1 00:00:00,440 --> 00:00:03,840 Speaker 1: Strap on your parachute. It's time for What Goes Up 2 00:00:04,120 --> 00:00:13,800 Speaker 1: with Sarah Ponzick and Mike Reagan. Hello and welcome to 3 00:00:13,840 --> 00:00:17,600 Speaker 1: What goes Up, a Bloomberg Weekly Markets podcast. I'm Sarah Pons, 4 00:00:18,040 --> 00:00:21,000 Speaker 1: reporter on the Cross Asset team, and I'm Mike Reagan, 5 00:00:21,160 --> 00:00:24,120 Speaker 1: a senior editor at Bloomberg. This week on the show, 6 00:00:24,440 --> 00:00:27,360 Speaker 1: the week before Election night was a volatile one. At 7 00:00:27,400 --> 00:00:29,479 Speaker 1: one point, the SMP five hundred was on track for 8 00:00:29,560 --> 00:00:32,240 Speaker 1: its worst week since March, with tech giving into the 9 00:00:32,280 --> 00:00:35,440 Speaker 1: selling pressure. But at the same time, haven's didn't really 10 00:00:35,479 --> 00:00:38,720 Speaker 1: work as they should, gold fell while bond yields rose, 11 00:00:38,880 --> 00:00:42,479 Speaker 1: So what gives? And as always, we will close out 12 00:00:42,520 --> 00:00:45,720 Speaker 1: this episode with our tradition the craziest thing I saw 13 00:00:45,840 --> 00:00:48,479 Speaker 1: in markets this week, and by all means, if you 14 00:00:48,479 --> 00:00:51,360 Speaker 1: saw something crazy and markets, give us a call on 15 00:00:51,400 --> 00:00:56,480 Speaker 1: the Bloomberg Podcast hotline at six four six three to 16 00:00:56,720 --> 00:01:00,800 Speaker 1: four three four nine zero and leave us voicemail and 17 00:01:00,880 --> 00:01:03,880 Speaker 1: maybe we'll play your voicemail on the show and we 18 00:01:03,960 --> 00:01:07,080 Speaker 1: will appreciate your crazy things. I think Sarah especially will 19 00:01:07,120 --> 00:01:09,920 Speaker 1: appreciate them, because I think she struck out this week 20 00:01:10,000 --> 00:01:13,959 Speaker 1: on crazy things I did. I had a pretty crazy week, 21 00:01:14,040 --> 00:01:17,720 Speaker 1: and I just took cover because luckily, so many listeners 22 00:01:17,760 --> 00:01:20,000 Speaker 1: wrote into us this week, so we had a plethora 23 00:01:20,080 --> 00:01:21,720 Speaker 1: to choose from. So I said, you know what, Mike, 24 00:01:21,760 --> 00:01:23,840 Speaker 1: I'm going to stand down this week. I'm going to 25 00:01:23,920 --> 00:01:28,319 Speaker 1: take a bye week, and I'm just this is my 26 00:01:28,400 --> 00:01:32,480 Speaker 1: bye week, and uh, someone this week. All right. I 27 00:01:32,560 --> 00:01:35,080 Speaker 1: was a little jealous that people seem to be directing 28 00:01:35,120 --> 00:01:37,360 Speaker 1: their crazy things more to you than to me. But 29 00:01:37,840 --> 00:01:39,760 Speaker 1: you know, then I realized, maybe they realized you just 30 00:01:39,800 --> 00:01:42,000 Speaker 1: need to help. I guess, I guess is it that 31 00:01:42,120 --> 00:01:44,880 Speaker 1: I'm gonna say, that's not the reason why. But you know, 32 00:01:45,080 --> 00:01:47,120 Speaker 1: next time anyone reaches out, if you reach out to me, 33 00:01:47,200 --> 00:01:48,880 Speaker 1: let's let's find out why. Let let us know why 34 00:01:48,920 --> 00:01:52,960 Speaker 1: you're not hitting my cup. Okay, fair enough. Well, joining 35 00:01:53,040 --> 00:01:55,040 Speaker 1: us this week on the show for the first time. 36 00:01:55,560 --> 00:01:58,600 Speaker 1: Very excited to have him. He's a fund manager at 37 00:01:58,640 --> 00:02:02,920 Speaker 1: Westwood Holdings. His name is Adrian Helper. Adrian, welcome to 38 00:02:02,920 --> 00:02:05,280 Speaker 1: the show. Thank you for having me and Adrian, I 39 00:02:05,320 --> 00:02:08,480 Speaker 1: gotta say I was reading some of your talking points 40 00:02:08,480 --> 00:02:10,959 Speaker 1: they sent along to prepare for the interview, and I 41 00:02:11,040 --> 00:02:13,919 Speaker 1: got excited about one thing. It's you were talking about 42 00:02:13,919 --> 00:02:16,760 Speaker 1: the Velocity of Money. And the reason I got excited 43 00:02:16,840 --> 00:02:20,079 Speaker 1: is I love this data series. Not many people track 44 00:02:20,200 --> 00:02:23,200 Speaker 1: this or follow this, and whenever I ask anyone about 45 00:02:23,240 --> 00:02:25,799 Speaker 1: it that they give me a blank stare. So I'm 46 00:02:25,800 --> 00:02:27,720 Speaker 1: gonna start off. We're gonna talk about the election and 47 00:02:27,760 --> 00:02:30,040 Speaker 1: the volatility, like Sarah said, but I wanted to talk 48 00:02:30,400 --> 00:02:32,840 Speaker 1: start off talking about the velocity of money because I'm 49 00:02:32,840 --> 00:02:34,919 Speaker 1: not sure I'll ever get a chance to talk with 50 00:02:34,960 --> 00:02:38,240 Speaker 1: someone who who tracks it. And for listeners who aren't 51 00:02:38,240 --> 00:02:41,320 Speaker 1: familiar with the velocity of money, UM, it's basically a 52 00:02:41,360 --> 00:02:44,760 Speaker 1: calculation done to try to take a stab at estimating 53 00:02:44,800 --> 00:02:48,440 Speaker 1: how often every dollar in the money supply turns over. 54 00:02:48,840 --> 00:02:51,280 Speaker 1: The whole data series to me, Adrian is fascinating. Let 55 00:02:51,280 --> 00:02:53,400 Speaker 1: me let me just go through it to explain what 56 00:02:53,400 --> 00:02:56,359 Speaker 1: the chart looks like to to listeners. UM. Bloomberg has 57 00:02:56,480 --> 00:02:58,959 Speaker 1: a calculation of it that goes back to the late 58 00:02:59,080 --> 00:03:02,640 Speaker 1: nineteen fifties, and if you look at the chart, it's 59 00:03:02,680 --> 00:03:06,840 Speaker 1: interesting because it stays pretty stable for most of the 60 00:03:06,919 --> 00:03:10,960 Speaker 1: series from the late nineteen fifties through say the early nineties. 61 00:03:11,400 --> 00:03:14,280 Speaker 1: Then in the nineties it really starts shooting higher reaches 62 00:03:14,320 --> 00:03:17,960 Speaker 1: about peak of about two point two in n then 63 00:03:18,000 --> 00:03:20,880 Speaker 1: it kind of reverts back to the mean, picks up 64 00:03:20,919 --> 00:03:24,880 Speaker 1: again a little bit before the financial crisis peaks it 65 00:03:24,880 --> 00:03:28,520 Speaker 1: around two and two thousand and six. What's really interesting, then, 66 00:03:28,560 --> 00:03:32,200 Speaker 1: is it it then it really crashes hard, uh, mainly 67 00:03:32,200 --> 00:03:35,080 Speaker 1: in the global financial crisis, but even in the recovery 68 00:03:35,120 --> 00:03:39,760 Speaker 1: after that, the trend is still pretty solidly down UM. 69 00:03:39,800 --> 00:03:43,720 Speaker 1: And then it breaks below that range was in previously 70 00:03:44,080 --> 00:03:48,560 Speaker 1: UM into the less than two areas. Obviously, at the 71 00:03:48,560 --> 00:03:51,520 Speaker 1: beginning of this year it crashes really hard to about 72 00:03:51,560 --> 00:03:54,480 Speaker 1: one point one. So a lot of that I get 73 00:03:54,600 --> 00:03:57,880 Speaker 1: Like this year, obviously, the savings rate just exploded, so 74 00:03:57,960 --> 00:04:01,520 Speaker 1: money is not changing hands as much. What I'm curious 75 00:04:01,520 --> 00:04:05,720 Speaker 1: about is that overall trend since the since the nineties. UM, 76 00:04:05,760 --> 00:04:09,839 Speaker 1: it's the steady trend down that sort of peaked sort 77 00:04:09,880 --> 00:04:12,240 Speaker 1: of close to the height of the dot com bubble 78 00:04:12,360 --> 00:04:16,279 Speaker 1: and then trends down all the way until this massive 79 00:04:16,880 --> 00:04:19,400 Speaker 1: drop in it at the beginning of this year. I Mean, 80 00:04:19,400 --> 00:04:21,719 Speaker 1: my guess is, and I'm curious what you think, but 81 00:04:22,000 --> 00:04:24,920 Speaker 1: my guess is that is it just that the Internet 82 00:04:24,960 --> 00:04:28,640 Speaker 1: has sort of eliminated a lot of the middlemen and 83 00:04:28,640 --> 00:04:31,920 Speaker 1: and sort of you know, each dollar changes hands less 84 00:04:31,920 --> 00:04:34,599 Speaker 1: than it used to. Is that a crazy theory or 85 00:04:34,640 --> 00:04:36,680 Speaker 1: do you think that makes sense? There may be part 86 00:04:36,800 --> 00:04:40,919 Speaker 1: of that, and you know, this is where economics meets investing, 87 00:04:41,760 --> 00:04:44,240 Speaker 1: as there's a lot of theory here about you know 88 00:04:44,320 --> 00:04:48,800 Speaker 1: what that impact is on markets themselves. And certainly we 89 00:04:48,839 --> 00:04:51,040 Speaker 1: can have all of the monetary creation in the world 90 00:04:51,120 --> 00:04:54,799 Speaker 1: and liquidity that's created, but unless that money changes hands, 91 00:04:55,400 --> 00:04:58,280 Speaker 1: it's going to be very hard for us to see inflation. 