Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg Weekly
Speaker 1: Markets podcast. I'm Sarah Pontzac, a reporter on the Cross
Speaker 1: Asset team, and I'm Mike Reagan, a senior editor on
Speaker 1: the Markets Team. This week on the show, recession fears
Speaker 1: are back in vogue. The worst I s M manufacturing
Speaker 1: reading in a decade was followed by a three year
Speaker 1: low and services. Our guests will discuss the strength of
Speaker 1: the economy and how worried markets should actually be. And
Speaker 1: if you're wondering if we saw any crazy things in
Speaker 1: markets this week, come on. Of course we did, so
Speaker 1: we will close out the episode with the craziest things
Speaker 1: we saw on markets this week. Sarah, I'm gonna give
Speaker 1: you one hint for mine, all right, give us a hint.
Speaker 1: The Hamptons. The Hampton's all right, you know where I'm
Speaker 1: going with that. I don't. This is always how it goes.
Speaker 1: You give us a hint. I have no idea where
Speaker 1: you're going with it. And then we have to wait.
Speaker 1: Now we have to wait. But remember we do have
Speaker 1: our very own Bloomberg Podcast hotline. You have any questions
Speaker 1: for us, you want to call in, tell us about
Speaker 1: the crazy things that you guys have seen in markets.
Speaker 1: Give us a call, leave us a voicemail. It's six
Speaker 1: four six three two four three four nine zero and
Speaker 1: we may even play it on the show. So, Sarah,
Speaker 1: one of the things I do before every show is
Speaker 1: I like to look up the biographies of our guests,
Speaker 1: and I gotta say our first guest, I I haven't
Speaker 1: seen anything quite like this. Um. I always I always
Speaker 1: look for what letters they may have after their name
Speaker 1: and sort of what degrees they have, and boy, I've
Speaker 1: never seen anything like this. She is a CFP, which
Speaker 1: we all know as a Certified Financial Planner. She's also
Speaker 1: a Chartered Alternative Investment Analysts, a Certified Investment Management Analyst,
Speaker 1: and a chartered Financial consultant. She has not one but
Speaker 1: two master's degree and a law degree. Alien underachiever and
Speaker 1: under achiever. I would love to know her budget on
Speaker 1: textbooks on tuition, um, but we're It all leads up
Speaker 1: to this final crowning achievement of her career is appearing
Speaker 1: on the What Goes Up podcast and Christina Hooper, chief
Speaker 1: Global market Strategist at Investco, welcome to the show. Thank
Speaker 1: you for having me, and I assume your business card
Speaker 1: is like you know, letters after name continued on the
Speaker 1: back or something. Well, compliance really tries to limit you
Speaker 1: to the number of letters you have. So luckily they've
Speaker 1: they've they've urtailed any kind of interest in and expanding
Speaker 1: on business cards. Then I looked up our our second
Speaker 1: guests bio and I felt a little bit better. I mean,
Speaker 1: he's he's got a good a good resume too, Cornel Guy, right,
Speaker 1: Cordell Guy. And one of the things he's certified in
Speaker 1: is standard first Aid from the American Red Cross, which
Speaker 1: I did not know we could claim on our resume.
Speaker 1: I got the same thing. I'm putting it on there.
Speaker 1: I don't know if we get to put that was
Speaker 1: that'll be a qualification for everyone who comes on the podcast. Christine,
Speaker 1: I don't know if you're you've got your first age.
Speaker 1: I was a lifeguard, but that lapsed many years ago,
Speaker 1: and so I feel very very safe right now that
Speaker 1: if I were to have any kind of issue, you
Speaker 1: don't know where to do. But Christine, let's start with you.
