1 00:00:12,880 --> 00:00:16,000 Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg Weekly 2 00:00:16,040 --> 00:00:19,680 Speaker 1: Markets podcast. I'm Sara Ponzac, a reporter on the Cross 3 00:00:19,680 --> 00:00:22,720 Speaker 1: Asset team, and I'm Mike Reagan, a senior editor on 4 00:00:22,760 --> 00:00:25,480 Speaker 1: the Markets team. This week, on the show, the Feds 5 00:00:25,520 --> 00:00:29,200 Speaker 1: a buyer again, Powell announced plans to expand the bank's 6 00:00:29,240 --> 00:00:32,320 Speaker 1: balance sheet, but don't you dare go confusing the asset 7 00:00:32,360 --> 00:00:36,680 Speaker 1: purchases with quantitative easing. And the US China trade talks 8 00:00:36,760 --> 00:00:40,160 Speaker 1: were once again front and center with a Chinese delegation 9 00:00:40,240 --> 00:00:43,479 Speaker 1: in Washington. D c our guests break it down, and 10 00:00:43,600 --> 00:00:46,320 Speaker 1: if you're here for the craziest things we saw in 11 00:00:46,400 --> 00:00:48,880 Speaker 1: markets this week, don't worry, we will get to them. Sarah, 12 00:00:48,880 --> 00:00:50,720 Speaker 1: I'll give you a hint, as as I usually do 13 00:00:50,920 --> 00:00:54,600 Speaker 1: minds in the collectibles market, and he guesses, I'm I'm 14 00:00:54,640 --> 00:00:57,120 Speaker 1: honestly a bit worried that we may have the same 15 00:00:57,200 --> 00:01:02,880 Speaker 1: craziest thing, the worst things that could happen. There's worst 16 00:01:02,880 --> 00:01:04,840 Speaker 1: things that could happen. And remember that we have our 17 00:01:04,959 --> 00:01:08,360 Speaker 1: very own Bloomberg Podcast hotline. Give us a call, let 18 00:01:08,440 --> 00:01:10,399 Speaker 1: us know about the craziest things that you guys have heard, 19 00:01:10,480 --> 00:01:12,600 Speaker 1: or feel free to ask us any questions. That number 20 00:01:12,640 --> 00:01:16,959 Speaker 1: is six four six three to four three four nine zero, 21 00:01:17,080 --> 00:01:20,080 Speaker 1: and we may even play your message on the show. So, Sarah, 22 00:01:20,120 --> 00:01:23,479 Speaker 1: as you know, I think the podcast works best when 23 00:01:23,560 --> 00:01:26,040 Speaker 1: everybody agrees with me. It just seems like the right thing. 24 00:01:26,120 --> 00:01:28,560 Speaker 1: This has been over the past two epis. Seems like 25 00:01:28,600 --> 00:01:31,200 Speaker 1: it lends more authority to be on the right side 26 00:01:31,200 --> 00:01:32,920 Speaker 1: of history that that sort of thing. But as you 27 00:01:32,959 --> 00:01:35,200 Speaker 1: informed me, I think our two guests here there might 28 00:01:35,200 --> 00:01:37,680 Speaker 1: be a chance we'll get an actual debate on the podcast, 29 00:01:37,680 --> 00:01:40,600 Speaker 1: which which would be exciting so um to me, this 30 00:01:40,680 --> 00:01:43,000 Speaker 1: is could be the best debate since the is a 31 00:01:43,000 --> 00:01:46,720 Speaker 1: hot dog of sandwich debate which has has royal many 32 00:01:47,040 --> 00:01:48,760 Speaker 1: cock ol parties I've been at, and I mean, I'll 33 00:01:48,760 --> 00:01:52,040 Speaker 1: give my opinion. It's clearly not wrong. Wrong you are. 34 00:01:52,520 --> 00:01:55,200 Speaker 1: You've got bread, you've got meat, you've got a sandwich. Anyway, 35 00:01:55,520 --> 00:01:58,080 Speaker 1: enough of that, let's introduce the guests are first guests. 36 00:01:58,160 --> 00:02:02,960 Speaker 1: He's actually our first turn guest among U non Bloomberg people, 37 00:02:03,400 --> 00:02:07,360 Speaker 1: our first two timer. He's the managing director of Global 38 00:02:07,840 --> 00:02:12,519 Speaker 1: macro Strategy at Medley Global Advisors UH. Previously, he was 39 00:02:12,600 --> 00:02:16,280 Speaker 1: chief economist and a portfolio manager at Intellectist Partners, and 40 00:02:16,320 --> 00:02:19,680 Speaker 1: he spent several years at PIMCO out on the West coast, 41 00:02:19,720 --> 00:02:22,840 Speaker 1: back in the Bill Gross days, and we're proud of him. 42 00:02:22,840 --> 00:02:25,760 Speaker 1: Back Ben Emmons, welcome to the show. Thank you very much. Sarah, 43 00:02:25,800 --> 00:02:28,320 Speaker 1: Mike is really great to be back. Thanks Ben also 44 00:02:28,400 --> 00:02:30,000 Speaker 1: joining us. Well, this guy is like a three or 45 00:02:30,080 --> 00:02:32,200 Speaker 1: four timer, but he's a Bloomberg guy, so he doesn't 46 00:02:32,280 --> 00:02:36,520 Speaker 1: doesn't really count. Uh, he's a cross asset reporter. Lukalla, 47 00:02:36,600 --> 00:02:38,359 Speaker 1: welcome to the show. Good to be here. It's uh 48 00:02:38,720 --> 00:02:41,640 Speaker 1: rough to debate someone with the kung fu background of 49 00:02:41,639 --> 00:02:44,240 Speaker 1: of Ben Buttoh hey, well we'll see what happens. Well, 50 00:02:44,280 --> 00:02:46,720 Speaker 1: Lincoln Douglas is up. No violence here, we'll keep it 51 00:02:47,080 --> 00:02:50,400 Speaker 1: very very g rated. A little violence, a little violence, 52 00:02:50,480 --> 00:02:55,400 Speaker 1: podcast the violence. But if I remember correctly, the source 53 00:02:55,440 --> 00:02:58,760 Speaker 1: of this debate stems from the speech that Jerome pal 54 00:02:58,880 --> 00:03:02,120 Speaker 1: gave this week in which he basically announced that the 55 00:03:02,160 --> 00:03:06,519 Speaker 1: FED was going to begin buying treasury bonds again, especially 56 00:03:06,560 --> 00:03:08,840 Speaker 1: on the short end, a lot of treasury notes to 57 00:03:08,880 --> 00:03:12,720 Speaker 1: sort of manage the yield curve, prevent these inversions. In 58 00:03:12,760 --> 00:03:15,200 Speaker 1: the shooter ended part of the yield curve that we've 59 00:03:15,240 --> 00:03:18,519 Speaker 1: seen so immediately. Sorry. I don't know about you, but 60 00:03:18,639 --> 00:03:23,720 Speaker 1: my Twitter feed erupted into this is more quantitative easing, 61 00:03:24,280 --> 00:03:29,120 Speaker 1: and other people say no, it's not quantitative easing. So, uh, luke, 62 00:03:29,360 --> 00:03:32,280 Speaker 1: why don't you start explaining to us why you believe 63 00:03:32,280 --> 00:03:34,800 Speaker 1: this is not quantitative easing. So first, I want to 64 00:03:34,840 --> 00:03:36,960 Speaker 1: push back on your on your premise some of the 65 00:03:37,120 --> 00:03:38,640 Speaker 1: some of the things you said there in terms of 66 00:03:38,640 --> 00:03:44,080 Speaker 1: Powell's justification for returning to purchases of not treasury bonds 67 00:03:44,120 --> 00:03:46,520 Speaker 1: but pretty much all bills, is the plan as as 68 00:03:46,520 --> 00:03:48,800 Speaker 1: far as I can tell, he didn't really mention a 69 00:03:48,840 --> 00:03:50,880 Speaker 1: desire to steep rest deep in the yield curve. That's 70 00:03:50,880 --> 00:03:52,800 Speaker 1: something you can read into it if you want to. 71 00:03:53,080 --> 00:03:55,520 Speaker 1: But he said this is all about maintaining an ample 72 00:03:55,600 --> 00:03:59,120 Speaker 1: reserve system, focusing more on the liability side of bank 73 00:03:59,160 --> 00:04:01,640 Speaker 1: balance sheet, make con sure reserves are ample. And for me, 74 00:04:01,880 --> 00:04:06,240 Speaker 1: what this isn't is quantitative easing, it's quantitative normal ng back. 75 00:04:06,320 --> 00:04:09,240 Speaker 1: It's an expansion of the balance sheet and the buying 76 00:04:09,280 --> 00:04:11,840 Speaker 1: of bills in a way that's designed to ensure the 77 00:04:11,880 --> 00:04:15,120 Speaker 1: adequate transmission of current monetary policy, whether