1 00:00:13,600 --> 00:00:16,680 Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg Weekly 2 00:00:16,760 --> 00:00:20,239 Speaker 1: Markets podcast. I'm Sarah pont sec, a reporter on the 3 00:00:20,280 --> 00:00:23,560 Speaker 1: Cross Asset team, and I'm Mike Reagan, a senior editor 4 00:00:23,640 --> 00:00:26,159 Speaker 1: on the Markets team. This week on the show, a 5 00:00:26,160 --> 00:00:29,560 Speaker 1: Bloomberg Economics model that projects the probability of a US 6 00:00:29,640 --> 00:00:32,440 Speaker 1: recession in the next twelve months is now at one 7 00:00:34,000 --> 00:00:36,440 Speaker 1: after the jobs data, though over the last couple of weeks, 8 00:00:36,720 --> 00:00:39,000 Speaker 1: you could have said that that much was clear. So 9 00:00:39,080 --> 00:00:42,599 Speaker 1: how should you actually invest through an economic recession? Our 10 00:00:42,640 --> 00:00:45,599 Speaker 1: guests will break it all down. That's right, Sarah, And 11 00:00:45,720 --> 00:00:48,680 Speaker 1: of course we'll close the episode with the craziest thing 12 00:00:48,840 --> 00:00:52,320 Speaker 1: we saw in markets this week. And sorry, before we 13 00:00:52,360 --> 00:00:54,400 Speaker 1: get into all that, I want, I would love an 14 00:00:54,440 --> 00:00:56,720 Speaker 1: update on your situation. I know you made a mad 15 00:00:56,960 --> 00:01:00,680 Speaker 1: dash escape from New York. Tell us exactly what you did. 16 00:01:00,720 --> 00:01:04,400 Speaker 1: You drove all the way to Florida's all right? I did? Um. 17 00:01:04,480 --> 00:01:07,000 Speaker 1: So I decided I had been self quarantining in New 18 00:01:07,040 --> 00:01:09,880 Speaker 1: York for quite a while, for over two weeks, so 19 00:01:10,400 --> 00:01:13,000 Speaker 1: I decided to try to make the Great escape. So 20 00:01:13,200 --> 00:01:15,200 Speaker 1: I did the drive all on one day. I didn't 21 00:01:15,240 --> 00:01:19,360 Speaker 1: want to go through an airport so Saturday, seventeen hours, 22 00:01:19,440 --> 00:01:22,920 Speaker 1: woke up right and early. We drove all the way 23 00:01:22,959 --> 00:01:26,959 Speaker 1: down to South Florida. UM. We had to stop for 24 00:01:27,000 --> 00:01:29,679 Speaker 1: gas a couple of times, of course, had masks gloves 25 00:01:29,800 --> 00:01:32,880 Speaker 1: in uh, certain areas that were a little bit more remote. 26 00:01:33,040 --> 00:01:35,479 Speaker 1: I think people were looking at us like we were insane. 27 00:01:35,560 --> 00:01:37,800 Speaker 1: It looked like there weren't many people around. What they 28 00:01:37,800 --> 00:01:40,479 Speaker 1: were going on with their lives as usual, And there 29 00:01:40,520 --> 00:01:46,240 Speaker 1: we are chloroxing the entire gas station. UM. But but 30 00:01:46,400 --> 00:01:50,280 Speaker 1: made it down and other than stopping at gas stations, 31 00:01:50,320 --> 00:01:53,920 Speaker 1: didn't make a single stop. So now I have to 32 00:01:53,920 --> 00:01:56,920 Speaker 1: self quarantine by law in Florida. So I'm quarantining for 33 00:01:56,960 --> 00:02:00,080 Speaker 1: fourteen days here. UM. But I'm at least happy to 34 00:02:00,160 --> 00:02:02,840 Speaker 1: have more space than my New York apartment. So how 35 00:02:02,840 --> 00:02:04,920 Speaker 1: does that work? They stopped you at the state line 36 00:02:05,600 --> 00:02:07,880 Speaker 1: because of the Yeah, so at the at the at 37 00:02:07,880 --> 00:02:11,240 Speaker 1: the Florida Georgia border, UM wasn't backed up at all. 38 00:02:11,280 --> 00:02:13,400 Speaker 1: They didn't have to go through any traffic or weight 39 00:02:13,480 --> 00:02:16,720 Speaker 1: or anything like that. But I had to go through 40 00:02:16,760 --> 00:02:20,040 Speaker 1: a checkpoint. So essentially you drive through, they ask you 41 00:02:20,080 --> 00:02:22,720 Speaker 1: where you're traveling from. UM. I told him I was 42 00:02:22,760 --> 00:02:24,480 Speaker 1: coming from New York. So then they make you circle 43 00:02:24,520 --> 00:02:27,520 Speaker 1: back around to a different checkpoint area where they make 44 00:02:27,560 --> 00:02:30,000 Speaker 1: you feel out of form. You have to give them 45 00:02:30,040 --> 00:02:33,320 Speaker 1: your contact information where you will be self quarantining in 46 00:02:33,360 --> 00:02:35,440 Speaker 1: case they want to check in on you, and you 47 00:02:35,520 --> 00:02:39,120 Speaker 1: have to sign a form saying that you are aware 48 00:02:39,360 --> 00:02:41,760 Speaker 1: that by Florida Lock, if you break the quarantine, you 49 00:02:41,760 --> 00:02:44,480 Speaker 1: can be subject to a finer up to sixty days 50 00:02:44,480 --> 00:02:48,800 Speaker 1: in jail. So I am quarantining, you know. I think, Sarah, 51 00:02:48,840 --> 00:02:51,640 Speaker 1: you realize that my dad instincts were kicking in on 52 00:02:51,680 --> 00:02:53,600 Speaker 1: this trip, and I was very worried. I thought you 53 00:02:53,639 --> 00:02:55,480 Speaker 1: making it dounce, So you did. You did tell me 54 00:02:55,560 --> 00:02:57,919 Speaker 1: when you arrived safely. I appreciate. As soon as I arrived, 55 00:02:57,919 --> 00:03:01,960 Speaker 1: I let you know I was worried about that trip, 56 00:03:02,120 --> 00:03:06,840 Speaker 1: but glad to hear you're safe and sound, uh than quarantine. 57 00:03:06,919 --> 00:03:10,680 Speaker 1: And I think um our guest is in quarantine not 58 00:03:10,840 --> 00:03:13,840 Speaker 1: far from me here in New Jersey where we're basically 59 00:03:13,919 --> 00:03:17,200 Speaker 1: all in quarantine. But we're very welcome to have her 60 00:03:17,360 --> 00:03:20,840 Speaker 1: return to the show. She is an investment strategist at 61 00:03:20,960 --> 00:03:24,520 Speaker 1: Edward Jones. Her name is Nila Richardson. Neila, welcome back 62 00:03:24,520 --> 00:03:26,800 Speaker 1: to the show. Thank you, Mike. It's great to be 63 00:03:26,880 --> 00:03:30,000 Speaker 1: with you both. And how are you surviving the quarantine? 