1 00:00:13,560 --> 00:00:16,720 Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg Weekly 2 00:00:16,760 --> 00:00:20,200 Speaker 1: Markets podcast. I'm Sarah Pantza, a reporter on the Cross 3 00:00:20,200 --> 00:00:22,960 Speaker 1: Asset team, and I'm Mike Reagan, a senior editor on 4 00:00:23,000 --> 00:00:26,280 Speaker 1: the market Scene. This week on the show, August continues 5 00:00:26,360 --> 00:00:29,280 Speaker 1: to live up to its reputation for being a pretty 6 00:00:29,400 --> 00:00:32,920 Speaker 1: volatile month. We saw closely watched portion of the Old 7 00:00:32,960 --> 00:00:36,240 Speaker 1: Curve briefly invert for the first time since two thousand 8 00:00:36,240 --> 00:00:39,200 Speaker 1: and seven. The DAL suffered its worst day of the year, 9 00:00:39,560 --> 00:00:43,599 Speaker 1: and events in Hong Kong and Argentina also jolted financial markets. 10 00:00:43,840 --> 00:00:45,960 Speaker 1: And if that's not crazy enough, we'll close out the 11 00:00:45,960 --> 00:00:48,800 Speaker 1: episode with our tradition the craziest thing I saw in 12 00:00:48,880 --> 00:00:51,440 Speaker 1: markets this week, Sir, I feel like we're changing the 13 00:00:51,440 --> 00:00:53,320 Speaker 1: paradigm a little bit on Wall Street. You know, it 14 00:00:53,400 --> 00:00:55,520 Speaker 1: used to be to make a name for yourself on 15 00:00:55,600 --> 00:00:58,280 Speaker 1: Wall Street you had to sort of show up at 16 00:00:58,320 --> 00:01:02,400 Speaker 1: appearances like this you have have actionable investment ideas. Now 17 00:01:02,440 --> 00:01:04,760 Speaker 1: you need to show up with actionable investment ideas and 18 00:01:04,880 --> 00:01:07,720 Speaker 1: some crazy things you saw in markets this week. Well, this, 19 00:01:07,920 --> 00:01:11,600 Speaker 1: at least this week, makes it pretty easy to do that, right, right, 20 00:01:11,640 --> 00:01:14,360 Speaker 1: So no pressure on our guests, but we'll introduce him now. First, 21 00:01:14,440 --> 00:01:17,600 Speaker 1: joining us for the first time is Gabrielle Santos, a 22 00:01:17,680 --> 00:01:21,920 Speaker 1: global market strategist for JP Morgan Asset Management. Gabriella, welcome 23 00:01:21,959 --> 00:01:23,520 Speaker 1: to the show, and I hope you have something crazy 24 00:01:23,560 --> 00:01:28,600 Speaker 1: for us. Oh, I have a lot of crazy. That's 25 00:01:28,640 --> 00:01:31,840 Speaker 1: the kind of guest we like. And a walking crazy 26 00:01:31,880 --> 00:01:35,559 Speaker 1: idea machine himself is our Cross Asset reporter Luke Kawa 27 00:01:35,840 --> 00:01:38,319 Speaker 1: joining us this week. To Luke, I trust you have 28 00:01:38,400 --> 00:01:42,200 Speaker 1: some crazy. I'll give a hint. It involves one sixty nine. 29 00:01:42,920 --> 00:01:45,920 Speaker 1: All right, leave people hanging. We'll get there, all right, 30 00:01:46,160 --> 00:01:48,440 Speaker 1: and don't forget to call our what goes Up hotline 31 00:01:48,520 --> 00:01:51,080 Speaker 1: to offer your own crazy things you saw in markets, 32 00:01:51,160 --> 00:01:53,360 Speaker 1: or if you have a question for the hosts uh 33 00:01:53,400 --> 00:01:56,120 Speaker 1: and upcoming guests, give us a call, drop a voicemail. 34 00:01:56,160 --> 00:01:59,120 Speaker 1: Maybe we'll play your voicemail on the show. And just 35 00:01:59,240 --> 00:02:02,120 Speaker 1: as a reminder, that number is six four six three 36 00:02:02,160 --> 00:02:07,160 Speaker 1: to four three four nine zero. But Gabby, I want 37 00:02:07,160 --> 00:02:10,360 Speaker 1: to start with you. A lot of talk this week 38 00:02:10,480 --> 00:02:13,320 Speaker 1: about the inversion of the yield curve, the two stend 39 00:02:13,880 --> 00:02:18,840 Speaker 1: finally turning negative. What does this actually mean? So we 40 00:02:18,880 --> 00:02:20,640 Speaker 1: tend to look at the yield curve, not as a 41 00:02:20,680 --> 00:02:23,240 Speaker 1: crystal ball on its own, but really a piece of 42 00:02:23,240 --> 00:02:25,600 Speaker 1: a much broader puzzle. We look at a whole other 43 00:02:25,720 --> 00:02:28,440 Speaker 1: variety of indicators, which will include market as well as 44 00:02:28,480 --> 00:02:31,280 Speaker 1: economic data, and I think really the inversion of the 45 00:02:31,360 --> 00:02:34,799 Speaker 1: yield curve, after a really long process of flattening here, 46 00:02:35,200 --> 00:02:38,080 Speaker 1: confirms a few things we've already known. We're late cycle, 47 00:02:38,639 --> 00:02:41,040 Speaker 1: and we're clearly in the midst of a down shift 48 00:02:41,080 --> 00:02:44,000 Speaker 1: in the pace of global and US growth. So for us, 49 00:02:44,040 --> 00:02:46,360 Speaker 1: it's broad. It's a broader piece of the story that 50 00:02:46,400 --> 00:02:48,600 Speaker 1: we've been telling our clients, and that's led us to 51 00:02:48,680 --> 00:02:51,600 Speaker 1: advise clients to become a bit more defensive here. You know, Gabby, 52 00:02:51,639 --> 00:02:53,560 Speaker 1: I was an English major, not a finance major, so 53 00:02:53,600 --> 00:02:56,480 Speaker 1: I tend to think in corny analogies and metaphors, and 54 00:02:56,520 --> 00:02:58,120 Speaker 1: the one I've been using all week is is the 55 00:02:58,200 --> 00:03:01,080 Speaker 1: yield curve inversion. It's like if you're a captain of 56 00:03:01,080 --> 00:03:04,080 Speaker 1: a ship and you see a lighthouse out in the distance, 57 00:03:04,120 --> 00:03:06,160 Speaker 1: but you're not sure if it's a mile away or 58 00:03:06,200 --> 00:03:08,639 Speaker 1: a hundred miles away. And I think it's even more 59 00:03:08,680 --> 00:03:11,400 Speaker 1: complicated this time, since we saw that three month, ten 60 00:03:11,480 --> 00:03:15,880 Speaker 1: year and the three month five year curve invert? Uh? 61 00:03:16,200 --> 00:03:19,520 Speaker 1: Was it March? Basically they started inverting, have have been 62 00:03:19,520 --> 00:03:23,359 Speaker 1: an inversion often on since then, more in inversion than not. 63 00:03:23,600 --> 00:03:26,920 Speaker 1: So does that complicate sort of the timing of this 64 00:03:27,040 --> 00:03:29,800 Speaker 1: signal um and and the timing of potential weakness in 65 00:03:29,800 --> 00:03:33,040 Speaker 1: the economy um because that strikes me as an unusual event. 