Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast.
Speaker 1: I'm Mike Reagan, and I'm a senior editor at Bloomberg,
Speaker 1: and I'm dannahark Across, asset reporter at Bloomberg. This week
Speaker 1: on the show, well Mark, it's got a few curveballs
Speaker 1: thrown at it. Geopolitics is front and center again in
Speaker 1: the news as the evacuation of Afghanistan turns deadly, and
Speaker 1: policymakers at the Federal Reserve are starting to make it
Speaker 1: clear that they're ready to start dialing back the liquidity
Speaker 1: that has been so crucial to the bull market over
Speaker 1: the last year and a half. What's it all means
Speaker 1: for financial markets. Well, we'll get into it with the
Speaker 1: chief strategist at a major brokerage. But first, Vildanna, I
Speaker 1: gotta tell you it was a big week this week
Speaker 1: because our old pal uh Sarah Hanzac actually re emerged
Speaker 1: on television. Did you did you catch her appearance? I
Speaker 1: sure did. It was really an exciting day. It reminded
Speaker 1: me of how smart and well educated Sarah is, Vildona,
Speaker 1: But as I she knows the one big gaping hole
Speaker 1: in her education that I pointed out to her many
Speaker 1: times is old man movies. Um, she hasn't seen any
Speaker 1: of them. Whenever you get two old guys together in
Speaker 1: a room, at some point, they just lapse into another
Speaker 1: language that is nothing but quotes from old man movies.
Speaker 1: And I gave her a list of movies to see
Speaker 1: so that she could understand guys like me. I think
Speaker 1: you tweeted it out once, right, I did? I did? Yeah? Yeah? Actually,
Speaker 1: John and John author has wrote a calm about it.
Speaker 1: Uh not everyone's a fan of the old man movies.
Speaker 1: I know your generation maybe it's kind of sick of
Speaker 1: us old men, But I do think it's important in
Speaker 1: your job to know the old man movies. I'm gonna
Speaker 1: give you a list too. I think you should. You'll
Speaker 1: actually watch them. I think Sarah kind of pretended like
Speaker 1: she was gonna watch them. If you give me a list,
Speaker 1: then I'll treat it as homework and I'll watch them. Okay, good?
Speaker 1: And now well we can play stump Fildonna with some
Speaker 1: old man movie clicks. I'll give you one today. Let's
Speaker 1: see if you can get this one. You ready? Their nihilists, man,
Speaker 1: they keep saying they believe in nothing. Do you get
Speaker 1: that one? You need me? Repeated crickets over here. But
Speaker 1: I have a feeling our guest knows exactly what you're
Speaker 1: talking about. Do you think let's find out. Let's find out. Well,
Speaker 1: we're joined today by Steve Sosnik. He's the chief strategist
Speaker 1: at Interactive Brokers. Welcome to the show, Steve. It's my
Speaker 1: pleasure to join you, Bill, Donna, and Mike. You can
Speaker 1: call me dude or his dudeness or l doin no,
Speaker 1: which Mike knows immediately what I'm talking about. And you
Speaker 1: don't have the slightest now I know, the big Lebowski.
Speaker 1: There you go a just not good quotes. I get
Speaker 1: half a point. We're impressed you caught it at least
Speaker 1: on the on the second reference. Sorry, that's good. That
Speaker 1: is impressive, Steve. Let's get into it though, I you know,
Speaker 1: talk about a sudden uh drama in the news with
Speaker 1: this Afghanistan situation. I mean it's it's obviously a heartbreaking
Speaker 1: situation from a humanitymanitarian standpoint, and I know, you know
Speaker 1: it's can be awkward to talk about that type of
Speaker 1: thing as it relates to markets. But um, such as
Speaker 1: our our fate in life, I guess so, um, you
Speaker 1: know our thoughts and simpathy to everyone affected by that.
