1 00:00:03,720 --> 00:00:07,120 Speaker 1: Scrap on your parachute. It's time for What Goes Up 2 00:00:07,360 --> 00:00:14,920 Speaker 1: with Sarah Ponzick and Mike Reagan. Hello, and welcome to 3 00:00:15,040 --> 00:00:18,960 Speaker 1: What Goes Up, a Bloomberg Weekly Markets podcast. I'm Sara Pont, 4 00:00:19,480 --> 00:00:22,320 Speaker 1: reporter on the Cross Asset team, and I'm Mike Reagan, 5 00:00:22,520 --> 00:00:26,000 Speaker 1: a senior editor at Bloomberg. This week on the show, 6 00:00:26,480 --> 00:00:30,120 Speaker 1: a year ago, global markets were reeling from the COVID crisis. 7 00:00:30,680 --> 00:00:34,640 Speaker 1: Now stocks are surging, meme stocks are a near daily phenomenon, 8 00:00:35,000 --> 00:00:37,400 Speaker 1: and bond yields are taking higher on Wall Street. It 9 00:00:37,440 --> 00:00:40,640 Speaker 1: almost feels like a different world. Well, our guests last 10 00:00:40,720 --> 00:00:43,040 Speaker 1: joined the show in the summer to discuss the very 11 00:00:43,080 --> 00:00:47,680 Speaker 1: trade that delivered a double digit return duringsh So now 12 00:00:47,960 --> 00:00:49,559 Speaker 1: he's going to join us and he'll share how is 13 00:00:49,560 --> 00:00:52,720 Speaker 1: from his position to capitalize on the recovery, and of 14 00:00:52,760 --> 00:00:55,640 Speaker 1: course we will close out the episode with our tradition 15 00:00:55,760 --> 00:00:59,760 Speaker 1: the craziest thing I saw in markets this week? And 16 00:01:00,000 --> 00:01:02,000 Speaker 1: if you saw something crazy, please do give us a 17 00:01:02,080 --> 00:01:05,760 Speaker 1: call on the Bloomberg Podcast hotline at six four six 18 00:01:06,319 --> 00:01:08,960 Speaker 1: three two four three four nine, oh and leave us 19 00:01:08,959 --> 00:01:11,559 Speaker 1: a voicemail and maybe we'll play it on the show. 20 00:01:12,160 --> 00:01:15,840 Speaker 1: Of course, can also tweet in our general direction. We're 21 00:01:15,880 --> 00:01:20,199 Speaker 1: at the handle at podcasts are Bloomberg podcast Handle and Sarah. 22 00:01:20,240 --> 00:01:22,920 Speaker 1: I gotta say, for the crazy things I've sworn off 23 00:01:22,959 --> 00:01:24,880 Speaker 1: of n f T s, I'm done with the n 24 00:01:24,920 --> 00:01:27,720 Speaker 1: f T s there were I have plenty of n 25 00:01:27,800 --> 00:01:29,600 Speaker 1: f T s to offer, and I did bring one 26 00:01:29,680 --> 00:01:32,360 Speaker 1: non n f T crazy thing as well, because I 27 00:01:32,360 --> 00:01:34,119 Speaker 1: know we've discussed n f T s the past couple 28 00:01:34,400 --> 00:01:36,000 Speaker 1: but come on, there were just a couple of this 29 00:01:36,080 --> 00:01:38,400 Speaker 1: past week that you couldn't ignore. I know, I know, 30 00:01:38,520 --> 00:01:40,880 Speaker 1: but there, I feel like they're jumping the shark now there. 31 00:01:40,920 --> 00:01:42,680 Speaker 1: There there were fun when no one had ever heard 32 00:01:42,720 --> 00:01:44,479 Speaker 1: about an n f T. Now it's just get it's 33 00:01:44,480 --> 00:01:48,640 Speaker 1: getting everywhere, very commonplace. We're minting n f T millionaires 34 00:01:48,680 --> 00:01:52,440 Speaker 1: and probably billionaires soon. You know. I it makes my 35 00:01:52,520 --> 00:01:55,200 Speaker 1: head spin, But I look forward to your crazy n 36 00:01:55,280 --> 00:01:58,600 Speaker 1: f T things. But before we get to that, let's 37 00:01:58,720 --> 00:02:03,200 Speaker 1: welcome back our guest. He is the chief investment officer 38 00:02:03,400 --> 00:02:07,640 Speaker 1: at Reminiscent Capital in Australia. His name is David Adams. David, 39 00:02:07,680 --> 00:02:11,239 Speaker 1: welcome back to the show. Thanks guys, great to be here, 40 00:02:11,400 --> 00:02:13,200 Speaker 1: and yeah, I guess it was nine months ago that 41 00:02:13,200 --> 00:02:14,919 Speaker 1: we last caught up. So thanks for having us back 42 00:02:14,919 --> 00:02:17,880 Speaker 1: on the show. It was fun last time. Right right now, David, 43 00:02:17,919 --> 00:02:20,440 Speaker 1: I know you made some trades that that worked out 44 00:02:20,440 --> 00:02:24,600 Speaker 1: pretty well during COVID. Luckily for you, what goes up 45 00:02:24,639 --> 00:02:27,440 Speaker 1: we allow for victory laps, So so we will allow 46 00:02:27,600 --> 00:02:31,320 Speaker 1: allow a victory lap. Remind us about what worked for 47 00:02:31,400 --> 00:02:35,280 Speaker 1: you in your trading strategies, what didn't work during COVID. 48 00:02:35,320 --> 00:02:37,600 Speaker 1: Catch us up on and you know sort of how 49 00:02:37,639 --> 00:02:40,920 Speaker 1: you handle the whole situation and kind of where things 50 00:02:40,960 --> 00:02:46,560 Speaker 1: stand now as far as how you're looking at opportunities. Sure, yeah, 51 00:02:46,600 --> 00:02:49,720 Speaker 1: so we sort of, um we we I mentioned last time, 52 00:02:49,720 --> 00:02:52,160 Speaker 1: we've we've been lucky enough that we're on lucky in 53 00:02:52,160 --> 00:02:56,040 Speaker 1: some ways, had been through four crises previously, and so 54 00:02:56,080 --> 00:02:58,200 Speaker 1: there was a certain sort of playbook when you've been 55 00:02:58,360 --> 00:03:00,440 Speaker 1: been there. All a little bit to front, but they 56 00:03:00,440 --> 00:03:02,640 Speaker 1: have an underlying kind of similarity. So we sort of 57 00:03:02,680 --> 00:03:05,919 Speaker 1: rolled out that playbook um in Q one of last year, 58 00:03:05,919 --> 00:03:09,120 Speaker 1: and it was essentially, you know, bonds and then FX 59 00:03:09,280 --> 00:03:12,720 Speaker 1: involved in equity downside, and then margin as people kind 60 00:03:12,720 --> 00:03:14,320 Speaker 1: of have to post margin. We sort of went went 61 00:03:14,320 --> 00:03:16,919 Speaker 1: through that and uh and and it played out much 62 00:03:16,960 --> 00:03:19,760 Speaker 1: like the prior prior crisis had done. So we're fortunate 63 00:03:19,840 --> 00:03:23,040 Speaker 1: enough to sort of capture that and avoid avoid trouble 64 00:03:23,080 --> 00:03:25,560 Speaker 1: and make money for investors in Q one. And I 65 00:03:25,560 --> 00:03:30,040 Speaker 1: think when we caught up was around July from memory 66 00:03:30,880 --> 00:03:33,519 Speaker 1: on the show, and and then what we were describing 67 00:03:33,720 --> 00:03:36,560 Speaker 1: was what we thought was giving the opportunity possibly for 68 00:03:36,560 --> 00:03:40,640 Speaker 1: the next couple of years, is a handover from the 69 00:03:40,720 --> 00:03:44,880 Speaker 1: developed markets um into the ear market, especially Asia. So 70 00:03:44,880 --> 00:03:47,720 Speaker 1: what I mean that specifically is UM for for for 71 00:03:47,720 --> 00:03:50,960 Speaker 1: for countries like China, India and Japan to extent, and 72 00:03:51,080 --> 00:03:54,160 Speaker 1: and and one or two others in Asia to play 73 00:03:54,320 --> 00:03:56,920 Speaker 1: a big catch up to the likes of the SMP 74 00:03:57,040 --> 00:03:59,680 Speaker 1: and the NASDAC. And I was just against some some 75 00:03:59,760 --> 00:04:03,880 Speaker 1: note last night, and this is an anecdote. UM you've had. 76 00:04:04,000 --> 00:04:06,960 Speaker 1: China since we last caught up peaked up at thirty 77 00:04:06,960 --> 00:04:10,640 Speaker 1: eight point nine percent gained from that July level, India 78 00:04:10,680 --> 00:04:13,640 Speaker 1: up at forty six point six, Japan the NICK up 79 00:04:13,640 --> 00:04:16,960 Speaker 1: at thirty five point six, and meanwhile the SMP put 80 00:04:17,040 --> 00:04:19,039 Speaker 1: up a healthy yame it was only twenty two point eight. 