64 00:03:30,080 --> 00:03:33,040 Speaker 1: Is every is the family behaving and there you Uh, 65 00:03:33,400 --> 00:03:38,600 Speaker 1: you have enough supplies? You know, supplies have changed definition. Um, 66 00:03:38,680 --> 00:03:42,240 Speaker 1: do we have enough of what we need? And the 67 00:03:42,320 --> 00:03:44,680 Speaker 1: family is doing well. Thanks for asking me. I have 68 00:03:44,800 --> 00:03:48,840 Speaker 1: two teenage boys, and so the question is not keeping 69 00:03:48,840 --> 00:03:51,160 Speaker 1: them entertained. It's getting them to talk to you on 70 00:03:51,200 --> 00:03:56,400 Speaker 1: a regular basis. And so you know, every so often 71 00:03:56,440 --> 00:03:58,920 Speaker 1: I just check in their rooms, make sure they're they're 72 00:03:58,960 --> 00:04:02,760 Speaker 1: still function ng and and they're doing quite well. Um, 73 00:04:02,920 --> 00:04:04,920 Speaker 1: they don't seem to be missing school as much as 74 00:04:05,000 --> 00:04:08,280 Speaker 1: I imagined that they would be. Well now they have 75 00:04:08,320 --> 00:04:10,880 Speaker 1: plenty of time to find time to speak with you 76 00:04:10,960 --> 00:04:14,080 Speaker 1: and the facts. That's right. We're breaking breaking out the 77 00:04:14,120 --> 00:04:18,720 Speaker 1: board games and the puzzle, so plenty to do. Well. Hey, 78 00:04:18,760 --> 00:04:21,400 Speaker 1: I have teenage girls, So when I hear that teenage 79 00:04:21,400 --> 00:04:23,760 Speaker 1: boys are quarantined, I'm happy about that. I hope that 80 00:04:23,839 --> 00:04:29,960 Speaker 1: continues past the past the pestivirus dating things kicking in. 81 00:04:31,640 --> 00:04:34,960 Speaker 1: But no, I'm curious, you know, as an investment strategist, 82 00:04:36,320 --> 00:04:38,080 Speaker 1: how do you do your job these days? You must 83 00:04:38,120 --> 00:04:40,200 Speaker 1: be getting a lot of calls. A lot of people 84 00:04:40,240 --> 00:04:42,479 Speaker 1: wondering is the is the bottom in the market in 85 00:04:43,279 --> 00:04:45,760 Speaker 1: Is this a new bowl market we're seeing given all 86 00:04:45,760 --> 00:04:50,760 Speaker 1: the stimulus that's going on. Um like me, I'm sure 87 00:04:50,760 --> 00:04:53,240 Speaker 1: your clients are throwing a million questions at you at once. 88 00:04:53,279 --> 00:04:54,800 Speaker 1: So what is you know? What are you saying when 89 00:04:54,800 --> 00:04:58,000 Speaker 1: you answer the phone these days? Well, you're right, Mike, 90 00:04:58,040 --> 00:05:00,960 Speaker 1: we are talking to clients. Are out reach to clients 91 00:05:00,960 --> 00:05:05,320 Speaker 1: and to financial advisors have has aunt up considerably over 92 00:05:05,360 --> 00:05:08,760 Speaker 1: the course of the month. And that constant communication is 93 00:05:08,800 --> 00:05:12,200 Speaker 1: critical because what we're focused on it is not just 94 00:05:12,279 --> 00:05:16,560 Speaker 1: the markets, but the emotional reaction to the markets. And 95 00:05:16,600 --> 00:05:20,400 Speaker 1: this is the time where the behavioral economics come into play. 96 00:05:20,440 --> 00:05:23,480 Speaker 1: All those things that we warn about the investors do, 97 00:05:23,560 --> 00:05:27,360 Speaker 1: the mistakes investors make, This is the time where they 98 00:05:27,400 --> 00:05:31,120 Speaker 1: make those mistakes right. They try to time the bottom 99 00:05:31,120 --> 00:05:35,080 Speaker 1: of the market, they try to sell uh at at 100 00:05:35,120 --> 00:05:39,360 Speaker 1: the peak, and along the way they miss the rally. 101 00:05:39,440 --> 00:05:42,839 Speaker 1: And we've seen the markets rally over the last few 102 00:05:42,920 --> 00:05:47,560 Speaker 1: days here. So we're trying to both inform them at 103 00:05:47,560 --> 00:05:52,159 Speaker 1: a market level, but also make sure that their behavioral 104 00:05:52,240 --> 00:05:56,240 Speaker 1: reactions are not ones that make them drail their long 105 00:05:56,320 --> 00:06:01,080 Speaker 1: term goals and that's quite a balance. So given that, uh, 106 00:06:01,200 --> 00:06:05,240 Speaker 1: it's pretty certain, it's virtually certain that we know that 107 00:06:05,279 --> 00:06:08,240 Speaker 1: we are now in a recession, and sure this time 108 00:06:08,279 --> 00:06:12,719 Speaker 1: around it could be completely unique considering the reasons why 109 00:06:12,760 --> 00:06:16,800 Speaker 1: we have seen the economy react as it has due 110 00:06:16,839 --> 00:06:20,000 Speaker 1: to a spreading viral outbreak. But can you maybe just 111 00:06:20,040 --> 00:06:24,440 Speaker 1: walk us through how markets actually typically react through a recession, 112 00:06:24,440 --> 00:06:27,240 Speaker 1: span from from start to the point in which you 113 00:06:27,360 --> 00:06:31,400 Speaker 1: actually start seeing a recovery. Well, as you know, this 114 00:06:31,960 --> 00:06:35,240 Speaker 1: recession is quite different than what's typical, and if you 115 00:06:35,279 --> 00:06:40,080 Speaker 1: think about the typical timeline of of an expansion path, 116 00:06:40,520 --> 00:06:44,000 Speaker 1: it's really affected by the path of inflation. We see 117 00:06:44,040 --> 00:06:47,839 Speaker 1: that economies, they typically they grow for a very long time, 118 00:06:48,200 --> 00:06:52,600 Speaker 1: they become overheated, consumer prices start to increase, and then 119 00:06:52,600 --> 00:06:56,280 Speaker 1: there's this inflation threat that's an overhang. That's when the 120 00:06:56,279 --> 00:07:00,320 Speaker 1: Fed comes with their butcher knives and tries to choke 121 00:07:00,400 --> 00:07:05,159 Speaker 1: off this expansion by raising interest rates. We're not seeing 122 00:07:05,200 --> 00:07:07,880 Speaker 1: anything like that right now. What we're seeing is an 123 00:07:07,920 --> 00:07:12,280 Speaker 1: economy that's not broken, but has basically put itself into 124 00:07:12,320 --> 00:07:16,200 Speaker 1: a medically induced comma in order to attack a disease. 125 00:07:16,680 --> 00:07:20,400 Speaker 1: And that's we've done that by social containment. And the 126 00:07:20,480 --> 00:07:23,240 Speaker 1: real threat right now in terms of the economy is 127 00:07:23,280 --> 00:07:27,600 Speaker 1: not inflation, it's deflation UH and the fact that that 128 00:07:27,680 --> 00:07:31,560 Speaker 1: people can't work and the economy is tackling a hit 129 00:07:31,640 --> 00:07:36,040 Speaker 1: to both supply and demand. So the market reaction is 130 00:07:36,120 --> 00:07:40,120 Speaker 1: actually following I think a traditional playbook. We're seeing that 131 00:07:40,160 --> 00:07:45,160 Speaker 1: the markets typically lead a recession for a period of 132 00:07:45,200 --> 00:07:49,600 Speaker 1: time UM and that since it's correct, before we knew 133 00:07:49,720 --> 00:07:53,000 Speaker 1: the extent of this downturn and before we saw those 134 00:07:53,080 --> 00:07:56,640 Speaker 1: jobless claims, the market had already reacted. Now, the key 135 00:07:56,720 --> 00:08:01,160 Speaker 1: difference is the market reacted really quickly. It typically