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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferroll and Lisa Brownowitz. Daily we bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot com

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Speaker 1: and of course on the Bloomberg terminal. We welcome all

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Speaker 1: of you again. For Nora Rubini, there any number of

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Speaker 1: topics to spend a long conversation when professor at Rubini

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Speaker 1: n hyu Stern School, and of course in Oriel Today

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Speaker 1: dot com. But his comments the last time he appeared

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Speaker 1: with us on bitcoin, those comments worldwide we get an update?

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Speaker 1: What ten thousand dollars higher on bitcoin? Noil, Let's just

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Speaker 1: start with the simple microeconomics to supply the demand. Why

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Speaker 1: is bitcoins surging surge in because there is a massive

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Speaker 1: amount of manipulation that are pumping damp schemes that is

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Speaker 1: s fool thing. There's wash trading, there is front running,

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Speaker 1: there's the issues by tether or a fiat currency not

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Speaker 1: backed by much that's used to manipulate at the price

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Speaker 1: of bitcoin. I think it's a bubble. Fundamentally, bitcoin is

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Speaker 1: not a currency it's not a unit of account. It

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Speaker 1: is not a scalable means of payment, is not a

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Speaker 1: stable store of value. Not even bitcoin conferences accepted as

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Speaker 1: a means of payment because the price flativity implies your

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Speaker 1: profit margin can be wiped out. And it's not even

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Speaker 1: a single numera you know, the flintstones at the better

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Speaker 1: monetary system that bitcoin, because that the shells instead of

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Speaker 1: having a different token for different purchase of goods and services.

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Speaker 1: So these are not currencies. Calling them occurrencies them is nowhere,

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Speaker 1: cannot even assets nor I want to get to the

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Speaker 1: heart of it, and I'm gonna go to ruff Field

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Speaker 1: hours path break breaking work with bead work correct the

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Speaker 1: Bank of International Settlements. The transaction costs of big coin

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Speaker 1: in retail transactions preclude its use. So do you look

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Speaker 1: at Tesla is a one off and the bitcoin just

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Speaker 1: simply will never be used in retail because the transaction

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Speaker 1: costs are so much higher than normal currency. Well, the

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Speaker 1: transaction costs are huge, but the technology proof of work

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Speaker 1: doesn't allow more than fact transaction per second. The Visa

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Speaker 1: network allows you twenty four thousand transaction per second. So

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Speaker 1: it's not the scalable means of payment leaving aside the

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Speaker 1: fact that transaction costs are so high, is never going

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Speaker 1: to be used for goods and services, just used for

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Speaker 1: speculation and buying other cryptocurrency. So it's a self serving system,

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Speaker 1: but it's not something that's going to be used as

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Speaker 1: scalable means of payment for goods and services. Ever. No,

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Speaker 1: you mentioned the volume of transactions, What about just a

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Speaker 1: small volume but in large size meaning what meaning if

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Speaker 1: you could transact in large sums of money and move

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Speaker 1: cash through bitcoin from one country to another in large numbers.

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Speaker 1: So not the volume of individual transactions, but let's say

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Speaker 1: you could move a billion from point A to point

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Speaker 1: day with bitcoin. Well, you know, even Steve me Nuchin

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Speaker 1: said that we cannot have a cryptim bitcoin becoming the

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Speaker 1: next Swiss bank account being used by human traffickers, terrorists,

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Speaker 1: tax invaders as a way of sheltering their worth and

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Speaker 1: moving across borders right now, across borders that are slow

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Speaker 1: movements of transactions because there is a ky C, there's

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Speaker 1: a m a L, there's compliance. That's why it's hard

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Speaker 1: to move money from one county. Now that that's why

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Speaker 1: there are capital controls. So if you have a system

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Speaker 1: is illegal that allows the transfer money instead dalleaging from

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Speaker 1: accounting to another one without any control. Of course, that

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Speaker 1: something is going to be used by crimin out or terrorists,

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Speaker 1: or human traffickers or tax evaders, but no system, no

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Speaker 1: count is gonna allow that. There's been a crackdown of

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Speaker 1: the G twenty on those types of offshore financial centers

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Speaker 1: will be similar crackdown against the total lack of m E,

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Speaker 1: L and KYC in anything script of so, professor, what

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Speaker 1: you make of the increased institutional find that we've seen

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Speaker 1: more recently, Well, you know, I think that you have

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Speaker 1: to ask yourself, is this as an asset? It's not occurrency,

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Speaker 1: it's not even an asset. Usually stocks, bonds, loans, real

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Speaker 1: estate give you some income, davidends, coupon interest or rent

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Speaker 1: some other assets like residential real estate if you use

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Speaker 1: housing services. Gold doesn't have any income, but there's a

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Speaker 1: using industry as utility has jewelry and the past monitor

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Speaker 1: use as a store of value. You look at bitcoin,

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Speaker 1: it doesn't have any income, it doesn't have an use,

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Speaker 1: it doesn't have any utility. So it's a pure speculative,

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Speaker 1: self fulfilling bubble on a price appreciation is like tulip mania,

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Speaker 1: but in case of tulip bank, at least tulips had

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Speaker 1: some utility even today people love flowers. In this case,

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Speaker 1: you have an asset that is not an asset because

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Speaker 1: it doesn't have any feature of an asset. It doesn't

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Speaker 1: any feature of the currency. So it's just a self

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Speaker 1: fulfilling bubble. That's what it is. It's a in realistic

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Speaker 1: values zero and actually, given it's hard so much energy

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Speaker 1: for producing it, more than Argentina, if you had a

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Speaker 1: pure carbon tax, the value will lead negative, not even zero. Well,

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Speaker 1: some people would argue and neural that the idea of

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Speaker 1: so much money flooding the financial system that there is

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Speaker 1: value and being able to put it somewhere and not

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Speaker 1: lose money. That basically not being charged to negative yield

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Speaker 1: is value in and of itself in this nerve uh,

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Speaker 1: this negative indestry policy world that we're living in. If

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Speaker 1: this is a bubble, can it burst? Given where we

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Speaker 1: are with the liquidity spickets, without many other parts of

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Speaker 1: financial markets also suffering big blows. Well, you know, if

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Speaker 1: it's a hedge against inflation, the basement of your currencies

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Speaker 1: are a collapse of the dollar, you would see a

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Speaker 1: spy king tips in the price of gold in inflation expectation. Yeah,

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Speaker 1: eventually the monetary policy may lead us to those kind

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Speaker 1: of outcomes, but the price of other assets will be

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Speaker 1: sharply increasing. Gold went up fifty percent in the last

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Speaker 1: two years, has now corrected a little bit. Why would

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Speaker 1: the bigcoin go from five thousand earlier last year to

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Speaker 1: something like fifty thou ten times higher just because there's

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Speaker 1: a hedge against some tail risk of that sort. Other

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Speaker 1: ascids will be pricing in. So that's not the explanation

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Speaker 1: of the rising bicom prices. This price manipulation of one

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Speaker 1: sort of another and bacon, it's not even hedge against

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Speaker 1: a risk. During the February March episode last year when

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Speaker 1: you had a collapse in US and global equity of

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Speaker 1: thirty becouse went done by fifty percent. Another keep occurrency

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Speaker 1: when done by sixty percent. So when there is a

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Speaker 1: risk of they're not even hedge against those tale risks.