66 00:03:33,120 --> 00:03:35,920 Speaker 1: Usually it's the two's tends either goes first or they 67 00:03:35,920 --> 00:03:38,400 Speaker 1: all go at the same time. How do you sort 68 00:03:38,440 --> 00:03:40,600 Speaker 1: of I mean, is it foolish to try to even 69 00:03:40,680 --> 00:03:44,920 Speaker 1: time uh say, a stock market top or the onset 70 00:03:44,920 --> 00:03:48,840 Speaker 1: of a recession based on the curve? Should you just think, well, 71 00:03:48,880 --> 00:03:51,200 Speaker 1: it's coming eventually and and not try to time it. 72 00:03:51,400 --> 00:03:55,640 Speaker 1: Absolutely we do not believe in timing our investments or 73 00:03:55,720 --> 00:03:59,200 Speaker 1: portfolio occasions frankly at all, much less based on the 74 00:03:59,240 --> 00:04:01,960 Speaker 1: yield curve below own um. When we hear stats about 75 00:04:02,000 --> 00:04:05,280 Speaker 1: the yield curve, usually they're done when the yield curve 76 00:04:05,360 --> 00:04:09,480 Speaker 1: inverts on a sustained manner before recession. Where we are 77 00:04:09,480 --> 00:04:12,080 Speaker 1: it's just the yield curve inverted in true day. We 78 00:04:12,120 --> 00:04:14,480 Speaker 1: don't know if this is going to continue happening, sustain 79 00:04:14,600 --> 00:04:17,560 Speaker 1: or not. So actually the lead time between the first 80 00:04:17,680 --> 00:04:22,200 Speaker 1: inversion when it first happens and a recession is huge. 81 00:04:22,640 --> 00:04:26,960 Speaker 1: Sometimes it's fifty months, sometimes it's twelve months. So there's 82 00:04:26,960 --> 00:04:29,560 Speaker 1: absolutely no way to know, and hence that's why we 83 00:04:29,600 --> 00:04:32,200 Speaker 1: really need to look at a much broader range of 84 00:04:32,240 --> 00:04:34,840 Speaker 1: pieces of the puzzle here, Luke. What has been different 85 00:04:34,920 --> 00:04:37,440 Speaker 1: this time around is that we have seen the inversion 86 00:04:38,000 --> 00:04:40,600 Speaker 1: on top of a bowl flattening. So as we see 87 00:04:40,640 --> 00:04:45,320 Speaker 1: bonds rallying bullish for people holding bonds, yields are coming down. 88 00:04:45,800 --> 00:04:49,120 Speaker 1: What about this message? Does that actually change since we're 89 00:04:49,120 --> 00:04:52,000 Speaker 1: seeing a bowl flattening. Yeah, First of all, in general, 90 00:04:52,040 --> 00:04:54,000 Speaker 1: i'd say, you know, trying to use the yield curve 91 00:04:54,040 --> 00:04:56,520 Speaker 1: as a recession indicator, like, think of the sample size 92 00:04:56,720 --> 00:04:59,120 Speaker 1: we're working with here. This is this is this is 93 00:04:59,160 --> 00:05:01,120 Speaker 1: just not not press of it all. This is not 94 00:05:01,960 --> 00:05:09,920 Speaker 1: what anyone would consider very very rigorous statistical So now exactly, 95 00:05:09,920 --> 00:05:11,880 Speaker 1: it's it's it's a it's a good news story in 96 00:05:11,880 --> 00:05:14,680 Speaker 1: that effect. But I think the nature that this was 97 00:05:14,920 --> 00:05:17,960 Speaker 1: a bowl flattened ten years rallying more than two years 98 00:05:18,160 --> 00:05:20,760 Speaker 1: into it, it helps, uh to Gabrielle was saying, it 99 00:05:20,800 --> 00:05:23,880 Speaker 1: helps back up the points we already knew. This is 100 00:05:24,040 --> 00:05:27,840 Speaker 1: much more a signal that, you know, the global economy 101 00:05:27,880 --> 00:05:31,479 Speaker 1: will remain is expected to remain slow, relatively morbund for 102 00:05:31,480 --> 00:05:34,280 Speaker 1: for a long period of time, rather than that there's 103 00:05:34,360 --> 00:05:37,440 Speaker 1: danger right around the corner. That's the particular message I 104 00:05:37,480 --> 00:05:40,039 Speaker 1: would take from here. And also it does help that, 105 00:05:40,520 --> 00:05:42,160 Speaker 1: you know, if we were talking about yield curve as 106 00:05:42,160 --> 00:05:46,040 Speaker 1: a recession indicator, we have the last bowl flattening into 107 00:05:46,080 --> 00:05:50,320 Speaker 1: inversion that we had was the FED responded aggressively to 108 00:05:50,440 --> 00:05:54,160 Speaker 1: damage in financial markets by cutting rates and managed to 109 00:05:54,200 --> 00:05:57,080 Speaker 1: avoid recession until the Fed it started and then hiking 110 00:05:57,120 --> 00:05:59,800 Speaker 1: again and the the t MT bubble blew up. So 111 00:06:00,120 --> 00:06:02,360 Speaker 1: you know, you can say history is on our side 112 00:06:02,360 --> 00:06:05,159 Speaker 1: that this is not a recession indicator this time. And 113 00:06:05,200 --> 00:06:07,400 Speaker 1: if we just think about white people, I think mentioned 114 00:06:07,440 --> 00:06:10,120 Speaker 1: the yield curve so much, it's you know, it's supposed 115 00:06:10,160 --> 00:06:12,920 Speaker 1: to be this crystal ball that's telling us so much 116 00:06:12,960 --> 00:06:16,520 Speaker 1: about expectations. And part of it is true. There's clearly 117 00:06:16,640 --> 00:06:20,120 Speaker 1: a downshift happening in growth and that's part of the story. 118 00:06:20,160 --> 00:06:22,480 Speaker 1: But the reason the long end is falling so much, 119 00:06:22,520 --> 00:06:24,760 Speaker 1: I think we think has also a lot to do 120 00:06:24,880 --> 00:06:28,440 Speaker 1: with variables that are not economic necessarily in nature, there's 121 00:06:28,480 --> 00:06:32,720 Speaker 1: just a tremendous amount of foreign demand. For example, with 122 00:06:32,800 --> 00:06:34,919 Speaker 1: this week, am I getting ahead of myself with a 123 00:06:34,920 --> 00:06:40,880 Speaker 1: crazy stat sixteen trillion dollars the crazy stat of negative 124 00:06:40,920 --> 00:06:45,480 Speaker 1: yielding debt bus crazy thing, bonus crazy injected in the mix, 125 00:06:45,640 --> 00:06:48,599 Speaker 1: But it says a lot about the kind of foreign demand, 126 00:06:48,640 --> 00:06:51,440 Speaker 1: the heavy anchor that's also weighing that long end. It 127 00:06:51,480 --> 00:06:54,400 Speaker 1: makes it a bit more of a mixed indicator than usual. 128 00:06:54,480 --> 00:06:57,120 Speaker 1: Something actually Johnny Yellen pointed out this this week, like 129 00:06:57,200 --> 00:07:00,120 Speaker 1: we've had this week, we've seen retail sales be be 130 00:07:00,200 --> 00:07:03,520 Speaker 1: fairly strong. US data clearly is not falling off cliff 131 00:07:03,520 --> 00:07:06,000 Speaker 1: and you see a lot of folks saying, well, well, 132 00:07:06,120 --> 00:07:09,320 Speaker 1: rates clearly aren't trading off US economic fundamentals. Well, yes, 133 00:07:09,640 --> 00:07:11,880 Speaker 1: that's that's because we don't live in a closed system. 