Speaker 1: You had a really interesting piece out on the Investo
Speaker 1: blog headline News News versus Noise, assessing the market impact
Speaker 1: of three major headlines. Really interesting take. I wanted to
Speaker 1: go through a few of the things. One obviously is
Speaker 1: the big story you cannot avoid in the news, uh,
Speaker 1: the impeachment inquiry into President Donald Trump, And you put
Speaker 1: that in sort of the noise category. It's not really
Speaker 1: something that should necessarily affect the markets, but there's always
Speaker 1: a butt and I think there's always a risk that
Speaker 1: this could begin to affect markets, especially when you start
Speaker 1: to think of, well, uh, does this damage Joe Biden,
Speaker 1: doesn't make Elizabeth Warren more of the front runner? So
Speaker 1: walk us through, you know, when could this story move
Speaker 1: from that noise category into the news that really could
Speaker 1: affect the markets. I think it's going to take a
Speaker 1: long time for it to be eligible to move from
Speaker 1: noise to something that really matters, because at this juncture,
Speaker 1: what we're really doing is going through a fact finding
Speaker 1: um investigation. And I think everyone, you know, almost everyone
Speaker 1: assumes that even if the House were to impeach that
Speaker 1: you wouldn't see a conviction in the Senate. So the
Speaker 1: whole issue becomes mood. But you're right, there can be
Speaker 1: some peripheral damage to other candidates in the process of
Speaker 1: this fact finding investigation, and all the media attention that
Speaker 1: it's getting. Um. The reality is, though, that we have
Speaker 1: no idea who the nominee is going to be for
Speaker 1: the Democratic Party and uh and so um. One can
Speaker 1: assume that the most pro growth candidate on the Democratic
Speaker 1: side is Joe Biden. But I would give a put
Speaker 1: a big asterisk after that because we just haven't heard
Speaker 1: enough from the candidates. The only candidate willing to really
Speaker 1: get out there in terms of in depth policies on
Speaker 1: so many different issues is Elizabeth Warren. So that's causing
Speaker 1: a little concern on the part of of capitalists, members
Speaker 1: of you know, on the part of Wall Street. Um,
Speaker 1: but we haven't yet heard from other candidates, and perhaps
Speaker 1: we could be surprised by some some pro growth policies. Certainly,
Speaker 1: I think one positive for Joe Biden is it he
Speaker 1: suggests that if he were to become president, he would
Speaker 1: end the trade war and we would go back to
Speaker 1: a pre trade war kind of relationship with China, which
Speaker 1: I think would be viewed very positively. Nick Collis of
Speaker 1: Data Track, who is a former podcast guest, sent out
Speaker 1: an email this week pointing out the fact that at
Speaker 1: this time in ahead of the presidential elections, Ben Carson
Speaker 1: and Donald Trump, or even in the polls. I mean,
Speaker 1: when you take that into account, how difficult is it
Speaker 1: to actually even think about any election risks to markets
Speaker 1: because so much could change from here on out. Well,
Speaker 1: that's exactly right, and that's why even if we were
Speaker 1: to see a different president, no matter what their policy
Speaker 1: position is, that would not be that material without looking
Speaker 1: at the composition of Congress. But it's very hard to
Speaker 1: define what we would actually see come January two twenty one. Now,
Speaker 1: the one headline that I think you agree is is
Speaker 1: less noise, more actual news that we have to worry
Speaker 1: about is obviously the trade tensions. In the back and forth. Um.
Speaker 1: A lot of people I've heard have offered the theory
Speaker 1: that while this impeachment risk sort of puts the pressure
Speaker 1: on Donald Trump to agree to the water down deal
Speaker 1: a little bit sooner than he may have otherwise. Um.
Speaker 1: At the same time, he tweeted this week that, oh boy,
Speaker 1: look at what this impeachment is doing to the stock market.
Speaker 1: So he seems to be trying to to push the
Speaker 1: narrative that it's the impeachment that's causing the volatility in
Speaker 1: the markets. Are the two related? I mean, can Can
Speaker 1: the impeachment threat actually get us to a trade deal sooner?
Speaker 1: Do you think? Or is it? Is it just crazy
Speaker 1: to even try to predict what is going to happen
Speaker 1: in this situation. Well, I think what the impeachment threat
Speaker 1: does is it creates fatter tails. UH. It increases the
Speaker 1: likelihood of extreme outcomes, whether it is a greater likelihood
Speaker 1: that the U S takes minor concessions from China and
Speaker 1: calls it a deal or um, we could see something
Speaker 1: moving in the opposite direction where the U S takes
Speaker 1: a very extreme aggressive position with China, something along the
Speaker 1: lines of the news report from Bloomberg last week on
Speaker 1: capital controls and the US mulling that banning or restricting
Speaker 1: of investments in China. So I think that that uh
Speaker 1: impeachment does UM does matter in in that it could
Speaker 1: cause an outsized reaction one way or the other in
Speaker 1: terms of the U s is trade policy. Sorry if
Speaker 1: you're wondering why I'm smiling, it's because I just had
Speaker 1: the headline Donald Trump and fatter tails popping into my head.
