1 00:00:12,360 --> 00:00:16,040 Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast. 2 00:00:16,079 --> 00:00:18,960 Speaker 1: My name is Mike Reagan. I'm a senior editor at Bloomberg, 3 00:00:19,480 --> 00:00:22,080 Speaker 1: and I'm Ldonna Hick, a crosshouse at report at Bloomberg. 4 00:00:22,680 --> 00:00:25,119 Speaker 1: At This week on the show, well, the markets have 5 00:00:25,320 --> 00:00:28,120 Speaker 1: gotten hit with a one to punch, a hawkish pivot 6 00:00:28,120 --> 00:00:31,240 Speaker 1: from the Federal Reserve Chair Jerome pal and a new 7 00:00:31,320 --> 00:00:34,560 Speaker 1: sort of alarming variant of the coronavirus that's spreading around 8 00:00:34,560 --> 00:00:37,800 Speaker 1: the world. Will these two combined to form the Grinch 9 00:00:37,840 --> 00:00:40,839 Speaker 1: who stole the Santa Claus Rally. We'll get into it 10 00:00:40,880 --> 00:00:43,200 Speaker 1: with a Goldman alum who is now the chief investment 11 00:00:43,240 --> 00:00:47,640 Speaker 1: officer at Kestra Investment Management. But first, vil Donna, I 12 00:00:47,840 --> 00:00:50,240 Speaker 1: I wanted to thank you for holding down the fort 13 00:00:50,360 --> 00:00:52,080 Speaker 1: for the last couple of weeks while I was out. 14 00:00:52,200 --> 00:00:55,959 Speaker 1: I was actually first my wife got COVID and then 15 00:00:56,000 --> 00:00:58,680 Speaker 1: I got COVID, and um, as you know, I'm not 16 00:00:58,840 --> 00:01:01,160 Speaker 1: usually on time with things like COVID. You know that 17 00:01:01,280 --> 00:01:04,640 Speaker 1: the early adopters got it almost two years ago, and 18 00:01:04,680 --> 00:01:09,280 Speaker 1: here I'm finally getting it now. You know it's it's 19 00:01:09,360 --> 00:01:11,559 Speaker 1: it's right on brand for me. Like I'm I'm still 20 00:01:11,600 --> 00:01:15,800 Speaker 1: listening to Taylor Swift songs, the scooter versions, you know, 21 00:01:15,920 --> 00:01:19,080 Speaker 1: to give you an idea. Oh my gosh, don't say 22 00:01:19,120 --> 00:01:21,520 Speaker 1: that you're going to fend a lot of podcast listeners. 23 00:01:21,840 --> 00:01:24,399 Speaker 1: I'm trying to. I'm trying to recalibrate the jokes to 24 00:01:24,400 --> 00:01:27,759 Speaker 1: to your generation. But anyway, Danna tell us about this 25 00:01:27,959 --> 00:01:29,800 Speaker 1: week's guest. I just met her for the first time. 26 00:01:29,840 --> 00:01:32,240 Speaker 1: I'm I'm excited. What do we know about? What's your 27 00:01:32,280 --> 00:01:34,800 Speaker 1: intel on this guest? Well, first, I want to say 28 00:01:34,800 --> 00:01:37,200 Speaker 1: welcome back, and we really missed you on the podcast. 29 00:01:37,720 --> 00:01:40,200 Speaker 1: I don't believe. I don't believe that. In fact, I 30 00:01:40,240 --> 00:01:43,200 Speaker 1: haven't even listened because I assumed you spent the whole 31 00:01:43,240 --> 00:01:45,800 Speaker 1: time roasting me on on the last two episodes a 32 00:01:45,840 --> 00:01:48,400 Speaker 1: little bit, so maybe don't really listen to them. But 33 00:01:48,640 --> 00:01:50,760 Speaker 1: I did miss you. I'm glad to have you back, 34 00:01:51,000 --> 00:01:53,240 Speaker 1: and I want to thank everybody who helped fill in 35 00:01:53,280 --> 00:01:55,960 Speaker 1: over the last couple of weeks. But then let's bring 36 00:01:55,960 --> 00:01:57,960 Speaker 1: in our guest. Her name is Kara Murphy. She's the 37 00:01:58,000 --> 00:02:01,400 Speaker 1: chief investment officer of Quesh and S Management. Kara, I 38 00:02:01,400 --> 00:02:03,240 Speaker 1: spoke with you recently. I had so much fun talking 39 00:02:03,280 --> 00:02:05,160 Speaker 1: to you, and I want to thank you for joining 40 00:02:05,240 --> 00:02:07,960 Speaker 1: us on the podcast. Well, thanks for having me, and 41 00:02:08,040 --> 00:02:10,519 Speaker 1: you guys promised me it would be fun, so it 42 00:02:10,600 --> 00:02:14,000 Speaker 1: was an easy yet it's supposed to be fun. It's 43 00:02:14,000 --> 00:02:18,080 Speaker 1: a really high bar. Well care tell us a little 44 00:02:18,080 --> 00:02:20,440 Speaker 1: bit about Kestra. I don't know a lot about the firms, 45 00:02:20,480 --> 00:02:23,200 Speaker 1: so just give us sort of the the overview about 46 00:02:23,280 --> 00:02:25,679 Speaker 1: Kestra and how you ended up there. It's it's only 47 00:02:25,720 --> 00:02:27,839 Speaker 1: been a few months you've been there, right, That's right, 48 00:02:27,960 --> 00:02:31,800 Speaker 1: that's right. So we are a wealth management firm with 49 00:02:31,919 --> 00:02:36,320 Speaker 1: a number of different UM channels. So there's Kester Financial 50 00:02:36,520 --> 00:02:40,919 Speaker 1: which has UM advisors all throughout the country, Grove Point. 51 00:02:41,320 --> 00:02:44,200 Speaker 1: We also work with Art and Trust Company and then 52 00:02:44,240 --> 00:02:46,360 Speaker 1: Blue Spring, so we have a number of different channels 53 00:02:46,360 --> 00:02:49,359 Speaker 1: and ways in which we work with financial advisors. As 54 00:02:49,400 --> 00:02:51,160 Speaker 1: you said, I joined a number of months ago to 55 00:02:51,240 --> 00:02:55,080 Speaker 1: build out Kester Investment Management and so my remit is 56 00:02:55,120 --> 00:03:01,040 Speaker 1: really to build out investment resources, research commentary strategies to 57 00:03:01,080 --> 00:03:04,120 Speaker 1: be able to assist advisors in managing their client's wealth. 58 00:03:04,520 --> 00:03:07,960 Speaker 1: So it's been a wonderful opportunity for me to kind 59 00:03:07,960 --> 00:03:10,680 Speaker 1: of have a blank sheet of paper and build something 60 00:03:10,720 --> 00:03:12,760 Speaker 1: that we think is going to be really helpful and 61 00:03:12,880 --> 00:03:15,280 Speaker 1: valuable to advisors, and I want to get into some 62 00:03:15,360 --> 00:03:17,440 Speaker 1: of your strategy and how you're thinking about things. But 63 00:03:17,560 --> 00:03:20,320 Speaker 1: just to start things off with the big events that 64 00:03:20,360 --> 00:03:21,920 Speaker 1: we had this week, because it was a really, really 65 00:03:21,919 --> 00:03:24,880 Speaker 1: busy week. Because Mike mentioned, we had these pet winds 66 00:03:24,919 --> 00:03:27,000 Speaker 1: that really weren't here a couple of days ago, with 67 00:03:27,120 --> 00:03:30,160 Speaker 1: a new variant, plus a federal reserve that potentially could 68 00:03:30,200 --> 00:03:32,400 Speaker 1: be withdrawing stimulus at a much faster pace than we 69 00:03:32,440 --> 00:03:35,000 Speaker 1: had previously thought. So how are you thinking about this 70 00:03:35,040 --> 00:03:38,640 Speaker 1: and how are some of these developments impacting your strategy. Yeah, 71 00:03:39,000 --> 00:03:41,040 Speaker 1: as you said, it's been a very interesting week. You know, 72 00:03:41,080 --> 00:03:42,839 Speaker 1: you kind of come back from a holiday and hope 73 00:03:42,840 --> 00:03:44,960 Speaker 1: it will be a little quiet, but it never quite 74 00:03:45,000 --> 00:03:47,640 Speaker 1: works out that way. UM. But it's not too dissimilar 75 00:03:48,000 --> 00:03:50,640 Speaker 1: um to where we were over the summer. UM. So, 76 00:03:50,760 --> 00:03:53,040 Speaker 1: just as the delta variant was getting going, we were 77 00:03:53,040 --> 00:03:55,520 Speaker 1: starting to understand that it was much more contagious and 78 00:03:55,560 --> 00:03:58,680 Speaker 1: we were starting to see rapid um case increases in 79 00:03:58,680 --> 00:04:01,960 Speaker 1: the US, and that happened just at a time when 80 00:04:02,000 --> 00:04:05,839 Speaker 1: the Fed was gearing up to start withdrawing some stimulus. UM. 81 00:04:05,920 --> 00:04:08,560 Speaker 1: So as those two things unfolded Around the same time, 82 00:04:09,000 --> 00:04:12,200 Speaker 1: UM delta ended up becoming more of a head one 83 00:04:12,320 --> 00:04:15,520 Speaker 1: that maybe some had initially thought, and that actually got 84 00:04:15,520 --> 00:04:18,120 Speaker 1: the FED to hit the pause button a bit and 85 00:04:18,120 --> 00:04:20,960 Speaker 1: and pushed out expectations for tapering and for FED rate. 86 00:04:21,040 --> 00:04:25,480 Speaker 1: Kites now roll forward a couple of months more and 87 00:04:25,680 --> 00:04:28,080 Speaker 1: the kind of steaks on both sides have increased a 88 00:04:28,080 --> 00:04:31,239 Speaker 1: little bit where we have another kind of unknown variant. 