or not the 78 00:04:15,120 --> 00:04:18,880 Speaker 1: Fed lowers or raises rates From here, would still coincide 79 00:04:19,000 --> 00:04:22,400 Speaker 1: with balance sheet expansion. Probably it's not a measure to 80 00:04:22,640 --> 00:04:26,560 Speaker 1: add additional easing push people out the curve. Removed duration, 81 00:04:26,680 --> 00:04:29,279 Speaker 1: so you have to move into risk your assets. And 82 00:04:29,320 --> 00:04:32,760 Speaker 1: I think this kind of distinction is useful and worth 83 00:04:32,839 --> 00:04:36,000 Speaker 1: noting because the intent of monetary policy matters. Back in 84 00:04:36,040 --> 00:04:38,720 Speaker 1: the day, pre ninety four, I believe it was, you'd 85 00:04:38,720 --> 00:04:41,479 Speaker 1: really even didn't get FED statements to know when rates 86 00:04:41,480 --> 00:04:43,400 Speaker 1: are removing up or down. You had to discern it. 87 00:04:43,560 --> 00:04:45,880 Speaker 1: But why by what they were doing in open market 88 00:04:45,920 --> 00:04:49,279 Speaker 1: operations in excess essentially of what you would suspect they'd 89 00:04:49,279 --> 00:04:51,719 Speaker 1: be doing in order to kind of manage the reserves 90 00:04:51,720 --> 00:04:53,880 Speaker 1: in the system. That was the signal. So I think 91 00:04:53,960 --> 00:04:59,839 Speaker 1: signal and intent matter a lot in monetary policy. Look, you, 92 00:04:59,839 --> 00:05:02,719 Speaker 1: you're supposed to debate Bed, not me. All right, all right, 93 00:05:03,200 --> 00:05:06,240 Speaker 1: he's the only one saying wrong things so far. His 94 00:05:06,400 --> 00:05:08,600 Speaker 1: he's coming at you. But I have to say Ben 95 00:05:08,680 --> 00:05:11,880 Speaker 1: was pretty rebellious this week because Jerome Howell must have 96 00:05:11,920 --> 00:05:14,400 Speaker 1: said about five times in his speech did I mentioned 97 00:05:14,440 --> 00:05:16,960 Speaker 1: that this is not quee? And then Ben goes ahead 98 00:05:17,000 --> 00:05:19,400 Speaker 1: and sends around an email to his clients and the 99 00:05:19,440 --> 00:05:23,120 Speaker 1: title of it is call it a quei comeback. So, Ben, 100 00:05:23,160 --> 00:05:25,159 Speaker 1: why don't you give us your take from your point 101 00:05:25,200 --> 00:05:28,040 Speaker 1: of view? Why can you call it a quwie come back? Yes, 102 00:05:28,120 --> 00:05:30,320 Speaker 1: I think that and two two looks point like, look 103 00:05:30,360 --> 00:05:33,160 Speaker 1: as we fair that you are buying treasury bills and 104 00:05:33,240 --> 00:05:35,839 Speaker 1: you injecting reserves back in the system, and fair enough, 105 00:05:35,920 --> 00:05:39,240 Speaker 1: this is what the Fed would do since fourteen. Sorry 106 00:05:39,400 --> 00:05:43,000 Speaker 1: see traditional function of the fellow reserve. But let's think 107 00:05:43,000 --> 00:05:45,760 Speaker 1: about it this way, like, we are in a situation 108 00:05:45,800 --> 00:05:48,479 Speaker 1: where two years ago we started a normalization of the 109 00:05:48,480 --> 00:05:51,880 Speaker 1: bound she's and we contracted the reserves, and we built 110 00:05:51,880 --> 00:05:55,159 Speaker 1: this pretty big gap between currency circulation and reserves in 111 00:05:55,160 --> 00:05:58,520 Speaker 1: the system. And that has become a pressing issue. So 112 00:05:58,720 --> 00:06:01,119 Speaker 1: as Bau goes ahead and try us to fill that gap, 113 00:06:01,600 --> 00:06:03,800 Speaker 1: he's gonna have to buy these tea bills to do that, right, 114 00:06:03,839 --> 00:06:06,400 Speaker 1: He's gonna have to buy from dealers, right, and then 115 00:06:06,440 --> 00:06:09,040 Speaker 1: those dealers have new reserves and banks are new reserves, 116 00:06:09,040 --> 00:06:12,840 Speaker 1: and then there will be another let's say conversion in fact, 117 00:06:12,880 --> 00:06:15,880 Speaker 1: if you're called that way, of something happening with those reserves. 118 00:06:16,240 --> 00:06:18,360 Speaker 1: Why did we ended up with this repot issue in 119 00:06:18,680 --> 00:06:21,240 Speaker 1: September because a lot of banks that hoard of reserves, 120 00:06:21,320 --> 00:06:23,920 Speaker 1: banning a few banks held a lot of reserves. So 121 00:06:24,000 --> 00:06:26,520 Speaker 1: they try to resolve that. But if you didn't think 122 00:06:26,560 --> 00:06:30,240 Speaker 1: about what que actually did. There's two ways to think 123 00:06:30,279 --> 00:06:32,200 Speaker 1: about it, right. One it is a duration of fact, 124 00:06:32,279 --> 00:06:34,120 Speaker 1: just as you buy a long day of securities and 125 00:06:34,200 --> 00:06:37,440 Speaker 1: you you push people out in the respectrum. The other 126 00:06:37,520 --> 00:06:40,320 Speaker 1: part is it that you are providing let's say, a 127 00:06:40,440 --> 00:06:43,120 Speaker 1: real cushion to the system. One reason why we want 128 00:06:43,160 --> 00:06:46,159 Speaker 1: to really happen was to try to really resolve the 129 00:06:46,160 --> 00:06:50,200 Speaker 1: frencial crisis and the liquidity aspects of that and the 130 00:06:50,200 --> 00:06:53,560 Speaker 1: distress that happened. We don't really deal with that right now, 131 00:06:53,720 --> 00:06:56,320 Speaker 1: but we do deal with a quickly issue, so to speak. 132 00:06:56,360 --> 00:06:59,600 Speaker 1: So if you cushion the system with a let's say 133 00:06:59,680 --> 00:07:03,520 Speaker 1: very af acid which is the excess reserve, by driving 134 00:07:03,600 --> 00:07:05,440 Speaker 1: up the price of the risk free asset, which is 135 00:07:05,440 --> 00:07:08,000 Speaker 1: the d bill, then you will get some sort of 136 00:07:08,040 --> 00:07:10,400 Speaker 1: idea that people will will at least respond to it 137 00:07:10,440 --> 00:07:13,280 Speaker 1: and say, Okay, there's a cushioning effect in the system. 138 00:07:13,360 --> 00:07:15,760 Speaker 1: I'm going to do something else, right, I'm gonna take 139 00:07:15,840 --> 00:07:19,000 Speaker 1: perhaps more risk or at least some enticement. And this 140 00:07:19,120 --> 00:07:21,800 Speaker 1: may be the debate right where we don't debate so 141 00:07:21,920 --> 00:07:25,560 Speaker 1: much about buying interior treasury bonds and that's QUE right, 142 00:07:25,840 --> 00:07:28,880 Speaker 1: more about what will this program ultimately resolved into how 143 00:07:28,920 --> 00:07:32,840 Speaker 1: people will behave as this question. The motivations may be different, 144 00:07:32,880 --> 00:07:36,720 Speaker 1: but the the reaction will be similar in markets. I 145 00:07:36,760 --> 00:07:38,920 Speaker 1: want to say, just to like back up Ben's point 146 00:07:38,960 --> 00:07:41,920 Speaker 1: to a certain extent, go against myself. What you saw 147 00:07:41,920 --> 00:07:45,200 Speaker 1: in markets, especially on Tuesday, there was this big twist 148 00:07:45,240 --> 00:07:47,880 Speaker 1: steepening of the curve, and steepening in a trade like 149 00:07:47,960 --> 00:07:51,080 Speaker 1: that is typically associated with what we saw right before 150 00:07:51,160 --> 00:07:54,280 Speaker 1: QUE two and UH and following on from that in 151 00:07:54,320 --> 00:07:57,280 Speaker 1: August of and again when we were talking up the 152 00:07:57,320 --> 00:08:01,040 Speaker 1: possibility of q E three. So essentially what this is 153 00:08:01,080 --> 00:08:03,600 Speaker 1: intended on doing, whether it's a problem with anything with 154 00:08:03,680 --> 00:08:05,880 Speaker 1: the with the reserves of the system, with bank liquidity 155 