1 00:00:06,280 --> 00:00:09,680 Speaker 1: Strap on your parachute. It's time for What Goes Up 2 00:00:10,000 --> 00:00:14,960 Speaker 1: with Sarah Ponzick and Mike Reagan. Hello and welcome to 3 00:00:15,040 --> 00:00:18,480 Speaker 1: What goes Up, a Bloomberg Weekly markets podcast. I'm Sarah 4 00:00:18,480 --> 00:00:21,320 Speaker 1: Ponze or porter on the Cross Asset team, and I'm 5 00:00:21,320 --> 00:00:24,480 Speaker 1: Mike Reagan, a senior editor at Bloomberg. And you can 6 00:00:24,520 --> 00:00:28,880 Speaker 1: think of me as the molder to Sarah's scully. I'm 7 00:00:28,880 --> 00:00:31,639 Speaker 1: gonna wait for one of these weeks, Mike, when you 8 00:00:31,720 --> 00:00:34,879 Speaker 1: give me one that I maybe don't have to. You know, Sarah, 9 00:00:35,040 --> 00:00:37,159 Speaker 1: I thought that one was fresh. I mean, that's like 10 00:00:37,240 --> 00:00:39,839 Speaker 1: mid nineties. That's about as fresh as I get. With 11 00:00:39,880 --> 00:00:42,680 Speaker 1: the references. I should know it. Maybe I'm just I'm 12 00:00:42,720 --> 00:00:46,600 Speaker 1: just out of it all right, Well, X files, X files. 13 00:00:46,640 --> 00:00:48,720 Speaker 1: Get on the Netflix and watch some X files. It 14 00:00:48,720 --> 00:00:52,319 Speaker 1: will all make sense my whole if I haven't been 15 00:00:52,360 --> 00:00:56,680 Speaker 1: watching enough Netflix these days. But this week on the show, Mike, 16 00:00:57,000 --> 00:01:00,000 Speaker 1: different asset classes across financial markets are giving off pretty 17 00:01:00,040 --> 00:01:03,800 Speaker 1: strong messages. Real yields in the US are deeply negative, 18 00:01:03,840 --> 00:01:06,720 Speaker 1: while the US dollar actually just had its worst July 19 00:01:06,880 --> 00:01:10,199 Speaker 1: in a decade. That all as precious metals have become 20 00:01:10,240 --> 00:01:13,680 Speaker 1: a quasi obsession with gold futures touching two thousand dollars 21 00:01:13,680 --> 00:01:17,480 Speaker 1: announced for the first time ever. So what's it all 22 00:01:17,520 --> 00:01:20,360 Speaker 1: telling us? And of course we will close out the 23 00:01:20,400 --> 00:01:23,600 Speaker 1: episode with our tradition the craziest thing I saw in 24 00:01:23,760 --> 00:01:26,800 Speaker 1: markets this week? And if you saw something crazy, please 25 00:01:26,840 --> 00:01:29,920 Speaker 1: do give us a call on the Bloomberg Podcast hotline 26 00:01:30,000 --> 00:01:34,640 Speaker 1: at six four six three to four three four nine oh, 27 00:01:34,840 --> 00:01:38,480 Speaker 1: or tweet to us at podcasts and maybe we'll play 28 00:01:38,480 --> 00:01:41,399 Speaker 1: your voicemail or read your tweet on the show. Sarah, 29 00:01:41,400 --> 00:01:45,240 Speaker 1: we did get a pretty interesting voicemail. Uh, no spoilers, 30 00:01:45,319 --> 00:01:49,360 Speaker 1: but I think our friends in the crypto currency world 31 00:01:49,400 --> 00:01:51,320 Speaker 1: will appreciate this one, so we'll get to that at 32 00:01:51,360 --> 00:01:54,240 Speaker 1: the end as well. We have been asked to speak 33 00:01:54,280 --> 00:01:56,480 Speaker 1: a little bit more about crypto lately, so maybe and 34 00:01:56,520 --> 00:01:58,000 Speaker 1: this is a question that Mike and I may not 35 00:01:58,080 --> 00:02:00,520 Speaker 1: have answers to, so maybe some of our listeners well, 36 00:02:00,560 --> 00:02:02,720 Speaker 1: and if you do, like Mike said, give us a call. Yeah. 37 00:02:02,760 --> 00:02:06,320 Speaker 1: I can't give any serious answer about anything crypto. It'll 38 00:02:06,360 --> 00:02:09,040 Speaker 1: all be insulting to all the crypto people, so I 39 00:02:09,080 --> 00:02:11,400 Speaker 1: will not proffer an answer to this one. But hopefully 40 00:02:11,440 --> 00:02:14,560 Speaker 1: you can figure out this riddle for us. Like Molder 41 00:02:14,600 --> 00:02:17,080 Speaker 1: and Scully and call us call us up and let 42 00:02:17,160 --> 00:02:19,120 Speaker 1: us know when once you get to that, listeners call 43 00:02:19,160 --> 00:02:21,600 Speaker 1: I know we're teasing the listeners a lot with this, 44 00:02:21,720 --> 00:02:24,720 Speaker 1: with this setup, but but anyway, Sarah, as you said, 45 00:02:25,000 --> 00:02:27,880 Speaker 1: really interesting guests this week, first time on the show. 46 00:02:28,560 --> 00:02:31,840 Speaker 1: He is the head of North American macro Strategy for 47 00:02:32,200 --> 00:02:35,919 Speaker 1: State Street Global Markets and his name is Lee Farridge. Lee, 48 00:02:35,960 --> 00:02:38,280 Speaker 1: welcome to the show. Thank you very much, Mike, thank 49 00:02:38,280 --> 00:02:40,079 Speaker 1: you for having me. Lee. I think you've got the 50 00:02:40,120 --> 00:02:43,840 Speaker 1: Molder and Scully reference, right, I certainly I got Molder 51 00:02:43,880 --> 00:02:48,160 Speaker 1: and Scully. I've got to I've got to do my 52 00:02:48,200 --> 00:02:51,040 Speaker 1: homework from now on. Certainly, you know, I want to 53 00:02:51,080 --> 00:02:53,880 Speaker 1: get to what Sarah said at the beginning there with 54 00:02:54,000 --> 00:02:56,560 Speaker 1: gold and the dollar. But before we get to that, 55 00:02:56,600 --> 00:03:00,360 Speaker 1: I want to ask you about what's going on in Washington, 56 00:03:00,440 --> 00:03:03,240 Speaker 1: d C. I know you've been paying pretty close attention 57 00:03:03,320 --> 00:03:06,640 Speaker 1: to sort of the sausage making, as they say in 58 00:03:06,760 --> 00:03:09,520 Speaker 1: d C. As far as what is going on with 59 00:03:09,520 --> 00:03:14,040 Speaker 1: the prospects for another round of fiscal stimulus, Why don't 60 00:03:14,040 --> 00:03:17,200 Speaker 1: you walk us through what it looks like from your seat? 61 00:03:17,400 --> 00:03:20,800 Speaker 1: You know, what can we expect in terms of another 62 00:03:21,360 --> 00:03:24,000 Speaker 1: spending bill, and what do you think it all means 63 00:03:24,040 --> 00:03:26,640 Speaker 1: for markets going forward? Well, I think I think for 64 00:03:26,680 --> 00:03:30,600 Speaker 1: the economy in general, a market specifically, it's vital that 65 00:03:30,639 --> 00:03:34,240 Speaker 1: we've got another package. And there's no doubt that the 66 00:03:34,320 --> 00:03:37,880 Speaker 1: Cares acts really did bail out the economy back in 67 00:03:37,960 --> 00:03:41,520 Speaker 1: Q two. So the unemployment insurance supplement runs out on 68 00:03:41,640 --> 00:03:45,200 Speaker 1: July thirty one. You know, the other PPP loans can 69 00:03:45,240 --> 00:03:47,920 Speaker 1: get converted to grants. During the course of August, we 70 00:03:47,960 --> 00:03:51,240 Speaker 1: have the moratorium mon evictions. The Care's package was was 71 00:03:51,280 --> 00:03:55,720 Speaker 1: a temporary stop gap, but huge measure, and now we 72 00:03:55,800 --> 00:04:00,400 Speaker 1: need another one because the GDP dats of you two 73 00:04:00,440 --> 00:04:03,440 Speaker 1: showed we're still in the midst of this is Jerome 74 00:04:03,520 --> 00:04:07,560 Speaker 1: Power talked about at the latest FED meeting. Data is 75 00:04:07,560 --> 00:04:11,320 Speaker 1: actually deteriorated since the middle of June. We need more 76 00:04:11,320 --> 00:04:14,560 Speaker 1: coming through from Congress and at the moment it's stuck. 77 00:04:15,360 --> 00:04:19,400 Speaker 1: There was an attempt to try and pass a just 78 00:04:19,400 --> 00:04:22,200 Speaker 1: just one part of it, which was the unemployment insurance supplement. 79 00:04:22,800 --> 00:04:24,919 Speaker 1: Doesn't look as if that got through, and it was 80 00:04:24,960 --> 00:04:27,200 Speaker 1: only the third of the level it was out before. 