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Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg Weekly

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Speaker 1: Markets podcast. I'm Sarah Pontzac, a reporter on the Cross

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Speaker 1: Asset team, and I'm Mike Reagan, a senior editor on

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Speaker 1: the Markets Team. This week on the show, recession fears

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Speaker 1: are back in vogue. The worst I s M manufacturing

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Speaker 1: reading in a decade was followed by a three year

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Speaker 1: low and services. Our guests will discuss the strength of

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Speaker 1: the economy and how worried markets should actually be. And

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Speaker 1: if you're wondering if we saw any crazy things in

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Speaker 1: markets this week, come on. Of course we did, so

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Speaker 1: we will close out the episode with the craziest things

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Speaker 1: we saw on markets this week. Sarah, I'm gonna give

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Speaker 1: you one hint for mine, all right, give us a hint.

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Speaker 1: The Hamptons. The Hampton's all right, you know where I'm

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Speaker 1: going with that. I don't. This is always how it goes.

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Speaker 1: You give us a hint. I have no idea where

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Speaker 1: you're going with it. And then we have to wait.

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Speaker 1: Now we have to wait. But remember we do have

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Speaker 1: our very own Bloomberg Podcast hotline. You have any questions

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Speaker 1: for us, you want to call in, tell us about

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Speaker 1: the crazy things that you guys have seen in markets.

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Speaker 1: Give us a call, leave us a voicemail. It's six

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Speaker 1: four six three two four three four nine zero and

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Speaker 1: we may even play it on the show. So, Sarah,

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Speaker 1: one of the things I do before every show is

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Speaker 1: I like to look up the biographies of our guests,

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Speaker 1: and I gotta say our first guest, I I haven't

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Speaker 1: seen anything quite like this. Um. I always I always

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Speaker 1: look for what letters they may have after their name

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Speaker 1: and sort of what degrees they have, and boy, I've

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Speaker 1: never seen anything like this. She is a CFP, which

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Speaker 1: we all know as a Certified Financial Planner. She's also

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Speaker 1: a Chartered Alternative Investment Analysts, a Certified Investment Management Analyst,

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Speaker 1: and a chartered Financial consultant. She has not one but

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Speaker 1: two master's degree and a law degree. Alien underachiever and

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Speaker 1: under achiever. I would love to know her budget on

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Speaker 1: textbooks on tuition, um, but we're It all leads up

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Speaker 1: to this final crowning achievement of her career is appearing

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Speaker 1: on the What Goes Up podcast and Christina Hooper, chief

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Speaker 1: Global market Strategist at Investco, welcome to the show. Thank

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Speaker 1: you for having me, and I assume your business card

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Speaker 1: is like you know, letters after name continued on the

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Speaker 1: back or something. Well, compliance really tries to limit you

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Speaker 1: to the number of letters you have. So luckily they've

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Speaker 1: they've they've urtailed any kind of interest in and expanding

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Speaker 1: on business cards. Then I looked up our our second

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Speaker 1: guests bio and I felt a little bit better. I mean,

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Speaker 1: he's he's got a good a good resume too, Cornel Guy, right,

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Speaker 1: Cordell Guy. And one of the things he's certified in

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Speaker 1: is standard first Aid from the American Red Cross, which

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Speaker 1: I did not know we could claim on our resume.

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Speaker 1: I got the same thing. I'm putting it on there.

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Speaker 1: I don't know if we get to put that was

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Speaker 1: that'll be a qualification for everyone who comes on the podcast. Christine,

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Speaker 1: I don't know if you're you've got your first age.

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Speaker 1: I was a lifeguard, but that lapsed many years ago,

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Speaker 1: and so I feel very very safe right now that

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Speaker 1: if I were to have any kind of issue, you

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Speaker 1: don't know where to do. But Christine, let's start with you.

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Speaker 1: You had a really interesting piece out on the Investo

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Speaker 1: blog headline News News versus Noise, assessing the market impact

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Speaker 1: of three major headlines. Really interesting take. I wanted to

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Speaker 1: go through a few of the things. One obviously is

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Speaker 1: the big story you cannot avoid in the news, uh,

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Speaker 1: the impeachment inquiry into President Donald Trump, And you put

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Speaker 1: that in sort of the noise category. It's not really

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Speaker 1: something that should necessarily affect the markets, but there's always

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Speaker 1: a butt and I think there's always a risk that

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Speaker 1: this could begin to affect markets, especially when you start

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Speaker 1: to think of, well, uh, does this damage Joe Biden,

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Speaker 1: doesn't make Elizabeth Warren more of the front runner? So

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Speaker 1: walk us through, you know, when could this story move

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Speaker 1: from that noise category into the news that really could

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Speaker 1: affect the markets. I think it's going to take a

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Speaker 1: long time for it to be eligible to move from

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Speaker 1: noise to something that really matters, because at this juncture,

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Speaker 1: what we're really doing is going through a fact finding

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Speaker 1: um investigation. And I think everyone, you know, almost everyone

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Speaker 1: assumes that even if the House were to impeach that

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Speaker 1: you wouldn't see a conviction in the Senate. So the

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Speaker 1: whole issue becomes mood. But you're right, there can be

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Speaker 1: some peripheral damage to other candidates in the process of

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Speaker 1: this fact finding investigation, and all the media attention that

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Speaker 1: it's getting. Um. The reality is, though, that we have

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Speaker 1: no idea who the nominee is going to be for

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Speaker 1: the Democratic Party and uh and so um. One can

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Speaker 1: assume that the most pro growth candidate on the Democratic

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Speaker 1: side is Joe Biden. But I would give a put

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Speaker 1: a big asterisk after that because we just haven't heard

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Speaker 1: enough from the candidates. The only candidate willing to really

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Speaker 1: get out there in terms of in depth policies on