00:08:05,920 --> 00:08:09,840 Speaker 1: selling and so forth, it's effectively serving as forward guidance, 156 00:08:09,880 --> 00:08:14,520 Speaker 1: which is pushing short rates down and removing more deflationary 157 00:08:14,560 --> 00:08:18,240 Speaker 1: tail risk negative risk asset outcomes. And you saw long 158 00:08:18,280 --> 00:08:20,800 Speaker 1: bond yields go up. So hey, if the market thinks 159 00:08:20,840 --> 00:08:23,000 Speaker 1: it's kuwi and wants to act like it's QUI in 160 00:08:23,000 --> 00:08:25,240 Speaker 1: a way, who am I to say it's not I 161 00:08:25,240 --> 00:08:27,559 Speaker 1: think you just conceded defeat their Luke, I'm not sure 162 00:08:27,640 --> 00:08:32,400 Speaker 1: is that? Can you can you see the threatening motions 163 00:08:32,400 --> 00:08:36,560 Speaker 1: that Ben is making at Ben's practicing kung fu in 164 00:08:36,679 --> 00:08:39,840 Speaker 1: his seat. But I want to ask you then, Luke. 165 00:08:39,920 --> 00:08:42,080 Speaker 1: I mean you can make the quip that markets are 166 00:08:42,120 --> 00:08:44,520 Speaker 1: never wrong. But if you look at the spread between 167 00:08:44,840 --> 00:08:47,360 Speaker 1: three month treasury yields and tenure treasury yields, I mean 168 00:08:47,360 --> 00:08:51,640 Speaker 1: we're now back near the vicinity of being in positive territory. 169 00:08:51,679 --> 00:08:53,280 Speaker 1: I mean, can you make the case then that if 170 00:08:53,320 --> 00:08:57,720 Speaker 1: this isn't que then we're seeing markets act the wrong way, 171 00:08:58,720 --> 00:09:02,079 Speaker 1: uh potential. I think you can make that point. However, 172 00:09:02,240 --> 00:09:04,600 Speaker 1: I think this week and I'm sure we'll get to this. 173 00:09:04,760 --> 00:09:07,720 Speaker 1: It's kind of important to note that this wasn't happening 174 00:09:07,720 --> 00:09:11,080 Speaker 1: in a vacuum, and in fact, even during Powell on Tuesday, 175 00:09:11,160 --> 00:09:14,000 Speaker 1: some of the h was taken out of his remarks 176 00:09:14,320 --> 00:09:16,720 Speaker 1: by the fact that you had trade headlines hitting fast 177 00:09:16,760 --> 00:09:19,840 Speaker 1: and furious and kind of either whip sawing and negating 178 00:09:19,840 --> 00:09:22,640 Speaker 1: the effect or in some cases accelerating it. And what 179 00:09:22,679 --> 00:09:27,160 Speaker 1: we've seen essentially since that point is more positive than negative. 180 00:09:27,520 --> 00:09:30,400 Speaker 1: Trade headlines, and that's a reason why the tenure yield 181 00:09:30,400 --> 00:09:33,880 Speaker 1: has kind of risen as dramatically as it has this week. So, Ben, 182 00:09:33,920 --> 00:09:37,520 Speaker 1: you gave a TV interview to Bloomberg TV earlier this 183 00:09:37,559 --> 00:09:40,760 Speaker 1: week where you talked about this whole issue and um, 184 00:09:41,240 --> 00:09:43,680 Speaker 1: how you see the rest of the year shaping out? 185 00:09:44,040 --> 00:09:45,680 Speaker 1: And we wrote a story on it. The headline was 186 00:09:45,760 --> 00:09:49,000 Speaker 1: shades of two thousand and eighteen route coming for markets 187 00:09:49,040 --> 00:09:52,200 Speaker 1: this quarter. Emmon says, that's that's a scary headline, Ben, 188 00:09:52,280 --> 00:09:55,040 Speaker 1: But I just wanted to sort of go through your rationale. 189 00:09:55,520 --> 00:09:59,720 Speaker 1: You don't think, um, that this will solve the repo, 190 00:09:59,800 --> 00:10:04,000 Speaker 1: which you the funding issue as we get towards year end. Um, 191 00:10:04,240 --> 00:10:07,400 Speaker 1: you say, uh, this will take some time to catch up. 192 00:10:07,440 --> 00:10:10,000 Speaker 1: It may alleviate at some point a bit of the 193 00:10:10,000 --> 00:10:12,080 Speaker 1: funding pressures that we see, but it will not be 194 00:10:12,280 --> 00:10:14,920 Speaker 1: by year end. It will be more by the second 195 00:10:15,000 --> 00:10:17,360 Speaker 1: quarter of next year. So walk us through a little 196 00:10:17,360 --> 00:10:19,439 Speaker 1: bit more how you see the rest of the year 197 00:10:19,480 --> 00:10:22,120 Speaker 1: shaping out. It sounds like you're you're pretty cautious for 198 00:10:22,720 --> 00:10:25,480 Speaker 1: the fourth quarter. Yeah, I am, man, Mike, because um, 199 00:10:26,240 --> 00:10:28,640 Speaker 1: although this is a really good step at these to 200 00:10:28,760 --> 00:10:31,880 Speaker 1: address it more permanently, in the sense, and they still 201 00:10:31,920 --> 00:10:34,320 Speaker 1: have to, by the way, announce the permanent repo facility 202 00:10:34,400 --> 00:10:36,720 Speaker 1: that it's not there yet. It may happen October. We 203 00:10:36,720 --> 00:10:39,600 Speaker 1: don't know yet yet, but it's like in the air um. 204 00:10:39,679 --> 00:10:42,360 Speaker 1: But most of all it will it will take a 205 00:10:42,440 --> 00:10:45,440 Speaker 1: number of months to ramp it really up right, they 206 00:10:45,480 --> 00:10:47,839 Speaker 1: would have to buy at least a hun to on 207 00:10:47,920 --> 00:10:51,160 Speaker 1: a billion or so of de bails to make that difference. 208 00:10:51,800 --> 00:10:54,920 Speaker 1: Then we're dealing with this redistribution issue of reserves that 209 00:10:55,080 --> 00:10:57,720 Speaker 1: is still happening, and then we're dealing with just the 210 00:10:57,800 --> 00:11:00,280 Speaker 1: year end effect in itself. Right, And if you this 211 00:11:00,360 --> 00:11:02,280 Speaker 1: is actually what where I'm coming really from, is that 212 00:11:02,760 --> 00:11:07,280 Speaker 1: since when the Basil three agreement may changes to let's say, 213 00:11:07,559 --> 00:11:10,160 Speaker 1: leverage that banks can have on their bound sheet, particularly 214 00:11:10,280 --> 00:11:12,920 Speaker 1: over year end, there's a lot of there's a lot 215 00:11:12,960 --> 00:11:16,559 Speaker 1: of constraint on that. Now this is actually limited the 216 00:11:16,720 --> 00:11:19,679 Speaker 1: ability of companies and others to fund themselves over year 217 00:11:19,720 --> 00:11:21,719 Speaker 1: and they all go to a really small door, so 218 00:11:21,840 --> 00:11:25,480 Speaker 1: to speak. And we've delvet this repeatedly, so we're dealing 219 00:11:25,520 --> 00:11:28,040 Speaker 1: with it this year too. One way to look at 220 00:11:28,040 --> 00:11:30,360 Speaker 1: it is the technical part of the market is the 221 00:11:30,400 --> 00:11:33,040 Speaker 1: currency market, where you have basis swaps right where you 222 00:11:33,040 --> 00:11:37,080 Speaker 1: can have swap floating rates with one another. That gives 223 00:11:37,120 --> 00:11:40,079 Speaker 1: you sort of a sense of demand for dollars in particular. 224 00:11:40,600 --> 00:11:43,520 Speaker 1: Now we're also coming off of really a tense period 225 00:11:43,559 --> 00:11:47,040 Speaker 1: in August of flight to safety. There's other signs there 226 00:11:47,040 --> 00:11:49,000 Speaker 1: that there's been a fair amount of dollar issuance happening 227 00:11:49,000 --> 00:11:50,960 Speaker 1: in Asia, right, that's I think all of rush for 228 00:11:51,200 --> 00:11:54,840 Speaker 1: having dollars before the end of the year. There's generally, 229 00:11:54,920 --> 00:11:57,120 Speaker 1: I think just a demand for dollars in itself, which 230 00:11:57,120 --> 00:11:58,640 Speaker 1: have nothing to do with the value of dollars, just 231 00:11:58,679 --> 00:12:02,040 Speaker 1: demand for dollars. So we were in a pretty tight situation. 