89 00:04:31,400 --> 00:04:34,479 Speaker 1: We know that the market hates unknowns, so in the 90 00:04:34,520 --> 00:04:38,520 Speaker 1: absence of information, people often go to dark places, right, 91 00:04:38,560 --> 00:04:41,239 Speaker 1: So so the market is sometimes assuming the worst about 92 00:04:41,240 --> 00:04:43,679 Speaker 1: this new variant at the same time that we're seeing 93 00:04:43,839 --> 00:04:47,960 Speaker 1: more evidence of inflationary pressures. And and I think we 94 00:04:47,960 --> 00:04:50,760 Speaker 1: should break down kind of what's driving some of these 95 00:04:50,800 --> 00:04:53,919 Speaker 1: inflationary pressures. But clearly the stakes have gotten higher for 96 00:04:53,960 --> 00:04:56,520 Speaker 1: the FED. And so we've seen a big change in 97 00:04:56,600 --> 00:04:59,560 Speaker 1: language from Powell and the markets starting to pull forward 98 00:04:59,600 --> 00:05:04,440 Speaker 1: expect patitions for tapering and FED rate increases. Well. Carry 99 00:05:04,640 --> 00:05:07,200 Speaker 1: my colleague Cameron Christ has a sort of a jokey 100 00:05:07,240 --> 00:05:10,480 Speaker 1: line that he puts in columns, and that's uh that 101 00:05:10,520 --> 00:05:13,960 Speaker 1: you know, everyone got a master's in epidemiology from Google. 102 00:05:14,000 --> 00:05:16,880 Speaker 1: Your you know, I know as a as a chief 103 00:05:16,920 --> 00:05:21,520 Speaker 1: investment officer, I'm I'm sure you you've you've got that too. So, um, 104 00:05:21,560 --> 00:05:24,200 Speaker 1: there is this sort of echo of the frightening nous 105 00:05:24,200 --> 00:05:27,440 Speaker 1: of the delta variant with this omicron variant. What have 106 00:05:27,520 --> 00:05:30,839 Speaker 1: you learned about it? How are you thinking about it specifically? 107 00:05:31,080 --> 00:05:33,520 Speaker 1: I mean, is it potentially a false alarm? Do you 108 00:05:33,520 --> 00:05:35,960 Speaker 1: think that that everyone's sort of freaking out about this? 109 00:05:36,160 --> 00:05:39,000 Speaker 1: I look at this is me speaking as an investor 110 00:05:39,040 --> 00:05:43,200 Speaker 1: and not an epidemiologist, but there is definitely a chance 111 00:05:43,240 --> 00:05:46,200 Speaker 1: that this is a false alarm. And again i'd like, 112 00:05:46,240 --> 00:05:48,719 Speaker 1: I don't mean to downplay like the very real human 113 00:05:48,800 --> 00:05:53,880 Speaker 1: impact of this, but when we think about how businesses, individuals, 114 00:05:53,920 --> 00:05:58,000 Speaker 1: economies have been able to react in previous periods, we've 115 00:05:58,000 --> 00:06:00,760 Speaker 1: gotten better and better with every that goes by in 116 00:06:00,800 --> 00:06:04,760 Speaker 1: this COVID environment. So, assuming that this new variant is 117 00:06:04,800 --> 00:06:09,360 Speaker 1: not a wholly new kind of type of disease, we 118 00:06:09,440 --> 00:06:12,720 Speaker 1: have better therapeutics, we have people being more careful in 119 00:06:12,760 --> 00:06:15,640 Speaker 1: their behavior, we have you know, a large portion of 120 00:06:15,680 --> 00:06:18,880 Speaker 1: the population vaccinated. So so there are we have a 121 00:06:18,920 --> 00:06:21,680 Speaker 1: lot more tools today, um to be able to manage 122 00:06:21,680 --> 00:06:23,600 Speaker 1: through this than we did before. And then put on 123 00:06:23,640 --> 00:06:25,560 Speaker 1: top of that, we all know how to use our zoom. 124 00:06:25,760 --> 00:06:28,960 Speaker 1: We've all gotten used to working remotely, we know how 125 00:06:28,960 --> 00:06:32,359 Speaker 1: to order things online. So I think the economy and 126 00:06:32,400 --> 00:06:34,240 Speaker 1: people are in much better position to be able to 127 00:06:34,279 --> 00:06:37,680 Speaker 1: handle a setback, even if it isn't setback. Yeah, I 128 00:06:37,680 --> 00:06:39,520 Speaker 1: still mess off the zoom from time to time, but 129 00:06:39,680 --> 00:06:44,960 Speaker 1: I know I do too. Yeah, we all do. And 130 00:06:45,000 --> 00:06:47,839 Speaker 1: then karat the other part of this, obviously is the FED. 131 00:06:47,960 --> 00:06:51,000 Speaker 1: I know before we started taping the podcast, Mike and 132 00:06:51,040 --> 00:06:53,760 Speaker 1: I have this conversation where I told him I had 133 00:06:53,800 --> 00:06:56,560 Speaker 1: written this story, saying that this is the most hawkish 134 00:06:56,640 --> 00:06:59,240 Speaker 1: j Powell has been in about three years. I got 135 00:06:59,320 --> 00:07:03,240 Speaker 1: some mails from Bloomberg users terminal users saying, actually, you 136 00:07:03,240 --> 00:07:06,440 Speaker 1: can't really use that word to describe him. So how 137 00:07:06,520 --> 00:07:09,080 Speaker 1: much of what's happened this week? How big of a 138 00:07:09,160 --> 00:07:12,160 Speaker 1: rule does Powell play in the sell off that we 139 00:07:12,400 --> 00:07:14,640 Speaker 1: saw over the last couple of days, And do you 140 00:07:14,680 --> 00:07:18,800 Speaker 1: think that the reaction was rational? So I I do 141 00:07:18,920 --> 00:07:21,440 Speaker 1: think that the market had a bit of an overreaction, 142 00:07:21,600 --> 00:07:23,800 Speaker 1: which is not uncommon. Right when you see a big 143 00:07:23,840 --> 00:07:26,720 Speaker 1: pivot in in a viewpoint with somebody like Powell who 144 00:07:26,840 --> 00:07:29,360 Speaker 1: is very influential, you can often see the market kind 145 00:07:29,360 --> 00:07:31,960 Speaker 1: of overreact in the short term. And and remember that 146 00:07:32,000 --> 00:07:35,720 Speaker 1: we only just recently had renomination of Powell, so his 147 00:07:36,120 --> 00:07:40,120 Speaker 1: sort of level of authority has been reinforced because of 148 00:07:40,160 --> 00:07:43,239 Speaker 1: that nomination. So I think his word carries very heavy weight. 