Speaker 1: I think we might have to go with that. I
Speaker 1: think we're bringing you back how many years? Uh, Peter
Speaker 1: let's let's bring you in here a little bit because
Speaker 1: a lot of the economic data we've seen this week,
Speaker 1: it kind of looks like the economy needs a little
Speaker 1: first aid. You see what I did there? Yeah? Really
Speaker 1: really making these jokes today, It was really clever. That
Speaker 1: was good, right, thank you. But walk us through all
Speaker 1: the releases we've seen this week. What is sort of
Speaker 1: the bottom line takeaway, uh from the I s M
Speaker 1: UH manufacturing services adp uh. You know, what's your sort
Speaker 1: of end of the week assessment of what the economy
Speaker 1: is doing? Well? Have the three numbers that got a
Speaker 1: lot of attention. First was the S M manufacturing, which
Speaker 1: came in at like a ten year low, and then
Speaker 1: we had the I s M Services, which was three
Speaker 1: year low, but that was still about fifty. So we
Speaker 1: have manufact ccturing basically in a recession, services, which is bigger,
Speaker 1: bigger and more important part of the economy, hanging in
Speaker 1: above fifty. And the question really being which pulls which?
Speaker 1: Right does does manufacturing pulls services down? Or is the
Speaker 1: overall strength of the consumer has reflected in the services
Speaker 1: I s M enough to kind of get businesses feeling
Speaker 1: more optimistic. And I would say What will make the
Speaker 1: difference between those two scenarios is probably politics. And if
Speaker 1: you include trade and politics, which I do, I think
Speaker 1: that what's we're having now with with the U. S.
Speaker 1: China trade tensions are much more about the politics of
Speaker 1: j Ping and Donald Trump than they are about any
Speaker 1: underlying economic issues. So and that's far more unknowable than
Speaker 1: you know, broad economic trends. So yeah, I'm just with Christina.
Speaker 1: What happens with trade is going to be really really
Speaker 1: important for the next few months. Christina. The big question
Speaker 1: all along really has been is Peter mentioned, how long
Speaker 1: can you have services and the consumer hanging there while
Speaker 1: you do see the manufacturing sector languish a bit. This week,
Speaker 1: I've heard many people bring up the word recession once again,
Speaker 1: even after a month in which it really kind of
Speaker 1: fell off the back and wasn't mentioned as much. Do
Speaker 1: you think at this point it's still a bit dramatic
Speaker 1: and it's more about slowing growth or do you think
Speaker 1: recession fears are actually valid at this point in time.
Speaker 1: I think it is a bit traumatic. It was just
Speaker 1: a shocker. Um. You know, markets had gone on quite
Speaker 1: merrily throughout um the end of August and through September. Uh,
Speaker 1: not dissimilar to when I UM put on my first
Speaker 1: pair of pants after the summer, after probably a little
Speaker 1: going a little too easy on my diet and drinking
Speaker 1: a little too much, and and it was this huge
Speaker 1: shock and I, you know, I've got to get on
Speaker 1: a workout program. And so very similarly, we had this
Speaker 1: this I S M manufacturing print that reminded everyone that hey,
Speaker 1: we're actually part of a trade war. And it's not
Speaker 1: just the Eurozone and Japan and China that are being
Speaker 1: hurt by this, but actually it is having an impact
Speaker 1: on the U S. So um at this juncture, I
Speaker 1: expect our base case is that we see a deceleration
Speaker 1: in the U. S. Economy, but that we don't go
Speaker 1: into recession in the next year. However, so much of
Speaker 1: that is dictated by where the trade war goes from here.
Speaker 1: If it accelerates, if it gets worse, we're likely to
Speaker 1: see more damage to the U. S. Economy. Now, I've
Speaker 1: seen analyzes that focus in on the actual impact of tariffs,
Speaker 1: but it's not that. The big issue, of course, is
Speaker 1: the psychological dimension. It's creating economic policy uncertainty, which discourages
Speaker 1: business investment and we've seen companies, I mean really it's
Speaker 1: been reporting the Federal Reserve bage book for over a
Speaker 1: year that companies have pulled back on spending plants. Now
Speaker 1: first to go, of course is capex. But then oftentimes,
Speaker 1: if it lasts long enough, this state of economic policy
Speaker 1: and certainty, we see it impact jobs. And that's where
Speaker 1: it becomes an issue because then it filters over into
Speaker 1: um the consumer side and impacts consumers ability to spend.
Speaker 1: That's why it's so important for us to focus in
Speaker 1: on consumer metrics right now. You know, another big story
Speaker 1: this week was the U S one a bit of
Speaker 1: a victory at the World Trade Organization which allowed them
Speaker 1: to proceed with tariffs on some imports from from Europe.
Speaker 1: The number I saw it was only seven and a
Speaker 1: half billion, but it's headline catching items Scotch, Irish whiskey,
Speaker 1: French wine. I mean, sort of hitting hitting you where
Speaker 1: it counts. Um. You know, seven and a half billion,
Speaker 1: it's kind of a drop in the bucket of the economy.