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Speaker 1: so many different issues is Elizabeth Warren. So that's causing

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Speaker 1: a little concern on the part of of capitalists, members

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Speaker 1: of you know, on the part of Wall Street. Um,

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Speaker 1: but we haven't yet heard from other candidates, and perhaps

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Speaker 1: we could be surprised by some some pro growth policies. Certainly,

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Speaker 1: I think one positive for Joe Biden is it he

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Speaker 1: suggests that if he were to become president, he would

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Speaker 1: end the trade war and we would go back to

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Speaker 1: a pre trade war kind of relationship with China, which

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Speaker 1: I think would be viewed very positively. Nick Collis of

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Speaker 1: Data Track, who is a former podcast guest, sent out

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Speaker 1: an email this week pointing out the fact that at

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Speaker 1: this time in ahead of the presidential elections, Ben Carson

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Speaker 1: and Donald Trump, or even in the polls. I mean,

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Speaker 1: when you take that into account, how difficult is it

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Speaker 1: to actually even think about any election risks to markets

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Speaker 1: because so much could change from here on out. Well,

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Speaker 1: that's exactly right, and that's why even if we were

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Speaker 1: to see a different president, no matter what their policy

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Speaker 1: position is, that would not be that material without looking

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Speaker 1: at the composition of Congress. But it's very hard to

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Speaker 1: define what we would actually see come January two twenty one. Now,

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Speaker 1: the one headline that I think you agree is is

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Speaker 1: less noise, more actual news that we have to worry

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Speaker 1: about is obviously the trade tensions. In the back and forth. Um.

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Speaker 1: A lot of people I've heard have offered the theory

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Speaker 1: that while this impeachment risk sort of puts the pressure

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Speaker 1: on Donald Trump to agree to the water down deal

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Speaker 1: a little bit sooner than he may have otherwise. Um.

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Speaker 1: At the same time, he tweeted this week that, oh boy,

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Speaker 1: look at what this impeachment is doing to the stock market.

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Speaker 1: So he seems to be trying to to push the

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Speaker 1: narrative that it's the impeachment that's causing the volatility in

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Speaker 1: the markets. Are the two related? I mean, can Can

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Speaker 1: the impeachment threat actually get us to a trade deal sooner?

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Speaker 1: Do you think? Or is it? Is it just crazy

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Speaker 1: to even try to predict what is going to happen

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Speaker 1: in this situation. Well, I think what the impeachment threat

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Speaker 1: does is it creates fatter tails. UH. It increases the

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Speaker 1: likelihood of extreme outcomes, whether it is a greater likelihood

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Speaker 1: that the U S takes minor concessions from China and

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Speaker 1: calls it a deal or um, we could see something

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Speaker 1: moving in the opposite direction where the U S takes

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Speaker 1: a very extreme aggressive position with China, something along the

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Speaker 1: lines of the news report from Bloomberg last week on

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Speaker 1: capital controls and the US mulling that banning or restricting

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Speaker 1: of investments in China. So I think that that uh

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Speaker 1: impeachment does UM does matter in in that it could

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Speaker 1: cause an outsized reaction one way or the other in

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Speaker 1: terms of the U s is trade policy. Sorry if

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Speaker 1: you're wondering why I'm smiling, it's because I just had

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Speaker 1: the headline Donald Trump and fatter tails popping into my head.

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Speaker 1: I think we might have to go with that. I

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Speaker 1: think we're bringing you back how many years? Uh, Peter

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Speaker 1: let's let's bring you in here a little bit because

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Speaker 1: a lot of the economic data we've seen this week,

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Speaker 1: it kind of looks like the economy needs a little

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Speaker 1: first aid. You see what I did there? Yeah? Really

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Speaker 1: really making these jokes today, It was really clever. That

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Speaker 1: was good, right, thank you. But walk us through all

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Speaker 1: the releases we've seen this week. What is sort of

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Speaker 1: the bottom line takeaway, uh from the I s M

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Speaker 1: UH manufacturing services adp uh. You know, what's your sort

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Speaker 1: of end of the week assessment of what the economy

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Speaker 1: is doing? Well? Have the three numbers that got a

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Speaker 1: lot of attention. First was the S M manufacturing, which

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Speaker 1: came in at like a ten year low, and then

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Speaker 1: we had the I s M Services, which was three

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Speaker 1: year low, but that was still about fifty. So we

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Speaker 1: have manufact ccturing basically in a recession, services, which is bigger,

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Speaker 1: bigger and more important part of the economy, hanging in

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Speaker 1: above fifty. And the question really being which pulls which?

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Speaker 1: Right does does manufacturing pulls services down? Or is the

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Speaker 1: overall strength of the consumer has reflected in the services

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Speaker 1: I s M enough to kind of get businesses feeling

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Speaker 1: more optimistic. And I would say What will make the

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Speaker 1: difference between those two scenarios is probably politics. And if

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Speaker 1: you include trade and politics, which I do, I think

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Speaker 1: that what's we're having now with with the U. S.

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Speaker 1: China trade tensions are much more about the politics of

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Speaker 1: j Ping and Donald Trump than they are about any

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Speaker 1: underlying economic issues. So and that's far more unknowable than

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Speaker 1: you know, broad economic trends. So yeah, I'm just with Christina.

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Speaker 1: What happens with trade is going to be really really

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Speaker 1: important for the next few months. Christina. The big question

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Speaker 1: all along really has been is Peter mentioned, how long

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Speaker 1: can you have services and the consumer hanging there while

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Speaker 1: you do see the manufacturing sector languish a bit. This week,

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Speaker 1: I've heard many people bring up the word recession once again,

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Speaker 1: even after a month in which it really kind of

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Speaker 1: fell off the back and wasn't mentioned as much. Do

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Speaker 1: you think at this point it's still a bit dramatic

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Speaker 1: and it's more about slowing growth or do you think

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Speaker 1: recession fears are actually valid at this point in time.

