Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg weekly
Speaker 1: market podcast. I'm Sarah Pontac, or porter on the cross
Speaker 1: Set team, and I'm Mike Reagan, a senior editor at Bloomberg.
Speaker 1: And the Shirley to Sarah's Laverne. Maybe, but you're gonna
Speaker 1: go Shirley to Sarah's temple or something. Maybe I'm the Liver.
Speaker 1: I'm the Shirley and you're the Liver, and I don't know.
Speaker 1: We'll work on Wolvern either way. Either way this week
Speaker 1: on the show, agree to disagree with me, but we
Speaker 1: have may just witnessed the best week for crazy things ever.
Speaker 1: Bankruptcy stocks are soaring evidently traders on the robin Hood
Speaker 1: investing app are going all in. Then all of a sudden,
Speaker 1: a five percent stock decline reminiscent of the infamous days
Speaker 1: of March? Is it a sign potentially of market froth?
Speaker 1: Our guests and yes, PLU all guests way in right? Sorry?
Speaker 1: And I I you know, I gotta give you a
Speaker 1: shout out because I think you've covered basically all these
Speaker 1: crazy things by yourself this week. You've been doing some
Speaker 1: amazing reporting in the world of crazy things. Uh. You
Speaker 1: stole my thunder with the bankruptcy stock surging. That was
Speaker 1: gonna be my crazy thing of the week. But as
Speaker 1: you know, I came prepared with a backup, so so
Speaker 1: we're good. I think there there's multiple backups, so many,
Speaker 1: so many crazy things this week, and I thank you,
Speaker 1: thank you for the shout at Mike. But I also
Speaker 1: will admit I'm ready for the weekend. I'm a bit,
Speaker 1: I'm a bit tired. But let's bring in our guests
Speaker 1: to help us break it all down. Uh. Two of
Speaker 1: our favorite Sarah. I'm glad to have them both the
Speaker 1: double header here with us, UH this week, joining us
Speaker 1: for the I don't know how many times it's got
Speaker 1: to be at least five or six. Is the head
Speaker 1: of macro strategy at med League Global Advisors, Mr Ben Emmons. Ben,
Speaker 1: welcome back to the show, a good and also joining us.
Speaker 1: It's been a while, but I'm I'm psyched he's back.
Speaker 1: He's a macro strategist at Bloomberg itself. Uh. He writes
Speaker 1: the Macroman Calm. He's a blogger, UH for the Market's
Speaker 1: Live blog. I believe he holds a doctorate in armchair
Speaker 1: epidemiology from the University of Google. Is that right, Cameron Price, Uh,
Speaker 1: it's actually Google University. That's total, totally separate institutions. Can
Speaker 1: anyone go ahead and get that degree? Cameron, Well, you
Speaker 1: have to put in quite a bit of quite a
Speaker 1: bit of work, I gotta say, with at least thirty
Speaker 1: seconds of search. We need dedicate that was that of course,
Speaker 1: was a great line from one of Cameron's columns, sort
Speaker 1: of making fun of how everyone is an expert in
Speaker 1: infectious diseases these days. UM, so we will not pretend
Speaker 1: to be experts in infectious diseases, but very much experts
Speaker 1: are guests in markets. So but let me start with you. UM.
Speaker 1: I know you've been sort of optimistic about this rebound
Speaker 1: in stocks to some degree. Um. And you know, full disclosure,
Speaker 1: we're recording this podcast here on Thursday, June eleven, the
Speaker 1: markets down about five percent. Who knows what Friday will
Speaker 1: look like or even Monday. Maybe we'll see a bounce back,
Speaker 1: but at the moment, things look like they've turned on
Speaker 1: the dime. Uh. And for one thing, I think it's safe.
Speaker 1: We can all agree that this market was a little
Speaker 1: bit overextended, a little bit overbought, and was due for
Speaker 1: some consolidation. Perhaps this seems a little bit more than consolidation.
Speaker 1: And I'm not sure how much it matters what the
Speaker 1: catalyst is considering how overbought the market was, but I'm
Speaker 1: just curious your take. I mean, it seems to have
Speaker 1: really uh started to roll over a little bit before
Speaker 1: the FED meeting, it accelerated after the Fed announcement and
Speaker 1: the press conference, and then uh Thursday morning, it was
Speaker 1: just off to the races with the selling just a
Speaker 1: nest the tape from the get go. So I'm curious.