Speaker 1: But is there a knock on effect here as far
Speaker 1: as uh is? This a ratcheting up of tensions with
Speaker 1: Europe and we have to worry about reaction from Europe.
Speaker 1: I don't think so, just because this is actually sanctioned
Speaker 1: UM tariffs. This is the way the US should be
Speaker 1: pursuing its trade disagreements. It's trade grievances is through the
Speaker 1: w t O, and so I look at this very
Speaker 1: differently than the kind of tariffs that the US decided
Speaker 1: unilaterally to levy against other countries. Put in a different bucket. Certainly,
Speaker 1: it's going to give the Eurozone some pain, but keep
Speaker 1: in mind that there are also gonna there's also going
Speaker 1: to be a decision about Boeing subsidies. So it's not
Speaker 1: a one sided um decision. We just haven't gotten the outcome,
Speaker 1: the full outcome. Peter Christina mentioned that we have seen
Speaker 1: trade way on business confidence. When it comes to those
Speaker 1: consumer metrics, where do we actually stand right now? I
Speaker 1: mean we keep hearing people say that the consumer is
Speaker 1: carrying the economy on its back. What does the picture
Speaker 1: actually look like. Let's start with the obvious, which is
Speaker 1: we have three point seven percent unemployment. It's really historically low.
Speaker 1: We've sort of gotten used to it because it's been
Speaker 1: going on for a while, but this is really just
Speaker 1: almost unheard of. And and the beauty is that it's
Speaker 1: occurring without inflation. Um inflation is actually below the fed's target.
Speaker 1: Usually if that the FED word would have expected by
Speaker 1: now that if inflation, if an unemployment never got this low,
Speaker 1: you would have had an outburst of inflation. So consumers
Speaker 1: are in a great, great position here, and I think
Speaker 1: what's important to keep that in mind is, well, we
Speaker 1: tend to focus on the negative, but there's a huge
Speaker 1: positive here and consumers again are the bulk of the economy. So, uh,
Speaker 1: consumer sentiment is pretty decent. Stock market, you know, we
Speaker 1: keep looking at the every time it comes down, but
Speaker 1: we're not that far away from historic highs on the
Speaker 1: major indusicries. So there's a lot to like. And I'll
Speaker 1: just throw in a um. Bloomberg Economics came out with
Speaker 1: the report today about the outlook for the US economy
Speaker 1: the next twelve months. Only prediction of a risk of
Speaker 1: recession in the next twelve months. That's based on a
Speaker 1: survey on model. That's their model. Yeah, and a lot
Speaker 1: of has to do with the confidence in the consumer
Speaker 1: for a lot of these models. So that's still a
Speaker 1: pretty high number, right, I mean the New York Fed model,
Speaker 1: I mean it's only it only looks one yield curve,
Speaker 1: but it's I don't think it's ever gotten above like
Speaker 1: thirty something without a recession following. I mean, by the
Speaker 1: time it hits a really alarming then you're in trouble.
Speaker 1: I agree. Another widely watched indicator, of course, is the
Speaker 1: yield curve. And when the yield curve between the twos
Speaker 1: and the tents went inverted, everybody panicked, Well, it's not
Speaker 1: inverted anymore. It's actually in positive territory, So you know,
Speaker 1: I I. You can easily write a story, tell a
Speaker 1: story of pending recession, but you can also tell a
Speaker 1: story that maybe things be okay. It depends why your
Speaker 1: editor asked for again, seeing such a divergence into scenarios
Speaker 1: that you could potentially see playing out. What do you
Speaker 1: actually advise clients to do at this point in time,
Speaker 1: especially when so much of it seems to hang on
Speaker 1: the back of what happens with trade, which is so
Speaker 1: so difficult to predict. Well, we need to encourage investors
Speaker 1: to take a long look at their portfolios have a
Speaker 1: long time horizon. So for those that can do that,
Speaker 1: that enables them that perspective to really put on blinders,
Speaker 1: not listen to the noise, because we know that over
Speaker 1: time usually equities turn in a strong performance with more volatility,
Speaker 1: but they turn in a strong So if you can
Speaker 1: wait a long time UM, usually you're rewarded by being
Speaker 1: by having exposure to risk assets. That's particularly so in
Speaker 1: an environment where the feed is accommodative. UM. We are
Speaker 1: late cycle, but it is an abnormal late cycle because
Speaker 1: usually late cycles are characterized by central bank tightening, and
Speaker 1: that is not the case. The central bank is actually
Speaker 1: getting more accommodative UM. Just this week we saw you know,
Speaker 1: expectations go up UM significantly and and I think that
Speaker 1: UM that speaks to a very UM positive environment for
Speaker 1: risk assets. So UM. So to put it simply, expect
Speaker 1: more volatility, be very well diversified UM, and that includes
Speaker 1: not just equities and fixed income but alternatives. And be
Speaker 1: well diversified within those three buckets UM, and and try
Speaker 1: to drown out the noise. That is such creat advice.