232 00:12:02,520 --> 00:12:06,280 Speaker 1: So this program that they're talking about will make some difference, 233 00:12:06,320 --> 00:12:10,760 Speaker 1: but not immediately. Um. In addition that you if you 234 00:12:10,800 --> 00:12:14,080 Speaker 1: do deal with this constraint in itself, then you're going 235 00:12:14,120 --> 00:12:16,400 Speaker 1: to get the same sort of sort of gaveway, a 236 00:12:16,400 --> 00:12:19,000 Speaker 1: really tight gave way to get through. And if we're 237 00:12:19,040 --> 00:12:21,280 Speaker 1: then dealing with everything that comes ahead of us now, 238 00:12:21,440 --> 00:12:23,120 Speaker 1: the trade talks, we don't know how it ends, right, 239 00:12:23,160 --> 00:12:26,240 Speaker 1: So the tears that come into effect perhaps next week 240 00:12:26,280 --> 00:12:28,959 Speaker 1: and in December, other than certainty we know the drill 241 00:12:29,000 --> 00:12:31,360 Speaker 1: of that, So it does. It does keeps us in 242 00:12:31,360 --> 00:12:35,200 Speaker 1: a really tight environments. And that's the caution that I have, 243 00:12:35,800 --> 00:12:37,520 Speaker 1: you know, and and it will that be the chase 244 00:12:37,559 --> 00:12:40,040 Speaker 1: of Tony eighteen. Yes, that looks like a bit like that, 245 00:12:40,440 --> 00:12:42,640 Speaker 1: um and that depends, of course, to on on all 246 00:12:42,640 --> 00:12:45,040 Speaker 1: the geopolitical developments. But we have a lot of that 247 00:12:45,160 --> 00:12:47,640 Speaker 1: this time, right, not forget what's happening with Turkey Syria, 248 00:12:47,800 --> 00:12:51,880 Speaker 1: which is very politically charged, and that also China is 249 00:12:51,960 --> 00:12:54,520 Speaker 1: involved in that too. There's all of that political aspect 250 00:12:54,520 --> 00:12:57,559 Speaker 1: there to that markets are in a bind here, and 251 00:12:57,640 --> 00:13:01,000 Speaker 1: to piggyback on Bend's point, they're like that that is 252 00:13:01,040 --> 00:13:05,280 Speaker 1: trying to essentially help with the amount of water going 253 00:13:05,320 --> 00:13:08,280 Speaker 1: through the plumbing here and and loosen that up. But 254 00:13:08,360 --> 00:13:10,480 Speaker 1: the size of the pipes is really what's going to 255 00:13:10,520 --> 00:13:12,839 Speaker 1: become an issue at the end of Q four And 256 00:13:13,280 --> 00:13:15,560 Speaker 1: Bank of America had kind of a recent note uh 257 00:13:15,720 --> 00:13:19,560 Speaker 1: talking about just GA regulations and the desire of big 258 00:13:19,559 --> 00:13:22,960 Speaker 1: banks to avoid search charges on their assets, and that means, 259 00:13:23,000 --> 00:13:26,079 Speaker 1: you know, essentially slimming down on your assets, which obviously 260 00:13:26,120 --> 00:13:29,199 Speaker 1: has ripple effects beyond in terms of those who need 261 00:13:29,280 --> 00:13:33,440 Speaker 1: financing or have finance positions currently and it's kind of 262 00:13:33,640 --> 00:13:36,040 Speaker 1: same as it ever was. It is shades of eighteen 263 00:13:36,160 --> 00:13:38,360 Speaker 1: there and that you know, you see some banks that 264 00:13:38,400 --> 00:13:41,160 Speaker 1: are right above a level where if they just got 265 00:13:41,160 --> 00:13:43,920 Speaker 1: below it would be a lower charge for the next year. 266 00:13:43,960 --> 00:13:46,040 Speaker 1: So that means they have the same incentive to kind 267 00:13:46,080 --> 00:13:48,880 Speaker 1: of retreat from a market, the market in the way 268 00:13:48,920 --> 00:13:51,280 Speaker 1: that they did in Q four that had people just 269 00:13:51,440 --> 00:13:55,000 Speaker 1: crying about how bad liquidity was and really seeing a 270 00:13:55,040 --> 00:13:57,440 Speaker 1: lot of the gaps you got during that time, it 271 00:13:57,480 --> 00:14:00,960 Speaker 1: really makes you wonder if they shouldn't do say assets 272 00:14:01,040 --> 00:14:03,280 Speaker 1: over a period rather than it doesn't. It doesn't make 273 00:14:03,320 --> 00:14:08,280 Speaker 1: you wonder that that's not how the Basil agreement works. 274 00:14:08,320 --> 00:14:11,400 Speaker 1: And ultimately the Basil Agreement actually is overlapping agreement that 275 00:14:11,480 --> 00:14:14,319 Speaker 1: all banks do have to comply with, even though the 276 00:14:14,400 --> 00:14:17,319 Speaker 1: domestic regulation may be a bit different. It has been 277 00:14:17,320 --> 00:14:22,120 Speaker 1: an interesting repeating a phenomenon of the last four years 278 00:14:22,800 --> 00:14:26,960 Speaker 1: sixteen eighteen and now right so, and every time that 279 00:14:27,040 --> 00:14:30,560 Speaker 1: the tensions get build up that year and effect becomes 280 00:14:30,560 --> 00:14:34,360 Speaker 1: more severe. So this year too, we have plenty of 281 00:14:34,360 --> 00:14:36,720 Speaker 1: reasons to be really cautious. So I am with look 282 00:14:36,840 --> 00:14:39,680 Speaker 1: that on that way is that we're going to go 283 00:14:39,760 --> 00:14:41,680 Speaker 1: through small door. There's gonna be a lot of parties 284 00:14:41,720 --> 00:14:43,280 Speaker 1: have to all go through the small door, and whether 285 00:14:43,280 --> 00:14:46,280 Speaker 1: the fetes there but this repoperation or not. I don't 286 00:14:46,280 --> 00:14:48,800 Speaker 1: think that the tightness in the markets will necessarily change 287 00:14:48,840 --> 00:15:06,760 Speaker 1: as it was then. When you talk about shades of eighteen, 288 00:15:06,880 --> 00:15:09,640 Speaker 1: especially being at the beginning of the fourth quarter, a 289 00:15:09,680 --> 00:15:13,080 Speaker 1: lot of people will picture the near death experience of 290 00:15:13,120 --> 00:15:16,040 Speaker 1: the ballmarket that we experienced last year. But many would 291 00:15:16,080 --> 00:15:18,560 Speaker 1: point out the fact that interest rates are much lower 292 00:15:18,640 --> 00:15:21,480 Speaker 1: clearly than where they were back then. How does that 293 00:15:21,800 --> 00:15:25,440 Speaker 1: change the picture heading into this quarter and then maybe 294 00:15:25,440 --> 00:15:29,440 Speaker 1: even into as well, because as we all know, the 295 00:15:29,480 --> 00:15:31,760 Speaker 1: fourth quarter was pretty rough, but then we saw a 296 00:15:31,880 --> 00:15:34,840 Speaker 1: very steep rebound. Yeah, And I think that's an interesting 297 00:15:34,880 --> 00:15:37,080 Speaker 1: point because you were talking here about then the macro 298 00:15:37,480 --> 00:15:41,440 Speaker 1: reasons of why there's caution that, yes, we have hunter 299 00:15:41,520 --> 00:15:45,560 Speaker 1: based point basements, more of lower rates, with rate cuts everywhere. 