134 00:07:12,000 --> 00:07:14,320 Speaker 1: It's because we have free and open capital accounts. And 135 00:07:14,360 --> 00:07:17,320 Speaker 1: when you see the still yawning gap between do you 136 00:07:17,360 --> 00:07:19,400 Speaker 1: say the US thirty year and you know the thirty 137 00:07:19,440 --> 00:07:23,040 Speaker 1: year booned, it's it's very clear that you know, the 138 00:07:23,120 --> 00:07:27,000 Speaker 1: global aspect to this is kind of outweighing at times, 139 00:07:27,040 --> 00:07:30,080 Speaker 1: any big macro story you might be wanting to tell 140 00:07:30,120 --> 00:07:32,240 Speaker 1: through the yield curve. And I'll be honest, I'm sick 141 00:07:32,280 --> 00:07:34,480 Speaker 1: of talking about the yield curve. I don't know anyone else. 142 00:07:37,760 --> 00:07:40,080 Speaker 1: I think regular listeners of this podcast are sick of 143 00:07:40,120 --> 00:07:42,840 Speaker 1: here to Babby has gotten many calls if I can 144 00:07:42,880 --> 00:07:45,520 Speaker 1: tell you this week, haven't you. So let's let's move 145 00:07:45,520 --> 00:07:46,960 Speaker 1: on to the you know you mentioned it being one 146 00:07:47,000 --> 00:07:48,840 Speaker 1: piece of the puzzle. Let's move on to what are 147 00:07:48,840 --> 00:07:51,320 Speaker 1: the other pieces of the puzzle you're looking at? Um? 148 00:07:51,360 --> 00:07:53,200 Speaker 1: You know, I've been looking at the I S M 149 00:07:53,280 --> 00:07:56,760 Speaker 1: numbers and I gotta say they do look like they're 150 00:07:56,760 --> 00:07:59,680 Speaker 1: starting to fit into that recession image a little bit. Um, 151 00:08:00,360 --> 00:08:02,360 Speaker 1: what else are you looking at? And you know what's 152 00:08:02,400 --> 00:08:05,480 Speaker 1: the picture that's emerging in this puzzle? Yeah, manufacturing is 153 00:08:05,480 --> 00:08:09,040 Speaker 1: is a big piece of that UM downshift puzzle. Uh. 154 00:08:09,280 --> 00:08:12,600 Speaker 1: We we could arguably say that the global manufacturing sector 155 00:08:12,680 --> 00:08:15,640 Speaker 1: is in recession. We think a lot of that has 156 00:08:15,680 --> 00:08:19,440 Speaker 1: to do with with trade tensions, not necessarily the tariffs 157 00:08:19,440 --> 00:08:22,440 Speaker 1: in and of themselves, but the uncertainty that this is 158 00:08:22,480 --> 00:08:27,200 Speaker 1: all generating this like dark gloomy cloud following businesses around 159 00:08:27,320 --> 00:08:31,280 Speaker 1: and it's just not the environment where capex UH is 160 00:08:31,360 --> 00:08:34,240 Speaker 1: very strong, right, So a piece of the puzzle that's 161 00:08:34,240 --> 00:08:37,920 Speaker 1: flashing a red sign would very much be the manufacturing sector. 162 00:08:38,679 --> 00:08:41,760 Speaker 1: Exports around the world as well in particular and Emerging 163 00:08:41,800 --> 00:08:44,920 Speaker 1: Asia as well as Germany. Um so those are all 164 00:08:44,920 --> 00:08:47,760 Speaker 1: the negative pieces of the puzzle. The more positive ones 165 00:08:48,360 --> 00:08:51,280 Speaker 1: um much more related to the consumer. That definitely remains 166 00:08:51,280 --> 00:08:53,680 Speaker 1: the life best here. And you know you mentioned obviously 167 00:08:53,760 --> 00:08:58,000 Speaker 1: the trade we're being the biggest weight on manufacturing. I 168 00:08:58,040 --> 00:09:00,880 Speaker 1: think the assumption for most of this year was that 169 00:09:01,400 --> 00:09:04,160 Speaker 1: this is something Donald Trump could could end instantly, could 170 00:09:04,240 --> 00:09:07,439 Speaker 1: could turn it around. Um is that water under the 171 00:09:07,480 --> 00:09:09,920 Speaker 1: bridge now that was Has enough damage been done? Do 172 00:09:09,960 --> 00:09:13,520 Speaker 1: you think that even a tweet calling off the entire 173 00:09:13,640 --> 00:09:15,960 Speaker 1: trade war would would be enough to sort of turn 174 00:09:16,000 --> 00:09:19,319 Speaker 1: these numbers around in time to avoid a contraction. I 175 00:09:20,880 --> 00:09:24,079 Speaker 1: struggled to see what that tweet would look like that 176 00:09:24,320 --> 00:09:26,600 Speaker 1: just because you know it would come and tweet form 177 00:09:26,640 --> 00:09:29,240 Speaker 1: a and tweet form and be even not trying to 178 00:09:29,240 --> 00:09:31,960 Speaker 1: be facetious, but just you know, what would it say 179 00:09:32,000 --> 00:09:35,480 Speaker 1: that would give everyone so much clarity that this issue 180 00:09:35,559 --> 00:09:37,880 Speaker 1: is not coming back a month from now, a quarter 181 00:09:37,960 --> 00:09:40,960 Speaker 1: from now, a couple of years from now, Especially because 182 00:09:41,000 --> 00:09:43,560 Speaker 1: I think if you look at some recent surveys, there 183 00:09:43,600 --> 00:09:46,840 Speaker 1: has been a building support here for a much tougher 184 00:09:46,920 --> 00:09:50,120 Speaker 1: posture on China from the U. S side, as well 185 00:09:50,160 --> 00:09:54,320 Speaker 1: as building support within China to resist pressures like these 186 00:09:54,360 --> 00:09:58,080 Speaker 1: from the outside. So outcome of the election or not, 187 00:09:58,320 --> 00:10:00,120 Speaker 1: it's also hard to see how this issue goes is 188 00:10:00,160 --> 00:10:02,400 Speaker 1: away in a couple of years. Even I have to 189 00:10:02,400 --> 00:10:04,400 Speaker 1: say this week has felt very long. It was at 190 00:10:04,440 --> 00:10:06,720 Speaker 1: the beginning of this week that President Trump did come 191 00:10:06,760 --> 00:10:10,440 Speaker 1: out his administration and delay those ten percent tariffs, will 192 00:10:10,480 --> 00:10:14,000 Speaker 1: at least a portion of them from September one two December. 193 00:10:14,960 --> 00:10:18,640 Speaker 1: Even with this delay, though, does it actually change the outlook? 