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Speaker 1: I think it is a bit traumatic. It was just

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Speaker 1: a shocker. Um. You know, markets had gone on quite

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Speaker 1: merrily throughout um the end of August and through September. Uh,

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Speaker 1: not dissimilar to when I UM put on my first

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Speaker 1: pair of pants after the summer, after probably a little

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Speaker 1: going a little too easy on my diet and drinking

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Speaker 1: a little too much, and and it was this huge

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Speaker 1: shock and I, you know, I've got to get on

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Speaker 1: a workout program. And so very similarly, we had this

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Speaker 1: this I S M manufacturing print that reminded everyone that hey,

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Speaker 1: we're actually part of a trade war. And it's not

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Speaker 1: just the Eurozone and Japan and China that are being

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Speaker 1: hurt by this, but actually it is having an impact

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Speaker 1: on the U S. So um at this juncture, I

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Speaker 1: expect our base case is that we see a deceleration

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Speaker 1: in the U. S. Economy, but that we don't go

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Speaker 1: into recession in the next year. However, so much of

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Speaker 1: that is dictated by where the trade war goes from here.

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Speaker 1: If it accelerates, if it gets worse, we're likely to

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Speaker 1: see more damage to the U. S. Economy. Now, I've

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Speaker 1: seen analyzes that focus in on the actual impact of tariffs,

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Speaker 1: but it's not that. The big issue, of course, is

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Speaker 1: the psychological dimension. It's creating economic policy uncertainty, which discourages

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Speaker 1: business investment and we've seen companies, I mean really it's

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Speaker 1: been reporting the Federal Reserve bage book for over a

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Speaker 1: year that companies have pulled back on spending plants. Now

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Speaker 1: first to go, of course is capex. But then oftentimes,

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Speaker 1: if it lasts long enough, this state of economic policy

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Speaker 1: and certainty, we see it impact jobs. And that's where

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Speaker 1: it becomes an issue because then it filters over into

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Speaker 1: um the consumer side and impacts consumers ability to spend.

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Speaker 1: That's why it's so important for us to focus in

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Speaker 1: on consumer metrics right now. You know, another big story

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Speaker 1: this week was the U S one a bit of

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Speaker 1: a victory at the World Trade Organization which allowed them

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Speaker 1: to proceed with tariffs on some imports from from Europe.

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Speaker 1: The number I saw it was only seven and a

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Speaker 1: half billion, but it's headline catching items Scotch, Irish whiskey,

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Speaker 1: French wine. I mean, sort of hitting hitting you where

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Speaker 1: it counts. Um. You know, seven and a half billion,

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Speaker 1: it's kind of a drop in the bucket of the economy.

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Speaker 1: But is there a knock on effect here as far

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Speaker 1: as uh is? This a ratcheting up of tensions with

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Speaker 1: Europe and we have to worry about reaction from Europe.

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Speaker 1: I don't think so, just because this is actually sanctioned

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Speaker 1: UM tariffs. This is the way the US should be

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Speaker 1: pursuing its trade disagreements. It's trade grievances is through the

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Speaker 1: w t O, and so I look at this very

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Speaker 1: differently than the kind of tariffs that the US decided

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Speaker 1: unilaterally to levy against other countries. Put in a different bucket. Certainly,

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Speaker 1: it's going to give the Eurozone some pain, but keep

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Speaker 1: in mind that there are also gonna there's also going

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Speaker 1: to be a decision about Boeing subsidies. So it's not

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Speaker 1: a one sided um decision. We just haven't gotten the outcome,

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Speaker 1: the full outcome. Peter Christina mentioned that we have seen

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Speaker 1: trade way on business confidence. When it comes to those

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Speaker 1: consumer metrics, where do we actually stand right now? I

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Speaker 1: mean we keep hearing people say that the consumer is

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Speaker 1: carrying the economy on its back. What does the picture

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Speaker 1: actually look like. Let's start with the obvious, which is

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Speaker 1: we have three point seven percent unemployment. It's really historically low.

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Speaker 1: We've sort of gotten used to it because it's been

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Speaker 1: going on for a while, but this is really just

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Speaker 1: almost unheard of. And and the beauty is that it's

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Speaker 1: occurring without inflation. Um inflation is actually below the fed's target.

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Speaker 1: Usually if that the FED word would have expected by

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Speaker 1: now that if inflation, if an unemployment never got this low,

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Speaker 1: you would have had an outburst of inflation. So consumers

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Speaker 1: are in a great, great position here, and I think

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Speaker 1: what's important to keep that in mind is, well, we

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Speaker 1: tend to focus on the negative, but there's a huge

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Speaker 1: positive here and consumers again are the bulk of the economy. So, uh,

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Speaker 1: consumer sentiment is pretty decent. Stock market, you know, we

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Speaker 1: keep looking at the every time it comes down, but

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Speaker 1: we're not that far away from historic highs on the

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Speaker 1: major indusicries. So there's a lot to like. And I'll

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Speaker 1: just throw in a um. Bloomberg Economics came out with

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Speaker 1: the report today about the outlook for the US economy

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Speaker 1: the next twelve months. Only prediction of a risk of

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Speaker 1: recession in the next twelve months. That's based on a

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Speaker 1: survey on model. That's their model. Yeah, and a lot

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Speaker 1: of has to do with the confidence in the consumer

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Speaker 1: for a lot of these models. So that's still a

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Speaker 1: pretty high number, right, I mean the New York Fed model,

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Speaker 1: I mean it's only it only looks one yield curve,

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Speaker 1: but it's I don't think it's ever gotten above like

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Speaker 1: thirty something without a recession following. I mean, by the

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Speaker 1: time it hits a really alarming then you're in trouble.