Speaker 1: You know, some people are blaming it on sort of
Speaker 1: this resurgeon in the virus um. Others talking about how
Speaker 1: the you know, POW is not exactly optimistic about the
Speaker 1: economy and the economic projections sort of backed that up. Again,
Speaker 1: I'm not sure how much it matters. I feel like
Speaker 1: it's a market that was due for a little bit
Speaker 1: of a calm down. But walk us through what you're
Speaker 1: thinking about the state of the market right now. What
Speaker 1: caused this nasty dip on Thursday? And um, is it
Speaker 1: just a a sort of correction in an overbought market
Speaker 1: or is it the beginning of some more weakness? Do
Speaker 1: you think, yes, A certainly. I can. So what I
Speaker 1: noticed on Monday, actually Monday evening, um those news out
Speaker 1: that koreation he cut off communication with Soft Korea, and
Speaker 1: the end dropped like almost two big things, like really quick,
Speaker 1: like roundies I think against the dollar, and I spinkings
Speaker 1: to a friend of mine over in Asia, and I
Speaker 1: was kinda trying to figure out, like, why is suddenly happening, right,
Speaker 1: And you know, that was the only news that we
Speaker 1: thought that was the case, because the Japanese government actually
Speaker 1: came out I think I can forty five minutes later
Speaker 1: after that news broke, which apparently broke already over the weekend,
Speaker 1: but I guess it came in the market on Monday,
Speaker 1: and this is Monday night Asia, by the way, that
Speaker 1: so our time, you know, specific time, like six year time,
Speaker 1: nine at night something like that, And and I was
Speaker 1: the Japanese government kind of responded like, you know, we're
Speaker 1: watching this carefully, the situation. And so I think that
Speaker 1: was a bit of a geopolitical tension. That's that that
Speaker 1: started a bit of this flight to safety idea. I
Speaker 1: think the treasuries from there took that on as well
Speaker 1: as usual Golden and Swizz Frank, but it's nothing to
Speaker 1: do but what we're actually seeing today maybe that indeed,
Speaker 1: people have reassessed a bit that the reopening euphoria, as
Speaker 1: you say, it was pretty exuberant, and it's taken somewhat
Speaker 1: out of the off the table. People points still point
Speaker 1: too that the fat yesterday delivered the exact message that
Speaker 1: the market was looking for. It's a v shape for
Speaker 1: coffee on the short term, but a long road. I
Speaker 1: had rates state low quee stage in place, and it's
Speaker 1: sort of a message like, you know, not much more
Speaker 1: euphoria behind that, right, And I think that and the
Speaker 1: acknowledgement that the job or report was strong but not
Speaker 1: like you know, we need to see a lot more
Speaker 1: of it. We would like to see a lot more
Speaker 1: of it. As I think that tone was kind of
Speaker 1: added to the simmering view political little tension with North
Speaker 1: Korea in the background that that triggered what we're seeing
Speaker 1: now today. The people then start liquidating maybe some of
Speaker 1: these trades that was so popular that you know that
Speaker 1: Sarah and actually written about on the retail side. I
Speaker 1: was a little skeptical on that part, thinking that that
Speaker 1: actually came early to the party these times of late right,
Speaker 1: and tends to be when they're late retail investors, they
Speaker 1: tend to be then the ones that really drive that
Speaker 1: we pushed the market b down and start overreacting. But
Speaker 1: you know, at the end of the day, I think
Speaker 1: this is kind of the sequence of events that that
Speaker 1: we're dealing with. Added to that, perhaps also that I
Speaker 1: think what people are looking at though as a background
Speaker 1: story is I think two other stories you want to highlight.
Speaker 1: Um One, the story around Hong Kong continues to be
Speaker 1: something to be able to carefully watch. So what I've
Speaker 1: noted was that this and the swings in the ad
Speaker 1: rs right that are on the exchanges here is huge, right,
Speaker 1: and and that indicated that there's a lot of speculation,
Speaker 1: a lot of Chinese company looking to move away from
Speaker 1: US markets and go listen in Hong Kong. The flood
Speaker 1: of IBOs has picked up quite a bit in Hong Kong.