194 00:10:18,640 --> 00:10:21,240 Speaker 1: Does it change anything for people who are actually putting 195 00:10:21,280 --> 00:10:24,400 Speaker 1: money to work right now? I think if it does 196 00:10:24,520 --> 00:10:28,280 Speaker 1: change anything, it might do so in a slightly negative way. 197 00:10:28,320 --> 00:10:30,959 Speaker 1: First off, it's you know, the mere fact that there 198 00:10:31,040 --> 00:10:33,720 Speaker 1: is a delay on you know, the the items deemed 199 00:10:33,720 --> 00:10:37,600 Speaker 1: to be highly Christmas consumer sensitive, does tell you, you know, 200 00:10:37,720 --> 00:10:39,640 Speaker 1: that's tantam out. That's the best admission you will get 201 00:10:39,640 --> 00:10:41,680 Speaker 1: as to who is paying for the tariffs, and it's 202 00:10:41,720 --> 00:10:44,199 Speaker 1: you know, the the American, the American and a worker, 203 00:10:44,280 --> 00:10:47,880 Speaker 1: the American consumer by by and large. And then Secondly, 204 00:10:48,200 --> 00:10:50,520 Speaker 1: I think the idea that we had Wilbur Ross almost 205 00:10:50,640 --> 00:10:53,679 Speaker 1: you know, pretty much confirmed the idea that there was 206 00:10:53,720 --> 00:10:56,480 Speaker 1: no quid pro quo here and that the US really 207 00:10:56,520 --> 00:10:59,520 Speaker 1: came to the table to make this happen. This could 208 00:10:59,600 --> 00:11:02,679 Speaker 1: probably pie emboldened China to take a tougher line if 209 00:11:02,679 --> 00:11:05,319 Speaker 1: they know that the US has gotten to the point 210 00:11:05,480 --> 00:11:08,920 Speaker 1: where it's the potential that any escalation really does start 211 00:11:08,960 --> 00:11:11,520 Speaker 1: to blow back in a meaningful way on the US 212 00:11:11,559 --> 00:11:14,920 Speaker 1: economy and could potentially damage the president's re election chances. 213 00:11:14,960 --> 00:11:18,120 Speaker 1: So I think this gives, you know, both sides kind 214 00:11:18,120 --> 00:11:20,920 Speaker 1: of fodder to to escalate, as odd as it seems 215 00:11:20,920 --> 00:11:23,480 Speaker 1: in a walk back, but is it potentially a step 216 00:11:23,480 --> 00:11:26,679 Speaker 1: in the right direction. Considering the fact that the administration 217 00:11:26,800 --> 00:11:29,760 Speaker 1: is now considering or admitting in a sense that the 218 00:11:29,800 --> 00:11:32,959 Speaker 1: consumer is the one who would bear the burden of 219 00:11:33,000 --> 00:11:36,240 Speaker 1: this next set of tariffs. I think it's encouraging in 220 00:11:36,320 --> 00:11:41,880 Speaker 1: that front that the escalation the administration has clearly taken 221 00:11:41,920 --> 00:11:45,160 Speaker 1: care to make sure that the brunt of the any 222 00:11:45,280 --> 00:11:48,520 Speaker 1: escalation does not fall in a meaningful way on the 223 00:11:48,600 --> 00:11:51,760 Speaker 1: US consumer. The fact that they know it will happen 224 00:11:51,800 --> 00:11:54,679 Speaker 1: if they go through with this I guess is encouraging 225 00:11:54,720 --> 00:11:58,040 Speaker 1: for now, but like like Gabriella says, it's just so 226 00:11:58,160 --> 00:12:02,400 Speaker 1: hard to tell what I wherefore is the considerations here? 227 00:12:02,400 --> 00:12:04,960 Speaker 1: And there was actually a good note from RBC's Tom 228 00:12:04,960 --> 00:12:08,559 Speaker 1: Porcelli earlier this week saying that if China is trying 229 00:12:08,559 --> 00:12:12,080 Speaker 1: to wait this out, they're really just betting on Biden winning, 230 00:12:12,360 --> 00:12:14,640 Speaker 1: not even just Trump losing, because a lot of the 231 00:12:14,679 --> 00:12:18,000 Speaker 1: Democratic candidates would take even as hard if not harder, 232 00:12:18,040 --> 00:12:20,960 Speaker 1: align on trade with China. Gabrielle, I know you you 233 00:12:21,480 --> 00:12:25,160 Speaker 1: look a lot at emerging markets pretty closely, um, and 234 00:12:25,480 --> 00:12:28,400 Speaker 1: every time that there's an escalation in trade tensions, it 235 00:12:28,440 --> 00:12:31,600 Speaker 1: seems like they get hit even harder than the US. 236 00:12:31,640 --> 00:12:34,720 Speaker 1: I mean, obviously China big weight in all the indexes, 237 00:12:34,800 --> 00:12:37,720 Speaker 1: so so that's part of it. But I was found 238 00:12:37,720 --> 00:12:39,719 Speaker 1: it interesting in one of the notes from you that 239 00:12:39,800 --> 00:12:43,800 Speaker 1: you're you're kind of bullish on emerging market consumers, and 240 00:12:43,840 --> 00:12:46,839 Speaker 1: I'm curious, uh, sort of what the rationale is for that. 241 00:12:46,920 --> 00:12:48,600 Speaker 1: I mean, is it sort of going to be a 242 00:12:48,600 --> 00:12:52,880 Speaker 1: bifurcated e M market where maybe manufacturing gets hit, but 243 00:12:52,920 --> 00:12:56,160 Speaker 1: the e M consumer stays strong. And walk us through 244 00:12:56,200 --> 00:12:58,160 Speaker 1: your your thinking with that So for us, the e 245 00:12:58,320 --> 00:13:01,320 Speaker 1: M story is is along to story, and it's about 246 00:13:01,360 --> 00:13:05,360 Speaker 1: this really long term emergence of the middle class consumer. 247 00:13:05,520 --> 00:13:08,959 Speaker 1: So not the emergence of the countries, neither the economies 248 00:13:08,960 --> 00:13:12,200 Speaker 1: as a whole, but of the consumers. So estimates that 249 00:13:12,280 --> 00:13:16,440 Speaker 1: we look at from Brookings Institute estimate that by will 250 00:13:16,440 --> 00:13:21,760 Speaker 1: have added new one point seven billion em middle class consumers. 251 00:13:21,800 --> 00:13:26,120 Speaker 1: That's about three people per second. So that process is 252 00:13:26,160 --> 00:13:29,920 Speaker 1: ongoing trade war no trade war. Uh. And that's really 253 00:13:29,920 --> 00:13:32,320 Speaker 1: the long term theme we're playing for here. Uh. And 254 00:13:32,360 --> 00:13:35,480 Speaker 1: there's also a cyclical aspect um, which is when you 255 00:13:35,480 --> 00:13:39,000 Speaker 1: look at earnings expectations within em Asia, you see a 256 00:13:39,200 --> 00:13:43,680 Speaker 1: really strong bifurcation between the exporters so just completely falling 257 00:13:43,679 --> 00:13:46,400 Speaker 1: off a cliff, versus the ones that are geared towards 258 00:13:46,480 --> 00:13:49,840 Speaker 1: this domestic demand story. And that's holding up much much better, 259 00:13:50,160 --> 00:13:53,040 Speaker 1: so both for safety, for defensiveness, as well as for 260 00:13:53,080 --> 00:13:56,080 Speaker 1: that long term growth story. And that's I would assume 261 00:13:56,080 --> 00:13:57,600 Speaker 1: sort of holds up even in the face of a 262 00:13:57,600 --> 00:14:01,600 Speaker 1: strong gallar. I mean, em we'll turn more domestic focused 263 00:14:02,200 --> 00:14:04,760 Speaker 1: in that case. So a strong dollar is always a 264 00:14:04,800 --> 00:14:08,760 Speaker 1: problem for e M relative performance compared to developed markets 265 00:14:08,760 --> 00:14:13,280 Speaker 1: so a risk aversion, growth, worry, strong dollar kind of 266 00:14:13,280 --> 00:14:15,960 Speaker 1: world doesn't mean EM is going to be about outperform here. 267 00:14:16,360 --> 00:14:18,800 Speaker 1: So it's about writing out that wave and really keeping 268 00:14:18,840 --> 00:14:20,680 Speaker 1: your eye on the horizon, which is that e M 269 00:14:20,760 --> 00:14:24,840 Speaker 1: consumer story? What is JP Morgan asset managements take on 270 00:14:25,120 --> 00:14:27,520 Speaker 1: the goings on in Hong Kong. Seeing that we are 271 00:14:27,600 --> 00:14:31,160 Speaker 1: seeing the protests escalate, some people are coming out and 272 00:14:31,200 --> 00:14:33,680 Speaker 1: talking about the hit to GDP that could cause for 273 00:14:33,720 --> 00:14:35,560 Speaker 1: Hong Kong. What that means for the rest of the world. 