Speaker 1: You hear it so often. Uh, if you're a long
Speaker 1: term investor, don't even look at your four O one K,
Speaker 1: just ignore the the noise. The people really listen to
Speaker 1: that though, or do you find clients just can't can't
Speaker 1: help but peek at that those numbers. I think when
Speaker 1: the headlines become alarming enough, clients can't help but worry.
Speaker 1: And that is completely understandable. Look at two thousand eight,
Speaker 1: two thousand nine, UM, there was just so much alarm,
Speaker 1: and I think it took many by surprise that things
Speaker 1: got so bad so quickly. So that creates a hyper
Speaker 1: sensitivity to what's going on now. But the reality has
Speaker 1: had someone UM put on you know, put on blinders
Speaker 1: back then and ridden through it, they probably would not
Speaker 1: have even realized how bad things got before they got better.
Speaker 1: I do want to ask in the same post that
Speaker 1: Mike mentioned at the beginning of the show, I saw
Speaker 1: that you also wrote that investors should take advantage of
Speaker 1: opportunities created by downward volatility in order to acquire oversold
Speaker 1: assets such as Chinese stocks. Now, I feel like that's
Speaker 1: kind of an interesting take Chinese stocks Why? And also
Speaker 1: what other areas do you feel like at this point
Speaker 1: are oversold but have enough positivity going forward that it's
Speaker 1: worth it to hop in And if I can butt into,
Speaker 1: how should a US investor approach the Chinese stock market?
Speaker 1: I mean E. T F S or Ali baba, you know,
Speaker 1: how would you go about it? Well, Uh, first, let
Speaker 1: me say that Chinese stocks look attractive because they've been
Speaker 1: beaten down for a while. Um, when the US China
Speaker 1: trade war started, there was a conventional wisdom that suggested
Speaker 1: that the U S would win and China would lose
Speaker 1: a trade war, and that costs a real sell off
Speaker 1: in Chinese stocks, and they've really been depressed for a while.
Speaker 1: Now valuations are very attractive. I think there's a growing
Speaker 1: recognition that there are no winners in a trade war.
Speaker 1: And then in fact, China maybe in a better position
Speaker 1: given its ability to throw all kinds of stimulus at
Speaker 1: its economy, whether it's fiscal or monetary versus what the
Speaker 1: what the U S has its its disposal, which is
Speaker 1: not as many tools to stimulate it economy. And so
Speaker 1: that to me creates an environment where Chinese stocks um
Speaker 1: our opportunities, especially if one has a long enough time horizon.
Speaker 1: How do you access Chinese stocks? Well, it's very interesting,
Speaker 1: but um, you know a shares could be one way
Speaker 1: to do that in this environment and starting to look
Speaker 1: more attractive beyond just Chinese stocks, I would focus in
Speaker 1: on emerging markets equities in general as well as e
Speaker 1: M debt just because of the yields. UM. We are
Speaker 1: in a world of low yields and it doesn't look
Speaker 1: like it's going to change anytime soon, or though it
Speaker 1: might get lower, and so we're gonna have to sniff
Speaker 1: out whatever opportunities we can in terms of yield. That's
Speaker 1: going to take us to dividend paying stocks, but will
Speaker 1: also take us to e M debt, which relative to
Speaker 1: historical um uh, historical yield looks pretty good right now.