Speaker 1: There's been a fair bit of dollar demands in Hong Kong,
Speaker 1: like as in people holding dollars to deposits and banks
Speaker 1: have risen quite a bit, right as in it's not
Speaker 1: the capital flight system mind, people that kept I guess
Speaker 1: hoarding the dollar instead of the Hong Kong dollar. So
Speaker 1: it sounds like there's a there's plenty of reasons to
Speaker 1: be concerned. You just gotta take your pick. But I
Speaker 1: want to I want to focus on the reopening, though,
Speaker 1: because something I've heard from a fair amount of investors
Speaker 1: this week that I just personally do not understand at
Speaker 1: all is them saying that a second wave of the
Speaker 1: coronavirus is priced into markets. So even though we're seeing
Speaker 1: numbers starting to increase in the likes of California, Texas, Florida,
Speaker 1: where I personally am right now a little bit nervous, um,
Speaker 1: they're saying, you know, it shouldn't really matter all that
Speaker 1: much because markets are expecting a second wave. It is
Speaker 1: that the truth, like, should that? Should we buy into
Speaker 1: that narrative? I don't. I don't buy that. I don't
Speaker 1: buy that. I don't get it at all. But then
Speaker 1: I have investors at certain firms which I won't name,
Speaker 1: saying this to me before the five percent decline on Thursday,
Speaker 1: that is, and it just doesn't make any sense to me. Um,
Speaker 1: So if anyone can make sense of it, I would
Speaker 1: love to. I would love to hear that so so well.
Speaker 1: I looked at it said we're going to get the
Speaker 1: second wave, because it was actually communicated already in March
Speaker 1: by Fauci that look what when we're doing today, we're
Speaker 1: gonna prepare for the second wave. Right, So the fact
Speaker 1: that the second wave will becoming is there, and and
Speaker 1: the dreadful story about that, this eighteen Spanish flu scenario
Speaker 1: of like the second wave is worse than the first wave, right,
Speaker 1: And I'm not sure if that plays are roll here today.
Speaker 1: But what I do think matters to markets mostly is
Speaker 1: that if we get the second wave, that indeed picts
Speaker 1: are quite quite requite a momentum that there would be
Speaker 1: a governor or a mayor or anyone right that's in
Speaker 1: charge of a city, county. Then support suddenly says, okay,
Speaker 1: I'm going to close this thing down, and it starts
Speaker 1: with one and a bunch of others followed because they're
Speaker 1: getting worried politically that they may be responsible for more fatalities, right,
Speaker 1: and they're making a decision on we gotta shut things
Speaker 1: again down. That would be I think very negative for
Speaker 1: markets because think about what's priced in in that sense,
Speaker 1: in that V shape idea is that the reopening when
Speaker 1: you reopen eCOM tiki United States economy, you get immediately recovery.
Speaker 1: And that's that's kind of what it's shown, right the
Speaker 1: data when you look at mobility data or in kind
Speaker 1: of like real time data, sales or whatnot of people
Speaker 1: can be hired, that's all jumping really quickly, with the
Speaker 1: capacity of airlines jumping quickly. So I think that the
Speaker 1: market is really nervous if the if the second wave
Speaker 1: leads to another lockdown. I think my personal view, it's
Speaker 1: politically not possible, like we would really push ourselves into
Speaker 1: a depression, right, I think that's in this season of
Speaker 1: political season, not possible. But I do think there's worries
Speaker 1: in the market that certain parts of the country may
Speaker 1: end up that way simply because the local governor or
Speaker 1: mayor who's in in charge is putting her or her
Speaker 1: or his feet on the ground. Kevin, I wanted to
Speaker 1: bring you in here at a bit um. Both you
Speaker 1: and Sarah have written really well this week about this
Speaker 1: whole retail trader phenomenon. You know, you had a column
Speaker 1: talking about what you call this is the phase of
Speaker 1: the market where garbage starts to float. Floating garbage. I
Speaker 1: love it. Floating garbage A great line. Now, I obviously,
Speaker 1: you know, these retail traders uh their home, their board,
Speaker 1: there's not a lot of entertainment. They might have some
Speaker 1: spare cash from their stimulus checks, or that the extra
Speaker 1: unemployment benefits, whatever, it is not a lot of options
Speaker 1: to sort of blow your money foolishly on gambling or
Speaker 1: expensive trips whatever you otherwise do. So I think, I mean,
Speaker 1: it's obvious that these traders have puffed up some ridiculous stocks,
Speaker 1: like the the bankruptcy stocks that you both have written about,
Speaker 1: you know, Hurts, chess, Peak Energy, arguably the surgeon inflows
Speaker 1: in the jets, the air travel etf is A is
Speaker 1: another example. I think the debate though, and where it
Speaker 1: gets sort of I get greeted with skepticism is when
Speaker 1: I suggest to people that they're also maybe part of
Speaker 1: what lifted the entire market over the past couple of months.
Speaker 1: And I know, from from sort of an a U M. Standpoint,
Speaker 1: even all these retail traders together are a a sort
Speaker 1: of drop in the ocean compared to institutional investors. But
Speaker 1: is it possible that their exuberance is kind of set
Speaker 1: off signals that that has has helped the rest of
Speaker 1: the market sort of float higher than it it should
Speaker 1: have in the last couple of months. Well, I think
Speaker 1: we need to acknowledge that this is not a regular market.