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Speaker 1: So they don't have any hedging purpose of that sort either.

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Speaker 1: You see this price manipulation. Who's doing the manipulation manipulating?

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Speaker 1: I will get my words out manipulating. Well, there've been

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Speaker 1: tons of articles showing that these pumping dump schemes that

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Speaker 1: are all over telegram groups that essential pumping and dumping

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Speaker 1: the price of it. We know that tail the issuance

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Speaker 1: is literally a billion dollar every other day out of nowhere.

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Speaker 1: No one has been very fined account of tether and

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Speaker 1: he's being used essentially to buy bitcoin, and he's not

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Speaker 1: backed by anything. And there's a whole bunch of wash

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Speaker 1: trading or spoofing exchange on the front, running their own clients.

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Speaker 1: It's all over the map. I mean, stuff that he

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Speaker 1: just should be investigated is being investigated. The whole bunch

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Speaker 1: of investigation by the adjesc F. You see the New

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Speaker 1: York Attorney General Office of TED and bats that are

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Speaker 1: undergoing right now. Nora. What should governments do? I mean,

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Speaker 1: there's got to be a point where in the United Kingdom,

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Speaker 1: the City, the chancel of the Exchequer or some FSA

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Speaker 1: body steps in. Same in the United States and same

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Speaker 1: in other nations as well. With your government experience with

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Speaker 1: the Clinton administration, how can governments be constructive with the

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Speaker 1: surgeon bitcoin? Well, you have to enforce antimony laundering and

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Speaker 1: know your customer KAC rules. That's the first thing there

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Speaker 1: was a proposal by the Trump administration to make sure

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Speaker 1: that an allset wallets have to reveal was behind them.

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Speaker 1: That rule has not yet done into fact. That lots

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Speaker 1: of things you can do that could be investigation of

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Speaker 1: why that there is a price manipulation. The investigation right now,

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Speaker 1: but that phoenex those things have to continue because this

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Speaker 1: is a bubble and eventually it's reaching now a market

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Speaker 1: value crepto of one point for three dom dollar and

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Speaker 1: when there's gonna be a blood bat like in two

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Speaker 1: eighteen the price of bitcoin when initially from a thousand

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Speaker 1: to twenty and then collapse from twenty down to three

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Speaker 1: that at time. At that time the market body was

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Speaker 1: very small. A couple hundred billion dollars right now is

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Speaker 1: a multiple of that. So the consequences and the losses

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Speaker 1: of people are going to be so much severe for

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Speaker 1: institutions and for retail sackers of one sort or another.

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Speaker 1: Nourial comment please, and of course, and we thank all

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Speaker 1: of you out on Twitter, in your emails, watching professor

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Speaker 1: we're being here on television and radio is honorial. People

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Speaker 1: are transfixed by this debate. Explain to it's not the

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Speaker 1: thermodynamics but the proof of work of electricity and it's artificiality.

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Speaker 1: How do you see the electrical consumption to make this

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Speaker 1: machine go well? Bitcot alone, it uses the energy of

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Speaker 1: a medial size country like Argentina. Because instead of having,

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Speaker 1: like in any legacy financial system, a few trusted individuals

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Speaker 1: or institutions are validating transaction to make sure there is

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Speaker 1: no double spend a bunch of banks. Now you have

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Speaker 1: literally hundreds of thousands of good miners. We have to

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Speaker 1: do a stupid cryptographic exercise of that one of them

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Speaker 1: wins the task of verifying those transactions and that are

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Speaker 1: put on a ledger in hundreds of thousands of other computers.

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Speaker 1: It's the most inefficient way of essentially verifying transaction. Doesn't

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Speaker 1: make any sense. And by the way, it's not the

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Speaker 1: centralized either because sev of all the mining of cripto

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Speaker 1: or bitcoin is being done by five or six Oligo

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Speaker 1: police firms that are based where in Russia, Belarus and

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Speaker 1: China that are is that no rule of law and

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Speaker 1: we have the national security problem right now if we're

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Speaker 1: relying on a bunch of miners in counties that are

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Speaker 1: our strategic rivals, which there is no rule of law

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Speaker 1: to VERI find those transactions. So people talk about the

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Speaker 1: centralization is not a the centralized system, your centralization of mining,

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Speaker 1: the centralization of exchanges, where transaction occurring, the centralization of

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Speaker 1: developers and centralization of wealth. The gene coefficient for bitcoin

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Speaker 1: is worse than the one of North Korea, where Kimon

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Speaker 1: Jude and his family and chronies on the entire country

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Speaker 1: his point eighty six. Well, in Korea is point eighty four.

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Speaker 1: It's just a total light. This is that the centralized

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Speaker 1: system is centralized where a bunch of insiders and whales

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Speaker 1: and others are controlling the entire system, and they are

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Speaker 1: manipulating it in space in which there is no rule

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Speaker 1: of law. It's just pathetic, Professor healthy, Next time we

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Speaker 1: come back, you can tell us what you really think about, professor.

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Speaker 1: It's good to see here they are Raban, a professor

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Speaker 1: of economics m y U Sterns called past right now.

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Speaker 1: An oil definitive is Paul Sanki long ago and far

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Speaker 1: away at Deutsche Bank there was absolute definitive sell side

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Speaker 1: research like a bible. You read is Saminsky and Sanky

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Speaker 1: on the global supply, the global demand of oil. We're

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Speaker 1: thrilled at Paul Sanky could join us from Sanky Research

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Speaker 1: U this morning. Paul, with the gyrations that we see

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Speaker 1: in the midwest of the United States, in Texas, Permian basin,

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Speaker 1: et cetera, can we get out of the assumption of

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Speaker 1: range bound oil? Well, these are these are not gyrations.

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Speaker 1: I mean this situation to me is is very reminiscent

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Speaker 1: of Park in Katrina, where if you recall, on the

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Speaker 1: Monday after Katrina, there was sort of an attitude that, uh,

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Speaker 1: this hasn't been that big a deal, and then over

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Speaker 1: the course of the following week, it's suddenly you emerged

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Speaker 1: as a as a horrendous disaster. So gyrations in this

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Speaker 1: I've observed this morning, Tom, people don't realize how about

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Speaker 1: this situation is. I mean, you've got, like, as you mentioned,

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Speaker 1: your previous guests mentioned, you've got basically full scale blackouts

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Speaker 1: in Mexico, but you've also lost here the biggest outage

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Speaker 1: in the history of US oil and gas. I mean,

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Speaker 1: this thing is we have never seen a loss of

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Speaker 1: this scale at a time when you know you're in midwinter.

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Speaker 1: So basically we think you've lost about three million barrels

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Speaker 1: a day of oil. We think you've lost about ten

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Speaker 1: BCP of gas at least, and we're down at least

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Speaker 1: three million barrels a day. And the finding you know,

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Speaker 1: all of these for example, in the finding of the

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Speaker 1: base of about sixteen million barrels a day with inventory

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Speaker 1: is not that high. So this is an energy crisis.