81 00:04:19,560 --> 00:04:22,400 Speaker 1: So that's the sort of seventeen and a half PERCENTUM 82 00:04:22,640 --> 00:04:26,440 Speaker 1: kind of relative catch up that Asia is starting to do, 83 00:04:26,880 --> 00:04:28,839 Speaker 1: and a lot of that actually came in the fourth quarter. 84 00:04:29,320 --> 00:04:31,080 Speaker 1: So if we just take beta, you know, the beta 85 00:04:31,120 --> 00:04:33,360 Speaker 1: of the market out for a second, you know, this 86 00:04:33,440 --> 00:04:36,120 Speaker 1: is just starting to happen now. So this this sort 87 00:04:36,160 --> 00:04:38,880 Speaker 1: of relative catch up which we started in a fourth 88 00:04:38,920 --> 00:04:41,200 Speaker 1: quarter is beginning. I think last time on the show 89 00:04:41,200 --> 00:04:42,960 Speaker 1: we described that could be as much as a sixty 90 00:04:44,040 --> 00:04:46,359 Speaker 1: relative catch up. So it's definitely not too late for 91 00:04:46,400 --> 00:04:49,120 Speaker 1: investors out there. And I'll talk in a minute about 92 00:04:49,160 --> 00:04:51,839 Speaker 1: kind of opportunities for this year and how we're positioning 93 00:04:51,880 --> 00:04:54,880 Speaker 1: to sort of participate in that. It's quite interesting because 94 00:04:55,560 --> 00:04:58,200 Speaker 1: UM equity markets had a strong start, but had you 95 00:04:58,240 --> 00:05:01,520 Speaker 1: piled in so late jan mid web, you'd be sort 96 00:05:01,520 --> 00:05:04,000 Speaker 1: of eighteen percent off side with this pullback that we've had. 97 00:05:04,120 --> 00:05:07,200 Speaker 1: We'd have described how we avoided that UM. So that 98 00:05:07,279 --> 00:05:08,599 Speaker 1: was one of the main things we were talking about 99 00:05:08,640 --> 00:05:12,560 Speaker 1: as an opportunity UM that relative catch up for Asian equities, 100 00:05:12,760 --> 00:05:14,760 Speaker 1: which is starting to occur, and we'll expand on that 101 00:05:15,000 --> 00:05:17,359 Speaker 1: maybe a little bit later in the show. That was 102 00:05:17,400 --> 00:05:19,320 Speaker 1: one thing, and then we had a bit of an 103 00:05:19,320 --> 00:05:25,159 Speaker 1: anecdote that I spoke about Mr Bunny and Terry age 104 00:05:25,200 --> 00:05:27,920 Speaker 1: of turbulence book. But I'm pleased to say there's been 105 00:05:27,920 --> 00:05:33,520 Speaker 1: no no books eaten since then. Probably probably probably you know, 106 00:05:34,560 --> 00:05:36,440 Speaker 1: probably tells us this probably a little bit of smooth 107 00:05:36,440 --> 00:05:40,520 Speaker 1: sailing a head still for a while. However, Um, we're 108 00:05:40,520 --> 00:05:44,440 Speaker 1: seeing some stuff in our process that's very concerning, that's 109 00:05:44,480 --> 00:05:46,880 Speaker 1: actually very interesting as well, and we'll talk to that 110 00:05:46,960 --> 00:05:49,120 Speaker 1: a little bit later. Um. So yeah, that just brings 111 00:05:49,160 --> 00:05:51,760 Speaker 1: us up to speed. So I definitely want to get 112 00:05:51,800 --> 00:05:54,359 Speaker 1: into what you said is possibly concerning. But you mentioned 113 00:05:54,400 --> 00:05:57,120 Speaker 1: the pullback that we have seen in particularly in Asian equities. 114 00:05:57,160 --> 00:05:59,320 Speaker 1: I was just pulled up the CSI three D. We 115 00:05:59,360 --> 00:06:02,560 Speaker 1: recently saw fourteen percent pullback. Granted we've seen a pullback 116 00:06:02,600 --> 00:06:06,040 Speaker 1: in US equities and other equities around the globe as well, 117 00:06:06,560 --> 00:06:10,560 Speaker 1: but more pronounced any um in Asian equities to We've 118 00:06:10,560 --> 00:06:12,359 Speaker 1: spent a lot of time over the last couple of 119 00:06:12,360 --> 00:06:15,800 Speaker 1: weeks discussing with guests this cyclical rotation that we've seen, 120 00:06:15,839 --> 00:06:19,680 Speaker 1: but mostly focused on US equity is talking about growth 121 00:06:19,720 --> 00:06:22,239 Speaker 1: to value or the move that we've seen into energy 122 00:06:22,240 --> 00:06:25,080 Speaker 1: and financials. Where does this rotation that we have seen 123 00:06:25,120 --> 00:06:28,240 Speaker 1: from developed to emerging markets currently stand and even considering 124 00:06:28,240 --> 00:06:30,919 Speaker 1: the pullback that we have seen in recent weeks, would 125 00:06:30,920 --> 00:06:32,600 Speaker 1: you say that there is more room for a catch 126 00:06:32,640 --> 00:06:35,320 Speaker 1: up and why would that be? What what will do 127 00:06:35,440 --> 00:06:37,880 Speaker 1: here is I'll draw on you know what it typically 128 00:06:37,880 --> 00:06:41,560 Speaker 1: in my career has been a north star and UM 129 00:06:42,080 --> 00:06:45,159 Speaker 1: is very worthwhile paying attention to. I think we spoke 130 00:06:45,200 --> 00:06:48,520 Speaker 1: about it last time. It was analogous back in February March. 131 00:06:49,240 --> 00:06:51,440 Speaker 1: UM been in many ways in the opposite direction. That 132 00:06:51,520 --> 00:06:55,120 Speaker 1: was the bonde market, the rights market, UM. And you know, 133 00:06:55,200 --> 00:06:58,160 Speaker 1: when when she wakes up and speaks, we should definitely listen. 134 00:06:58,200 --> 00:07:00,560 Speaker 1: And last year I think I'm just bribed some of 135 00:07:00,600 --> 00:07:04,400 Speaker 1: the intricacies of you know, dollar block funding. We spoke 136 00:07:04,400 --> 00:07:06,800 Speaker 1: about how the informational value at the front end. You know, 137 00:07:06,839 --> 00:07:09,840 Speaker 1: she definitely knows what's going on. We spoke also about, 138 00:07:09,880 --> 00:07:12,840 Speaker 1: you know, the type of price section whereby last year, 139 00:07:12,840 --> 00:07:15,360 Speaker 1: when we're going into the crisis mode, UM, you know, 140 00:07:15,640 --> 00:07:18,480 Speaker 1: very large percentage of the of the price section was 141 00:07:18,520 --> 00:07:20,600 Speaker 1: happening on the offense side of futures are either we're 142 00:07:20,600 --> 00:07:23,960 Speaker 1: getting bought with no pullbacks and that that tells you something. 