Speaker 1: And while it's always tempting to point to catalysts as
Speaker 1: to why things are moving, fundamental catalyst or whatever, um,
Speaker 1: the fact is is that it takes a lot less
Speaker 1: flow to move the price than it used to. I've
Speaker 1: got a measure of market liquidity, and it's off of
Speaker 1: its lows, but it's basically still shows worse stock market
Speaker 1: liquidity than at any point uh in the last quarter century,
Speaker 1: other than the very nid deer of the financial crisis. UM.
Speaker 1: At the same time, you see a lot more sort
Speaker 1: of student body left, student body right price act. If
Speaker 1: you look at the TICK index the New York Stock Exchange,
Speaker 1: Sarah pointed out that it hit an all time low Thursday,
Speaker 1: having hit an all time high last month. And indeed,
Speaker 1: if you look at a long term chart, you can
Speaker 1: see the amplitude in terms of highs and lows of
Speaker 1: the TICK index is unparalleled in the history of that index,
Speaker 1: which is suggests that everybody seems to be moving the
Speaker 1: same way at the same time at the same time
Speaker 1: that there's not really much liquidity. So if Davy day
Speaker 1: Trader says, I'm buying Spirit Airlines, well guess what Davy
Speaker 1: day Trader has two? Well whatever, I'm not, I'm not
Speaker 1: one of them, right whatever. Anyway, he's got this this
Speaker 1: legion of people hanging on his on his sort of
Speaker 1: every word, and if every if each one of them,
Speaker 1: you know, if a million people each by five thousand
Speaker 1: dollars worth of stock, that's all of a sudden, a
Speaker 1: five billion dollar trade that's going to move the price.
Speaker 1: Right Um, And Okay, that's that's an exaggeration, but I
Speaker 1: think it does speak to the dynamic of what's going
Speaker 1: on here. For those who don't know Davy Day Trader,
Speaker 1: that is Dave Portnoy. He's the founder of the website
Speaker 1: bar stool Sports. This guy was most famous recently for
Speaker 1: his reviews of pizza. He would go to pizza joints,
Speaker 1: take one bite, and give you a review. And that's
Speaker 1: that's what made him famous. Well, what happened was he
Speaker 1: sold part of his business to this uh this Penn
Speaker 1: National Gaming, got paid in stock. The stock went up,
Speaker 1: then it collapsed and it came back. And so you
Speaker 1: know he also got some cash. It was a pretty
Speaker 1: wealthy guy, right, and he can't gamble on sports because
Speaker 1: there is no sports. So he started trading stocks basically
Speaker 1: and coincidentally more or less about it at the time
Speaker 1: of the low And guess what, you know, a blind
Speaker 1: monkey throwing dart in a newspaper trading from the longside
Speaker 1: was gonna make money over the last two and a
Speaker 1: half months. And that's uh, you know, and that's what
Speaker 1: he's done. I'll give it to him. I mean, it's
Speaker 1: been great marketing on his behalf. Everything going on right
Speaker 1: now in him day trading and people following along. But
Speaker 1: it feels like in the year of the anecdotes are endless. Okay,
Speaker 1: you have Davy day Trader, as he's called one. My
Speaker 1: colleague vill Donna this past week was talking to a
Speaker 1: strategist over at bat t I G who was telling
Speaker 1: her how all of a sudden, his eye doctor's son
Speaker 1: is asking her which stocks he should be buying. At
Speaker 1: the same time, I've been spending my days just watching
Speaker 1: Robin Tracks, which watches Rob Tracks, Robin Hood uh and
Speaker 1: on Wall Street bets once again, and I think of
Speaker 1: Luke Cowell'll say r I p no longer with the
Speaker 1: step Bloomberg, but wishing him the best. No, wishing him
Speaker 1: the best. Missed him very much. But he wrote this
Speaker 1: almost infamous story back in February, right before everything blew up. Uh,
Speaker 1: And it was about the Wall Street Bets crowd and
Speaker 1: Robin Hood traders and kind of speculating that there could
Speaker 1: be some type of dot com bubble out and about,
Speaker 1: and all of a sudden, it feels like it's back.