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Speaker 1: And you know, yeah, gyerations, you know you're seeing Brent

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Speaker 1: at sixty four here the obvious price reaction would be. Firstly, obviously,

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Speaker 1: if you lose US Texas oil, you're expecting Brent to

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Speaker 1: go up, and it is and yeah, what is your

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Speaker 1: price target? I mean, you give us visibility and price

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Speaker 1: right now. Well, we've been talking a lot about the dollar,

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Speaker 1: so we think you can get to eight this year

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Speaker 1: based on the dollar. Now that obviously if the dollar

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Speaker 1: strengthens a lot, that that calls it dad. But essentially

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Speaker 1: oil should be around sixty five seventy just on the

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Speaker 1: dollar at ninety on the d X Y. You know,

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Speaker 1: if we break down to eight in below, then you

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Speaker 1: can you could easy see oil at eight um. And

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Speaker 1: you know, therefore there's quite a bit of upside at

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Speaker 1: this point, which has been that was prior to the outage,

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Speaker 1: So you know, we'll see how this thing plays out,

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Speaker 1: but I think it's going to take a long time

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Speaker 1: to sort this problem out. Well, Paul, can you talk

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Speaker 1: about the way forward? In other words, how much federal

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Speaker 1: interference has to be waged here given the fact that

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Speaker 1: to upgrade texas Is infrastructure to be more weather proof

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Speaker 1: would cost trillions of dollars and we're looking at a

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Speaker 1: state that doesn't ensure against potential outages the way that

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Speaker 1: places in the Northeast do. How do you see the

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Speaker 1: federal government getting involved? Well, so far, the only comments

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Speaker 1: been from AOC. You know, we haven't really seen much

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Speaker 1: from the President for example, I mean Ergans following a

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Speaker 1: post Trump you know, no Twitter kind of approach. But yeah,

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Speaker 1: it's a major problem for the Texans and they're going

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Speaker 1: to have to completely rethink this is this is really

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Speaker 1: existential in terms of how much wind and how much

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Speaker 1: solar you can have in a system. Given that you know,

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Speaker 1: you were caught really badly shut what happens if you

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Speaker 1: lose natural gas? And you know, to be honest, people

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Speaker 1: haven't really thought what happens if there's a major matt

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Speaker 1: gas outage at the time when there's no wind and solar?

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Speaker 1: And the answer probably is, well, where are your nukes? Well,

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Speaker 1: where's your cod file? Old one, get Paul. But this

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Speaker 1: is really important because yesterday we had a Texas regulator

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Speaker 1: come on and say that the default really was prioritizing

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Speaker 1: green energy, that the wind turbines and some of the

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Speaker 1: other natural resources that went offline were part of the

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Speaker 1: big culprits behind this outage. If we look at data

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Speaker 1: as reported by Bloomberg, it's not really the case that

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Speaker 1: actually it's very much across the board, and that accounts

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Speaker 1: for a much smaller proportion of the total energy output.

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Speaker 1: So can you give us some perspective on how much

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Speaker 1: this sort of shift to green energy really is behind

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Speaker 1: this versus something much broader and more existential. As you say, yeah,

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Speaker 1: I mean, look it's broader. That's exactly my point. Thank

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Speaker 1: you for making that. No, I mean, you've you've had

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Speaker 1: a failure of the natural gas system, You've had a

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Speaker 1: nuclear power very large one two hundred bank or nuclear

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Speaker 1: power plant has gone down. And obviously this is somewhat

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Speaker 1: unprecedented weather. I think it's a sixties sixty year event

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Speaker 1: since we've seen something like this in Texas. So all

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Speaker 1: of the all of the above absolutely, and for one side,

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Speaker 1: you know, exactly as you highlight for one side to

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Speaker 1: say it's wind spot, for the other side to sort

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Speaker 1: of say, you know, this shows you that even invest

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Speaker 1: in nothing the grid is the kind of idiocy that

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Speaker 1: we see around, you know, the whole energy transition debate.

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Speaker 1: The thing that bugs me the most is people who

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Speaker 1: are trying to get us of natural gas. You know,

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Speaker 1: the idea that natural gas and the enemy because it's

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Speaker 1: a fossil fuel. It's really flawed. And you know, ultimately

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Speaker 1: all of us agree that basically we should be building

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Speaker 1: nuclear if we really want to be emissions creed, because

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Speaker 1: that's by far the best emission this pretty option pull.

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Speaker 1: A couple of different conversations happen here, and I'm trying

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Speaker 1: to reconcile them. You've got this eighty dollar price target,

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Speaker 1: at least an eighty dollar call that you're looking for

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Speaker 1: oil prices to gravitate towards. Then we're talking about a

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Speaker 1: problem right now that could be fixed in a couple

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Speaker 1: of weeks as we get into springs. So Paul, can

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Speaker 1: you reconcile the two things for me? Yeah, I mean,

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Speaker 1: the demand growth that we expect to see is going

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Speaker 1: to be about three million barrels a day. In the summer,

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Speaker 1: you're about five million barrels a day versus last year

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Speaker 1: in OPEC with another million coming off from Saudi, So

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Speaker 1: that's that leaves you about three million. At the same time.

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Speaker 1: We've been drawing inventories before this crisis, that about two

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Speaker 1: million a day globally. So basically the market is pretty

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Speaker 1: much tight by summer. And that gets you. And that's

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Speaker 1: by the way, I mean, I'm sure you guys, you know,

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Speaker 1: are pretty jazzed up about the potential for a major

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Speaker 1: pent up demand situations to emerge here. I think all

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Speaker 1: of us, you know, desperate apply in a plane and

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Speaker 1: whatever Tom does in the summer vacations. But I'm sure

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Speaker 1: it involves travel and um, you know. So the point

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Speaker 1: to count me out pull The point is that you're

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Speaker 1: going to see a significant up searching demand. It's almost guaranteed.

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Speaker 1: This is always you know, energy wise, this is a

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Speaker 1: very strong point. Obviously the windsor fuels, obviously natural gas,

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Speaker 1: heating oil. Propane by the way, is pretty much approaching

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Speaker 1: crisis levels as well. The line that we've had before

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Speaker 1: this crisis was there's no propane less than the Mississippi.

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Speaker 1: So my point is that you're in an energy crisis,

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Speaker 1: and I don't even see it as the top headline,

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Speaker 1: you know, in the various media outlets like followed, including

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Speaker 1: blue Bug. Blue Bug always does a great job, by

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Speaker 1: the way, on thanks basically just to jump in forward

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Speaker 1: just quickly. The more one of the more populist outlets

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Speaker 1: don't seem to realize that you've got an energy crisis.

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Speaker 1: Some laquetrina. Final question from me, sir, there's a difference

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Speaker 1: between a rebound and crude crisis and the start of

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Speaker 1: a commodity super psychole. I think that's been the big

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Speaker 1: conversation amongst many people in this industry in the last

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Speaker 1: couple of weeks. This was Andy Hall, of course, fain

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Speaker 1: oil trader of the previous cycle, the last supercycle, he

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Speaker 1: said the following in the ft, the oil and gas

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Speaker 1: industry is in terminal decline. Perhaps this dead cat can

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Speaker 1: bant a few more times, but would that be a

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Speaker 1: super cycle. What's your take on that? Pot? Well, yeah,

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Speaker 1: I used to I used to meet and the in

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Speaker 1: a bar up on the upper rest side player and

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Speaker 1: he's obviously a brilliant mad or is bullish actually I'm

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Speaker 1: very interested to hear him not so bullish. Yeah, my concern.