81 00:04:28,040 --> 00:04:34,400 Speaker 1: So yeah, this is a huge deal. Markets are reacting 82 00:04:34,440 --> 00:04:37,800 Speaker 1: to it. To an extent on the basis that the 83 00:04:37,800 --> 00:04:40,400 Speaker 1: heavy lifting is going to continue with the FED, so 84 00:04:40,440 --> 00:04:43,239 Speaker 1: they're going to continue to have to be as dubbish 85 00:04:43,279 --> 00:04:46,640 Speaker 1: as Power talked about, um. And that's why we're seeing 86 00:04:47,040 --> 00:04:49,479 Speaker 1: so the gold continue to go up, euro you know, 87 00:04:49,480 --> 00:04:51,599 Speaker 1: the dollar go down. But even if we get the 88 00:04:51,600 --> 00:04:54,480 Speaker 1: fiscal package, it it's almost like a bare minimum. We 89 00:04:54,520 --> 00:04:57,040 Speaker 1: have to get it. Like you said, on the monetary side, 90 00:04:57,040 --> 00:04:59,080 Speaker 1: when it comes to the FED and durn Power, we 91 00:04:59,200 --> 00:05:01,200 Speaker 1: know that there of support there. They have made it 92 00:05:01,240 --> 00:05:04,720 Speaker 1: abundantly clear that they are on the market side, they 93 00:05:04,720 --> 00:05:08,840 Speaker 1: will do absolutely whatever is necessary. Now on the fiscal side, 94 00:05:09,600 --> 00:05:12,120 Speaker 1: do you have a sense of what the bare minimum is? 95 00:05:12,200 --> 00:05:14,599 Speaker 1: I mean, what is the bare minimum that has to 96 00:05:14,680 --> 00:05:18,200 Speaker 1: come through from the fiscal package for markets to not 97 00:05:18,400 --> 00:05:21,440 Speaker 1: throw a fit? I mean, sure, before we had heard 98 00:05:21,440 --> 00:05:25,760 Speaker 1: of two hundred dollars floated before replacement for that unemployment boost, 99 00:05:25,760 --> 00:05:28,440 Speaker 1: I mean, would would that have even been enough? It 100 00:05:28,600 --> 00:05:34,839 Speaker 1: may be enough to keep the market relatively happy, but 101 00:05:35,000 --> 00:05:37,279 Speaker 1: actually when we start to see the data in the 102 00:05:37,320 --> 00:05:41,400 Speaker 1: next month or so, we'll see it isn't enough. Um. 103 00:05:41,480 --> 00:05:45,320 Speaker 1: So your two hundred dollars is a third of where 104 00:05:45,320 --> 00:05:49,080 Speaker 1: we were before So to put that in context, in May, 105 00:05:49,480 --> 00:05:52,400 Speaker 1: that six hundred dollars is worth one point three trillion 106 00:05:52,720 --> 00:05:55,320 Speaker 1: to the U S consumer. It's seasonally adjusted annualized rates, 107 00:05:55,320 --> 00:05:57,840 Speaker 1: which is where you look at personal income, so you're 108 00:05:57,839 --> 00:06:00,839 Speaker 1: looking at the third of that. That's that's a huge 109 00:06:00,960 --> 00:06:04,080 Speaker 1: drop UM. And with the unemployment rate still as high 110 00:06:04,120 --> 00:06:07,280 Speaker 1: as it is UM and the potential next week when 111 00:06:07,320 --> 00:06:11,040 Speaker 1: we get the payrolls report for July that we won't 112 00:06:11,080 --> 00:06:14,440 Speaker 1: see much of improvement in the labor market picture. So 113 00:06:14,600 --> 00:06:17,839 Speaker 1: I think that two hundred dollars might be enough to 114 00:06:17,960 --> 00:06:21,400 Speaker 1: calm the market to an extent, but I think it 115 00:06:21,480 --> 00:06:23,680 Speaker 1: means that actually the day to go forward is is 116 00:06:23,680 --> 00:06:25,680 Speaker 1: going to get bad again. Ell. Yeah, I wanted to 117 00:06:25,960 --> 00:06:28,320 Speaker 1: shift to the talk about the dollar a little bit now. 118 00:06:28,360 --> 00:06:30,400 Speaker 1: I'll warn't you. I tend to ask questions that have 119 00:06:30,600 --> 00:06:35,680 Speaker 1: about twenty seven parts in them, soah, so, so you 120 00:06:35,760 --> 00:06:38,240 Speaker 1: might need to take some notes. But you know, obviously 121 00:06:38,600 --> 00:06:42,440 Speaker 1: the dollar has just been weakening very aggressively in the 122 00:06:42,520 --> 00:06:44,240 Speaker 1: last few months. Last time I looked at sort of 123 00:06:44,240 --> 00:06:46,680 Speaker 1: the broad indexes down at like a two year low 124 00:06:47,480 --> 00:06:50,080 Speaker 1: for the d X Y and the Bloomberg version of it. 125 00:06:50,520 --> 00:06:53,919 Speaker 1: Now I know the bearrish case for the dollar is 126 00:06:53,960 --> 00:06:59,120 Speaker 1: pretty simple. The twin deficits, the the government budget depthsit 127 00:06:59,680 --> 00:07:02,520 Speaker 1: and the trade depth sit are are very bearished for 128 00:07:02,560 --> 00:07:05,080 Speaker 1: the dollar. They have been for several years now, and 129 00:07:05,120 --> 00:07:08,200 Speaker 1: a lot of people predicting barishness for the dollar have 130 00:07:08,600 --> 00:07:12,200 Speaker 1: kind of gotten burned. But this time it really does 131 00:07:12,240 --> 00:07:15,080 Speaker 1: seem like those sort of ranges that we've seen in 132 00:07:15,080 --> 00:07:16,920 Speaker 1: the dollar are going to break, that we will see 133 00:07:17,640 --> 00:07:21,440 Speaker 1: some potentially some more weakness starting to hear people talk 134 00:07:21,640 --> 00:07:26,840 Speaker 1: about the risk of the dollar's role as a reserve currency. 135 00:07:27,000 --> 00:07:29,680 Speaker 1: Do you think that's part of it? Uh? Is it 136 00:07:29,800 --> 00:07:33,520 Speaker 1: time to start worrying about the dollar its position as 137 00:07:33,560 --> 00:07:36,880 Speaker 1: a reserve currency? Or is this weakness more just you know, 138 00:07:37,320 --> 00:07:40,640 Speaker 1: the the other fundamentals, the twin deficits and that sort 139 00:07:40,680 --> 00:07:43,920 Speaker 1: of thing, and that basically you know, the idea that 140 00:07:43,920 --> 00:07:46,880 Speaker 1: that this fiscal depths it's not going anywhere, it's gonna 141 00:07:46,880 --> 00:07:49,680 Speaker 1: be huge for a long time. Or you know, is 142 00:07:49,680 --> 00:07:52,000 Speaker 1: there any sort of risk of to the reserve currency 143 00:07:52,040 --> 00:07:55,040 Speaker 1: status that that might be applay in this weakness. I 144 00:07:55,080 --> 00:07:58,720 Speaker 1: don't think really it is about the reserve stasis. I mean, 145 00:07:58,760 --> 00:08:00,960 Speaker 1: I think it is more to do with the fundamentals 146 00:08:01,000 --> 00:08:03,600 Speaker 1: this if these are normal FX market moves, I mean 147 00:08:03,640 --> 00:08:06,640 Speaker 1: the dollar euro dollars traded at one sixty in the 148 00:08:06,760 --> 00:08:08,280 Speaker 1: history of the euro, and it was still the dollar 149 00:08:08,320 --> 00:08:11,000 Speaker 1: was still the reserve currency. So there's a difference between 150 00:08:11,000 --> 00:08:14,320 Speaker 1: the dollar being weak and the dollar losing its reserve 151 00:08:14,360 --> 00:08:17,920 Speaker 1: currency status. But what has been a trend for a 152 00:08:18,000 --> 00:08:20,280 Speaker 1: number of years now, last couple of years in particular, 153 00:08:20,720 --> 00:08:24,360 Speaker 1: is the share of dollars within global reserves has been 154 00:08:24,360 --> 00:08:27,280 Speaker 1: going down. It's still the dominant currency, but it's probably 155 00:08:27,280 --> 00:08:30,520 Speaker 1: around sixties six of global reserves now it was up 156 00:08:30,560 --> 00:08:37,160 Speaker 1: at And I think the fact is as the US 157 00:08:38,200 --> 00:08:40,480 Speaker 1: withdraws from the world, which it has done over the 158 00:08:40,559 --> 00:08:44,560 Speaker 1: last few years, then you know, other currencies have that 159 00:08:44,679 --> 00:08:48,400 Speaker 1: potential to two or central banks around the world probably 160 00:08:48,400 --> 00:08:52,440 Speaker 1: will make a more balanced reserve portfolio. Now, the dollar 161 00:08:52,559 --> 00:08:54,599 Speaker 1: is still going to be the biggest means of exchange, 162 00:08:55,320 --> 00:08:58,680 Speaker 1: so commodities are still priced in dollars. Oil is still 163 00:08:58,679 --> 00:09:01,200 Speaker 1: priced in dollars, and that means that it's still going 164 00:09:01,280 --> 00:09:05,440 Speaker 1: to be the dominant currency within reserves, but is it 165 00:09:05,480 --> 00:09:06,920 Speaker 1: going to be as high as it on? Us