WEBVTT - Bear-Market Flashback 0:00:12.840 --> 0:00:16.000 Hello, and welcome to What Goes Up, a Bloomberg weekly 0:00:16.079 --> 0:00:19.600 market podcast. I'm Sarah Pontac, or porter on the cross 0:00:19.640 --> 0:00:23.239 Set team, and I'm Mike Reagan, a senior editor at Bloomberg. 0:00:23.480 --> 0:00:28.520 And the Shirley to Sarah's Laverne. Maybe, but you're gonna 0:00:28.560 --> 0:00:31.840 go Shirley to Sarah's temple or something. Maybe I'm the Liver. 0:00:32.000 --> 0:00:33.680 I'm the Shirley and you're the Liver, and I don't know. 0:00:33.680 --> 0:00:36.520 We'll work on Wolvern either way. Either way this week 0:00:36.560 --> 0:00:39.080 on the show, agree to disagree with me, but we 0:00:39.200 --> 0:00:43.480 have may just witnessed the best week for crazy things ever. 0:00:43.920 --> 0:00:47.720 Bankruptcy stocks are soaring evidently traders on the robin Hood 0:00:47.760 --> 0:00:50.519 investing app are going all in. Then all of a sudden, 0:00:50.640 --> 0:00:54.520 a five percent stock decline reminiscent of the infamous days 0:00:54.920 --> 0:00:58.200 of March? Is it a sign potentially of market froth? 0:00:58.360 --> 0:01:02.400 Our guests and yes, PLU all guests way in right? Sorry? 0:01:02.400 --> 0:01:03.800 And I I you know, I gotta give you a 0:01:03.800 --> 0:01:06.839 shout out because I think you've covered basically all these 0:01:06.880 --> 0:01:10.120 crazy things by yourself this week. You've been doing some 0:01:10.200 --> 0:01:14.320 amazing reporting in the world of crazy things. Uh. You 0:01:14.480 --> 0:01:17.480 stole my thunder with the bankruptcy stock surging. That was 0:01:17.480 --> 0:01:19.399 gonna be my crazy thing of the week. But as 0:01:19.440 --> 0:01:22.000 you know, I came prepared with a backup, so so 0:01:22.040 --> 0:01:26.039 we're good. I think there there's multiple backups, so many, 0:01:26.080 --> 0:01:28.920 so many crazy things this week, and I thank you, 0:01:29.120 --> 0:01:30.800 thank you for the shout at Mike. But I also 0:01:30.880 --> 0:01:33.600 will admit I'm ready for the weekend. I'm a bit, 0:01:33.600 --> 0:01:37.440 I'm a bit tired. But let's bring in our guests 0:01:37.480 --> 0:01:40.120 to help us break it all down. Uh. Two of 0:01:40.160 --> 0:01:43.440 our favorite Sarah. I'm glad to have them both the 0:01:43.480 --> 0:01:46.600 double header here with us, UH this week, joining us 0:01:46.600 --> 0:01:48.960 for the I don't know how many times it's got 0:01:48.960 --> 0:01:51.760 to be at least five or six. Is the head 0:01:51.800 --> 0:01:56.200 of macro strategy at med League Global Advisors, Mr Ben Emmons. Ben, 0:01:56.360 --> 0:02:01.040 welcome back to the show, a good and also joining us. 0:02:01.040 --> 0:02:03.120 It's been a while, but I'm I'm psyched he's back. 0:02:03.240 --> 0:02:07.120 He's a macro strategist at Bloomberg itself. Uh. He writes 0:02:07.200 --> 0:02:11.160 the Macroman Calm. He's a blogger, UH for the Market's 0:02:11.200 --> 0:02:15.760 Live blog. I believe he holds a doctorate in armchair 0:02:15.840 --> 0:02:20.160 epidemiology from the University of Google. Is that right, Cameron Price, Uh, 0:02:20.240 --> 0:02:25.040 it's actually Google University. That's total, totally separate institutions. Can 0:02:25.080 --> 0:02:28.240 anyone go ahead and get that degree? Cameron, Well, you 0:02:28.280 --> 0:02:30.520 have to put in quite a bit of quite a 0:02:30.520 --> 0:02:34.680 bit of work, I gotta say, with at least thirty 0:02:34.680 --> 0:02:39.440 seconds of search. We need dedicate that was that of course, 0:02:39.520 --> 0:02:41.560 was a great line from one of Cameron's columns, sort 0:02:41.560 --> 0:02:43.880 of making fun of how everyone is an expert in 0:02:44.160 --> 0:02:49.120 infectious diseases these days. UM, so we will not pretend 0:02:49.120 --> 0:02:53.120 to be experts in infectious diseases, but very much experts 0:02:53.600 --> 0:02:58.560 are guests in markets. So but let me start with you. UM. 0:02:58.600 --> 0:03:02.360 I know you've been sort of optimistic about this rebound 0:03:02.400 --> 