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Speaker 1: It's obviously it's a it's a consensus call. There's going

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Speaker 1: to be a super cycle, you know, the world. And

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Speaker 1: his wife is saying, yeah, you know everything, hands up,

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Speaker 1: it's a super cycle. Having said that, we are bullish

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Speaker 1: on our demand over the next five years, you know,

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Speaker 1: the whole impact of the VS, which is so heavily

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Speaker 1: discanted by the market, overvalued by the market, is going

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Speaker 1: to take a lot longer to really have an impact.

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Speaker 1: And it really comes down to still being at ninety

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Speaker 1: five nineties six million bars in the wild demand with

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Speaker 1: effectively no jet fuel demand in the US, you know,

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Speaker 1: the discretionary basis, so you can easily get three to

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Speaker 1: four million barrels today of extra jet field demand here,

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Speaker 1: which takes you way back up to the hundred million

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Speaker 1: barrel a day market, And then you're really questioning can

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Speaker 1: the supplice I meet that? As you know, the key questions,

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Speaker 1: one of them is going to be is the USC

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Speaker 1: and P industry going to actually show capital discipline and

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Speaker 1: generate returns this time? That's what's relating to me. I

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Speaker 1: think they will. And yesterday we had Devon announced a

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Speaker 1: variable dividend very early in its announcement of that policy.

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Speaker 1: So essentially now Devon Energy is paying a standard dividend

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Speaker 1: and then a variable dividend depending on the old price.

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Speaker 1: And they came in with the nineteen cent boost that

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Speaker 1: their dividend just based on fortify or and que Corps.

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Speaker 1: That's that's a very good leadership role from from Devon

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Speaker 1: to what this industry should be doing, which is paying

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Speaker 1: out heavily cash to shareholders to pay them to the

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Speaker 1: E s G. Pain of earning oil. I'm far more

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Speaker 1: interested in how drinks went with Andy on the Upper

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Speaker 1: West Side was the two thousand and seven just as

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Speaker 1: like Steve Jobs right, So it's a mysterious figure. I

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Speaker 1: don't know if you've ever seen the naked painting of

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Speaker 1: him and his wife, but I've seen him make really

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Speaker 1: interesting catch up folder at a time. Folking to see

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Speaker 1: him a folk, thank you, thank you, thank you. Michael

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Speaker 1: Gabon joined some Barclays right now. Michael, does this kind

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Speaker 1: of data solidify a Barclay's call for buoyant economic growth?

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Speaker 1: It certainly does help. At least we're looking for growth

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Speaker 1: to be very solid this year and I think what

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Speaker 1: this tells you is when fiscal stimulus or fiscal aid

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Speaker 1: I think it's the better word arrives to household balance

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Speaker 1: sheets is it does get turned around fairly quickly and

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Speaker 1: materializes in economic activities. So this is largely, we think

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Speaker 1: attributable to the nine plus billion aid package that was

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Speaker 1: passed at the end of last year. We suspect we

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Speaker 1: will be getting around to one point four one point

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Speaker 1: five trillion dollar aid package by the middle to the

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Speaker 1: end of March. So I think this means we should

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Speaker 1: see a pretty rapid acceleration in demand and household spending

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Speaker 1: as we move into the into the second quarter, which

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Speaker 1: could be continued if vaccinations continue apace and mobility gradually

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Speaker 1: recovers over time. So yes, Tom, it does I think

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Speaker 1: confirm our expectations about growth for this year, at least initially.

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Speaker 1: Obviously there's eleven more months to go. Well, Michael, can

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Speaker 1: you connect retail sales and sort of a one month

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Speaker 1: pop after passing this stimulus plan to longer term growth?

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Speaker 1: How neat is that line? I wouldn't say it's it's

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Speaker 1: entirely neat, but so there are certainly a list of

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Speaker 1: things that have to happen, including vaccinations and getting on

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Speaker 1: top of the pandemic and perhaps turning to an economic

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Speaker 1: recovery package later this year. But but I think it

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Speaker 1: does show you that when households have resources to spend,

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Speaker 1: they ultimately will. So I think this does also address

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Speaker 1: the question of excess saving our household balance sheets and

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Speaker 1: what's going to happen to that excess saving if we

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Speaker 1: can gradually normalize activity. There's one school of thought that

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Speaker 1: says its wealth it's it's not really going to support

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Speaker 1: consumption all that much. The wealth effective diminished. Our view

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Speaker 1: is that we think a lot of it is is

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Speaker 1: pent up demand or at least deferred consumption that's likely

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Speaker 1: to come back and support activity. Just give you an

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Speaker 1: update briefly on this price action. The move didn't hold,

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Speaker 1: it didn't stick. We find just a little bit one

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Speaker 1: on tens pushed one thirty three about five ten minutes

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Speaker 1: ago on the dollar index, just off the highs of

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Speaker 1: the session of ninety. Michael, we're talking about retail selves here,

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Speaker 1: but maybe we should pay a little bit more attention

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Speaker 1: to p p I facial gate prices are standard push um.

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Speaker 1: We're starting to see this in China as well, and

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Speaker 1: I'm trying to understand. You've got this commodity boom, you've

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Speaker 1: got the supply chain issues, PPI standard to bleed higher.

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Speaker 1: How do you take the read on PPI at two

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Speaker 1: c p I? Michael cow consistent? Is that read across?

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Speaker 1: I think first of all, we we should note this

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Speaker 1: is not just a US phenomenon. You mentioned China. Across

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Speaker 1: the globe. The p m I data in January said

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Speaker 1: prices paid the input prices are moving are moving higher.

429
00:23:13,080 --> 00:23:16,520
Speaker 1: Now this we think on net, this affects the emerging market,

430
00:23:16,680 --> 00:23:19,640
Speaker 1: say central bank policy position much more because they're much

431
00:23:19,680 --> 00:23:23,240
Speaker 1: more export oriented. They have a heavier focus on goods

432
00:23:23,240 --> 00:23:26,679
Speaker 1: production in the in the US and in Europe and

433
00:23:26,720 --> 00:23:28,600
Speaker 1: most of the developed world where still more of a

434
00:23:28,680 --> 00:23:32,200
Speaker 1: services oriented economy. So how does it pass through to

435
00:23:32,480 --> 00:23:36,720
Speaker 1: c p I Probably further buoyancy in in goods prices.

436
00:23:36,760 --> 00:23:42,480
Speaker 1: Now services really take the weight off of that. And

437
00:23:42,480 --> 00:23:45,680
Speaker 1: and so we think buoyant good goods prices are still

438
00:23:45,680 --> 00:23:49,840
Speaker 1: offset by disinflation and shelter in services at least for

439
00:23:49,920 --> 00:23:52,199
Speaker 1: much of this year. So I think there will be

440
00:23:52,240 --> 00:23:54,639
Speaker 1: a pass through. I don't think it's going to affects,

441
00:23:54,640 --> 00:23:57,920
Speaker 1: say the fed's view on on how policy should be set.