92 00:04:58,480 --> 00:05:00,760 Speaker 1: It's going to be hard to see on yields rise 93 00:05:01,360 --> 00:05:04,719 Speaker 1: um And finally enough it's it's been getting on the 94 00:05:04,720 --> 00:05:08,719 Speaker 1: train of concurrent with bond yields continuing to fall. I 95 00:05:08,760 --> 00:05:11,960 Speaker 1: think there may be part of the explanation around a 96 00:05:12,080 --> 00:05:16,240 Speaker 1: changing context of payment systems that some degree is a 97 00:05:16,240 --> 00:05:18,680 Speaker 1: little bit more even barter even though we don't call 98 00:05:18,760 --> 00:05:22,080 Speaker 1: it barter um. The way we do transactions in an 99 00:05:22,160 --> 00:05:25,720 Speaker 1: internet age is at least part of it is an 100 00:05:25,720 --> 00:05:29,600 Speaker 1: exchange of goods without monetary influence um. I do think 101 00:05:29,640 --> 00:05:33,200 Speaker 1: that's a small part. I think that especially since two 102 00:05:33,240 --> 00:05:36,760 Speaker 1: thousand and six, what we've seen is a rising savings rate, 103 00:05:36,800 --> 00:05:39,520 Speaker 1: at least a stable to a rising savings rate, and 104 00:05:39,720 --> 00:05:41,440 Speaker 1: that savings right of course, if you look back to 105 00:05:41,480 --> 00:05:45,600 Speaker 1: the nineteen fifties, has been coming down significantly, kind of 106 00:05:45,640 --> 00:05:49,080 Speaker 1: like the you know, the opposite of home ownership, and 107 00:05:49,240 --> 00:05:51,400 Speaker 1: it almost looks like we're going back to the nuclear 108 00:05:51,920 --> 00:05:54,320 Speaker 1: family kind of economy. Savings rates have been going up, 109 00:05:54,680 --> 00:05:57,120 Speaker 1: and maybe that had to do with before you know, 110 00:05:57,160 --> 00:05:59,920 Speaker 1: your house was your was your saving you didn't. We're 111 00:06:00,160 --> 00:06:01,760 Speaker 1: too much about having the money in a bank for 112 00:06:01,800 --> 00:06:04,359 Speaker 1: losing your job. That's been a bigger part of it. 113 00:06:04,400 --> 00:06:06,599 Speaker 1: I think of we need the money changing hands. We 114 00:06:06,680 --> 00:06:10,560 Speaker 1: need consumers to find their save things and leverage funnily 115 00:06:10,720 --> 00:06:13,560 Speaker 1: enough to get the economy going. So it's something that 116 00:06:13,600 --> 00:06:15,880 Speaker 1: I watch of. We can have all the monetary creation 117 00:06:15,880 --> 00:06:18,840 Speaker 1: in the world until that money changes hands, it's going 118 00:06:18,880 --> 00:06:21,640 Speaker 1: to be hard to see inflation and and a push 119 00:06:21,680 --> 00:06:24,880 Speaker 1: for economic growth from monetary creation. Yeah, I was gonna 120 00:06:24,920 --> 00:06:27,560 Speaker 1: ask you, do you think that that sort of deceleration 121 00:06:27,600 --> 00:06:30,640 Speaker 1: in the velocity of money does it explain why inflation 122 00:06:30,680 --> 00:06:34,800 Speaker 1: has stayed so low us say, in this century? Where 123 00:06:34,880 --> 00:06:37,080 Speaker 1: is it sort of to two sides of the same coin, 124 00:06:37,920 --> 00:06:40,800 Speaker 1: being the the you know, technology and just trends in 125 00:06:40,839 --> 00:06:44,880 Speaker 1: general that are causing both things at wance. A good question. 126 00:06:44,960 --> 00:06:49,240 Speaker 1: I think inflation is influenced by both of those things. 127 00:06:49,600 --> 00:06:53,560 Speaker 1: I think it's influenced by your savings rates, by low 128 00:06:53,640 --> 00:06:56,599 Speaker 1: velocity of money. So this is not just consumers, This 129 00:06:56,680 --> 00:06:59,640 Speaker 1: is corporations, This is a lack of capital expenditure, things 130 00:06:59,640 --> 00:07:02,960 Speaker 1: that have since the crisis. Inflation itself is influenced by that, 131 00:07:03,160 --> 00:07:07,160 Speaker 1: of course, but it is also heavily influenced by changing 132 00:07:07,400 --> 00:07:12,240 Speaker 1: modes of transaction, which comes from technology. So what could 133 00:07:12,280 --> 00:07:15,640 Speaker 1: possibly spark change? And our investors missing something because I 134 00:07:15,640 --> 00:07:18,480 Speaker 1: feel like the predominant narrative over the past couple of 135 00:07:18,520 --> 00:07:21,240 Speaker 1: weeks is that we are going to see this reflation 136 00:07:21,280 --> 00:07:25,119 Speaker 1: trade take hold because we may see a blue wave 137 00:07:25,280 --> 00:07:27,240 Speaker 1: or no matter what the election outcome is, we are 138 00:07:27,280 --> 00:07:30,200 Speaker 1: going to see more fiscal spending that's going to feed 139 00:07:30,240 --> 00:07:32,160 Speaker 1: itself into the system. At some point, you're going to 140 00:07:32,240 --> 00:07:36,800 Speaker 1: get an economic rebound and COVID nineteen will reconcile itself 141 00:07:36,840 --> 00:07:40,680 Speaker 1: and you'll see inflation take shape. Our our investors who 142 00:07:40,680 --> 00:07:45,040 Speaker 1: believe in that narrative truly missing the point that, yes, 143 00:07:45,280 --> 00:07:48,040 Speaker 1: all of those factors might be in play, but the 144 00:07:48,120 --> 00:07:51,600 Speaker 1: velocity of money just still remains low. And what would 145 00:07:51,640 --> 00:07:55,320 Speaker 1: possibly change that I think that is part of things 146 00:07:55,360 --> 00:07:58,520 Speaker 1: that in some investors are missing this so much data 147 00:07:59,040 --> 00:08:02,560 Speaker 1: instruction or round all of this creation of money, of 148 00:08:02,560 --> 00:08:06,000 Speaker 1: the larger balance sheet that we're operating with monetary policy 149 00:08:06,040 --> 00:08:09,080 Speaker 1: pushing the portfolio balance channel, and then you know what 150 00:08:09,200 --> 00:08:12,040 Speaker 1: that means for perspective inflation in the future. This gets 151 00:08:12,080 --> 00:08:14,440 Speaker 1: down to whether you know when bond deals rise and 152 00:08:14,480 --> 00:08:17,680 Speaker 1: what that means for balanced portfolios, things of those natures. 153 00:08:18,680 --> 00:08:22,920 Speaker 1: That said, until we see money change hands, it's going 154 00:08:22,960 --> 00:08:28,280 Speaker 1: to be hard to see inflation and rising prices take hold. Now, 155 00:08:28,320 --> 00:08:30,920 Speaker 1: money will start changing hands if we see that differentiation 156 00:08:31,000 --> 00:08:35,079 Speaker 1: between the core basket of goods demanding stable but wage 157 00:08:35,120 --> 00:08:39,160 Speaker 1: inflation which keeps taken up and as people make more 158 00:08:39,200 --> 00:08:42,360 Speaker 1: money than they are able to pay a little bit 159 00:08:42,360 --> 00:08:44,880 Speaker 1: of extra for that xbox, for the new one that's 160 00:08:44,880 --> 00:08:48,480 Speaker 1: coming out that my son ones, whichever it is. So 161 00:08:49,120 --> 00:08:52,640 Speaker 1: we do see that potential happening. And I would say 162 00:08:52,640 --> 00:08:55,400 Speaker 1: it's just a it's a it's a metric that is underappreciated. 163 00:08:55,400 --> 00:08:57,840 Speaker 1: As you mentioned, it's a confluence of economics and markets. 