143 00:07:24,560 --> 00:07:27,120 Speaker 1: UM this time around is actually the opposite UM. So 144 00:07:27,160 --> 00:07:29,040 Speaker 1: the so the bond market has woken up and shaken 145 00:07:29,080 --> 00:07:31,680 Speaker 1: her tail. It's not the front end I you risk 146 00:07:31,720 --> 00:07:34,960 Speaker 1: off and rates lower, it's the back end rates higher, 147 00:07:35,320 --> 00:07:37,000 Speaker 1: and in some way they won't call it a risk on. 148 00:07:37,080 --> 00:07:39,680 Speaker 1: I'll describe in a minute when I think is going on. Um. 149 00:07:39,720 --> 00:07:43,080 Speaker 1: And the opposite to the price section was relentless selling 150 00:07:43,080 --> 00:07:46,120 Speaker 1: of bonds and fixed income and fixed income futures kind 151 00:07:46,120 --> 00:07:49,960 Speaker 1: of across the board. Um. Okay, that's really interesting and 152 00:07:49,960 --> 00:07:54,480 Speaker 1: and what's happening there. So my humble belief is that 153 00:07:55,800 --> 00:08:00,000 Speaker 1: the central banks have completely overcooked this. There's way too 154 00:08:00,080 --> 00:08:05,240 Speaker 1: much kind of stimulus globally. Now granted that's probably not 155 00:08:05,320 --> 00:08:09,360 Speaker 1: helping the real economy, but the financial asset reflation UM 156 00:08:09,400 --> 00:08:12,280 Speaker 1: and some of the exuberant behavior, whether it's game stop 157 00:08:12,400 --> 00:08:15,160 Speaker 1: or other anecdotes we want to choose from for people 158 00:08:15,200 --> 00:08:16,880 Speaker 1: have been around for a while, it really is kind 159 00:08:16,880 --> 00:08:20,840 Speaker 1: of um reminiscent to plug the name of you know, 160 00:08:21,000 --> 00:08:26,960 Speaker 1: sort of uh overcooking, overcooking of of a stimulus. And 161 00:08:26,960 --> 00:08:29,840 Speaker 1: I think, you know, um, I don't think if you 162 00:08:29,920 --> 00:08:33,439 Speaker 1: look at Stanley Drugconen was recent interviewed. He gave a 163 00:08:33,480 --> 00:08:36,400 Speaker 1: fantastic interview and he quotes some really interesting stats about 164 00:08:36,400 --> 00:08:39,400 Speaker 1: the extent of um kind of stimulus that was that 165 00:08:39,520 --> 00:08:41,520 Speaker 1: was that was handed out in the first three months, 166 00:08:41,960 --> 00:08:43,960 Speaker 1: something on the lines of it equal the prior three 167 00:08:44,080 --> 00:08:47,360 Speaker 1: q q E episodes. Has been quite phenomenal. Now compliments 168 00:08:47,360 --> 00:08:50,440 Speaker 1: of the Chinese, they've really matured out in terms of 169 00:08:50,440 --> 00:08:54,120 Speaker 1: their approach for for crisis management. It would be much 170 00:08:54,160 --> 00:08:56,960 Speaker 1: more prudent, frugal um they didn't have to do anywhere 171 00:08:56,960 --> 00:09:00,960 Speaker 1: near as much kind of disbursement of stimulus. And in 172 00:09:01,000 --> 00:09:04,520 Speaker 1: addition to that, they've been quite prudent on commenting. They've 173 00:09:04,520 --> 00:09:06,120 Speaker 1: had the bravery taken out to a comment on some 174 00:09:06,120 --> 00:09:08,520 Speaker 1: sort of perspectative bubble like behavior in their equity market. 175 00:09:08,559 --> 00:09:11,000 Speaker 1: Now they have suffered as a result, but just remember 176 00:09:11,040 --> 00:09:13,720 Speaker 1: I mentioned this last time. They're getting very very good 177 00:09:13,760 --> 00:09:16,480 Speaker 1: at managing They've got a lot of leavers to manage 178 00:09:16,520 --> 00:09:19,600 Speaker 1: their economy and their stock market. And we saw this 179 00:09:19,679 --> 00:09:21,960 Speaker 1: recently on the recent pullback. You know, they had the 180 00:09:21,960 --> 00:09:25,840 Speaker 1: ability to sort of um we were there was we 181 00:09:25,840 --> 00:09:27,840 Speaker 1: were led to believe that the national team or there 182 00:09:27,880 --> 00:09:30,840 Speaker 1: was some national support for their stock market that sort 183 00:09:30,840 --> 00:09:33,120 Speaker 1: of halted the decline and started to recover a bit. 184 00:09:33,160 --> 00:09:35,600 Speaker 1: So I don't feel like they're not until after they 185 00:09:35,640 --> 00:09:38,160 Speaker 1: came out and said that assets looked over price. I mean, 186 00:09:38,160 --> 00:09:42,199 Speaker 1: granted they were talking about Chinese equities, but correct, yeah, yeah, correct. 187 00:09:42,400 --> 00:09:44,280 Speaker 1: So so so going back on on the on point 188 00:09:44,400 --> 00:09:47,720 Speaker 1: is UM. The bond market move that we had in 189 00:09:47,840 --> 00:09:52,280 Speaker 1: February UM is a very important signal. And essentially what 190 00:09:52,280 --> 00:09:53,679 Speaker 1: it's saying as the bondom market is saying, you know, 191 00:09:53,760 --> 00:09:56,280 Speaker 1: to the center banks, you're wrong. There's you've gone a 192 00:09:56,320 --> 00:09:59,000 Speaker 1: little bit too far. And whether it's you know, reflationary 193 00:09:59,040 --> 00:10:03,400 Speaker 1: assets through copper equity prices, UM. You know, they're also 194 00:10:03,440 --> 00:10:07,920 Speaker 1: speaking as well. UM. So, so that's important. I'm also 195 00:10:08,000 --> 00:10:11,400 Speaker 1: seeing some really interesting signs leads I've seen in the past. 196 00:10:11,440 --> 00:10:13,600 Speaker 1: You know, if you think about the G ten. Oddly enough, 197 00:10:13,720 --> 00:10:17,000 Speaker 1: we mentioned before in New Zealand for whatever reasons, partly 198 00:10:17,120 --> 00:10:20,040 Speaker 1: is a small open economy and juxtaposed between EM and 199 00:10:20,120 --> 00:10:22,920 Speaker 1: d M M is speaking as well. You know, they're 200 00:10:22,920 --> 00:10:25,960 Speaker 1: they're over there in New Zealand recently they had UM. 201 00:10:26,240 --> 00:10:28,760 Speaker 1: The New Zealand government essentially's turned around to the central 202 00:10:28,800 --> 00:10:31,160 Speaker 1: Bank and said, you know, you need to take house 203 00:10:31,200 --> 00:10:35,080 Speaker 1: prices into account in your mandate. Your wire is this 204 00:10:35,080 --> 00:10:37,959 Speaker 1: This is because it's very similar in the G ten um. 205 00:10:38,040 --> 00:10:41,640 Speaker 1: The policies that are being deployed helping the top ten 206 00:10:41,679 --> 00:10:45,760 Speaker 1: percent get richer. House prices are going up, equity prices 207 00:10:45,760 --> 00:10:48,199 Speaker 1: are going up, but real folks, you know, they're real 208 00:10:48,320 --> 00:10:50,960 Speaker 1: jobs that don't necessarily have any of those things, are 209 00:10:50,960 --> 00:10:54,440 Speaker 1: not benefiting from that. And your places like New Zealand 210 00:10:54,440 --> 00:10:57,160 Speaker 1: and Australia to extended quite equalitarian. And then they said, 211 00:10:57,200 --> 00:11:00,640 Speaker 1: you know, central bank policies not helping are our voters, 212 00:11:01,040 --> 00:11:04,040 Speaker 1: constituents and and and they paid a lot of attention 213 00:11:04,080 --> 00:11:06,199 Speaker 1: to that. So what does that mean? That means in 214 00:11:06,800 --> 00:11:09,520 Speaker 1: some of these detaining countries where you've had property go up, 215 00:11:09,559 --> 00:11:13,360 Speaker 1: stocks go up, but people are not necessarily benefiting from that. Perversely, 216 00:11:13,400 --> 00:11:15,440 Speaker 1: you could have say, what what what New Zealand could 217 00:11:15,440 --> 00:11:18,000 Speaker 1: be sort of hinting at here is um you might 218 00:11:18,040 --> 00:11:20,840 Speaker 1: need to raise rates, you know, to just cool down 219 00:11:20,880 --> 00:11:23,880 Speaker 1: some of these asset prices. That's very different from where 220 00:11:23,920 --> 00:11:26,280 Speaker 1: we were just three six months ago. And you know, 221 00:11:26,280 --> 00:11:28,199 Speaker 1: whilst people might say that's just that's New zeal it's 222 00:11:28,240 --> 00:11:30,920 Speaker 1: not not applicable here. That won't happen in the US. 223 