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Speaker 1: I agree. Another widely watched indicator, of course, is the

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Speaker 1: yield curve. And when the yield curve between the twos

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Speaker 1: and the tents went inverted, everybody panicked, Well, it's not

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Speaker 1: inverted anymore. It's actually in positive territory, So you know,

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Speaker 1: I I. You can easily write a story, tell a

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Speaker 1: story of pending recession, but you can also tell a

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Speaker 1: story that maybe things be okay. It depends why your

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Speaker 1: editor asked for again, seeing such a divergence into scenarios

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Speaker 1: that you could potentially see playing out. What do you

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Speaker 1: actually advise clients to do at this point in time,

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Speaker 1: especially when so much of it seems to hang on

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Speaker 1: the back of what happens with trade, which is so

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Speaker 1: so difficult to predict. Well, we need to encourage investors

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Speaker 1: to take a long look at their portfolios have a

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Speaker 1: long time horizon. So for those that can do that,

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Speaker 1: that enables them that perspective to really put on blinders,

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Speaker 1: not listen to the noise, because we know that over

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Speaker 1: time usually equities turn in a strong performance with more volatility,

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Speaker 1: but they turn in a strong So if you can

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Speaker 1: wait a long time UM, usually you're rewarded by being

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Speaker 1: by having exposure to risk assets. That's particularly so in

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Speaker 1: an environment where the feed is accommodative. UM. We are

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Speaker 1: late cycle, but it is an abnormal late cycle because

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Speaker 1: usually late cycles are characterized by central bank tightening, and

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Speaker 1: that is not the case. The central bank is actually

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Speaker 1: getting more accommodative UM. Just this week we saw you know,

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Speaker 1: expectations go up UM significantly and and I think that

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Speaker 1: UM that speaks to a very UM positive environment for

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Speaker 1: risk assets. So UM. So to put it simply, expect

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Speaker 1: more volatility, be very well diversified UM, and that includes

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Speaker 1: not just equities and fixed income but alternatives. And be

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Speaker 1: well diversified within those three buckets UM, and and try

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Speaker 1: to drown out the noise. That is such creat advice.

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Speaker 1: You hear it so often. Uh, if you're a long

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Speaker 1: term investor, don't even look at your four O one K,

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Speaker 1: just ignore the the noise. The people really listen to

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Speaker 1: that though, or do you find clients just can't can't

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Speaker 1: help but peek at that those numbers. I think when

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Speaker 1: the headlines become alarming enough, clients can't help but worry.

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Speaker 1: And that is completely understandable. Look at two thousand eight,

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Speaker 1: two thousand nine, UM, there was just so much alarm,

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Speaker 1: and I think it took many by surprise that things

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Speaker 1: got so bad so quickly. So that creates a hyper

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Speaker 1: sensitivity to what's going on now. But the reality has

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Speaker 1: had someone UM put on you know, put on blinders

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Speaker 1: back then and ridden through it, they probably would not

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Speaker 1: have even realized how bad things got before they got better.

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Speaker 1: I do want to ask in the same post that

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Speaker 1: Mike mentioned at the beginning of the show, I saw

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Speaker 1: that you also wrote that investors should take advantage of

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Speaker 1: opportunities created by downward volatility in order to acquire oversold

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Speaker 1: assets such as Chinese stocks. Now, I feel like that's

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Speaker 1: kind of an interesting take Chinese stocks Why? And also

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Speaker 1: what other areas do you feel like at this point

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Speaker 1: are oversold but have enough positivity going forward that it's

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Speaker 1: worth it to hop in And if I can butt into,

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Speaker 1: how should a US investor approach the Chinese stock market?

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Speaker 1: I mean E. T F S or Ali baba, you know,

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Speaker 1: how would you go about it? Well, Uh, first, let

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Speaker 1: me say that Chinese stocks look attractive because they've been

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Speaker 1: beaten down for a while. Um, when the US China

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Speaker 1: trade war started, there was a conventional wisdom that suggested

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Speaker 1: that the U S would win and China would lose

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Speaker 1: a trade war, and that costs a real sell off

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Speaker 1: in Chinese stocks, and they've really been depressed for a while.

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Speaker 1: Now valuations are very attractive. I think there's a growing

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Speaker 1: recognition that there are no winners in a trade war.

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Speaker 1: And then in fact, China maybe in a better position

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Speaker 1: given its ability to throw all kinds of stimulus at

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Speaker 1: its economy, whether it's fiscal or monetary versus what the

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Speaker 1: what the U S has its its disposal, which is

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Speaker 1: not as many tools to stimulate it economy. And so

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Speaker 1: that to me creates an environment where Chinese stocks um

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Speaker 1: our opportunities, especially if one has a long enough time horizon.

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Speaker 1: How do you access Chinese stocks? Well, it's very interesting,

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Speaker 1: but um, you know a shares could be one way

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Speaker 1: to do that in this environment and starting to look

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Speaker 1: more attractive beyond just Chinese stocks, I would focus in

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Speaker 1: on emerging markets equities in general as well as e

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Speaker 1: M debt just because of the yields. UM. We are

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Speaker 1: in a world of low yields and it doesn't look

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Speaker 1: like it's going to change anytime soon, or though it

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Speaker 1: might get lower, and so we're gonna have to sniff

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Speaker 1: out whatever opportunities we can in terms of yield. That's

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Speaker 1: going to take us to dividend paying stocks, but will

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Speaker 1: also take us to e M debt, which relative to

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Speaker 1: historical um uh, historical yield looks pretty good right now.