164 00:08:58,280 --> 00:09:01,920 Speaker 1: Investors should be watching that more closely for inflation and 165 00:09:02,320 --> 00:09:04,600 Speaker 1: a measure I mean that could be a spark to 166 00:09:04,679 --> 00:09:08,680 Speaker 1: the fireplace or given the amount of monet creation we've had, 167 00:09:09,040 --> 00:09:12,560 Speaker 1: that would be much larger influence than in the past. 168 00:09:13,080 --> 00:09:17,280 Speaker 1: It's the place my kids been bugging me for the PlayStation? Uh, Sarah, 169 00:09:17,320 --> 00:09:18,680 Speaker 1: what is it that I don't even know what it 170 00:09:18,720 --> 00:09:22,920 Speaker 1: is now? The PlayStation PS PS PS five PS where 171 00:09:22,960 --> 00:09:24,760 Speaker 1: I don't know, I don't know, I've lost track. As 172 00:09:24,760 --> 00:09:27,520 Speaker 1: you can tell, I'm not exactly ready to go out 173 00:09:27,679 --> 00:09:30,439 Speaker 1: and buy that for her. But well, this is how 174 00:09:30,440 --> 00:09:34,200 Speaker 1: you know. The holiday season's right around the corner. But 175 00:09:34,200 --> 00:09:39,320 Speaker 1: they're already getting asked. That's a good segue into sort 176 00:09:39,360 --> 00:09:43,000 Speaker 1: of what you're you've been doing with your funds this year? Um, 177 00:09:43,040 --> 00:09:44,760 Speaker 1: you know, that's the kids call it. Whenever they look 178 00:09:44,840 --> 00:09:47,520 Speaker 1: up someone on social media, they call it stalking, which 179 00:09:47,559 --> 00:09:51,000 Speaker 1: I I feel like it's a bit of a strong term, Sarah. 180 00:09:51,040 --> 00:09:53,760 Speaker 1: But I was doing a little stalking of Adrian's funds 181 00:09:53,800 --> 00:09:57,959 Speaker 1: on the terminal and that was good some Bloomberg. Yes, yes, dude, 182 00:09:58,040 --> 00:10:01,439 Speaker 1: due diligence, I'll call it not stalking. Uh. And and and hey, 183 00:10:01,480 --> 00:10:04,559 Speaker 1: everyone under your bio is up for the year. Congratulations. 184 00:10:04,559 --> 00:10:08,480 Speaker 1: That's uh, that's good. Total Westwood Total Return fund up 185 00:10:08,760 --> 00:10:13,040 Speaker 1: twelve percent year today, pretty good, pretty good. Um. Poking 186 00:10:13,120 --> 00:10:17,880 Speaker 1: around in the holdings, I noticed, um, you had some tips. 187 00:10:17,880 --> 00:10:21,719 Speaker 1: Some treasury inflation protected securities were among sort of the 188 00:10:21,720 --> 00:10:24,840 Speaker 1: bigger holdings in some of the funds. And it's been 189 00:10:24,880 --> 00:10:29,040 Speaker 1: an interesting sort of dialogue about tips this year. Uh, 190 00:10:29,200 --> 00:10:32,559 Speaker 1: people were piled into you know, obviously during the whole 191 00:10:32,760 --> 00:10:35,800 Speaker 1: crisis in March, I mean, the bond market just went berserk, 192 00:10:36,280 --> 00:10:38,839 Speaker 1: and you could buy tips for a song. I guess, 193 00:10:38,880 --> 00:10:42,760 Speaker 1: you know, the market was basically discounting what looked like deflation, 194 00:10:42,960 --> 00:10:44,400 Speaker 1: or at least that's what it looked like. I might 195 00:10:44,400 --> 00:10:46,840 Speaker 1: it might have just been a liquidity story in the 196 00:10:46,880 --> 00:10:49,600 Speaker 1: bond market. And I think there was a big discussion 197 00:10:49,600 --> 00:10:53,040 Speaker 1: at least among you know, some of my colleagues saying, well, 198 00:10:53,760 --> 00:10:57,120 Speaker 1: tips then did really well. Uh, you know break evens 199 00:10:57,120 --> 00:11:00,920 Speaker 1: are upper people where people just bargain hunting hunting with 200 00:11:01,000 --> 00:11:05,720 Speaker 1: tips or was it uh, really based on concerns about 201 00:11:05,720 --> 00:11:08,920 Speaker 1: inflation going forward? And maybe your funds always have tips 202 00:11:09,000 --> 00:11:11,600 Speaker 1: up there in the in the sort of high weightings 203 00:11:11,760 --> 00:11:13,720 Speaker 1: of the fund I don't know, but walk us through 204 00:11:13,760 --> 00:11:17,360 Speaker 1: basically what your your outlook is for tips right now 205 00:11:17,400 --> 00:11:20,960 Speaker 1: and how you're thinking about, you know, inflation linked bonds 206 00:11:20,960 --> 00:11:24,520 Speaker 1: in general. Sure, well, you know, during the global financial 207 00:11:24,559 --> 00:11:28,319 Speaker 1: prices the DFC, we saw TIPS really crap at that point, 208 00:11:28,360 --> 00:11:30,960 Speaker 1: and that was liquid room. That was a market that 209 00:11:31,040 --> 00:11:34,319 Speaker 1: dried up. That was a use of capital on bank 210 00:11:34,400 --> 00:11:37,280 Speaker 1: balance sheets and in a large way for which created 211 00:11:37,320 --> 00:11:42,080 Speaker 1: exist location. We didn't see that this time. Maybe parts 212 00:11:42,120 --> 00:11:45,080 Speaker 1: of Dodd Frank and clean up and liquidity rules did 213 00:11:45,120 --> 00:11:47,280 Speaker 1: their job. We did, we saw less of that disconnect. 214 00:11:47,360 --> 00:11:49,120 Speaker 1: I think that means that when you looked at what 215 00:11:49,160 --> 00:11:52,320 Speaker 1: happened with TIPS, it is more reflective of what you know, 216 00:11:52,360 --> 00:11:55,480 Speaker 1: what we saw there in the duldrums was more reflective 217 00:11:55,520 --> 00:11:58,920 Speaker 1: of a very dire apploic on inflation, and so we 218 00:11:59,000 --> 00:12:01,040 Speaker 1: have seen that come up a little bit. Of course 219 00:12:01,280 --> 00:12:03,679 Speaker 1: at Jackson Hole of FED did tell us that they 220 00:12:03,720 --> 00:12:08,680 Speaker 1: are going to continue to let inflation run hot. That 221 00:12:08,720 --> 00:12:10,679 Speaker 1: doesn't mean inflation is going to get there. And maybe 222 00:12:10,679 --> 00:12:14,000 Speaker 1: that actually even means the Fed thinks that they don't 223 00:12:14,040 --> 00:12:17,400 Speaker 1: see perspective inflation coming. But for folks like myself that 224 00:12:17,520 --> 00:12:20,560 Speaker 1: have a multi asset representation, that's their long term view. 225 00:12:21,120 --> 00:12:25,040 Speaker 1: It means I'm always going to have likely some degree 226 00:12:25,080 --> 00:12:29,160 Speaker 1: of inflation protection in case we see they say that 227 00:12:29,160 --> 00:12:31,400 Speaker 1: that velocity of money could be the spark to the 228 00:12:31,400 --> 00:12:34,640 Speaker 1: fireplace when there's a lot of monetary creation. So I 229 00:12:34,640 --> 00:12:37,880 Speaker 1: want some degree of inflation protection on the fund if 230 00:12:37,920 --> 00:12:39,720 Speaker 1: we see that, I want the compensation to come in 231 00:12:39,760 --> 00:12:44,280 Speaker 1: for heightened inflation. You over just my straight nominals. So 232 00:12:44,640 --> 00:12:46,400 Speaker 1: it's always a decent protection to have on and I 233 00:12:46,400 --> 00:12:49,520 Speaker 1: think that's that's where investors are really appining now, less 234 00:12:49,559 --> 00:12:53,320 Speaker 1: that they see inflation, but more than inflation protection itself 235 00:12:53,360 --> 00:12:57,440 Speaker 1: may be becoming attractive because of the rapidity with which 236 00:12:58,160 --> 00:13:01,000 Speaker 1: inflation could change. I mean, we've got wage inflation that 237 00:13:01,120 --> 00:13:03,920 Speaker 1: it has been increasing over core um I should say 238 00:13:03,960 --> 00:13:06,200 Speaker 1: it's just been ticking up. At the same time, you've 239 00:13:06,360 --> 00:13:08,400 Speaker 1: you've got a lot of liquidity in the environment and 240 00:13:08,480 --> 00:13:11,360 Speaker 1: a lack of velocity. If we were to see the 241 00:13:11,400 --> 00:13:14,400 Speaker 1: stimulant that we're trying to achieve from the Fed and 242 00:13:14,520 --> 00:13:18,720 Speaker 1: from the Treasury take hold, then I want to be 243 00:13:18,760 --> 00:13:36,960 Speaker 1: protected in some ways for the portfolio. So where does 244 00:13:37,000 --> 00:13:40,280 Speaker 1: the outlook for nominal bond yields stand? Then on one end, 245 00:13:40,400 --> 00:13:43,360 Speaker 1: you have the velocity of money conversation, But it feels 246 00:13:43,400 --> 00:13:47,320 Speaker 1: as that the narrative has just been shifting very quickly lately. 