Speaker 1: think it's still crazy that one person UM can tweet 538 00:27:54,600 --> 00:27:57,560 Speaker 1: about a cryptocurrency and cause it to move as much 539 00:27:57,560 --> 00:28:00,239 Speaker 1: as that person does, And that probably shows Katie kind 540 00:28:00,240 --> 00:28:02,360 Speaker 1: of ties back into what you're just mentioned. I mean, 541 00:28:02,359 --> 00:28:05,800 Speaker 1: there's ten thousands of these cryptocurrencies, I believe, uh and 542 00:28:05,960 --> 00:28:08,600 Speaker 1: when one person can move, it kind of shows you 543 00:28:08,640 --> 00:28:13,000 Speaker 1: how immature the whatever this is asset class still is. UM. 544 00:28:13,000 --> 00:28:14,760 Speaker 1: But I thought i'd i'd maybe end with a comment 545 00:28:14,880 --> 00:28:17,280 Speaker 1: and a question that I get quite often uh more 546 00:28:17,400 --> 00:28:19,359 Speaker 1: this week, and I saw it actually maybe pop up 547 00:28:19,359 --> 00:28:23,760 Speaker 1: on one of your blogs potentially where someone asked, UM, 548 00:28:23,800 --> 00:28:26,359 Speaker 1: you know, with regards to inflation, the question that is 549 00:28:26,400 --> 00:28:28,280 Speaker 1: coming up quite often is well, do you think these 550 00:28:28,280 --> 00:28:31,800 Speaker 1: companies are just going to roll back their prices? I 551 00:28:31,840 --> 00:28:33,520 Speaker 1: want you to think what inflation is and how we 552 00:28:33,600 --> 00:28:36,919 Speaker 1: measure it. So inflation is a year over your measure. 553 00:28:37,640 --> 00:28:39,800 Speaker 1: If these companies don't roll back their prices next year 554 00:28:39,800 --> 00:28:42,840 Speaker 1: and they stay the same, inflation will be zero. So 555 00:28:43,640 --> 00:28:45,360 Speaker 1: I think people just need a little bit of a 556 00:28:45,360 --> 00:28:49,320 Speaker 1: math reminder, um that even if they don't roll back 557 00:28:49,360 --> 00:28:51,240 Speaker 1: their prices and they keep them at these elevated levels 558 00:28:51,400 --> 00:28:54,240 Speaker 1: and they're the same next year. That's not inflation. That's 559 00:28:54,240 --> 00:28:57,280 Speaker 1: actually zero inflation. So I don't know. I guess it's 560 00:28:57,280 --> 00:28:58,600 Speaker 1: more of a math thing and a question that I'm 561 00:28:58,600 --> 00:29:00,960 Speaker 1: getting quite often and if it's crazy or not, but 562 00:29:01,000 --> 00:29:03,800 Speaker 1: it's certainly struck me as a bit crazy. Well, I 563 00:29:04,120 --> 00:29:06,479 Speaker 1: I agree with you, and I keep thinking that we're 564 00:29:06,520 --> 00:29:11,280 Speaker 1: gonna be talking about transitory deflation, uh, you know, or 565 00:29:11,320 --> 00:29:14,000 Speaker 1: disinflation at least at some point next year when that 566 00:29:14,080 --> 00:29:17,520 Speaker 1: exact thing happens that you know, everyone plays catch up 567 00:29:17,520 --> 00:29:20,240 Speaker 1: and just leaves prices where they are. The commodities that 568 00:29:20,280 --> 00:29:22,080 Speaker 1: we're running hot go down a little bit, you know, 569 00:29:22,720 --> 00:29:24,760 Speaker 1: the base effects work the off site direction next year. Right, 570 00:29:24,840 --> 00:29:28,959 Speaker 1: this year you had higher inflation, last year had lower inflation. Yep, yep. Yeah, 571 00:29:29,000 --> 00:29:32,520 Speaker 1: that's pretty good. AT's your point about it being a 572 00:29:32,760 --> 00:29:36,200 Speaker 1: crypto being an immature asset class, which I agree with, 573 00:29:36,440 --> 00:29:40,479 Speaker 1: especially when one ah know named person can move it 574 00:29:40,560 --> 00:29:42,960 Speaker 1: with the market around as much as as they can. 575 00:29:44,000 --> 00:29:46,880 Speaker 1: What's it's mature? That was the amount of money involved 576 00:29:46,880 --> 00:29:48,840 Speaker 1: in the market caps of of some of these That's 577 00:29:48,840 --> 00:29:52,200 Speaker 1: what's fascinating to me. It is a very immature asset class. 