WEBVTT - Tucker Carlson, Derivatives, Airline Investing, and GE 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.280 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 I'm the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.360 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:20.880 --> 0:00:23.880 All right, here's a cool roundtable here. Yesterday was a 0:00:23.920 --> 0:00:26.280 crazy day in the world of cable news. Don Lemon 0:00:26.320 --> 0:00:29.920 from CNN gone, Tucker Carlson from Fox gone. 0:00:30.240 --> 0:00:33.080 What does this mean for the business? 0:00:33.159 --> 0:00:37.239 NBCUniversal Dave Yeah, Shell, mister Shell gone, So crazy day 0:00:37.280 --> 0:00:38.680 in the world of media. What does it mean for 0:00:38.720 --> 0:00:41.440 the politics as we head into the next election cycle? 0:00:41.440 --> 0:00:42.519 What does it mean for the business? We have a 0:00:42.560 --> 0:00:45.879 cool round table here. Wendy Schuller, Brown University professor. She 0:00:46.040 --> 0:00:49.360 joins us here, as does Mark Douglas, CEO of Mountain 0:00:50.159 --> 0:00:52.920 Let's start with you, Wendy. I mean, really, with the 0:00:52.960 --> 0:00:56.240 Tucker Carlson thing, how does that impact the calculus I 0:00:56.280 --> 0:00:59.760 guess of the messaging if nothing else, of the Republican 0:01:00.280 --> 0:01:02.760 and maybe Donald Trump and some of the others. 0:01:03.960 --> 0:01:06.319 I think It's really interesting to see how the momentum 0:01:06.319 --> 0:01:08.679 will shift or not shift. You know, we saw Fox 0:01:08.680 --> 0:01:11.920 to really kind of almost virtually dump Donald Trump and 0:01:11.920 --> 0:01:15.240 start really promoting Dusantis and Tucker Carlson sort of stuck 0:01:15.280 --> 0:01:17.520 with Trump in some ways, right, he wasn't really willing 0:01:17.560 --> 0:01:20.360 to go there, and that was a mouthpiece for Trump. 0:01:20.600 --> 0:01:24.240 And now we see Dave Santis kind of endenduring some doubts, 0:01:24.280 --> 0:01:27.040 maybe faltering a little bit, hasn't really hasn't jumped in yet, 0:01:27.280 --> 0:01:29.760 and he's gone pretty far right on the social agenda, 0:01:29.760 --> 0:01:32.720 which I think making some Republicans a little nervous about electability. 0:01:33.040 --> 0:01:35.280 And so now what does Fox do. You've lost your 0:01:35.319 --> 0:01:38.080 mouthpiece for Trump. You were all in on Defantis, but 0:01:38.120 --> 0:01:40.200 now you've got doubts. So I think this is really 0:01:40.240 --> 0:01:43.560 important for the Publican party. They used Fox to consolidate 0:01:43.720 --> 0:01:46.920 their message, put pressure on members in the Congress and 0:01:46.920 --> 0:01:49.880 state legislature just to go along with whoever they decide 0:01:49.920 --> 0:01:53.400 they want to anoint. And now it's unclear you know who's. 0:01:53.120 --> 0:01:54.960 Going to be the anoint the yeah, And I mean 0:01:55.000 --> 0:01:57.920 you're the expert on this. Mark Douglass over at Mountain 0:01:59.000 --> 0:02:05.640 helps companies to drive, you know, marketing dollars and raise revenue, 0:02:05.680 --> 0:02:08.200 but you focus on the politics, Wendy. So before I 0:02:08.240 --> 0:02:11.880 get to Mark, you know, you teach the American Presidency 0:02:12.000 --> 0:02:14.679 at Brown, Introduction to the American Political Process, Congress, and 0:02:14.720 --> 0:02:18.240 public Policy. Does Tucker Carlson have a future in some 0:02:18.280 --> 0:02:21.079 of those institutions that you're teaching about, because it seems 0:02:21.120 --> 0:02:23.640 to me he has a huge following and he can 0:02:23.760 --> 0:02:26.919 raise a lot of money, you know, with this sort 0:02:26.919 --> 0:02:31.240 of angry base that he has, and it's like a 0:02:31.360 --> 0:02:32.359 huge part of America. 