149 00:07:43,560 --> 00:07:46,880 Speaker 1: He was also very clearly associated with the devish camp 150 00:07:46,960 --> 00:07:48,960 Speaker 1: within the FED, and so to see him move a 151 00:07:48,960 --> 00:07:51,320 Speaker 1: little bit more toward that hawk ish end, I think 152 00:07:51,480 --> 00:07:54,280 Speaker 1: is quite significant. But you know, I might agree with 153 00:07:54,320 --> 00:07:56,880 Speaker 1: some of those terminal users who reached out were like, 154 00:07:56,920 --> 00:07:59,120 Speaker 1: I don't know that I'd call him a hawk. He's 155 00:07:59,200 --> 00:08:02,320 Speaker 1: just a little bit more hawkish than he had been before. Yeah, 156 00:08:02,440 --> 00:08:05,040 Speaker 1: I think that's fair. And I my guess is he 157 00:08:05,080 --> 00:08:08,280 Speaker 1: reserves the right to go be going up back to 158 00:08:08,320 --> 00:08:10,000 Speaker 1: a dove in the in the spring of this summer, 159 00:08:10,040 --> 00:08:13,160 Speaker 1: if right. I mean, all we need are a couple 160 00:08:13,160 --> 00:08:15,240 Speaker 1: of data points in the other direction, and he could 161 00:08:15,320 --> 00:08:17,640 Speaker 1: very easily move back to the other side. Care One 162 00:08:17,640 --> 00:08:20,040 Speaker 1: thing I know you you keep an eye on is 163 00:08:20,240 --> 00:08:24,360 Speaker 1: the credit markets and and credit spreads. Um reading some 164 00:08:24,400 --> 00:08:26,840 Speaker 1: of the notes you sent over to us with some 165 00:08:26,880 --> 00:08:29,320 Speaker 1: of your thoughts, and you know pointing out that you 166 00:08:29,320 --> 00:08:31,480 Speaker 1: know that the credit markets haven't really sort of freaked 167 00:08:31,480 --> 00:08:35,559 Speaker 1: out over these developments. I mean, spreads are widening out 168 00:08:35,559 --> 00:08:38,040 Speaker 1: a little bit, but boy, historically if you zoom out 169 00:08:38,080 --> 00:08:40,400 Speaker 1: on the chart, you can't even notice it. To me, 170 00:08:40,480 --> 00:08:42,840 Speaker 1: it's fascinating. I mean you you certainly, I'm sure have 171 00:08:42,920 --> 00:08:47,160 Speaker 1: clients who are actively engaged in credit markets or at 172 00:08:47,240 --> 00:08:49,760 Speaker 1: least dipping their toes in it, you know, for people 173 00:08:50,280 --> 00:08:52,360 Speaker 1: sort of just looking at the stock market, though, there's 174 00:08:52,400 --> 00:08:56,480 Speaker 1: this tendency you know, for stock investors always seek a 175 00:08:56,520 --> 00:08:59,120 Speaker 1: second opinion from someone they think is smarter. In the 176 00:08:59,160 --> 00:09:02,319 Speaker 1: fixed income mark gets um and that the temptation is 177 00:09:02,360 --> 00:09:04,200 Speaker 1: look at to look at credit markets and say, well, 178 00:09:04,200 --> 00:09:07,000 Speaker 1: they're not really freaking out. This is a false alarm, 179 00:09:07,200 --> 00:09:09,360 Speaker 1: you know. To me, I think about it as I 180 00:09:09,840 --> 00:09:12,280 Speaker 1: the participants in credit and fixed income tend to be 181 00:09:12,520 --> 00:09:17,520 Speaker 1: h entirely professional investing class, whereas in the stock market 182 00:09:17,600 --> 00:09:20,080 Speaker 1: you've got read It and Robin Hood and everything else 183 00:09:20,120 --> 00:09:23,640 Speaker 1: and and and not entirely driven by you know, the 184 00:09:23,640 --> 00:09:26,600 Speaker 1: CFAs of the world. But I'm curious how you are 185 00:09:26,720 --> 00:09:30,040 Speaker 1: looking at credit markets as sort of the signal for 186 00:09:30,080 --> 00:09:32,959 Speaker 1: the stock market, you know, the FED. While how's a 187 00:09:33,000 --> 00:09:36,080 Speaker 1: little bit more hawkish. Now, I feel like, you know, 188 00:09:36,360 --> 00:09:39,160 Speaker 1: the FED really sort of changed the game with their 189 00:09:39,200 --> 00:09:44,000 Speaker 1: credit facilities during the pandemic actually being willing to go 190 00:09:44,040 --> 00:09:46,480 Speaker 1: out and buy corporate credit. Um And I know they 191 00:09:46,480 --> 00:09:49,600 Speaker 1: didn't really end up buying a whole ton, but sort 192 00:09:49,640 --> 00:09:52,080 Speaker 1: of the symbolism of it, of of the FED sort 193 00:09:52,080 --> 00:09:55,880 Speaker 1: of breaking that glass and breaking that seal. Does that 194 00:09:56,160 --> 00:09:59,360 Speaker 1: does that at all? Sort of sort of break that 195 00:09:59,480 --> 00:10:02,480 Speaker 1: signal for credit markets that that we rely on in 196 00:10:02,520 --> 00:10:06,320 Speaker 1: your opinion, Well, it's so interesting that you mentioned about 197 00:10:06,360 --> 00:10:09,679 Speaker 1: like stock investors looking to the bond market for confirmation, 198 00:10:09,880 --> 00:10:12,640 Speaker 1: and like I often think of stock investors versus bond 199 00:10:12,679 --> 00:10:16,400 Speaker 1: investors almost like Griffin Door versus s blitz Lytherin. You know, 200 00:10:16,440 --> 00:10:20,160 Speaker 1: there's this like healthy level of competition between the two, 201 00:10:20,200 --> 00:10:22,600 Speaker 1: and there's always this like real fealty to wherever it 202 00:10:22,679 --> 00:10:24,840 Speaker 1: is that you came from. I won't say whether like 203 00:10:24,920 --> 00:10:28,360 Speaker 1: who's the slitherin house, but but but there is like 204 00:10:28,400 --> 00:10:31,600 Speaker 1: a fair amount of um of sort of like loyalty 205 00:10:31,720 --> 00:10:33,520 Speaker 1: saying like if you're a stock investor, no, no no, no, 206 00:10:33,640 --> 00:10:36,439 Speaker 1: the stock market is the one that's giving the real signals. 207 00:10:36,800 --> 00:10:38,480 Speaker 1: But but I think any investor is going to look 208 00:10:38,520 --> 00:10:41,480 Speaker 1: for more than one single data point to confirm, right, 209 00:10:41,600 --> 00:10:44,720 Speaker 1: especially in very fast moving markets, you know, Like I 210 00:10:44,760 --> 00:10:47,719 Speaker 1: think back to the global financial crisis. I was then 211 00:10:47,720 --> 00:10:50,440 Speaker 1: a stock analyst covering financial companies, and we would use 212 00:10:50,480 --> 00:10:53,280 Speaker 1: the credit markets a lot because they were often picking 213 00:10:53,360 --> 00:10:56,360 Speaker 1: up signals, particularly like short term funding markets, that the 214 00:10:56,400 --> 00:10:59,679 Speaker 1: equity markets were missing. So so there are times when 215 00:10:59,720 --> 00:11:01,439 Speaker 1: there's one part of the market that's a little bit 216 00:11:01,440 --> 00:11:04,760 Speaker 1: closer to this story. I think in this particular instance, 217 00:11:04,840 --> 00:11:07,680 Speaker 1: like we really aren't. We're not like looking at a 218 00:11:07,679 --> 00:11:10,599 Speaker 1: lot of stress in general in credit and so I 219 00:11:10,600 --> 00:11:13,320 Speaker 1: wouldn't say that like credit markets are necessarily closer to 220 00:11:13,360 --> 00:11:16,440 Speaker 1: the locus of the issue. It's just yet another kind 221 00:11:16,440 --> 00:11:19,480 Speaker 1: of UM signal to be able to put alongside these 222 00:11:19,480 --> 00:11:22,040 Speaker 1: other ones. UM. So in this case, you know, you're 223 00:11:22,040 --> 00:11:24,800 Speaker 1: gonna look at the full set of data that you 224 00:11:24,840 --> 00:11:27,480 Speaker 1: can UM and what that's telling us is that there's 225 00:11:27,480 --> 00:11:29,800 Speaker 1: nobody there who's raising the red flag. Mike, I feel 226 00:11:29,800 --> 00:11:32,760 Speaker 1: like you'd be in raven Claw or huffle Pop. Those 227 00:11:32,760 --> 00:11:38,720 Speaker 1: are Harry Potter. Oh oh my god, Okay, you'll probably 228 00:11:38,720 --> 00:11:43,080 Speaker 1: watch Harry Potter and like twenty years the way you're trending. Yeah, 229 00:11:43,360 --> 00:11:53,600 Speaker 1: I'll catch up with that eventually. Yeah, yeah, yeah, Karen, 230 00:11:53,840 --> 00:11:56,000 Speaker 1: I promise. We talked about your strategy, can you talk 231 00:11:56,000 --> 00:11:59,320 Speaker 1: a little bit about what you're expecting for I think 232 00:11:59,320 --> 00:12:01,320 Speaker 1: in one of your no to had said it would 233 00:12:01,360 --> 00:12:03,960 Speaker 1: be really healthy for the market to turn sideways for 234 00:12:04,000 --> 00:12:07,040 Speaker 1: a bit, which struck me a little bit because that 235 00:12:07,120 --> 00:12:10,200 Speaker 1: might sound a little bit disappointing to somebody who was 236 00:12:10,360 --> 00:12:14,280 Speaker 1: expecting a rally into year end. And so, how are 237 00:12:14,280 --> 00:12:15,960 Speaker 1: you thinking about the next couple of weeks, what are 238 00:12:15,960 --> 00:12:18,520 Speaker 1: you expecting? And then looking into two what are you 239 00:12:18,559 --> 00:12:21,880 Speaker 1: expecting there as well? Yeah. So, so if we roll 240 00:12:22,000 --> 00:12:24,520 Speaker 1: back briefly to like two thousand twenty, where we had 241 00:12:24,600 --> 00:12:27,840 Speaker 1: this massive air pocket in the economy, corporate earnings took 242 00:12:27,840 --> 00:12:30,800 Speaker 1: a really quick dip down, and then as the market 243 00:12:30,880 --> 00:12:34,120 Speaker 1: started to recover, you had prices that were covered recovering 244 00:12:34,200 --> 00:12:37,880 Speaker 1: way before earnings did. Right, So all of the increase 245 00:12:37,960 --> 00:12:39,960 Speaker 1: in stock prices that we had in two thousand twenty 246 00:12:40,080 --> 00:12:43,240 Speaker 1: was really driven by an increase in valuation. And when 247 00:12:43,240 --> 00:12:46,360 Speaker 1: we roll forward to two thousand twenty two one, then 248 00:12:46,400 --> 00:12:49,320 Speaker 1: we had a really big rebound in corporate earnings, profits 249 00:12:49,360 --> 00:12:53,040 Speaker 1: and some compression and valuation and that's a healthy thing, 250 00:12:53,120 --> 00:12:56,760 Speaker 1: and that's typically what we'll see coming out of a downturn, 251 00:12:57,200 --> 00:12:59,000 Speaker 1: and so I would expect to see more of the 252 00:12:59,040 --> 00:13:01,400 Speaker 1: same into two thousan in twenty two. We already have 253 00:13:01,440 --> 00:13:04,840 Speaker 1: corporate profits that are at or near historic highs. We've 254 00:13:04,960 --> 00:13:08,320 Speaker 1: really really strong corporate earnings growth. We think corporate earnings 255 00:13:08,320 --> 00:13:10,920 Speaker 1: growth will remain strong in two thousand and twenty two, 256 00:13:10,920 --> 00:13:13,840 Speaker 1: but not as strong. But if we have a market 257 00:13:13,880 --> 00:13:16,240 Speaker 1: that's just turning sideways for a little bit, it just 258 00:13:16,360 --> 00:13:18,520 Speaker 1: gives time for those earnings to catch up with the 259 00:13:18,559 --> 00:13:20,720 Speaker 1: prices that we have right now. Yeah, I just think 260 00:13:20,720 --> 00:13:22,920 Speaker 1: of it as a correction on the other axis, you know, 261 00:13:23,000 --> 00:13:25,040 Speaker 1: not on the price axis, but the but the time 262 00:13:25,080 --> 00:13:28,520 Speaker 1: access And I mean, you know, yes, as far as 263 00:13:28,600 --> 00:13:32,199 Speaker 1: valuations go, do you think that that top has been set? Uh? 264 00:13:33,000 --> 00:13:36,400 Speaker 1: Do you think? Never? Say never? Right? I? I you know, 265 00:13:36,480 --> 00:13:38,840 Speaker 1: I've I've learned that it's very hard to call like 266 00:13:38,920 --> 00:13:43,960 Speaker 1: specific turning points UM and and so valuations typically are 267 00:13:44,000 --> 00:13:48,559 Speaker 1: are a very bad indicator UM from market turns because 268 00:13:48,559 --> 00:13:50,600 Speaker 1: we can stay expensive for a long time, we can 269 00:13:50,600 --> 00:13:52,880 Speaker 1: stay cheap for a long time. But what they are 270 00:13:53,000 --> 00:13:56,360 Speaker 1: good at doing is forecasting forward returns over like a 271 00:13:56,400 --> 00:14:00,000 Speaker 1: medium term time period. Right now, valuations are high relative 272 00:14:00,160 --> 00:14:03,040 Speaker 1: to historical measures. That doesn't mean that the market is 273 00:14:03,040 --> 00:14:05,199 Speaker 1: going to turn down, but it does mean it should 274 00:14:05,280 --> 00:14:08,320 Speaker 1: keep a lid on returns over the medium term. And 275 00:14:08,360 --> 00:14:11,079 Speaker 1: then another one of your notes said, and correct me 276 00:14:11,080 --> 00:14:12,839 Speaker 1: if I'm wrong. I think it's aid that it's sort 277 00:14:12,880 --> 00:14:16,360 Speaker 1: of a contrarian call that once inflation turns, we'll see 278 00:14:16,360 --> 00:14:18,679 Speaker 1: a swift reversal. So I'm wondering if you can lay 279 00:14:18,679 --> 00:14:21,640 Speaker 1: out the timeframe around that and you're thinking around that 280 00:14:21,800 --> 00:14:27,040 Speaker 1: and how it potentially affects markets. Yeah, and so this 281 00:14:27,120 --> 00:14:29,040 Speaker 1: is I don't know if you guys have had this experience, 282 00:14:29,040 --> 00:14:32,040 Speaker 1: but like we we order we had some new cabinets 283 00:14:32,160 --> 00:14:34,560 Speaker 1: in our house and we ordered new polls, right like 284 00:14:34,600 --> 00:14:37,920 Speaker 1: simply like pretty like basic thing. But we ordered them 285 00:14:37,960 --> 00:14:44,640 Speaker 1: about like fourteen months ago, and we've reordered them multiple times, right, 286 00:14:44,720 --> 00:14:46,840 Speaker 1: So they're sitting on side like they were sitting on 287 00:14:46,880 --> 00:14:49,640 Speaker 1: some ships, you know, off the off the port um. 288 00:14:49,720 --> 00:14:52,000 Speaker 1: So we ended up ordering three different sets, not knowing 289 00:14:52,040 --> 00:14:54,240 Speaker 1: which one was going to arrive when, and in fact 290 00:14:54,240 --> 00:14:57,720 Speaker 1: we ended up getting two partial orders. So it was good, right, 291 00:14:57,840 --> 00:14:59,680 Speaker 1: but someday that third order and the rest of the 292 00:14:59,760 --> 00:15:01,480 Speaker 1: order are going to arrive, and we're gonna have a 293 00:15:01,520 --> 00:15:04,040 Speaker 1: bunch of polls that we don't really need. So think 294 00:15:04,080 --> 00:15:08,120 Speaker 1: about that replicating all over the economy where you have 295 00:15:08,360 --> 00:15:09,960 Speaker 1: and in fact that there was just an article the 296 00:15:09,960 --> 00:15:13,200 Speaker 1: other day about store owners that we're starting to order 297 00:15:13,240 --> 00:15:15,960 Speaker 1: additional amounts of inventory just to be prepared and have 298 00:15:16,080 --> 00:15:19,640 Speaker 1: stuff on their shelves. So once all of those ships 299 00:15:19,680 --> 00:15:22,760 Speaker 1: get unloaded, once that inventory gets on trucks and it 300 00:15:22,840 --> 00:15:25,360 Speaker 1: gets the stores, there are going to be certain types 301 00:15:25,400 --> 00:15:27,680 Speaker 1: of goods where we end up having more inventory than 302 00:15:27,760 --> 00:15:30,680 Speaker 1: what we had originally forecast. And that's the challenge in 303 00:15:30,760 --> 00:15:33,720 Speaker 1: managing this inventory at a time when like demand and 304 00:15:33,760 --> 00:15:37,280 Speaker 1: supply are changing so rapidly. So you know, it's you 305 00:15:37,640 --> 00:15:40,560 Speaker 1: asked about a specific timing, and I think it will 306 00:15:40,640 --> 00:15:43,800 Speaker 1: depend on the specific good that we're talking about. So, 307 00:15:43,880 --> 00:15:46,680 Speaker 1: for instance, like lumber was one of those commodities that 308 00:15:46,760 --> 00:15:50,200 Speaker 1: started to shoot up fairly early in this cycle um 309 00:15:50,240 --> 00:15:52,200 Speaker 1: and you started to see people who were reaching out 310 00:15:52,200 --> 00:15:54,280 Speaker 1: and buying lumber ahead of time because they were worried 311 00:15:54,320 --> 00:15:56,600 Speaker 1: that the price would keep going up. Well, sure enough, 312 00:15:56,600 --> 00:15:59,200 Speaker 1: those prices are down like six percent or so from 313 00:15:59,280 --> 00:16:02,840 Speaker 1: that peak, so that reversal came very very quickly. So 314 00:16:03,120 --> 00:16:05,680 Speaker 1: ones that went up more rapidly are likely to decline 315 00:16:05,680 --> 00:16:08,120 Speaker 1: more rapidly. Um and it won't all happen at the 316 00:16:08,120 --> 00:16:10,680 Speaker 1: same time. It will be kind of sequenced out. We 317 00:16:10,760 --> 00:16:14,280 Speaker 1: had the exact same experience, you know, stuck in the house. 