know? 166 00:09:07,640 --> 00:09:10,520 Speaker 1: And I think you know the euro is now coming 167 00:09:10,559 --> 00:09:14,040 Speaker 1: forward as as somewhat of a viable alternative. I think 168 00:09:14,040 --> 00:09:17,560 Speaker 1: the the common Fiscal package that was agreed a couple 169 00:09:17,600 --> 00:09:20,520 Speaker 1: of weeks ago that was significant, maybe not in terms 170 00:09:20,520 --> 00:09:24,160 Speaker 1: of the numbers, but in terms of the message, in 171 00:09:24,280 --> 00:09:28,880 Speaker 1: terms of taking that step to a common fiscal policy. So, 172 00:09:29,080 --> 00:09:31,680 Speaker 1: you know, for once during the crisis, I'm not hearing 173 00:09:31,720 --> 00:09:34,960 Speaker 1: people talking about the Eurozone breaking up, which has been 174 00:09:35,320 --> 00:09:37,440 Speaker 1: every crisis we've had in the past. Oh, could this 175 00:09:37,480 --> 00:09:39,480 Speaker 1: be the end of the Euro? No, we're not getting 176 00:09:39,520 --> 00:09:42,000 Speaker 1: that now. You know, Christine Legarde has come in and 177 00:09:42,040 --> 00:09:45,000 Speaker 1: she has you know, carried on the drugging whatever it 178 00:09:45,040 --> 00:09:47,920 Speaker 1: takes mantra, and at the same time you've now got 179 00:09:47,920 --> 00:09:50,960 Speaker 1: the politicians stepping up with this this more common fiscal 180 00:09:51,040 --> 00:09:54,439 Speaker 1: policy that means the euro is am or viable alternative. 181 00:09:54,960 --> 00:09:58,240 Speaker 1: The remember is becoming more having more of a role 182 00:09:58,280 --> 00:10:01,480 Speaker 1: within global reserves, still small, but I think what you're 183 00:10:01,480 --> 00:10:04,600 Speaker 1: looking at is is reserves becoming a bit more balanced. 184 00:10:04,640 --> 00:10:06,600 Speaker 1: But the dollar is still going to be the reserve currency. 185 00:10:06,840 --> 00:10:09,640 Speaker 1: It's still the main global means of exchange and therefore 186 00:10:09,640 --> 00:10:12,720 Speaker 1: it's still going to be the dominant currency within global reserves. 187 00:10:13,640 --> 00:10:16,800 Speaker 1: But that doesn't mean it can't weaken further. That doesn't 188 00:10:16,840 --> 00:10:19,080 Speaker 1: mean you can't have the dollar weakening against the euro 189 00:10:19,160 --> 00:10:23,000 Speaker 1: and other currencies whilest maintaining reserve currency status. There there 190 00:10:23,000 --> 00:10:40,360 Speaker 1: are two different things. So in your view, what actually 191 00:10:40,480 --> 00:10:42,360 Speaker 1: is it that's driving a weaker dollar. I mean, I've 192 00:10:42,360 --> 00:10:45,439 Speaker 1: heard a couple of different narratives, one being simply that 193 00:10:45,480 --> 00:10:48,760 Speaker 1: the US has not gotten coronavirus cases under control relative 194 00:10:48,800 --> 00:10:51,760 Speaker 1: to other countries around the world, one of course being 195 00:10:51,840 --> 00:10:55,800 Speaker 1: growing deficits or inflation. Is it possible at a pinpoint something, 196 00:10:55,840 --> 00:10:58,280 Speaker 1: and if so, what does that mean for how much 197 00:10:58,360 --> 00:11:01,160 Speaker 1: further the dollar can actually be appreciate it? Well, I 198 00:11:01,200 --> 00:11:03,880 Speaker 1: think it's it's a combination of those factors. But but 199 00:11:04,040 --> 00:11:07,880 Speaker 1: what they do is they manifest themselves in this debasement 200 00:11:07,920 --> 00:11:09,760 Speaker 1: of the dollar. And by that what I mean is 201 00:11:10,120 --> 00:11:13,320 Speaker 1: real interest rates in the US have plummeted. You know, 202 00:11:13,400 --> 00:11:14,840 Speaker 1: you look at the break even as you look at 203 00:11:14,880 --> 00:11:18,640 Speaker 1: the tips that real interest rates have really sharply depreciated 204 00:11:18,679 --> 00:11:22,000 Speaker 1: in the US over the last few months. And you know, 205 00:11:22,080 --> 00:11:24,960 Speaker 1: it's a simple question of supply and demands. So the 206 00:11:24,960 --> 00:11:28,160 Speaker 1: Fed is doing all of this, it has to do, 207 00:11:28,400 --> 00:11:30,960 Speaker 1: you know, in terms of printing money expanding the balance sheet. 208 00:11:31,200 --> 00:11:34,520 Speaker 1: We need desperately need more on the fiscal side. So 209 00:11:34,679 --> 00:11:37,040 Speaker 1: it's a supply and demand. Money is like anything else, 210 00:11:37,240 --> 00:11:40,719 Speaker 1: supply and demand. If you increase the supply, which we're 211 00:11:40,720 --> 00:11:44,679 Speaker 1: seeing in dollars, significant increase in supply, and there's no 212 00:11:44,760 --> 00:11:47,840 Speaker 1: increase in demand, what the price has to fall. Now 213 00:11:47,880 --> 00:11:50,560 Speaker 1: normally people say, well, that would be inflation, and we 214 00:11:50,640 --> 00:11:54,600 Speaker 1: think about inflation. Is consumer price inflation? We're not seeing that, 215 00:11:54,960 --> 00:11:57,840 Speaker 1: and then we're not seeing a pickup in in inflation. 216 00:11:57,880 --> 00:12:01,560 Speaker 1: And the GDP reports showed the inflation in Q two declined. 217 00:12:02,040 --> 00:12:03,959 Speaker 1: But where we are seeing in play. The reason why 218 00:12:03,960 --> 00:12:06,679 Speaker 1: we're not seeing consumer price inflation is because there's no demand. 219 00:12:07,559 --> 00:12:10,920 Speaker 1: If prices of goods go up, people are unemployed, wages 220 00:12:10,960 --> 00:12:12,520 Speaker 1: aren't going up, they won't be able to buy them, 221 00:12:12,520 --> 00:12:14,880 Speaker 1: so demand will go down. So where we're seeing the 222 00:12:14,960 --> 00:12:17,559 Speaker 1: inflation come through or the debatement the dollar come through 223 00:12:17,679 --> 00:12:22,559 Speaker 1: is in asset prices. So that's in gold, it's in equities, 224 00:12:23,120 --> 00:12:25,600 Speaker 1: it's in the dollar on the foreign exchange markets. Even 225 00:12:25,600 --> 00:12:28,360 Speaker 1: treasury is treasury yields are going down. That means that 226 00:12:28,360 --> 00:12:31,959 Speaker 1: the treasury values are going up. So every asset class 227 00:12:32,559 --> 00:12:35,080 Speaker 1: is going up in price against the dollar. The dollar 228 00:12:35,200 --> 00:12:38,240 Speaker 1: is being debased against those asset classes. But you're not 229 00:12:38,320 --> 00:12:40,800 Speaker 1: seeing that traditional inflation in the high street. And it's 230 00:12:40,880 --> 00:12:42,880 Speaker 1: very hard to have that traditional inflation in the high 231 00:12:42,880 --> 00:12:46,920 Speaker 1: street without wage inflation. And that's not on the horizon now, 232 00:12:47,000 --> 00:12:49,160 Speaker 1: is jero and Power has mentioned? You know, we didn't 233 00:12:49,160 --> 00:12:51,559 Speaker 1: get wage in place in three and a half percent unemployment. 