Speaker 1: But um, UM, I do think our listeners probably are curious,
Speaker 1: um if this eventually has uh the chance to to
Speaker 1: be a catalyst in the market. You know, I for me,
Speaker 1: I can't really draw a straight line from what's going
Speaker 1: on to sort of any fundamentals in the economy or
Speaker 1: in the market's. Maybe oil gets a little jittery in
Speaker 1: those markets, but you know that doesn't always stop the
Speaker 1: market from having sort of a knee jerk reaction to
Speaker 1: this sort of thing, especially on Thursday this week, as
Speaker 1: it the bombings happened, and there's reports coming in as
Speaker 1: we tape right now, some some Marines being killed in
Speaker 1: the bombings. Is this a market potentially a market moving event?
Speaker 1: Do you think, um, either in the short term or
Speaker 1: in the long term, if this sort of affects the
Speaker 1: US standing geopolitically with other um situations around the world, well,
Speaker 1: as tough as it is to deal with, it's as
Speaker 1: a market moving event. It's it's really an outlier, you know,
Speaker 1: think of it this way. And I don't mean to
Speaker 1: minimize what happened today by any means, but the last
Speaker 1: week and a half two weeks in Afghanistan has been
Speaker 1: you know, pretty much an unmitigated um set of scenes
Speaker 1: of of of nightmarish looking you know, nightmares looking setups.
Speaker 1: And you know, the thought is as it like Psigon
Speaker 1: or whatever. Bottom line though, is the market didn't care.
Speaker 1: And for better or worse, this is not you know,
Speaker 1: the markets, I will say, I think the people in
Speaker 1: the market's care. But ultimately, when you get down to it,
Speaker 1: it's not. Afghanistan is such an outlier to the world economy.
Speaker 1: It doesn't contribute much in the way of GDP if anything.
Speaker 1: You know, their main export at this point is opium poppy,
Speaker 1: which is really outside the you know, the framework of
Speaker 1: the economy. And so if if we have to think
Speaker 1: in the terms of what does this mean to earnings
Speaker 1: and cash flows or whatever, it doesn't um And that's
Speaker 1: why that that's why the market reaction is has been
Speaker 1: muted in that regard. Yes, the markets sold off on
Speaker 1: that trigger. I think markets just don't like anything any
Speaker 1: sort of terrorism that because that's that's a more visceral problem.
Speaker 1: But in terms of a widespread economic thing, perhaps there's
Speaker 1: a geopolitical answer answer in there. But um, you know,
Speaker 1: I think I think in the world of day to
Speaker 1: day trading and short term investing, it's just not there's
Speaker 1: there's not a clear cause effect in terms of what's
Speaker 1: going to move a market. And I think Steve the
Speaker 1: through line here is that the market has been able
Speaker 1: to look past so much. I think a lot of
Speaker 1: people refer to the market climbing, you know, the wall
Speaker 1: of worry, and you know, we keep hitting record high
Speaker 1: after record high. I think the big question is how
Speaker 1: much longer all of this can go on for? And
Speaker 1: I'm hoping you can share your thoughts. Well, I think
Speaker 1: we'll get some clarity on that. Regard um this this weekend, um,
Speaker 1: you know, as the Jackson Hole Conference proceeds, you know, Friday, Saturday, UM,
Speaker 1: you know, we're we're as we're taping this now. I
Speaker 1: think they're you know, they're having drinks on the patio,
Speaker 1: you know, virtually or those who or those who had
Speaker 1: nonrefundable tickets, you know, in hotel reservations are um. But
Speaker 1: you know, I think that the key is this has
Speaker 1: been a very liquidity driven market. I think that somehow
Speaker 1: the market has markets have still really not come to
Speaker 1: grips with the fact that the FED is really talking
Speaker 1: quite seriously about if not not necessarily tightening, but taking
Speaker 1: their foot off the accelerator. And you know, I wonder
Speaker 1: if even just the act of taking their foot off
Speaker 1: the accelerator. You know, I don't love to use the
Speaker 1: term taper tantrum, but you know, I think that we've
Speaker 1: gotten We've gotten to where we are in a wide
Speaker 1: variety of risk assets because of the relentless accommodation of
Speaker 1: the FED and too and certainly to some extent of
Speaker 1: the fiscal accommodation as well. Um and I think that
Speaker 1: the market is going to have to reckon with this,
Speaker 1: and I think stock investors will probably end up taking
Speaker 1: their cue from the bond market, because quite honestly, bond
Speaker 1: traders are better at this stuff than stock traders. Fair enough.