takes 136 00:08:01,160 --> 00:08:04,800 Speaker 1: about nine months to see that dropped from a record 137 00:08:04,920 --> 00:08:08,840 Speaker 1: high all the way down to a bear market. That decline, 138 00:08:10,440 --> 00:08:15,440 Speaker 1: this bear market happened in twenty two calendar days. I mean, 139 00:08:15,560 --> 00:08:19,800 Speaker 1: the speed of the market reaction has been really unprecedented, 140 00:08:19,840 --> 00:08:23,680 Speaker 1: and I think that's what's different along with the composition 141 00:08:23,760 --> 00:08:28,600 Speaker 1: of this UH expansion to recession timeline. I think that's 142 00:08:28,600 --> 00:08:32,440 Speaker 1: a great analogy that medically induced coma. Neil, and I 143 00:08:32,480 --> 00:08:36,680 Speaker 1: know you have an economics background, So what I think 144 00:08:36,760 --> 00:08:39,560 Speaker 1: the big question I have and and maybe other people have, 145 00:08:39,920 --> 00:08:43,439 Speaker 1: is that Okay, we take that patient out of that coma, 146 00:08:43,800 --> 00:08:47,640 Speaker 1: you know, and and quote unquote reopened the economy. I 147 00:08:47,760 --> 00:08:51,839 Speaker 1: just can't help but wonder how long the headwinds UH 148 00:08:51,960 --> 00:08:56,800 Speaker 1: to the economy last after that process, because I'm thinking, um, 149 00:08:56,960 --> 00:08:59,280 Speaker 1: you know, it would be a while personally before I 150 00:08:59,280 --> 00:09:01,720 Speaker 1: would be comfort will say, going to a movie theater, 151 00:09:01,800 --> 00:09:06,080 Speaker 1: going to a stadium, flying on a plane, going to 152 00:09:06,120 --> 00:09:10,320 Speaker 1: a hotel, all of those things until the vaccine comes, 153 00:09:10,360 --> 00:09:13,200 Speaker 1: which is you know, hypothetically, I guess still probably at 154 00:09:13,240 --> 00:09:16,199 Speaker 1: least a year out. So once we do, you know, 155 00:09:16,280 --> 00:09:20,120 Speaker 1: quote unquote reopen the economy, how strong do you think 156 00:09:20,120 --> 00:09:24,200 Speaker 1: those headwinds will be as far as consumer behavior and 157 00:09:24,360 --> 00:09:27,840 Speaker 1: getting back to that normal uh that we we were 158 00:09:27,840 --> 00:09:30,079 Speaker 1: in before the virus. Well, I think there's a lot 159 00:09:30,120 --> 00:09:32,560 Speaker 1: of uncertainty. I don't know about you, my can Sarah, 160 00:09:32,640 --> 00:09:34,480 Speaker 1: but I want to break out of this house and 161 00:09:34,480 --> 00:09:37,120 Speaker 1: go to a restaurant in a bar like nobody's business. 162 00:09:39,200 --> 00:09:42,280 Speaker 1: You might see a surgeon economic activity. I would love 163 00:09:42,320 --> 00:09:44,360 Speaker 1: to go to the mall in shop right now. I 164 00:09:44,400 --> 00:09:48,080 Speaker 1: would there are many things. I'm looking forward to the 165 00:09:48,120 --> 00:09:51,080 Speaker 1: next Marvel movie and seeing it in a theater. So 166 00:09:52,640 --> 00:09:54,600 Speaker 1: you've got that Short Hills mall near you. I can't 167 00:09:54,600 --> 00:09:56,360 Speaker 1: blame you. It's a good mall. It's it's the mall 168 00:09:56,400 --> 00:09:59,319 Speaker 1: I was thinking of when I said it. So, But 169 00:10:00,120 --> 00:10:02,760 Speaker 1: have to think that even these activities are going to 170 00:10:02,800 --> 00:10:06,440 Speaker 1: be scaled down. Yes, maybe movie theaters will reopen, but 171 00:10:06,679 --> 00:10:11,720 Speaker 1: they'll be at maybe fifty capacity instead of acent capacity. 172 00:10:11,840 --> 00:10:15,920 Speaker 1: There will still respect the six ft of distance between us, 173 00:10:15,920 --> 00:10:19,560 Speaker 1: at least initially, until we get enough test kits and 174 00:10:19,720 --> 00:10:23,800 Speaker 1: security that people are on the other side of of 175 00:10:23,800 --> 00:10:26,680 Speaker 1: of a viral outbreak and that it won't lead to 176 00:10:26,760 --> 00:10:30,760 Speaker 1: this huge community contagion that we've seen. And I think 177 00:10:30,840 --> 00:10:33,520 Speaker 1: in terms of the market perspective, the market has done 178 00:10:33,679 --> 00:10:36,600 Speaker 1: a fantastic job of pricing and I think a lot 179 00:10:36,640 --> 00:10:39,640 Speaker 1: of bad news already and that's why we can see 180 00:10:39,679 --> 00:10:44,920 Speaker 1: this huge uptick and jobless claims and the market still 181 00:10:45,040 --> 00:10:48,960 Speaker 1: rally on a weekly basis. But but I don't think 182 00:10:49,000 --> 00:10:51,440 Speaker 1: the market has done a very good job of pricing 183 00:10:51,480 --> 00:10:54,840 Speaker 1: in a recovery or the timeline to that recovery. And 184 00:10:54,880 --> 00:10:57,520 Speaker 1: I think that's the biggest risk. We're in a recession. 185 00:10:57,800 --> 00:11:01,000 Speaker 1: We know it's going to be deep, but we don't 186 00:11:01,040 --> 00:11:04,320 Speaker 1: know how quickly the economy gets back online, and that 187 00:11:04,520 --> 00:11:07,920 Speaker 1: is the huge question mark, you know. I have seen 188 00:11:07,960 --> 00:11:11,040 Speaker 1: others say that it is possible that if we do 189 00:11:11,120 --> 00:11:14,960 Speaker 1: get a reopening of the economy by say June, then 190 00:11:15,240 --> 00:11:16,760 Speaker 1: the season will pick up that you see in the 191 00:11:16,800 --> 00:11:19,400 Speaker 1: economy over the summer. You still might see that occur 192 00:11:19,559 --> 00:11:22,840 Speaker 1: because you might see people wanting to go out um 193 00:11:22,880 --> 00:11:25,559 Speaker 1: and get out of the house and really take part 194 00:11:25,640 --> 00:11:28,000 Speaker 1: in some of those activities are traveling. But it's yet 195 00:11:28,040 --> 00:11:30,839 Speaker 1: to be seen. And NILA's something I've been thinking about 196 00:11:31,080 --> 00:11:35,760 Speaker 1: is the idea that okay, the leveling off that we 197 00:11:35,840 --> 00:11:40,800 Speaker 1: have seen in some hotspots as it relates to coronavirus cases, 198 00:11:40,840 --> 00:11:44,559 Speaker 1: some investors have said that's been encouraging as it relates 199 00:11:44,640 --> 00:11:47,800 Speaker 1: to the idea that maybe the economy can open sooner 200 00:11:47,920 --> 00:11:52,520 Speaker 1: rather than later. But Peter Zacchini, one strategist, he pointed 201 00:11:52,520 --> 00:11:54,760 Speaker 1: out to me in a colleague of mine that the 202 00:11:54,880 --> 00:11:57,440 Speaker 1: reason that we're seeing this leveling off is the fact 203 00:11:57,440 --> 00:12:01,560 Speaker 1: that social distancing and self quarantine is in fact working. 