0:03:07.120 in stocks to some degree. Um. And you know, full disclosure, 0:03:07.160 --> 0:03:12.280 we're recording this podcast here on Thursday, June eleven, the 0:03:12.360 --> 0:03:15.440 markets down about five percent. Who knows what Friday will 0:03:15.440 --> 0:03:17.799 look like or even Monday. Maybe we'll see a bounce back, 0:03:17.880 --> 0:03:21.440 but at the moment, things look like they've turned on 0:03:21.480 --> 0:03:24.640 the dime. Uh. And for one thing, I think it's safe. 0:03:24.680 --> 0:03:26.480 We can all agree that this market was a little 0:03:26.520 --> 0:03:30.480 bit overextended, a little bit overbought, and was due for 0:03:30.600 --> 0:03:34.960 some consolidation. Perhaps this seems a little bit more than consolidation. 0:03:35.680 --> 0:03:38.480 And I'm not sure how much it matters what the 0:03:38.560 --> 0:03:42.280 catalyst is considering how overbought the market was, but I'm 0:03:42.280 --> 0:03:44.760 just curious your take. I mean, it seems to have 0:03:44.920 --> 0:03:48.800 really uh started to roll over a little bit before 0:03:48.840 --> 0:03:53.320 the FED meeting, it accelerated after the Fed announcement and 0:03:53.560 --> 0:03:56.960 the press conference, and then uh Thursday morning, it was 0:03:57.080 --> 0:03:59.600 just off to the races with the selling just a 0:03:59.720 --> 0:04:02.760 nest the tape from the get go. So I'm curious. 0:04:02.760 --> 0:04:04.760 You know, some people are blaming it on sort of 0:04:04.800 --> 0:04:09.560 this resurgeon in the virus um. Others talking about how 0:04:09.600 --> 0:04:12.520 the you know, POW is not exactly optimistic about the 0:04:12.560 --> 0:04:16.719 economy and the economic projections sort of backed that up. Again, 0:04:16.760 --> 0:04:18.520 I'm not sure how much it matters. I feel like 0:04:18.560 --> 0:04:20.280 it's a market that was due for a little bit 0:04:20.320 --> 0:04:23.960 of a calm down. But walk us through what you're 0:04:24.000 --> 0:04:26.240 thinking about the state of the market right now. What 0:04:26.440 --> 0:04:30.599 caused this nasty dip on Thursday? And um, is it 0:04:30.760 --> 0:04:34.599 just a a sort of correction in an overbought market 0:04:34.720 --> 0:04:36.800 or is it the beginning of some more weakness? Do 0:04:36.839 --> 0:04:39.880 you think, yes, A certainly. I can. So what I 0:04:40.000 --> 0:04:44.840 noticed on Monday, actually Monday evening, um those news out 0:04:45.080 --> 0:04:48.279 that koreation he cut off communication with Soft Korea, and 0:04:48.320 --> 0:04:51.360 the end dropped like almost two big things, like really quick, 0:04:51.440 --> 0:04:54.720 like roundies I think against the dollar, and I spinkings 0:04:54.800 --> 0:04:56.599 to a friend of mine over in Asia, and I 0:04:56.680 --> 0:04:59.760 was kinda trying to figure out, like, why is suddenly happening, right, 0:04:59.839 --> 0:05:01.960 And you know, that was the only news that we 0:05:02.040 --> 0:05:05.120 thought that was the case, because the Japanese government actually 0:05:05.120 --> 0:05:08.680 came out I think I can forty five minutes later 0:05:08.720 --> 0:05:11.400 after that news broke, which apparently broke already over the weekend, 0:05:11.400 --> 0:05:13.640 but I guess it came in the market on Monday, 0:05:13.839 --> 0:05:15.760 and this is Monday night Asia, by the way, that 0:05:15.880 --> 0:05:18.960 so our time, you know, specific time, like six year time, 0:05:19.080 --> 0:05:23.279 nine at night something like that, And and I was 0:05:23.520 --> 0:05:25.960 the Japanese government kind of responded like, you know, we're 0:05:25.960 --> 0:05:28.640 watching this carefully, the situation. And so I think that 0:05:28.760 --> 0:05:32.080 was a bit of a geopolitical tension. That's that that 0:05:32.240 --> 0:05:35.279 started a bit of this flight to safety idea. I 0:05:35.320 --> 0:05:39.160 think the treasuries from there took that on as well 0:05:39.160 --> 0:05:42.760 as usual Golden and Swizz Frank, but it's nothing to 0:05:42.800 --> 0:05:46.240 do but what we're actually seeing