00:11:32,440 --> 00:11:35,040 Speaker 1: Let's see, you know, I've been through many, many rate 224 00:11:35,080 --> 00:11:37,520 Speaker 1: cycles up and down, and I'll get a lot of 225 00:11:37,679 --> 00:11:39,319 Speaker 1: pushback on this, with a lot of that indemics, it 226 00:11:39,320 --> 00:11:41,320 Speaker 1: will tell me why that's not going to happen. But 227 00:11:41,480 --> 00:11:43,719 Speaker 1: I wouldn't be surprised we continue at going at this 228 00:11:43,840 --> 00:11:48,520 Speaker 1: rate of commodity prices, asset prices, property prices, that the 229 00:11:48,559 --> 00:11:51,839 Speaker 1: conversation gets brought way forward as to potential when rate 230 00:11:51,840 --> 00:11:54,720 Speaker 1: backs can happen. Now, why is that worrying? Well, in 231 00:11:54,760 --> 00:11:57,679 Speaker 1: the real economy, um, you know, and in a very 232 00:11:57,800 --> 00:12:00,920 Speaker 1: leveraged world that we're in now, I don't think markets 233 00:12:00,920 --> 00:12:03,240 Speaker 1: will be able to take rate hugs all that well. 234 00:12:04,040 --> 00:12:06,560 Speaker 1: And people say that, well, nor it's reflation that you 235 00:12:06,600 --> 00:12:09,120 Speaker 1: can have higher stocks, you can have higher commodities, you 236 00:12:09,160 --> 00:12:11,120 Speaker 1: can have higher rates, because it's all it's all in 237 00:12:11,200 --> 00:12:14,480 Speaker 1: the recovery mode. Now, the first thirty basis points of 238 00:12:14,520 --> 00:12:16,160 Speaker 1: that in rates is true, and we saw this in 239 00:12:16,160 --> 00:12:18,840 Speaker 1: the recent hundred basis points sell off. The last thirty 240 00:12:18,840 --> 00:12:22,080 Speaker 1: basis points is not. Um whereby that started to really 241 00:12:22,760 --> 00:12:27,560 Speaker 1: puncture things like long duration assets like tech. So you know, 242 00:12:28,200 --> 00:12:29,760 Speaker 1: around at a minute, but what I'm saying, I think 243 00:12:29,800 --> 00:12:31,880 Speaker 1: we're entering into a very kind of dangerous spiral in 244 00:12:31,920 --> 00:12:33,640 Speaker 1: the later stages of and you can see a lot 245 00:12:33,640 --> 00:12:37,800 Speaker 1: of that because retails participation is very high. Whereby m 246 00:12:37,960 --> 00:12:40,480 Speaker 1: as we had that kind of nasty sell off in 247 00:12:40,480 --> 00:12:43,079 Speaker 1: bonds that started to prick things like the Nasdaq. Central 248 00:12:43,120 --> 00:12:45,480 Speaker 1: banks had to come in and calm down verbally, and 249 00:12:45,600 --> 00:12:48,559 Speaker 1: initially bond markets you could get what we're getting now, 250 00:12:48,760 --> 00:12:51,320 Speaker 1: which is yields of calm down, you'll start to go 251 00:12:51,400 --> 00:12:55,600 Speaker 1: back down, and you probably get equities rip higher again, 252 00:12:56,360 --> 00:12:58,360 Speaker 1: and then you're back to the same problem whereby the 253 00:12:58,400 --> 00:13:00,920 Speaker 1: bond market maybe two three months from now, we'll start 254 00:13:00,920 --> 00:13:03,920 Speaker 1: to go We'll hang on. We're back into a reflationary 255 00:13:03,960 --> 00:13:06,559 Speaker 1: situation here, and I wouldn't be surprised if you make 256 00:13:06,640 --> 00:13:09,720 Speaker 1: fresh significant highs and yields well up above two percent 257 00:13:09,840 --> 00:13:12,320 Speaker 1: in U S tens for example, And that then puts 258 00:13:12,360 --> 00:13:14,439 Speaker 1: us in the precarious situation of how assets going to 259 00:13:14,480 --> 00:13:17,559 Speaker 1: be able to take that, things like tech. So it's 260 00:13:17,559 --> 00:13:20,160 Speaker 1: gonna be a very interesting year, I think from that Bally, 261 00:13:31,640 --> 00:13:33,960 Speaker 1: You know, David, it's good to get someone on who 262 00:13:34,000 --> 00:13:36,640 Speaker 1: sounds even more worried than I am about how all 263 00:13:36,679 --> 00:13:38,800 Speaker 1: this stuff is going to shake out. You didn't even 264 00:13:38,840 --> 00:13:41,800 Speaker 1: get into n f T price inflation, which which we 265 00:13:41,800 --> 00:13:44,920 Speaker 1: we won't even go there. But I'm curious how um 266 00:13:45,080 --> 00:13:48,199 Speaker 1: break evens fit into your thinking with all this. You know, 267 00:13:48,240 --> 00:13:50,600 Speaker 1: at least in the US, if you look at UM 268 00:13:50,840 --> 00:13:54,199 Speaker 1: five year break evens uh less I checked something like 269 00:13:54,240 --> 00:13:57,560 Speaker 1: two and a half percent ten years, or at something 270 00:13:57,600 --> 00:14:03,240 Speaker 1: like two point three roughly. Um, is this sort of 271 00:14:03,360 --> 00:14:07,040 Speaker 1: just uh indicator of exactly what you're talking about? That 272 00:14:07,080 --> 00:14:09,200 Speaker 1: maybe the central banks have put a little too much 273 00:14:09,400 --> 00:14:12,440 Speaker 1: whiskey in the punch pole, so to speak, or is 274 00:14:12,480 --> 00:14:14,880 Speaker 1: there something you know, I'm just curious how much faith 275 00:14:14,920 --> 00:14:16,920 Speaker 1: you put into the break evens as sort of a 276 00:14:17,440 --> 00:14:20,440 Speaker 1: fortune teller when it comes to inflation, or is there 277 00:14:20,480 --> 00:14:24,760 Speaker 1: anything about market structure and sort of this exuberance and 278 00:14:24,880 --> 00:14:28,960 Speaker 1: massive risk taking mood that we see that would allow 279 00:14:29,000 --> 00:14:32,720 Speaker 1: them to send a false signal? Perhaps? Yeah, that's a 280 00:14:32,720 --> 00:14:36,440 Speaker 1: good question. Um, good questions. So there a few components 281 00:14:36,440 --> 00:14:39,400 Speaker 1: of that. One would be just in the very short run, 282 00:14:39,720 --> 00:14:43,240 Speaker 1: you know, we're not actually seeing inflation. Yes, CPI called 283 00:14:43,280 --> 00:14:47,760 Speaker 1: last last this week was not particularly stellar seven or 284 00:14:47,800 --> 00:14:51,960 Speaker 1: something I think, Yes, yeah, and slightly underkindawhelmed intom x 285 00:14:52,200 --> 00:14:56,080 Speaker 1: X energy. So it's not turned up yet number one. UM. 286 00:14:56,640 --> 00:15:00,800 Speaker 1: Number two would be that UM as we described, underlying 287 00:15:01,680 --> 00:15:05,200 Speaker 1: within many of the economies, even just the US, for example, 288 00:15:05,240 --> 00:15:06,640 Speaker 1: despite all the hype, if you look at the U 289 00:15:06,800 --> 00:15:10,600 Speaker 1: s um that the small medium enterprises with five or 290 00:15:10,640 --> 00:15:13,760 Speaker 1: less employees from memories something like forty center of the 291 00:15:13,880 --> 00:15:17,120 Speaker 1: entire employment workforce, and they're not doing so well. In fact, 292 00:15:17,120 --> 00:15:18,960 Speaker 1: many of them are actually going out of business or struggling, 293 00:15:19,320 --> 00:15:21,520 Speaker 1: So that that detracts a little bit from this UM 294 00:15:22,480 --> 00:15:25,280 Speaker 1: feared kind of wage inflation and inflation that people think 295 00:15:25,400 --> 00:15:28,320 Speaker 1: is coming UM and they're not. Also, in addition to 296 00:15:28,440 --> 00:15:30,880 Speaker 1: if you look at China, you know their data is 297 00:15:31,120 --> 00:15:33,280 Speaker 1: slowing somewhat. If you look at some of the charts 298 00:15:33,320 --> 00:15:35,960 Speaker 1: of what the Chinese aggregates are doing, they're very very 299 00:15:36,040 --> 00:15:38,440 Speaker 1: much in contrast to the likes of Copper and commody. 