0:02:33.240 --> 0:02:36.080 Yeah, you're raising a fantastic point. He's I think I 0:02:36.120 --> 0:02:39.480 was fifty three years old and yesterday I said to 0:02:39.520 --> 0:02:43.080 my students, you know, I've seen new gingrids come and 0:02:43.120 --> 0:02:45.880 go and come and go and come and go, and 0:02:45.919 --> 0:02:48.919 it's never really gone. And I have absolutely no doubt 0:02:48.919 --> 0:02:50.920 that we will see Tucker Carlson again. The question is 0:02:50.919 --> 0:02:54.600 does he become Steve Bannon to the next candidate? Does 0:02:54.600 --> 0:02:57.160 he go work with Trump? You know, there are a 0:02:57.160 --> 0:02:59.720 lot of things that we can see him re emerging 0:02:59.760 --> 0:03:02.560 to you and I think, you know his demise would 0:03:02.560 --> 0:03:03.400 be premature. 0:03:03.720 --> 0:03:07.400 I mean, Senate, does he primary Trump? I feel like 0:03:07.440 --> 0:03:10.280 there's a lot more that he could do than you know, 0:03:10.400 --> 0:03:12.799 the eighty year old former president Mark Let me get 0:03:12.800 --> 0:03:15.840 to you on the business side of things. Does this 0:03:15.960 --> 0:03:18.799 hurt Fox at all? Tucker Carlson leaving, he has three 0:03:18.800 --> 0:03:21.840 point four million viewers. Are they there for him or are 0:03:21.800 --> 0:03:23.079 they there for the time slot? 0:03:24.040 --> 0:03:28.600 Yeah? I think Tucker is a brand, and I think 0:03:28.600 --> 0:03:31.560 we're going to learn very quickly that brands have a 0:03:31.639 --> 0:03:35.400 lot of choices right now, and that Fox's brand is 0:03:35.440 --> 0:03:38.440 not as strong. So if you look at someone that 0:03:38.560 --> 0:03:41.840 the choices that someone like Tucker has is they can 0:03:41.880 --> 0:03:44.600 go to other platforms. Daily Wire, you know, one that 0:03:44.680 --> 0:03:48.240 their contracts was released. They offered Steven Crowder, who is 0:03:48.280 --> 0:03:51.120 someone you may not even even heard of, has nowhere 0:03:51.120 --> 0:03:54.000 near the following a Tucker Carlson. They are from fifty 0:03:54.120 --> 0:03:57.360 million dollars to be on Daily Wire, and so the 0:03:57.480 --> 0:04:01.320 numbers you look at the plus looking at Tucker to 0:04:01.360 --> 0:04:04.680 get equity. I don't see Tucker becoming a political force 0:04:04.720 --> 0:04:07.600 in the sense of he goes off and creates something. 0:04:08.000 --> 0:04:11.400 I think there's huge media dollars out there for stars 0:04:11.480 --> 0:04:15.320 like Tucker, and also the audience he has, he needs 0:04:15.360 --> 0:04:18.760 to carry it someplace really soon. And I think you're 0:04:18.760 --> 0:04:20.960 looking at a deal that's on a level with a 0:04:21.080 --> 0:04:21.800 Joe Rogan. 0:04:22.080 --> 0:04:22.240 You know. 0:04:22.279 --> 0:04:24.719 One of the other points on that is Tucker had 0:04:25.320 --> 0:04:28.360 average three point three million viewers a day. Ben Shapiro 0:04:28.440 --> 0:04:31.400 has eleven million a day, right, Joe Rogan has eleven 0:04:31.440 --> 0:04:34.200 to twelve million a day. They have much much bigger 0:04:34.440 --> 0:04:38.520 audiences off of networks like Fox than they do on Fox. 0:04:38.880 --> 0:04:40.479 And so I think Tucker is just going to go 0:04:40.480 --> 0:04:42.400 where the money leads them. Their money's going to lead 0:04:42.440 --> 0:04:46.160 them onto YouTube, on the podcast and where you're talking 0:04:46.240 --> 0:04:49.480 fifty one hundred million dollar deals plus equity in the company. 