234 00:12:51,559 --> 00:12:54,600 Speaker 1: We're not going to get over eleven percent unemployment. But 235 00:12:54,679 --> 00:12:58,240 Speaker 1: you can still see asset price inflation. And that's what 236 00:12:58,280 --> 00:13:01,440 Speaker 1: we're witnessed in the debatement dollar through asset prices. Yeah, 237 00:13:01,480 --> 00:13:05,200 Speaker 1: I think you know, whenever sort of a equity bull 238 00:13:05,240 --> 00:13:07,920 Speaker 1: in the US, here's the words doll dollar weakness. You 239 00:13:07,960 --> 00:13:10,000 Speaker 1: can see their eyes light up, and you know and 240 00:13:10,040 --> 00:13:14,120 Speaker 1: assume that that is, you know, gonna be unequivocal bal 241 00:13:14,559 --> 00:13:17,920 Speaker 1: bullish signal for for equities. Do you think that's the 242 00:13:17,960 --> 00:13:20,880 Speaker 1: case this time? Given everything else you've talked about, this 243 00:13:21,280 --> 00:13:25,080 Speaker 1: lack of demand and the sort of nationalist sentiment around 244 00:13:25,080 --> 00:13:28,120 Speaker 1: the world. Now, this US withdrawing from the rest of 245 00:13:28,160 --> 00:13:31,560 Speaker 1: the world and China specifically, is a weaker dollar, is it? 246 00:13:31,600 --> 00:13:33,760 Speaker 1: Is it as easy as a call as it used 247 00:13:33,760 --> 00:13:37,440 Speaker 1: to be to say, weaker dollar means higher stock prices, 248 00:13:37,480 --> 00:13:39,880 Speaker 1: at least on the index level. You know, obviously can 249 00:13:40,080 --> 00:13:42,400 Speaker 1: go under the hood and pick out who has more 250 00:13:42,720 --> 00:13:45,920 Speaker 1: export exposure. But from a macro level, is it's still 251 00:13:46,360 --> 00:13:50,400 Speaker 1: weaker dollar equals great for stocks. Well, I mean, it's 252 00:13:50,440 --> 00:13:53,000 Speaker 1: what was saying right now. Um, you know, it still 253 00:13:53,200 --> 00:13:57,120 Speaker 1: continue to go up. And I'm you know, I've been 254 00:13:57,720 --> 00:14:00,520 Speaker 1: surprised over the last couple of months. I I didn't 255 00:14:00,520 --> 00:14:03,040 Speaker 1: expect stocks to do this, but I've been bullish on 256 00:14:03,080 --> 00:14:06,000 Speaker 1: gold for a long time, you know, and and when 257 00:14:06,040 --> 00:14:08,800 Speaker 1: the crisis happened, once we got through the liquidity issues 258 00:14:08,880 --> 00:14:11,319 Speaker 1: and US rates at zero and the Fed we're doing 259 00:14:11,360 --> 00:14:14,320 Speaker 1: what they're doing, I was negative on the dollar. I've 260 00:14:14,320 --> 00:14:18,480 Speaker 1: been shocked by how the value of equities can get 261 00:14:18,559 --> 00:14:22,080 Speaker 1: so divorced by the fundamentals, because ultimately there has to 262 00:14:22,080 --> 00:14:26,200 Speaker 1: be a relationship between growth and equities, because earnings have 263 00:14:26,320 --> 00:14:28,680 Speaker 1: to matter. So what we've got now, if you look 264 00:14:28,680 --> 00:14:31,440 Speaker 1: at forward p ratios for the SMP, we're at the 265 00:14:31,480 --> 00:14:34,600 Speaker 1: highest for nineteen years. We're in the midst of a pandemic. 266 00:14:35,120 --> 00:14:37,720 Speaker 1: You know, we're somewhere between a recession and depression. Although 267 00:14:37,720 --> 00:14:39,880 Speaker 1: there's no strict definition of the difference between the two. 268 00:14:40,280 --> 00:14:43,360 Speaker 1: But the fact is that the equity valuations are at 269 00:14:43,480 --> 00:14:46,880 Speaker 1: nineteen year highs. Yeah, and and and that to me 270 00:14:46,960 --> 00:14:49,960 Speaker 1: makes no logical sense. But then when I look at 271 00:14:49,960 --> 00:14:54,360 Speaker 1: it in terms of the dollar debasement story, then yeah, 272 00:14:54,920 --> 00:14:58,520 Speaker 1: you know, it's hard to to really turn bearish on 273 00:14:58,560 --> 00:15:02,240 Speaker 1: equities when we have the moves going on in terms 274 00:15:02,240 --> 00:15:04,520 Speaker 1: of policy that we're seeing. So, you know, everyone talks 275 00:15:04,560 --> 00:15:06,760 Speaker 1: about the NASDAK and how great the Nazdak is, and 276 00:15:06,920 --> 00:15:09,240 Speaker 1: you know, yes, it's up eighteen percent this year, which 277 00:15:09,280 --> 00:15:12,680 Speaker 1: is given what's happened since the start of January is 278 00:15:12,680 --> 00:15:15,120 Speaker 1: is amazing, But the SMP is flat for the year. 279 00:15:15,240 --> 00:15:19,000 Speaker 1: Even that in itself can be amazing. Gold is up 280 00:15:19,040 --> 00:15:22,440 Speaker 1: twenty nine since the start of the year. So, yes, 281 00:15:22,480 --> 00:15:25,680 Speaker 1: equities are doing well and in saying Nazdak is hit 282 00:15:25,720 --> 00:15:28,840 Speaker 1: all time highs et cetera. But actually other asset classes 283 00:15:28,840 --> 00:15:30,640 Speaker 1: are doing better. If you if you look at Treasury 284 00:15:30,680 --> 00:15:34,080 Speaker 1: index since the start of the year, it's outperformed the SMP. 285 00:15:34,680 --> 00:15:36,880 Speaker 1: If you were long of a treasury index, you've outperformed 286 00:15:36,880 --> 00:15:39,240 Speaker 1: the SMP since the start of the year. So stocks 287 00:15:39,280 --> 00:15:42,080 Speaker 1: at face value are doing well, But actually when you 288 00:15:42,080 --> 00:15:44,040 Speaker 1: look at them relative with a lot of other asset classes, 289 00:15:44,040 --> 00:15:46,200 Speaker 1: they're not doing as well as you might think, apart 290 00:15:46,280 --> 00:15:49,560 Speaker 1: from a select few. And that's where the valuations get really, 291 00:15:49,560 --> 00:15:52,400 Speaker 1: really hard. It might seem as though a year in 292 00:15:52,440 --> 00:15:55,880 Speaker 1: which gold has very strong returns and then treasuries have 293 00:15:56,000 --> 00:15:58,960 Speaker 1: very strong returns, yet you still have the nasdak up 294 00:15:58,960 --> 00:16:02,320 Speaker 1: double digits. Some would say something has to break. We 295 00:16:02,400 --> 00:16:05,720 Speaker 1: can't see this continue together. But is there a scenario 296 00:16:05,840 --> 00:16:10,040 Speaker 1: where this can continue? Considering the fact that real yield 297 00:16:10,040 --> 00:16:12,760 Speaker 1: I mean ten, you're real yielder at record lows near 298 00:16:12,840 --> 00:16:17,280 Speaker 1: negative one percent, and Jerome Powell keeps on reiterating that 299 00:16:17,400 --> 00:16:21,160 Speaker 1: the Fed is not even thinking about thinking about raising rates. Yeah, 300 00:16:21,160 --> 00:16:23,080 Speaker 1: I think there are actually three thinking about I was 301 00:16:23,160 --> 00:16:25,160 Speaker 1: thinking about thinking about thinking about to add one in 302 00:16:25,200 --> 00:16:31,200 Speaker 1: this time. I mean everything when you when you study economics, 303 00:16:31,240 --> 00:16:33,400 Speaker 1: when you're an economist as I am, everything tells you 304 00:16:33,400 --> 00:16:36,400 Speaker 1: you can't just keep creating money this way without there 305 00:16:36,440 --> 00:16:40,040 Speaker 1: being a price at some point, and that price ultimately 306 00:16:40,160 --> 00:16:43,480 Speaker 1: comes in the form of inflation. But you know, we've 307 00:16:43,560 --> 00:16:47,400 Speaker 1: we've seen it in Japan for for twenty years. Yeah, 308 00:16:47,400 --> 00:16:50,200 Speaker 1: we've seen the budget deficit go out. You know, the 309 00:16:50,240 --> 00:16:53,520 Speaker 1: government debt grads children GDP. We've seen the b J 310 00:16:53,680 --> 00:16:57,000 Speaker 1: continue to expand the balance sheet. It's never translated into 311 00:16:57,040 --> 00:17:00,800 Speaker 1: inflation on the high street. Because we have this situation 312 00:17:00,840 --> 00:17:03,280 Speaker 1: in the global economy hour and developed markets where you 313 00:17:03,280 --> 00:17:06,480 Speaker 1: have this huge level of inequality. So for a vast 314 00:17:06,560 --> 00:17:09,840 Speaker 1: number of people, wages are not going up and therefore 315 00:17:09,920 --> 00:17:13,439 Speaker 1: spending power isn't going up. So it's very hard for 316 00:17:13,480 --> 00:17:17,840 Speaker 1: companies to raise prices. So consumer prices and you have 317 00:17:17,920 --> 00:17:20,240 Speaker 1: the Amazon effect and others, you know that they're keeping 318 00:17:20,280 --> 00:17:23,600 Speaker 1: prices down. You have transparent pricing, so you don't see 319 00:17:23,600 --> 00:17:25,919 Speaker 1: it come through into consumer price inflation. You see an 320 00:17:25,960 --> 00:17:29,600 Speaker 1: asset price inflation. It doesn't no, I don't think it 321 00:17:29,640 --> 00:17:32,760 Speaker 1: can last forever. But you know we've seen in the 322 00:17:32,760 --> 00:17:35,000 Speaker 1: case of Japan it it's gone on for a long time. 323 00:17:35,040 --> 00:17:37,119 Speaker 1: And as you say, the message from jer own power, 324 00:17:37,160 --> 00:17:40,080 Speaker 1: and this is why you know we see real yields 325 00:17:40,119 --> 00:17:42,520 Speaker 1: in the US record lows. The record from you know, 326 00:17:42,600 --> 00:17:45,600 Speaker 1: the very clear message from your own power is even 327 00:17:45,640 --> 00:17:48,880 Speaker 1: when we start to recover, we're not going to start 328 00:17:48,960 --> 00:17:51,720 Speaker 1: raising rates for a long time. You know, the market 329 00:17:51,760 --> 00:17:54,040 Speaker 1: with price for about five years for the first FED 330 00:17:54,119 --> 00:17:57,200 Speaker 1: rate hike. You know, when that's the situation, you've got 331 00:17:57,200 --> 00:18:01,200 Speaker 1: to think inflation expectations have to rise, and that's manifesting 332 00:18:01,240 --> 00:18:05,680 Speaker 1: itself in in asset prices. Walk us through your reasons 333 00:18:05,680 --> 00:18:09,840 Speaker 1: for being bullish on gold, because I confess I can 334 00:18:09,840 --> 00:18:13,399 Speaker 1: never quite wrap my head around what the the you know, 335 00:18:14,040 --> 00:18:16,760 Speaker 1: current days catalyst is for gold. I remember a few 336 00:18:16,840 --> 00:18:19,520 Speaker 1: years ago, people would talk about the actual physical demand 337 00:18:19,880 --> 00:18:22,560 Speaker 1: for gold out of India and the number of weddings India, 338 00:18:22,560 --> 00:18:24,040 Speaker 1: and I was like, it's trying to make sense to 339 00:18:24,080 --> 00:18:27,760 Speaker 1: me now, But but but is it all just about 340 00:18:27,800 --> 00:18:31,119 Speaker 1: the money supply basically? At least right now? It seems 341 00:18:31,119 --> 00:18:32,840 Speaker 1: like it is that. Is that just trump everything else? 342 00:18:32,960 --> 00:18:35,280 Speaker 1: Right now? Yeah? It does. I mean that that it's 343 00:18:35,320 --> 00:18:37,800 Speaker 1: not about supply and demand. It's it's it's about demand. 344 00:18:37,840 --> 00:18:40,880 Speaker 1: It's not about you know, it's about market demand rather 345 00:18:40,920 --> 00:18:44,240 Speaker 1: than than than weddings in India. But yeah, I mean 346 00:18:44,440 --> 00:18:47,240 Speaker 1: the fact is that the again going back to the 347 00:18:47,240 --> 00:18:49,560 Speaker 1: supply and demand of money, if you if you massively 348 00:18:49,560 --> 00:18:52,919 Speaker 1: increase the supply of dollars without an increase in demand, 349 00:18:52,960 --> 00:18:55,600 Speaker 1: then the price of that has to go out down. Therefore, 350 00:18:55,640 --> 00:18:58,600 Speaker 1: people seek out hard assets, and gold is the ultimate 351 00:18:58,640 --> 00:19:00,639 Speaker 1: hard asset, and that's that's why it this. I mean, 352 00:19:00,640 --> 00:19:02,520 Speaker 1: don't get me wrong, I'm not a gold expert or 353 00:19:02,640 --> 00:19:05,800 Speaker 1: a metal person by any means, but you know, I 354 00:19:05,840 --> 00:19:07,840 Speaker 1: say I've been bullish on gold for probably the last 355 00:19:07,840 --> 00:19:11,040 Speaker 1: twelve months or so on the basis that I've always 356 00:19:11,119 --> 00:19:13,960 Speaker 1: worried that that we had a bubble in markets and 357 00:19:14,080 --> 00:19:16,679 Speaker 1: that at some point we were going to see the 358 00:19:16,720 --> 00:19:18,680 Speaker 1: Fed have to cut rates and we would see QUI 359 00:19:18,800 --> 00:19:22,440 Speaker 1: starts to rise again. Obviously did not foresee the pandemic, 360 00:19:22,480 --> 00:19:24,240 Speaker 1: but I've been worried about it, you know, for a 361 00:19:24,240 --> 00:19:27,480 Speaker 1: while now, you know, basically since the end of twenty 362 00:19:27,560 --> 00:19:31,199 Speaker 1: eighteen or Q four eighteen, when the FED tried to 363 00:19:31,240 --> 00:19:34,880 Speaker 1: shrink the balance sheet, when we had constated tightening and 364 00:19:34,880 --> 00:19:38,240 Speaker 1: and yield started to move up, and what happens, equities 365 00:19:38,280 --> 00:19:41,440 Speaker 1: crashed off in Q four eighteen, the Fed back away 366 00:19:41,600 --> 00:19:45,399 Speaker 1: started cutting rates again. In it's like they're never getting 367 00:19:45,400 --> 00:19:47,280 Speaker 1: out of this balance sheet where it is now, so 368 00:19:47,320 --> 00:19:50,240 Speaker 1: the next downturn that happens, we're going to see more quie. 369 00:19:50,280 --> 00:19:53,040 Speaker 1: And that's sort of led to my my bullish view 370 00:19:53,040 --> 00:19:56,320 Speaker 1: on gold. Twelve eighteen months ago, So you became bullish 371 00:19:56,320 --> 00:19:58,119 Speaker 1: on gold quite a while ago. How much does it 372 00:19:58,359 --> 00:20:00,760 Speaker 1: how far does it take you? Then? Is there something 373 00:20:00,760 --> 00:20:03,240 Speaker 1: that can happen that would then change your mind. The 374 00:20:03,320 --> 00:20:06,640 Speaker 1: thing that would probably change my mind is if, well, 375 00:20:07,160 --> 00:20:10,040 Speaker 1: if we get a vaccine, things starts to recover and 376 00:20:10,080 --> 00:20:12,080 Speaker 1: we start to get inflation on the high street, and 377 00:20:12,119 --> 00:20:15,960 Speaker 1: the Fed then has to to quickly backpedal. But until 378 00:20:16,000 --> 00:20:17,760 Speaker 1: that happens, as long as you know the Fed, they're 379 00:20:17,800 --> 00:20:19,600 Speaker 1: going to keep adding in liquidity, and as as long 380 00:20:19,640 --> 00:20:21,919 Speaker 1: as rates are going to be at zero UM and 381 00:20:22,040 --> 00:20:24,200 Speaker 1: your own pal is not even thinking about thinking about 382 00:20:24,240 --> 00:20:27,359 Speaker 1: thinking about raising rates, then you know gold is going 383 00:20:27,400 --> 00:20:29,360 Speaker 1: to continue to go up. And how do you put 384 00:20:29,359 --> 00:20:31,600 Speaker 1: a value on gold? This is the problem with with 385 00:20:31,640 --> 00:20:33,080 Speaker 1: equity is this is where I have a problem. Right, 386 00:20:33,119 --> 00:20:35,320 Speaker 1: So I look at actors, they should be related to earnings. 387 00:20:35,840 --> 00:20:38,600 Speaker 1: Gold is I don't know how you put a value 388 00:20:38,600 --> 00:20:40,240 Speaker 1: on gold. I mean, I've said for a while, I've 389 00:20:40,240 --> 00:20:42,280 Speaker 1: got a target in two and a half thousand. You know, 390 00:20:42,280 --> 00:20:44,560 Speaker 1: I've had that for for a little while, so I'm 391 00:20:44,640 --> 00:20:47,760 Speaker 1: sticking with that for now. But but really it's it's 392 00:20:47,800 --> 00:20:50,520 Speaker 1: not it's not about a price target for me. It's 393 00:20:50,560 --> 00:20:54,720 Speaker 1: about the conditions behind it. So if the conditions continue 394 00:20:54,760 --> 00:20:57,719 Speaker 1: to be as they are now, then gold will continue 395 00:20:57,760 --> 00:21:16,200 Speaker 1: to get supportive. At before we get to the craziest things. Um, 396 00:21:16,240 --> 00:21:19,640 Speaker 1: I know you've been keeping a close eye on Brexit. 