today maybe that indeed, 0:05:46.279 --> 0:05:51.800 people have reassessed a bit that the reopening euphoria, as 0:05:51.839 --> 0:05:55.279 you say, it was pretty exuberant, and it's taken somewhat 0:05:55.320 --> 0:05:57.960 out of the off the table. People points still point 0:05:58.000 --> 0:06:01.279 too that the fat yesterday delivered the exact message that 0:06:01.320 --> 0:06:03.680 the market was looking for. It's a v shape for 0:06:03.720 --> 0:06:05.960 coffee on the short term, but a long road. I 0:06:06.000 --> 0:06:10.440 had rates state low quee stage in place, and it's 0:06:10.480 --> 0:06:12.960 sort of a message like, you know, not much more 0:06:12.960 --> 0:06:15.480 euphoria behind that, right, And I think that and the 0:06:15.520 --> 0:06:19.039 acknowledgement that the job or report was strong but not 0:06:19.240 --> 0:06:21.039 like you know, we need to see a lot more 0:06:21.040 --> 0:06:22.400 of it. We would like to see a lot more 0:06:22.440 --> 0:06:24.880 of it. As I think that tone was kind of 0:06:24.920 --> 0:06:28.400 added to the simmering view political little tension with North 0:06:28.480 --> 0:06:32.000 Korea in the background that that triggered what we're seeing 0:06:32.040 --> 0:06:35.640 now today. The people then start liquidating maybe some of 0:06:35.680 --> 0:06:37.680 these trades that was so popular that you know that 0:06:38.080 --> 0:06:41.720 Sarah and actually written about on the retail side. I 0:06:41.800 --> 0:06:43.880 was a little skeptical on that part, thinking that that 0:06:43.880 --> 0:06:46.400 actually came early to the party these times of late right, 0:06:46.440 --> 0:06:49.200 and tends to be when they're late retail investors, they 0:06:49.240 --> 0:06:51.240 tend to be then the ones that really drive that 0:06:51.440 --> 0:06:54.720 we pushed the market b down and start overreacting. But 0:06:54.800 --> 0:06:55.880 you know, at the end of the day, I think 0:06:55.920 --> 0:06:58.440 this is kind of the sequence of events that that 0:06:58.520 --> 0:07:01.599 we're dealing with. Added to that, perhaps also that I 0:07:01.600 --> 0:07:04.520 think what people are looking at though as a background 0:07:04.600 --> 0:07:08.240 story is I think two other stories you want to highlight. 0:07:08.839 --> 0:07:12.720 Um One, the story around Hong Kong continues to be 0:07:13.520 --> 0:07:15.960 something to be able to carefully watch. So what I've 0:07:16.000 --> 0:07:18.480 noted was that this and the swings in the ad 0:07:18.680 --> 0:07:21.600 rs right that are on the exchanges here is huge, right, 0:07:21.760 --> 0:07:24.440 and and that indicated that there's a lot of speculation, 0:07:24.440 --> 0:07:26.840 a lot of Chinese company looking to move away from 0:07:26.880 --> 0:07:30.280 US markets and go listen in Hong Kong. The flood 0:07:30.320 --> 0:07:32.720 of IBOs has picked up quite a bit in Hong Kong. 0:07:33.560 --> 0:07:37.120 There's been a fair bit of dollar demands in Hong Kong, 0:07:37.120 --> 0:07:40.040 like as in people holding dollars to deposits and banks 0:07:40.040 --> 0:07:43.000 have risen quite a bit, right as in it's not 0:07:43.040 --> 0:07:45.800 the capital flight system mind, people that kept I guess 0:07:45.880 --> 0:07:48.880 hoarding the dollar instead of the Hong Kong dollar. So 0:07:48.920 --> 0:07:50.880 it sounds like there's a there's plenty of reasons to 0:07:50.880 --> 0:07:53.440 be concerned. You just gotta take your pick. But I 0:07:54.560 --> 0:07:56.400 want to I want to focus on the reopening, though, 0:07:56.400 --> 0:08:00.440 because something I've heard from a fair amount of investors 0:08:00.560 --> 0:08:03.720 this week that I just personally do not understand at 0:08:03.720 --> 0:08:08.040 all is them saying that a second wave of the 0:08:08.040 --> 0:08:11.360 coronavirus is priced into markets. So even though we're seeing 0:08:11.920 --> 0:08:17.600 numbers starting to increase in the likes of California, Texas, Florida, 0:08:17.760 --> 0:08:21.320 where I personally am right now a little bit nervous, um, 0:08:21.360 --> 0:08:23.280 they're saying, you know, it shouldn't really matter all that 0:08:23.400 --> 0:08:27.800 much because markets are expecting a second wave. It is 0:08:27.840 --> 0:08:30.880 that the truth, like, should that? Should we buy into 0:08:30.920 --> 0:08:34.200 that narrative? I don't. I don't buy that. I don't 0:08:34.200 --> 0:08:36.839 buy that. I don't get it at all. But then 0:08:36.880 --> 0:08:39.920 I have investors at certain firms which I won't name, 0:08:40.440 --> 0:08:43.840 saying this to me before the five percent decline on Thursday, 0:08:43.840 --> 0:08:46.520 that is, and it just doesn't make any sense to me. Um, 0:08:46.559 --> 0:08:48.400 So if anyone can make sense of it, I would 0:08:48.400 --> 0:08:51.800 love to. I would love to hear that so so well. 0:08:51.840 --> 0:08:54.360 I looked at it said we're going to get the 0:08:54.360 --> 0:08:57.880 second wave, because it was actually communicated already in March 0:08:58.000 --> 0:09:01.719 by Fauci that look what when we're doing today, we're 0:09:01.720 --> 0:09:05.600 gonna prepare for the second wave. Right, So the fact 0:09:05.679 --> 0:09:07.880 that the second wave will becoming is there, and and 0:09:07.920 --> 0:09:12.120 the dreadful story about that, this eighteen Spanish flu scenario 0:09:12.240 --> 0:09:15.120 of like the second wave is worse than the first wave, right, 0:09:15.200 --> 0:09:18.200 And I'm not sure if that plays are roll here today. 0:09:18.720 --> 0:09:21.360 But what I do think matters to markets mostly is 0:09:21.400 --> 0:09:25.400 that if we get the second wave, that indeed picts 0:09:25.440 --> 0:09:28.720 are quite quite requite a momentum that there would be 0:09:28.720 --> 0:09:31.840 a governor or a mayor or anyone right that's in 0:09:31.920 --> 0:09:34.480 charge of a city, county. Then support suddenly says, okay, 0:09:34.600 --> 0:09:37.280 I'm going to close this thing down, and it starts 0:09:37.320 --> 0:09:40.480 with one and a bunch of others followed because they're 0:09:40.480 --> 0:09:44.480 getting worried politically that they may be responsible for more fatalities, right, 0:09:44.679 --> 0:09:47.720 and they're making a decision on we gotta shut things 0:09:47.800 --> 0:09:50.839 again down. That would be I think very negative for 0:09:51.000 --> 0:09:54.040 markets because think about what's priced in in that sense, 0:09:54.040 --> 0:09:56.800 in that V shape idea is that the reopening when 0:09:56.800 --> 0:10:01.160 you reopen eCOM tiki United States economy, you get immediately recovery. 0:10:01.200 --> 0:10:02.840 And that's that's kind of what it's shown, right the 0:10:02.920 --> 0:10:05.880 data when you look at mobility data or in kind 0:10:05.880 --> 0:10:08.680 of like real time data, sales or whatnot of people 0:10:08.720 --> 0:10:11.640 can be hired, that's all jumping really quickly, with the 0:10:11.679 --> 0:10:15.600 capacity of airlines jumping quickly. So I think that the 0:10:15.640 --> 0:10:17.840 market is really nervous if the if the second wave 0:10:17.920 --> 0:10:21.480 leads to another lockdown. I think my personal view, it's 0:10:21.559 --> 0:10:24.880 politically not possible, like we would really push ourselves into 0:10:24.880 --> 0:10:27.319 a depression, right, I think that's in this season of 0:10:27.360 --> 0:10:30.800 political season, not possible. But I do think there's worries 0:10:30.800 --> 0:10:32.840 in the market that certain parts of the country may 0:10:32.960 --> 0:10:36.240 end up that way simply because the local governor or 0:10:36.360 --> 0:10:41.200 mayor who's in in charge is putting her or her 0:10:41.320 --> 0:10:58.920 or his feet on the ground. Kevin, I wanted to 0:10:58.960 --> 0:11:01.200 bring you in here at a bit um. Both you 0:11:01.240 --> 0:11:04.800 and Sarah have written really well this week about this 0:11:04.840 --> 0:11:09.080 whole retail trader phenomenon. You know, you had a column 0:11:09.120 --> 0:11:11.960 talking about what you call this is the phase of 0:11:11.960 --> 0:11:15.480 the market where garbage starts to