204 00:12:02,000 --> 00:12:04,560 Speaker 1: So do you ever think about or do you get 205 00:12:04,559 --> 00:12:07,839 Speaker 1: worried about this possibility that until we do have a 206 00:12:07,920 --> 00:12:12,040 Speaker 1: vaccine or science develops further, that this is maybe the 207 00:12:12,120 --> 00:12:14,800 Speaker 1: only way to combat the spread of the virus, which 208 00:12:14,840 --> 00:12:18,560 Speaker 1: means the economy won't be able to open holy for 209 00:12:18,679 --> 00:12:23,960 Speaker 1: quite a long period of time. It it is a concern, uh, 210 00:12:24,360 --> 00:12:30,360 Speaker 1: the medical progress will lead everything. You know, this is 211 00:12:30,400 --> 00:12:33,520 Speaker 1: not a problem that the FED can fix, and we 212 00:12:33,520 --> 00:12:36,079 Speaker 1: we saw that the FED even this week has come 213 00:12:36,080 --> 00:12:41,760 Speaker 1: out with even new kitchen sink approaches to ensuring the 214 00:12:41,760 --> 00:12:44,800 Speaker 1: flow of liquidity. This is not a problem that just 215 00:12:44,920 --> 00:12:48,400 Speaker 1: fiscal dollars alone to consumers can fix, so that will 216 00:12:48,440 --> 00:12:52,240 Speaker 1: help turn in the economy. This is a problem that 217 00:12:52,360 --> 00:12:58,640 Speaker 1: it takes medical ingenuity, progress and innovation. Now that may 218 00:12:58,640 --> 00:13:01,760 Speaker 1: not just rest on a vaccine. It could be expanded 219 00:13:01,800 --> 00:13:07,559 Speaker 1: testing procedures or other things that uh that the medical community, 220 00:13:07,760 --> 00:13:11,440 Speaker 1: with ample help from from the FED and state governments 221 00:13:11,480 --> 00:13:14,440 Speaker 1: can do to build confidence so that we can go 222 00:13:14,520 --> 00:13:19,080 Speaker 1: outside and not feel threatened just going into a grocery store. 223 00:13:19,120 --> 00:13:21,960 Speaker 1: And that's going to take some uh some time, I 224 00:13:22,000 --> 00:13:41,480 Speaker 1: think to get over that psychology. You know. You you 225 00:13:41,559 --> 00:13:46,000 Speaker 1: mentioned that kitchen sink approach from the FED. Are our communist? 226 00:13:46,040 --> 00:13:49,559 Speaker 1: Cameron christ had a funny line saying, well, yeah, it's 227 00:13:49,559 --> 00:13:52,680 Speaker 1: also the coverbs, the sideboard and even a few paper 228 00:13:52,679 --> 00:13:55,679 Speaker 1: plates and plastic cups they dredged up from a closet 229 00:13:56,200 --> 00:14:00,680 Speaker 1: launch room. I wonder, Nila, they clearly are are doing 230 00:14:00,720 --> 00:14:05,240 Speaker 1: everything under the sun, uh, to to add liquidity to 231 00:14:05,320 --> 00:14:10,000 Speaker 1: the market. UM. I worry though, if there's a little 232 00:14:10,040 --> 00:14:15,600 Speaker 1: bit of improvisation and experimenting experimentation here going on. I 233 00:14:15,600 --> 00:14:19,200 Speaker 1: feel like this this quote unquote whatever it takes approach. Um, 234 00:14:20,080 --> 00:14:23,080 Speaker 1: it's difficult for central bankers, at least in the US, 235 00:14:23,200 --> 00:14:25,760 Speaker 1: and for the government to do when the recession is 236 00:14:25,800 --> 00:14:30,600 Speaker 1: caused by sort of, uh, you know, an endogenous financial 237 00:14:30,680 --> 00:14:34,680 Speaker 1: system issue like say, the the financial crisis. I think 238 00:14:35,040 --> 00:14:38,360 Speaker 1: you know, the public did not have a good taste 239 00:14:38,360 --> 00:14:40,960 Speaker 1: in their mouth about a lot of those bank bailouts 240 00:14:41,040 --> 00:14:44,800 Speaker 1: and and the various programs that went on. In this case, 241 00:14:45,000 --> 00:14:48,320 Speaker 1: it seems since you know, it's this virus that was 242 00:14:49,040 --> 00:14:52,120 Speaker 1: the fault of no human as far as we know. Um, 243 00:14:52,480 --> 00:14:55,040 Speaker 1: you know, this real exogenous shock to the economy that 244 00:14:55,640 --> 00:15:00,120 Speaker 1: it's almost like it's it's freed the reins of the 245 00:15:00,120 --> 00:15:03,720 Speaker 1: FED and the government to basically really do whatever it takes. 246 00:15:04,240 --> 00:15:06,160 Speaker 1: But once we get through this, I wonder where the 247 00:15:06,280 --> 00:15:08,920 Speaker 1: risk is. And you had mentioned that that the near 248 00:15:09,080 --> 00:15:13,720 Speaker 1: term threat is deflation. Um, are we again going to 249 00:15:13,800 --> 00:15:17,840 Speaker 1: be worrying about inflation at the other end of this um? 250 00:15:17,880 --> 00:15:20,320 Speaker 1: And I know people have been worried about inflation throughout 251 00:15:20,360 --> 00:15:24,760 Speaker 1: the entire bullmarket that that just finished UM and the 252 00:15:24,960 --> 00:15:28,360 Speaker 1: entire economic cycle. But is it is there any reason 253 00:15:28,360 --> 00:15:30,840 Speaker 1: to believe that this time could be different, that that 254 00:15:30,960 --> 00:15:35,880 Speaker 1: this will be the potential for an inflationary shock once 255 00:15:35,920 --> 00:15:40,320 Speaker 1: we're through uh, you know, the the economic slump that's 256 00:15:40,360 --> 00:15:43,560 Speaker 1: being caused by the the quarantines and the isolation. Is 257 00:15:43,600 --> 00:15:47,000 Speaker 1: all this liquidity and money being thrown at this problem 258 00:15:47,040 --> 00:15:49,120 Speaker 1: going to come back and bite us down the line. 259 00:15:49,320 --> 00:15:51,480 Speaker 1: That's a great question. I'm going to take that in part. 260 00:15:51,600 --> 00:15:55,240 Speaker 1: I'll start with your your last statement on inflation. What's 261 00:15:55,280 --> 00:15:58,960 Speaker 1: remarkable about this downturn is it's both a hit to 262 00:15:59,480 --> 00:16:02,920 Speaker 1: demand end in a hit to supply. Now, the global 263 00:16:02,960 --> 00:16:05,960 Speaker 1: hit to demand we've seen and we understand, and that's 264 00:16:05,960 --> 00:16:10,680 Speaker 1: what's deflationary. But what's inflationary is the global hit to supply. 