0:04:49.520 --> 0:04:52.839 But they're very different, right, I mean Joe Rogan, although 0:04:52.880 --> 0:04:56.840 he's out there, he's more of your open minded draw 0:04:57.680 --> 0:05:02.320 Ben Sjapiro, he's more of your sort of witty educated draw. 0:05:02.560 --> 0:05:08.760 Tucker Carlson. He has the ability to spread wacko conspiracy theories, 0:05:09.760 --> 0:05:13.120 spread fear, and spread hatred. Can you get someone else 0:05:13.160 --> 0:05:17.880 that does that for Fox? The probably not? 0:05:17.960 --> 0:05:22.320 I mean replacing the most highly rated show on news. 0:05:22.440 --> 0:05:25.760 I mean it's a tall order. The advertisers they have 0:05:25.920 --> 0:05:28.880 are not the premium advertisers because they if you look 0:05:28.920 --> 0:05:30.960 at Mountain, like we have a feature where you can 0:05:31.040 --> 0:05:34.039 just block their networks that you don't want to advertise 0:05:34.120 --> 0:05:37.000 on on TV, and the number one block networks are CNN, 0:05:37.120 --> 0:05:38.640 Box and MSNBC. 0:05:39.279 --> 0:05:40.120 So they don't. 0:05:39.920 --> 0:05:43.719 Get the premium advertisers. So as long as they can 0:05:43.800 --> 0:05:47.160 bill the number of viewers, they won't lose ad dollars. 0:05:47.240 --> 0:05:50.240 But you know, matching Tucker in terms of nightly viewership, 0:05:50.680 --> 0:05:53.000 that's not going to be easy. And there's not a 0:05:53.080 --> 0:05:55.400 lot of There's not a lot of people to choose from. 0:05:55.480 --> 0:05:58.719 It's not like Tucker was a huge star before he 0:05:58.960 --> 0:06:02.839 arrived at Box for me, he was known to build 0:06:02.880 --> 0:06:04.000 that Yeah, exactly. 0:06:04.120 --> 0:06:07.479 Okay, Hey, Wendy, President Biden just announced his reelection. Any 0:06:07.760 --> 0:06:10.320 what's your takeaway on that announcement and maybe more to 0:06:10.320 --> 0:06:12.560 the point, how he announced it would just kind of 0:06:12.640 --> 0:06:13.480 drop in a video. 0:06:14.480 --> 0:06:16.640 Well, and you know, I guess it's really close to 0:06:16.720 --> 0:06:18.680 her exactly the same day that he announced, you know, 0:06:18.760 --> 0:06:21.320 four years ago, so I think there was some continuity there. 0:06:21.480 --> 0:06:24.760 Two things. One is I think that it forces the Democrats, 0:06:24.800 --> 0:06:28.240 now this is a big if to consolidate their messaging early. 0:06:28.560 --> 0:06:30.800 You know, he's running, he's the leader of the party. 0:06:31.040 --> 0:06:33.039 You know, you're going to run or lose on the 0:06:33.040 --> 0:06:35.760 success of the Biden administration, and that's going to force 0:06:35.800 --> 0:06:38.320 the Democrats, with very tough Senate race looking in twenty 0:06:38.360 --> 0:06:41.279 twenty four, to consolidate. And that's going to be, in 0:06:41.320 --> 0:06:43.479 the end of the day, helpful for fundraising. In other words, 0:06:43.520 --> 0:06:45.400 we're all on the same team. We got a fundraise. 0:06:45.400 --> 0:06:47.800 Plus it's the beginning of a new fundraising quarter, so 0:06:47.960 --> 0:06:50.800 you know, the numbers will look better for him at 0:06:50.800 --> 0:06:53.159 the end of this quarter if he starts earlier. And 0:06:53.160 --> 0:06:55.520 I just really think this is about consolidating because you 0:06:55.560 --> 0:06:57.760 have to really take advantage of what looks to be disarray, 0:06:58.040 --> 0:07:00.400 both in the Republican Party in terms they're not, but 0:07:00.440 --> 0:07:03.039 also in the messaging machine of the Republican Party. I 0:07:03.040 --> 0:07:05.640 would circle back on Tucker though, you know, he's young 0:07:05.760 --> 0:07:07.800 enough and he's come pretty close to the sort of 0:07:07.800 --> 0:07:10.119 center of power, which is the White House. I would 0:07:10.120 --> 0:07:12.040 not count him out. Maybe he makes a lot of 0:07:12.040 --> 0:07:13.880 money in the interim, but I would not count him 0:07:13.880 --> 0:07:15.600 out as running for a Senate seat in a safe 0:07:15.600 --> 0:07:18.440 Republican state somewhere and then launching for president. 0:07:18.680 --> 0:07:19.880 All right, interesting stuff. 0:07:20.000 --> 0:07:21.800 It was a crazy day yesterday with all the news 0:07:21.960 --> 0:07:23.080 coming out of the media space. 0:07:23.080 --> 0:07:24.480 So it was a great, cool little round. 