274 00:14:35,800 --> 00:14:39,040 Speaker 1: How do you guys see this filtering in into assets? 275 00:14:39,600 --> 00:14:43,640 Speaker 1: So staying completely away from the political um issues which 276 00:14:43,760 --> 00:14:47,680 Speaker 1: um we wouldn't comment on, but just purely the economic impact, 277 00:14:47,720 --> 00:14:50,640 Speaker 1: I think we can we can clearly see it, UM 278 00:14:50,680 --> 00:14:53,240 Speaker 1: And I think when you're thinking about investing in the 279 00:14:53,320 --> 00:14:57,240 Speaker 1: China story at this point, even more than before, it's 280 00:14:57,320 --> 00:15:00,960 Speaker 1: more a story of the domestic Asia chairs in China, 281 00:15:01,040 --> 00:15:04,480 Speaker 1: which are more domestic oriented anyway, and it is much 282 00:15:04,520 --> 00:15:06,760 Speaker 1: more geared towards the consumer. And now you can add 283 00:15:06,800 --> 00:15:11,120 Speaker 1: this added little ingredient of being less exposed to any 284 00:15:11,200 --> 00:15:14,520 Speaker 1: sort of slowdown that's probably occurring in Hong Kong. I 285 00:15:14,560 --> 00:15:17,320 Speaker 1: feel like e M stocks have a correction every year, right, 286 00:15:17,400 --> 00:15:20,680 Speaker 1: I mean, is this any more unusual than than past 287 00:15:20,760 --> 00:15:23,080 Speaker 1: years the strawtown we've seen. I mean, it's definitely better 288 00:15:23,080 --> 00:15:25,400 Speaker 1: than the last year. Uh the last year was a 289 00:15:25,520 --> 00:15:30,520 Speaker 1: very tough year for EM. It's definitely better than UM. 290 00:15:30,520 --> 00:15:34,280 Speaker 1: But EM tends to be very, very volatile UM. But 291 00:15:34,320 --> 00:15:37,200 Speaker 1: as soon as as things stabilize a bit, EM is 292 00:15:37,200 --> 00:15:39,400 Speaker 1: going to be the one that really turns, that goes 293 00:15:39,440 --> 00:15:41,560 Speaker 1: to the long term sort of thinking towards it, I 294 00:15:41,560 --> 00:15:44,920 Speaker 1: imagine exactly. It's it's really a story of famine and 295 00:15:45,040 --> 00:15:48,440 Speaker 1: feast in the mum. You have some really bad years, 296 00:15:48,520 --> 00:15:50,320 Speaker 1: which this one is not one of the worst ones, 297 00:15:50,520 --> 00:15:53,360 Speaker 1: followed by some really amazing years, and if you write 298 00:15:53,360 --> 00:16:11,880 Speaker 1: it out, then long term your returns are really good. Luke, 299 00:16:12,320 --> 00:16:15,560 Speaker 1: you've spent a lot of time focusing on volatility cross 300 00:16:15,600 --> 00:16:18,320 Speaker 1: asset folatility. I gotta say, if I were a reporter 301 00:16:18,360 --> 00:16:20,880 Speaker 1: focused on volatility, I think I would take eleven months 302 00:16:20,880 --> 00:16:23,000 Speaker 1: of the year off and just come to work in August. 303 00:16:23,080 --> 00:16:27,240 Speaker 1: Is that is that? Can you please be my bus? 304 00:16:28,800 --> 00:16:31,440 Speaker 1: But how does this August? Obviously it's been volatle but 305 00:16:32,040 --> 00:16:34,720 Speaker 1: uh say, for the last couple of years, August is 306 00:16:35,000 --> 00:16:38,240 Speaker 1: traditionally pretty violatal. How how's this shaping up in terms 307 00:16:38,240 --> 00:16:41,640 Speaker 1: of the history of August volatility. I mean, it's I 308 00:16:42,080 --> 00:16:44,520 Speaker 1: like to compare this more in terms of highlighting the 309 00:16:44,560 --> 00:16:48,120 Speaker 1: difference between this ball shock and more recent ones we've had. 310 00:16:48,120 --> 00:16:50,800 Speaker 1: I think that's you know, it's pretty instructive to see 311 00:16:50,840 --> 00:16:54,520 Speaker 1: the differences in this one. The demand, the demand for 312 00:16:54,560 --> 00:16:58,520 Speaker 1: puts relative to calls has stayed in US equities has 313 00:16:58,520 --> 00:17:02,520 Speaker 1: stayed pretty high. So in past downturns, you know, it's 314 00:17:02,800 --> 00:17:04,919 Speaker 1: skew as it's known, has performed pretty well on the 315 00:17:04,960 --> 00:17:07,399 Speaker 1: first leg of a downturn, and then it doesn't. And 316 00:17:07,400 --> 00:17:10,560 Speaker 1: the thinking here has been that's twofold people just you know, 317 00:17:10,720 --> 00:17:12,879 Speaker 1: dump their holdings, so you know, you have nothing to 318 00:17:12,960 --> 00:17:16,320 Speaker 1: hedge once you've sold and you know, reduced gross or 319 00:17:16,359 --> 00:17:18,600 Speaker 1: the second is that we've had this kind of dynamic 320 00:17:19,000 --> 00:17:21,199 Speaker 1: involved markets where you know, when you saw this a 321 00:17:21,240 --> 00:17:24,679 Speaker 1: lot during Q four, where big institutions were out in 322 00:17:24,800 --> 00:17:28,320 Speaker 1: full size selling puts even into the you know, selling 323 00:17:29,440 --> 00:17:32,560 Speaker 1: even in you know, the throws of a downturn, and 324 00:17:32,600 --> 00:17:34,720 Speaker 1: so that actually has the effect perversely of you know, 325 00:17:34,880 --> 00:17:38,080 Speaker 1: dampening volatility. If you have this huge supply on offer 326 00:17:38,160 --> 00:17:41,240 Speaker 1: the fact that that activity has gone away, and you know, 327 00:17:41,359 --> 00:17:44,560 Speaker 1: dealers right now are a little shorter GAMA now than 328 00:17:44,600 --> 00:17:47,639 Speaker 1: they have been in past downturns. It helps explain on 329 00:17:47,720 --> 00:17:50,399 Speaker 1: the margin, why we seem to be getting, you know, 330 00:17:50,440 --> 00:17:53,680 Speaker 1: these larger inter