300 00:15:38,440 --> 00:15:42,720 Speaker 1: And then one the biggest UM one of one of 301 00:15:42,760 --> 00:15:45,800 Speaker 1: the biggest consumers of energy and commodities in the world, 302 00:15:46,200 --> 00:15:48,760 Speaker 1: if not the biggest, depending which ones you look at. 303 00:15:49,200 --> 00:15:51,000 Speaker 1: And so that's that's painting a very different picture and 304 00:15:51,120 --> 00:15:54,720 Speaker 1: kind of the real economies UM. So those two things 305 00:15:55,240 --> 00:15:56,520 Speaker 1: make me sort of look at the world in the 306 00:15:56,560 --> 00:16:00,760 Speaker 1: following way. And that is, Um, there's asset price reflation 307 00:16:01,800 --> 00:16:04,720 Speaker 1: just anticipation and kind of flows and money flooding into 308 00:16:04,800 --> 00:16:08,040 Speaker 1: various markets, and then there's kind of real actual inflation. 309 00:16:08,720 --> 00:16:10,680 Speaker 1: Now will it work in the end if we kept 310 00:16:10,720 --> 00:16:13,480 Speaker 1: on at this rate and starts to create more jobs 311 00:16:13,560 --> 00:16:17,520 Speaker 1: and get more confidence feeds back into economy and you 312 00:16:17,600 --> 00:16:21,280 Speaker 1: start to get in certain pockets by all means, I'm 313 00:16:21,320 --> 00:16:23,040 Speaker 1: sure if you look at the safe exams restaurants when 314 00:16:23,040 --> 00:16:25,200 Speaker 1: they reopen in New York and things like that, Um, 315 00:16:25,280 --> 00:16:27,040 Speaker 1: you get demand for waiters and labor and things that 316 00:16:27,280 --> 00:16:29,680 Speaker 1: you probably will start to actually get some actual inflation 317 00:16:29,840 --> 00:16:32,080 Speaker 1: further down there down So the you know, the break 318 00:16:32,120 --> 00:16:35,160 Speaker 1: evens and such are probably a relatively decent predictor given 319 00:16:35,240 --> 00:16:37,920 Speaker 1: where we are now. It's a long way of from 320 00:16:37,920 --> 00:16:39,680 Speaker 1: the future, and a lot can change between now and then. 321 00:16:39,720 --> 00:16:41,480 Speaker 1: So I think it's one of those that I need 322 00:16:41,560 --> 00:16:44,800 Speaker 1: to think about asset price reflation, what actual inflation is 323 00:16:44,840 --> 00:16:46,720 Speaker 1: doing now, what it could do further down the track. 324 00:16:47,280 --> 00:16:48,720 Speaker 1: For me to sit here and think I've got a 325 00:16:48,800 --> 00:16:50,880 Speaker 1: view on where it could actually be five years from now, 326 00:16:51,280 --> 00:16:55,480 Speaker 1: it's not that relevant because, um, you know, what is 327 00:16:55,520 --> 00:16:59,200 Speaker 1: more relevant is letting the market speak okay, and in 328 00:16:59,360 --> 00:17:01,560 Speaker 1: the in the in the in the investiable time wherese 329 00:17:01,560 --> 00:17:04,439 Speaker 1: we're looking at, which is say, for example, this year, Um, 330 00:17:04,600 --> 00:17:08,080 Speaker 1: what what's relevant by which we can make money for investors? 331 00:17:08,359 --> 00:17:11,760 Speaker 1: And it probably as follows, you know, as your real 332 00:17:11,880 --> 00:17:15,240 Speaker 1: rates in the US go up a lot um what 333 00:17:15,440 --> 00:17:17,199 Speaker 1: what what starts to happen then is you look at 334 00:17:17,240 --> 00:17:20,560 Speaker 1: a world where say six months a year ago, there's 335 00:17:20,680 --> 00:17:23,760 Speaker 1: very little yield, people having to chase the last little 336 00:17:23,920 --> 00:17:27,440 Speaker 1: um a few basis points of returns, whether it's crunching 337 00:17:27,440 --> 00:17:29,720 Speaker 1: in high yield credits or trying to receive that last 338 00:17:29,760 --> 00:17:33,000 Speaker 1: little bit of five or ten year yields, or being 339 00:17:33,040 --> 00:17:35,840 Speaker 1: an emerging market FX where there's a little bit of 340 00:17:35,880 --> 00:17:39,320 Speaker 1: extra carry and pick up money just chases that has 341 00:17:39,400 --> 00:17:43,160 Speaker 1: been doing for quite some time. And that that bond 342 00:17:43,240 --> 00:17:47,240 Speaker 1: market wake up call and and real rates going higher 343 00:17:47,240 --> 00:17:51,200 Speaker 1: in the US means that um a lot of manage 344 00:17:51,240 --> 00:17:53,480 Speaker 1: managers out their investors out there start to scratch their 345 00:17:53,520 --> 00:17:55,240 Speaker 1: heads and say, do I really want to be in 346 00:17:56,000 --> 00:17:59,080 Speaker 1: you know, um, some of these emerging markets currencies where 347 00:17:59,119 --> 00:18:00,840 Speaker 1: I get very little from pick up for all of 348 00:18:00,920 --> 00:18:05,000 Speaker 1: that additional risk. So that's the interesting bit to me 349 00:18:05,400 --> 00:18:08,280 Speaker 1: is you know, when if the market is speaking and 350 00:18:09,040 --> 00:18:10,879 Speaker 1: real rates are going off in the US, you know, 351 00:18:10,960 --> 00:18:13,119 Speaker 1: where are the monkey's going to run? As it was 352 00:18:13,119 --> 00:18:16,240 Speaker 1: an expression people used to use, and um, you start 353 00:18:16,240 --> 00:18:18,240 Speaker 1: to see little bit of a sign of that. Um 354 00:18:18,680 --> 00:18:21,040 Speaker 1: just recently with money coming out of tech. Um some 355 00:18:21,160 --> 00:18:24,719 Speaker 1: E M f X getting hit. How your credit getting hit? Um? 356 00:18:24,800 --> 00:18:27,280 Speaker 1: I think it's probably just an early wake up call 357 00:18:27,800 --> 00:18:30,399 Speaker 1: for what can happen sort of later in the year. UM. 358 00:18:30,560 --> 00:18:32,720 Speaker 1: So if that moves, it's to some talk points on that. 359 00:18:33,560 --> 00:18:36,040 Speaker 1: When you say real rates moving up by a lot, 360 00:18:36,160 --> 00:18:40,080 Speaker 1: I mean what exactly quantifies a lot? I mean, certainly 361 00:18:40,200 --> 00:18:43,120 Speaker 1: we have moved a lot. We were negative one point 362 00:18:43,160 --> 00:18:47,320 Speaker 1: one uh percent, Now we're closer to negative sixty five, 363 00:18:47,400 --> 00:18:49,920 Speaker 1: negative seventy basis points or so. But when you say 364 00:18:49,960 --> 00:18:52,520 Speaker 1: a lot, I mean what do you expect? Are you 365 00:18:52,560 --> 00:18:56,680 Speaker 1: talking positive? By chance? Yeah? I mean so in the 366 00:18:56,760 --> 00:18:58,440 Speaker 1: great scheme of things, the moves not been to that 367 00:18:58,520 --> 00:19:00,720 Speaker 1: secen different the speed of it has been. UM. So 368 00:19:00,800 --> 00:19:03,040 Speaker 1: it's it's it's speed matters as well, because it can 369 00:19:03,800 --> 00:19:06,320 Speaker 1: people can extrapolate and start to start to get concerned 370 00:19:06,320 --> 00:19:08,439 Speaker 1: that you carry out at that sort of rate. UM. 371 00:19:08,760 --> 00:19:11,879 Speaker 1: I think things will obviously um get dislodged. So so 372 00:19:11,960 --> 00:19:14,440 Speaker 1: the speed of the moves obviously in February was important. 