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Speaker 1: Any particular countries look at or sovereign corporates for you, well,

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Speaker 1: I think you can really run the run the gamut

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Speaker 1: and have exposure to both sovereigns and corporates UM. But

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Speaker 1: for sovereigns I would focus in on Asia. UM. I

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Speaker 1: have a question about that. This sounds a little bit

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Speaker 1: like reaching for yield, being dissatisfied with what conventional assets

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Speaker 1: give you, and saying, well, I'll go to some more

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Speaker 1: obscure corners of investing world, and of course that can

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Speaker 1: turn out really badly. What about the alternative of just saying, Okay,

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Speaker 1: I'm gonna have to live with the fact that yields

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Speaker 1: are kind of low and that will just dust us

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Speaker 1: my life. It doesn't sound like a very happy Well,

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Speaker 1: you haven't given a great set of options. But if

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Speaker 1: you want, if you're willing to take lower yields, then

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Speaker 1: you're going to have to save more. UM. Yeah, but

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Speaker 1: I would say that going out on the on the

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Speaker 1: risk curve, so to speak, UM, moving into higher yielding

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Speaker 1: asset classes as long as you're well diversified and UM

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Speaker 1: can make sense. Uh. If you if you're adding US municipals,

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Speaker 1: high yield municipals as well as he AM debt UM,

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Speaker 1: you're getting a well diversified array of yielding debt and

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Speaker 1: some correlations don't go to one as long as the

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Speaker 1: correlation of one. But I will tell you that one

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Speaker 1: big headwind has been removed from emerging market equities and

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Speaker 1: that is balance sheet normalization that was creating a huge

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Speaker 1: liquidity stuck and that is going away. I'm going all

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Speaker 1: hundred year Argentina bonds entire PORF sounds very safe and

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Speaker 1: I will tell you that it's not advocated. That was

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Speaker 1: just a joke for anyone else, a joke where it

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Speaker 1: was completely serious for our listeners in Argentine. Do we

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Speaker 1: have some sort of a footnote weekend read right now

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Speaker 1: compliance footnote on yeah, right right, read all the footnotes.

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Speaker 1: Do not listen to Mike reading, I think is the

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Speaker 1: main foot as Peter real quickly, before we get to

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Speaker 1: the crazy things, I have to ask you about this

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Speaker 1: piece you have in a business week. Everyone has a

397
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Speaker 1: wealth number, what's yours? And the lead is really funny.

398
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Speaker 1: You say the world needs a more precise way to

399
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Speaker 1: describe wealth. Millionaires too broad, covering everyone from random pikers

400
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Speaker 1: with a scant one million in net worth all the

401
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Speaker 1: way up to people just shout of billionaires. Billionaire has

402
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Speaker 1: the same problem and being you know, what's the meaning

403
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Speaker 1: to be a millionaire? Billionaire? So so tell us real

404
00:23:26,800 --> 00:23:29,399
Speaker 1: quickly what you did with this. You basically created a

405
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Speaker 1: scale scale, a scale which is based on logarithms, and said, okay, look, uh,

406
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Speaker 1: if you're a million, one million dollars is ten to

407
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Speaker 1: the six power dollars, so you're a six, right, A

408
00:23:42,119 --> 00:23:44,320
Speaker 1: thousand dollars is tend to the third, so you're three

409
00:23:44,440 --> 00:23:47,280
Speaker 1: until your net worth it can be boiled onto a

410
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Speaker 1: single number. Um, if you're worth one penny, that's tend

411
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Speaker 1: to the negative seconds, so you're a minus two. That's

412
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Speaker 1: kind of low and then the richest people in the world,

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Speaker 1: and they're really only two of them in this category,

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Speaker 1: Bill Gates and Jeffrey Bays. Those are elevens. They have

415
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Speaker 1: more than a hundred billion dollars in net worth. So

416
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Speaker 1: that's the fun of it, is like, well, everybody is

417
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Speaker 1: somewhere in that scale, even if you're have liabilities exceeding

418
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Speaker 1: your assets, so the logarithm is undefined. I just arbitrually

419
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Speaker 1: stuck them into the minus two categories. That's really interesting,

420
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Speaker 1: especially that catches on. It is catching on. It's like

421
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Speaker 1: amazing people should look at it on the internet, like

422
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Speaker 1: everybody is saying, oh, what's your one or what's your number?

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Speaker 1: Has been pretty fun. Yeah, alright, well we will not

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Speaker 1: disclose our numbers. No, no, no, Well, in this show,

425
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Speaker 1: we will disclose the craziest things we've seen this week?

426
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Speaker 1: Is it to the invest go is a eleven in

427
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Speaker 1: terms of the amount of an assets under manage nine

428
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Speaker 1: hundreds something billion. Actually we're at a close to one

429
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Speaker 1: point to trillion, so you're a twelve. Amazing bezos. Yeah,

430
00:24:55,920 --> 00:24:59,240
Speaker 1: wow about those crazy things, Sarah, I believe we got

431
00:24:59,240 --> 00:25:01,320
Speaker 1: a call in to the what goes up hotline. Is

432
00:25:01,320 --> 00:25:03,679
Speaker 1: that true? We did. It's from Morgan Hill. He's an

433
00:25:03,720 --> 00:25:08,040
Speaker 1: investment associate at Providence Wealth Advisors in Fort Lauderdale, Florida.

434
00:25:08,119 --> 00:25:13,119
Speaker 1: So let's take a listen. I've noticed on Tuesday that

435
00:25:13,320 --> 00:25:19,080
Speaker 1: Charles Schwab Interactive Brokers actually announced that they're issuing a

436
00:25:19,119 --> 00:25:25,879
Speaker 1: commission free trading platform for stocks, et s and options online.