318 00:16:14,360 --> 00:16:17,280 Speaker 1: My wife decided it's the perfect time to redecorate, and 319 00:16:17,800 --> 00:16:20,760 Speaker 1: you know, ordered guiding room chairs. We got a new 320 00:16:20,760 --> 00:16:23,200 Speaker 1: front door. I mean, we never got the first thing 321 00:16:23,200 --> 00:16:26,200 Speaker 1: you wanted, right, It's so frustrating, it's such a nightmare. 322 00:16:26,240 --> 00:16:28,840 Speaker 1: But Carol, I think I always picture some of our 323 00:16:28,880 --> 00:16:32,600 Speaker 1: listeners sitting there sort of you know, rolling their fingers 324 00:16:32,640 --> 00:16:34,400 Speaker 1: on the desk, saying, just tell me what to buy? 325 00:16:34,480 --> 00:16:36,360 Speaker 1: Have this person tell me what to buy right now? 326 00:16:36,360 --> 00:16:38,920 Speaker 1: So can you kind of break it down? It was 327 00:16:39,000 --> 00:16:42,880 Speaker 1: sort of what's attractive to you both from uh, you know, 328 00:16:42,920 --> 00:16:46,040 Speaker 1: sort of an allocation standpoint at this point in the cycle, 329 00:16:46,080 --> 00:16:49,120 Speaker 1: and also you know what you like in each bucket 330 00:16:49,120 --> 00:16:52,200 Speaker 1: of allocation. So like one word of warning that I 331 00:16:52,240 --> 00:16:56,520 Speaker 1: would have is make sure that your overall portfolio allocations 332 00:16:56,520 --> 00:17:00,680 Speaker 1: are aligned with your risk level and your strategic goal, right, 333 00:17:00,720 --> 00:17:03,880 Speaker 1: so so you know when you think about the incredible 334 00:17:03,960 --> 00:17:06,440 Speaker 1: growth and stocks that we've had over the last year 335 00:17:06,520 --> 00:17:10,200 Speaker 1: or two, it's very likely that folks have portfolios that 336 00:17:10,240 --> 00:17:12,760 Speaker 1: are out of whack, right, where the equities have just 337 00:17:12,880 --> 00:17:16,639 Speaker 1: become a disproportionately large portion of their overall portfolio. And 338 00:17:16,720 --> 00:17:19,159 Speaker 1: so this is part of just being disciplined, right, And 339 00:17:19,400 --> 00:17:21,040 Speaker 1: it doesn't matter where you are on the cycle. You 340 00:17:21,080 --> 00:17:23,760 Speaker 1: should you should be just like looking at that portfolio 341 00:17:23,800 --> 00:17:26,240 Speaker 1: and confirming, yes, you know, I am comfortable with this 342 00:17:26,320 --> 00:17:28,879 Speaker 1: level of risk. Make sure you're honest with yourself, right. 343 00:17:28,920 --> 00:17:30,359 Speaker 1: You don't want to get over your skis and have 344 00:17:30,400 --> 00:17:32,399 Speaker 1: too much risk. Then the market tirns down and then 345 00:17:32,400 --> 00:17:35,040 Speaker 1: you're unhappy. So so that's very important, and that just 346 00:17:35,040 --> 00:17:38,280 Speaker 1: goes to like the good hygiene habits of being an investor. 347 00:17:38,840 --> 00:17:41,119 Speaker 1: And then when I think about, you know, our expectation 348 00:17:41,200 --> 00:17:43,600 Speaker 1: for returns going forward for both stocks and bonds are 349 00:17:43,640 --> 00:17:45,720 Speaker 1: more muted than what we've seen over the last couple 350 00:17:45,760 --> 00:17:48,800 Speaker 1: of years, no surprise, UM. And as I said, that's 351 00:17:48,880 --> 00:17:51,720 Speaker 1: part of you know, earnings catching up with prices. Bond 352 00:17:51,760 --> 00:17:54,560 Speaker 1: yields are incredibly low. There's only so much lower that 353 00:17:54,600 --> 00:17:57,920 Speaker 1: they can go. UM, So it indicates more moderate returns 354 00:17:57,920 --> 00:18:01,520 Speaker 1: going forward. Within the stock market, we talked about valuation, 355 00:18:01,840 --> 00:18:04,119 Speaker 1: and this reflects my bias generally is more of a 356 00:18:04,200 --> 00:18:07,240 Speaker 1: value type investor. UM, but we would have a preference 357 00:18:07,240 --> 00:18:10,160 Speaker 1: for the types of companies that have, you know, strong growth, 358 00:18:10,240 --> 00:18:13,760 Speaker 1: characteristic strong balance sheets, have the opportunity to start to 359 00:18:13,760 --> 00:18:17,480 Speaker 1: return capital or increase their capital return to shareholders. And 360 00:18:17,520 --> 00:18:20,119 Speaker 1: you can find stocks like that in pretty much any sector. 361 00:18:20,200 --> 00:18:23,080 Speaker 1: So it's not necessarily a sector, but UM, but having 362 00:18:23,119 --> 00:18:26,320 Speaker 1: a higher preference or quality in general, I'm like six 363 00:18:26,960 --> 00:18:31,960 Speaker 1: game stop Sheba. You know, I got a mixture rebalanced. 364 00:18:32,119 --> 00:18:35,280 Speaker 1: That's that's a good mix. It's a really good mix. Actually, 365 00:18:35,280 --> 00:18:36,960 Speaker 1: she but you it was down earlier this week, even 366 00:18:36,960 --> 00:18:40,800 Speaker 1: though it had some really high profile around announcements around it, 367 00:18:40,880 --> 00:18:44,840 Speaker 1: and oh my, oh my goodness, but can you talk 368 00:18:44,880 --> 00:18:47,760 Speaker 1: about where tech fits in with what you were just saying, 369 00:18:47,800 --> 00:18:50,960 Speaker 1: because it struck me a little bit by earlier this 370 00:18:51,040 --> 00:18:53,560 Speaker 1: week we had expected some of the bigger names to 371 00:18:53,600 --> 00:18:55,880 Speaker 1: maybe hold up really well during the sell off days 372 00:18:55,920 --> 00:18:58,120 Speaker 1: that we saw. I remember looking at the Nicety thing 373 00:18:58,440 --> 00:19:01,000 Speaker 1: in Next I think it was on one saying it 374 00:19:01,080 --> 00:19:03,840 Speaker 1: was down something like two point seven percent, which really 375 00:19:03,840 --> 00:19:06,040 Speaker 1: struck me. So how are you thinking about where tech 376 00:19:06,119 --> 00:19:10,000 Speaker 1: fits in with your strategy and are you expecting some 377 00:19:10,040 --> 00:19:13,560 Speaker 1: of the names to be a performers going forward. Yeah, Now, 378 00:19:13,720 --> 00:19:17,680 Speaker 1: tech is a good example where you can find those 379 00:19:17,800 --> 00:19:21,679 Speaker 1: really go go stocks with super high aggressive evaluations, and 380 00:19:21,680 --> 00:19:24,800 Speaker 1: then you can also find some more mature companies who 381 00:19:24,880 --> 00:19:28,560 Speaker 1: have like very solid earnings growth. So so you you 382 00:19:28,600 --> 00:19:32,080 Speaker 1: can kind of find good examples of both types of stocks. 383 00:19:32,240 --> 00:19:34,880 Speaker 1: And so you know in the cellf that you're talking about. 