247 00:13:47,400 --> 00:13:50,360 Speaker 1: It was just last week that we were discussing bond 248 00:13:50,440 --> 00:13:54,400 Speaker 1: yields breaking through eight basis points, people talking about possible 249 00:13:54,520 --> 00:13:57,440 Speaker 1: upside towards one percent, that we were going to see 250 00:13:57,440 --> 00:14:00,120 Speaker 1: this reflation trade. Then all of a sudden, heading to 251 00:14:00,240 --> 00:14:04,079 Speaker 1: this week, as we saw COVID cases rising, in particular, 252 00:14:04,200 --> 00:14:07,360 Speaker 1: more restrictions overseas in Europe, concerns about what that could 253 00:14:07,400 --> 00:14:11,160 Speaker 1: mean for the US, we saw that completely reverse itself 254 00:14:11,760 --> 00:14:14,840 Speaker 1: with the tenure breaking back through a basis points and 255 00:14:14,880 --> 00:14:18,080 Speaker 1: below it. Where do we currently stand and is it 256 00:14:18,120 --> 00:14:20,880 Speaker 1: reasonable to expect that we are going to see much 257 00:14:20,920 --> 00:14:23,400 Speaker 1: movement either which way? Or is the reality that we're 258 00:14:23,440 --> 00:14:31,600 Speaker 1: just stuck in this trading range funny all of a sudden, Yeah, 259 00:14:31,760 --> 00:14:34,440 Speaker 1: it's amazing. Really, you have to put everything in perspective. 260 00:14:34,920 --> 00:14:39,280 Speaker 1: Plushing my curls over here. You know, the base rate, 261 00:14:39,360 --> 00:14:45,479 Speaker 1: the short end of the curve is anchored, and the 262 00:14:46,000 --> 00:14:48,280 Speaker 1: is very clear that it is going to be anchored 263 00:14:48,360 --> 00:14:51,880 Speaker 1: for a while. As I mentioned, to let inflation run 264 00:14:51,920 --> 00:14:56,360 Speaker 1: hot or too. You know, the average inflation targeting. If 265 00:14:56,400 --> 00:14:59,080 Speaker 1: you look at the ducts that they produce, they give 266 00:14:59,160 --> 00:15:01,240 Speaker 1: us an idea that we're not going to move rates 267 00:15:01,320 --> 00:15:05,640 Speaker 1: until probably two thousand three, could be longer, which means 268 00:15:05,640 --> 00:15:08,640 Speaker 1: we're really talking about the curve. We're talking about whether 269 00:15:08,680 --> 00:15:12,960 Speaker 1: economic growth comes up, and you are seeing the potential 270 00:15:13,000 --> 00:15:17,600 Speaker 1: for inflation, you want to be compensated for a term premium, etcetera. 271 00:15:17,960 --> 00:15:21,480 Speaker 1: In your tenure body field. And it's hard for me 272 00:15:21,560 --> 00:15:25,840 Speaker 1: to see a tenure body fielding yield above one percent 273 00:15:26,000 --> 00:15:30,920 Speaker 1: significantly without exorbiting economic growth. And you know, while I 274 00:15:30,960 --> 00:15:34,840 Speaker 1: do see the potential for good economic growth, it's supported 275 00:15:34,920 --> 00:15:40,440 Speaker 1: by the necessary physical stimulus and by monetary policy. This 276 00:15:40,600 --> 00:15:43,640 Speaker 1: is not an engine running by itself. This is us 277 00:15:43,640 --> 00:15:45,680 Speaker 1: pouring gas. I'm an I'm an old old man that 278 00:15:45,720 --> 00:15:47,120 Speaker 1: I used to work on cars back when the head 279 00:15:47,120 --> 00:15:51,080 Speaker 1: carburetors and not infectors. This is us pouring gas directly 280 00:15:51,080 --> 00:15:53,880 Speaker 1: into the carburetor. The car will start and you'll see 281 00:15:53,920 --> 00:15:56,920 Speaker 1: some fire come out when you close the lid, you close. 282 00:15:57,000 --> 00:16:00,160 Speaker 1: The bondum is the same the UK. Does the car 283 00:16:00,240 --> 00:16:03,400 Speaker 1: stay started? We're not there yet. The hoods still open. 284 00:16:03,600 --> 00:16:06,480 Speaker 1: We've got the car started, but it's not running on 285 00:16:06,520 --> 00:16:09,200 Speaker 1: its own just yet. Until we see that, it's gonna 286 00:16:09,240 --> 00:16:12,920 Speaker 1: be hard to see bond yields above, they're going to 287 00:16:13,000 --> 00:16:18,120 Speaker 1: be inordinately low. And that's just if the Fed doesn't 288 00:16:18,160 --> 00:16:20,200 Speaker 1: do what it did in the last in the GFC, 289 00:16:20,360 --> 00:16:22,120 Speaker 1: which is, you know, how quickly we pulled out the 290 00:16:22,120 --> 00:16:25,360 Speaker 1: old playbook. If we need to stimulate the economy further, 291 00:16:25,640 --> 00:16:28,600 Speaker 1: we could go down to buying out the curve, so 292 00:16:28,680 --> 00:16:32,720 Speaker 1: called twist. We're not calling that route yet. We are 293 00:16:33,520 --> 00:16:35,800 Speaker 1: increasing the size of the balance sheet. We're buying a 294 00:16:35,840 --> 00:16:39,920 Speaker 1: shoulder average maturity. But if need be, if we felt 295 00:16:39,960 --> 00:16:43,560 Speaker 1: like that that portfolio balance channel was needed, we could 296 00:16:43,560 --> 00:16:46,480 Speaker 1: do that as well, which which I think constrains bond 297 00:16:46,560 --> 00:16:48,920 Speaker 1: yields to where you know, you hold bonds treasury bonds 298 00:16:48,920 --> 00:16:51,040 Speaker 1: for two reasons. You hold it for the income and 299 00:16:51,120 --> 00:16:53,400 Speaker 1: you hold it for the insurance policy. There's a lot 300 00:16:53,440 --> 00:16:55,840 Speaker 1: of questions right now as to whether that insurance policy 301 00:16:55,920 --> 00:16:58,120 Speaker 1: is still useful. The S and P five hundred or 302 00:16:58,240 --> 00:17:01,480 Speaker 1: some risk asset drops significant lead. Do I make money 303 00:17:01,480 --> 00:17:03,880 Speaker 1: on the bomb lid by prices going up and rates 304 00:17:03,920 --> 00:17:06,199 Speaker 1: going down? I think you still do. I think it's 305 00:17:06,240 --> 00:17:09,639 Speaker 1: an attractive asset to hold for the insurance policy, and 306 00:17:09,680 --> 00:17:11,680 Speaker 1: you hold up for the income, and I say, real 307 00:17:11,760 --> 00:17:14,920 Speaker 1: rates are still significantly negative. We don't have to look 308 00:17:15,040 --> 00:17:17,439 Speaker 1: very far to our foreign partners to see what, you know, 309 00:17:17,440 --> 00:17:19,720 Speaker 1: where other bond yields are in the developed markets to 310 00:17:19,800 --> 00:17:22,840 Speaker 1: say that, gosh, let's say one percent, all of a sudden, 311 00:17:22,880 --> 00:17:27,359 Speaker 1: doesn't seem so bad. Who would have ever thought you'd 312 00:17:27,480 --> 00:17:29,760 Speaker 1: be thinking along those lines. Huh. By the way, Star, 313 00:17:30,000 --> 00:17:32,520 Speaker 1: that was a nice twelve part question for Adrian there. 314 00:17:32,520 --> 00:17:34,040 Speaker 1: I'm proud of you. That was that. That was a 315 00:17:34,040 --> 00:17:36,840 Speaker 1: good one. You know, I was originally going to say, 316 00:17:36,880 --> 00:17:39,439 Speaker 1: earlier in the show, your first question to Adrian, I 317 00:17:39,440 --> 00:17:41,359 Speaker 1: was gonna say, you really outdid yourself with that one. 318 00:17:41,400 --> 00:17:44,760 Speaker 1: I think that might have been an all time record. 