Speaker 1: Any particular countries look at or sovereign corporates for you, well,
Speaker 1: I think you can really run the run the gamut
Speaker 1: and have exposure to both sovereigns and corporates UM. But
Speaker 1: for sovereigns I would focus in on Asia. UM. I
Speaker 1: have a question about that. This sounds a little bit
Speaker 1: like reaching for yield, being dissatisfied with what conventional assets
Speaker 1: give you, and saying, well, I'll go to some more
Speaker 1: obscure corners of investing world, and of course that can
Speaker 1: turn out really badly. What about the alternative of just saying, Okay,
Speaker 1: I'm gonna have to live with the fact that yields
Speaker 1: are kind of low and that will just dust us
Speaker 1: my life. It doesn't sound like a very happy Well,
Speaker 1: you haven't given a great set of options. But if
Speaker 1: you want, if you're willing to take lower yields, then
Speaker 1: you're going to have to save more. UM. Yeah, but
Speaker 1: I would say that going out on the on the
Speaker 1: risk curve, so to speak, UM, moving into higher yielding
Speaker 1: asset classes as long as you're well diversified and UM
Speaker 1: can make sense. Uh. If you if you're adding US municipals,
Speaker 1: high yield municipals as well as he AM debt UM,
Speaker 1: you're getting a well diversified array of yielding debt and
Speaker 1: some correlations don't go to one as long as the
Speaker 1: correlation of one. But I will tell you that one
Speaker 1: big headwind has been removed from emerging market equities and
Speaker 1: that is balance sheet normalization that was creating a huge
Speaker 1: liquidity stuck and that is going away. I'm going all
Speaker 1: hundred year Argentina bonds entire PORF sounds very safe and
Speaker 1: I will tell you that it's not advocated. That was
Speaker 1: just a joke for anyone else, a joke where it
Speaker 1: was completely serious for our listeners in Argentine. Do we
Speaker 1: have some sort of a footnote weekend read right now
Speaker 1: compliance footnote on yeah, right right, read all the footnotes.
Speaker 1: Do not listen to Mike reading, I think is the
Speaker 1: main foot as Peter real quickly, before we get to
Speaker 1: the crazy things, I have to ask you about this
Speaker 1: piece you have in a business week. Everyone has a
Speaker 1: wealth number, what's yours? And the lead is really funny.
Speaker 1: You say the world needs a more precise way to
Speaker 1: describe wealth. Millionaires too broad, covering everyone from random pikers
Speaker 1: with a scant one million in net worth all the
Speaker 1: way up to people just shout of billionaires. Billionaire has
Speaker 1: the same problem and being you know, what's the meaning
Speaker 1: to be a millionaire? Billionaire? So so tell us real
Speaker 1: quickly what you did with this. You basically created a
Speaker 1: scale scale, a scale which is based on logarithms, and said, okay, look, uh,
Speaker 1: if you're a million, one million dollars is ten to
Speaker 1: the six power dollars, so you're a six, right, A
Speaker 1: thousand dollars is tend to the third, so you're three
Speaker 1: until your net worth it can be boiled onto a
Speaker 1: single number. Um, if you're worth one penny, that's tend
Speaker 1: to the negative seconds, so you're a minus two. That's
Speaker 1: kind of low and then the richest people in the world,
Speaker 1: and they're really only two of them in this category,
Speaker 1: Bill Gates and Jeffrey Bays. Those are elevens. They have
Speaker 1: more than a hundred billion dollars in net worth. So
Speaker 1: that's the fun of it, is like, well, everybody is
Speaker 1: somewhere in that scale, even if you're have liabilities exceeding
Speaker 1: your assets, so the logarithm is undefined. I just arbitrually
Speaker 1: stuck them into the minus two categories. That's really interesting,
Speaker 1: especially that catches on. It is catching on. It's like
Speaker 1: amazing people should look at it on the internet, like
Speaker 1: everybody is saying, oh, what's your one or what's your number?
Speaker 1: Has been pretty fun. Yeah, alright, well we will not
Speaker 1: disclose our numbers. No, no, no, Well, in this show,
Speaker 1: we will disclose the craziest things we've seen this week?
Speaker 1: Is it to the invest go is a eleven in
Speaker 1: terms of the amount of an assets under manage nine
Speaker 1: hundreds something billion. Actually we're at a close to one
Speaker 1: point to trillion, so you're a twelve. Amazing bezos. Yeah,
Speaker 1: wow about those crazy things, Sarah, I believe we got
Speaker 1: a call in to the what goes up hotline. Is
Speaker 1: that true? We did. It's from Morgan Hill. He's an
Speaker 1: investment associate at Providence Wealth Advisors in Fort Lauderdale, Florida.
Speaker 1: So let's take a listen. I've noticed on Tuesday that
Speaker 1: Charles Schwab Interactive Brokers actually announced that they're issuing a
Speaker 1: commission free trading platform for stocks, et s and options online.
Speaker 1: And what was crazy about it that as soon as
Speaker 1: that announcement came out, both of their UM kickers as
Speaker 1: well as TDA Merrit Trade and other brokers dropped at
Speaker 1: least nine percent. So the market interpret of that is
Speaker 1: a negative, I guess, but I just thought it was crazy.