float. Floating garbage. I 0:11:15.520 --> 0:11:19.359 love it. Floating garbage A great line. Now, I obviously, 0:11:20.040 --> 0:11:25.160 you know, these retail traders uh their home, their board, 0:11:25.280 --> 0:11:27.320 there's not a lot of entertainment. They might have some 0:11:27.679 --> 0:11:31.240 spare cash from their stimulus checks, or that the extra 0:11:31.360 --> 0:11:34.400 unemployment benefits, whatever, it is not a lot of options 0:11:34.440 --> 0:11:37.800 to sort of blow your money foolishly on gambling or 0:11:38.320 --> 0:11:42.000 expensive trips whatever you otherwise do. So I think, I mean, 0:11:42.720 --> 0:11:47.120 it's obvious that these traders have puffed up some ridiculous stocks, 0:11:47.160 --> 0:11:50.320 like the the bankruptcy stocks that you both have written about, 0:11:50.360 --> 0:11:55.559 you know, Hurts, chess, Peak Energy, arguably the surgeon inflows 0:11:55.600 --> 0:11:59.000 in the jets, the air travel etf is A is 0:11:59.040 --> 0:12:02.560 another example. I think the debate though, and where it 0:12:02.600 --> 0:12:06.839 gets sort of I get greeted with skepticism is when 0:12:06.840 --> 0:12:10.800 I suggest to people that they're also maybe part of 0:12:10.840 --> 0:12:13.680 what lifted the entire market over the past couple of months. 0:12:13.960 --> 0:12:16.720 And I know, from from sort of an a U M. Standpoint, 0:12:16.760 --> 0:12:21.080 even all these retail traders together are a a sort 0:12:21.080 --> 0:12:24.600 of drop in the ocean compared to institutional investors. But 0:12:24.760 --> 0:12:27.559 is it possible that their exuberance is kind of set 0:12:27.559 --> 0:12:30.840 off signals that that has has helped the rest of 0:12:30.840 --> 0:12:33.360 the market sort of float higher than it it should 0:12:33.360 --> 0:12:35.920 have in the last couple of months. Well, I think 0:12:35.920 --> 0:12:39.520 we need to acknowledge that this is not a regular market. 0:12:39.720 --> 0:12:44.920 And while it's always tempting to point to catalysts as 0:12:44.960 --> 0:12:49.960 to why things are moving, fundamental catalyst or whatever, um, 0:12:50.080 --> 0:12:52.840 the fact is is that it takes a lot less 0:12:53.080 --> 0:12:56.360 flow to move the price than it used to. I've 0:12:56.400 --> 0:13:00.800 got a measure of market liquidity, and it's off of 0:13:00.800 --> 0:13:05.439 its lows, but it's basically still shows worse stock market 0:13:05.480 --> 0:13:09.240 liquidity than at any point uh in the last quarter century, 0:13:09.280 --> 0:13:13.920 other than the very nid deer of the financial crisis. UM. 0:13:13.960 --> 0:13:17.559 At the same time, you see a lot more sort 0:13:17.559 --> 0:13:21.640 of student body left, student body right price act. If 0:13:21.640 --> 0:13:25.040 you look at the TICK index the New York Stock Exchange, 0:13:25.120 --> 0:13:29.800 Sarah pointed out that it hit an all time low Thursday, 0:13:30.040 --> 0:13:33.920 having hit an all time high last month. And indeed, 0:13:33.960 --> 0:13:35.640 if you look at a long term chart, you can 0:13:35.679 --> 0:13:38.719 see the amplitude in terms of highs and lows of 0:13:38.800 --> 0:13:43.240 the TICK index is unparalleled in the history of that index, 0:13:43.280 --> 0:13:46.720 which is suggests that everybody seems to be moving the 0:13:46.760 --> 0:13:50.160 same way at the same time at the same time 0:13:50.600 --> 0:13:54.720 that there's not really much liquidity. So if Davy day 0:13:54.720 --> 0:13:59.760 Trader says, I'm buying Spirit Airlines, well guess what Davy 0:13:59.840 --> 0:14:07.800 day Trader has two? Well whatever, I'm not, I'm not 0:14:07.880 --> 0:14:10.959 one of them, right whatever. Anyway, he's got this this 0:14:11.120 --> 0:14:14.680 legion of people hanging on his on his sort of 0:14:14.720 --> 0:14:17.840 every word, and if every if each one of them, 0:14:18.120 --> 0:14:21.800 you know, if a million people each by five thousand 0:14:21.880 --> 0:14:24.080 dollars worth of stock, that's all of a sudden, a 0:14:24.160 --> 0:14:26.600 five billion dollar trade that's going to move the price. 