300 00:15:45,840 --> 00:15:48,280 Speaker 1: There's a lot of focus on to try to avoid 301 00:15:48,400 --> 00:15:51,200 Speaker 1: the tradeboard turning into a global recession, so not our 302 00:15:51,280 --> 00:15:54,680 Speaker 1: insurance being put in the system. That's completely opposite from 303 00:15:54,760 --> 00:15:57,520 Speaker 1: last year. Clearly, at that time, we were actually very 304 00:15:57,520 --> 00:15:59,480 Speaker 1: confident that we had a very strong outlook and it 305 00:15:59,560 --> 00:16:02,880 Speaker 1: was more about talking about tightening, and in fact emerging markets, 306 00:16:02,880 --> 00:16:05,680 Speaker 1: in particular central banks there had had the tighten because 307 00:16:05,800 --> 00:16:08,440 Speaker 1: they dealt with pressure on their currencies. So we're really 308 00:16:08,480 --> 00:16:11,480 Speaker 1: opposite situation on that front. But that all said, like, 309 00:16:11,920 --> 00:16:14,080 Speaker 1: I think the complexity of the trade war has has 310 00:16:14,120 --> 00:16:17,000 Speaker 1: compounded since that time, and there's so many layers have 311 00:16:17,080 --> 00:16:20,040 Speaker 1: been added to with that, although not not not all 312 00:16:20,080 --> 00:16:22,880 Speaker 1: of that has been yet really implemented the market clearly 313 00:16:22,920 --> 00:16:25,640 Speaker 1: discounting that's a scenario that makes the economic scenario a 314 00:16:25,720 --> 00:16:28,520 Speaker 1: lot worse than what we had before. They say at 315 00:16:28,560 --> 00:16:31,680 Speaker 1: least six months before, you know, the complexity vally pent up. 316 00:16:32,040 --> 00:16:34,720 Speaker 1: So I think that that the year end situation on 317 00:16:34,760 --> 00:16:37,560 Speaker 1: that sense is not different than last year in terms 318 00:16:37,600 --> 00:16:41,800 Speaker 1: of having tension about where we're really handing with trade brackits, 319 00:16:42,080 --> 00:16:46,400 Speaker 1: golf tensions, etcetera. The uncertainty is just much more elevated, 320 00:16:46,560 --> 00:16:49,120 Speaker 1: and that is not I think it's something that low 321 00:16:49,240 --> 00:16:52,240 Speaker 1: rates have yet the offside where they have not really 322 00:16:52,320 --> 00:16:54,680 Speaker 1: upsettled uncertainty. And if you look kind of at the 323 00:16:54,680 --> 00:16:58,240 Speaker 1: the history of the market from eighteen to the present 324 00:16:58,600 --> 00:17:02,440 Speaker 1: and especially during the risk of episodes a February UH 325 00:17:02,600 --> 00:17:06,520 Speaker 1: of alpocalypse and q FO. To be clear, it's it's 326 00:17:06,680 --> 00:17:10,879 Speaker 1: very evident that these don't appear to be broad macro issues. 327 00:17:10,920 --> 00:17:14,600 Speaker 1: It does appear as though market structure and liquidity concerns 328 00:17:15,200 --> 00:17:18,000 Speaker 1: just become the overriding factors, like we've had over the 329 00:17:18,000 --> 00:17:20,760 Speaker 1: past couple of years. I'd say we're up about twenty 330 00:17:20,880 --> 00:17:24,919 Speaker 1: percent and earnings are up about but the time periods 331 00:17:24,920 --> 00:17:28,080 Speaker 1: in which those have occurred are completely divorced from one another. 332 00:17:28,119 --> 00:17:31,080 Speaker 1: So I think, you know, the kind of stocks follow fundamentals, yeah, 333 00:17:31,160 --> 00:17:33,919 Speaker 1: over the long haul, but we've seen kind of market 334 00:17:33,960 --> 00:17:38,320 Speaker 1: conditions play a bigger role, especially in our risk off episodes, 335 00:17:39,000 --> 00:17:40,560 Speaker 1: you know. But I wanted to go back to something 336 00:17:40,640 --> 00:17:46,119 Speaker 1: you mentioned, Um, the Turkey invading Seria situation. UM. I 337 00:17:46,160 --> 00:17:50,120 Speaker 1: know that Lira was weak, the Turkish lero was weak. Um, 338 00:17:50,560 --> 00:17:53,840 Speaker 1: is there any other risks from that scenario that we 339 00:17:53,920 --> 00:17:56,280 Speaker 1: need to think about. Have you seen any sort of 340 00:17:56,400 --> 00:18:00,399 Speaker 1: contagion in markets elsewhere or is it just add on 341 00:18:00,480 --> 00:18:04,199 Speaker 1: top of the sort of global geopolitical uncertainty that we 342 00:18:04,240 --> 00:18:06,679 Speaker 1: have all over the place. It's an add on and 343 00:18:06,760 --> 00:18:09,119 Speaker 1: it will be local and it will be very fact 344 00:18:09,200 --> 00:18:11,560 Speaker 1: you know, impact on Turkey itself. And obviously the region 345 00:18:11,600 --> 00:18:13,840 Speaker 1: and you know, looking Syria has been a war going 346 00:18:13,840 --> 00:18:17,080 Speaker 1: on for eight years. But I think the political angle 347 00:18:17,119 --> 00:18:21,359 Speaker 1: there was about the curves right who holds so many 348 00:18:21,400 --> 00:18:26,320 Speaker 1: of these ices fighters and the subsequent flood of again 349 00:18:26,440 --> 00:18:29,480 Speaker 1: of refugees out of Syria coming into Europe. Right, So 350 00:18:29,600 --> 00:18:31,439 Speaker 1: you have Europe there in place, and you have the 351 00:18:31,520 --> 00:18:35,800 Speaker 1: US focus on as and obviously the let's say, the 352 00:18:35,960 --> 00:18:38,840 Speaker 1: criticism on on the on the turner from took on 353 00:18:38,880 --> 00:18:42,160 Speaker 1: this on this policy related to Syria. This is another 354 00:18:42,200 --> 00:18:46,000 Speaker 1: political angle here. I think that's new. It won't really 355 00:18:46,040 --> 00:18:49,120 Speaker 1: impact i'd say trade talks or or or another sort 356 00:18:49,119 --> 00:18:53,480 Speaker 1: of event. It's just add on um contagion to other uh, 357 00:18:53,920 --> 00:18:57,480 Speaker 1: locally emerging markets is not there, other than if it 358 00:18:57,520 --> 00:19:00,200 Speaker 1: were the fact that say the Turkish banks again because 359 00:19:00,320 --> 00:19:03,680 Speaker 1: Leira weekends in the banks at no liquidity anymore, etcetera. 360 00:19:03,760 --> 00:19:05,639 Speaker 1: That you know, there's some banks in Europe that have 361 00:19:05,760 --> 00:19:08,560 Speaker 1: lent lots of Turkish banks and they and Turkish banks 362 00:19:08,600 --> 00:19:10,760 Speaker 1: are very religned on dollar funding, so that could be 363 00:19:10,800 --> 00:19:14,439 Speaker 1: dead tension. You know, resurfacing has happened before, you know, 364 00:19:14,520 --> 00:19:16,560 Speaker 1: when Turkish LEARR was on a lot of pressure and 365 00:19:16,640 --> 00:19:20,080 Speaker 1: Trump had at a big skirmage with icon as I 366 00:19:20,119 --> 00:19:23,439 Speaker 1: think twenty seventeen, so maybe something like that. Other than that, 367 00:19:23,480 --> 00:19:26,000 Speaker 1: I don't think it's brons Contagian issue. Well, for first, 368 00:19:26,080 --> 00:19:28,639 Speaker 1: like I think you know, this is probably first and 369 00:19:28,680 --> 00:19:31,760 Speaker 1: foremost in everyone's mind, more a moral issue than anything. 370 00:19:32,040 --> 00:19:35,239 Speaker 1: But when it comes to the potential market impact, I 371 00:19:35,240 --> 00:19:37,800 Speaker 1: think one extra way you could see this is some 372 00:19:37,840 --> 00:19:41,560 Speaker 1: potential read through between this and the possibility of the 373 00:19:41,600 --> 00:19:45,040 Speaker 1: president being impeached or that impeachment then being successful, and 374 00:19:45,080 --> 00:19:47,640 Speaker 1: the Senate to the extent that matters to markets. Because 375 00:19:47,680 --> 00:19:50,399 Speaker 1: if there's one thing that several Republican senators have not 376 00:19:50,520 --> 00:19:53,399 Speaker 1: liked them have been happy to voice their disapproval on 377 00:19:53,440 --> 00:19:56,800 Speaker 1: this week Marco Rubio and Lindsay graham Uh in particular 378 00:19:56,880 --> 00:19:58,720 Speaker 1: come to mind, it's that they very much do not 379 00:19:59,160 --> 00:20:02,680 Speaker 1: agree with this or in policy decisions. So inasmuch as 380 00:20:02,800 --> 00:20:06,440 Speaker 1: the president's constituency right now is is very dependent upon 381 00:20:06,840 --> 00:20:09,639 Speaker 1: his party, and particularly his party in the Senate, in 382 00:20:09,760 --> 00:20:12,320 Speaker 1: order to retain control, this is one way in which 383 00:20:12,400 --> 00:20:15,560 Speaker 1: he perhaps might be undermining his support. Because this has 384 00:20:15,560 --> 00:20:17,359 