319 00:17:46,480 --> 00:17:48,320 Speaker 1: I had to I had to play my part. We'll 320 00:17:48,320 --> 00:17:52,159 Speaker 1: put a time around that. But uh as uh agent 321 00:17:52,200 --> 00:17:56,399 Speaker 1: is Sarah pointed out, there is um the minor little 322 00:17:56,920 --> 00:18:01,000 Speaker 1: event risk coming up known as the US election. Um. 323 00:18:01,040 --> 00:18:03,600 Speaker 1: I feel like, you know, obviously, all the polls, all 324 00:18:03,640 --> 00:18:06,679 Speaker 1: the betting markets, whatever metric you look at, makes it 325 00:18:06,720 --> 00:18:10,240 Speaker 1: look like Biden's a pretty good chance to win. The 326 00:18:10,359 --> 00:18:12,879 Speaker 1: Senate looks more like a toss up. I mean, the 327 00:18:12,880 --> 00:18:16,080 Speaker 1: House is likely going to stay under Democratic control. The 328 00:18:16,119 --> 00:18:19,120 Speaker 1: Senate looks more like a toss up. Yet, I feel 329 00:18:19,119 --> 00:18:21,800 Speaker 1: like a lot of investors sort of talk themselves into 330 00:18:21,840 --> 00:18:25,240 Speaker 1: this notion of a blue wave coming, that the Dems 331 00:18:25,240 --> 00:18:28,159 Speaker 1: would sweep both the House, Senate and the White House, 332 00:18:28,640 --> 00:18:31,160 Speaker 1: and that as a result, we'd get this massive fiscal 333 00:18:31,240 --> 00:18:35,399 Speaker 1: stimulus early in And so, you know, a lot of 334 00:18:35,400 --> 00:18:38,000 Speaker 1: people for that are sort of, you know, positioning for 335 00:18:38,040 --> 00:18:41,680 Speaker 1: this idea of a reflation, a steeper yield curve, perhaps 336 00:18:42,160 --> 00:18:48,280 Speaker 1: that proverbial rotation from growth to value and cyclicals that 337 00:18:48,760 --> 00:18:52,960 Speaker 1: sort of is seems to always be someone's positioning for 338 00:18:53,040 --> 00:18:55,960 Speaker 1: that somewhere. But I wonder, you know, for a guy 339 00:18:56,080 --> 00:18:58,560 Speaker 1: like you, I mean, does it make sense to try 340 00:18:58,560 --> 00:19:00,959 Speaker 1: to get ahead of this result next week or do 341 00:19:01,040 --> 00:19:04,600 Speaker 1: you sort of stand back and and try to, you know, 342 00:19:04,680 --> 00:19:06,800 Speaker 1: let the cards fall where they may. You know, how 343 00:19:06,840 --> 00:19:08,879 Speaker 1: are you sort of approaching this event risk coming up? 344 00:19:09,359 --> 00:19:11,800 Speaker 1: I think it does make sense, And and my prediction 345 00:19:11,840 --> 00:19:14,080 Speaker 1: for who's gonna win is I'm just kidding, I'm not 346 00:19:14,119 --> 00:19:19,480 Speaker 1: gonna It's very hard to say the outcome of the election. 347 00:19:19,560 --> 00:19:21,560 Speaker 1: What I what I can do as an investors, I 348 00:19:21,600 --> 00:19:25,480 Speaker 1: can look at the various potential outcomes, and you know, 349 00:19:25,480 --> 00:19:27,240 Speaker 1: while I don't I don't have an Excel model that 350 00:19:27,280 --> 00:19:30,080 Speaker 1: probability waits those I can get an idea of what 351 00:19:30,240 --> 00:19:34,119 Speaker 1: I think the outcome might be in different scenarios. And 352 00:19:34,520 --> 00:19:37,159 Speaker 1: I think you're exactly right on what is consensus right 353 00:19:37,200 --> 00:19:41,600 Speaker 1: now as far as Biden win less you know, the 354 00:19:41,600 --> 00:19:46,480 Speaker 1: potential but less consensus of a Blue sweep, or you know, 355 00:19:46,520 --> 00:19:50,680 Speaker 1: really just the Democrats take the center, and if that happens, 356 00:19:50,720 --> 00:19:53,800 Speaker 1: I think there, you know, that's a positive potential event 357 00:19:54,240 --> 00:19:59,080 Speaker 1: from fiscal rise. You're exactly right that that will just 358 00:19:59,119 --> 00:20:02,679 Speaker 1: as we talked about the economic activity and the push 359 00:20:02,720 --> 00:20:06,399 Speaker 1: on nominal interest rates further out, that will push up 360 00:20:06,440 --> 00:20:08,879 Speaker 1: the curve. So we'll see a rising interest curve, we'll 361 00:20:08,880 --> 00:20:14,040 Speaker 1: see rising inflation expectations, we'll see rising commodity prices where 362 00:20:14,359 --> 00:20:18,280 Speaker 1: you know, stimulus means we're going to pump money into 363 00:20:18,600 --> 00:20:23,040 Speaker 1: infrastructure and roads and buying copper for wires and things. 364 00:20:23,800 --> 00:20:26,720 Speaker 1: That is where we'll start to see some activity there. 365 00:20:26,720 --> 00:20:32,120 Speaker 1: So that's that's a positive offset by the taxes where 366 00:20:32,119 --> 00:20:35,440 Speaker 1: the corporate tax rate would go from all the things 367 00:20:35,480 --> 00:20:37,720 Speaker 1: we know, and we can see some shift around in 368 00:20:37,760 --> 00:20:39,879 Speaker 1: some sectors. So there's a there's a great opportunity for 369 00:20:39,960 --> 00:20:43,359 Speaker 1: investors to think about individual companies in their reactions and 370 00:20:43,400 --> 00:20:47,520 Speaker 1: the sector rotations. Places like healthcare are going to be impacted. 371 00:20:47,880 --> 00:20:51,240 Speaker 1: That's probably the number one place where there's a complete 372 00:20:52,200 --> 00:20:55,120 Speaker 1: difference between what the two candidates would would like to see. 373 00:20:56,119 --> 00:21:00,239 Speaker 1: The other option is that we see Trump won the election. Um. 374 00:21:00,359 --> 00:21:02,280 Speaker 1: Then as you say, the Senate's kind of a kind 375 00:21:02,280 --> 00:21:04,320 Speaker 1: of a toss up, and if we see Trump win 376 00:21:04,400 --> 00:21:07,600 Speaker 1: the election and just things stay the same, then actually 377 00:21:07,680 --> 00:21:10,200 Speaker 1: that's probably a good outcome as well, because we both 378 00:21:10,240 --> 00:21:13,199 Speaker 1: candidates would like to see a lot of fiscal stimulus. 379 00:21:14,320 --> 00:21:16,320 Speaker 1: One of those candidates doesn't want to raise taxes at 380 00:21:16,359 --> 00:21:19,760 Speaker 1: the same time, so maybe that's a positive, more positive 381 00:21:19,800 --> 00:21:24,440 Speaker 1: outcome that center outcome, which is where you have a 382 00:21:24,480 --> 00:21:27,880 Speaker 1: Senate that remains read and a blue president. There's one 383 00:21:27,920 --> 00:21:30,200 Speaker 1: aspect of that that scares me, and usually that's the 384 00:21:30,240 --> 00:21:34,879 Speaker 1: good outcome. Usually that means okay, less policy volatility. A 385 00:21:34,920 --> 00:21:37,480 Speaker 1: lot of things don't make it through, and the market 386 00:21:37,520 --> 00:21:41,960 Speaker 1: likes less uncertainty and less volatility on policy. Um. One 387 00:21:41,960 --> 00:21:44,399 Speaker 1: thing that does scare me around that of anything that 388 00:21:44,480 --> 00:21:47,600 Speaker 1: does is because of all this partisanship that we have, 389 00:21:48,119 --> 00:21:50,399 Speaker 1: will there be a pushback and an elongation of the 390 00:21:50,440 --> 00:21:53,600 Speaker 1: time frame to get to a phase for stimulus. UM, 391 00:21:53,640 --> 00:21:55,399 Speaker 1: that's what I think the market will be focused on 392 00:21:55,520 --> 00:21:57,840 Speaker 1: for for the big risk on risk off afterwards is 393 00:21:58,480 --> 00:22:01,760 Speaker 1: can we come to agreement on providing the necessary stimulus 394 00:22:01,880 --> 00:22:05,360 Speaker 1: to the economy? Um. Secondary questions will be okay, well, 395 00:22:05,760 --> 00:22:08,320 Speaker 1: depending on the candidate that wins, will we see taxes 396 00:22:08,440 --> 00:22:12,399 Speaker 1: or or no taxes? Will we see UM A, c 397 00:22:12,600 --> 00:22:16,520 Speaker 1: A or some other healthcare plan? The primary thing right now, 398 00:22:16,640 --> 00:22:20,639 Speaker 1: because of the visibility of COVID, is going to be okay. Well, 399 00:22:21,000 --> 00:22:24,920 Speaker 1: then can we come to fruition on our phaise for Well, 400 00:22:24,960 --> 00:22:27,840 Speaker 1: if there's anything that we learned four years ago, almost 401 00:22:27,880 --> 00:22:30,119 Speaker 1: to the day, it's that one predicting the election is 402 00:22:30,240 --> 00:22:33,719 Speaker 1: very difficult, and to predicting what the outcome of an 403 00:22:33,760 --> 00:22:36,959 Speaker 1: election means for markets is also very difficult. I mean, 404 00:22:36,960 --> 00:22:38,920 Speaker 1: the market even got it wrong on election night, going 405 00:22:38,960 --> 00:22:41,640 Speaker 1: limit down in the middle of the night and then 406 00:22:41,840 --> 00:22:44,959 Speaker 1: just rip roaring back. But I think we can all 407 00:22:45,000 --> 00:22:48,159 Speaker 1: agree that Tuesday will be a bit of a hectic 408 00:22:48,240 --> 00:22:51,080 Speaker 1: and maybe a crazy night, Mike, a crazy night that 409 00:22:51,119 --> 00:22:57,040 Speaker 1: could last a month