373 00:19:15,200 --> 00:19:18,119 Speaker 1: UM So further down the track, if you know, if 374 00:19:18,160 --> 00:19:21,920 Speaker 1: we go to the example of um what I described, 375 00:19:21,960 --> 00:19:25,359 Speaker 1: whereby after maybe some pullback in yields lower, if the 376 00:19:25,440 --> 00:19:28,920 Speaker 1: reflationary story kind of gather steam again and yields dislodge 377 00:19:29,480 --> 00:19:32,080 Speaker 1: later in the year, we get up above two two 378 00:19:32,119 --> 00:19:34,080 Speaker 1: and a quarter in U s tens. You know, I 379 00:19:34,119 --> 00:19:35,960 Speaker 1: guess bottom to top that would be a move of 380 00:19:36,000 --> 00:19:38,040 Speaker 1: a hundred hundred and fifty basis points and starting to 381 00:19:38,080 --> 00:19:41,560 Speaker 1: push positive. And you know, positive is an important rubicon 382 00:19:41,680 --> 00:19:45,240 Speaker 1: to cross because much like we've seen in European assets 383 00:19:45,280 --> 00:19:49,919 Speaker 1: when they went negative, people just allows to individuals, allows 384 00:19:50,000 --> 00:19:52,240 Speaker 1: to pay away native rates that that obviously starts to 385 00:19:52,280 --> 00:19:55,840 Speaker 1: become relevant. UM So I would say crossing crossing over 386 00:19:55,960 --> 00:20:00,040 Speaker 1: positive and don't have hundred fifty plus basis point It 387 00:20:00,160 --> 00:20:02,160 Speaker 1: was mean you don't need to be chasing that last 388 00:20:03,320 --> 00:20:06,760 Speaker 1: basis points in a very high yield bond structures or 389 00:20:06,760 --> 00:20:27,800 Speaker 1: an emotion markets maybe quite vicarious. It's fun to talk 390 00:20:27,840 --> 00:20:29,520 Speaker 1: with you, David, because I know we can jump from 391 00:20:29,560 --> 00:20:31,920 Speaker 1: asset class to asset class and you'll you'll jump along 392 00:20:31,960 --> 00:20:35,680 Speaker 1: with us, which is nice. So I know, you know, 393 00:20:35,720 --> 00:20:38,200 Speaker 1: as a hedge fund manager you must keep sort of 394 00:20:38,359 --> 00:20:40,800 Speaker 1: at least one eye or half an eye on volatility 395 00:20:40,920 --> 00:20:44,480 Speaker 1: markets to some degree. I think what's been amazing to 396 00:20:44,600 --> 00:20:49,200 Speaker 1: me is this continued grind higher inequities. Yeah, we had 397 00:20:49,560 --> 00:20:51,760 Speaker 1: a little bit of a correction in the last month 398 00:20:51,880 --> 00:20:55,760 Speaker 1: or so, but you know, continued grind higher, and yet 399 00:20:55,840 --> 00:20:58,600 Speaker 1: the VIX just does not seem like it wants to 400 00:20:58,680 --> 00:21:01,879 Speaker 1: go below twenty. It seems gets found a floor around twenty. 401 00:21:02,640 --> 00:21:05,639 Speaker 1: I'm curious, you know what you're thinking about that and 402 00:21:05,880 --> 00:21:08,520 Speaker 1: why that might be. I mean, my theories are are 403 00:21:09,320 --> 00:21:11,960 Speaker 1: perhaps people are are worried about some of the things 404 00:21:12,000 --> 00:21:15,280 Speaker 1: you're talking about about. Maybe value valuations have gotten ahead 405 00:21:15,280 --> 00:21:18,400 Speaker 1: of themselves, and if rates do perk back up, there 406 00:21:18,400 --> 00:21:21,880 Speaker 1: could be another another dip. Also, maybe so many people 407 00:21:21,960 --> 00:21:24,800 Speaker 1: got burned by selling volatility a few years ago that 408 00:21:25,280 --> 00:21:27,800 Speaker 1: they're sort of gun shot to do it again. Um, 409 00:21:29,560 --> 00:21:31,760 Speaker 1: how are you thinking about it? If you are at all? 410 00:21:31,840 --> 00:21:33,879 Speaker 1: I mean, am I am I crazy for thinking that 411 00:21:34,040 --> 00:21:36,320 Speaker 1: maybe that there's still a little bit of a hangover 412 00:21:36,440 --> 00:21:38,840 Speaker 1: from that that short volatility trade that blew up a 413 00:21:38,920 --> 00:21:41,359 Speaker 1: few years ago. That's that's gonna make it tough for 414 00:21:41,440 --> 00:21:45,440 Speaker 1: the VIX to come back down blow twenty. Okay, sure, 415 00:21:45,880 --> 00:21:51,879 Speaker 1: good question. The US equity VOLS specialists will will be 416 00:21:52,240 --> 00:21:56,080 Speaker 1: um much more granular their answer than myself. Um, I 417 00:21:56,200 --> 00:21:58,760 Speaker 1: pretty deferred to them. However, what I can give you 418 00:21:58,800 --> 00:22:01,800 Speaker 1: from like a macro manager kind of response is is 419 00:22:01,880 --> 00:22:04,280 Speaker 1: drawing on and forget the gentleman's name, but there was 420 00:22:04,320 --> 00:22:07,280 Speaker 1: a two hour podcast given my VOLT specialist and his 421 00:22:07,640 --> 00:22:09,440 Speaker 1: because I was quite curious that question myself a few 422 00:22:09,440 --> 00:22:11,960 Speaker 1: months ago, about two months ago, and his response, which 423 00:22:11,960 --> 00:22:15,520 Speaker 1: I'll sort of repeat here, was that there is still 424 00:22:15,640 --> 00:22:20,080 Speaker 1: quite large portfolio hedging. Um, so to folks out there 425 00:22:20,119 --> 00:22:23,480 Speaker 1: purchasing out of the money puts to portfolio hedge. That's 426 00:22:23,560 --> 00:22:27,040 Speaker 1: keeping aggregate vole high. And the shoulder vols is kind 427 00:22:27,080 --> 00:22:28,879 Speaker 1: of short dated at the money volve where you know, 428 00:22:28,960 --> 00:22:31,880 Speaker 1: things aren't moving necessary all that much apart from last month. 429 00:22:32,200 --> 00:22:34,000 Speaker 1: As you said in many periods of the past of 430 00:22:34,000 --> 00:22:37,399 Speaker 1: a couple of quarters, a slow grinding, sensible rally, that 431 00:22:37,480 --> 00:22:41,160 Speaker 1: shoulder vols being sold as in the short dated vole 432 00:22:41,280 --> 00:22:44,959 Speaker 1: at the moneys, you know, is not particularly expensive. Um 433 00:22:45,280 --> 00:22:48,119 Speaker 1: after after a recent pullback. Of course, it spikes up 434 00:22:48,119 --> 00:22:50,159 Speaker 1: and then slowly settles back down. But that was the 435 00:22:50,440 --> 00:22:54,159 Speaker 1: gist of it was portfolio um insurance kind of hedging, 436 00:22:54,520 --> 00:22:57,800 Speaker 1: keeping aggregate vols still quite high. I suspect prove if 437 00:22:57,840 --> 00:22:59,959 Speaker 1: we continued in this environment that would continue to come 438 00:23:00,240 --> 00:23:05,000 Speaker 1: so gently come down. But that's that's the that's the 439 00:23:05,040 --> 00:23:08,440 Speaker 1: reason's high than otherwise we'd be stand clear of the 440 00:23:08,560 --> 00:23:12,800 Speaker 1: craziest things we saw in markets this week. You know 441 00:23:12,960 --> 00:23:17,040 Speaker 1: exactly what time it is, Mike. All right, all right, David, 442 00:23:17,080 --> 00:23:20,520 Speaker 1: I'm sure you came prepared with the craziest thing you 443 00:23:20,600 --> 00:23:23,639 Speaker 1: saw in markets. Let's start with Sarah. Sarah tease that 444 00:23:23,800 --> 00:23:26,120 Speaker 1: she's got a lot to deliver this week, so let's 445 00:23:26,200 --> 00:23:28,600 Speaker 1: let's get her going. So I actually believe that we 446 00:23:28,720 --> 00:23:31,840 Speaker 1: have a voicemail, so