Speaker 1: Yet we're in the midst of a recession. We just
Speaker 1: experienced this extremely fast bear market and fast rebound. But
Speaker 1: in a way it feels very speculative. I mean, what
Speaker 1: what do you make of that type of environment that
Speaker 1: we're in right now? Well, yeah, I mean it is
Speaker 1: in many ways very reminiscent of the dot com era. Um,
Speaker 1: you know, the the Wall Street bets, the reddits of
Speaker 1: today were the sort of the Yahoo message boards of
Speaker 1: twenty long years ago. To some extent, I suppose it's
Speaker 1: difficult to square this idea that there's a zillion people
Speaker 1: out of work and struggling with this notion that people
Speaker 1: have all the spare cash to play with the market. Uh.
Speaker 1: You know, there's a sort of cliche there's caricature that
Speaker 1: that sort of the millennials living at home took their
Speaker 1: stimulus checks and opened robin hood account of Yeah, maybe
Speaker 1: there's maybe there's something to it. I'm sure that some
Speaker 1: of the some of the individuals involved with this are
Speaker 1: are are professionals or software engineers or whatever. You know,
Speaker 1: people who can work from home do have disposable income,
Speaker 1: in fact, more disposable income than they used to because
Speaker 1: they don't go out anymore. Yeah, I mean, I think
Speaker 1: there there is something to it, and you know, it's
Speaker 1: almost enough to make me when I take off my
Speaker 1: flip pops, put on a pair of shoes and go
Speaker 1: get them shine so I can get some stock tips.
Speaker 1: I do wonder about this all coincides with sort of
Speaker 1: universal commission free trading to you know it. It's you know,
Speaker 1: it's one thing if you have a few hundred bucks
Speaker 1: to invest in the market, but a trade costs ten
Speaker 1: or fifteen bucks, you're gonna be sort of a little
Speaker 1: more gunshy than if you can do it for free.
Speaker 1: To some degree. But Ben, let's let's bring you in
Speaker 1: on this. What do you make of all this is?
Speaker 1: Is this a uh sort of a sustainable effect that
Speaker 1: we're gonna have to deal with in the market now,
Speaker 1: these davy day traders, or is it, you know, something
Speaker 1: that a real institutional investor should just kind of forget about.
Speaker 1: I don't think so, Mike. I think that you do
Speaker 1: to keep the retail traders in mind because as you know,
Speaker 1: as camera point camera points out right, people are at home,
Speaker 1: they have other time, they have more spare time. I
Speaker 1: guess like it's a different work environments you said of
Speaker 1: work doing this right, because you deal with a lot
Speaker 1: of people around you work. So I think I think
Speaker 1: that may play a hole that you have less distraction
Speaker 1: besides the money that you may have access and you know,
Speaker 1: let's not forget you have the savings right now thirty
Speaker 1: three percent, right, so there's a lot of people have
Speaker 1: a lot of money. I think just sitting on the
Speaker 1: sideline and then looking for new opportunities, right which this
Speaker 1: would become again the next opportunity. We were getting a
Speaker 1: decent dip here and people come back, right. So I
Speaker 1: wouldn't add to that is that this this dot com
Speaker 1: bubble air that we went through late nineties. Think about
Speaker 1: the stocks on that that are working on vaccines for
Speaker 1: this crisis, right, Like you know, some of those are
Speaker 1: just also completely through the roof. Other than this hurts
Speaker 1: and other like stocks. This another kind of bubble kind
Speaker 1: of environment in the background, right, and one of them
Speaker 1: will become the true winner, right and has to vaccine
Speaker 1: and that there's the magic ocean, ocean if you will.
Speaker 1: But but there's a lot of speculation there, right, So
Speaker 1: I think the temple will continue. People will continue to
Speaker 1: come back in seeking out those types of opportunities as
Speaker 1: well then just buying Apple and Google and you and Test.
Speaker 1: I guess right, you know you standard trades. I think
Speaker 1: that that's gonna stay here, just kind of tactical retail
Speaker 1: style trading here until the path of the economy is
Speaker 1: more clear. Obviously it's really hard to know in the
Speaker 1: short term. But you said, I mean people will come back.
Speaker 1: Do you get the sense that, like Mike said, we
Speaker 1: are recording on a Thursday, we don't know what will
Speaker 1: happen on Friday, but that people will be willing to
Speaker 1: come back and and step in at these levels. I mean,
Speaker 1: if I just use a benchmark as an example, ensure
Speaker 1: that might be skewed because you have much more leniency
Speaker 1: towards your mega cap names like Google and Microsoft for example.