Speaker 1: Fair enough, they certainly watched the FED a lot closer
Speaker 1: than than most of the stock traders I know. But Steve,
Speaker 1: I was joking about the nihilism and the nihilists at
Speaker 1: the beginning, because you had a funny quote in some
Speaker 1: of our email traffic before this, uh, reacting to a story,
Speaker 1: and not to talk our own book, but I will
Speaker 1: talk her own book of Eldon and I wrote a
Speaker 1: story about sort of, as she said, sort of the
Speaker 1: wall where or just the the the basic unknowable nous
Speaker 1: if that's an actual word about the economy and the
Speaker 1: markets and what's coming next in the age of COVID
Speaker 1: and in the age of all the stimulus throne at it,
Speaker 1: and I wonder, you know, and you you would sort
Speaker 1: of describe it as as a nihilist market, which I
Speaker 1: like that a lot, uh dude references aside, but I wonder,
Speaker 1: you know, obviously the FED liquidity is a huge part
Speaker 1: of why that phenomenon exists to some degree. There's a
Speaker 1: lot of money slashing around looking to find a home. Um,
Speaker 1: how important is the dialing back of that when the
Speaker 1: fiscal side of things has been so aggressive to um
Speaker 1: and and not only just the fiscal stimulus that the spending,
Speaker 1: but just you know, the amount of savings that the
Speaker 1: consumer in America has had over the past year, those
Speaker 1: of us lucky enough to keep our job or you know,
Speaker 1: be able to whatever reason, boost our savings rate. The
Speaker 1: the American savings rate just went through the roof. There
Speaker 1: just was not a lot of things to spend money on.
Speaker 1: So in some ways, does that sort of uh make
Speaker 1: the tapering maybe less problematic than it would be otherwise
Speaker 1: if we didn't have this this aggressive fiscal and you know,
Speaker 1: economic based liquidity on on the other side, outside of
Speaker 1: the federal reserve. UM. I think a lot of it
Speaker 1: has to do with how those savings are deployed. UM.
Speaker 1: I think if you and you know, I think if
Speaker 1: those savings, first of all, if those savings were used
Speaker 1: to pay down debt um, you know, if they were
Speaker 1: used to refinance mortgages, UM, if they were used to
Speaker 1: pay down credit cards, UH, the individual's balance sheet is
Speaker 1: in much better shape and thus able to withstand it.
Speaker 1: If you then too, if, on the other hand, you
Speaker 1: took all your stimulus money and refinanced your house and
Speaker 1: bought um, you know, doach coin, I would say that
Speaker 1: you're I would say that your financial standing maybe a
Speaker 1: bit more UM tied to the outcome of Jackson Hole.
Speaker 1: And I think you know, if if you if you've
Speaker 1: used those if part of the savings, you know, the
Speaker 1: improvement and balance sheet is because of the wealth effect
Speaker 1: from you know, stocks going up. Let's say you just
Speaker 1: did something and let's say you just brought SMP index funds.
Speaker 1: You're you're you're doing what quite well. Um, if the
Speaker 1: market reacts poorly, you'll get a draw down. You probably
Speaker 1: won't get the full draw down to what we saw
Speaker 1: last March, um, you know, and so that's really where
Speaker 1: it comes. I think. I think the problem you have
Speaker 1: is when monetary policy is extraordinarily easy, you get a
Speaker 1: lot of a lot of that money flows into incredibly speculative,
Speaker 1: not necessarily particularly productive assets. I'll call it a flight
Speaker 1: to rap for lack of a better word. And I
Speaker 1: think that as part of this, you know, if you own,
Speaker 1: if you own the really the stuff that's way out
Speaker 1: there on the risk curve, that's where you're that's where
Speaker 1: your most susceptible to to the to the bigger draw down.