384 00:19:35,680 --> 00:19:38,440 Speaker 1: So typically when you get later in an economic cycle, 385 00:19:39,040 --> 00:19:42,000 Speaker 1: the market tends to start to shift towards growth, right 386 00:19:42,040 --> 00:19:44,359 Speaker 1: because overall growth is harder to come by, so we're 387 00:19:44,359 --> 00:19:46,440 Speaker 1: going to pay more of a premium for those companies 388 00:19:46,440 --> 00:19:50,520 Speaker 1: who actually can deliver repeatable growth. But then contrast that 389 00:19:50,560 --> 00:19:53,320 Speaker 1: with where we are right now, which is that a 390 00:19:53,359 --> 00:19:57,080 Speaker 1: lot of those um valuations are quite stretched relative to 391 00:19:57,160 --> 00:20:00,000 Speaker 1: historic levels. So I think when you have that risk 392 00:20:00,040 --> 00:20:03,560 Speaker 1: goff environment like we saw earlier this week, the market 393 00:20:03,600 --> 00:20:06,760 Speaker 1: is punishing those that have the more lofty valuations and 394 00:20:06,800 --> 00:20:09,359 Speaker 1: the less reliable earnings. So I think what the market 395 00:20:09,400 --> 00:20:11,640 Speaker 1: is telling us that in a risk off environment, when 396 00:20:11,640 --> 00:20:13,960 Speaker 1: we're worried, we're going to go back to that safety 397 00:20:14,440 --> 00:20:18,480 Speaker 1: rather than looking for growth. One bullet point in your notes, 398 00:20:18,520 --> 00:20:20,760 Speaker 1: I wanted to discuss a little bit. You say, once 399 00:20:20,800 --> 00:20:23,560 Speaker 1: inflation turns, we will we will see a swift reversal. 400 00:20:24,480 --> 00:20:27,120 Speaker 1: Do you mean a reversal in that this recent dip 401 00:20:27,200 --> 00:20:31,000 Speaker 1: we've had, or reversal in the the oh, I mean 402 00:20:31,359 --> 00:20:35,400 Speaker 1: reversal in prices so um, and you know, I think 403 00:20:35,400 --> 00:20:37,760 Speaker 1: that's worth drilling into a little bit more. Right, there's 404 00:20:37,800 --> 00:20:41,080 Speaker 1: sort of like two things going on with inflation. There's 405 00:20:41,160 --> 00:20:44,239 Speaker 1: the supply chain disruptions that we talked about, right, and 406 00:20:44,280 --> 00:20:47,440 Speaker 1: so the good sitting off of ports and the multiple 407 00:20:47,560 --> 00:20:50,679 Speaker 1: orders UM. And I think that's where you'll see the 408 00:20:50,800 --> 00:20:55,800 Speaker 1: really big swift reversal in price increases. And that's very 409 00:20:55,840 --> 00:21:00,119 Speaker 1: concentrated in durable goods, and it's um concentrated in and 410 00:21:00,359 --> 00:21:02,560 Speaker 1: UM a lot of types of prices that tend to 411 00:21:02,560 --> 00:21:06,000 Speaker 1: be more volatile anyway. The other one that's more concerning, 412 00:21:06,080 --> 00:21:07,320 Speaker 1: and this is a little bit more I think what 413 00:21:07,440 --> 00:21:10,919 Speaker 1: Powell is looking at is just like the the you know, 414 00:21:11,119 --> 00:21:15,520 Speaker 1: core sticky, everyday type of inflation that's more tied to 415 00:21:15,600 --> 00:21:18,520 Speaker 1: economic growth. And so you know, we've had over the 416 00:21:18,600 --> 00:21:21,560 Speaker 1: last couple of weeks we've had some really strong indicators 417 00:21:21,680 --> 00:21:24,879 Speaker 1: of almost a re acceleration of growth into fourth quarter. 418 00:21:25,560 --> 00:21:28,560 Speaker 1: And the bigger concern is that very broad based growth 419 00:21:28,600 --> 00:21:30,719 Speaker 1: will find its way into those like sticky kind of 420 00:21:30,760 --> 00:21:34,480 Speaker 1: core prices. UM so, so that and that's a part 421 00:21:34,480 --> 00:21:38,760 Speaker 1: of the um of the economy that moves more slowly, 422 00:21:39,280 --> 00:21:42,240 Speaker 1: but certainly those durable goods anything affected by the supply 423 00:21:42,400 --> 00:22:00,800 Speaker 1: chain I think will reverse quite swiftly. So so I 424 00:22:01,240 --> 00:22:03,600 Speaker 1: keep wondering, well, how how big of an effect can 425 00:22:03,600 --> 00:22:08,200 Speaker 1: the FED have on inflation until the supply chain stuff 426 00:22:08,280 --> 00:22:10,879 Speaker 1: is sorted out? But I'm curious, so how how you 427 00:22:10,960 --> 00:22:12,399 Speaker 1: kind of look at that core stuff? Would you look 428 00:22:12,400 --> 00:22:15,760 Speaker 1: at sort of a trimmed uh CPI measure or something 429 00:22:15,800 --> 00:22:18,159 Speaker 1: like that, Or that's another one where like you have 430 00:22:18,240 --> 00:22:20,480 Speaker 1: to look at like a ton of different ways of 431 00:22:20,480 --> 00:22:23,640 Speaker 1: slicing and dicing because you're going to get very different answers. 432 00:22:23,680 --> 00:22:26,280 Speaker 1: Then you can't rely on you know, your your standard 433 00:22:26,359 --> 00:22:29,320 Speaker 1: core p PC because you know, you look at it 434 00:22:29,359 --> 00:22:31,439 Speaker 1: a slightly different way and you get very different numbers. 435 00:22:31,760 --> 00:22:35,840 Speaker 1: So we've broken it down by um, you know, core 436 00:22:36,040 --> 00:22:41,280 Speaker 1: versus headline trimmed, broken it down into like pandemic affected 437 00:22:41,320 --> 00:22:45,399 Speaker 1: baskets versus non and I think what it's seeing is 438 00:22:45,440 --> 00:22:50,040 Speaker 1: that there, it's pretty it's pretty easy to track that 439 00:22:50,080 --> 00:22:52,760 Speaker 1: stuff that has been affected very directly by the supply chain, 440 00:22:53,440 --> 00:22:56,119 Speaker 1: but it's hard to remove all of that from the core, 441 00:22:56,640 --> 00:22:59,480 Speaker 1: from like the true core. But what we've seen is 442 00:22:59,520 --> 00:23:02,960 Speaker 1: that in the specific indicators that we know are impacted 443 00:23:02,960 --> 00:23:05,000 Speaker 1: by the supply chain, we have seen some of those 444 00:23:05,040 --> 00:23:06,840 Speaker 1: start to peek and start to come down. So I 445 00:23:06,880 --> 00:23:10,040 Speaker 1: mentioned lumber, Auto prices is another one where use car 446 00:23:10,080 --> 00:23:12,320 Speaker 1: prices have started to retreat a little bit, and we've 447 00:23:12,320 --> 00:23:14,840 Speaker 1: seen a number of other indicators like that that have 448 00:23:15,000 --> 00:23:17,560 Speaker 1: started to sort of come on the other side, stuff 449 00:23:17,600 --> 00:23:21,120 Speaker 1: that's not sitting on a on a ship somewhere right right, 450 00:23:22,760 --> 00:23:26,520 Speaker 1: Tiden up your straight jackets. It's time for the Craziest 451 00:23:26,560 --> 00:23:31,240 Speaker 1: Things we saw in markets this week? Well, Theil Donna 452 00:23:31,280 --> 00:23:34,720 Speaker 1: speaking of core, obviously, the core element of this podcast 453 00:23:35,000 --> 00:23:38,720 Speaker 1: is the craziest things we saw in markets this week. Uh, 454 00:23:38,760 --> 00:23:41,280 Speaker 1: and there's a lot of inflation in that area as well. 455 00:23:41,320 --> 00:23:46,040 Speaker 1: The crazy things continue to keep rising. What are you 456 00:23:46,080 --> 00:23:48,320 Speaker 1: got for us this week? Well, first, I have to 457 00:23:48,320 --> 00:23:51,360 Speaker 1: apologize to everybody because I've been calling it the weirdest 458 00:23:51,680 --> 00:23:54,840 Speaker 1: thing or which is it crazy? You know, I'm in 459 00:23:54,880 --> 00:23:58,840 Speaker 1: my bed sleeping during COVID and I'm getting texts. Tell 460 00:23:58,920 --> 00:24:03,040 Speaker 1: fil Donna, it's the craziest thing. Oh, I shouldn't know better. 