0:07:24.400 --> 0:07:27.360 Dame, and then President Biden sneaks out, sneaks that little 0:07:28.120 --> 0:07:31.240 re election video in the middle of a giant Fox 0:07:31.320 --> 0:07:35.360 News Tucker Carlson, you know, media dates just unbelievable. 0:07:35.400 --> 0:07:37.680 It is odd, odd odd makes for good news though. 0:07:37.680 --> 0:07:41.640 Wendy Schillebrown University, Mark Douglas, CEO of Mountain joining us, 0:07:41.640 --> 0:07:44.920 talking except talking us about the politics of cable television. 0:07:46.320 --> 0:07:50.680 You're listening to the teenth Kenserline program Bloomberg Markets weekdays 0:07:50.680 --> 0:07:54.440 at ten am Eastern on Bloomberg dot Com, the iHeartRadio app, 0:07:54.480 --> 0:07:57.360 and the Bloomberg Business app, or listen on demand wherever 0:07:57.400 --> 0:07:58.520 you get your podcast. 0:08:00.640 --> 0:08:03.280 We're just getting into the real teeth of this first 0:08:03.320 --> 0:08:06.280 quarter earnings season. Want to get a sense of kind 0:08:06.280 --> 0:08:09.360 of how some of the pros are approaching it. Randy Frederick, 0:08:09.720 --> 0:08:12.920 Managing director of Trading Derivatives at de Schwab Center for 0:08:12.960 --> 0:08:15.720 Financial Results, that joins us on the phone. Randy, again, 0:08:15.760 --> 0:08:18.000 we're just starting to get into some of the meat 0:08:18.040 --> 0:08:19.200 of this earning season. 0:08:19.240 --> 0:08:19.400 Here. 0:08:19.400 --> 0:08:21.240 We've already got the banks, and now we're starting to 0:08:21.240 --> 0:08:24.080 get some of the industrials and consumer names. Any takeaways 0:08:24.120 --> 0:08:26.240 you have here, what are you looking for, what are 0:08:26.240 --> 0:08:28.080 some of your clients looking for? 0:08:28.080 --> 0:08:28.880 How are you approaching it? 0:08:29.600 --> 0:08:31.560 Well, to be quite honest with you, earning season so 0:08:31.640 --> 0:08:34.960 far has actually been quite good. It's been better than expectations. 0:08:35.040 --> 0:08:37.400 Now that may very well be simply because the bar 0:08:37.559 --> 0:08:41.000 was set substantially lower, but it's actually been pretty good. Yes, 0:08:41.080 --> 0:08:44.439 earnings per share growth is actually negative two point eight 0:08:44.440 --> 0:08:46.880 percent so far, and we're about twenty four percent of 0:08:46.880 --> 0:08:48.520 the way through the S and P five hundred at 0:08:48.520 --> 0:08:51.040 this point. But the expectation was for to be down 0:08:51.040 --> 0:08:53.840 about six and a half percent on a revenue basis 0:08:53.920 --> 0:08:57.000 same thing. We're up about five point seven percent so far, 0:08:57.400 --> 0:09:00.880 but the expectations was that we're that earnings would only 0:09:00.920 --> 0:09:03.240 be up one point nine percent. So no matter how 0:09:03.240 --> 0:09:05.520 you look at it, it's better than expected. And if 0:09:05.520 --> 0:09:07.000 you look at the beat rates, in other words, how 0:09:07.000 --> 0:09:10.199 many companies did better on earnings or better on revenue, 0:09:10.320 --> 0:09:13.920 same story, You've got better percentages in both cases than 0:09:13.960 --> 0:09:16.000 the prior quarter. So it's been pretty good so far, 0:09:16.040 --> 0:09:17.920 and I think that's part of the reason why the 0:09:17.960 --> 0:09:19.880 market has held up reasonably well. 0:09:19.920 --> 0:09:24.160 I think Randy Matt Miller here in the studio. Listen, 0:09:25.320 --> 0:09:30.040 you are expecting intraweek volatility because of all of these 0:09:30.200 --> 0:09:32.880 these earnings, and we saw a slew of them today. 0:09:32.880 --> 0:09:34.880 We're going to pick up tomorrow and then end the 0:09:34.880 --> 0:09:38.839 week with some macro data. But I wonder how you 0:09:39.120 --> 0:09:44.719 measure volatility, especially as the director managing director of trading derivatives. 