day moves, because in the past, dealers 331 00:17:53,680 --> 00:17:56,560 Speaker 1: will be pushing back against the interday action and now 332 00:17:56,600 --> 00:17:58,879 Speaker 1: they're in a position where they're more exacerbating it on 333 00:17:58,920 --> 00:18:01,560 Speaker 1: the margin. All right, and let the listeners google Gamma 334 00:18:01,680 --> 00:18:03,359 Speaker 1: on their own, all right. If I try to explain, 335 00:18:03,359 --> 00:18:06,120 Speaker 1: I think we need a whole separate podcast next week 336 00:18:06,400 --> 00:18:09,080 Speaker 1: before we really get into the craziest thing. I feel 337 00:18:09,119 --> 00:18:11,040 Speaker 1: like this will be a pretty good segue. Gabriella, We 338 00:18:11,080 --> 00:18:14,639 Speaker 1: have to ask you, Gabriella was in Argentina roughly ten 339 00:18:14,720 --> 00:18:18,639 Speaker 1: days ago before we saw the complete fallout earlier this week. 340 00:18:19,119 --> 00:18:22,359 Speaker 1: Do you feel like the reaction that we saw after 341 00:18:22,400 --> 00:18:27,320 Speaker 1: that surprise primary election outcome was warranted? So? I think 342 00:18:27,400 --> 00:18:31,359 Speaker 1: it made sense for two main reasons. The first is 343 00:18:31,480 --> 00:18:35,000 Speaker 1: it was completely unexpected, so there was expected to be 344 00:18:35,040 --> 00:18:38,080 Speaker 1: a very tight race between the incumbent and the opposition, 345 00:18:38,760 --> 00:18:42,920 Speaker 1: very polarized, very consequential race. But the gap was really 346 00:18:42,960 --> 00:18:46,119 Speaker 1: only about two and a half percentage points. Instead we 347 00:18:46,160 --> 00:18:49,840 Speaker 1: got a gap that was five times bigger, so a 348 00:18:49,920 --> 00:18:53,080 Speaker 1: huge shock, huge surprise, not what was being priced in. 349 00:18:53,600 --> 00:18:55,919 Speaker 1: So it makes sense in that in that regard. And 350 00:18:55,960 --> 00:18:58,760 Speaker 1: the second way that it makes sense also is if 351 00:18:58,800 --> 00:19:03,240 Speaker 1: the opposition does win, and that really symbolizes policy discontinuity 352 00:19:03,520 --> 00:19:07,080 Speaker 1: um it brings into question not just economics inflation, but 353 00:19:07,200 --> 00:19:10,520 Speaker 1: also liquidity and solvency. So it makes sense to me, 354 00:19:10,560 --> 00:19:12,760 Speaker 1: and that was actually going to be my crazy weird 355 00:19:16,280 --> 00:19:18,320 Speaker 1: I would advise go in Argentina in the winter, in 356 00:19:18,320 --> 00:19:20,800 Speaker 1: our winter, though not not the summers. You know, I 357 00:19:21,080 --> 00:19:23,919 Speaker 1: went there in their winter. It's very cozy. I kind 358 00:19:23,960 --> 00:19:26,640 Speaker 1: of like it. I prefer it you have some wine 359 00:19:26,840 --> 00:19:31,960 Speaker 1: and nates and alcoholism and sing. Now. Is there any 360 00:19:32,160 --> 00:19:34,520 Speaker 1: risk It doesn't seem like there's much risk of a 361 00:19:34,520 --> 00:19:38,320 Speaker 1: contagion from Argentina, even in the rest of lad Am. 362 00:19:38,760 --> 00:19:41,000 Speaker 1: You know, Argentina, let's just say, has been through this 363 00:19:41,040 --> 00:19:43,280 Speaker 1: type of thing before. How are you looking at that? 364 00:19:43,400 --> 00:19:46,800 Speaker 1: Is there the potential for Argentina to become a more 365 00:19:47,200 --> 00:19:51,080 Speaker 1: regional or even global story. So Argentina is very clearly 366 00:19:51,160 --> 00:19:55,359 Speaker 1: in its own um realm here in terms of where 367 00:19:55,359 --> 00:19:59,480 Speaker 1: it's coming from and where it's going. Um very unrepresentative 368 00:19:59,600 --> 00:20:02,960 Speaker 1: of the hot or Latam and e M complex generally speaking. 369 00:20:03,359 --> 00:20:05,520 Speaker 1: But I think there were two read throughs for the region. 370 00:20:05,680 --> 00:20:09,199 Speaker 1: For Latam the first is it's an important trading partner, 371 00:20:09,840 --> 00:20:13,480 Speaker 1: especially for a big economy like Brazil. About six percent 372 00:20:13,520 --> 00:20:16,479 Speaker 1: of its exports go to Argentina, so it would definitely 373 00:20:16,480 --> 00:20:20,480 Speaker 1: do better if its main neighbor is doing better as well. 374 00:20:21,000 --> 00:20:24,720 Speaker 1: And the second read through is is just the general disappointment. 375 00:20:24,880 --> 00:20:27,359 Speaker 1: I think that about four years ago there was a 376 00:20:27,359 --> 00:20:31,760 Speaker 1: lot of enthusiasm about Argentina and reform in the direction 377 00:20:31,800 --> 00:20:34,240 Speaker 1: of the country, and this is the first time in 378 00:20:34,280 --> 00:20:37,679 Speaker 1: a little bit that investors have gotten disappointed. Um So 379 00:20:37,720 --> 00:20:39,800 Speaker 1: I think two read throughs for the region, but by 380 00:20:39,880 --> 00:20:42,960 Speaker 1: no means of course as a representative. And that was 381 00:20:43,000 --> 00:20:44,680 Speaker 1: one of our crazy things from a few weeks ago. 382 00:20:44,760 --> 00:20:46,760 Speaker 1: Someone pointed out the I think it was the ten 383 00:20:46,840 --> 00:20:51,080 Speaker 1: year hundred year Argentina curve inverted. I mean, blow your 384 00:20:51,080 --> 00:20:55,040 Speaker 1: mind absolutely with that. I think it's time for the 385 00:20:55,040 --> 00:20:59,040 Speaker 1: craziest things we saw in markets this week. Done? Done? 386 00:20:58,640 --> 00:21:01,480 Speaker 1: Do we really need to sound a fact for the producers? 