397 00:21:20,600 --> 00:21:22,359 Speaker 1: As I like to call it, a never ending story 398 00:21:23,040 --> 00:21:25,360 Speaker 1: of Brexit. This is like a soap opera in its 399 00:21:25,400 --> 00:21:28,840 Speaker 1: tenth season at this point. Uh, but walk us through 400 00:21:29,760 --> 00:21:31,960 Speaker 1: every I don't know how what four years? I guess 401 00:21:32,000 --> 00:21:36,520 Speaker 1: it was sixteen, right, wasn't it. Yeah, out of that 402 00:21:36,600 --> 00:21:39,400 Speaker 1: changed history two thousand and sixteen. We'll all remember that one. 403 00:21:40,480 --> 00:21:44,240 Speaker 1: Walk us through. Uh, what's next for Brexit and if 404 00:21:44,240 --> 00:21:48,800 Speaker 1: there are any sort of potential market uh implications that 405 00:21:48,840 --> 00:21:51,440 Speaker 1: we should know about. Yeah, I mean there's a very 406 00:21:51,480 --> 00:21:53,960 Speaker 1: clear sort of date for Brexit now. It is December 407 00:21:54,040 --> 00:21:58,240 Speaker 1: thirty one. The UK will leave the Eurozone on December 408 00:21:58,280 --> 00:22:01,119 Speaker 1: thirty one, come what may. The question is whether they 409 00:22:01,200 --> 00:22:04,640 Speaker 1: leave with a withdrawal agreement or not. And the way 410 00:22:04,680 --> 00:22:08,480 Speaker 1: things are right now, it's not looking optimistic. There was 411 00:22:08,480 --> 00:22:12,880 Speaker 1: meant to be an interim agreement agreed in July that 412 00:22:12,880 --> 00:22:16,800 Speaker 1: that didn't happen. They had to June thirty to actually 413 00:22:16,800 --> 00:22:20,280 Speaker 1: extend the date of leaving beyond the end of this year, 414 00:22:20,320 --> 00:22:22,560 Speaker 1: and they Boris Johnson, this government said they were not 415 00:22:22,600 --> 00:22:24,080 Speaker 1: going to do that, and they didn't do that. So 416 00:22:24,400 --> 00:22:26,399 Speaker 1: December thirty one is set in stone. And then in 417 00:22:26,520 --> 00:22:28,359 Speaker 1: July there was meant to be an interim agreement that 418 00:22:28,400 --> 00:22:32,680 Speaker 1: didn't happen. Um and so we are where we are. 419 00:22:32,800 --> 00:22:36,600 Speaker 1: And and the problem is one of the problems is 420 00:22:36,600 --> 00:22:40,280 Speaker 1: obviously that the pandemic, the virus is as you know, 421 00:22:40,320 --> 00:22:44,320 Speaker 1: the focus is not on Brexit negotiations within the European Union. 422 00:22:44,359 --> 00:22:47,360 Speaker 1: It's on trying to revive the economy. You know, similarly 423 00:22:47,440 --> 00:22:50,919 Speaker 1: in the UK in a lot of ways. So you know, 424 00:22:51,000 --> 00:22:55,080 Speaker 1: these issues that are still the fundamental issues that have 425 00:22:55,160 --> 00:22:58,520 Speaker 1: been there since the since the referendum vote, which is 426 00:22:59,600 --> 00:23:02,440 Speaker 1: how in the UK have access to the Single market 427 00:23:03,080 --> 00:23:06,800 Speaker 1: whilst maintaining sovereignty over its laws and borders, and the 428 00:23:06,880 --> 00:23:10,199 Speaker 1: EU say you can't. If you want access to our 429 00:23:10,280 --> 00:23:13,840 Speaker 1: single market, you have to allow free moon of labor 430 00:23:13,880 --> 00:23:16,200 Speaker 1: and free movement of capital and you have to accept 431 00:23:16,520 --> 00:23:19,840 Speaker 1: our laws, and the UK said, we're not doing that. 432 00:23:20,160 --> 00:23:23,880 Speaker 1: So it's hard to see how they get an agreement. 433 00:23:24,400 --> 00:23:26,680 Speaker 1: So you know, the market is not I mean sterling's 434 00:23:27,359 --> 00:23:30,000 Speaker 1: doing fabulously while strings back over one thirty. You know, 435 00:23:30,520 --> 00:23:33,479 Speaker 1: it's along with the dollar going down. We're seeing sterling 436 00:23:33,600 --> 00:23:36,320 Speaker 1: rally along with the euro. But I do think at 437 00:23:36,359 --> 00:23:39,159 Speaker 1: some point during the second half of this year we 438 00:23:39,280 --> 00:23:41,560 Speaker 1: have to start looking at that and working out, well, 439 00:23:42,080 --> 00:23:44,520 Speaker 1: if the UK does leave without an agreement with which 440 00:23:44,560 --> 00:23:47,040 Speaker 1: at the moment to me is the most likely scenario, 441 00:23:47,760 --> 00:23:50,000 Speaker 1: then that has to be another big blow for the 442 00:23:50,040 --> 00:23:53,240 Speaker 1: UK economy. Do you believe these deadline the deadline over 443 00:23:53,240 --> 00:23:55,359 Speaker 1: at the end of the years is literally set in stone. 444 00:23:55,400 --> 00:23:57,119 Speaker 1: I mean a lot of these dates, a lot of 445 00:23:57,160 --> 00:23:59,199 Speaker 1: these deadline dates have been set in sort of you know, 446 00:23:59,320 --> 00:24:05,720 Speaker 1: whiteboard marker. They raised pretty easily. But this this time 447 00:24:05,720 --> 00:24:08,440 Speaker 1: it's real. Huh. I think this time in Israel. Yeah, 448 00:24:08,480 --> 00:24:12,480 Speaker 1: I mean it's an Act of Parliament. Yeah, it's set 449 00:24:12,480 --> 00:24:14,399 Speaker 1: in stone as much as it can be setting stone. 450 00:24:14,800 --> 00:24:16,480 Speaker 1: You know what's crazy is that in a year that 451 00:24:16,520 --> 00:24:19,560 Speaker 1: would have been so dominated by politics, Brexit, the U 452 00:24:19,680 --> 00:24:22,439 Speaker 1: S election. Sure we're hearing about the election more so 453 00:24:22,520 --> 00:24:25,760 Speaker 1: now that we are entering August, but it has completely 454 00:24:25,760 --> 00:24:28,119 Speaker 1: taken a back seat. Yeah. No, absolutely, I mean there 455 00:24:28,119 --> 00:24:30,200 Speaker 1: should have been a big political year as you say Brexit, 456 00:24:30,280 --> 00:24:33,080 Speaker 1: the U S election, um, and you know, you look 457 00:24:33,080 --> 00:24:35,639 Speaker 1: at the polls on the US election, and the potential 458 00:24:35,720 --> 00:24:39,360 Speaker 1: for a blue wave has to be you know significant now, 459 00:24:39,400 --> 00:24:41,600 Speaker 1: that's what the polls are telling us. And yet the 460 00:24:41,600 --> 00:24:44,480 Speaker 1: market is is really not focused on it yet and 461 00:24:45,080 --> 00:24:47,480 Speaker 1: it has to become focused on it, you know, pandemic 462 00:24:47,600 --> 00:24:49,840 Speaker 1: or not. We have to start working out what what 463 00:24:49,920 --> 00:24:54,320 Speaker 1: does the potential Biden presidency mean? And the market isn't 464 00:24:54,320 --> 00:24:57,320 Speaker 1: there yet. I suspect after the summer, when when we 465 00:24:57,359 --> 00:25:01,120 Speaker 1: get into September, then I think people will start trying 466 00:25:01,160 --> 00:25:04,000 Speaker 1: to pass out. You know, what is Biden likely to do? 467 00:25:04,040 --> 00:25:06,200 Speaker 1: What's it likely to mean? But but you know it's 468 00:25:06,280 --> 00:25:08,600 Speaker 1: later than I would have thought. Well, I guess if 469 00:25:08,640 --> 00:25:11,080 Speaker 1: the if the blue wave does not wash away drown power, 470 00:25:11,240 --> 00:25:16,200 Speaker 1: maybe maybe how much change can we expect? Well, I mean, 471 00:25:16,240 --> 00:25:19,520 Speaker 1: I think the thing is where we can expect changes 472 00:25:19,600 --> 00:25:22,800 Speaker 1: on the you know, things that are likely to impact 473 00:25:22,960 --> 00:25:28,239 Speaker 1: tax equity market, Yeah, corporate tax potential regulation, you know, 474 00:25:28,320 --> 00:25:31,119 Speaker 1: depending on who he picks is his VP or whoever 475 00:25:31,200 --> 00:25:34,440 Speaker 1: is in his administration. Break up of the tech stocks maybe, 476 00:25:34,520 --> 00:25:36,879 Speaker 1: you know, that's been that was talked about by some 477 00:25:36,960 --> 00:25:39,640 Speaker 1: of the candidates, you know, for the for the Democratic nomination. 478 00:25:39,760 --> 00:25:43,000 Speaker 1: So you know, these are things that are are significant 479 00:25:43,520 --> 00:25:46,480 Speaker 1: and at some point one would think that has to 480 00:25:46,520 --> 00:25:49,399 Speaker 1: start factoring into the market. All right, well, you know 481 00:25:49,600 --> 00:25:52,480 Speaker 1: we have to factor in Sarah factor into the podcast 482 00:25:53,119 --> 00:25:56,919 Speaker 1: factored in Crazy Things. Charlie Pellett will tell us stand 483 00:25:56,960 --> 00:26:00,840 Speaker 1: clearer of the craziest things we sign markets this week. 484 00:26:01,560 --> 00:26:04,359 Speaker 1: All right, Lee, I hope they warned you about our gimmick. 485 00:26:04,359 --> 00:26:06,840 Speaker 1: Here the craziest thing you've seen lately in markets. I 486 00:26:06,920 --> 00:26:08,520 Speaker 1: got a feeling you've got a good one for us, 487 00:26:08,520 --> 00:26:12,000 Speaker 1: so let's let's start with you. Well, I was told 488 00:26:12,000 --> 00:26:14,320 Speaker 1: it was it was the craziest thing you've seen this week, 489 00:26:15,640 --> 00:26:20,280 Speaker 1: and it wasn't a major move, but I found it amusing. 