I was hoping and thinking we 447 00:23:31,880 --> 00:23:55,679 Speaker 1: should play that one first. Oh yeah, so I couldn't 448 00:23:55,720 --> 00:23:58,480 Speaker 1: help myself. An entire choir actually called in to wish 449 00:23:58,640 --> 00:24:00,800 Speaker 1: you a happy birthday. Mike was gonna say that with 450 00:24:01,040 --> 00:24:05,200 Speaker 1: the Vienna Boys choir called in to the hot last week. 451 00:24:05,680 --> 00:24:09,040 Speaker 1: Mike gave us all the gift of his nickname, So 452 00:24:09,640 --> 00:24:13,440 Speaker 1: this week it's Mike birthday, So happy birthday. Thank you, 453 00:24:13,880 --> 00:24:16,359 Speaker 1: I will say that. Uh, And Sarah, don't bust me 454 00:24:16,480 --> 00:24:19,960 Speaker 1: for repeating this joke a few times. In the Rigging family, 455 00:24:20,000 --> 00:24:21,920 Speaker 1: we have a tradition. If it's funny the first time, 456 00:24:21,960 --> 00:24:24,040 Speaker 1: it's funny the next four or five times too. But 457 00:24:24,800 --> 00:24:27,520 Speaker 1: what I've been saying is, uh, you know, I share 458 00:24:27,560 --> 00:24:31,040 Speaker 1: the exact birthday, day and year with Johnny Knoxville. I 459 00:24:31,080 --> 00:24:33,880 Speaker 1: don't know if you know who that is Johnny Knoxville, 460 00:24:33,920 --> 00:24:38,800 Speaker 1: so it's debatable who the bigger jackass is. But thank you. 461 00:24:38,880 --> 00:24:42,440 Speaker 1: I appreciate it. Big one for me number I'm not 462 00:24:42,600 --> 00:24:44,240 Speaker 1: happy about it. But what are you gonna do, Dave? 463 00:24:44,320 --> 00:24:50,760 Speaker 1: You know, now, give us a real crazy thing, Sarah, Okay, 464 00:24:50,800 --> 00:24:51,879 Speaker 1: now I'll give you. Now, I'll give you a real 465 00:24:51,920 --> 00:24:53,640 Speaker 1: and I'll give you a real one. So I'll stay 466 00:24:53,640 --> 00:24:55,879 Speaker 1: away from the n f T s first one. This 467 00:24:56,080 --> 00:24:59,639 Speaker 1: was just a survey that was put out by Business 468 00:24:59,720 --> 00:25:03,359 Speaker 1: in Cider and they ordered up thirty seven percent of 469 00:25:03,440 --> 00:25:07,560 Speaker 1: American investors in a recent survey say they've made trades. 470 00:25:08,000 --> 00:25:12,280 Speaker 1: Based on an Elon Musk tweet, seven percent of all 471 00:25:12,359 --> 00:25:17,920 Speaker 1: Americans seems really high to me? Is that just me? Americans? 472 00:25:17,960 --> 00:25:22,160 Speaker 1: Who actually actively trade were I mean, to be honest, 473 00:25:22,200 --> 00:25:28,480 Speaker 1: I didn't really think either. Is just very very high, 474 00:25:29,000 --> 00:25:32,760 Speaker 1: very absolutely astounding, especially when he's pumping stuff like doge coin, 475 00:25:32,880 --> 00:25:36,520 Speaker 1: you know, right, I mean honestly, I could say I 476 00:25:36,640 --> 00:25:39,520 Speaker 1: know people who, on a personal basis have have bought 477 00:25:39,600 --> 00:25:42,680 Speaker 1: doge after Elon must tweeted about it. So I guess 478 00:25:42,800 --> 00:25:45,640 Speaker 1: I know people who are contributing to the very high 479 00:25:46,040 --> 00:25:50,280 Speaker 1: share of respondence to survey. That is pretty good. That 480 00:25:50,440 --> 00:25:54,240 Speaker 1: is pretty good, Sarah, you came you delivered with that one. Well, 481 00:25:54,280 --> 00:25:55,840 Speaker 1: I have I have two n f t ones because 482 00:25:55,880 --> 00:25:58,960 Speaker 1: you can't, you can't ignore them. One just that Jack 483 00:25:59,040 --> 00:26:03,000 Speaker 1: Dorsey selling the first tweet ever as an n f 484 00:26:03,119 --> 00:26:05,000 Speaker 1: T and there have already been bids up to two 485 00:26:05,080 --> 00:26:08,560 Speaker 1: and a half million dollars. But the best one is 486 00:26:09,560 --> 00:26:14,920 Speaker 1: on Thursday, Digital artwork and n f T sold for 487 00:26:15,160 --> 00:26:22,200 Speaker 1: sixty nine million dollars. I mean, how crazy. I can't even, 488 00:26:22,320 --> 00:26:25,119 Speaker 1: as the kids would say, I can't even David, I 489 00:26:25,160 --> 00:26:27,680 Speaker 1: know you keep an eye on bitcoin and crypto. What 490 00:26:28,000 --> 00:26:31,760 Speaker 1: do you think of all this n f T stuff. Well, 491 00:26:31,800 --> 00:26:34,000 Speaker 1: I think we spoke last something becomes of eight thousand. 492 00:26:34,080 --> 00:26:36,080 Speaker 1: I was sort of mentioning there was an angle whereby 493 00:26:36,400 --> 00:26:39,240 Speaker 1: you know, folks wanted to essentially high it worse than 494 00:26:39,359 --> 00:26:41,440 Speaker 1: such what might want to have their money, you know, 495 00:26:41,560 --> 00:26:43,399 Speaker 1: in other assets like crypto and that it could do 496 00:26:43,520 --> 00:26:45,479 Speaker 1: very very well. And it sort of looks like that's happened. 497 00:26:45,920 --> 00:26:49,560 Speaker 1: There's there's also been much more of another victory lap 498 00:26:49,680 --> 00:26:53,000 Speaker 1: for you, by the way, congratulations. Well no, I mean, 499 00:26:53,119 --> 00:26:56,280 Speaker 1: you know things, but I mean we don't do it 500 00:26:56,320 --> 00:26:57,840 Speaker 1: for the fun. It was more just think we were 501 00:26:58,200 --> 00:27:03,240 Speaker 1: talking thing. But the investors are probably okay with that, 502 00:27:03,359 --> 00:27:05,800 Speaker 1: I imagine, so that you're you're not you're out out 503 00:27:05,800 --> 00:27:09,120 Speaker 1: there putting their money in the cryptough I would guess, well, yeah, 504 00:27:09,160 --> 00:27:11,600 Speaker 1: it's it's not with a strategy at this stage. Um. 505 00:27:12,080 --> 00:27:13,480 Speaker 1: But but what I was going to say is that, 506 00:27:13,720 --> 00:27:16,680 Speaker 1: um a lot more homework has been done by high 507 00:27:16,760 --> 00:27:20,240 Speaker 1: it Worse and superannuation funds and pension funds around the world, 508 00:27:20,280 --> 00:27:23,200 Speaker 1: and it really does look like it's getting adopted as 509 00:27:23,240 --> 00:27:24,920 Speaker 1: a sort of you know, one to three percent of 510 00:27:24,960 --> 00:27:27,800 Speaker 1: your portfolio. That's a huge number. And you know, the 511 00:27:27,880 --> 00:27:29,680 Speaker 1: more you look into these things that there's some great, 512 00:27:29,840 --> 00:27:33,399 Speaker 1: great protocols and products in there. So UM, I can 513 00:27:33,600 --> 00:27:36,800 Speaker 1: only see one way traffic, I would I would suspect 514 00:27:36,960 --> 00:27:41,200 Speaker 1: that within three years, Um, we've got something like three 515 00:27:41,240 --> 00:27:43,400 Speaker 1: point six billion people have phones. I'd say a third 516 00:27:43,440 --> 00:27:46,359 Speaker 1: of those. I'd say within three years a billion people 517 00:27:46,400 --> 00:27:48,879 Speaker 1: have some sort of digital currencies on their phone. And 518 00:27:49,040 --> 00:27:50,639 Speaker 1: that's up from where we are now I think sixty 519 00:27:50,680 --> 00:27:54,440 Speaker 1: six million million wallets. So it's just phenomenal kind of inflowers, 520 00:27:54,440 --> 00:27:57,639 Speaker 1: I thank you coming. Um. So, so that's what I 521 00:27:57,640 --> 00:28:00,600 Speaker 1: would say with regard to that, And my sort of 522 00:28:01,119 --> 00:28:02,520 Speaker 1: crazy thing for the week would be which is a 523 00:28:02,560 --> 00:28:04,600 Speaker 1: combination of everything. So this is Mr Bunny's owner, my 524 00:28:04,800 --> 00:28:07,760 Speaker 1: my eleven year old daughter, Holly. This is all of 525 00:28:07,840 --> 00:28:11,440 Speaker 1: the monetary and fiscal and kind of liquidity that's out there. 