Speaker 1: been a topic of light and we've discussed it on 385 00:20:17,400 --> 00:20:20,640 Speaker 1: a couple of the past episodes been Let's get your view, 386 00:20:20,680 --> 00:20:24,040 Speaker 1: I mean, thinking about impeachment and the markets, what is 387 00:20:24,080 --> 00:20:27,439 Speaker 1: the relationship if at all, I guess the relationship is 388 00:20:27,480 --> 00:20:30,119 Speaker 1: not about the faults of you know, treasury debt. I 389 00:20:30,119 --> 00:20:32,440 Speaker 1: wouldn't strongly emphasize that. I don't think that has anything 390 00:20:32,440 --> 00:20:33,920 Speaker 1: with one and on it to do, because that's would 391 00:20:33,960 --> 00:20:36,960 Speaker 1: be people's first maybe thinking is said, we're going to 392 00:20:37,040 --> 00:20:40,320 Speaker 1: get a default over getting a very weak dollar. Neither 393 00:20:40,359 --> 00:20:44,280 Speaker 1: has happened so far or will happen. I think, um, 394 00:20:44,320 --> 00:20:48,080 Speaker 1: it will be disruptive, of course, because any political leadership 395 00:20:48,200 --> 00:20:51,640 Speaker 1: change causes again additional uncertainty will be here the case 396 00:20:51,680 --> 00:20:54,760 Speaker 1: two if you really think about it, we have not 397 00:20:54,920 --> 00:20:58,280 Speaker 1: had a political crisis like we've had in Europe for example, 398 00:20:58,359 --> 00:21:00,760 Speaker 1: including what's happening with the Brexit it. So it will 399 00:21:00,800 --> 00:21:04,680 Speaker 1: be a really, I think, will first constitutional political crisis 400 00:21:05,440 --> 00:21:07,560 Speaker 1: that you know. Ultimately, I do think markets will react 401 00:21:07,640 --> 00:21:11,479 Speaker 1: negatively too. In a sense. It is disruption. It's uncertainty. 402 00:21:11,640 --> 00:21:14,920 Speaker 1: If you do think back of the Nixon era when 403 00:21:15,080 --> 00:21:17,680 Speaker 1: you know it wasn't impeached, but he ultimately left the 404 00:21:17,680 --> 00:21:19,919 Speaker 1: White House. There was a lot uncertainty after that, right 405 00:21:20,000 --> 00:21:23,040 Speaker 1: and how things would unfold, so that boy would definitely 406 00:21:23,040 --> 00:21:26,920 Speaker 1: affect markets, but I think that it is a otherwise, 407 00:21:26,960 --> 00:21:29,520 Speaker 1: it's more of an issue that it will be about 408 00:21:29,600 --> 00:21:33,280 Speaker 1: the election, how to shape South, who will be the 409 00:21:33,280 --> 00:21:37,239 Speaker 1: new Republican front runner there? That particularly, I think, and 410 00:21:37,280 --> 00:21:40,119 Speaker 1: that's more political. I think that would not have impact 411 00:21:40,119 --> 00:21:42,440 Speaker 1: on markets. I think the only thing you could see 412 00:21:42,440 --> 00:21:45,439 Speaker 1: about this then is that the dollar actually ironically continue 413 00:21:45,440 --> 00:21:48,400 Speaker 1: to strengthening because it's just to flight safety effect from 414 00:21:48,440 --> 00:21:52,920 Speaker 1: the uncertainty. Yeah. Interesting, the pound did strengthening quite a 415 00:21:53,000 --> 00:21:56,600 Speaker 1: bit on Thursday when Boris Johnson and the Irish Prime 416 00:21:56,640 --> 00:22:00,040 Speaker 1: Minister met. It renewed optimism that maybe they will in 417 00:22:00,320 --> 00:22:04,640 Speaker 1: some sort of agreement before the Brexit dropped dead deadline. 418 00:22:05,000 --> 00:22:06,680 Speaker 1: What is your read on how that's all going to 419 00:22:06,760 --> 00:22:08,879 Speaker 1: shape out? I mean, I think the pound went from 420 00:22:08,920 --> 00:22:13,000 Speaker 1: like a dollar twenty two to above a dollar. Have 421 00:22:13,080 --> 00:22:14,720 Speaker 1: we seen the loads in the pounder? Or is there 422 00:22:14,920 --> 00:22:19,720 Speaker 1: is there danger for a big crash if this stuff 423 00:22:19,760 --> 00:22:22,000 Speaker 1: falls through before the end of the month. So the 424 00:22:22,040 --> 00:22:24,160 Speaker 1: good news actually is with with the brexits two things. 425 00:22:24,200 --> 00:22:27,000 Speaker 1: Actually one day passed a law through the House of 426 00:22:27,080 --> 00:22:29,879 Speaker 1: Comments that they could not leave the EU with without 427 00:22:29,880 --> 00:22:33,080 Speaker 1: a deal. That's pass. So no matter what happens between 428 00:22:33,080 --> 00:22:36,240 Speaker 1: now and the end of October, Boris Johnson or someone 429 00:22:36,240 --> 00:22:39,240 Speaker 1: appointed would have to go to the EU for an extension. 430 00:22:39,560 --> 00:22:42,639 Speaker 1: That's very clear. So we won't get this hard accit. 431 00:22:43,480 --> 00:22:46,000 Speaker 1: As I said before, the Bank of England and the 432 00:22:46,000 --> 00:22:48,520 Speaker 1: e c B have done some pretty good background works 433 00:22:48,520 --> 00:22:51,439 Speaker 1: to control the followed in the derivative markets so that 434 00:22:51,440 --> 00:22:54,160 Speaker 1: it won't be a financial systemic effect either if there's 435 00:22:54,160 --> 00:22:57,000 Speaker 1: a Brexit, and that's why markets have always been pretty 436 00:22:57,119 --> 00:23:02,280 Speaker 1: calm about the Brexit headlines, other than just general uncertainty effect. UM. 437 00:23:02,480 --> 00:23:05,000 Speaker 1: Of course the pounds has upside here if if it 438 00:23:05,119 --> 00:23:07,719 Speaker 1: does lead to the resolution finding the Brexit is behind us. 439 00:23:07,760 --> 00:23:10,360 Speaker 1: If anything is just a relief right like the three 440 00:23:10,440 --> 00:23:14,320 Speaker 1: years of this UM. But the most likely outcome so 441 00:23:14,359 --> 00:23:18,400 Speaker 1: far still is that UM, if you do not leave 442 00:23:18,480 --> 00:23:21,680 Speaker 1: the the the EU on the so without a deal 443 00:23:21,680 --> 00:23:25,520 Speaker 1: on the one, then it will be new elections. Obviously 444 00:23:25,560 --> 00:23:27,439 Speaker 1: that will be happening in November and a number of 445 00:23:27,480 --> 00:23:31,320 Speaker 1: months during that extension time new government. That what happens 446 00:23:31,560 --> 00:23:36,600 Speaker 1: was that Boris Johnson Matt with the Northern Irish Prime 447 00:23:36,640 --> 00:23:40,440 Speaker 1: Minister and they find a way. I guess to keep 448 00:23:40,480 --> 00:23:42,879 Speaker 1: the e the Northern Ireland into the EU on a 449 00:23:42,880 --> 00:23:45,639 Speaker 1: certain code and it's a very technical thing, and that 450 00:23:45,720 --> 00:23:47,560 Speaker 1: would be then to to the sort of a piece 451 00:23:47,600 --> 00:23:50,199 Speaker 1: of of of the government, not only the government but 452 00:23:50,320 --> 00:23:54,000 Speaker 1: other opposition parties except the Irish d d UP. They 453 00:23:54,040 --> 00:23:56,680 Speaker 1: would be against that still, but it would be just 454 00:23:56,840 --> 00:23:59,520 Speaker 1: enough to actually say now we can actually have to 455 00:23:59,600 --> 00:24:03,080 Speaker 1: withdraw agreement work on the technicalities of the hardboard around 456 00:24:03,119 --> 00:24:06,240 Speaker 1: Northern Ireland, which has been the big block you know, 457 00:24:06,560 --> 00:24:11,119 Speaker 1: against that Brexfit conclusion. But they say it there is 458 00:24:11,119 --> 00:24:12,600 Speaker 1: still a lot of work to be done, So I 459 00:24:12,600 --> 00:24:14,680 Speaker 1: would I would be still in the camp of saying 460 00:24:14,720 --> 00:24:17,480 Speaker 1: we're gonna head towards the ENNA in a month with 461 00:24:17,640 --> 00:24:20,160 Speaker 1: a no deal action that leads to you know, new 462 00:24:20,160 --> 00:24:23,040 Speaker 1: elections in the UK and more broadly stepping back. When 463 00:24:23,080 --> 00:24:26,080 Speaker 1: you take a look at Thursday's price action, this could 464 00:24:26,160 --> 00:24:30,320 Speaker 1: be peak policy maker optimism that we've kind of ever seen, 465 00:24:30,720 --> 00:24:32,640 Speaker 1: at least so far this year. If you can look 466 00:24:32,680 --> 00:24:35,440 Speaker 1: at a day when cable the pound against the US 467 00:24:35,480 --> 00:24:38,600 Speaker 1: dollar is up about one five and U S docks 468 00:24:38,600 --> 00:24:41,120 Speaker 1: with heavy exposure to China are also up one point 469 00:24:41,200 --> 00:24:43,720 Speaker 1: five percent, those two things don't happen together. We don't 470 00:24:43,720 --> 00:24:47,240 Speaker 1: suspect that global policy makers are going to avoid worst 471 00:24:47,240 --> 00:24:51,200 Speaker 1: case scenarios and rally like that on both legs that often. 