437
00:25:26,280 --> 00:25:28,879
Speaker 1: And what was crazy about it that as soon as

438
00:25:28,960 --> 00:25:32,959
Speaker 1: that announcement came out, both of their UM kickers as

439
00:25:33,000 --> 00:25:37,159
Speaker 1: well as TDA Merrit Trade and other brokers dropped at

440
00:25:37,240 --> 00:25:40,000
Speaker 1: least nine percent. So the market interpret of that is

441
00:25:40,040 --> 00:25:44,359
Speaker 1: a negative, I guess, but I just thought it was crazy.

442
00:25:44,400 --> 00:25:47,000
Speaker 1: So it was. And then we saw TDA Merrit Trade follow,

443
00:25:47,080 --> 00:25:49,760
Speaker 1: we saw each trade follow, and that just really plays

444
00:25:49,800 --> 00:25:53,080
Speaker 1: into that whole narrative of what we've seen of these

445
00:25:53,080 --> 00:25:55,880
Speaker 1: different brokerages just in a race to the bottom. It's

446
00:25:55,920 --> 00:25:58,320
Speaker 1: pretty it was a pretty big story. And the question

447
00:25:58,400 --> 00:26:00,000
Speaker 1: people always ask me about that as well, how did

448
00:26:00,040 --> 00:26:02,680
Speaker 1: these guys make money? And you know the answers well,

449
00:26:02,800 --> 00:26:05,480
Speaker 1: net interest margin, like banks, you know, people have cash

450
00:26:05,560 --> 00:26:08,200
Speaker 1: sitting there and they make money off of those bounces.

451
00:26:08,280 --> 00:26:10,639
Speaker 1: But also what I think is really interesting is the

452
00:26:10,680 --> 00:26:13,520
Speaker 1: payment for order flow. You know, these firms basically sell

453
00:26:13,560 --> 00:26:17,960
Speaker 1: their order flow to electronic market makers a k. High

454
00:26:17,960 --> 00:26:21,680
Speaker 1: speed traders. So I'll be curious if that whole controversy

455
00:26:21,800 --> 00:26:25,399
Speaker 1: over h f T comes back. People always love talking

456
00:26:25,440 --> 00:26:28,160
Speaker 1: and ragging on h f T, so I wouldn't be surprised.

457
00:26:28,200 --> 00:26:30,359
Speaker 1: I think that's it's a day in the sun again.

458
00:26:30,640 --> 00:26:32,640
Speaker 1: Well thanks to the color. That's a That's a good one, Sarah.

459
00:26:32,680 --> 00:26:36,760
Speaker 1: Can you top the zero commission fees? I don't know

460
00:26:36,800 --> 00:26:39,399
Speaker 1: if I can, but I think this is a pretty

461
00:26:39,400 --> 00:26:40,919
Speaker 1: good one. I think we could say there's been some

462
00:26:40,960 --> 00:26:45,679
Speaker 1: craziness going on over at Credit Suites. There was this

463
00:26:45,760 --> 00:26:50,679
Speaker 1: investigation disclosed in which one of the former heads of

464
00:26:50,760 --> 00:26:54,080
Speaker 1: the wealth management unit left and the CEO had sent

465
00:26:54,119 --> 00:26:58,600
Speaker 1: a private investigator detective after him. Well, Bloomberg had a

466
00:26:58,680 --> 00:27:04,680
Speaker 1: great story out this week, and what they disclosed was

467
00:27:04,760 --> 00:27:08,880
Speaker 1: that there was one day um when the two parties

468
00:27:09,480 --> 00:27:13,080
Speaker 1: were at the same party together and they got in

469
00:27:13,200 --> 00:27:18,680
Speaker 1: a fight, supposedly over gardening, and they make it out

470
00:27:18,720 --> 00:27:21,120
Speaker 1: to seem as if ever since that moment, there's been

471
00:27:21,160 --> 00:27:23,600
Speaker 1: this back and forth between the two which because one

472
00:27:23,680 --> 00:27:28,240
Speaker 1: criticized the equality of the other's garden right, So it's

473
00:27:28,320 --> 00:27:31,120
Speaker 1: pretty pretty unbelievable. I guess you asked for gardening leave

474
00:27:31,200 --> 00:27:37,480
Speaker 1: after that. Yeah, man, the Crowns need a better studio

475
00:27:37,520 --> 00:27:42,760
Speaker 1: audience here, Peter, Can you top the Great Garden Words?

476
00:27:43,640 --> 00:27:46,000
Speaker 1: It's kind of a weird one. I went to a

477
00:27:46,000 --> 00:27:48,440
Speaker 1: book party for Stephen Schwartzman this week. He has a

478
00:27:48,480 --> 00:27:51,399
Speaker 1: new book coming out called What It Takes, and he

479
00:27:51,480 --> 00:27:53,600
Speaker 1: spoke with the New York Pollitic Library and the Schwartzman

480
00:27:53,640 --> 00:27:57,040
Speaker 1: Building as it happens. Um, what a coincidence. And at

481
00:27:57,040 --> 00:28:00,399
Speaker 1: the end of it, he was asked about what Bernie

482
00:28:00,440 --> 00:28:03,880
Speaker 1: Sanders said, which is that I don't think billionaires should exist.

483
00:28:04,000 --> 00:28:07,399
Speaker 1: So uh, impromptu, he shot back, I don't think Bernie

484
00:28:07,480 --> 00:28:10,760
Speaker 1: Sanders should exist, so bold. I wrote a story about

485
00:28:10,800 --> 00:28:12,480
Speaker 1: this and it was getting a lot of traffic, and

486
00:28:12,480 --> 00:28:15,120
Speaker 1: then suddenly we had the terrible news about Bernie Sanders.