526 00:28:12,080 --> 00:28:14,080 Speaker 1: A little Holly turned around to me because I talked 527 00:28:14,080 --> 00:28:15,639 Speaker 1: to a little bit about finance. She keeps reminding me 528 00:28:15,680 --> 00:28:20,760 Speaker 1: how I never bought Apple every day. Um, and she's 529 00:28:20,800 --> 00:28:23,080 Speaker 1: a big gamer, so Minecraft and Fortnite all that sort 530 00:28:23,080 --> 00:28:24,960 Speaker 1: of stuffiens hours on there and it hits me up 531 00:28:24,960 --> 00:28:26,879 Speaker 1: on my credit card for skins and swords and all 532 00:28:26,920 --> 00:28:30,359 Speaker 1: that sort of stuff. And you know, she she she's 533 00:28:30,359 --> 00:28:32,240 Speaker 1: she's because I've talked a little bit about cryptize stuff 534 00:28:32,240 --> 00:28:34,720 Speaker 1: and the punchline was she said, Dad, you should buy 535 00:28:34,800 --> 00:28:38,000 Speaker 1: this coin engine E n j I n Jin said, 536 00:28:38,000 --> 00:28:40,800 Speaker 1: why is that? Well, you can smelt down your sword 537 00:28:41,240 --> 00:28:42,800 Speaker 1: and then move it to a new game when you 538 00:28:42,840 --> 00:28:44,120 Speaker 1: decide you want to be in a new game and 539 00:28:44,440 --> 00:28:48,880 Speaker 1: use that credit in a new game. And um, interesting enough, 540 00:28:49,040 --> 00:28:52,000 Speaker 1: this is a two hundred and fifty billion dollar business gaming, 541 00:28:52,200 --> 00:28:55,120 Speaker 1: you know, worldwide, if not, if not more. Japan's just 542 00:28:55,240 --> 00:28:58,800 Speaker 1: to prove this coin. And so Holly takes surprise her 543 00:28:59,040 --> 00:29:02,600 Speaker 1: her trade idea investment if you will as up something 544 00:29:02,680 --> 00:29:05,200 Speaker 1: like jeez, I think it's well of a two thousand 545 00:29:05,240 --> 00:29:11,680 Speaker 1: percent in about six weeks. Already two in six weeks, 546 00:29:11,720 --> 00:29:15,760 Speaker 1: she sounded. You know, we're pretty dull in comparison to 547 00:29:15,840 --> 00:29:20,760 Speaker 1: what the young kids are doing. That's pretty good. That's 548 00:29:20,800 --> 00:29:23,960 Speaker 1: pretty good. Well, I'm going back to old school commodity 549 00:29:24,080 --> 00:29:27,360 Speaker 1: markets for mine. And this one is courtesy of our 550 00:29:28,080 --> 00:29:31,600 Speaker 1: chief Crazy Things correspondent, vil Donna Hirich, who's so as 551 00:29:31,640 --> 00:29:35,120 Speaker 1: she's earning her keep again with a crazy thing. She 552 00:29:35,280 --> 00:29:38,959 Speaker 1: pointed out this story Bloomberg story by Andy Hoffman. Uh, 553 00:29:39,280 --> 00:29:45,360 Speaker 1: there's a commodities trader called Mercuria Energy Group, and they 554 00:29:45,840 --> 00:29:49,760 Speaker 1: bought thirty six million dollars worth of copper from a 555 00:29:49,880 --> 00:29:55,800 Speaker 1: counterparty in Turkey. One problem is when the copper arrived 556 00:29:55,960 --> 00:29:58,640 Speaker 1: for delivery, Um, it turned out it was a bunch 557 00:29:58,720 --> 00:30:03,440 Speaker 1: of painted rocks, a bunch of rocks painted copper color. Uh. 558 00:30:03,760 --> 00:30:08,320 Speaker 1: And it's the nightmare. It's big scandal. Thirteen people apprehended 559 00:30:08,440 --> 00:30:12,040 Speaker 1: by authorities in Turkey over this. And to give you 560 00:30:12,160 --> 00:30:15,760 Speaker 1: an old man movie reference, Sarah Midnight Express from back 561 00:30:15,840 --> 00:30:18,960 Speaker 1: in my day about a Turkish prison, not the prison 562 00:30:19,040 --> 00:30:22,600 Speaker 1: you want to be in. Trust trust me on that, um. 563 00:30:23,200 --> 00:30:25,280 Speaker 1: But I also wonder if it turns out they were 564 00:30:25,360 --> 00:30:29,560 Speaker 1: paving stones that someone painted a copper color, uh, and 565 00:30:29,680 --> 00:30:33,440 Speaker 1: somehow switched them out in in in transit between one 566 00:30:33,720 --> 00:30:37,479 Speaker 1: party to the counterparty. So David, I'm wondering if someone's 567 00:30:37,480 --> 00:30:40,240 Speaker 1: probably awaiting a delivery of paving stones, maybe your neighbor 568 00:30:40,280 --> 00:30:43,760 Speaker 1: whose house is being un construction, writing a delivery of 569 00:30:43,800 --> 00:30:50,800 Speaker 1: painting stones, and gone, there you go, there you go. 570 00:30:50,920 --> 00:30:54,040 Speaker 1: You figured it out. David's got construction going on next door, 571 00:30:54,080 --> 00:30:56,480 Speaker 1: and we managed to squeeze this whole thing in before 572 00:30:56,520 --> 00:31:00,400 Speaker 1: the before the jackhammers and whatnot started, Uh make a noise. 573 00:31:00,480 --> 00:31:03,440 Speaker 1: So I'd call that a success, I would agree, but 574 00:31:03,560 --> 00:31:10,320 Speaker 1: we we still have to get David's crazy things though. Yeah, wow, 575 00:31:10,400 --> 00:31:12,800 Speaker 1: I was. I was so into it, was so into 576 00:31:12,840 --> 00:31:18,480 Speaker 1: the n f T conversation, just having a real, real conversation. Yes, 577 00:31:18,920 --> 00:31:22,200 Speaker 1: actually I pulled out my phone and I started buying 578 00:31:22,280 --> 00:31:27,240 Speaker 1: to courtesy of your daughter. So that's the truth of 579 00:31:27,360 --> 00:31:30,640 Speaker 1: it all. But no, it's It's been an absolute pleasure. 580 00:31:30,800 --> 00:31:32,480 Speaker 1: I'm so glad that we were able to have you 581 00:31:32,600 --> 00:31:34,480 Speaker 1: on the show again. David Adams thinks so much for 582 00:31:34,520 --> 00:31:36,520 Speaker 1: coming on the show. Thanks for much for having us. 583 00:31:37,360 --> 00:31:47,560 Speaker 1: Thanks David, that was great. What Goes Out We'll be 584 00:31:47,680 --> 00:31:50,640 Speaker 1: back next week. Until then, you can find us on 585 00:31:50,680 --> 00:31:53,760 Speaker 1: the Bloomberg Terminal website and app, or wherever you get 586 00:31:53,800 --> 00:31:56,720 Speaker 1: your podcasts. We'd love it if you took the time 587 00:31:56,800 --> 00:31:59,400 Speaker 1: to rate and review the show on Apple podcast. Some 588 00:31:59,520 --> 00:32:02,240 Speaker 1: more listeners can find us, and you can find us 589 00:32:02,280 --> 00:32:06,480 Speaker 1: on Twitter, follow me at Sara pont Sec, Mike is 590 00:32:06,520 --> 00:32:12,120 Speaker 1: that Reaganonymous, and you can also follow Bloomberg Podcasts at podcasts. Also, 591 00:32:12,240 --> 00:32:14,400 Speaker 1: thank you to Charlie Pellett of Bloomberg Radio and the 592 00:32:14,480 --> 00:32:17,360 Speaker 1: voice of the New York City Subway System. What Goes 593 00:32:17,480 --> 00:32:20,280 Speaker 1: Up is produced by tofur foreheads. The head of Bloomberg 594 00:32:20,320 --> 00:32:24,080 Speaker 1: Podcast is Francesco Levie. Thanks for listening, See you next time.