265 00:16:11,760 --> 00:16:13,840 Speaker 1: I think, I mean Sarah went to a couple of 266 00:16:13,840 --> 00:16:18,000 Speaker 1: gas stations. I think gas stations are the mecca for 267 00:16:18,160 --> 00:16:22,240 Speaker 1: the supply and demand shock illustration. Why I want to 268 00:16:22,280 --> 00:16:24,760 Speaker 1: say that at one gas station we stopped out, We 269 00:16:24,880 --> 00:16:27,880 Speaker 1: paid one seventy eight gallon. There you go, There you go. 270 00:16:28,120 --> 00:16:30,640 Speaker 1: Was that the was that the low of the that 271 00:16:30,760 --> 00:16:32,440 Speaker 1: was the lowest that we should have had? You do 272 00:16:32,480 --> 00:16:37,320 Speaker 1: a chart everywhere we stopped Yeah, I mean they were 273 00:16:37,360 --> 00:16:39,080 Speaker 1: all very low, but yeah, a couple of couple of 274 00:16:39,080 --> 00:16:42,720 Speaker 1: spots remarkable. So there you go. There's the UH, the 275 00:16:42,760 --> 00:16:47,040 Speaker 1: oil price shock, the slump and demand, and then they 276 00:16:47,160 --> 00:16:50,920 Speaker 1: break down into OPEC talks recently hopefully that's improving soon, 277 00:16:51,040 --> 00:16:55,560 Speaker 1: which led to UH the announcement of more supply. So 278 00:16:55,640 --> 00:16:57,840 Speaker 1: that's it. But if you go into that gas station 279 00:16:57,880 --> 00:17:00,800 Speaker 1: and try to buy a bottle of a pack of water, 280 00:17:00,960 --> 00:17:04,720 Speaker 1: you might see eighteen dollar water for twenty four bottles. 281 00:17:04,840 --> 00:17:07,920 Speaker 1: Let's how you're seeing some inflation and and and things 282 00:17:07,960 --> 00:17:11,760 Speaker 1: like bullet paper and water and and and rice and basics. 283 00:17:12,119 --> 00:17:16,840 Speaker 1: So if if, if, if global demand rebounds, but we 284 00:17:16,880 --> 00:17:20,920 Speaker 1: still have these supply shots, you could see the dominance 285 00:17:21,000 --> 00:17:25,399 Speaker 1: of of slagging demand be outweighed by the dominance of 286 00:17:25,400 --> 00:17:28,560 Speaker 1: the shock and supply, and that would be inflationary. And 287 00:17:28,600 --> 00:17:32,359 Speaker 1: so there's a huge amount of uncertainty in terms of 288 00:17:32,400 --> 00:17:36,000 Speaker 1: how this plays out into the recovering and then just 289 00:17:36,080 --> 00:17:39,320 Speaker 1: briefly you asked, UH what we be paying for this 290 00:17:39,480 --> 00:17:43,080 Speaker 1: somehow the kitchen sink approach by the Fed and by 291 00:17:43,400 --> 00:17:47,800 Speaker 1: UH fiscal government sometime down the road, Well, we already 292 00:17:47,840 --> 00:17:51,040 Speaker 1: know that deficits were high trillion dollars as far as 293 00:17:51,119 --> 00:17:54,040 Speaker 1: the I can see every year, UH deficits are about 294 00:17:54,080 --> 00:17:57,040 Speaker 1: to to search further though, in the context of low 295 00:17:57,160 --> 00:18:02,120 Speaker 1: interest rates, economists are really concerned about incentives, and when 296 00:18:02,119 --> 00:18:05,639 Speaker 1: you have a kitchen sync approach, you don't think a 297 00:18:05,640 --> 00:18:11,160 Speaker 1: lot about incentives UH in and doing that kind of legislation. 298 00:18:11,520 --> 00:18:13,920 Speaker 1: And so that could be where the rubber meets the road. 299 00:18:14,080 --> 00:18:18,720 Speaker 1: Are we changing behavior in unexpected ways by the way 300 00:18:18,760 --> 00:18:21,080 Speaker 1: that we are trying to stimulate the economy in a 301 00:18:21,160 --> 00:18:26,040 Speaker 1: time of crisis. So i'd imagine, of course the inflation outlook, 302 00:18:26,040 --> 00:18:28,480 Speaker 1: which is a little bit muddied at this point in time, 303 00:18:28,560 --> 00:18:30,680 Speaker 1: is something you have to take it into account when 304 00:18:30,720 --> 00:18:34,199 Speaker 1: thinking about how to position portfolio is going forward. But 305 00:18:34,320 --> 00:18:36,320 Speaker 1: I also want to dive a little bit deeper into 306 00:18:36,440 --> 00:18:39,040 Speaker 1: something you mentioned earlier in the show. Was that was 307 00:18:39,720 --> 00:18:45,320 Speaker 1: you feel like the market priced in the downturn relatively well, 308 00:18:45,359 --> 00:18:49,639 Speaker 1: but hasn't been as good at pricing in a recovery. 309 00:18:49,760 --> 00:18:52,639 Speaker 1: And it made me think of a chart, uh that 310 00:18:52,720 --> 00:18:55,359 Speaker 1: I received from Credit Suites where they've been looking at 311 00:18:55,359 --> 00:18:58,359 Speaker 1: what they call fresh estimates, where they only take into 312 00:18:58,400 --> 00:19:02,400 Speaker 1: account bottom up company profit estimates that have been revised 313 00:19:02,440 --> 00:19:05,040 Speaker 1: recently UM and what they looked at and what they 314 00:19:05,119 --> 00:19:08,399 Speaker 1: highlighted this week was that because of the falling e 315 00:19:08,880 --> 00:19:11,119 Speaker 1: and multiple expansion that we've seen this week with the 316 00:19:11,200 --> 00:19:14,200 Speaker 1: rally is the fact that we're actually at now a 317 00:19:14,359 --> 00:19:19,359 Speaker 1: nineteen times multiple, matching the multiple from the February nineteenth 318 00:19:19,400 --> 00:19:22,320 Speaker 1: high in the stock market. And it's been hard for 319 00:19:22,359 --> 00:19:24,600 Speaker 1: me to wrap my mind abound around. But it makes 320 00:19:24,600 --> 00:19:27,359 Speaker 1: me also think, do you get a sense that the 321 00:19:27,359 --> 00:19:31,520 Speaker 1: market doesn't really care about earnings the idea that yeah, 322 00:19:31,560 --> 00:19:35,160 Speaker 1: everyone knows this year is going to be really rough, 323 00:19:35,720 --> 00:19:39,680 Speaker 1: particularly in the next two quarters as we get those results, 324 00:19:39,960 --> 00:19:45,920 Speaker 1: and that instead investors in the market are looking forward too, 325 00:19:46,040 --> 00:19:50,119 Speaker 1: trying to envision what that rebound might look like. I 326 00:19:50,160 --> 00:19:53,760 Speaker 1: think Steph Curry said it best if a couple of 327 00:19:53,800 --> 00:19:58,040 Speaker 1: months ago we should just forget that's what that's what 328 00:19:58,160 --> 00:20:00,919 Speaker 1: the markets want to do. They want to move to 329 00:20:02,240 --> 00:20:06,160 Speaker 1: and they're anxious to do that, and and and so yes, 330 00:20:06,240 --> 00:20:09,119 Speaker 1: I think a lot of this bad news is being dismissed. 331 00:20:09,200 --> 00:20:12,800 Speaker 1: It's either already priced in or will be dismissed going forward. 332 00:20:13,080 --> 00:20:16,119 Speaker 1: But it also shows a concern because this bear market 333 00:20:16,200 --> 00:20:20,879 Speaker 1: rally may have further to fall once that economic news 334 00:20:20,920 --> 00:20:25,640 Speaker 1: and earnings news comes in differently than the market projects. 