0:09:44.840 --> 0:09:47.880 Do you still look at the VIX? Are you excited 0:09:47.920 --> 0:09:52.200 for VIX one D? Do you watch zero days two 0:09:52.240 --> 0:09:56.080 expiry options? How does it pro like you measure volatility? 0:09:56.920 --> 0:09:59.040 So the answer is yes, I still watch the VIX 0:09:59.040 --> 0:10:01.240 a lot. The VIX has been around since ninety three, 0:10:01.320 --> 0:10:03.560 so it's got a very long track record. There are 0:10:03.600 --> 0:10:08.000 a number of other VIX related items that have been introduced, 0:10:08.480 --> 0:10:10.800 and VIX one D is just the most recent, and 0:10:10.840 --> 0:10:14.760 it will be not necessarily a replacement for the VIX, 0:10:14.800 --> 0:10:17.360 but instead it will actually complement it. There are a 0:10:17.400 --> 0:10:20.760 bunch of different volatility related indicators that have been out 0:10:20.760 --> 0:10:23.120 there for quite a while. And you know, I think 0:10:23.160 --> 0:10:25.480 that when people say, oh, the VIX is broken or 0:10:25.520 --> 0:10:28.040 the VIX isn't working right, what they're not realizing is 0:10:28.360 --> 0:10:30.760 the VIX isn't broken. It's doing what it was intended 0:10:30.760 --> 0:10:33.040 to do. The purpose of the VIX was to measure 0:10:33.120 --> 0:10:36.040 volatility thirty days into the future, and so of course 0:10:36.040 --> 0:10:39.520 it doesn't necessarily reflect what's going on in the very 0:10:39.640 --> 0:10:42.040 very near term. That was never its intent. We have 0:10:42.120 --> 0:10:43.840 a whole bunch of other gages. We've got the VIX 0:10:43.880 --> 0:10:46.760 three months, We've got the VIN, the v I X, 0:10:46.840 --> 0:10:50.440 the VIX nine day. All of these were introduced much 0:10:50.520 --> 0:10:52.800 later than the VIX to give people a look into 0:10:53.120 --> 0:10:55.719 parts of the market that they were not seeing from 0:10:55.720 --> 0:10:57.760 the VIX. It doesn't mean the VIX isn't working. It's 0:10:57.800 --> 0:11:00.760 just that people are looking for shorter term So frankly, 0:11:00.800 --> 0:11:04.160 it's a logical move by the CBOE to introduce this 0:11:04.240 --> 0:11:04.920 new gauge. 0:11:05.080 --> 0:11:09.480 Well, we have seen a super tight trading range. I 0:11:09.480 --> 0:11:11.360 mean today we're breaking out of a little bit on 0:11:11.440 --> 0:11:14.160 the S and P, but we're on track for the 0:11:14.200 --> 0:11:19.120 tightest trading range in a month since twenty seventeen. What 0:11:19.160 --> 0:11:21.199 do you expect really. 0:11:20.960 --> 0:11:21.720 Moves us out of that? 0:11:21.840 --> 0:11:24.120 Last week? I thought the options expired on Friday was 0:11:24.160 --> 0:11:25.720 going to be awesome and then it turned out to 0:11:25.760 --> 0:11:27.479 be such a disappointment. 0:11:28.120 --> 0:11:30.760 Yeah, I think the zero data trading, zero data expiration 0:11:30.880 --> 0:11:32.960 options thing is getting a bit overblown and people are 0:11:33.000 --> 0:11:35.440 paying a little bit too much attention to it. Keep 0:11:35.440 --> 0:11:38.800 in mind, you've always had zero data expiration options. It's 0:11:38.880 --> 0:11:41.480 just that originally they were only on the third Friday 0:11:41.480 --> 0:11:43.800 of the month. Then later we added weeklies, and so 0:11:43.880 --> 0:11:46.400 now you had them every Friday, and now on a 0:11:46.440 --> 0:11:50.040 handful not a large number, but a relatively handful of names, 0:11:50.360 --> 0:11:53.720 you have options that expire every day. So that ability 0:11:53.720 --> 0:11:56.840 has always been there, it's just now they're more frequent. Yes, 0:11:56.880 --> 0:11:59.240 there's a lot of activity on it if you take 0:11:59.240 --> 0:12:01.040 a look at it, but if you're talking about things 0:12:01.080 --> 0:12:02.720 like a broad based index like the S and P 0:12:02.840 --> 0:12:05.400 five hundred or the SPY which is tied to that, 0:12:06.080 --> 0:12:08.560 those aren't like stocks that can drop twenty or thirty 0:12:08.600 --> 0:12:10.800 percent in a day. If that happens, we're in big trouble. 