Speaker 1: But I mean, if you look at the valuation for
Speaker 1: the SMP right now, it's still well above what it
Speaker 1: was back in Februar. Werey on a forward basis, So
Speaker 1: do you think people will be as willing to come
Speaker 1: back in and quote unquote catch a falling knife so easily? Look,
Speaker 1: I do think there's optimism out there that we're going
Speaker 1: to see the end of the of the tunnel here
Speaker 1: right It's just not going to stay this way. It's
Speaker 1: in a contagious virus, but it's not gonna dictate our
Speaker 1: lives forever because there's such a political pressure on getting
Speaker 1: this vaccine and therapeutics, and we've made a huge amount
Speaker 1: of investment in in the personal protective equipment and the
Speaker 1: system is more flooded with that now that there is
Speaker 1: a formal comfort, I think compared to the February situation
Speaker 1: that that was not in place. Therefore we have to
Speaker 1: go to the lockdown. And so the lockdown scenario, my view,
Speaker 1: is a is a scenario that's not as likely maybe localized,
Speaker 1: but not nationwide or globally. So it remains really I
Speaker 1: think an opportunity of this future rebound of the economy
Speaker 1: that you do want to play why you want to
Speaker 1: come back and take opportunity here as you have these
Speaker 1: like this, you know that I am more on the
Speaker 1: domistic side that way, as opposed to those who really
Speaker 1: think that we know, the pandemic was just really what
Speaker 1: pushed the new normal into a into a new depression,
Speaker 1: and we're going to get a new normal triple like
Speaker 1: it's really really, really bad. If we're gonna get deflation
Speaker 1: and we're gonna not grow much of all of all,
Speaker 1: I'm gonna have to army unemployed people out there, and
Speaker 1: we're just not going to get out of it. That
Speaker 1: I don't firmly don't believe in that, because there's been
Speaker 1: a tremendous amount of effort done here to actually not
Speaker 1: be in that scenario, and I think the market is
Speaker 1: right to not buy that that that depression scenario. But
Speaker 1: staying on the optimistic side, hence there's gonna be de
Speaker 1: buying again here coming in. If not not tomorrow, it
Speaker 1: will be in the next weeks or so, you know,
Speaker 1: driven my data and driven by just what I said,
Speaker 1: like the optimism of that we can get out of us.
Speaker 1: I would disagree in the sense that you don't have
Speaker 1: to think that there's going to be depression to think
Speaker 1: that stocks or allow the investment here. I mean, paying
Speaker 1: a dollar in time cents for a dollar is never
Speaker 1: a good idea. It doesn't matter what the economy is doing.
Speaker 1: And I think if you buy stocks here, essentially you're
Speaker 1: paying a dollar in a quarter for five cents. If
Speaker 1: you look at the ratio of US market cap to
Speaker 1: the size of the economy, even taking out the Corona
Speaker 1: hit UH in the first quarter, we're basically at all
Speaker 1: time highs. That implies an expected return over the next
Speaker 1: decade it's negative. So personally, I have no interest in
Speaker 1: hopping in here, and I wouldn't have interest for many
Speaker 1: many percents. H since both you guys are macro focused,
Speaker 1: I didn't want to ask a little bit about the dollar.
Speaker 1: I feel like the dollar bears are out in force
Speaker 1: these days, and I know there's been I don't know
Speaker 1: if it's quite consensus or maybe just the loudest voices
Speaker 1: have been the dollar bears over the years, and they've
Speaker 1: kind of not necessarily been right. Um. Something really caught
Speaker 1: my eye today is is uh. One Goldman strategist has
Speaker 1: a call for something like a depreciation in the dollar
Speaker 1: over the next few years. I don't know exactly how
Speaker 1: many years, but um, oh, Kvin, I gotta wonder, you know.
Speaker 1: And I'm kind of putting you on the spot here
Speaker 1: because I know you haven't written about the dollar in
Speaker 1: a while, but if you do have an outlook for
Speaker 1: the dollar, and also I feel like if we go
Speaker 1: if the dollar weakens as much as in the next
Speaker 1: couple of years, the narrative will switch from sort of
Speaker 1: a oh a week, dollar is good for the economy
Speaker 1: to uh, wait a second, this is this is bad. Um.
Speaker 1: What's your outlook for the dollar? And am I right
Speaker 1: that that sort of that much of a weakness would
Speaker 1: be not necessarily a bullish economy story. Well, you know,
Speaker 1: it's an interesting question. And in so far as we
Speaker 1: are kind of reliving in two thousand parallel in the
Speaker 1: stock market, maybe the follow through will be a sort
Speaker 1: of mid two thousand's um episode with the dollar um.