442
00:23:58,280 --> 00:24:00,240
Speaker 1: But it is kind of moving the needle of bit

443
00:24:00,320 --> 00:24:03,879
Speaker 1: on central banks, like in Brazil and South Africa, thinking

444
00:24:03,920 --> 00:24:06,919
Speaker 1: about maybe we need to delay, or maybe we delay

445
00:24:06,960 --> 00:24:09,080
Speaker 1: further cuts, or maybe we need to to move to

446
00:24:09,240 --> 00:24:12,760
Speaker 1: tighter policy stands. So it's a global phenomenon right now.

447
00:24:12,920 --> 00:24:15,280
Speaker 1: We don't think it affects the developed market world as

448
00:24:15,359 --> 00:24:17,720
Speaker 1: much as the emerging market. Is it more than just

449
00:24:17,760 --> 00:24:21,240
Speaker 1: spise effects though my code, yes, I think it's it's

450
00:24:21,880 --> 00:24:25,520
Speaker 1: I think it's clearly supply constraints. Its lack of availability

451
00:24:25,720 --> 00:24:29,920
Speaker 1: of labor. Uh, it's lack of inputs. It's the lack

452
00:24:29,960 --> 00:24:32,720
Speaker 1: of containers. We're not moving as much cargo via air

453
00:24:32,840 --> 00:24:35,159
Speaker 1: we need them versus containers. We know what's happened on

454
00:24:35,200 --> 00:24:37,919
Speaker 1: shipping prices there. I just think that the cost of

455
00:24:37,960 --> 00:24:41,600
Speaker 1: getting goods where they're needed globally has has risen. So

456
00:24:41,880 --> 00:24:44,919
Speaker 1: I think it's more than base effects, presumably, or we

457
00:24:45,160 --> 00:24:48,040
Speaker 1: expect it will diminish over the course of the year

458
00:24:48,080 --> 00:24:50,680
Speaker 1: if the composition of activity shifts back in the direction

459
00:24:50,720 --> 00:24:53,879
Speaker 1: of services. But in the meantime, I think it's going

460
00:24:53,920 --> 00:24:55,720
Speaker 1: to be with us for at least the first half

461
00:24:55,720 --> 00:24:58,200
Speaker 1: of this year getting increasingly complex. To get a read

462
00:24:58,200 --> 00:25:00,280
Speaker 1: on this, Mikel's tried to catch up, so thank Michael

463
00:25:00,280 --> 00:25:08,679
Speaker 1: gayfan Bacles. Right now the conversation of the day Ina

464
00:25:08,720 --> 00:25:11,560
Speaker 1: Pandemic Lawrence Our with John Hopp because I know Lisa

465
00:25:11,560 --> 00:25:13,480
Speaker 1: and John got a bunch of questions. We welcome all

466
00:25:13,520 --> 00:25:17,199
Speaker 1: of you across this nation on radio, in television. Lawrence

467
00:25:17,240 --> 00:25:22,600
Speaker 1: sour estimate for us the amount of your public that

468
00:25:22,680 --> 00:25:26,679
Speaker 1: doesn't want to get the vaccine? Is it inconsequential? Is

469
00:25:26,720 --> 00:25:31,359
Speaker 1: it tangible? I think it's definitely tangible. Um. We're rolling

470
00:25:31,359 --> 00:25:35,400
Speaker 1: out to healthcare workers and elderly and vulnerable populations right now.

471
00:25:35,920 --> 00:25:38,440
Speaker 1: You know, I think around the tenth of the population,

472
00:25:38,600 --> 00:25:42,280
Speaker 1: maybe even less, has been vaccinated so far. Um. But

473
00:25:42,400 --> 00:25:45,240
Speaker 1: what we know is that we're already seeing hesitancy from

474
00:25:45,280 --> 00:25:50,119
Speaker 1: these vulnerable, marginalized populations. And that's within our healthcare cohorts

475
00:25:50,600 --> 00:25:53,520
Speaker 1: and more broadly, as we're starting to roll out vaccine

476
00:25:53,680 --> 00:25:58,040
Speaker 1: education campaigns and access campaigns. And so we don't have

477
00:25:58,160 --> 00:26:00,840
Speaker 1: great numbers on the perscent of the popular Asian saying no,

478
00:26:01,080 --> 00:26:03,600
Speaker 1: because there's so many people who are willing to get

479
00:26:03,640 --> 00:26:05,320
Speaker 1: it right now just because they want life to go

480
00:26:05,440 --> 00:26:07,919
Speaker 1: back to normal and they're not scared of the vaccine

481
00:26:08,000 --> 00:26:10,280
Speaker 1: or they're not hesitant to get it. But as soon

482
00:26:10,359 --> 00:26:12,360
Speaker 1: as we get to the point where the where there's

483
00:26:12,359 --> 00:26:15,480
Speaker 1: a significant amount of supply increase, and we've gone through

484
00:26:15,640 --> 00:26:19,760
Speaker 1: our frontline healthcare workers, we've gone through our um elderly

485
00:26:19,840 --> 00:26:22,160
Speaker 1: populations that have been able to get it through things

486
00:26:22,200 --> 00:26:24,680
Speaker 1: like long term care facilities, a lot of us think

487
00:26:24,720 --> 00:26:26,240
Speaker 1: that we're going to see a sort of a cliff

488
00:26:26,320 --> 00:26:28,560
Speaker 1: where there's this drop off of people who are willing

489
00:26:28,760 --> 00:26:31,920
Speaker 1: to get it and we're gonna just be sitting on supply. Lauren,

490
00:26:31,960 --> 00:26:34,120
Speaker 1: As you talk, it just strikes me that this process

491
00:26:34,160 --> 00:26:37,120
Speaker 1: has been really messy. I mean, we're dealing with both

492
00:26:37,160 --> 00:26:39,960
Speaker 1: the education campaigns in addition to trying to figure out

493
00:26:40,040 --> 00:26:43,080
Speaker 1: the rollout campaigns because it's changing in real time, with

494
00:26:43,160 --> 00:26:46,760
Speaker 1: the CDC recommending possibly delaying the second shot now to

495
00:26:46,880 --> 00:26:49,639
Speaker 1: get the first shot as many people's arms. To John's

496
00:26:49,680 --> 00:26:52,760
Speaker 1: point following the UK model, Lauren, is this a mess?

497
00:26:52,960 --> 00:26:55,040
Speaker 1: Is there a plan? Do you think that we're moving

498
00:26:55,080 --> 00:26:59,880
Speaker 1: ahead as expeditiously, expeditiously and as organized, Lee as pos

499
00:27:00,000 --> 00:27:03,359
Speaker 1: of all, I will get my words out. Yeah, I

500
00:27:03,440 --> 00:27:06,359
Speaker 1: mean I think there's there's a plan being built, right,

501
00:27:06,400 --> 00:27:10,359
Speaker 1: but it's being built, you know, as it's going and

502
00:27:10,640 --> 00:27:13,560
Speaker 1: and that's really problematic for something like this, where you

503
00:27:13,800 --> 00:27:19,000
Speaker 1: potentially have multiple vaccines with multiple different uh distribution strategies,

504
00:27:19,080 --> 00:27:23,520
Speaker 1: multiple different cold chain processes, and multiple different dozing approaches,

505
00:27:24,119 --> 00:27:27,360
Speaker 1: and so how this has been rolled out has been

506
00:27:27,560 --> 00:27:30,840
Speaker 1: left to local planners. And those are the same people

507
00:27:31,320 --> 00:27:34,199
Speaker 1: who have had to plan testing campaigns, who have had

508
00:27:34,280 --> 00:27:38,520
Speaker 1: to plan uh PPE access projects, who have had to

509
00:27:38,800 --> 00:27:41,920
Speaker 1: do all of the case counting in their region, and

510
00:27:42,200 --> 00:27:44,840
Speaker 1: and there's just not enough local resources to do that.