487
00:28:15,480 --> 00:28:18,879
Speaker 1: Extents put in um and I'm sure he's gonna be fine,

488
00:28:18,960 --> 00:28:21,440
Speaker 1: but it was a little scary, and so we kind

489
00:28:21,440 --> 00:28:26,919
Speaker 1: of submerged that story. Timing not the best timing, but

490
00:28:27,359 --> 00:28:29,800
Speaker 1: thankfully they have come out now and said Bernie Sanders

491
00:28:29,800 --> 00:28:33,240
Speaker 1: should be fine. I'll be at the next debate etcetera, etcetera. Yeah,

492
00:28:33,320 --> 00:28:34,960
Speaker 1: well you won't get a lecture for me. I've never

493
00:28:35,000 --> 00:28:38,440
Speaker 1: been famous for my good taste. What did Schwarzman's what

494
00:28:38,520 --> 00:28:40,480
Speaker 1: a seven or an eight on your scale? Yeah, he's

495
00:28:40,480 --> 00:28:43,440
Speaker 1: a ten. That's okay. Yeah he's up there, but he's

496
00:28:43,480 --> 00:28:47,280
Speaker 1: not as well. You know, Christina, did they inform you

497
00:28:47,400 --> 00:28:50,400
Speaker 1: of our our tradition here with the craziest thing? Yes,

498
00:28:50,520 --> 00:28:53,320
Speaker 1: but I'm not as interesting certainly as the stories you have,

499
00:28:53,440 --> 00:28:56,240
Speaker 1: so I have to apologize in advance. But it seems

500
00:28:56,280 --> 00:28:58,520
Speaker 1: this seemed pretty crazy to me, and it just has

501
00:28:58,560 --> 00:29:01,800
Speaker 1: to do with FED funds futures. If you look at

502
00:29:01,800 --> 00:29:05,680
Speaker 1: the CMEME FED Watch tool, in just a week, and

503
00:29:05,720 --> 00:29:07,920
Speaker 1: of course during the course of that week, we got

504
00:29:07,920 --> 00:29:10,800
Speaker 1: the I s M manufacturing number and we got the

505
00:29:10,840 --> 00:29:13,920
Speaker 1: I s M Services number. But the course of a week, um,

506
00:29:14,240 --> 00:29:18,080
Speaker 1: we went from less than fifty expecting a rate cut

507
00:29:18,080 --> 00:29:20,160
Speaker 1: at the end of the month to a full eighty

508
00:29:20,280 --> 00:29:23,000
Speaker 1: eight percent or so expecting a rake cut at the

509
00:29:23,080 --> 00:29:25,240
Speaker 1: end of the month. So talk about a story where

510
00:29:25,520 --> 00:29:29,040
Speaker 1: bad is good. Um. Markets always seem to find a

511
00:29:29,040 --> 00:29:31,800
Speaker 1: way to find a silver lining, and this seems to

512
00:29:31,800 --> 00:29:34,080
Speaker 1: be it, especially to move that close to the meeting.

513
00:29:34,120 --> 00:29:36,040
Speaker 1: I think is is pretty rare that to see those

514
00:29:36,200 --> 00:29:39,760
Speaker 1: those moves that close, especially given how much dissension we've

515
00:29:39,760 --> 00:29:43,000
Speaker 1: heard from the FED um. The reluctance with which some

516
00:29:43,120 --> 00:29:46,520
Speaker 1: members actually voted for a cut in September very interesting.

517
00:29:46,920 --> 00:29:50,040
Speaker 1: There's no doubt that the meeting this month will be

518
00:29:50,160 --> 00:29:53,760
Speaker 1: very very well watched, and hopefully they will only have

519
00:29:53,920 --> 00:29:57,040
Speaker 1: plastic utensils, because you know, we don't want to see

520
00:29:57,040 --> 00:29:59,440
Speaker 1: any kind of a violence breakout on the course of

521
00:29:59,480 --> 00:30:03,040
Speaker 1: a FED meet that could be very charged. Yes, yes, okay,

522
00:30:03,080 --> 00:30:05,880
Speaker 1: these are all good crazy things. I'm gonna go out

523
00:30:05,880 --> 00:30:11,160
Speaker 1: on a women say I think I consider you a

524
00:30:11,200 --> 00:30:13,880
Speaker 1: trendy New Yorker. That's that's safe to say. I think

525
00:30:13,960 --> 00:30:18,719
Speaker 1: you might be. You might be giving me something from

526
00:30:18,800 --> 00:30:21,720
Speaker 1: a bridge and tunnel guy like myself. You're you're a trendy.

527
00:30:21,760 --> 00:30:24,240
Speaker 1: So this is straight out of the headlines from the

528
00:30:24,280 --> 00:30:28,360
Speaker 1: New York Post. I'm not making this up. By the way,

529
00:30:28,720 --> 00:30:32,280
Speaker 1: the hottest new psychedelic drug trend among trendy New Yorkers

530
00:30:32,440 --> 00:30:36,560
Speaker 1: is illegal toad venom. But illegal toad venom, so apparently

531
00:30:36,560 --> 00:30:39,600
Speaker 1: you take a Colorado River toad and you have to

532
00:30:39,640 --> 00:30:41,960
Speaker 1: milk the venom out of it. Then you try. I

533
00:30:42,000 --> 00:30:45,960
Speaker 1: won't ask how I don't ask. It's like that, Robert,

534
00:30:48,200 --> 00:30:50,040
Speaker 1: I'm not sure you're calling me a trendy New Yorker.

535
00:30:50,160 --> 00:30:53,080
Speaker 1: Is really much of a compliment? Have you been spoken?