0:12:10.800 --> 0:12:13.160 And we know that that doesn't happen very often. I mean, 0:12:13.160 --> 0:12:16.200 it's been since nineteen eighty seven since we've had that 0:12:16.240 --> 0:12:18.200 big of a move in an index like that. So 0:12:19.160 --> 0:12:21.360 I think there's a little bit too much attention being 0:12:21.360 --> 0:12:24.480 focused on this. It doesn't represent any more systemic risk 0:12:24.600 --> 0:12:27.200 than when you had two expirations a week, or just 0:12:27.280 --> 0:12:29.560 one expiration a week, or even just a couple of months. 0:12:29.559 --> 0:12:31.520 So I don't think that's a big issue. But part 0:12:31.559 --> 0:12:34.439 of the reason that I am expecting volatility to increase 0:12:34.520 --> 0:12:36.880 is because of what you just said. Last week, the 0:12:36.960 --> 0:12:39.520 VICS index was at its year to date low, and 0:12:39.600 --> 0:12:42.400 it has been a very quiet market here. Very recently. 0:12:42.440 --> 0:12:45.000 We've had it, like you said, you know, three out 0:12:45.000 --> 0:12:47.280 of the last five days, we've had actually four out 0:12:47.320 --> 0:12:48.800 of the last five days, we've had the S and 0:12:48.800 --> 0:12:51.160 P five hundred moved less than three points, which is 0:12:51.240 --> 0:12:54.720 just a fraction. That's quite unusual, especially compared to what 0:12:54.760 --> 0:12:57.160 we've seen earlier this year and of course last year 0:12:57.200 --> 0:12:57.840 as well. 0:12:58.280 --> 0:13:00.319 Randy, when you're looking at this market here over the 0:13:00.360 --> 0:13:02.160 next say, six to twelve months, what are kind of 0:13:02.160 --> 0:13:04.120 the things you need to be right on. Is it 0:13:04.400 --> 0:13:07.680 just the Fed, is it earnings? What are the things 0:13:07.679 --> 0:13:10.080 that you really need to have a strong conviction on. 0:13:10.760 --> 0:13:13.720 Well, all of those things have an impact. Obviously this week, specifically, 0:13:13.760 --> 0:13:16.199 we're going to get a GDP number here on Thursday. 0:13:16.880 --> 0:13:19.280 People have been talking since last year that we would 0:13:19.320 --> 0:13:20.839 be in a recession at this year we're going to 0:13:20.920 --> 0:13:25.000 get a positive GDP number above two percent in all likelihood. 0:13:25.000 --> 0:13:27.439 The ranges are between about two and two and a 0:13:27.480 --> 0:13:30.000 half percent if we have them. If we're going to 0:13:30.040 --> 0:13:32.520 have a recession this year, it didn't happen in Q one, 0:13:33.040 --> 0:13:35.160 and so far in Q two, it doesn't appear as 0:13:35.240 --> 0:13:38.000 if things are going that far down the hole on Granted, 0:13:38.000 --> 0:13:39.920 we're only a third of the way through, so we've 0:13:39.960 --> 0:13:42.600 got to keep an eye on GDP certainly, but even 0:13:42.640 --> 0:13:45.319 two consecutive quarters of negative GDP, at least in the 0:13:45.440 --> 0:13:48.520 United States does not constitute a recession. In fact, we 0:13:48.640 --> 0:13:51.160 had that in Q one and Q two of last year, 0:13:51.679 --> 0:13:54.960 so we're going to need to see probably that plus 0:13:55.000 --> 0:13:58.400 a significant deterioration in the labor market. So far, we've 0:13:58.440 --> 0:14:01.280 seen a very minor uptick and weekly javas claims, which 0:14:01.320 --> 0:14:04.280 is the more forward looking employment data. We haven't seen 0:14:04.320 --> 0:14:07.080 anything negative in the monthly numbers, which we'll get a 0:14:07.080 --> 0:14:09.720 good of course, on the first Friday of the subsequent month. 