511
00:27:45,359 --> 00:27:48,679
Speaker 1: The national strategy is being fixed UM and by fixed

512
00:27:48,720 --> 00:27:51,000
Speaker 1: I mean built, I think because we didn't have a

513
00:27:51,040 --> 00:27:55,920
Speaker 1: strong national strategy for vaccine rollout. It's been incredibly impressive

514
00:27:55,960 --> 00:27:58,000
Speaker 1: how fast we've gotten to vaccine, but that is just

515
00:27:58,160 --> 00:28:01,040
Speaker 1: one piece of the picture, you know, the actual products,

516
00:28:01,440 --> 00:28:03,600
Speaker 1: and then all of these other pieces I think have

517
00:28:03,720 --> 00:28:06,600
Speaker 1: been neglected while all of the focus was on getting

518
00:28:06,720 --> 00:28:10,320
Speaker 1: vaccine UM that actually works. And so now it's time

519
00:28:10,440 --> 00:28:14,640
Speaker 1: to really focus on UM a strategy that takes all

520
00:28:14,720 --> 00:28:18,440
Speaker 1: of the responsibility out of the local health departments and

521
00:28:18,560 --> 00:28:22,360
Speaker 1: local health systems hands so that they can go back

522
00:28:22,400 --> 00:28:25,960
Speaker 1: to providing strong patient care and planning for all of

523
00:28:26,040 --> 00:28:28,879
Speaker 1: the other day to day emergencies that they have in

524
00:28:28,960 --> 00:28:31,720
Speaker 1: the meantime. President Biden last night at a town hall meeting,

525
00:28:32,000 --> 00:28:34,800
Speaker 1: said that he expected things to be back to normal

526
00:28:34,920 --> 00:28:38,920
Speaker 1: by Christmas. Uh, next year. What's the earliest that you

527
00:28:39,040 --> 00:28:42,760
Speaker 1: see as plausible. I think that the first thing we

528
00:28:42,840 --> 00:28:46,040
Speaker 1: have to do is readjust our our sense of what

529
00:28:46,160 --> 00:28:48,080
Speaker 1: back to normal looks like. I mean, this is the

530
00:28:48,200 --> 00:28:50,680
Speaker 1: virus that's going to be with us for a long time. Uh,

531
00:28:51,400 --> 00:28:53,560
Speaker 1: We're not going to get rid of it. We are

532
00:28:53,840 --> 00:28:56,760
Speaker 1: going to manage it, but probably the same way we

533
00:28:56,880 --> 00:29:00,400
Speaker 1: manage flu. But um, there are some distinct different inces.

534
00:29:00,640 --> 00:29:04,560
Speaker 1: And so as vaccine ruled out and more people get

535
00:29:04,600 --> 00:29:07,920
Speaker 1: it and we do focus on these education campaigns, we're

536
00:29:07,920 --> 00:29:10,960
Speaker 1: still going to have to maintain our masking strategies. Maintain

537
00:29:11,000 --> 00:29:14,360
Speaker 1: our strategies probably well into the new year, I would say,

538
00:29:14,520 --> 00:29:17,320
Speaker 1: and possibly more if we don't spend a lot of

539
00:29:17,400 --> 00:29:21,000
Speaker 1: time talking to these communities who are hesitant about vaccine

540
00:29:21,080 --> 00:29:24,720
Speaker 1: right now. Long we keep hearing from several sources, including yourself,

541
00:29:24,840 --> 00:29:26,880
Speaker 1: just then that the national strategy to run out this

542
00:29:26,960 --> 00:29:29,000
Speaker 1: vaccine needed to be fixed, just looking at the numbers

543
00:29:29,080 --> 00:29:30,960
Speaker 1: right now, the average daily rate of one point six

544
00:29:31,000 --> 00:29:33,640
Speaker 1: seven million. It's good and better compared to where it

545
00:29:33,800 --> 00:29:36,600
Speaker 1: was when Joe Biden took the presidency and walked into

546
00:29:36,640 --> 00:29:38,800
Speaker 1: the White House, but it was approaching one million then.

547
00:29:39,240 --> 00:29:41,320
Speaker 1: What was wrong with the strategy then? And how has

548
00:29:41,360 --> 00:29:44,800
Speaker 1: he fixed it? What's he changed? I think there's a

549
00:29:44,840 --> 00:29:47,840
Speaker 1: couple of things that are happening. I think the more

550
00:29:47,960 --> 00:29:52,800
Speaker 1: vaccines are coming online. Uh, people are getting messaging from

551
00:29:52,960 --> 00:29:56,400
Speaker 1: their highest level public health leaders, which is absolutely critical.

552
00:29:56,840 --> 00:30:00,120
Speaker 1: We were in a sort of trusted messenger gap, and

553
00:30:00,120 --> 00:30:03,760
Speaker 1: and that is a problem when people want information. It's

554
00:30:03,800 --> 00:30:07,120
Speaker 1: okay to say what we know has changed, It's okay

555
00:30:07,200 --> 00:30:09,240
Speaker 1: to say we have more information than we did a

556
00:30:09,320 --> 00:30:13,880
Speaker 1: week ago. But fundamentally, if you're not hearing from a consistent,

557
00:30:14,040 --> 00:30:18,120
Speaker 1: trusted voice, um, you can't build any of these strategies

558
00:30:18,240 --> 00:30:21,720
Speaker 1: to to sort of fix what's happening in this pandemic. Lauren,

559
00:30:21,760 --> 00:30:23,400
Speaker 1: we appreciate your time and thank you for jointing us.

560
00:30:23,520 --> 00:30:26,720
Speaker 1: Laurence Sander of Johns Hopkins on the more coherent message

561
00:30:27,040 --> 00:30:29,640
Speaker 1: in the last month or so around the vaccine roll out.

562
00:30:36,040 --> 00:30:40,360
Speaker 1: Charles Canton, Newberger, Berman Long short funds senior portfolio manager, Charles,

563
00:30:40,480 --> 00:30:43,320
Speaker 1: let's just start here on treasuries. He was pushing her,

564
00:30:43,360 --> 00:30:45,320
Speaker 1: and I think everyone in the equity market asking the

565
00:30:45,400 --> 00:30:49,200
Speaker 1: same question. When does it start to buy? Not one thirty,

566
00:30:49,240 --> 00:30:51,000
Speaker 1: when does it start to buy? How do you frame

567
00:30:51,080 --> 00:30:55,080
Speaker 1: that for clients? For you yourself investing? Charles, what's your view? Thanks?