maybe, and we're all looking forward 410 00:22:57,080 --> 00:23:01,560 Speaker 1: to it. Well, I feel like that was an intentional 411 00:23:01,600 --> 00:23:05,200 Speaker 1: segue there, Sarah, that was that right? You read me correctly. Right, 412 00:23:05,560 --> 00:23:08,560 Speaker 1: you want to talk some crazy things, I'm ready for it. 413 00:23:09,560 --> 00:23:12,000 Speaker 1: I'm ready. I'm ready to use all of our submissions 414 00:23:12,040 --> 00:23:14,439 Speaker 1: as my own. All right, Charlie Pellett will tell us 415 00:23:14,600 --> 00:23:17,800 Speaker 1: what time it is. Stand clear of the craziest things 416 00:23:17,880 --> 00:23:21,640 Speaker 1: we saw in markets this week. All right, Sorry, since 417 00:23:21,640 --> 00:23:26,240 Speaker 1: you're getting flooded with listeners crazy things, let us know 418 00:23:27,080 --> 00:23:30,879 Speaker 1: what you got. So I'll start with Seal Roston and 419 00:23:31,000 --> 00:23:34,040 Speaker 1: I really hope I am pronouncing your name correctly. Apologies 420 00:23:34,119 --> 00:23:36,679 Speaker 1: if I'm not. Uh. He actually reached out to me 421 00:23:36,720 --> 00:23:39,520 Speaker 1: on the Bloomberg terminal, so likely the coolest way to 422 00:23:39,560 --> 00:23:42,320 Speaker 1: be reached out for a crazy thing. Maybe a little 423 00:23:42,320 --> 00:23:47,359 Speaker 1: bit elitist, but we'll go with that. Absolutely. He's a 424 00:23:47,440 --> 00:23:50,000 Speaker 1: London based analyst over at Man Group and he flagged 425 00:23:50,040 --> 00:23:53,000 Speaker 1: a story on the Bluemberg terminal. It's crazy and also 426 00:23:53,040 --> 00:23:56,199 Speaker 1: just very ironic. The headline of this story is fraud 427 00:23:56,280 --> 00:24:03,240 Speaker 1: prevention firm goes bankrupt after CEO charged fraud. The lead 428 00:24:03,320 --> 00:24:06,960 Speaker 1: the first paragraph of the story reads, cyber fraud prevention 429 00:24:07,080 --> 00:24:10,520 Speaker 1: firm n S eight, Inc. Filed for Chapter eleven bankruptcy 430 00:24:10,520 --> 00:24:13,680 Speaker 1: on Tuesday, listing assets of at least ten million dollars 431 00:24:13,720 --> 00:24:17,240 Speaker 1: in liabilities of at least one hundred million dollars and 432 00:24:17,560 --> 00:24:20,920 Speaker 1: con you think if you run a cyber fraud firm 433 00:24:21,080 --> 00:24:24,399 Speaker 1: that you would be hyper vigilant of not committing the 434 00:24:24,400 --> 00:24:27,920 Speaker 1: fraud yourself. Maybe it's just a proof of concept or something. 435 00:24:28,000 --> 00:24:31,240 Speaker 1: He's uh, you know, he was just exploit showing them 436 00:24:31,240 --> 00:24:34,320 Speaker 1: their vulnerabilities, craps. Was it his his own firm that 437 00:24:34,400 --> 00:24:38,800 Speaker 1: found his own fraud then right, right, right, that's all 438 00:24:38,840 --> 00:24:41,080 Speaker 1: gonna work out. That is a good one. That is 439 00:24:41,119 --> 00:24:43,159 Speaker 1: a good one. I that's a good one. I applaud that. 440 00:24:43,960 --> 00:24:45,720 Speaker 1: And a guy from Man Group how about that. That's 441 00:24:45,720 --> 00:24:49,000 Speaker 1: pretty interesting. That's uh the big hedge fund firm in London, 442 00:24:49,280 --> 00:24:52,399 Speaker 1: all right. I got one from Twitter from our loyal 443 00:24:52,440 --> 00:24:57,199 Speaker 1: listener whose name is probably not really Twiggy Sunday, but 444 00:24:57,280 --> 00:25:00,119 Speaker 1: that's what he goes by on on Twitter, and he 445 00:25:00,160 --> 00:25:04,080 Speaker 1: points out, I feel like this stupid asteroid comes up 446 00:25:04,119 --> 00:25:07,080 Speaker 1: every week on the show. But there's an asteroid floating 447 00:25:07,080 --> 00:25:09,320 Speaker 1: out in space. You can't get away from it that 448 00:25:09,640 --> 00:25:14,360 Speaker 1: they say is worth ten thousand quadrillion dollars. I don't. 449 00:25:14,359 --> 00:25:17,160 Speaker 1: There must not be a number after quadrillion, Why it's 450 00:25:17,240 --> 00:25:21,040 Speaker 1: ten thousand quadrillion dollars From quadrillion it goes to infinity. 451 00:25:21,040 --> 00:25:24,760 Speaker 1: I don't know. Yeah, and uh, he asked the question, Well, 452 00:25:24,800 --> 00:25:28,280 Speaker 1: what could possibly be on this asteroid? I assumed it 453 00:25:28,359 --> 00:25:30,639 Speaker 1: was covered in intrastrate derivatives? Is the only thing I 454 00:25:30,640 --> 00:25:32,680 Speaker 1: could think that would get you to to to ten 455 00:25:32,720 --> 00:25:37,240 Speaker 1: thousand quadrillion, Adrian, I don't know, maybe maybe uh something else. 456 00:25:37,840 --> 00:25:40,520 Speaker 1: Eric Quener on Twitter responded, maybe it's covered with the 457 00:25:40,520 --> 00:25:43,960 Speaker 1: new iPhone, which could be a too. Turns out it's 458 00:25:44,000 --> 00:25:46,760 Speaker 1: just covered in iron. It's it's full. It's if they 459 00:25:46,760 --> 00:25:50,240 Speaker 1: think it's almost entirely made of iron and nickel and 460 00:25:51,240 --> 00:25:54,560 Speaker 1: enough that it's worth ten thousand quadrillion dollars. Although I 461 00:25:54,560 --> 00:25:57,520 Speaker 1: feel like our pest guests, Cam Harvey would would be 462 00:25:57,520 --> 00:26:00,560 Speaker 1: shaking his fist at at the screen right now if 463 00:26:00,560 --> 00:26:03,479 Speaker 1: you heard that, because obviously that amount of supply of 464 00:26:03,560 --> 00:26:07,040 Speaker 1: iron and nickel is gonna hurt prices, I would assume. 465 00:26:07,080 --> 00:26:11,840 Speaker 1: But anyway, pretty good one from Trick Twiggy Sunday. It's unbelievable. 466 00:26:12,119 --> 00:26:14,320 Speaker 1: Whenever you heard the quadrillion as a number, the next 467 00:26:14,359 --> 00:26:16,760 Speaker 1: time you do prices, right with me? Mike, I'm gonna 468 00:26:16,800 --> 00:26:19,679 Speaker 1: have to use quadrillion. That's right. We did not have 469 00:26:19,720 --> 00:26:21,560 Speaker 1: a prices right, Well I got one frag and we 470 00:26:21,600 --> 00:26:24,160 Speaker 1: can still do a prices right, Okay, Adrian, I don't 471 00:26:24,200 --> 00:26:26,640 Speaker 1: know would you pay ten thousand quadrillion for an asteroid 472 00:26:26,680 --> 00:26:29,879 Speaker 1: made of iron and nickel? I think it depends on 473 00:26:29,920 --> 00:26:35,360 Speaker 1: its velocity. That was a great answer, the velocity of buddy, 474 00:26:36,000 --> 00:26:54,679 Speaker 1: the velocity of an iron clad asteroid. How about you, Adrian? 475 00:26:54,720 --> 00:26:58,159 Speaker 1: I fear that we did not warn you about our gimmick. Here. 476 00:26:58,200 --> 00:27:00,240 Speaker 1: The craziest thing have you have you observed? I think 477 00:27:00,280 --> 00:27:03,560 Speaker 1: crazy in the past week or past month, or I 478 00:27:03,600 --> 00:27:05,480 Speaker 1: haven't looked other than you know, thinking about the markets 479 00:27:05,600 --> 00:27:09,679 Speaker 1: yesterday or Wednesday was the you know, it's one of 480 00:27:09,680 --> 00:27:12,920 Speaker 1: those very unusual days where everything is down in the markets, 481 00:27:14,080 --> 00:27:16,200 Speaker 1: and that was there's only then three days that we've 482 00:27:16,240 --> 00:27:20,600 Speaker 1: seen that since nineteen nineteen nineties, and both of the 483 00:27:20,840 --> 00:27:22,880 Speaker 1: both of the other days we're in March of this year, 484 00:27:24,080 --> 00:27:26,000 Speaker 1: and so you start to worry about, you know, the 485 00:27:26,640 --> 00:27:29,520 Speaker 1: crack in what is kind of the fundamental underpinnings of 486 00:27:29,680 --> 00:27:33,520 Speaker 1: things like risk parity and you know, just the old 487 00:27:33,560 --> 00:27:35,800 Speaker 1: crux up for what you sixty portfolio was the way 488 00:27:35,840 --> 00:27:39,159 Speaker 1: to go and that forty is bonds. Yeah, you need 489 00:27:39,200 --> 00:27:41,920 Speaker 1: to make sure that the offsets there. So, but that's 490 00:27:41,920 --> 00:27:43,879 Speaker 1: not quite the crazy you're looking for now. That is 491 00:27:43,960 --> 00:27:45,880 Speaker 1: that is very crazy, and that is the crazy we're 492 00:27:45,880 --> 00:27:48,320 Speaker 1: looking for. But I have I have a question, Like 493 00:27:48,359 --> 00:27:50,760 Speaker 1: you said, I saw the statistic about that being the 494 00:27:50,800 --> 00:27:53,120 Speaker 1: third time it's ever happened since the nineteen The other 495 00:27:53,200 --> 00:27:56,280 Speaker 1: two were this year. What does that tell you about 496 00:27:56,320 --> 00:27:58,679 Speaker 1: this market regime that we're living in the fact that 497 00:27:58,720 --> 00:28:01,080 Speaker 1: on a day when we saw pretty severe sell off 498 00:28:01,080 --> 00:28:04,600 Speaker 1: in the equity market, gold was lower, bonds were lower. 