490 00:26:20,400 --> 00:26:24,480 Speaker 1: And that was Yes, that was when Jerome Palm was 491 00:26:24,560 --> 00:26:28,840 Speaker 1: speaking at his press conference following the FED meeting, and 492 00:26:28,840 --> 00:26:33,320 Speaker 1: he was asked about the shortage of coins in the system, 493 00:26:33,359 --> 00:26:35,919 Speaker 1: and he talked about the shortage of coins and what 494 00:26:36,000 --> 00:26:38,440 Speaker 1: the FED was going to do about it, and suddenly 495 00:26:38,480 --> 00:26:41,600 Speaker 1: the dollar rallied gold sold off because while he was speaking, 496 00:26:42,119 --> 00:26:45,480 Speaker 1: the dollar was declining, gold was was within touching distance 497 00:26:45,520 --> 00:26:48,200 Speaker 1: of its all time highs again up near two thousand dollars, 498 00:26:48,800 --> 00:26:52,040 Speaker 1: and he started talking about coins, and certainly the dollar 499 00:26:52,119 --> 00:26:56,600 Speaker 1: rallied and gold sold off. And I think somebody thought 500 00:26:56,640 --> 00:27:01,480 Speaker 1: he was talking about a a lack of dollar liquidity 501 00:27:01,680 --> 00:27:05,639 Speaker 1: like we had in March. So people thought he was 502 00:27:06,040 --> 00:27:08,639 Speaker 1: talking about this lack of dollar liquidity that suddenly there 503 00:27:08,680 --> 00:27:11,320 Speaker 1: was a shortage of dollars. So somebody came in, or 504 00:27:11,359 --> 00:27:13,240 Speaker 1: a number of people came in the bought a load 505 00:27:13,240 --> 00:27:16,720 Speaker 1: of dollars and sold gold and actually was talking about acorns. 506 00:27:16,840 --> 00:27:19,800 Speaker 1: He was talking about quarters and dimes and nickels. And 507 00:27:19,840 --> 00:27:22,480 Speaker 1: we're all sitting again, why is the dollar suddenly sold off? What? What? 508 00:27:22,800 --> 00:27:26,159 Speaker 1: What caused that? And I said he was talking about 509 00:27:26,200 --> 00:27:29,080 Speaker 1: a dollar shortage. No, he was talking about shortage of 510 00:27:29,160 --> 00:27:34,159 Speaker 1: quarters and nickels, and so that to me was was crazy. 511 00:27:34,160 --> 00:27:36,320 Speaker 1: It shows that times were in and how nervous the 512 00:27:36,359 --> 00:27:40,920 Speaker 1: market is, how far these moves have gone. But it was, Yeah, 513 00:27:41,200 --> 00:27:43,040 Speaker 1: that was the craziest thing I've seen for a while 514 00:27:43,040 --> 00:27:45,040 Speaker 1: in market. And I told you, I told you you'd 515 00:27:45,040 --> 00:27:48,359 Speaker 1: have a good one. Pretty good. When Mike has a 516 00:27:48,400 --> 00:27:57,000 Speaker 1: feeling crazy, hunches always come true, just like Molder. So 517 00:27:57,119 --> 00:27:58,840 Speaker 1: I still want to look that up I haven't have 518 00:27:58,960 --> 00:28:02,399 Speaker 1: to go on and after this uh x files. Careful 519 00:28:02,440 --> 00:28:05,120 Speaker 1: Google in that though. That's a dangerous Google search term 520 00:28:05,200 --> 00:28:11,919 Speaker 1: right there. I'll send you some, Sarah. The truth is 521 00:28:11,960 --> 00:28:15,879 Speaker 1: out back, Okay, I'll find it whatever whatever, whatever that means. 522 00:28:16,320 --> 00:28:17,960 Speaker 1: All right, Sarah, I have a you know, I have 523 00:28:18,000 --> 00:28:22,000 Speaker 1: another hunch, Sarah, I think you and I might have 524 00:28:22,040 --> 00:28:24,240 Speaker 1: the same one, the same one. So I'll let me. 525 00:28:24,320 --> 00:28:30,119 Speaker 1: I'll let you start, okay, star Lukay, all right, Okay, 526 00:28:30,119 --> 00:28:34,399 Speaker 1: So this is just a crazy one all around. Um So, 527 00:28:34,480 --> 00:28:37,359 Speaker 1: Mike and I'm both talking about Kodak. Of course, the 528 00:28:37,480 --> 00:28:41,160 Speaker 1: one thirty one year old company that filed for bankruptcy 529 00:28:41,160 --> 00:28:45,800 Speaker 1: in used to be known uh for photography or in 530 00:28:45,800 --> 00:28:48,680 Speaker 1: the photography space. Then briefly I had a stint in 531 00:28:48,720 --> 00:28:51,360 Speaker 1: the crypto space, and all of a sudden it is 532 00:28:51,440 --> 00:28:56,600 Speaker 1: moving into pharmaceuticals. Um So. The company received a government 533 00:28:56,720 --> 00:29:02,360 Speaker 1: loan essentially to help may generic drugs to help treat 534 00:29:02,360 --> 00:29:06,560 Speaker 1: the coronavirus, one of them being hydroxychloro quinn and shares 535 00:29:06,640 --> 00:29:11,320 Speaker 1: of Kodak just when absolutely insane. This week, at one point, 536 00:29:11,400 --> 00:29:17,600 Speaker 1: up more than two thousand seven, we saw droves of 537 00:29:18,120 --> 00:29:21,680 Speaker 1: robin hood traders piling into the stock about eighty thousand 538 00:29:21,680 --> 00:29:24,800 Speaker 1: and twenty four hour period. But there's another part to 539 00:29:24,840 --> 00:29:27,040 Speaker 1: the story that is also crazy. And I don't know 540 00:29:27,080 --> 00:29:29,640 Speaker 1: if Mike, you are also going to hop on this one. Oh, 541 00:29:29,800 --> 00:29:32,080 Speaker 1: I don't know. Why don't you hop on it first? 542 00:29:32,080 --> 00:29:35,920 Speaker 1: And then I will? Alright. So a lot of people 543 00:29:36,720 --> 00:29:38,800 Speaker 1: thought that something fishy was going on in the stock 544 00:29:38,920 --> 00:29:41,040 Speaker 1: because if if you look at trading volume that happened 545 00:29:41,080 --> 00:29:46,040 Speaker 1: on Monday announcement, right, So the announcement wasn't made until 546 00:29:46,320 --> 00:29:50,160 Speaker 1: the next day, and typically like the day before Monday 547 00:29:50,240 --> 00:29:53,160 Speaker 1: or the trading session before on Friday, you saw seventy 548 00:29:53,160 --> 00:29:56,880 Speaker 1: five thousand shares of Kodak trade. However, on Monday, all 549 00:29:56,880 --> 00:29:59,800 Speaker 1: of a sudden, you saw one point six five mi 550 00:30:00,120 --> 00:30:02,880 Speaker 1: ly in shares change hands. So there's tons of people 551 00:30:02,920 --> 00:30:06,400 Speaker 1: out there saying, what's going on. It looks like insider trading. 552 00:30:06,440 --> 00:30:10,840 Speaker 1: Something's really fishy. Turns out, what happened on Monday was 553 00:30:10,880 --> 00:30:16,080 Speaker 1: that Kodak had given UH some local news outlets UH 554 00:30:16,280 --> 00:30:21,040 Speaker 1: previous announcement on what was happening on this announcement. However, 555 00:30:21,080 --> 00:30:23,680 Speaker 1: they didn't tell them that it was embargoed. It wasn't embargoed. 556 00:30:24,040 --> 00:30:28,800 Speaker 1: So a very few number of local news stations actually 557 00:30:28,840 --> 00:30:31,720 Speaker 1: published the news on this announcement, and then Codex said, 558 00:30:31,760 --> 00:30:34,360 Speaker 1: wait a second, that's not supposed to be public yet, 559 00:30:34,880 --> 00:30:38,640 Speaker 1: so they made them delete the news and pull down 560 00:30:38,720 --> 00:30:42,560 Speaker 1: some tweets that had been put out previously. Um So, 561 00:30:42,720 --> 00:30:45,959 Speaker 1: the idea is that some people had caught wind that 562 00:30:46,040 --> 00:30:48,600 Speaker 1: this was going on, traded on the news on Monday 563 00:30:48,640 --> 00:30:51,480 Speaker 1: ahead of the official announcement, but then all of a sudden, 564 00:30:51,480 --> 00:30:54,160 Speaker 1: a lot of it was taken down. Um So, no 565 00:30:54,200 --> 00:30:56,400 Speaker 1: one had a clue what had happened, why trading volume 566 00:30:56,400 --> 00:30:58,120 Speaker 1: had spiked so much on Monday, and then we just 567 00:30:58,120 --> 00:31:02,719 Speaker 1: sat continue throughout the remarkable. My favorite stat of it is, 568 00:31:02,760 --> 00:31:05,080 Speaker 1: so the loan was for a hundred or what seven 569 00:31:05,280 --> 00:31:09,760 Speaker 1: hundred and sixty five million, and the companies added something 570 00:31:09,800 --> 00:31:12,600 Speaker 1: like one point four billion in market cap. Is less 571 00:31:12,600 --> 00:31:14,600 Speaker 1: than a hundred million market cap company at the end 572 00:31:14,600 --> 00:31:17,520 Speaker 1: of next week, So do that ratio a two to 573 00:31:17,600 --> 00:31:22,080 Speaker 1: one loan to market cap ratio. Um and good luck 574 00:31:22,120 --> 00:31:24,640 Speaker 1: to all you robin Hood traders out there for for 575 00:31:24,640 --> 00:31:27,480 Speaker 1: for buying this one. And remember Kodak also pivoted the 576 00:31:27,480 --> 00:31:31,440 Speaker 1: blockchain a couple a couple of years ago and that 577 00:31:31,480 --> 00:31:34,760 Speaker 1: didn't quite work out. But uh, I don't know, what 578 00:31:34,800 --> 00:31:36,760 Speaker 1: do you think LEAs now they're think I got to 579 00:31:36,800 --> 00:31:39,600 Speaker 1: give it to Lee though that the coins. I think 580 00:31:39,640 --> 00:31:41,360 Speaker 1: I gotta tip my hat to leave with the coins 581 00:31:41,400 --> 00:31:43,520 Speaker 1: at the at the FED press conference. That's good, it 582 00:31:43,600 --> 00:31:47,320 Speaker 1: was too obvious. Congratulations, lead distinct Door. You can put 583 00:31:47,320 --> 00:31:53,000 Speaker 1: this on your resume. I will well. As Mike hinted 584 00:31:53,040 --> 00:31:54,680 Speaker 1: at in the beginning of the podcast, we did get 585 00:31:54,680 --> 00:31:58,040 Speaker 1: a call into our podcast hotline and it's also about 586 00:31:58,200 --> 00:32:01,320 Speaker 1: coins in a way, but digital coin. Um. So this 587 00:32:01,480 --> 00:32:06,120 Speaker 1: is from Morgan Hill from Fort Lauderdale, Florida. So why 588 00:32:06,160 --> 00:32:08,440 Speaker 1: don't we go ahead and hear what he had to say. Hello, 589 00:32:08,480 --> 00:32:11,360 Speaker 1: my name is Morgan Hill. I'm an analyst in Fort Lauderdale. 590 00:32:11,840 --> 00:32:15,440 Speaker 1: And my question actually is just in regards to the 591 00:32:15,480 --> 00:32:18,920 Speaker 1: recent weakening in the US dollar as of late and 592 00:32:19,440 --> 00:32:24,200 Speaker 1: correspondingly and increase or in performance at least in crypto 593 00:32:24,280 --> 00:32:28,080 Speaker 1: relative to the euro. Uh and uh, you know, modestly 594 00:32:28,240 --> 00:32:31,120 Speaker 1: in the dollar as well. If there is a blue sweep, 595 00:32:31,160 --> 00:32:35,400 Speaker 1: are there any considerations regarding a spike in the price 596 00:32:35,400 --> 00:32:40,520 Speaker 1: appreciation of crypto relative to other currencies and how that's 597 00:32:40,560 --> 00:32:44,440 Speaker 1: being Christon, I would love you know your feedback. Thank 598 00:32:44,480 --> 00:32:47,360 Speaker 1: you so much and I enjoy the show. So basically 599 00:32:47,720 --> 00:32:50,040 Speaker 1: what Morgan is asking, he says that if there is 600 00:32:50,080 --> 00:32:53,600 Speaker 1: a blue sweep, are there any considerations regarding a spike 601 00:32:53,720 --> 00:32:58,840 Speaker 1: in price appreciation of crypto relative to other currencies, and 602 00:32:58,960 --> 00:33:03,640 Speaker 1: how that's being priceton. Now, Mike, you have an answer 603 00:33:03,640 --> 00:33:05,800 Speaker 1: to this. I do certain most certainly do not not 604 00:33:05,920 --> 00:33:10,760 Speaker 1: an answer that will be acceptable Tony crypto enthusiasts out there, So, uh, 605 00:33:10,800 --> 00:33:12,760 Speaker 1: if you have an answer to this question, give us 606 00:33:12,760 --> 00:33:16,320 Speaker 1: a call on the hotline at six four six three 607 00:33:16,360 --> 00:33:19,440 Speaker 1: two four three four nine. Oh, Lee, I don't know 608 00:33:19,480 --> 00:33:22,000 Speaker 1: how how closely you follow crypto. Do you see any 609 00:33:22,240 --> 00:33:24,800 Speaker 1: bullish case for crypto in the event of a blue sweep? 610 00:33:24,800 --> 00:33:27,680 Speaker 1: I mean, I guess in theory you could think of, uh, 611 00:33:28,040 --> 00:33:31,480 Speaker 1: weaker dollar, bigger deficits, that that type of thing. I mean, 612 00:33:31,480 --> 00:33:33,840 Speaker 1: maybe that's what he's getting at. Yeah, I mean I 613 00:33:33,880 --> 00:33:36,280 Speaker 1: think you know, I've been asked this question, you know, 614 00:33:36,320 --> 00:33:38,920 Speaker 1: given the view on gold, I've been asked about bitcoin, 615 00:33:39,240 --> 00:33:42,920 Speaker 1: um crypto. Yeah, you know, in the same way as 616 00:33:43,320 --> 00:33:47,120 Speaker 1: gold is a a hard asset, then you can make 617 00:33:47,160 --> 00:33:50,080 Speaker 1: the case that crypto is as well, because it's you know, 618 00:33:50,160 --> 00:33:54,040 Speaker 1: it's a it's an asset priced against the dollar, and therefore, 619 00:33:54,200 --> 00:33:57,680 Speaker 1: if there's a depreciation the dollar, you would expect something, 620 00:33:57,760 --> 00:34:00,200 Speaker 1: you know, crypto to go up against the dollar. So yeah, 621 00:34:00,200 --> 00:34:02,520 Speaker 1: a lot of people are putting it in the sort 622 00:34:02,560 --> 00:34:05,960 Speaker 1: of gold category, and I can see the argument for that. 623 00:34:06,840 --> 00:34:09,600 Speaker 1: You know, it's got to be the most volatile safe 624 00:34:09,600 --> 00:34:11,760 Speaker 1: haven in the world, though I have to say so, 625 00:34:12,239 --> 00:34:15,680 Speaker 1: I'm not sure I'm I'm buying into it personally. Well 626 00:34:15,680 --> 00:34:18,680 Speaker 1: I know I'm not buying into it personally, but I 627 00:34:18,719 --> 00:34:21,680 Speaker 1: can see the argument putting it alongside gold. But the 628 00:34:21,760 --> 00:34:24,080 Speaker 1: volatility makes it a really, really tough sell. Is a 629 00:34:24,080 --> 00:34:27,120 Speaker 1: safe haven for me. My favorite remarks along those lines 630 00:34:27,120 --> 00:34:30,439 Speaker 1: where someone tweeted one time that we the dollar sure 631 00:34:30,560 --> 00:34:37,759 Speaker 1: is volatile against bitcoin, isn't it. That's that's the right direction, right. 632 00:34:39,920 --> 00:34:42,120 Speaker 1: So all right, Well, hopefully we got some other calls 633 00:34:42,120 --> 00:34:45,080 Speaker 1: with opinions on that, because I'm sorry, we need to 634 00:34:45,120 --> 00:34:48,360 Speaker 1: outsource some of our crypto content to to the listeners 635 00:34:48,400 --> 00:34:52,160 Speaker 1: because I I am the furthest thing from an authority 636 00:34:52,320 --> 00:34:55,400 Speaker 1: on on that space, and I would never pretend to 637 00:34:55,440 --> 00:35:01,200 Speaker 1: be one either. But with but said, such a great 638 00:35:01,239 --> 00:35:03,480 Speaker 1: time having we Farriage on the show today. Thank you 639 00:35:03,560 --> 00:35:05,920 Speaker 1: so much for joining us, Lee my pleasure. Thank you 640 00:35:05,960 --> 00:35:17,200 Speaker 1: for having me What Goes Up. We'll be back next week. 641 00:35:17,560 --> 00:35:20,200 Speaker 1: Until then, you can find us on the Bloomberg Terminal 642 00:35:20,320 --> 00:35:24,319 Speaker 1: website and app, or wherever you get your podcasts. We'd 643 00:35:24,360 --> 00:35:26,400 Speaker 1: love it if you took the time to rate interview 644 00:35:26,400 --> 00:35:29,680 Speaker 1: the show on Apple Podcasts so more listeners can find us. 645 00:35:30,160 --> 00:35:32,759 Speaker 1: And you can find us on Twitter, follow me at 646 00:35:32,880 --> 00:35:36,560 Speaker 1: at Sarah Pontzech, Mike is that Reaganonymous, and you can 647 00:35:36,600 --> 00:35:40,920 Speaker 1: also follow Bloomberg Podcasts at podcasts. Also, thank you to 648 00:35:41,000 --> 00:35:43,360 Speaker 1: Charlie Pellett of Bloomberg Radio and the voice of the 649 00:35:43,400 --> 00:35:46,600 Speaker 1: New York City Subway system. What Goes Up as produced 650 00:35:46,600 --> 00:35:50,440 Speaker 1: by Jordan Gospore. The head of Bloomberg podcast is Francesca Levie. 651 00:35:50,680 --> 00:35:52,600 Speaker 1: Thanks for listening. See you next time.