Speaker 1: So it was. And then we saw TDA Merrit Trade follow,
Speaker 1: we saw each trade follow, and that just really plays
Speaker 1: into that whole narrative of what we've seen of these
Speaker 1: different brokerages just in a race to the bottom. It's
Speaker 1: pretty it was a pretty big story. And the question
Speaker 1: people always ask me about that as well, how did
Speaker 1: these guys make money? And you know the answers well,
Speaker 1: net interest margin, like banks, you know, people have cash
Speaker 1: sitting there and they make money off of those bounces.
Speaker 1: But also what I think is really interesting is the
Speaker 1: payment for order flow. You know, these firms basically sell
Speaker 1: their order flow to electronic market makers a k. High
Speaker 1: speed traders. So I'll be curious if that whole controversy
Speaker 1: over h f T comes back. People always love talking
Speaker 1: and ragging on h f T, so I wouldn't be surprised.
Speaker 1: I think that's it's a day in the sun again.
Speaker 1: Well thanks to the color. That's a That's a good one, Sarah.
Speaker 1: Can you top the zero commission fees? I don't know
Speaker 1: if I can, but I think this is a pretty
Speaker 1: good one. I think we could say there's been some
Speaker 1: craziness going on over at Credit Suites. There was this
Speaker 1: investigation disclosed in which one of the former heads of
Speaker 1: the wealth management unit left and the CEO had sent
Speaker 1: a private investigator detective after him. Well, Bloomberg had a
Speaker 1: great story out this week, and what they disclosed was
Speaker 1: that there was one day um when the two parties
Speaker 1: were at the same party together and they got in
Speaker 1: a fight, supposedly over gardening, and they make it out
Speaker 1: to seem as if ever since that moment, there's been
Speaker 1: this back and forth between the two which because one
Speaker 1: criticized the equality of the other's garden right, So it's
Speaker 1: pretty pretty unbelievable. I guess you asked for gardening leave
Speaker 1: after that. Yeah, man, the Crowns need a better studio
Speaker 1: audience here, Peter, Can you top the Great Garden Words?
Speaker 1: It's kind of a weird one. I went to a
Speaker 1: book party for Stephen Schwartzman this week. He has a
Speaker 1: new book coming out called What It Takes, and he
Speaker 1: spoke with the New York Pollitic Library and the Schwartzman
Speaker 1: Building as it happens. Um, what a coincidence. And at
Speaker 1: the end of it, he was asked about what Bernie
Speaker 1: Sanders said, which is that I don't think billionaires should exist.
Speaker 1: So uh, impromptu, he shot back, I don't think Bernie
Speaker 1: Sanders should exist, so bold. I wrote a story about
Speaker 1: this and it was getting a lot of traffic, and
Speaker 1: then suddenly we had the terrible news about Bernie Sanders.
Speaker 1: Extents put in um and I'm sure he's gonna be fine,
Speaker 1: but it was a little scary, and so we kind
Speaker 1: of submerged that story. Timing not the best timing, but
Speaker 1: thankfully they have come out now and said Bernie Sanders
Speaker 1: should be fine. I'll be at the next debate etcetera, etcetera. Yeah,
Speaker 1: well you won't get a lecture for me. I've never
Speaker 1: been famous for my good taste. What did Schwarzman's what
Speaker 1: a seven or an eight on your scale? Yeah, he's
Speaker 1: a ten. That's okay. Yeah he's up there, but he's
Speaker 1: not as well. You know, Christina, did they inform you
Speaker 1: of our our tradition here with the craziest thing? Yes,
Speaker 1: but I'm not as interesting certainly as the stories you have,
Speaker 1: so I have to apologize in advance. But it seems
Speaker 1: this seemed pretty crazy to me, and it just has
Speaker 1: to do with FED funds futures. If you look at
Speaker 1: the CMEME FED Watch tool, in just a week, and
Speaker 1: of course during the course of that week, we got
Speaker 1: the I s M manufacturing number and we got the
Speaker 1: I s M Services number. But the course of a week, um,
Speaker 1: we went from less than fifty expecting a rate cut
Speaker 1: at the end of the month to a full eighty
Speaker 1: eight percent or so expecting a rake cut at the
Speaker 1: end of the month. So talk about a story where
Speaker 1: bad is good. Um. Markets always seem to find a
Speaker 1: way to find a silver lining, and this seems to
Speaker 1: be it, especially to move that close to the meeting.
Speaker 1: I think is is pretty rare that to see those
Speaker 1: those moves that close, especially given how much dissension we've
Speaker 1: heard from the FED um. The reluctance with which some
Speaker 1: members actually voted for a cut in September very interesting.