536
00:30:53,120 --> 00:30:56,120
Speaker 1: Absolutely not. So you drive into a paste and you

537
00:30:56,200 --> 00:30:58,640
Speaker 1: smoke it. And remember, Peter, when we were kids, people

538
00:30:58,720 --> 00:31:01,600
Speaker 1: used to joke about licking toads. I think it was

539
00:31:01,640 --> 00:31:03,560
Speaker 1: the same idea, but now they they've taken it. I'm

540
00:31:03,600 --> 00:31:08,200
Speaker 1: just surprised it's not vaping toads. But here's this one

541
00:31:08,200 --> 00:31:11,200
Speaker 1: guy sitting cross leg on a blanket in his Soho

542
00:31:11,280 --> 00:31:13,960
Speaker 1: apartment Parrot Paul and held toad venom smoked through a

543
00:31:14,000 --> 00:31:17,160
Speaker 1: glass stemp pipe. I saw my younger self with my

544
00:31:17,240 --> 00:31:20,640
Speaker 1: parents and next boyfriends and places I've been hurt. I

545
00:31:20,680 --> 00:31:23,360
Speaker 1: experienced forty five minutes of shooting through the universe and

546
00:31:23,440 --> 00:31:26,880
Speaker 1: being reborn. So this is the crazy story I've ever seen.

547
00:31:27,080 --> 00:31:29,760
Speaker 1: I've seen, and obviously it's very Of course, if you're

548
00:31:29,800 --> 00:31:31,800
Speaker 1: gonna have a psychedelic drug trend, it's going to be

549
00:31:31,800 --> 00:31:35,760
Speaker 1: popular in the Hampton's uh. Recently, the Post reports twenty

550
00:31:35,760 --> 00:31:38,040
Speaker 1: one people in white robes gathered at a mansion in

551
00:31:38,080 --> 00:31:40,840
Speaker 1: the Hamptons to smoke the substance with the same shaman

552
00:31:40,920 --> 00:31:44,120
Speaker 1: that Poul used. So you may ask, well, what does

553
00:31:44,160 --> 00:31:45,680
Speaker 1: this have to do with market, what does it want?

554
00:31:46,360 --> 00:31:50,120
Speaker 1: And the answer is not nothing. Really, it's such it's

555
00:31:50,120 --> 00:31:53,320
Speaker 1: a black market, right Mike. If I had known that

556
00:31:53,320 --> 00:32:00,080
Speaker 1: that there was such a liberal interpretation this week, I

557
00:32:00,080 --> 00:32:02,000
Speaker 1: would have told you the story about the squirrel that

558
00:32:02,080 --> 00:32:06,800
Speaker 1: actually asked a hiker for help um for its injured baby. Yes, absolutely,

559
00:32:06,960 --> 00:32:10,200
Speaker 1: this was in the news in the last week. UM

560
00:32:10,280 --> 00:32:14,080
Speaker 1: in Pulaski, Virginia. A hiker was walking on a trail.

561
00:32:14,360 --> 00:32:16,800
Speaker 1: A squirrel came out and wouldn't let it pass and

562
00:32:16,880 --> 00:32:19,600
Speaker 1: brought it to it, tugged on the hikers pants and

563
00:32:19,640 --> 00:32:23,400
Speaker 1: brought it to its injured um, small baby squirrel um,

564
00:32:23,440 --> 00:32:25,920
Speaker 1: which was being managed by a cat. This is beautiful,

565
00:32:26,120 --> 00:32:27,880
Speaker 1: isn't this. I mean, this is one of those feel

566
00:32:27,960 --> 00:32:31,080
Speaker 1: good moments that's not just crazy, but it's heartwarming. All

567
00:32:31,120 --> 00:32:33,160
Speaker 1: is good in the world now. But they didn't really

568
00:32:33,200 --> 00:32:35,400
Speaker 1: ask for help. I was assuming the hiker was smoking

569
00:32:35,440 --> 00:32:38,840
Speaker 1: some toad venoms. That could have been the case. All right,

570
00:32:38,880 --> 00:32:40,840
Speaker 1: that's a good one too, But this is a black market,

571
00:32:40,880 --> 00:32:43,840
Speaker 1: so it is okay. I give you that a stretch.

572
00:32:43,880 --> 00:32:46,600
Speaker 1: It's a stratech, but it was crazy, so i'll give

573
00:32:46,600 --> 00:32:52,880
Speaker 1: you that, and the squirrel relates to first date. All

574
00:32:52,920 --> 00:32:56,680
Speaker 1: coming together with that said, though, Christina Hooper Peter Coy

575
00:32:56,960 --> 00:32:58,800
Speaker 1: was so great having you both on the show today.

576
00:32:58,800 --> 00:33:11,000
Speaker 1: Thank you, Thank you. What Goes Up. We'll be back

577
00:33:11,120 --> 00:33:13,320
Speaker 1: next week. Until then, you can find us on the

578
00:33:13,320 --> 00:33:17,240
Speaker 1: Bloomberg Terminal website and app, or wherever you get your podcasts.

579
00:33:17,600 --> 00:33:19,320
Speaker 1: We'd love it if you took the time to rate

580
00:33:19,400 --> 00:33:22,680
Speaker 1: interview the show on Apple Podcasts so more listeners can

581
00:33:22,720 --> 00:33:25,719
Speaker 1: find us. And you can find us on Twitter. Follow

582
00:33:25,760 --> 00:33:29,400
Speaker 1: me at at Sarah pont Seck, Mike is at Regnonymous.

583
00:33:29,720 --> 00:33:33,240
Speaker 1: Our guest Christina Hooper is at Christina Hooper, and Peter

584
00:33:33,360 --> 00:33:36,560
Speaker 1: Coy is at peter Ki. You can also follow Bloomberg

585
00:33:36,600 --> 00:33:41,000
Speaker 1: Podcasts at podcasts. What Goes Up is produced by Toper Foreheads.

586
00:33:41,040 --> 00:33:44,040
Speaker 1: The head of Bloomberg podcast is Francesco Levie. Thanks for

587
00:33:44,120 --> 00:33:45,400
Speaker 1: listening to you. Next time,