335 00:20:26,119 --> 00:20:31,120 Speaker 1: So they eventually the market as it looks to the future, 336 00:20:31,800 --> 00:20:35,280 Speaker 1: which in my mind is it's going to be anchored 337 00:20:35,320 --> 00:20:39,119 Speaker 1: by the reality of the present and and still a 338 00:20:39,240 --> 00:20:42,720 Speaker 1: slog to get through this year. I'm glad you brought 339 00:20:42,760 --> 00:20:44,399 Speaker 1: up Steph Curry. There was a great story in the 340 00:20:44,480 --> 00:20:48,680 Speaker 1: journal about how he found himself quarantined at home and 341 00:20:48,880 --> 00:20:51,520 Speaker 1: he didn't have a basketball hoop in his own driveway, 342 00:20:51,600 --> 00:20:53,240 Speaker 1: so he had a order one online and it took 343 00:20:53,280 --> 00:20:58,280 Speaker 1: him like five hours together. Shocking. I can't believe you 344 00:20:58,280 --> 00:21:01,800 Speaker 1: didn't have its own back right, you know. Uh. I 345 00:21:01,920 --> 00:21:07,240 Speaker 1: envisioned every single NBA player having their own basketball. Maybe 346 00:21:07,320 --> 00:21:14,000 Speaker 1: someone just don't like working from home. I say, leave 347 00:21:14,080 --> 00:21:19,360 Speaker 1: it in the gym. Uh. You know, Neilie, you made 348 00:21:19,680 --> 00:21:24,199 Speaker 1: a very I think, super important point earlier in the 349 00:21:24,240 --> 00:21:28,679 Speaker 1: interview when you talked about that investor psychology. Um, I 350 00:21:28,760 --> 00:21:33,679 Speaker 1: know my own uh mentality about this virus shifted dramatically 351 00:21:33,720 --> 00:21:35,520 Speaker 1: this week. I had an old colleague I used to 352 00:21:35,520 --> 00:21:38,040 Speaker 1: work at the Associated Press way back when, an old 353 00:21:38,119 --> 00:21:41,560 Speaker 1: colleague and it's just then and uh, guy was fifty 354 00:21:41,600 --> 00:21:45,240 Speaker 1: one years old, a marathon runner, one of the nicest 355 00:21:45,240 --> 00:21:48,560 Speaker 1: people you'd ever meet, UM, caught this bug and died 356 00:21:48,600 --> 00:21:51,119 Speaker 1: from it. And it really sort of it was like 357 00:21:51,160 --> 00:21:53,320 Speaker 1: a gut punch to me. You know, I'd kind of 358 00:21:53,320 --> 00:21:56,320 Speaker 1: been dealing like I deal with every everything like this 359 00:21:56,359 --> 00:21:58,720 Speaker 1: with with bad jokes, you know, and it really kind 360 00:21:58,720 --> 00:22:02,200 Speaker 1: of made my head spin when you start to get 361 00:22:02,560 --> 00:22:06,520 Speaker 1: sort of, um, people in your lives being affected by 362 00:22:06,560 --> 00:22:08,800 Speaker 1: this rather than just watching it on the TV, watching 363 00:22:08,840 --> 00:22:13,080 Speaker 1: it in the newspaper. And I'm curious about that sort 364 00:22:13,119 --> 00:22:16,240 Speaker 1: of the consumer confidence element of this, uh, the investors 365 00:22:16,240 --> 00:22:20,000 Speaker 1: psychology element of this. Um. You know when you go 366 00:22:20,040 --> 00:22:22,240 Speaker 1: to that when you when you're finally allowed out of 367 00:22:22,280 --> 00:22:24,080 Speaker 1: your house and you go to that Short Hills mall 368 00:22:24,560 --> 00:22:25,960 Speaker 1: and sorry, I don't know if you're familiar with the 369 00:22:25,960 --> 00:22:27,600 Speaker 1: Short Hills Mall. To the only mall I know that 370 00:22:27,640 --> 00:22:32,359 Speaker 1: has you can take a helicopter to. Um, Yeah, that's 371 00:22:32,359 --> 00:22:34,160 Speaker 1: the thing. Yeah, we'll have to fly you out there. 372 00:22:34,200 --> 00:22:36,639 Speaker 1: Sometimes Nil is gonna get her helicopter and pick you 373 00:22:36,720 --> 00:22:38,520 Speaker 1: up and we'll go shopping. When this is all I'm 374 00:22:39,440 --> 00:22:42,160 Speaker 1: my helicopter looks like a ten year old Volvo. Don't 375 00:22:42,200 --> 00:22:49,520 Speaker 1: be surprised, But I wonder, you know that first trip 376 00:22:49,560 --> 00:22:53,960 Speaker 1: through the mall, how much is our people's psychology is 377 00:22:53,960 --> 00:22:56,000 Speaker 1: going to be affected for for years to come? You know, 378 00:22:56,000 --> 00:22:58,240 Speaker 1: are you gonna be You're gonna be doing more windows 379 00:22:58,240 --> 00:23:01,520 Speaker 1: shopping than actual spending at the mall all? And you 380 00:23:01,560 --> 00:23:04,760 Speaker 1: know how does that work in the in the investment 381 00:23:04,880 --> 00:23:08,280 Speaker 1: landscape to are people going to be risk adverse? Were 382 00:23:08,320 --> 00:23:12,320 Speaker 1: more risk averse than they were um for quite a 383 00:23:12,400 --> 00:23:16,040 Speaker 1: while at the back end of this in your opinion, Well, 384 00:23:16,119 --> 00:23:18,520 Speaker 1: first of all, Mike, I'm really sorry for your last 385 00:23:18,600 --> 00:23:22,600 Speaker 1: and I'm really sorry for all of these tragic stories 386 00:23:23,160 --> 00:23:26,080 Speaker 1: that I've heard and that people are being touched with. 387 00:23:26,240 --> 00:23:30,159 Speaker 1: I think I think this will be with us for 388 00:23:30,200 --> 00:23:32,760 Speaker 1: a while. When you think about other tragedies, you think 389 00:23:32,760 --> 00:23:37,320 Speaker 1: about nine eleven. It does change how you view things 390 00:23:37,840 --> 00:23:41,920 Speaker 1: and it changes how you operate. You think of those 391 00:23:42,000 --> 00:23:44,760 Speaker 1: nine eleven changes in New York and Washington, d C. 392 00:23:45,040 --> 00:23:47,879 Speaker 1: Where I was living at the time. It was profound 393 00:23:47,920 --> 00:23:51,440 Speaker 1: the changes at the time that happened as a result 394 00:23:51,440 --> 00:23:54,800 Speaker 1: of the tragedy, but over time you kind of got 395 00:23:54,880 --> 00:23:58,440 Speaker 1: used to them and those changes began to blend into 396 00:23:58,480 --> 00:24:01,560 Speaker 1: the background. And I expect that there will be changes 397 00:24:01,640 --> 00:24:05,680 Speaker 1: made this time around. We will be different, we will 398 00:24:05,800 --> 00:24:11,760 Speaker 1: shop different, we will approach crowds differently. Over it's going 399 00:24:11,840 --> 00:24:14,919 Speaker 1: to feel strange, but over time, it's going to be 400 00:24:15,040 --> 00:24:18,720 Speaker 1: business as usual and it'll those changes will fade into 401 00:24:18,760 --> 00:24:22,760 Speaker 1: the background. Now, the markets, there's two inclinations. We saw 402 00:24:22,800 --> 00:24:26,160 Speaker 1: them play out in March. First, it was the inclination 403 00:24:26,280 --> 00:24:29,440 Speaker 1: to sell in panic, sell whatever you can get your 404 00:24:29,440 --> 00:24:32,480 Speaker 1: hands on, and that was the most liquid assets, and 405 00:24:32,520 --> 00:24:35,000 Speaker 1: you saw that really play out in the bond markets. 