499 00:28:04,960 --> 00:28:08,520 Speaker 1: I mean, classic market studies would tell you that doesn't 500 00:28:08,560 --> 00:28:12,159 Speaker 1: make sense. De leveraging Maybe some c I was assumed 501 00:28:12,160 --> 00:28:15,280 Speaker 1: some funds blown up somewhere, or some leverage funds. But 502 00:28:15,280 --> 00:28:17,480 Speaker 1: but what do you think, Cadren if we were to 503 00:28:17,520 --> 00:28:20,120 Speaker 1: see a you know, blow up in the equity markets 504 00:28:20,760 --> 00:28:24,159 Speaker 1: when bond prices then build up ten points, would we 505 00:28:24,200 --> 00:28:27,720 Speaker 1: see bond yields then go down to negative? Yeah? I 506 00:28:27,720 --> 00:28:29,439 Speaker 1: probably would be the one to tell you guess they 507 00:28:29,480 --> 00:28:33,320 Speaker 1: could do. But right now there's an asymmetry in those prices, 508 00:28:33,760 --> 00:28:35,280 Speaker 1: and the same thing does with you know you have 509 00:28:35,359 --> 00:28:38,040 Speaker 1: commodities in gold, and there's a there's a questioning now 510 00:28:38,120 --> 00:28:41,720 Speaker 1: on the protection that you get in various risk assets. 511 00:28:42,200 --> 00:28:48,720 Speaker 1: But bitcoin did fun. I actually I I I tweeted 512 00:28:48,880 --> 00:28:51,040 Speaker 1: out what happened to hedges as a joke after a 513 00:28:51,120 --> 00:28:53,480 Speaker 1: Wednesday sell off, and you better be sure I was 514 00:28:53,560 --> 00:28:57,800 Speaker 1: quick to hear bitcoin did five you you heard that 515 00:28:57,840 --> 00:29:02,160 Speaker 1: about a thousand times. I imagine the enthusiasts will call 516 00:29:02,240 --> 00:29:08,480 Speaker 1: them not pumpers, not promoters, the offici crypto crypto offficionados 517 00:29:08,520 --> 00:29:10,720 Speaker 1: out there. All right, Now, that's a good one, Adrian. 518 00:29:10,800 --> 00:29:13,320 Speaker 1: I didn't I hadn't seen that stat of only three times. 519 00:29:13,320 --> 00:29:18,440 Speaker 1: That's remarkable. Um, but it does uh make me competent. 520 00:29:18,480 --> 00:29:23,040 Speaker 1: I've I've edited about ten straight stories about the portfolio 521 00:29:23,080 --> 00:29:25,720 Speaker 1: going out of fashion, so I it does kind of 522 00:29:25,760 --> 00:29:29,280 Speaker 1: explain why people are worried about that. All right, I 523 00:29:29,320 --> 00:29:31,600 Speaker 1: got a good one for you and Sarah. Um, let's 524 00:29:31,640 --> 00:29:35,080 Speaker 1: hear it, all right. One of my favorite characters in 525 00:29:35,120 --> 00:29:39,200 Speaker 1: the financial press is Mr Bill Gross. I'm sure listeners 526 00:29:39,200 --> 00:29:41,400 Speaker 1: are very familiar with him, the bond King as they 527 00:29:41,400 --> 00:29:44,040 Speaker 1: call him, and I like him because a lot of 528 00:29:44,160 --> 00:29:46,400 Speaker 1: financial types and this is the way you should be 529 00:29:46,520 --> 00:29:49,239 Speaker 1: by the way is buttoned down, reserved. You don't want 530 00:29:49,280 --> 00:29:52,360 Speaker 1: to make headlines for for anything but a good fun performance. 531 00:29:52,800 --> 00:29:54,840 Speaker 1: Bill doesn't worry about any of that. He's out there 532 00:29:54,880 --> 00:29:58,160 Speaker 1: living his life and you know, let let the headlines 533 00:29:58,200 --> 00:30:00,560 Speaker 1: fall where they may. And when he writes his momentaries, 534 00:30:00,600 --> 00:30:03,120 Speaker 1: it's it's always among my favorite because they're so colorful 535 00:30:03,240 --> 00:30:06,760 Speaker 1: and and just so unlike most other commentary out there. 536 00:30:07,520 --> 00:30:12,680 Speaker 1: So Mr Gross bought a million dollar statue made of 537 00:30:12,720 --> 00:30:16,920 Speaker 1: glass sculpture. I guess it's not one single statue uh 538 00:30:16,960 --> 00:30:21,520 Speaker 1: made of glass uh that is supposed to be evocative 539 00:30:21,720 --> 00:30:26,760 Speaker 1: of the um of Japanese fishing lures or or fishing 540 00:30:26,920 --> 00:30:30,280 Speaker 1: bobs whatever they call him that amazingly to me were 541 00:30:30,280 --> 00:30:32,560 Speaker 1: made of glass. I don't know, like a lobster pot 542 00:30:32,600 --> 00:30:35,440 Speaker 1: bowie type of thing, but made of glass. I I 543 00:30:35,680 --> 00:30:39,160 Speaker 1: blown glass. I can't imagine that is the most durable 544 00:30:39,280 --> 00:30:42,680 Speaker 1: material for that. But regardless, it's also not a very 545 00:30:42,760 --> 00:30:49,160 Speaker 1: durable material for outdoors artwork. Um because the thing kept breaking. 546 00:30:50,600 --> 00:30:54,680 Speaker 1: And there's a big conflict here because Mr Gross's neighbor 547 00:30:54,720 --> 00:30:57,280 Speaker 1: does not like the statue and he's complained about it 548 00:30:57,320 --> 00:30:59,880 Speaker 1: because he lights it up real bright at night, and 549 00:31:00,040 --> 00:31:03,720 Speaker 1: and you know there there's concerns that maybe he's thrown 550 00:31:03,840 --> 00:31:05,560 Speaker 1: rocks at it, or someone else who doesn't like it 551 00:31:05,560 --> 00:31:07,520 Speaker 1: has thrown rocks at it. But they're not sure if 552 00:31:07,560 --> 00:31:10,479 Speaker 1: it's that or just the palm trees the fronds are 553 00:31:10,480 --> 00:31:13,400 Speaker 1: falling on it. Whatever the case, it casts some serious 554 00:31:13,480 --> 00:31:16,680 Speaker 1: damage to to this sculpture. So Gross put off this 555 00:31:16,840 --> 00:31:20,000 Speaker 1: giant net over it, and that thing's like ten feet hot. 556 00:31:20,760 --> 00:31:22,440 Speaker 1: So this guy next to him is trying to look 557 00:31:22,480 --> 00:31:24,680 Speaker 1: out and enjoy the views of the Pacific, and he 558 00:31:24,720 --> 00:31:26,720 Speaker 1: doesn't like the sculpture. He also doesn't like the giant 559 00:31:26,800 --> 00:31:30,680 Speaker 1: net over it, so he's been calling the uh I 560 00:31:30,760 --> 00:31:33,040 Speaker 1: forget what beaches, Laguna Beach. Maybe it's it's one of 561 00:31:33,040 --> 00:31:38,360 Speaker 1: those really high money, yeah, Laguna Beach beach towns in California. 562 00:31:38,440 --> 00:31:41,479 Speaker 1: So the neighbor has been calling the police. They're threatening 563 00:31:41,520 --> 00:31:45,840 Speaker 1: to sue each other. Um Gross got back at him 564 00:31:45,880 --> 00:31:51,080 Speaker 1: by blaring music on like volume eleven on his outdoor speakers, 565 00:31:51,120 --> 00:31:54,960 Speaker 1: including the theme song to Gilligan's Island, in order to 566 00:31:55,120 --> 00:31:56,920 Speaker 1: drive this guy crazy. And he even texted the guy. 567 00:31:56,960 --> 00:31:58,400 Speaker 1: He said, keep it up and there's gonna be a 568 00:31:58,400 --> 00:32:03,360 Speaker 1: concert every night so, uh, I just love this story. 569 00:32:03,400 --> 00:32:06,480 Speaker 1: I don't know, I love I love, I love him. 570 00:32:06,640 --> 00:32:09,640 Speaker 1: I also so there's these broken shards of the sculpture 571 00:32:10,160 --> 00:32:12,920 Speaker 1: that I would actually be willing to bid on. Uh, 572 00:32:13,000 --> 00:32:16,080 Speaker 1: you know, because good artwork, you know, Sarah, I I 573 00:32:16,120 --> 00:32:20,040 Speaker 1: love nothing more than ridiculously overpriced artwork which I cannot afford. 