Speaker 1: There's no doubt that the meeting this month will be
Speaker 1: very very well watched, and hopefully they will only have
Speaker 1: plastic utensils, because you know, we don't want to see
Speaker 1: any kind of a violence breakout on the course of
Speaker 1: a FED meet that could be very charged. Yes, yes, okay,
Speaker 1: these are all good crazy things. I'm gonna go out
Speaker 1: on a women say I think I consider you a
Speaker 1: trendy New Yorker. That's that's safe to say. I think
Speaker 1: you might be. You might be giving me something from
Speaker 1: a bridge and tunnel guy like myself. You're you're a trendy.
Speaker 1: So this is straight out of the headlines from the
Speaker 1: New York Post. I'm not making this up. By the way,
Speaker 1: the hottest new psychedelic drug trend among trendy New Yorkers
Speaker 1: is illegal toad venom. But illegal toad venom, so apparently
Speaker 1: you take a Colorado River toad and you have to
Speaker 1: milk the venom out of it. Then you try. I
Speaker 1: won't ask how I don't ask. It's like that, Robert,
Speaker 1: I'm not sure you're calling me a trendy New Yorker.
Speaker 1: Is really much of a compliment? Have you been spoken?
Speaker 1: Absolutely not. So you drive into a paste and you
Speaker 1: smoke it. And remember, Peter, when we were kids, people
Speaker 1: used to joke about licking toads. I think it was
Speaker 1: the same idea, but now they they've taken it. I'm
Speaker 1: just surprised it's not vaping toads. But here's this one
Speaker 1: guy sitting cross leg on a blanket in his Soho
Speaker 1: apartment Parrot Paul and held toad venom smoked through a
Speaker 1: glass stemp pipe. I saw my younger self with my
Speaker 1: parents and next boyfriends and places I've been hurt. I
Speaker 1: experienced forty five minutes of shooting through the universe and
Speaker 1: being reborn. So this is the crazy story I've ever seen.
Speaker 1: I've seen, and obviously it's very Of course, if you're
Speaker 1: gonna have a psychedelic drug trend, it's going to be
Speaker 1: popular in the Hampton's uh. Recently, the Post reports twenty
Speaker 1: one people in white robes gathered at a mansion in
Speaker 1: the Hamptons to smoke the substance with the same shaman
Speaker 1: that Poul used. So you may ask, well, what does
Speaker 1: this have to do with market, what does it want?
Speaker 1: And the answer is not nothing. Really, it's such it's
Speaker 1: a black market, right Mike. If I had known that
Speaker 1: that there was such a liberal interpretation this week, I
Speaker 1: would have told you the story about the squirrel that
Speaker 1: actually asked a hiker for help um for its injured baby. Yes, absolutely,
Speaker 1: this was in the news in the last week. UM
Speaker 1: in Pulaski, Virginia. A hiker was walking on a trail.
Speaker 1: A squirrel came out and wouldn't let it pass and
Speaker 1: brought it to it, tugged on the hikers pants and
Speaker 1: brought it to its injured um, small baby squirrel um,
Speaker 1: which was being managed by a cat. This is beautiful,
Speaker 1: isn't this. I mean, this is one of those feel
Speaker 1: good moments that's not just crazy, but it's heartwarming. All
Speaker 1: is good in the world now. But they didn't really
Speaker 1: ask for help. I was assuming the hiker was smoking
Speaker 1: some toad venoms. That could have been the case. All right,
Speaker 1: that's a good one too, But this is a black market,
Speaker 1: so it is okay. I give you that a stretch.
Speaker 1: It's a stratech, but it was crazy, so i'll give
Speaker 1: you that, and the squirrel relates to first date. All
Speaker 1: coming together with that said, though, Christina Hooper Peter Coy
Speaker 1: was so great having you both on the show today.
Speaker 1: Thank you, Thank you. What Goes Up. We'll be back
Speaker 1: next week. Until then, you can find us on the
Speaker 1: Bloomberg Terminal website and app, or wherever you get your podcasts.
Speaker 1: We'd love it if you took the time to rate
Speaker 1: interview the show on Apple Podcasts so more listeners can
Speaker 1: find us. And you can find us on Twitter. Follow
Speaker 1: me at at Sarah pont Seck, Mike is at Regnonymous.
Speaker 1: Our guest Christina Hooper is at Christina Hooper, and Peter
Speaker 1: Coy is at peter Ki. You can also follow Bloomberg
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Speaker 1: The head of Bloomberg podcast is Francesco Levie. Thanks for
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