0:14:10.480 --> 0:14:13.520 That's kind of backward looking data. Earnings, of course, are 0:14:14.120 --> 0:14:17.200 obviously always important, and we're right now sort of ramping 0:14:17.280 --> 0:14:19.200 up into the thick part of earning season. I mean, 0:14:19.240 --> 0:14:22.880 we've got a lot of companies reporting earnings this week. 0:14:23.240 --> 0:14:25.120 S and P five hundred, well over one hundred companies 0:14:25.440 --> 0:14:28.160 due to announce this week so far, but the vast 0:14:28.160 --> 0:14:29.880 majority of the ones that have already announced, which is 0:14:29.920 --> 0:14:32.400 almost a third of them, have beaten expectations. So it's 0:14:32.440 --> 0:14:35.160 again a pretty decent earning season. So we need to 0:14:35.160 --> 0:14:38.760 see inflation continue to moderate. Based on both the CPI 0:14:39.240 --> 0:14:42.640 and the PPI, inflation either peaked in June or September 0:14:42.680 --> 0:14:45.480 of last year. Yes, prices are still going up, but 0:14:45.480 --> 0:14:49.080 they're going up at an ever decreasing rate. We're going 0:14:49.160 --> 0:14:51.080 to get a pc number on Friday, which, of course, 0:14:51.120 --> 0:14:53.800 as you know, is the FED favorite inflation engage, and 0:14:53.840 --> 0:14:55.720 all we really need from that one is to confirm 0:14:56.160 --> 0:14:59.520 the slowing trend of price increases that we got from 0:14:59.520 --> 0:15:01.040 both the c and the PPI, and. 0:15:01.000 --> 0:15:03.280 We get the employment cost Index, which I think your 0:15:03.320 --> 0:15:07.760 own power looks closely. Yet, Randy, you have a job 0:15:07.800 --> 0:15:12.600 in one of the most complicated areas of finance derivatives, right, 0:15:12.680 --> 0:15:15.040 I mean, we can't even spell it. How do you 0:15:16.000 --> 0:15:18.800 look at at options to tell you what's happening in 0:15:18.800 --> 0:15:20.520 the market, Like, what do you think is the most 0:15:20.520 --> 0:15:22.840 interesting play happening in your world. 0:15:22.960 --> 0:15:26.560 Yeah. So, derivatives is a very very very large category, 0:15:26.560 --> 0:15:29.320 and it includes all sorts of esoteric, over the counter, 0:15:30.120 --> 0:15:33.960 non standardized derivatives. I focus primarily on the options markets, 0:15:33.960 --> 0:15:38.239 the listed options markets, which are entirely fungible, multi exchanged, 0:15:38.600 --> 0:15:43.440 heavily regulated, standardized, and to a lesser extent, the futures markets. 0:15:43.600 --> 0:15:46.240 So what I'm looking for when I'm focusing on the 0:15:46.240 --> 0:15:48.400 options markets is what I found many many years ago 0:15:48.760 --> 0:15:51.440 my career now about thirty five years. I've found many 0:15:51.480 --> 0:15:55.560 years ago that when people have an opinion in the markets, 0:15:55.800 --> 0:15:58.480 they tend to go to the derivatives' markets to express 0:15:58.520 --> 0:16:01.880 that opinion first, not the equities markets. And the reason 0:16:01.960 --> 0:16:04.840 for that is because there's leverage there. Now, you could 0:16:04.840 --> 0:16:07.520 say that's the tail wagging the dog, but in many respects, 0:16:07.560 --> 0:16:10.840 that's exactly what happens. So I watch changes, I watch 0:16:10.920 --> 0:16:13.760 trends in changes of put call racials, and there are 0:16:13.760 --> 0:16:15.760 a lot of different put call racials. The ones that 0:16:15.840 --> 0:16:18.760 are on indexes are act for a different purpose. They're 0:16:18.800 --> 0:16:21.800 used primarily for hedging, whereas in the equity and ETF 0:16:21.880 --> 0:16:25.120 markets it's more directional and I look at open interest 0:16:25.200 --> 0:16:28.880 changes in the put call racials, and that's more longer term, 0:16:29.080 --> 0:16:31.400 and then of course things like volatility and a whole 0:16:31.480 --> 0:16:34.480 variety of other things. And it's not as intuitive as 0:16:34.520 --> 0:16:36.880 you might think. But if you can look at past patterns, 0:16:36.920 --> 0:16:39.080 and I've got data that goes all the way back 0:16:39.120 --> 0:16:40.840 twenty five or thirty years on a lot of this stuff, 0:16:40.840 --> 0:16:43.480 and I can see looking for repeating patterns, and when 0:16:43.520 --> 0:16:46.160 things start to look similar to what they have looked 0:16:46.160 --> 0:16:48.600 in the past, they oftentimes tend to do the same things. 