0:14:27.000 --> 0:14:31.240 Right Um, And Okay, that's that's an exaggeration, but I 0:14:31.240 --> 0:14:35.760 think it does speak to the dynamic of what's going 0:14:35.800 --> 0:14:39.360 on here. For those who don't know Davy Day Trader, 0:14:39.480 --> 0:14:43.760 that is Dave Portnoy. He's the founder of the website 0:14:43.800 --> 0:14:48.480 bar stool Sports. This guy was most famous recently for 0:14:48.840 --> 0:14:51.960 his reviews of pizza. He would go to pizza joints, 0:14:52.400 --> 0:14:55.320 take one bite, and give you a review. And that's 0:14:55.360 --> 0:14:58.080 that's what made him famous. Well, what happened was he 0:14:58.200 --> 0:15:02.400 sold part of his business to this uh this Penn 0:15:02.520 --> 0:15:07.000 National Gaming, got paid in stock. The stock went up, 0:15:07.280 --> 0:15:10.680 then it collapsed and it came back. And so you 0:15:10.760 --> 0:15:12.560 know he also got some cash. It was a pretty 0:15:12.560 --> 0:15:16.480 wealthy guy, right, and he can't gamble on sports because 0:15:16.480 --> 0:15:20.640 there is no sports. So he started trading stocks basically 0:15:20.960 --> 0:15:24.120 and coincidentally more or less about it at the time 0:15:24.160 --> 0:15:26.760 of the low And guess what, you know, a blind 0:15:26.800 --> 0:15:30.560 monkey throwing dart in a newspaper trading from the longside 0:15:30.640 --> 0:15:33.320 was gonna make money over the last two and a 0:15:33.360 --> 0:15:36.200 half months. And that's uh, you know, and that's what 0:15:36.280 --> 0:15:38.280 he's done. I'll give it to him. I mean, it's 0:15:38.280 --> 0:15:42.080 been great marketing on his behalf. Everything going on right 0:15:42.160 --> 0:15:44.480 now in him day trading and people following along. But 0:15:44.840 --> 0:15:49.360 it feels like in the year of the anecdotes are endless. Okay, 0:15:49.400 --> 0:15:53.080 you have Davy day Trader, as he's called one. My 0:15:53.240 --> 0:15:56.400 colleague vill Donna this past week was talking to a 0:15:56.480 --> 0:15:59.080 strategist over at bat t I G who was telling 0:15:59.080 --> 0:16:02.120 her how all of a sudden, his eye doctor's son 0:16:02.520 --> 0:16:06.400 is asking her which stocks he should be buying. At 0:16:06.440 --> 0:16:09.960 the same time, I've been spending my days just watching 0:16:10.640 --> 0:16:14.800 Robin Tracks, which watches Rob Tracks, Robin Hood uh and 0:16:15.080 --> 0:16:18.440 on Wall Street bets once again, and I think of 0:16:18.600 --> 0:16:21.520 Luke Cowell'll say r I p no longer with the 0:16:21.560 --> 0:16:26.400 step Bloomberg, but wishing him the best. No, wishing him 0:16:26.400 --> 0:16:29.360 the best. Missed him very much. But he wrote this 0:16:29.400 --> 0:16:34.320 almost infamous story back in February, right before everything blew up. Uh, 0:16:34.320 --> 0:16:37.480 And it was about the Wall Street Bets crowd and 0:16:37.640 --> 0:16:42.200 Robin Hood traders and kind of speculating that there could 0:16:42.320 --> 0:16:46.880 be some type of dot com bubble out and about, 0:16:47.040 --> 0:16:49.840 and all of a sudden, it feels like it's back. 0:16:50.000 --> 0:16:53.920 Yet we're in the midst of a recession. We just 0:16:54.320 --> 0:17:01.400 experienced this extremely fast bear market and fast rebound. But 0:17:01.480 --> 0:17:05.320 in a way it feels very speculative. I mean, what 0:17:05.320 --> 0:17:08.199 what do you make of that type of environment that 0:17:08.240 --> 0:17:11.440 we're in right now? Well, yeah, I mean it is 0:17:11.600 --> 0:17:16.480 in many ways very reminiscent of the dot com era. Um, 0:17:16.520 --> 0:17:20.600 you know, the the Wall Street bets, the reddits of 0:17:20.640 --> 0:17:24.040 today were the sort of the Yahoo message boards of 0:17:24.200 --> 0:17:27.880 twenty long years ago. To some extent, I suppose it's 0:17:27.920 --> 0:17:30.960 difficult to square this idea that there's a zillion people 0:17:30.960 --> 0:17:34.520 out of work and struggling with this notion that people 0:17:34.520 --> 0:17:37.960 have all the