406 00:24:35,040 --> 00:24:38,400 Speaker 1: But there's this other impulse, which is to buy by 407 00:24:38,560 --> 00:24:41,280 Speaker 1: now it's foamo fear of missing out. So you have 408 00:24:41,359 --> 00:24:45,960 Speaker 1: these two twin dramatic, extreme reactions, either to sell in 409 00:24:46,119 --> 00:24:49,200 Speaker 1: mass or to buy in mass. And that's where investors 410 00:24:49,200 --> 00:24:53,159 Speaker 1: can get caught up because neither of those approaches makes sense. 411 00:24:53,400 --> 00:24:57,040 Speaker 1: If you're a retail long term investor, it's always about 412 00:24:57,080 --> 00:25:00,199 Speaker 1: the plan. It's the plan that takes the emotion of 413 00:25:00,280 --> 00:25:03,840 Speaker 1: investing and it's going to be having a plan in place, 414 00:25:04,720 --> 00:25:11,119 Speaker 1: rules in place, helped by local governments in federal leadership 415 00:25:11,440 --> 00:25:18,120 Speaker 1: that makes people feel comfortable about resuming their normal economic activities. Yeah, 416 00:25:18,160 --> 00:25:23,520 Speaker 1: you know, there's been so many just heartbreaking stories out there. Um, 417 00:25:23,640 --> 00:25:26,960 Speaker 1: Mike again, we're both so sorry, um for your loss, 418 00:25:27,000 --> 00:25:29,800 Speaker 1: but I think, uh, we're all going to be a 419 00:25:29,800 --> 00:25:32,080 Speaker 1: little bit appreciative, but over the fact that it's a 420 00:25:32,600 --> 00:25:35,479 Speaker 1: three day weekend and we can all hopefully get some 421 00:25:35,560 --> 00:25:39,400 Speaker 1: rest and just take it all in UM and zoom 422 00:25:39,440 --> 00:25:42,200 Speaker 1: with families over over the weekend. If that's something we're 423 00:25:42,200 --> 00:25:45,080 Speaker 1: all doing now, we're doing it right now as we speak. 424 00:25:45,200 --> 00:25:48,879 Speaker 1: So so there you go, and hopefully no weirdos show up. 425 00:25:48,920 --> 00:25:51,800 Speaker 1: I keep hearing these stories about people zooming with their 426 00:25:51,840 --> 00:25:54,800 Speaker 1: class or or church group or something in some random 427 00:25:55,000 --> 00:26:03,200 Speaker 1: where I think normality to to what is It's nice 428 00:26:03,200 --> 00:26:08,879 Speaker 1: to know that they haven't gone away all. Well, speaking 429 00:26:08,880 --> 00:26:12,960 Speaker 1: of random weirdos, I think that's our segway, Sarah, that 430 00:26:13,160 --> 00:26:17,840 Speaker 1: is I was waiting for it. We're no random weirdos. 431 00:26:17,880 --> 00:26:21,320 Speaker 1: We're professional weirdos when it comes to the craziest things 432 00:26:21,359 --> 00:26:24,600 Speaker 1: we've seen in markets this week. So so sorry, what 433 00:26:24,640 --> 00:26:27,239 Speaker 1: do you what do you got? So I'm just going 434 00:26:27,280 --> 00:26:30,080 Speaker 1: to bring it back to the kitchen sink that the 435 00:26:30,160 --> 00:26:34,159 Speaker 1: FED has now given us, because it really is just 436 00:26:34,280 --> 00:26:38,520 Speaker 1: pretty crazy. On on Thursday, when they made the announcement 437 00:26:39,160 --> 00:26:42,000 Speaker 1: of more stimulus, that they would provide the fact that 438 00:26:42,040 --> 00:26:47,520 Speaker 1: they are now buying US high yield corporate bonds. So 439 00:26:47,960 --> 00:26:51,480 Speaker 1: the announcement reads the preponderance of et F holdings will 440 00:26:51,520 --> 00:26:54,639 Speaker 1: be of e T s whose primary investment objective is 441 00:26:54,680 --> 00:26:57,920 Speaker 1: exposure to US investment grade corporate bonds, and the remainder 442 00:26:58,280 --> 00:27:00,600 Speaker 1: will be in e T s whose primary our investment 443 00:27:00,840 --> 00:27:04,600 Speaker 1: objective is exposure to US hiled corporate bonds. And what 444 00:27:04,680 --> 00:27:06,840 Speaker 1: it's like, what's left now is is it just stocks 445 00:27:07,480 --> 00:27:10,080 Speaker 1: with the UK in the trunk pretty much all that's left. Yeah, 446 00:27:10,240 --> 00:27:13,240 Speaker 1: the junk in the trunk. But it's it's crazy, it's 447 00:27:13,240 --> 00:27:15,119 Speaker 1: pretty anazy. And what do you think about that? This 448 00:27:15,240 --> 00:27:17,240 Speaker 1: kind of goes back to what I was talking about 449 00:27:17,280 --> 00:27:21,160 Speaker 1: in that the potential risks and I hate to try 450 00:27:21,200 --> 00:27:24,719 Speaker 1: out the old world where moral hazard from this kitchen 451 00:27:24,720 --> 00:27:29,560 Speaker 1: sink approach. Um, I think clearly there's an urgent need 452 00:27:29,600 --> 00:27:31,399 Speaker 1: for the FED to do this in the junk market. 453 00:27:31,640 --> 00:27:36,120 Speaker 1: UM was this inevitable and is it? Does it bother 454 00:27:36,200 --> 00:27:41,560 Speaker 1: you at all? I think what is being done to 455 00:27:41,720 --> 00:27:47,760 Speaker 1: manage a crisis doesn't bother me, But the future does. 456 00:27:48,520 --> 00:27:51,720 Speaker 1: We've seen the FED having a lot of trouble prior 457 00:27:51,760 --> 00:27:56,200 Speaker 1: to this pandemic unwinding uh, the QI that it did 458 00:27:56,280 --> 00:27:59,239 Speaker 1: as a result of two thousand eight. Now they're just 459 00:27:59,320 --> 00:28:01,840 Speaker 1: blowing up their balance sheet and it's hard for me 460 00:28:01,880 --> 00:28:05,760 Speaker 1: to imagine a world in which the FED can comfortably 461 00:28:06,000 --> 00:28:08,520 Speaker 1: unwind a lot of these assets. Now many of them 462 00:28:08,520 --> 00:28:11,240 Speaker 1: are short term assets and they will just roll off. 463 00:28:11,480 --> 00:28:15,720 Speaker 1: But the FED is going to be uh, having this 464 00:28:16,440 --> 00:28:20,080 Speaker 1: huge trillion dollar portfolio, I think, for for a decade 465 00:28:20,160 --> 00:28:24,200 Speaker 1: or more, because it's been uh, it hasn't been able 466 00:28:24,240 --> 00:28:29,480 Speaker 1: to unwind successfully, even in the best of an economic expansion. Yeah, 467 00:28:29,680 --> 00:28:32,320 Speaker 1: I agree, I agree. It's it's once it's in, it's 468 00:28:32,359 --> 00:28:33,960 Speaker 1: hard to take it out. I guess, so unless you, 469 00:28:34,160 --> 00:28:36,440 Speaker 1: like you said, it rolls off and eventually a lot 470 00:28:36,480 --> 00:28:40,200 Speaker 1: witness over the last decade. But all right, Neil, you're 471 00:28:40,240 --> 