Speaker 1: I do like to think that we that the vast
Speaker 1: majority of Americans will end up in better shape as
Speaker 1: a result of all the things you said, But inevitably
Speaker 1: there will be there will be some who got out
Speaker 1: way over their skis, and and it's gonna stay. I
Speaker 1: think we have our headline with flight to crap. What
Speaker 1: do you think I like it, Steve, I'm actually working
Speaker 1: on a story that touches on a bit of that,
Speaker 1: where uh, as you know, I cover cryptocurrencies as well,
Speaker 1: and when I'm talking to people, a lot of them say, well,
Speaker 1: there is just so much money in the system. You
Speaker 1: had people receiving the stimilar as checks during the pandemic,
Speaker 1: and so it just makes sense that you would see
Speaker 1: even some of these, like smaller alternative cryptocurrencies gaining. I
Speaker 1: wrote a story about n f t s. Some of
Speaker 1: them are put droopling in price over just a couple
Speaker 1: of days. So I know you. I did my homework.
Speaker 1: I know you. You have written about blockchain technology recently.
Speaker 1: So I'm wondering if all of that makes sense to you,
Speaker 1: or if maybe you're seeing something else where you describe
Speaker 1: it a bit differently. Well, you know, those of us
Speaker 1: who those of us who can reference eighties movies I've seen.
Speaker 1: I've seen this movie before, which was the late nineties
Speaker 1: where you were you had, you know, the advent of
Speaker 1: the new technology being the Internet, and you know, and
Speaker 1: and I'll use blockchain as an analogy to that, and
Speaker 1: the blockchain. We don't know what blockchain is capable of,
Speaker 1: just as the you know, the original internet um was
Speaker 1: basically just a way to send messages, you know, around
Speaker 1: so effective. It was just an email protocol, and now
Speaker 1: it's so much more, um, you know, and it's it's
Speaker 1: it's pervaded all aspects of our life. Um. And the
Speaker 1: problem that I have is, you know, not all the
Speaker 1: the Internet was a huge winner. The Internet bubble was
Speaker 1: was clearly a bubble in hindsight, the result of you know,
Speaker 1: the result of an easy of an easy fed, particularly
Speaker 1: super turbo charged at the end by the y t
Speaker 1: K problem and then sort of you know, came apart
Speaker 1: when when the fed, when the fed withdrew some of
Speaker 1: that liquidity. Um. And that's why I wrote earlier this
Speaker 1: week about um, you know, is bitcoin Cisco? Is it
Speaker 1: pets dot com? What what is it? You know? And
Speaker 1: I would argue that, you know, doge coin is probably
Speaker 1: more like pets dot com, where it's just clearly what
Speaker 1: are these people doing? They know it's a joke, They've
Speaker 1: admitted it's a joke. Every you know, except that there
Speaker 1: are you know, a couple of very prominent billionaires who
Speaker 1: say the right thing is when it when it needs
Speaker 1: to go up every so often. And I'll leave them
Speaker 1: nameless so I don't get sued. But um, but that's
Speaker 1: really you know, and my analogy I kind of do
Speaker 1: the takeaway of, you know, some of the cryptocurrencies will
Speaker 1: be something, will be Amazon, you know, and it will
Speaker 1: just be this huge winner, and it may not be
Speaker 1: what we think it is. If I had to put
Speaker 1: my money on one day, it's probably either or not
Speaker 1: ethere I'm sorry, And I actually do not own any
Speaker 1: cryptos right now. So um, and so that would probably
Speaker 1: be the long term winner. I think. I think bitcoin
Speaker 1: my analogy of Cisco, which was the Internet would not
Speaker 1: exist without Cisco, you know, with all the switches, the wires, etcetera.
Speaker 1: And the market the market got that part right, except
Speaker 1: for the fact that they wildly overpriced it and it
Speaker 1: never you know, never really recovered from from those from
Speaker 1: those bubble days, and so and so that's the problem.