574 00:32:20,320 --> 00:32:22,160 Speaker 1: But I feel like I could afford a few shards 575 00:32:22,160 --> 00:32:24,800 Speaker 1: of Bill Gross's broken sculptures. You think you could? You 576 00:32:24,800 --> 00:32:26,400 Speaker 1: think you can make that work? I tell you, if there, 577 00:32:26,440 --> 00:32:29,280 Speaker 1: if anyone out there is connected to Gross, tell him 578 00:32:29,160 --> 00:32:31,240 Speaker 1: I'm a bitter. I mean, maybe only a couple hundred bucks, 579 00:32:31,280 --> 00:32:33,520 Speaker 1: but I'd like to display them in my more modest 580 00:32:33,520 --> 00:32:38,000 Speaker 1: New Jersey yard with absolutely a giant spotlight on them 581 00:32:38,040 --> 00:32:40,600 Speaker 1: and see what the neighbors think. Because good artworks all 582 00:32:40,640 --> 00:32:43,120 Speaker 1: about the story. And if anyone came up to me 583 00:32:43,160 --> 00:32:45,800 Speaker 1: and said, why do you have these glass shards in 584 00:32:45,800 --> 00:32:47,800 Speaker 1: your in your front, you know I could be like, well, sir, 585 00:32:48,200 --> 00:32:50,720 Speaker 1: let me let me tell you this story. Tell you 586 00:32:50,840 --> 00:32:54,160 Speaker 1: the story. So, by all means, if Mr Gross, if 587 00:32:54,200 --> 00:32:55,920 Speaker 1: you hear this, I'm a I'm a bitter on your 588 00:32:55,920 --> 00:32:58,760 Speaker 1: broken pieces of glass. You know, this really makes me 589 00:32:58,800 --> 00:33:01,320 Speaker 1: think you know how I told you many times that 590 00:33:01,840 --> 00:33:06,040 Speaker 1: the guy above me is constantly playing jazz music. Well 591 00:33:06,120 --> 00:33:09,040 Speaker 1: now I'm wondering if he's playing jazz music because he 592 00:33:09,080 --> 00:33:13,320 Speaker 1: really dislikes something that I'm doing. He's trying to annoy me. 593 00:33:16,280 --> 00:33:18,440 Speaker 1: I don't know. I don't know, but I do have. 594 00:33:18,560 --> 00:33:21,280 Speaker 1: I have one more that I want to share from Twitter, 595 00:33:21,320 --> 00:33:23,800 Speaker 1: and this is from at T J. Beller. He did 596 00:33:23,800 --> 00:33:26,160 Speaker 1: reach out to both of us, so thank you very much. 597 00:33:26,960 --> 00:33:28,640 Speaker 1: He said. The craziest thing I saw in markets this 598 00:33:28,680 --> 00:33:32,640 Speaker 1: week courtesy of Taylor Rigs, who was a Bloomberg anchor 599 00:33:32,640 --> 00:33:36,160 Speaker 1: and reporter on television, Apple and Microsoft now larger combined 600 00:33:36,200 --> 00:33:40,200 Speaker 1: market cap than the entire consumer stape staples sector, and 601 00:33:40,240 --> 00:33:44,200 Speaker 1: Mike wrote back to him confirmed, um three point six trillion, 602 00:33:44,280 --> 00:33:47,440 Speaker 1: just about what those two companies combined versus two point 603 00:33:47,560 --> 00:33:52,160 Speaker 1: three trillion for just consumer staples. And I just myself 604 00:33:52,240 --> 00:33:54,800 Speaker 1: pulled up a chart of Apple's market cap because it's 605 00:33:54,800 --> 00:33:57,080 Speaker 1: pretty unbelievable when you think about the speed at which 606 00:33:57,080 --> 00:34:00,520 Speaker 1: we have seen its market cap nearly double. It took 607 00:34:00,680 --> 00:34:05,680 Speaker 1: years for Apple to reach that one trillion dollar market 608 00:34:05,680 --> 00:34:09,720 Speaker 1: cap level, so that was originally surpassed in well now 609 00:34:10,239 --> 00:34:15,439 Speaker 1: as we speak, about three quarters of the way into 610 00:34:15,920 --> 00:34:21,000 Speaker 1: one nine trillion, so almost doubled in less than two years, 611 00:34:21,120 --> 00:34:27,399 Speaker 1: from one trillion to two trillion. To talk about velocity, Adrian, Yeah, 612 00:34:27,600 --> 00:34:29,239 Speaker 1: what do you think about that, Adrian? Does that make 613 00:34:29,280 --> 00:34:31,920 Speaker 1: you nervous that there's a company worth almost two trillion 614 00:34:32,000 --> 00:34:34,279 Speaker 1: out there, that these two companies are as big as 615 00:34:34,280 --> 00:34:37,400 Speaker 1: the entire stables sector of the s MP? Or is 616 00:34:37,440 --> 00:34:39,440 Speaker 1: it is that just the world we live in now, 617 00:34:39,440 --> 00:34:43,359 Speaker 1: where these these mega cap companies dominate everything. It's all 618 00:34:43,360 --> 00:34:45,880 Speaker 1: about earnings. It's the world we live in, and it's 619 00:34:45,880 --> 00:34:49,120 Speaker 1: it's the future of of pulling in all that those 620 00:34:49,160 --> 00:34:51,600 Speaker 1: growth assets that they're doing. If it makes me nervous, 621 00:34:51,640 --> 00:34:55,000 Speaker 1: it's around regulation, of starting to think about when you 622 00:34:55,120 --> 00:34:58,680 Speaker 1: have such great, large industries and the emos, do we 623 00:34:58,719 --> 00:35:03,279 Speaker 1: have a concern around regulation that looks at breaking up 624 00:35:03,320 --> 00:35:06,000 Speaker 1: pieces of that because we feel like we're constraining further. 625 00:35:06,400 --> 00:35:08,600 Speaker 1: And I think that'll be a conversation for the you know, 626 00:35:08,680 --> 00:35:11,160 Speaker 1: for the next administration, regardless of which comes in. It's 627 00:35:11,160 --> 00:35:15,040 Speaker 1: already something they're looking at. Yeah. Absolutely, And if I'd 628 00:35:15,040 --> 00:35:17,560 Speaker 1: say if that asteroid actually we're covered in iPhones, then 629 00:35:17,600 --> 00:35:20,880 Speaker 1: that would be bad news for Apple all thinks. I 630 00:35:20,880 --> 00:35:22,480 Speaker 1: don't know how Apple would have gone on the iPhones 631 00:35:22,520 --> 00:35:25,400 Speaker 1: on the asteroid in the first place, but some alien, 632 00:35:25,520 --> 00:35:28,399 Speaker 1: some alien company has replicated the iPhone. Who knows. We'll 633 00:35:28,440 --> 00:35:32,200 Speaker 1: start some conspiracy theories. Thanks for the laugh on Adrian. 634 00:35:32,239 --> 00:35:34,799 Speaker 1: That was not deserved, but I appreciate I appreciate the 635 00:35:35,040 --> 00:35:41,160 Speaker 1: fake laugh. Anyways, a fake laugh will take Mica a 636 00:35:41,200 --> 00:35:45,920 Speaker 1: long way. It doesn't matter, a notional laugh, whatever it takes. 637 00:35:46,320 --> 00:35:51,120 Speaker 1: All my laughs are genuine. Okay, thank you? All right, Well, 638 00:35:51,719 --> 00:35:55,279 Speaker 1: we're looking forward to a very very busy week um 639 00:35:55,320 --> 00:35:58,280 Speaker 1: an exciting week for many of us and Adrian Helford. 640 00:35:58,360 --> 00:36:00,400 Speaker 1: This was a great opportunity to have you on the 641 00:36:00,440 --> 00:36:02,799 Speaker 1: show and we really appreciate it. Thank you for having me. 642 00:36:13,000 --> 00:36:16,160 Speaker 1: What goes up. We'll be back next week. Until then, 643 00:36:16,400 --> 00:36:19,040 Speaker 1: you can find us on the Bloomberg Terminal website and 644 00:36:19,080 --> 00:36:22,600 Speaker 1: app or wherever you get your podcasts. We'd love it 645 00:36:22,600 --> 00:36:24,600 Speaker 1: if you took the time to rate and review the 646 00:36:24,600 --> 00:36:27,520 Speaker 1: show on Apple podcast so more listeners can find us. 647 00:36:27,920 --> 00:36:30,480 Speaker 1: And you can find us on Twitter, follow me at 648 00:36:30,719 --> 00:36:34,200 Speaker 1: at Sara Pantzack, Mike is that reaganonymous, and you can 649 00:36:34,280 --> 00:36:38,719 Speaker 1: also follow Bloomberg Podcasts at Podcasts. Also thank you to 650 00:36:38,800 --> 00:36:41,400 Speaker 1: Charlie Pellett of Bloomberg Radio and the voice of the 651 00:36:41,440 --> 00:36:44,680 Speaker 1: New York City subway system. What Goes Up is produced 652 00:36:44,680 --> 00:36:48,480 Speaker 1: by Jordan Gospore. The head of Bloomberg podcast is Francesco Levie. 653 00:36:48,800 --> 00:36:50,520 Speaker 1: Thanks for listening, See you next time.