387 00:21:01,480 --> 00:21:03,359 Speaker 1: Got to get us the sound effect if we have 388 00:21:03,400 --> 00:21:04,879 Speaker 1: the budget, but we have a hotline, I think we 389 00:21:04,880 --> 00:21:08,240 Speaker 1: can get I guess we shouldn't get too greedy. We 390 00:21:08,320 --> 00:21:10,320 Speaker 1: do have a crazy thing that came in over the 391 00:21:10,320 --> 00:21:12,840 Speaker 1: what goes Up hotline. Let's give that a Listen. This 392 00:21:12,920 --> 00:21:15,480 Speaker 1: is Andy Sinko at Bloomberg News, What goes up and 393 00:21:15,520 --> 00:21:19,000 Speaker 1: what was crazy this week? I'll tell you what recession 394 00:21:19,160 --> 00:21:21,760 Speaker 1: story count. It's the highest since the end of two 395 00:21:21,760 --> 00:21:24,439 Speaker 1: thousand and eleven. Guys, that's the highest in eight years, 396 00:21:24,560 --> 00:21:27,199 Speaker 1: all because the two ten curve went negative for a 397 00:21:27,240 --> 00:21:32,560 Speaker 1: few hours. Cheers our own Andy Sinko from the Market's 398 00:21:32,600 --> 00:21:34,919 Speaker 1: live blog. That is pretty crazy. I I pointed that 399 00:21:34,920 --> 00:21:37,000 Speaker 1: out too. I mean, the curve didn't even close. And 400 00:21:37,119 --> 00:21:42,399 Speaker 1: I can't believe we're talking about the curve again. Andy, 401 00:21:42,600 --> 00:21:45,400 Speaker 1: turn it anyway. That was pretty crazy that it didn't 402 00:21:45,400 --> 00:21:48,240 Speaker 1: even close an inversion. If you do uh end of 403 00:21:48,320 --> 00:21:50,240 Speaker 1: day chart, it doesn't even look like the curve. And 404 00:21:50,440 --> 00:21:52,800 Speaker 1: we I mean, I have to apologize for that too. 405 00:21:52,840 --> 00:21:55,239 Speaker 1: But the fact of the matter was if I mean, 406 00:21:55,280 --> 00:21:57,600 Speaker 1: markets have been freaking out every day, but if the 407 00:21:57,680 --> 00:22:00,119 Speaker 1: doal didn't close down eight points, if the SMP you 408 00:22:00,119 --> 00:22:01,879 Speaker 1: didn't go in free fall, it seemed during the day 409 00:22:01,920 --> 00:22:03,720 Speaker 1: that maybe we wouldn't have been talking about the youth 410 00:22:03,760 --> 00:22:06,000 Speaker 1: curve as much. It was just the reaction that forced 411 00:22:06,000 --> 00:22:09,240 Speaker 1: you to in turn, the recession could be coming in 412 00:22:09,320 --> 00:22:11,600 Speaker 1: two to five years, so we better sell everything now. 413 00:22:12,200 --> 00:22:15,360 Speaker 1: But anyway, Sarah, do you have anything crazy? First? So 414 00:22:15,400 --> 00:22:18,760 Speaker 1: I had something a bit crazy that happened on Thursday, 415 00:22:18,760 --> 00:22:21,080 Speaker 1: and it was just really the reaction that we saw 416 00:22:21,480 --> 00:22:25,239 Speaker 1: that was pretty insane. So Harry more Copolis, he was 417 00:22:25,560 --> 00:22:27,920 Speaker 1: the person who came out and raised concerns about the 418 00:22:27,960 --> 00:22:31,760 Speaker 1: Bernie made Off Ponzi scheme ahead of its actual announcement 419 00:22:31,880 --> 00:22:34,639 Speaker 1: and when people actually took it down. Here released a 420 00:22:34,680 --> 00:22:38,120 Speaker 1: report on Thursday, and if you go and look at 421 00:22:38,200 --> 00:22:43,520 Speaker 1: this report, it's pretty crazy. You go to this website 422 00:22:44,000 --> 00:22:47,000 Speaker 1: and it opens to a huge logo that says General 423 00:22:47,040 --> 00:22:50,439 Speaker 1: Electric a bigger fraud than n Ron. The website link 424 00:22:50,720 --> 00:22:56,320 Speaker 1: is ge fraud dot com. And after this happened about 425 00:22:56,359 --> 00:22:59,040 Speaker 1: it very subtle, very subtle, not I mean, things are 426 00:22:59,080 --> 00:23:02,439 Speaker 1: in bold and all caps. It's very intense when you 427 00:23:02,480 --> 00:23:05,600 Speaker 1: look at it, but it's sent ge at one point 428 00:23:05,680 --> 00:23:09,880 Speaker 1: down your that was the worst day. Now it did 429 00:23:09,920 --> 00:23:13,320 Speaker 1: come back and regain some of those losses, but still 430 00:23:13,400 --> 00:23:16,560 Speaker 1: the fact that a report of this sort he is 431 00:23:16,560 --> 00:23:20,000 Speaker 1: working with an unknown short selling hedge fund, but that 432 00:23:20,080 --> 00:23:22,000 Speaker 1: it can drive ge down in a day like that, 433 00:23:22,040 --> 00:23:24,760 Speaker 1: Serge has been all over the place, but still pretty crazy. Yeah, 434 00:23:24,800 --> 00:23:28,320 Speaker 1: I think the words uh matt Off, whistleblower or not 435 00:23:28,560 --> 00:23:30,280 Speaker 1: the thing you want to see in a headline about 436 00:23:30,359 --> 00:23:33,480 Speaker 1: about your absolutely not interesting to see how that one 437 00:23:34,000 --> 00:23:38,119 Speaker 1: shakes out. Gabriella, I trust you have some several crazy 438 00:23:38,119 --> 00:23:40,680 Speaker 1: things for us, give us, give us, give us some 439 00:23:40,720 --> 00:23:44,600 Speaker 1: sigmas and gamma and whatnot. So I guess I previewed it. 440 00:23:44,760 --> 00:23:47,280 Speaker 1: But for me, it was just such a crazy day 441 00:23:47,480 --> 00:23:50,720 Speaker 1: for us on Monday, for our clients in Latin America, 442 00:23:51,200 --> 00:23:53,879 Speaker 1: and just for the price action we saw with Argentina, 443 00:23:54,080 --> 00:23:57,679 Speaker 1: a currency that was down in one day percent against 444 00:23:57,680 --> 00:24:01,959 Speaker 1: the dollar, US dollar bond that were down almost thirty 445 00:24:02,000 --> 00:24:04,960 Speaker 1: percent in one day, and an equity market that was 446 00:24:05,000 --> 00:24:08,400 Speaker 1: down about fifty in dollar terms. I mean, talk about 447 00:24:08,440 --> 00:24:13,639 Speaker 1: a massive, massive move. Yeah, It's funny how much politics 448 00:24:13,840 --> 00:24:18,280 Speaker 1: is infecting markets and how there's always these surprises that 449 00:24:18,680 --> 00:24:21,480 Speaker 1: the science of polling, I guess is just not quite 450 00:24:21,480 --> 00:24:24,320 Speaker 1: there yet. It doesn't seem like no, it doesn't seem 451 00:24:24,359 --> 00:24:26,840 Speaker 1: like based by this, yes, it seems to be getting 452 00:24:26,840 --> 00:24:29,560 Speaker 1: worse couple elections, right, right? Do you think a few 453 00:24:29,640 --> 00:24:31,439 Speaker 1: examples perhaps do you think in the age of big 454 00:24:31,520 --> 00:24:34,439 Speaker 1: data would be so precise now? But actually interesting, a 455 00:24:34,440 --> 00:24:36,720 Speaker 1: few people that had looked at big data for the 456 00:24:36,880 --> 00:24:40,320 Speaker 1: Argentina primary actually had called it an advance. Really, so 457 00:24:40,359 --> 00:24:44,480 Speaker 1: the number of people that were tweeting or facebooking things 458 00:24:44,520 --> 00:24:49,440 Speaker 1: like the dollar um actually could have seen this coming. Interesting. 