00:28:42,000 Speaker 1: a veteran to the show, so I know you came 472 00:28:42,040 --> 00:28:44,480 Speaker 1: prepared with the craziest thing you saw. There's so many 473 00:28:44,520 --> 00:28:47,240 Speaker 1: crazy things it's hard to just choose one. But I'm 474 00:28:47,240 --> 00:28:49,640 Speaker 1: going to stick at the bond markets and I'm gonna 475 00:28:49,720 --> 00:28:54,040 Speaker 1: stick with this conversation about the FED. The record level 476 00:28:54,120 --> 00:28:57,560 Speaker 1: of investment grade corporate issuance that we saw this week 477 00:28:57,960 --> 00:29:01,840 Speaker 1: is really outstanding. It's like the the corporate market alternative 478 00:29:01,880 --> 00:29:06,440 Speaker 1: to stockpiling toilet paper. It's just just run on credit 479 00:29:06,800 --> 00:29:10,280 Speaker 1: while you can have it now, I have access. Now, 480 00:29:10,360 --> 00:29:12,360 Speaker 1: you don't know what the future is, so let's just 481 00:29:12,480 --> 00:29:15,440 Speaker 1: get as much as possible. And it seems that's what 482 00:29:16,000 --> 00:29:19,640 Speaker 1: corporations are doing. Who I have the investment grade rating? 483 00:29:19,800 --> 00:29:23,560 Speaker 1: So interesting? Um, it goes right back Mike, to to 484 00:29:23,680 --> 00:29:28,640 Speaker 1: your insights about what's going to happen over the long term. Yeah. 485 00:29:28,840 --> 00:29:30,920 Speaker 1: I think that's a great analogy with the toilet paper. 486 00:29:31,120 --> 00:29:33,520 Speaker 1: It's amazing though, that that hunt for yield is still there, 487 00:29:33,600 --> 00:29:37,080 Speaker 1: that the demand from investors is still there too to 488 00:29:37,360 --> 00:29:39,520 Speaker 1: allow this. I mean, I guess when the FED is 489 00:29:39,520 --> 00:29:42,520 Speaker 1: is uh, that's buying you know. It's it goes back 490 00:29:42,560 --> 00:29:45,680 Speaker 1: to why fight the WI flight the Fed? But pretty fascinating, 491 00:29:45,920 --> 00:29:50,760 Speaker 1: uh phenomenons we're seeing all right? Uh, Sarah, As you know, 492 00:29:51,280 --> 00:29:54,280 Speaker 1: for the crazy things, sometimes I go to the alternative 493 00:29:54,280 --> 00:29:57,800 Speaker 1: asset classes. Um, and I'm going And when I say 494 00:29:57,840 --> 00:30:00,560 Speaker 1: alternative asset classes, I'm not kidding this time. I'm I'm gonna. 495 00:30:00,840 --> 00:30:05,080 Speaker 1: I'm gonna take us to the exotic animal trade. Um. 496 00:30:05,120 --> 00:30:07,360 Speaker 1: And I'm assuming are you are you going to bring 497 00:30:07,400 --> 00:30:09,600 Speaker 1: in some tiger kings right now or you know it 498 00:30:09,760 --> 00:30:15,160 Speaker 1: was coming? Have you guys watched The Tiger King? This 499 00:30:15,200 --> 00:30:18,520 Speaker 1: is what I've I've been doing all quarantine long. Well 500 00:30:18,520 --> 00:30:20,640 Speaker 1: I guess not really because I got through it in 501 00:30:20,680 --> 00:30:22,960 Speaker 1: the matter of two days, but it's helped a couple 502 00:30:23,000 --> 00:30:26,600 Speaker 1: of days out. So I think it was it was 503 00:30:26,760 --> 00:30:31,200 Speaker 1: inevitable that eventually our President Donald Trump would would somehow 504 00:30:31,240 --> 00:30:34,720 Speaker 1: get involved in the tiger Kings saga. I mean that 505 00:30:34,800 --> 00:30:37,360 Speaker 1: was pretty predictable that those two pass would clyde. And 506 00:30:37,400 --> 00:30:41,640 Speaker 1: now there are reports out there, uh, indicating that Trump 507 00:30:41,720 --> 00:30:47,600 Speaker 1: is considering pardoning uh, the Tiger King, Joe Exotic himself. UM. 508 00:30:47,680 --> 00:30:51,080 Speaker 1: And like I said, this is an alternative asset class 509 00:30:51,400 --> 00:30:54,600 Speaker 1: exotic animals, so it counts. I don't know if that 510 00:30:54,640 --> 00:30:56,360 Speaker 1: guy from Hong Kong's in a call in and say 511 00:30:56,400 --> 00:30:59,240 Speaker 1: I'm cheating again, but I'll stand by this, Sam. You're cheating. 512 00:30:59,440 --> 00:31:02,200 Speaker 1: Did did either of you see uh. At one of 513 00:31:02,240 --> 00:31:05,320 Speaker 1: the press conferences, there was a reporter who asked UH 514 00:31:05,560 --> 00:31:08,320 Speaker 1: President Trump about Tiger King and asked if he would 515 00:31:08,320 --> 00:31:10,840 Speaker 1: consider pardoning him, and there was a nice little back 516 00:31:10,880 --> 00:31:14,920 Speaker 1: and forth, some comedic RELI, what do you guys think 517 00:31:14,960 --> 00:31:17,240 Speaker 1: that it was a Joe exotic pardon? Is that going 518 00:31:17,280 --> 00:31:22,600 Speaker 1: to help Trump's re election chances? Having never seen the show, 519 00:31:22,640 --> 00:31:26,080 Speaker 1: I'm not exactly sure what actions are being pardoned, but 520 00:31:28,840 --> 00:31:34,240 Speaker 1: so I'll reserve catch it. Well, you'll have you'll have 521 00:31:34,320 --> 00:31:37,360 Speaker 1: to go watch it. Nila, It's it's pretty unbelievable. I 522 00:31:37,360 --> 00:31:39,640 Speaker 1: don't know. I think has proven she might be the 523 00:31:39,640 --> 00:31:42,360 Speaker 1: only one among us with some actual taste and televisions 524 00:31:42,360 --> 00:31:46,760 Speaker 1: that the fact that she hasn't hasn't seen Neila Richardson, 525 00:31:46,800 --> 00:31:48,360 Speaker 1: thank you so much for coming on the show to deck. 526 00:31:48,480 --> 00:31:50,560 Speaker 1: Thanks for having me. It's always a delight to talk 527 00:31:50,560 --> 00:31:53,800 Speaker 1: with you both. And you take care please you do 528 00:32:01,840 --> 00:32:04,760 Speaker 1: what goes up. We'll be back next week. Until then, 529 00:32:04,920 --> 00:32:07,560 Speaker 1: you can find us on the Bloomberg Terminal website and app, 530 00:32:07,960 --> 00:32:10,640 Speaker 1: or wherever you get your podcasts. We love it if 531 00:32:10,680 --> 00:32:12,440 Speaker 1: you took the time to rate interview the show on 532 00:32:12,480 --> 00:32:15,800 Speaker 1: Apple podcasts, so more listeners can find us and you 533 00:32:15,840 --> 00:32:18,960 Speaker 1: can find us on Twitter, follow me at at Sara Panzac, 534 00:32:19,320 --> 00:32:23,200 Speaker 1: Mike is at Reaganonymous, and you can also follow Bloomberg 535 00:32:23,200 --> 00:32:27,400 Speaker 1: Podcasts at Podcasts. What Goes Up is produced by Tobra Forehead. 536 00:32:27,680 --> 00:32:31,280 Speaker 1: The head of Bloomberg Podcast is Francesco Levie. Thanks for listening, 537 00:32:31,400 --> 00:32:32,200 Speaker 1: See you next time.