Speaker 1: Insofar as if US demand comes back and you have
Speaker 1: this massive pent up demand and part of consumers, whether
Speaker 1: it emerges this year or next year, two, I don't
Speaker 1: know what that could very easily entail. Would be an
Speaker 1: extraordinary rise in the trade deficit at the same time
Speaker 1: that monetary policy is committed to being super easy and
Speaker 1: fiscal policy is obviously a mess. So if you have
Speaker 1: the current account deficit blowing out to five six of
Speaker 1: GDP at the same time that you still have a
Speaker 1: tremendously large budget deficit, you could see suddenly US moving
Speaker 1: and the rest of the world recovers a bit and
Speaker 1: and and risk sentiment and proves on a more structural basis.
Speaker 1: You could move from this environment where there's been this
Speaker 1: sort of structural shortage of dollars for for years, to
Speaker 1: reverting back to where we were starting and say two
Speaker 1: thousand three, where there was a structural surplus of dollars.
Speaker 1: Is it going to happen? There's a chance. I'm not
Speaker 1: convinted to base case, but if this this individual is
Speaker 1: going to be right about a tremendous declined the dollar,
Speaker 1: that's probably what what it will look like. UM. I
Speaker 1: would say as an addendum that there's certainly an argument
Speaker 1: to be made to be want to want to be
Speaker 1: long sort of real assets versus every currency, because none
Speaker 1: of these currencies pay you a dime, and the fiscal situation,
Speaker 1: all these countries is terrible, and we know that we
Speaker 1: can't trust the price of financial assets because for various
Speaker 1: reasons that we've talked about, and I'm sure there's a
Speaker 1: crazy thing we'll talk about talk about some more. Uh,
Speaker 1: there's an argument to be made for owning something that
Speaker 1: hurts when it falls on you. You know, Era Cameron
Speaker 1: gave us the perfect segue two crazy things there, and
Speaker 1: I totally dropped the ball on it. You're grabbing it,
Speaker 1: You're grabbing it and running with it. Now that's my bed.
Speaker 1: Why don't you get us, get us started. What's the
Speaker 1: craziest thing you've I know you've written about twenty crazy
Speaker 1: things stories this week, So what's your what's your top?
Speaker 1: So there there are so many, Uh, it's really hard
Speaker 1: to choose one that I will go with. UM. On Monday,
Speaker 1: the day that the SMP turned positive for what at
Speaker 1: the close and also in the middle of the day,
Speaker 1: if you were to look at the members of the
Speaker 1: SMP since March, every single one of them was positive.
Speaker 1: And I know Cameron then took it a step further, uh,
Speaker 1: and he ransom programs and found that was the first
Speaker 1: time that we've ever seen every single stock move higher
Speaker 1: together over an eleven week period, which is pretty crazy. Um,
Speaker 1: pretty crazy. And then one more just for you, Mike,
Speaker 1: because I know you love leveraged et s so so
Speaker 1: um hate them. Yeah dat. I've actually been spending my
Speaker 1: days just sitting on robin track dot net, which tracks
Speaker 1: what users on robin hood are doing. And on Thursday,
Speaker 1: as stocks are selling off, what were they adding up?
Speaker 1: What was number three on the most popular most increased
Speaker 1: interest list while it was t vix So let me
Speaker 1: products just for you, Mike, what could possibly go wrong
Speaker 1: with that trip? Nothing? All right, Cameron? Cameron told me
Speaker 1: he has a doozy for the crazy Things segments, so
Speaker 1: expectations are high. Well, I mean this is coming from
Speaker 1: finance geek, so my definition of crazy interesting might not
Speaker 1: be the same as year. So you know, we know
Speaker 1: that the robin Hood folks love bankrupt companies. We know
Speaker 1: that they love companies named after inventors. Obviously, Tesla has
Speaker 1: been a darling for years, and as I'm sure you know,
Speaker 1: last week saw the debut of Nicola U, named after
Speaker 1: the same scientists first name, and I've already looked he
Speaker 1: didn't have a middle name. My next career move so
Speaker 1: as I'm sure you saw, or as you may have seen,
Speaker 1: at one point, uh Nicola had a market cap greater
Speaker 1: than four despite having zero revenues, which is crazy enough
Speaker 1: as it is, right, But here's my crazy thing. The
Speaker 1: option market for Nicola is the wildest thing I have
Speaker 1: ever seen in my life. So the issue is that
Speaker 1: there's no because it's a new stock, you can't borrow it,