461 00:24:03,600 --> 00:24:05,520 Speaker 1: I did get a submission from a listener. I have 462 00:24:05,560 --> 00:24:09,480 Speaker 1: a submission from Alan wax Staff in Minnesota, and he 463 00:24:09,520 --> 00:24:12,680 Speaker 1: and I were actually exchanging messages via Twitter. He sent 464 00:24:12,720 --> 00:24:15,000 Speaker 1: me a link to an eBay page that lists Spider 465 00:24:15,000 --> 00:24:18,680 Speaker 1: Man movie tickets, and at first I think the top 466 00:24:18,760 --> 00:24:22,640 Speaker 1: one was for seventy dollars, and then as I scrolled through, 467 00:24:22,720 --> 00:24:27,280 Speaker 1: some of them were going into the tens of thousands. 468 00:24:27,280 --> 00:24:30,960 Speaker 1: So it turns out I mean, I like Spider Man 469 00:24:31,000 --> 00:24:33,840 Speaker 1: and all, but not for dollars. So it turns out 470 00:24:33,880 --> 00:24:36,879 Speaker 1: that advanced ticket sales for the movie had crashed MC's 471 00:24:36,880 --> 00:24:41,680 Speaker 1: website last weekend, and then mc CEO Adam Aaron tweeted 472 00:24:41,840 --> 00:24:45,640 Speaker 1: that the first eighty six thousand purchases of these special 473 00:24:45,800 --> 00:24:51,560 Speaker 1: reserved tickets for a December sixteen showing or some such 474 00:24:51,720 --> 00:24:54,480 Speaker 1: they were going to receive a Spider Man n f T. 475 00:24:55,320 --> 00:24:58,120 Speaker 1: But there was something like a hundred unique kind of tea. 476 00:24:58,359 --> 00:25:01,359 Speaker 1: So it was super complicated story. All these tickets. I 477 00:25:01,359 --> 00:25:04,600 Speaker 1: believe we're getting bit up on eBay because of this 478 00:25:04,680 --> 00:25:08,199 Speaker 1: and some other auction sites just because of the tweet 479 00:25:08,200 --> 00:25:11,760 Speaker 1: and all of this that was happening. Wow, that is fascinating. 480 00:25:11,960 --> 00:25:16,640 Speaker 1: So thank you Allen for for sending that in because Yeah, 481 00:25:17,000 --> 00:25:20,480 Speaker 1: sometimes I think that guy manages his company to optimize. 482 00:25:21,040 --> 00:25:24,800 Speaker 1: It's a strategy segments he manages to get in there. 483 00:25:25,359 --> 00:25:27,719 Speaker 1: That's pretty good. I don't know. I thought I had 484 00:25:27,720 --> 00:25:29,600 Speaker 1: a good one, But that's pretty good. How about you care? 485 00:25:29,680 --> 00:25:33,760 Speaker 1: What's your craziest, ender weirdest thing. So my you know, 486 00:25:33,800 --> 00:25:36,760 Speaker 1: we we talked about inflation, but we haven't talked about housing. Right, 487 00:25:36,800 --> 00:25:39,240 Speaker 1: So the housing market has been going crazy, and I'm 488 00:25:39,280 --> 00:25:42,680 Speaker 1: here in Austin where it's been especially crazy. But sure enough, 489 00:25:42,720 --> 00:25:46,720 Speaker 1: outside of Boston, there was a house that had had 490 00:25:46,760 --> 00:25:50,400 Speaker 1: a serious house fire, so there was almost nothing left 491 00:25:50,400 --> 00:25:53,040 Speaker 1: of the house, but sure enough it went on Zillo 492 00:25:53,200 --> 00:25:57,960 Speaker 1: for three thousand dollars as is, and I don't know, 493 00:25:57,960 --> 00:26:00,240 Speaker 1: I've been tracking it to see if it's actually sold yet. 494 00:26:00,320 --> 00:26:04,359 Speaker 1: But burned house, that's a hot house. Did they burn 495 00:26:04,400 --> 00:26:06,000 Speaker 1: it to tear the house into it? N f T 496 00:26:06,240 --> 00:26:11,200 Speaker 1: Maybe that's the but put him on EVA and yeah, 497 00:26:11,240 --> 00:26:14,679 Speaker 1: a millionaires. I sometimes think that the press loves that story. 498 00:26:14,760 --> 00:26:17,600 Speaker 1: This house that's a piece of junk. So but really 499 00:26:17,640 --> 00:26:20,480 Speaker 1: it's the lot, right, I mean, you know, I know 500 00:26:21,080 --> 00:26:23,640 Speaker 1: it's like it might have that lot, might that house 501 00:26:23,720 --> 00:26:26,080 Speaker 1: was probably worth less with the structure on it. Then 502 00:26:26,240 --> 00:26:29,040 Speaker 1: you know, well interestingly, so I looked and it's on 503 00:26:29,160 --> 00:26:33,560 Speaker 1: Zillo and the estimate was pretty close to three. I'm 504 00:26:33,600 --> 00:26:36,600 Speaker 1: assuming Zela did not try to flip that one, given 505 00:26:36,640 --> 00:26:40,719 Speaker 1: their there uh turmoilson, But you know, I like, I 506 00:26:40,760 --> 00:26:44,320 Speaker 1: like that crazy thing because it's it allows us to 507 00:26:44,320 --> 00:26:46,880 Speaker 1: talk about a more serious topic, which is this insane 508 00:26:46,920 --> 00:26:50,080 Speaker 1: housing market. And I think anyone of a certain age 509 00:26:50,119 --> 00:26:53,399 Speaker 1: who lived through the financial crisis to see house price 510 00:26:53,640 --> 00:26:56,239 Speaker 1: gains like this is very worrisome. I mean, do you 511 00:26:57,040 --> 00:26:59,800 Speaker 1: is there any concern for you of of sort of 512 00:26:59,840 --> 00:27:02,800 Speaker 1: a subsequent crash and housing prices and you know, is 513 00:27:02,800 --> 00:27:06,760 Speaker 1: the system hopefully better you know, safeguarded at this time 514 00:27:06,800 --> 00:27:10,360 Speaker 1: than than what happened last time? Yeah? So, I mean 515 00:27:10,400 --> 00:27:14,639 Speaker 1: a key difference between today and two thousand seven is leverage. 516 00:27:15,440 --> 00:27:18,159 Speaker 1: So if you look at mortgage lending standards, they're actually 517 00:27:18,200 --> 00:27:21,479 Speaker 1: still fairly tight. And go back to two thousand seven, 518 00:27:22,080 --> 00:27:26,280 Speaker 1: mortgage lending standards had been loosening for years, and lenders 519 00:27:26,280 --> 00:27:31,720 Speaker 1: had becoming increasingly creative in offering financing to individuals. And 520 00:27:31,720 --> 00:27:33,959 Speaker 1: then if you look just in general at consumer balance 521 00:27:34,000 --> 00:27:36,240 Speaker 1: sheets people have. You know, we have among the highest 522 00:27:36,240 --> 00:27:39,320 Speaker 1: savings rates that we've ever had. Consumer debt levels are 523 00:27:39,359 --> 00:27:41,480 Speaker 1: really low, interest rates are really low, so when you 524 00:27:41,520 --> 00:27:44,640 Speaker 1: do carry debt, the service payments are very low. So 525 00:27:44,680 --> 00:27:48,159 Speaker 1: I think that the fundamental health of consumer balance sheets 526 00:27:48,240 --> 00:27:51,040 Speaker 1: is much much better today than it was. No. Seven. Yeah, 527 00:27:51,040 --> 00:27:52,840 Speaker 1: that's a great point. All right, I'll stop worrying about that. 528 00:27:52,880 --> 00:27:56,080 Speaker 1: I've got a long list of things. My job is done. 529 00:27:56,320 --> 00:27:59,560 Speaker 1: I'll scratch that one off again. Minds from the alternative 530 00:27:59,600 --> 00:28:04,560 Speaker 1: asset class, uh, the collectibles class. So this is an 531 00:28:04,560 --> 00:28:07,239 Speaker 1: incredible I I encourage everyone to google the story from 532 00:28:07,280 --> 00:28:12,080 Speaker 1: the Washington Post. Really a well reported story. It's about 533 00:28:12,160 --> 00:28:17,040 Speaker 1: a letter from Catherine the Great, the Russian empress of 534 00:28:17,080 --> 00:28:22,000 Speaker 1: the of the eighteenth century. She wrote a letter supporting 535 00:28:22,440 --> 00:28:27,199 Speaker 1: mass immunization against smallpox. Uh. This is way back in 536 00:28:28,040 --> 00:28:32,360 Speaker 1: you know, the late seventeen eighties. And for one thing, 537 00:28:32,560 --> 00:28:36,879 Speaker 1: I'm fascinated at at the fact that you know, immunization 538 00:28:37,000 --> 00:28:40,160 Speaker 1: goes that far back, but this story lays out the 539 00:28:40,200 --> 00:28:44,440 Speaker 1: history of of immunization and it's it's even more fascinating. So, 540 00:28:45,120 --> 00:28:51,240 Speaker 1: prior to vaccination, they did what is called variolation, which 541 00:28:51,440 --> 00:28:54,240 Speaker 1: instead of creative a vaccine, they would take a piece 542 00:28:54,280 --> 00:28:57,560 Speaker 1: of the scab from the small pox were I hate 543 00:28:57,560 --> 00:28:59,840 Speaker 1: to say the word puss, but take some puss for 544 00:29:00,080 --> 00:29:03,920 Speaker 1: the small pox moon and actually get that into your bloodstream. 