0:16:49.120 --> 0:16:51.440 Like anything, it's not perfect, but if it's right two 0:16:51.440 --> 0:16:53.000 even two thirds of the time, you can you can 0:16:53.040 --> 0:16:54.080 take action based on that. 0:16:54.400 --> 0:16:56.080 I feel a little bit smarter now, I know. 0:16:57.000 --> 0:16:58.640 And that's saying something Randy. 0:16:58.520 --> 0:17:00.240 Adam listening. We got to get you to I'm in 0:17:00.240 --> 0:17:01.680 the studio and show us this data. 0:17:01.880 --> 0:17:03.600 I have been there before and it's been a while, 0:17:03.600 --> 0:17:04.760 but I'd be happy to come back. 0:17:04.880 --> 0:17:05.840 Are you based in Austin? 0:17:06.119 --> 0:17:07.400 I am yes, man. 0:17:07.600 --> 0:17:09.840 Now, is that city just busting at the seams? Let's 0:17:09.840 --> 0:17:10.520 be honest, it is. 0:17:10.680 --> 0:17:13.560 It absolutely is. It's like you know, the nation, the city, 0:17:13.640 --> 0:17:15.240 national bird, or whatever you want to call it. Is 0:17:15.280 --> 0:17:18.040 the crane like everywhere else, and all the roads are 0:17:18.080 --> 0:17:19.879 under construction, so it can be challenging. 0:17:19.880 --> 0:17:22.480 Everything cranes everywhere. It looks like Berlin in the nineties. 0:17:22.520 --> 0:17:24.480 I was there last week and I rode around for 0:17:24.520 --> 0:17:27.359 a couple days. All right, right, scooter, yep, And it's true. 0:17:27.560 --> 0:17:29.359 I've traveled all over. I travel all over. I was 0:17:29.400 --> 0:17:32.439 in southern California just last week, and it's like it everywhere. 0:17:32.480 --> 0:17:34.920 So you know that signs again the economy is doing 0:17:35.240 --> 0:17:35.920 really well. 0:17:36.080 --> 0:17:37.800 All right, Randy, thanks so much for joining us. Next 0:17:37.800 --> 0:17:39.600 time you're in the big city. Let us know. We'll 0:17:39.600 --> 0:17:41.480 get you in here. We'll chat derivatives. 0:17:41.520 --> 0:17:45.159 Randy Frederick, Managing director Trading Derivatives at the Schwab Center 0:17:45.480 --> 0:17:47.200 for Financial Research. 0:17:47.200 --> 0:17:49.159 That's pretty cool. I wont how many Schwab clients are 0:17:49.160 --> 0:17:50.280 trading derivatives. 0:17:50.680 --> 0:17:53.800 You're listening to the tape catch a line program Bloomberg 0:17:53.840 --> 0:17:57.439 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:17:57.520 --> 0:18:00.720 tune in app, Bloomberg dot Com, and the Bloomberg Business app. 0:18:00.760 --> 0:18:03.600 You can also listen live on Amazon Alexa from our 0:18:03.600 --> 0:18:07.600 flagship New York station, Just Say Alexa, playing Bloomberg eleven 0:18:07.720 --> 0:18:09.639 thirty all right. 0:18:09.680 --> 0:18:12.680 Everybody knows Matt's a gearhead. But I'm not as crazy 0:18:12.760 --> 0:18:15.600 about cars. But I love aviation just everything about the 0:18:15.640 --> 0:18:17.760 business in terms of making planes, flying planes, all that 0:18:17.840 --> 0:18:20.680 kind of stuff. I was destined to own a private jet, 0:18:20.680 --> 0:18:23.080 but I don't. I don't know what happened along the way. Yeah, 0:18:23.560 --> 0:18:25.320 I should be one of those people that has a 0:18:25.359 --> 0:18:28.480 private jet and jets all around. But something when skewed 0:18:28.680 --> 0:18:30.119 you do why on jets? 0:18:30.200 --> 0:18:33.560 I do fly lunch, you know, commercial airliners and those 0:18:33.680 --> 0:18:36.080 are pretty awesome also, especially if you lease them. 0:18:36.359 --> 0:18:38.720 Yes, and so let's talk about that whole business. We're 0:18:38.800 --> 0:18:43.200 joining once again by Ali ben Elmdani nailed it, CEO 0:18:43.280 --> 0:18:48.440 of Al Aviation, who has extended us an invitation and 0:18:48.560 --> 0:18:51.840