Speaker 1: so if you want to short it, you can't. So
Speaker 1: the only way you can you can bet against it
Speaker 1: is to buy putts. So the structure of the option
Speaker 1: market is Bologny. So the stock is UH sixty, give
Speaker 1: or take. So I'm looking at the July options, the
Speaker 1: July sixty calls, So the at the money calls trade
Speaker 1: at a two and are priced around eight dollars. That's
Speaker 1: crazy enough as it is. The sixty puts are trading
Speaker 1: a two eight and are priced at twenty eight dollars,
Speaker 1: So the at the money put is worth twenty dollars
Speaker 1: more than the at the money call, which is crazy,
Speaker 1: but that's not But that's still not the craziest thing
Speaker 1: I've seen. I got this one from a friend. In
Speaker 1: Nicola options, there's a option traders will know, there's a
Speaker 1: thing called a box where you can sell it call spread,
Speaker 1: say forty fifty call spread, uh, and then you sell
Speaker 1: it put spread against it. The thing can only ever
Speaker 1: be worth ten dollars. A forty fifty box can only
Speaker 1: ever be worth ten vols. Well, I've been a friend
Speaker 1: who sold the Nicola July call spread for eight dollars
Speaker 1: and eighty cents. He sold the fifty forty Nicola put
Speaker 1: spread for eight dollars. So we sold something that could
Speaker 1: only ever be worth uh, ten dollars for sixteen dollars
Speaker 1: and eighty cents. And that, my friends, is the craziest
Speaker 1: thing I've seen this week. That's that's pretty good, Ben, Ben,
Speaker 1: You've got some tough competition with that one. Oh, that's tough.
Speaker 1: That's good stuff. Wow. You know that I have a
Speaker 1: financial one I have and I have one for Sarah
Speaker 1: actually that I want to mention. It's that kind of
Speaker 1: local thing for Sarah. Actually, I've been tracking this Hong
Speaker 1: Kong situation. Um, so you know, the A d R
Speaker 1: swings were pretty dramatic, like if you take you know,
Speaker 1: like companies that you never heard of of, a Jian
Speaker 1: Group or Wins Finance whould just swing like nine hundred
Speaker 1: eight on a d R A d R s by
Speaker 1: the way, like our you know, the most liquid things
Speaker 1: he can trade, right, that's I mean, I think that's
Speaker 1: really really locally traded on on our exchanges here. I
Speaker 1: think that just again speaks to this tension that's there,
Speaker 1: right as a real tension building from money coming of
Speaker 1: adugunized stage back to Hong Kong. That that these that
Speaker 1: these ad R prices show aside from their their extraordinary swings,
Speaker 1: right which again back to the herds and other American
Speaker 1: airline step swings, it's kind of similar, right, So there's
Speaker 1: this really awkward phenomenon, so that that that is unusual,
Speaker 1: if not crazy. And then I guess the local one.
Speaker 1: I popped up some website, you know, legitimate website, I thinks,
Speaker 1: U P I is, I guess the trending website. I
Speaker 1: clicked on a few things and I read here the
Speaker 1: following a python hunter in Florida known as the Python Cowboy,
Speaker 1: might have had a new records as by bagging in
Speaker 1: sixteen seventeen foot snake by putting up a fierce fight.
Speaker 1: And that this is in Martin County, trapping Wildflife Rescue
Speaker 1: owner Mike Kimmel. That's the Python cowboy in Florida. I
Speaker 1: thought of, I can't, I can't, I can't say I'm surprised. Well, actually, um,
Speaker 1: funny story, not funny. Actually supposedly the last week or
Speaker 1: so there was a seven foot alligator found in the
Speaker 1: water right outside my house. So safe to say, I'm
Speaker 1: not going in the water anytime soon. So python's alligators.
Speaker 1: That's what you get down here, Ben Emmons and Kevin Christ.
Speaker 1: We will have to leave it there. Thank you so
Speaker 1: much for coming on the show today. There's always What
Speaker 1: Goes Up. We'll be back next week. Until then, you
Speaker 1: can find us on the Bloomberg Terminal website and app,
Speaker 1: or wherever you get your podcasts. We love it if
Speaker 1: you took the time to rate interview the show on
Speaker 1: Apple Podcasts, so more listeners can find us. And you
Speaker 1: can find us on Twitter. Follow me at Sara pont Sec,
Speaker 1: Mike is at Reagan Anonymous, and Cameron christ Is at
Speaker 1: Fifth Rule. You can also follow Bloomberg Podcasts at Podcasts.
Speaker 1: What Goes Up is produced by Jordan Gospore. The head
Speaker 1: of Bloomberg podcast is Francesca Levie. Thanks for listening, See
Speaker 1: you next time.