578 00:29:52,240 --> 00:29:55,560 Speaker 1: But yet the assets are there. It's it's so it's 579 00:29:55,600 --> 00:29:58,880 Speaker 1: kind of a scary thing. Yeah, the stakes are much 580 00:29:59,000 --> 00:30:02,080 Speaker 1: higher than they we're in seventeen now that you have 581 00:30:02,600 --> 00:30:05,280 Speaker 1: you know, a lot of Wall Street actually getting involved 582 00:30:05,280 --> 00:30:08,160 Speaker 1: and putting real money into it. Yeah. Yeah, that's a 583 00:30:08,160 --> 00:30:10,840 Speaker 1: great way to put it. The snakes are higher. All right. Well, 584 00:30:10,880 --> 00:30:12,920 Speaker 1: I I'll give you my crazy thing, and it is 585 00:30:13,040 --> 00:30:17,080 Speaker 1: I'm delving back into the crypto space myself. Uh. You know, 586 00:30:17,160 --> 00:30:19,840 Speaker 1: the president of El Salvador obviously made a lot of 587 00:30:19,840 --> 00:30:25,560 Speaker 1: headlines by declaring bitcoin legal tender. This I think is 588 00:30:26,240 --> 00:30:28,760 Speaker 1: even crazier and more interesting. I'm not sure I would 589 00:30:28,760 --> 00:30:31,000 Speaker 1: even call it crazy. I think it might be crazy 590 00:30:31,080 --> 00:30:33,280 Speaker 1: like a fox might be a shrik of genius. He 591 00:30:33,440 --> 00:30:38,840 Speaker 1: is suggesting that they use El Salvador's volcanoes as a 592 00:30:38,880 --> 00:30:44,360 Speaker 1: source of power for bitcoin mining. Obviously, the energy intensive 593 00:30:44,480 --> 00:30:48,320 Speaker 1: use of these bitcoin miners is a hot topic these days, 594 00:30:48,960 --> 00:30:51,280 Speaker 1: causing Elon Musk to sort of take a step back 595 00:30:51,320 --> 00:30:55,040 Speaker 1: away from it. But El Salvador does have a pretty 596 00:30:55,560 --> 00:31:00,480 Speaker 1: what sounds like a robust geothermal energy and for structure 597 00:31:00,520 --> 00:31:04,320 Speaker 1: and some power plants that aren't running at capacity, why 598 00:31:04,360 --> 00:31:07,160 Speaker 1: not mine bitcoin off of the volcanoes of El Salvador. 599 00:31:07,240 --> 00:31:09,280 Speaker 1: I don't know, I've I've heard crazier things, I think, 600 00:31:09,280 --> 00:31:11,240 Speaker 1: but I like it. I like that outside of the 601 00:31:11,240 --> 00:31:13,680 Speaker 1: box thinking. But it makes you think, Katie, you know, 602 00:31:13,720 --> 00:31:16,080 Speaker 1: if if that's where the mining is going to go eventually, 603 00:31:16,160 --> 00:31:21,400 Speaker 1: is too countries that are able to produce the energy 604 00:31:21,680 --> 00:31:25,240 Speaker 1: in some less provocative way than say burning coal or royal. 605 00:31:26,320 --> 00:31:29,480 Speaker 1: I was gonna say, I guess, you know, volcano powered 606 00:31:29,880 --> 00:31:33,840 Speaker 1: bitcoin mining that counts as green. That's, you know, a 607 00:31:33,920 --> 00:31:37,080 Speaker 1: removable source of energy theoretically. I don't know. I hear 608 00:31:37,120 --> 00:31:42,320 Speaker 1: the phrase volcano powered bitcoin mining and like refuses to 609 00:31:42,360 --> 00:31:46,760 Speaker 1: process what could possibly go wrong. I just can't can't 610 00:31:46,800 --> 00:31:49,280 Speaker 1: wrap my mind around it. But that I mean, that's 611 00:31:49,480 --> 00:31:53,440 Speaker 1: I can't wait to watch how that evolves me too. 612 00:31:53,480 --> 00:31:55,760 Speaker 1: And that's that's sort of courtesy a coin desk. By 613 00:31:55,800 --> 00:31:59,000 Speaker 1: the way, I like to give credit where it's do um. 614 00:31:59,040 --> 00:32:02,880 Speaker 1: But with that said, Brent shoots Katie Greyfeld, thank you 615 00:32:02,960 --> 00:32:04,920 Speaker 1: so much to both of you for coming on the show. 616 00:32:04,960 --> 00:32:07,280 Speaker 1: Really enjoyed this conversation and hopefully we'll have you back 617 00:32:07,320 --> 00:32:18,640 Speaker 1: again soon. Thank you, thank you. What goes up, we'll 618 00:32:18,680 --> 00:32:20,880 Speaker 1: be back next week. Until then, you can find us 619 00:32:20,880 --> 00:32:23,800 Speaker 1: on the Bloomberg Terminal, website and app, or wherever you 620 00:32:23,840 --> 00:32:26,160 Speaker 1: get your podcasts. We'd love it if you took the 621 00:32:26,200 --> 00:32:28,680 Speaker 1: time to rate and review the show on Apple Podcasts 622 00:32:28,800 --> 00:32:31,360 Speaker 1: so more listeners can find us. And you can find 623 00:32:31,440 --> 00:32:35,320 Speaker 1: us on Twitter follow me at Reaganonymous. Katie Greifeld is 624 00:32:35,400 --> 00:32:39,160 Speaker 1: at k Greyfeld. You can also follow Bloomberg Podcasts at 625 00:32:39,240 --> 00:32:42,840 Speaker 1: at Podcasts at That Get to Charlie Pelletto, Bloomberg Radio, 626 00:32:42,880 --> 00:32:45,320 Speaker 1: and the voice of the New York City Subway System. 627 00:32:45,320 --> 00:32:47,920 Speaker 1: What Goes Up is produced by topor Foreheads had a 628 00:32:47,920 --> 00:32:51,760 Speaker 1: Bloomberg Podcasts is Francesco Levie. Thanks for listening, See you 629 00:32:51,800 --> 00:33:02,920 Speaker 1: next time. The Foo