spare cash to play with the market. Uh. 0:17:38.000 --> 0:17:42.000 You know, there's a sort of cliche there's caricature that 0:17:42.000 --> 0:17:45.119 that sort of the millennials living at home took their 0:17:45.119 --> 0:17:48.760 stimulus checks and opened robin hood account of Yeah, maybe 0:17:48.760 --> 0:17:51.240 there's maybe there's something to it. I'm sure that some 0:17:51.320 --> 0:17:54.840 of the some of the individuals involved with this are 0:17:54.880 --> 0:17:58.560 are are professionals or software engineers or whatever. You know, 0:17:58.720 --> 0:18:02.159 people who can work from home do have disposable income, 0:18:02.160 --> 0:18:04.280 in fact, more disposable income than they used to because 0:18:04.280 --> 0:18:06.480 they don't go out anymore. Yeah, I mean, I think 0:18:06.480 --> 0:18:09.200 there there is something to it, and you know, it's 0:18:09.200 --> 0:18:10.919 almost enough to make me when I take off my 0:18:10.920 --> 0:18:12.760 flip pops, put on a pair of shoes and go 0:18:12.840 --> 0:18:14.840 get them shine so I can get some stock tips. 0:18:19.680 --> 0:18:23.560 I do wonder about this all coincides with sort of 0:18:23.760 --> 0:18:27.600 universal commission free trading to you know it. It's you know, 0:18:27.960 --> 0:18:29.760 it's one thing if you have a few hundred bucks 0:18:29.760 --> 0:18:32.240 to invest in the market, but a trade costs ten 0:18:32.320 --> 0:18:34.600 or fifteen bucks, you're gonna be sort of a little 0:18:34.640 --> 0:18:36.680 more gunshy than if you can do it for free. 0:18:36.760 --> 0:18:39.439 To some degree. But Ben, let's let's bring you in 0:18:39.440 --> 0:18:42.000 on this. What do you make of all this is? 0:18:42.000 --> 0:18:47.119 Is this a uh sort of a sustainable effect that 0:18:47.160 --> 0:18:49.040 we're gonna have to deal with in the market now, 0:18:49.080 --> 0:18:53.439 these davy day traders, or is it, you know, something 0:18:53.480 --> 0:18:57.320 that a real institutional investor should just kind of forget about. 0:18:57.960 --> 0:18:59.800 I don't think so, Mike. I think that you do 0:19:00.040 --> 0:19:04.439 to keep the retail traders in mind because as you know, 0:19:04.440 --> 0:19:07.480 as camera point camera points out right, people are at home, 0:19:08.040 --> 0:19:10.000 they have other time, they have more spare time. I 0:19:10.040 --> 0:19:12.440 guess like it's a different work environments you said of 0:19:12.520 --> 0:19:14.280 work doing this right, because you deal with a lot 0:19:14.320 --> 0:19:16.160 of people around you work. So I think I think 0:19:16.200 --> 0:19:18.600 that may play a hole that you have less distraction 0:19:19.240 --> 0:19:21.919 besides the money that you may have access and you know, 0:19:22.000 --> 0:19:24.040 let's not forget you have the savings right now thirty 0:19:24.119 --> 0:19:26.240 three percent, right, so there's a lot of people have 0:19:26.280 --> 0:19:28.399 a lot of money. I think just sitting on the 0:19:28.400 --> 0:19:31.760 sideline and then looking for new opportunities, right which this 0:19:31.840 --> 0:19:34.399 would become again the next opportunity. We were getting a 0:19:34.440 --> 0:19:37.800 decent dip here and people come back, right. So I 0:19:37.800 --> 0:19:40.280 wouldn't add to that is that this this dot com 0:19:40.320 --> 0:19:43.359 bubble air that we went through late nineties. Think about 0:19:43.440 --> 0:19:47.480 the stocks on that that are working on vaccines for 0:19:47.560 --> 0:19:49.720 this crisis, right, Like you know, some of those are 0:19:49.760 --> 0:19:53.280 just also completely through the roof. Other than this hurts 0:19:53.320 --> 0:19:56.000 and other like stocks. This another kind of bubble kind 0:19:56.000 --> 0:19:58.360 of environment in the background, right, and one of them 0:19:58.359 --> 0:20:01.080 will become the true winner, right and has to vaccine 0:20:01.080 --> 0:20:04.080 and that there's the magic ocean, ocean if you will. 0:20:04.160 --> 0:20:06.679 But but there's a lot of speculation there, right, So 