568
00:30:55,120 --> 00:30:57,960
Speaker 1: Good money, Jonathan and Tom Okay. I think at the

569
00:30:58,040 --> 00:31:02,360
Speaker 1: core of a high yield are predicting foster growth and

570
00:31:02,880 --> 00:31:06,120
Speaker 1: UM and a little inflation, a little pricing power generally

571
00:31:06,200 --> 00:31:08,680
Speaker 1: is good for equities. I think the speed of the

572
00:31:08,760 --> 00:31:12,680
Speaker 1: move matters as much as where rates ultimately settled out UM.

573
00:31:13,360 --> 00:31:15,440
Speaker 1: For the last twenty decades, we've lived in a world

574
00:31:15,480 --> 00:31:18,080
Speaker 1: with rates went in one direction, and that was from

575
00:31:18,200 --> 00:31:20,480
Speaker 1: from the top left to the bottom right. I think

576
00:31:20,600 --> 00:31:23,320
Speaker 1: look two two and a half, two and three quarters

577
00:31:23,920 --> 00:31:27,720
Speaker 1: becomes somewhat problematic, But to me, that feels like creating

578
00:31:27,720 --> 00:31:32,960
Speaker 1: a long way away. I looked Charles, where we are,

579
00:31:33,360 --> 00:31:37,120
Speaker 1: and I see a great adjustment in what corporations will do.

580
00:31:37,880 --> 00:31:41,840
Speaker 1: You are experts at the dynamics of corporations. What are

581
00:31:41,880 --> 00:31:45,480
Speaker 1: they doing right now to shape up their income statements,

582
00:31:45,800 --> 00:31:49,920
Speaker 1: to shape up the need for revenue. Are they activist corporations?

583
00:31:50,200 --> 00:31:54,080
Speaker 1: Are they gliding into the rest of two thousand twenty one. Look,

584
00:31:54,120 --> 00:31:59,000
Speaker 1: I think corporations are feeling fantastic having stayed into the

585
00:31:59,080 --> 00:32:03,160
Speaker 1: abyss and water about the survivability of their businesses and

586
00:32:03,280 --> 00:32:06,000
Speaker 1: their health of their employees and and and and and

587
00:32:06,400 --> 00:32:09,760
Speaker 1: their supply chains. I think they they've survived this in

588
00:32:10,080 --> 00:32:13,600
Speaker 1: this roague way that that almost wiped them out, and

589
00:32:14,000 --> 00:32:19,040
Speaker 1: and now feel emboldened and confident to to to invest

590
00:32:19,360 --> 00:32:22,920
Speaker 1: both inside there in their businesses in terms of people

591
00:32:23,000 --> 00:32:26,800
Speaker 1: and technology and and and new products and services. And

592
00:32:26,840 --> 00:32:29,480
Speaker 1: I think they're thinking a lot strategically as well about

593
00:32:29,760 --> 00:32:32,720
Speaker 1: how do they take advantage of this dramatic rise in

594
00:32:33,040 --> 00:32:36,040
Speaker 1: in their stock crisis. On top of that, many of

595
00:32:36,120 --> 00:32:39,640
Speaker 1: them have showed up their balance sheets by taking advantage

596
00:32:40,080 --> 00:32:46,680
Speaker 1: of incredibly low yields. As Jonathan mentioned earlier, the yield

597
00:32:46,720 --> 00:32:49,200
Speaker 1: on high yield, for example, doesn't start with the fire

598
00:32:49,280 --> 00:32:52,440
Speaker 1: handle anymore. So there's been shoring up of balance sheets,

599
00:32:52,560 --> 00:32:56,080
Speaker 1: lots of confidence um and many I think are thinking

600
00:32:56,200 --> 00:32:59,680
Speaker 1: through at what pace they start bringing folks back to

601
00:32:59,760 --> 00:33:02,560
Speaker 1: the office. And this definitely has been behind some of

602
00:33:02,640 --> 00:33:05,000
Speaker 1: the moves that we've seen in equity prices, and certainly

603
00:33:05,520 --> 00:33:08,240
Speaker 1: it's been helped by a very accommodative how to reserve.

604
00:33:08,800 --> 00:33:12,560
Speaker 1: Is short selling dead in this environment? No, I don't

605
00:33:12,600 --> 00:33:14,520
Speaker 1: think short setting is dead at all. I think we're

606
00:33:14,640 --> 00:33:18,200
Speaker 1: finally in environment where security selection, stock clicking, and risk

607
00:33:18,240 --> 00:33:21,480
Speaker 1: management matters again. And that played out across all of

608
00:33:21,600 --> 00:33:26,560
Speaker 1: twenty and continues to play out in one. Yes, there

609
00:33:26,640 --> 00:33:30,320
Speaker 1: was a moment in January where bad companies went down

610
00:33:30,480 --> 00:33:35,280
Speaker 1: and sorry, bad companies went up and um, good companies

611
00:33:35,320 --> 00:33:38,560
Speaker 1: went down as everyone try to bring down gross exposures

612
00:33:38,600 --> 00:33:42,600
Speaker 1: by covering heavily short at stocks and funding those those

613
00:33:42,840 --> 00:33:45,840
Speaker 1: those purchases by setting down really good companies. But that

614
00:33:45,960 --> 00:33:48,680
Speaker 1: seems to have worked its way through the system. Now

615
00:33:49,560 --> 00:33:53,560
Speaker 1: short setting is a massive opportunity to to to to

616
00:33:53,760 --> 00:33:59,160
Speaker 1: create value and by understanding where companies positioned within its sector,

617
00:33:59,760 --> 00:34:02,200
Speaker 1: with in its balance sheet, within its customers, within the

618
00:34:02,240 --> 00:34:05,280
Speaker 1: global supply chain has never mattered more and and and

619
00:34:05,360 --> 00:34:09,000
Speaker 1: the shorting opportunity is as large today I've seen it

620
00:34:09,080 --> 00:34:11,680
Speaker 1: in my career. How nervous do you feel about being sure?

621
00:34:11,760 --> 00:34:14,040
Speaker 1: How comfortable are your child? Surely, under the last three

622
00:34:14,120 --> 00:34:16,239
Speaker 1: months you feel a little bit more nervous putting that

623
00:34:16,320 --> 00:34:20,520
Speaker 1: trade on. Look, it's all about how you position the

624
00:34:20,600 --> 00:34:24,759
Speaker 1: short um and it's all about understanding where others are

625
00:34:24,880 --> 00:34:29,520
Speaker 1: within regard to to to to to betting against, betting

626
00:34:29,560 --> 00:34:34,719
Speaker 1: against the company. We manage our short positions very cautiously.

627
00:34:34,960 --> 00:34:38,600
Speaker 1: We're fully aware of of levels of short interest. But

628
00:34:38,760 --> 00:34:42,000
Speaker 1: we're not betting that that a that a company goes away,

629
00:34:42,239 --> 00:34:45,040
Speaker 1: and we're not betting our business that that company goes away.