459 00:24:49,840 --> 00:24:52,800 Speaker 1: I don't know, Luke, can you tap that? Probably probably not, 460 00:24:52,880 --> 00:24:55,880 Speaker 1: but let's let's try an away. So the one six 461 00:24:56,400 --> 00:25:00,359 Speaker 1: number earlier was in reference to the number of times 462 00:25:00,359 --> 00:25:05,480 Speaker 1: that Adam appears in the prospectus for WE Works. I 463 00:25:05,640 --> 00:25:10,439 Speaker 1: p O and you you really, you really have to 464 00:25:10,600 --> 00:25:13,680 Speaker 1: go through this thing because uh sure over there at 465 00:25:14,160 --> 00:25:16,800 Speaker 1: a Bloomberg Opinion, she she said, at the best, she said, 466 00:25:16,840 --> 00:25:19,280 Speaker 1: I write about things for a living, and you know 467 00:25:19,280 --> 00:25:22,320 Speaker 1: WE Works perspectives nearly has me at a loss for words. 468 00:25:23,280 --> 00:25:30,040 Speaker 1: The related party dealings section of that Uh, essentially, it 469 00:25:30,119 --> 00:25:33,600 Speaker 1: chose at one point that the company made a very 470 00:25:33,720 --> 00:25:36,879 Speaker 1: large loan to the founder that he then used to 471 00:25:36,920 --> 00:25:40,800 Speaker 1: purchase stock and then repaid the loan posting the stock 472 00:25:41,240 --> 00:25:45,960 Speaker 1: as collateral. So this and in a in a company 473 00:25:46,160 --> 00:25:50,840 Speaker 1: where you know, the actual org structure is so convoluted 474 00:25:50,960 --> 00:25:55,800 Speaker 1: to know that the related party transactions personally are just 475 00:25:56,000 --> 00:26:00,240 Speaker 1: as crazy and interwoven. I uh, this is deaf only 476 00:26:00,320 --> 00:26:04,640 Speaker 1: not gonna show up on any E s G list again. Yeah, 477 00:26:04,720 --> 00:26:09,040 Speaker 1: that's that's the vault. And they tried to sort of 478 00:26:09,080 --> 00:26:12,720 Speaker 1: simplify that organization chart with an actual flow chart of it. 479 00:26:13,880 --> 00:26:15,920 Speaker 1: I lost my head. It looks like something that should 480 00:26:15,920 --> 00:26:18,840 Speaker 1: be on a bulletin board with strings tied to, you know, 481 00:26:18,880 --> 00:26:21,920 Speaker 1: attached to one another, that sort of thing. That's pretty good. 482 00:26:21,920 --> 00:26:23,399 Speaker 1: I don't know if I can beat it, but uh, 483 00:26:23,840 --> 00:26:27,240 Speaker 1: mine's pretty good. We're all familiar with over stock uh 484 00:26:27,280 --> 00:26:29,560 Speaker 1: and their CEO. At did anyone read about the CEO 485 00:26:29,800 --> 00:26:35,119 Speaker 1: this week? Who didn't? Uh? The CEO of overstock dot 486 00:26:35,160 --> 00:26:40,160 Speaker 1: com UH guy named Patrick Byrne, basically released a statement 487 00:26:40,440 --> 00:26:44,960 Speaker 1: this week UH explaining the role he claims he played 488 00:26:45,720 --> 00:26:51,640 Speaker 1: in the investigation into Russian interference in the election and 489 00:26:52,080 --> 00:26:55,680 Speaker 1: a whole bunch of other political intrigue that he says 490 00:26:55,760 --> 00:26:58,920 Speaker 1: he was at the center of and is now speaking 491 00:26:58,960 --> 00:27:02,840 Speaker 1: out against. So let me just read this statement that 492 00:27:02,880 --> 00:27:07,760 Speaker 1: he released without further commentary. Uh, but you can sort 493 00:27:07,760 --> 00:27:10,160 Speaker 1: of judge for yourself why the stock dropped thirty six 494 00:27:10,680 --> 00:27:14,119 Speaker 1: in two days. Starting in two thousand and fifteen, I, 495 00:27:14,440 --> 00:27:17,040 Speaker 1: operating under the belief that I was helping legitimate law 496 00:27:17,080 --> 00:27:20,439 Speaker 1: enforcement efforts, assisted in what are known as the Clinton 497 00:27:20,480 --> 00:27:24,520 Speaker 1: Investigation and the Rusted Russia Investigation. In fact, I am 498 00:27:24,600 --> 00:27:27,960 Speaker 1: the notorious Missing Chapter one of the Russia investigation. It 499 00:27:28,040 --> 00:27:29,520 Speaker 1: was the third time in my life that I have 500 00:27:29,600 --> 00:27:31,919 Speaker 1: helped the Men in Black. The first was when my 501 00:27:31,960 --> 00:27:34,960 Speaker 1: friend Brian Williams was murdered, and the second was when 502 00:27:34,960 --> 00:27:37,199 Speaker 1: I helped the m IB shake up Wall Street a 503 00:27:37,240 --> 00:27:39,840 Speaker 1: decade ago. Unfortunately, this time turned out to be a 504 00:27:39,960 --> 00:27:43,720 Speaker 1: less about law enforcement and more about political espionage conducted 505 00:27:43,760 --> 00:27:46,720 Speaker 1: against Hillary Clinton and Donald Trump and, to a lesser degree, 506 00:27:46,960 --> 00:27:51,040 Speaker 1: Marco Rubio and Ted Cruz. I still can't believe this 507 00:27:51,080 --> 00:27:53,240 Speaker 1: is something that is actually happening in this world. But 508 00:27:53,280 --> 00:27:55,320 Speaker 1: then again, maybe I shouldn't be surprised, right. I think 509 00:27:55,359 --> 00:27:57,719 Speaker 1: if you mentioned the Men in Black the m IB, 510 00:27:57,800 --> 00:27:59,960 Speaker 1: you gotta you gotta do that flashy thing to erase 511 00:28:00,080 --> 00:28:02,760 Speaker 1: everyone's memory immediately afterwards, or else your stock is going 512 00:28:02,800 --> 00:28:07,040 Speaker 1: to go down. And that's exactly what it did. But 513 00:28:07,160 --> 00:28:10,080 Speaker 1: with that said, I mean everyone had pretty great crazy things. 514 00:28:10,080 --> 00:28:14,119 Speaker 1: This week had to be prepared with a week like this. Lukawa, 515 00:28:14,280 --> 00:28:16,680 Speaker 1: Gabriella Santos, thank you so much for coming on the 516 00:28:16,680 --> 00:28:25,560 Speaker 1: show this week. Thanks so much What Goes Out. We'll 517 00:28:25,600 --> 00:28:28,479 Speaker 1: be back next week. Until then, you can find us 518 00:28:28,480 --> 00:28:31,840 Speaker 1: on the Bloomberg Terminal website and app, or wherever you 519 00:28:31,960 --> 00:28:34,520 Speaker 1: get your podcasts. We'd love it if you took the 520 00:28:34,560 --> 00:28:37,560 Speaker 1: time to rate interview the show on Apple Podcasts so 521 00:28:37,640 --> 00:28:40,360 Speaker 1: more listeners can find us. And you can find us 522 00:28:40,360 --> 00:28:44,400 Speaker 1: on Twitter. Follow me at at Sarah Pontack. Mike is 523 00:28:44,440 --> 00:28:48,120 Speaker 1: at reag Anonymous. You can follow JP Morgan Asset Management 524 00:28:48,320 --> 00:28:51,920 Speaker 1: at JP Morgan a M. And Luke Pawa is at 525 00:28:52,120 --> 00:28:56,560 Speaker 1: l j Kawa. You can also follow Bloomberg podcast at podcasts. 526 00:28:56,880 --> 00:28:59,520 Speaker 1: What Goes Up is produced by Tofur Foreheads and the 527 00:28:59,560 --> 00:29:02,960 Speaker 1: head of burg podcast is Francesco Leavie. Thanks for listening, 528 00:29:03,200 --> 00:29:04,040 Speaker 1: See you next time.