545 00:29:04,000 --> 00:29:06,560 Speaker 1: And that's how you would, uh, that's how you you 546 00:29:06,720 --> 00:29:11,120 Speaker 1: get the immunity to it. I'm never complaining about a 547 00:29:11,160 --> 00:29:15,040 Speaker 1: shot again, right, I know, I'm I'm not at all 548 00:29:16,160 --> 00:29:18,480 Speaker 1: vaccine skeptical. I gotta say, I think I would have 549 00:29:18,520 --> 00:29:23,280 Speaker 1: been a little vary relations skeptical. Back to the well, 550 00:29:23,320 --> 00:29:25,640 Speaker 1: what's nuts is it's not even that far back. So 551 00:29:25,720 --> 00:29:28,320 Speaker 1: the way this was discovered in the West was a 552 00:29:28,400 --> 00:29:31,960 Speaker 1: slave in the early part of the seventeen hundreds who 553 00:29:32,200 --> 00:29:35,400 Speaker 1: introduced it in the US. And he said in Africa 554 00:29:35,400 --> 00:29:38,960 Speaker 1: they were doing this for hundreds of years. It's fascinating. Really, yeah, 555 00:29:39,400 --> 00:29:42,280 Speaker 1: that is fascinating. I encourage every and to look up 556 00:29:42,320 --> 00:29:45,280 Speaker 1: that story. Uh. It gives you a really great uh 557 00:29:45,400 --> 00:29:47,200 Speaker 1: look back on that. And the reason she wrote this 558 00:29:47,280 --> 00:29:49,600 Speaker 1: letter is because there was a lot of peasancy and 559 00:29:50,080 --> 00:29:53,719 Speaker 1: skepticism um to this, which I kind of sympathize with 560 00:29:53,760 --> 00:29:57,480 Speaker 1: in this case. Yeah, but anyway to turn it into 561 00:29:57,720 --> 00:30:00,280 Speaker 1: the craziest thing in prices, right, So this or she 562 00:30:00,400 --> 00:30:04,640 Speaker 1: wrote sold at auction along with a painting of Catherine 563 00:30:04,640 --> 00:30:06,760 Speaker 1: the Great from some some famous artists I don't know, 564 00:30:07,000 --> 00:30:09,880 Speaker 1: but the letter is really the key thing. So time 565 00:30:09,920 --> 00:30:13,880 Speaker 1: will play prices, right, Karen Villdonna, start with you, vildonna? 566 00:30:13,960 --> 00:30:16,520 Speaker 1: What would you pay for this letter from Catherine the Great? 567 00:30:17,080 --> 00:30:20,640 Speaker 1: Denominated in British pounds? By the way, you gotta you know, 568 00:30:21,080 --> 00:30:24,920 Speaker 1: you gotta account for the effects. I'm notoriously bad at 569 00:30:25,160 --> 00:30:29,200 Speaker 1: guessing these things. I'm going to I'm going to overshoot. 570 00:30:29,440 --> 00:30:34,160 Speaker 1: I'll go with ten million, Okay, I will keep my 571 00:30:34,240 --> 00:30:37,880 Speaker 1: eye out, I will keep my poker face. Ten million 572 00:30:38,080 --> 00:30:42,240 Speaker 1: British pounds is that way too high? I will I 573 00:30:42,240 --> 00:30:44,800 Speaker 1: will say that Vldonna is the type of customers that 574 00:30:45,680 --> 00:30:48,320 Speaker 1: auction houses dream of. And you'll probably getting some calls 575 00:30:48,320 --> 00:30:51,400 Speaker 1: from from from sales reps at uh at various. I 576 00:30:51,480 --> 00:30:54,080 Speaker 1: usually on a shoot by a huge amount, So I'm 577 00:30:54,120 --> 00:30:56,680 Speaker 1: really I'm trying really hard. I might have hit my 578 00:30:56,720 --> 00:30:59,000 Speaker 1: hand a little bit there, but you might forget I 579 00:30:59,040 --> 00:31:01,600 Speaker 1: said that, what what what's your bid? What's your bid? Well, 580 00:31:01,640 --> 00:31:03,640 Speaker 1: I think a very important question is are there n 581 00:31:03,720 --> 00:31:06,200 Speaker 1: f T s that come with us? I don't know 582 00:31:09,640 --> 00:31:12,120 Speaker 1: my price. You're free to burn the letter and sell 583 00:31:12,160 --> 00:31:14,320 Speaker 1: it as an n f T probably for what would 584 00:31:14,440 --> 00:31:18,280 Speaker 1: uh Bildona's talking about? Okay, so I'm going to take 585 00:31:18,320 --> 00:31:21,600 Speaker 1: the under. Then, Uh, let's go with five million pounds. 586 00:31:22,160 --> 00:31:24,520 Speaker 1: You guys are big spenders. I thought it was a 587 00:31:24,520 --> 00:31:30,400 Speaker 1: lot nine hundred and fifty one British pounds, which bargain, bargain, 588 00:31:32,120 --> 00:31:34,760 Speaker 1: let's go for it. Yeah, you should. You guys should 589 00:31:34,760 --> 00:31:37,160 Speaker 1: go go make a bit on that, and then we 590 00:31:37,200 --> 00:31:39,360 Speaker 1: can hang it up behind all of our zoom calls. 591 00:31:39,800 --> 00:31:41,760 Speaker 1: There we go. That would be that would be a 592 00:31:41,760 --> 00:31:44,840 Speaker 1: flex in a zoom call, for sure. If that would be, 593 00:31:44,920 --> 00:31:47,800 Speaker 1: Oh my gosh, that'd be fun. Yeah, I've got I 594 00:31:47,840 --> 00:31:50,840 Speaker 1: hang my wife's diploma because my diploma looks like I 595 00:31:50,840 --> 00:31:53,880 Speaker 1: don't know something from a comic book. It's not a 596 00:31:53,960 --> 00:31:59,240 Speaker 1: very distinguished looking tell you a little bit about maybe 597 00:31:59,240 --> 00:32:00,880 Speaker 1: that color is a little bit about the university I 598 00:32:00,960 --> 00:32:04,000 Speaker 1: went to. But my wife has a very distinguishing diplomas 599 00:32:05,560 --> 00:32:07,560 Speaker 1: and luckily no one has zoomed it enough to to 600 00:32:07,600 --> 00:32:12,440 Speaker 1: realize it's not mine, but it's not your name. But 601 00:32:12,440 --> 00:32:14,240 Speaker 1: with that said, I think that is all the time 602 00:32:14,280 --> 00:32:17,000 Speaker 1: we have care. Really great to have you on, uh, 603 00:32:18,080 --> 00:32:20,160 Speaker 1: really good conversation. I hope we can get you back 604 00:32:20,200 --> 00:32:23,240 Speaker 1: some day. Thank you, Thank you. Yeah, I love turning 605 00:32:23,480 --> 00:32:29,120 Speaker 1: talking about burning houses. Let's do it again. Thank you, Carol. 606 00:32:38,720 --> 00:32:41,160 Speaker 1: What Goes Up. We'll be back next week. Until then, 607 00:32:41,200 --> 00:32:43,480 Speaker 1: you can find us on the Bloomberg Terminal website and 608 00:32:43,560 --> 00:32:46,480 Speaker 1: app or wherever you get your podcast. We love it 609 00:32:46,520 --> 00:32:48,200 Speaker 1: if you took the time to rate and review the 610 00:32:48,240 --> 00:32:50,880 Speaker 1: show on Apple Podcasts so more listeners can find us. 611 00:32:51,760 --> 00:32:54,680 Speaker 1: And you can find us on Twitter, follow me at Reganonymous. 612 00:32:55,320 --> 00:32:58,520 Speaker 1: Will do a Hirich is at Bildta Hirich. You can 613 00:32:58,520 --> 00:33:02,120 Speaker 1: also follow Bloomberg Podcast at podcast and thank you to 614 00:33:02,200 --> 00:33:05,360 Speaker 1: Charlie Powell to Bloomberg Radio. What Goes Up is produced 615 00:33:05,360 --> 00:33:09,440 Speaker 1: by Laura Carlson. The head of Bloomberg Podcast is Francesco Levie. 616 00:33:09,680 --> 00:33:11,240 Speaker 1: Thanks for listening. To see you next time.