0:20:06.720 --> 0:20:08.920 I think the temple will continue. People will continue to 0:20:08.960 --> 0:20:12.199 come back in seeking out those types of opportunities as 0:20:12.240 --> 0:20:15.880 well then just buying Apple and Google and you and Test. 0:20:15.960 --> 0:20:18.840 I guess right, you know you standard trades. I think 0:20:18.840 --> 0:20:22.480 that that's gonna stay here, just kind of tactical retail 0:20:22.560 --> 0:20:26.320 style trading here until the path of the economy is 0:20:26.320 --> 0:20:28.679 more clear. Obviously it's really hard to know in the 0:20:28.680 --> 0:20:30.879 short term. But you said, I mean people will come back. 0:20:31.320 --> 0:20:34.800 Do you get the sense that, like Mike said, we 0:20:34.840 --> 0:20:36.800 are recording on a Thursday, we don't know what will 0:20:36.840 --> 0:20:39.480 happen on Friday, but that people will be willing to 0:20:39.560 --> 0:20:42.680 come back and and step in at these levels. I mean, 0:20:42.960 --> 0:20:46.399 if I just use a benchmark as an example, ensure 0:20:46.440 --> 0:20:49.840 that might be skewed because you have much more leniency 0:20:49.880 --> 0:20:53.120 towards your mega cap names like Google and Microsoft for example. 0:20:53.720 --> 0:20:55.959 But I mean, if you look at the valuation for 0:20:56.000 --> 0:20:58.399 the SMP right now, it's still well above what it 0:20:58.600 --> 0:21:01.520 was back in Februar. Werey on a forward basis, So 0:21:01.560 --> 0:21:04.600 do you think people will be as willing to come 0:21:04.640 --> 0:21:08.840 back in and quote unquote catch a falling knife so easily? Look, 0:21:08.880 --> 0:21:11.600 I do think there's optimism out there that we're going 0:21:11.640 --> 0:21:13.400 to see the end of the of the tunnel here 0:21:13.520 --> 0:21:15.440 right It's just not going to stay this way. It's 0:21:15.440 --> 0:21:18.960 in a contagious virus, but it's not gonna dictate our 0:21:18.960 --> 0:21:22.119 lives forever because there's such a political pressure on getting 0:21:22.119 --> 0:21:25.000 this vaccine and therapeutics, and we've made a huge amount 0:21:25.040 --> 0:21:28.879 of investment in in the personal protective equipment and the 0:21:28.920 --> 0:21:31.159 system is more flooded with that now that there is 0:21:31.200 --> 0:21:34.560 a formal comfort, I think compared to the February situation 0:21:35.359 --> 0:21:37.359 that that was not in place. Therefore we have to 0:21:37.359 --> 0:21:39.960 go to the lockdown. And so the lockdown scenario, my view, 0:21:40.440 --> 0:21:43.520 is a is a scenario that's not as likely maybe localized, 0:21:43.560 --> 0:21:47.239 but not nationwide or globally. So it remains really I 0:21:47.280 --> 0:21:52.080 think an opportunity of this future rebound of the economy 0:21:52.119 --> 0:21:54.760 that you do want to play why you want to 0:21:54.800 --> 0:21:57.600 come back and take opportunity here as you have these 0:21:57.720 --> 0:21:59.800 like this, you know that I am more on the 0:22:00.000 --> 0:22:03.280 domistic side that way, as opposed to those who really 0:22:03.320 --> 0:22:06.840 think that we know, the pandemic was just really what 0:22:07.000 --> 0:22:10.000 pushed the new normal into a into a new depression, 0:22:10.280 --> 0:22:12.720 and we're going to get a new normal triple like 0:22:12.800 --> 0:22:15.280 it's really really, really bad. If we're gonna get deflation 0:22:15.400 --> 0:22:17.800 and we're gonna not grow much of all of all, 0:22:17.840 --> 0:22:20.800 I'm gonna have to army unemployed people out there, and 0:22:20.800 --> 0:22:22.600 we're just not going to get out of it. That 0:22:22.760 --> 0:22:25.680 I don't firmly don't believe in that, because there's been 0:22:26.160 --> 0:22:29.439 a tremendous amount of effort done here to actually not 0:22:29.520 --> 0:22:31.399 be in that scenario, and I think the market is 0:22:31.480 --> 0:22:34.639 right to not buy that that that depression scenario. But 0:22:34.720 --> 0:22:37.760 staying on the optimistic side, hence there's gonna be de 0:22:37.840 --> 0:22:41.520