630
00:34:45,400 --> 00:34:48,440
Speaker 1: And when you combine those two things, I think you

631
00:34:48,520 --> 00:34:51,440
Speaker 1: see pretty well at night. The shorting opportunity is the

632
00:34:51,440 --> 00:34:53,400
Speaker 1: biggest in my career. I mean, child, you have got

633
00:34:53,480 --> 00:34:56,279
Speaker 1: to put some numbers on that. Where in energy we've

634
00:34:56,280 --> 00:34:58,480
Speaker 1: seen again of almost twenty percent year today, you've seen

635
00:34:58,520 --> 00:35:01,040
Speaker 1: a similar move in small caps on a rustle as well,

636
00:35:01,320 --> 00:35:05,000
Speaker 1: where you're seeing these massive opportunities. Look, we see a

637
00:35:05,080 --> 00:35:08,320
Speaker 1: market that continues to be very bifurcated between value and

638
00:35:08,400 --> 00:35:13,120
Speaker 1: growth and different sectors and how companies opposition our stencies.

639
00:35:13,200 --> 00:35:17,360
Speaker 1: Those companies that that that are still behind in terms

640
00:35:17,440 --> 00:35:21,040
Speaker 1: of digitizing their business, taking their businesses to the cloud,

641
00:35:21,600 --> 00:35:25,400
Speaker 1: engaging in their customers in a very different way, UM

642
00:35:26,400 --> 00:35:28,360
Speaker 1: are going to find it very difficult there are a

643
00:35:28,480 --> 00:35:32,480
Speaker 1: bunch of companies out there whose stories are so fanciful

644
00:35:33,160 --> 00:35:37,080
Speaker 1: they can't be validated or refuted. And and those are

645
00:35:37,120 --> 00:35:40,239
Speaker 1: the companies that that I prefer not to mention, but

646
00:35:40,360 --> 00:35:43,000
Speaker 1: those are the companies where a little the time um

647
00:35:43,440 --> 00:35:46,040
Speaker 1: truth will get revealed. And if you can manage those

648
00:35:46,080 --> 00:35:53,040
Speaker 1: positions within cautiously and and and and and small, I

649
00:35:53,160 --> 00:35:56,239
Speaker 1: think at some point you get paid. Charles Character give

650
00:35:56,280 --> 00:35:59,160
Speaker 1: a lesson to all of global Wall Street watching this morning.

651
00:35:59,520 --> 00:36:02,440
Speaker 1: How much short interest is too much short interest? I mean,

652
00:36:02,520 --> 00:36:06,000
Speaker 1: Game Stop was out well over. You've gotta be nuts

653
00:36:06,080 --> 00:36:08,279
Speaker 1: to go against that. Do you have a limit in

654
00:36:08,320 --> 00:36:11,200
Speaker 1: your head where you say, if it's thirty short interest,

655
00:36:11,600 --> 00:36:14,200
Speaker 1: that the thirty percent of the shares out I'm betting

656
00:36:14,200 --> 00:36:16,879
Speaker 1: against that they're gonna go down. Is that too much?

657
00:36:16,920 --> 00:36:19,239
Speaker 1: Do you have a number? I think you've got to

658
00:36:19,280 --> 00:36:22,440
Speaker 1: think about short interest and position sizing together. So the

659
00:36:22,560 --> 00:36:25,279
Speaker 1: larger the short interests, the smaller of the position should

660
00:36:25,320 --> 00:36:28,360
Speaker 1: be for as within the context of what what is reasonable.

661
00:36:28,719 --> 00:36:34,120
Speaker 1: I think once you get north of um short beware,

662
00:36:34,560 --> 00:36:37,240
Speaker 1: but that doesn't mean you don't you don't short that company.

663
00:36:37,320 --> 00:36:39,360
Speaker 1: But but once you get north of twenty percent, I

664
00:36:39,360 --> 00:36:41,920
Speaker 1: think there's a rule of um, um, you want to

665
00:36:42,080 --> 00:36:44,680
Speaker 1: you want to start thinking critically about how he did

666
00:36:44,760 --> 00:36:46,360
Speaker 1: you are, But then you want to think of actual

667
00:36:46,400 --> 00:36:51,320
Speaker 1: position within the context of of of the entire short interest.

668
00:36:51,360 --> 00:36:55,080
Speaker 1: How much of the short interest is you versus someone else?

669
00:36:55,120 --> 00:36:58,000
Speaker 1: I mean part of the challenges. Um. You know, so

670
00:36:58,160 --> 00:37:02,520
Speaker 1: many folks are on the same side of the trade

671
00:37:02,600 --> 00:37:04,400
Speaker 1: at the same time, and then they'll all do the

672
00:37:04,440 --> 00:37:07,200
Speaker 1: same thing at exactly the same time. I always found

673
00:37:07,239 --> 00:37:11,359
Speaker 1: it curious that the retail investors got accused of group think,

674
00:37:11,880 --> 00:37:14,920
Speaker 1: but the institutional short setter was also part of the

675
00:37:15,000 --> 00:37:16,719
Speaker 1: group think because they were all in it at the

676
00:37:16,760 --> 00:37:19,040
Speaker 1: same time, and then all do exactly the same thing

677
00:37:19,440 --> 00:37:22,200
Speaker 1: to manage down their gross exposures at the same time,

678
00:37:22,239 --> 00:37:28,000
Speaker 1: which creates this enormous opportunity to to to to make money. Charls,

679
00:37:28,040 --> 00:37:30,320
Speaker 1: I can't believe you run down the clock without actually

680
00:37:30,320 --> 00:37:32,279
Speaker 1: telling us where to find these shorts. He said, he

681
00:37:32,320 --> 00:37:34,400
Speaker 1: didn't want to comment. He said, the companies are so

682
00:37:39,239 --> 00:37:43,840
Speaker 1: does it rhyme with Westler Charles? It may not, but

683
00:37:44,000 --> 00:37:47,799
Speaker 1: it's it's where the businesses are pursuing a total addressable

684
00:37:48,400 --> 00:37:55,040
Speaker 1: market that seems massive evaluations are fanciful. Revenue doesn't seem

685
00:37:55,120 --> 00:37:58,680
Speaker 1: to be very great today, but enormous five years from now.

686
00:37:59,160 --> 00:38:01,200
Speaker 1: There are a lot of those businesses out there, and

687
00:38:01,320 --> 00:38:05,960
Speaker 1: that piece of the market, Kennedy feels very n I mean,

688
00:38:06,560 --> 00:38:10,239
Speaker 1: the market doesn't feel ninety nine at all. We need

689
00:38:10,280 --> 00:38:21,080
Speaker 1: a private conversation chouse. This is the Bloomberg Surveillance Podcast.

690
00:38:21,360 --> 00:38:24,680
Speaker 1: Thanks for listening. Join us live weekdays from seven to

691
00:38:24,800 --> 00:38:28,840
Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television

692
00:38:29,239 --> 00:38:33,200
Speaker 1: each day from six to nine am for insight from

693
00:38:33,239 --> 00:38:37,759
Speaker 1: the best in economics, finance, investment, and international relations. And

694
00:38:37,920 --> 00:38:43,040
Speaker 1: subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg

695
00:38:43,080 --> 00:38:46,759
Speaker 1: dot com, and of course on the terminal. I'm Tom Keene,

696
00:38:46,840 --> 00:38:48,800
Speaker 1: and this is Bloomberg