472 00:24:51,320 --> 00:24:53,200 Speaker 1: So this that's kind of something to keep in mind 473 00:24:53,240 --> 00:24:55,959 Speaker 1: going forward. Thursday's a pretty special day when you look 474 00:24:56,000 --> 00:24:58,240 Speaker 1: at global markets. So far, everyone just decided to be 475 00:24:58,280 --> 00:25:00,680 Speaker 1: really up to the bias definitely seen to be towards 476 00:25:00,760 --> 00:25:04,280 Speaker 1: positive outcomes all around, which you would think maybe people 477 00:25:04,320 --> 00:25:06,200 Speaker 1: would have learned their lessons by hour or maybe and 478 00:25:06,280 --> 00:25:10,040 Speaker 1: my just my too, Synacole. Then no, you're actually right, 479 00:25:10,119 --> 00:25:12,040 Speaker 1: and I think there's still a lot of caution out there. 480 00:25:12,240 --> 00:25:14,720 Speaker 1: I mean a little move of rates, but it's very 481 00:25:14,800 --> 00:25:16,879 Speaker 1: limited if you actually look at I mean it's a 482 00:25:16,880 --> 00:25:19,320 Speaker 1: great point by way by by look to look at 483 00:25:19,359 --> 00:25:22,480 Speaker 1: those two items that's directly linked to these two two deals. 484 00:25:23,119 --> 00:25:25,040 Speaker 1: But if you if you look at the ranges, the 485 00:25:25,240 --> 00:25:27,760 Speaker 1: SMP is still within the August range, right at what 486 00:25:27,920 --> 00:25:30,960 Speaker 1: all the stress happens, Tang year is really at a 487 00:25:31,000 --> 00:25:35,520 Speaker 1: low range, dollars stronger, Still not much movement there, gold 488 00:25:35,600 --> 00:25:38,399 Speaker 1: is up, etcetera. There's a lot of caution. Um, you know, 489 00:25:38,480 --> 00:25:41,040 Speaker 1: it's great if we get optimism. I'm just I think 490 00:25:41,080 --> 00:25:43,040 Speaker 1: a lot of investors field. This is more of like 491 00:25:43,160 --> 00:25:45,400 Speaker 1: that's a little bit of liquidy gap there that optimism. 492 00:25:45,480 --> 00:25:49,280 Speaker 1: That why Marcus move up waiting for this ultimately what 493 00:25:49,280 --> 00:25:51,679 Speaker 1: what will be the resolution in both cases, which you know, 494 00:25:51,920 --> 00:25:55,000 Speaker 1: again we don't know. I think you could maybe call 495 00:25:55,080 --> 00:25:58,480 Speaker 1: the optimism crazy. I think you could, and I think 496 00:25:58,520 --> 00:26:01,199 Speaker 1: that is a good segue to the craziest things we 497 00:26:01,240 --> 00:26:03,679 Speaker 1: saw in markets this week. I believe we got a 498 00:26:03,840 --> 00:26:06,320 Speaker 1: call into the what Goes Up hotline? Is that correct? 499 00:26:06,520 --> 00:26:09,560 Speaker 1: We did. It's from Gerald who is actually in Hong Kong, 500 00:26:09,560 --> 00:26:11,840 Speaker 1: and he's pointing out the fact that all in this 501 00:26:11,880 --> 00:26:15,800 Speaker 1: week China announced that it will actually encourage foreign financial 502 00:26:15,800 --> 00:26:18,920 Speaker 1: institutions and funds to invest in their financial markets, and 503 00:26:18,960 --> 00:26:23,320 Speaker 1: at that same time, Bloomberg reported further about trying to 504 00:26:23,560 --> 00:26:26,520 Speaker 1: bar capital flows into China that is out of the US. 505 00:26:26,560 --> 00:26:30,240 Speaker 1: So take a listen. So if I just arrived from Mars, 506 00:26:30,880 --> 00:26:35,800 Speaker 1: I could be confused which country represents capitalism and free 507 00:26:35,800 --> 00:26:42,639 Speaker 1: markets and which country is run by authoritarian communist But 508 00:26:42,680 --> 00:26:45,680 Speaker 1: then again, these days Hong Kong itself is a bit 509 00:26:45,720 --> 00:26:50,560 Speaker 1: like Mars, especially on the weekends. Thanks by It's a 510 00:26:50,560 --> 00:26:54,040 Speaker 1: great point. I wonder if these, uh, the Chinese officials 511 00:26:54,040 --> 00:26:57,159 Speaker 1: are eyeing all that NBA money that came into the 512 00:26:57,200 --> 00:27:03,160 Speaker 1: country and and some some good potential investors there. Perhaps 513 00:27:04,080 --> 00:27:07,720 Speaker 1: it's pretty blue Will. Supposedly Houston Rockets jerseys have just 514 00:27:07,800 --> 00:27:11,040 Speaker 1: come out of Nike stores in China. Yeah, yeah, that's 515 00:27:11,080 --> 00:27:13,120 Speaker 1: that's interesting. I mean that who would have thought that's 516 00:27:13,160 --> 00:27:17,680 Speaker 1: where the tensions would escalate. But hopefully, hopefully there's peace 517 00:27:17,720 --> 00:27:19,760 Speaker 1: on the horizon. All right, Luke, can you beat that 518 00:27:19,800 --> 00:27:22,760 Speaker 1: craziest thing? I think I might be able to. And 519 00:27:22,800 --> 00:27:24,960 Speaker 1: it's because I think this one I'm really playing to you, 520 00:27:25,040 --> 00:27:26,720 Speaker 1: I know you kind of like the legal ones. And 521 00:27:26,760 --> 00:27:28,800 Speaker 1: I'm also playing a bit to Sarah here because I 522 00:27:28,800 --> 00:27:30,880 Speaker 1: think she might have had a family member that did 523 00:27:30,960 --> 00:27:35,600 Speaker 1: something along the same lines, except a lot less criminality involved. 524 00:27:37,320 --> 00:27:39,560 Speaker 1: To tell that story a little later, So there's a 525 00:27:39,560 --> 00:27:44,400 Speaker 1: fourteen count indictment unsealed against the citizen of Singapore alleging, 526 00:27:44,560 --> 00:27:48,840 Speaker 1: essentially that he hijacked and did some identity theft with 527 00:27:48,880 --> 00:27:53,000 Speaker 1: a prominent California video game developer to often open cloud 528 00:27:53,119 --> 00:27:55,679 Speaker 1: computing accounts so that he would be able to have 529 00:27:55,800 --> 00:27:59,960 Speaker 1: computing power to mine bitcoin and ethereum. Apparently about five 530 00:28:00,200 --> 00:28:03,960 Speaker 1: million worth of cloud computing employed here, and at one 531 00:28:04,080 --> 00:28:06,800 Speaker 1: point they believe he was actually one of the biggest 532 00:28:06,880 --> 00:28:10,160 Speaker 1: users of Amazon Web services by volume at the time, 533 00:28:10,200 --> 00:28:13,000 Speaker 1: based on how much he was told an employing towards 534 00:28:13,280 --> 00:28:15,479 Speaker 1: this tax. So I think that's the that's the craziest 535 00:28:15,480 --> 00:28:17,280 Speaker 1: thing I've got for you. That's pretty good. That's pretty good. 536 00:28:17,280 --> 00:28:21,200 Speaker 1: So do you buy Amazon then? Or do you buy 537 00:28:21,359 --> 00:28:24,000 Speaker 1: And by the I think I'm gonna have to call 538 00:28:24,080 --> 00:28:25,960 Speaker 1: my brother after this and make sure all is good 539 00:28:25,960 --> 00:28:28,200 Speaker 1: in the world. He used to mind bitcoin and he's 540 00:28:28,200 --> 00:28:32,240 Speaker 1: a very good ex professional video game player. So the 541 00:28:32,320 --> 00:28:35,280 Speaker 1: two my cross we might have a witness to this week. Alright, man, 542 00:28:35,320 --> 00:28:38,440 Speaker 1: that's a tough one to beat, can you top I'm 543 00:28:38,440 --> 00:28:40,480 Speaker 1: not even sure what exactly went on there. Some guy 544 00:28:40,520 --> 00:28:43,920 Speaker 1: hacked into the cloud and was mining bitcoin. I'm gonna 545 00:28:43,960 --> 00:28:47,960 Speaker 1: try it. Yeah, I'm gonna completely the other way in 546 00:28:48,040 --> 00:28:50,520 Speaker 1: terms of let's keep to stick to the markets, let's 547 00:28:50,560 --> 00:28:54,200 Speaker 1: keep it boring, boring, and let's go back to the 548 00:28:54,200 --> 00:28:57,520 Speaker 1: e c V with their issues right as in the 549 00:28:57,560 --> 00:29:01,400 Speaker 1: Financial Times with borders. That's the ECB officials had such 550 00:29:01,400 --> 00:29:04,960 Speaker 1: a clash with each other abouts this que decision. But 551 00:29:05,000 --> 00:29:07,080 Speaker 1: if you then read the minutes from the c B. 552 00:29:07,840 --> 00:29:11,120 Speaker 1: There's nothing of that in there. I thought, this is 553 00:29:11,160 --> 00:29:13,640 Speaker 1: really crazy, like this game be right they you know? 554 00:29:13,800 --> 00:29:15,880 Speaker 1: So I'm not aware to say it's just the usual 555 00:29:15,960 --> 00:29:19,640 Speaker 1: europe Being way of communicating with one another, which means, 556 00:29:19,640 --> 00:29:22,440 Speaker 1: by the way, just like with the Brexit, and just 557 00:29:22,520 --> 00:29:25,040 Speaker 1: like with that situation, there's always what I called European 558 00:29:26,280 --> 00:29:28,720 Speaker 1: they get together, they kiss each other, lily on the cheek, 559 00:29:28,960 --> 00:29:31,240 Speaker 1: on each other, and then it will be that's the 560 00:29:31,280 --> 00:29:34,440 Speaker 1: craziest therapean way. It sounds like whoever the secretary was 561 00:29:34,440 --> 00:29:39,400 Speaker 1: that type those up those minutes should be promoted to diplomatic. Alright, Sarah, 562 00:29:39,440 --> 00:29:41,000 Speaker 1: can you beat that? All right, I'm gonna rip off 563 00:29:41,000 --> 00:29:42,480 Speaker 1: the band aid and make sure that we don't have 564 00:29:42,760 --> 00:29:45,440 Speaker 1: the same one today. Mine is kind of a follow 565 00:29:45,520 --> 00:29:47,520 Speaker 1: up on something I've touched on in the past, and 566 00:29:47,560 --> 00:29:52,000 Speaker 1: that is Treasury Secretary mnutions father with art. Can we 567 00:29:52,000 --> 00:29:54,040 Speaker 1: get a confirmation that it's not the same the same? 568 00:29:54,200 --> 00:29:57,000 Speaker 1: Great love it? Um? So the headline and the story 569 00:29:57,040 --> 00:29:59,920 Speaker 1: is Mnusian's dad is selling dakooning for as much as 570 00:30:00,040 --> 00:30:03,360 Speaker 1: thirty five million dollars. And I know in past times 571 00:30:03,400 --> 00:30:06,640 Speaker 1: on the show we talked about the stainless steel Bunny 572 00:30:06,880 --> 00:30:09,840 Speaker 1: that he had purchased on the behalf of hedge fund 573 00:30:09,880 --> 00:30:13,560 Speaker 1: manager Steve Cohen for about ninety million dollars. Well, this 574 00:30:13,640 --> 00:30:17,160 Speaker 1: time around he is selling a painting. It's actually titled 575 00:30:17,680 --> 00:30:20,360 Speaker 1: untitled twenty two, which makes me think we're there twenty 576 00:30:20,360 --> 00:30:24,840 Speaker 1: one other untitled paintings. Funk forty nine by the James Gang. Yeah, 577 00:30:24,880 --> 00:30:27,840 Speaker 1: but for thirty five million dollars. Thirty five million, and 578 00:30:27,880 --> 00:30:29,360 Speaker 1: you don't you don't even get a title. You don't 579 00:30:29,360 --> 00:30:32,640 Speaker 1: even get a title untitled two. All right, Well, I'm 580 00:30:32,680 --> 00:30:37,000 Speaker 1: gonna concede defeat to you, because that's pretty good. Mine's 581 00:30:37,040 --> 00:30:39,240 Speaker 1: also from the collectibles market. But I got I gotta 582 00:30:39,240 --> 00:30:41,320 Speaker 1: set up with a little childhood story when when I 583 00:30:41,360 --> 00:30:44,400 Speaker 1: was a young baby, really uh you know, one of 584 00:30:44,520 --> 00:30:48,520 Speaker 1: seven kids, youngest of sevens my parents had They drove 585 00:30:48,600 --> 00:30:52,640 Speaker 1: us all around in this beat up old Volkswagen minibus 586 00:30:52,680 --> 00:30:55,160 Speaker 1: from the sixties, and there were so many of us 587 00:30:55,200 --> 00:30:57,360 Speaker 1: in it. Like when you go up the hills, sometimes 588 00:30:57,480 --> 00:30:59,040 Speaker 1: some kids would have to get out so that it 589 00:30:59,040 --> 00:31:01,000 Speaker 1: could make it all the way up. It's like the 590 00:31:01,080 --> 00:31:04,840 Speaker 1: bigger kids would push so piece of junk car, right, 591 00:31:05,160 --> 00:31:09,200 Speaker 1: So my brother sends me a link today nineteen sixty 592 00:31:09,360 --> 00:31:13,160 Speaker 1: Volkswagen minibus granted this one's in mint condition. Then take 593 00:31:13,200 --> 00:31:15,200 Speaker 1: a guess on what it's uh, it's it's up for 594 00:31:15,240 --> 00:31:21,000 Speaker 1: self for a thousand dollars close hundred and one thousand dollars. 595 00:31:21,640 --> 00:31:24,560 Speaker 1: And what's interesting is my childhood house recently went up 596 00:31:24,600 --> 00:31:28,800 Speaker 1: for sale and the asking price was only about double 597 00:31:28,880 --> 00:31:33,240 Speaker 1: of what our childhood car was. Tells you something about 598 00:31:33,400 --> 00:31:35,480 Speaker 1: you know, buy and hold what exactly you should be holding. 599 00:31:38,360 --> 00:31:41,160 Speaker 1: That's on Classic Auto Mall dot com. So if any 600 00:31:41,160 --> 00:31:42,720 Speaker 1: listeners want to buy that, I hope they give me 601 00:31:42,760 --> 00:31:45,240 Speaker 1: a ride some day. But anyways, living it there Ben 602 00:31:45,280 --> 00:31:47,480 Speaker 1: Emmon's Lukawa. Thanks so much for joining us on the 603 00:31:47,480 --> 00:31:49,240 Speaker 1: show to day. Thank you very much for having thank 604 00:31:49,280 --> 00:31:57,920 Speaker 1: you what goes out. We'll be back next week. Until then, 605 00:31:58,040 --> 00:32:00,280 Speaker 1: you can find us on the Bloomberg Terminal web site, 606 00:32:00,280 --> 00:32:03,479 Speaker 1: an app, or wherever you get your podcasts. We'd love 607 00:32:03,520 --> 00:32:05,360 Speaker 1: it if you took the time to rate interview the 608 00:32:05,360 --> 00:32:08,479 Speaker 1: show on Apple podcast so more listeners can find us. 609 00:32:08,960 --> 00:32:11,640 Speaker 1: And you can find us on Twitter, follow me at 610 00:32:11,720 --> 00:32:15,360 Speaker 1: at Sarah Pontzack, Mike is at your anonymous and Luke 611 00:32:15,400 --> 00:32:18,720 Speaker 1: Kawa is at l J Kawa. You can also follow 612 00:32:18,760 --> 00:32:22,840 Speaker 1: Bloomberg Podcasts at podcasts. What Goes Up is produced by 613 00:32:22,880 --> 00:32:26,640 Speaker 1: tober Foreheads. The head of Bloomberg podcast is francesco Leavie. 614 00:32:26,920 --> 00:32:28,680 Speaker 1: Thanks for listening, See you next time.