Speaker 1: And so that you know, and and so and once
Speaker 1: you start really getting into the permutations, who's got the
Speaker 1: money for n f t s. Well, the money for
Speaker 1: n f t s comes from the people who made
Speaker 1: the money in crypto, and so now they're looking for
Speaker 1: something else to put it in. Um. This is that's
Speaker 1: like literally the epitome of too much money chasing too
Speaker 1: few goods. Another thing I often hear is exactly what
Speaker 1: you're describing. Where the money is moving maybe from some
Speaker 1: of the original or bigger cryptocurrencies towards smaller cryptocurrencies, towards
Speaker 1: defied towards n f t s, but then also meme stocks.
Speaker 1: And I know we saw a resurgence in some of
Speaker 1: the meme stocks this week. What are you seeing there
Speaker 1: and what do we make of the continued uh in
Speaker 1: investment and interest on the part of retail traders UM.
Speaker 1: You know, it's interesting because we you know, we do
Speaker 1: keep track of what our customers are, you know, are
Speaker 1: sort of our most actively involved in an AMC has
Speaker 1: been at or near the top of that list for weeks,
Speaker 1: you know, sort of the top five, top ten. So
Speaker 1: the meme stocks never really went away. I have sort
Speaker 1: of put forth the idea that there's a rotation that
Speaker 1: goes on between meme stocks and crypto and I think
Speaker 1: it was very interesting that the day that UM bitcoin
Speaker 1: pulled back from the fifty level was the day that
Speaker 1: that the meme stocks returned UM you know, and had
Speaker 1: their flash. I think a lot of what goes on
Speaker 1: in either event is just you know, the sellers walk away,
Speaker 1: you know, if you're how many times if you're you know,
Speaker 1: if you're a market maker, whether it's stock or options
Speaker 1: or just you know, a two sided trader, if you
Speaker 1: see that at this point you've come to notice that
Speaker 1: if there's the freight train coming in g M E
Speaker 1: or a M C or any of those things, Um,
Speaker 1: you know, I'm out of here. I'm stepping back. I'm
Speaker 1: really cutting back. One of one of the little market
Speaker 1: maker tricks, which I can now talk about since I'm
Speaker 1: not actively market making, is you know, one of the
Speaker 1: things when when your market making is we used to
Speaker 1: have a sign up and it was, you know, more
Speaker 1: or less when it gets bad, reduce size, widen widen
Speaker 1: markets and reduced sizes. Well, what does that mean? That
Speaker 1: means you're providing less liquidity at every given tick, and
Speaker 1: so you hit these liquidity air pockets in the meme
Speaker 1: stocks because everybody because it's self reinforcing behavior. And so
Speaker 1: I do think though, going back to your question, I
Speaker 1: think I think you do see it's it's if not
Speaker 1: the same cast of characters, it's it's a similar cast
Speaker 1: of characters. And and and actually what it means to
Speaker 1: me is there's probably a fairly fine heite amount of
Speaker 1: money that's being allocated from one to the next, and
Speaker 1: so I do think they rotate from one to the other.
Speaker 1: I think it's quite telling that other than Robin Hood,
Speaker 1: we don't really have any new lasting additions to the
Speaker 1: memes stock to my meme stock page. And yes, I
Speaker 1: do have a meme stock page on my market minder,
Speaker 1: um as I'm sure you do too at this point. Um,
Speaker 1: you know, other than Robin Hood, which which essentially is
Speaker 1: the you know, I use the Cisco. The Internet wouldn't
Speaker 1: exist without Cisco, it's not I'm not sure that the
Speaker 1: meme stock bubble would exist without Robin Hood. Um. And
Speaker 1: so you know, they're integral to it. But beyond that,
Speaker 1: it's not like there's this new class of stocks that
Speaker 1: developed memes and and I find that there's a lot
Speaker 1: of fragility there because these are they now in some
Speaker 1: cases have huge market caps relative to the business that
Speaker 1: that that underlies them. And you know, it's it's I
Speaker 1: fear that you get to a moment where it's like,
Speaker 1: you know, Wiley coyote chasing the road runner and he
Speaker 1: runs off the cliff and he still keeps running, but
Speaker 1: at some point, like he looks down and you know,
Speaker 1: down he goes. And I'm not I'm not wishing that,
Speaker 1: I'm not predicting that. But it's the longer you stay
Speaker 1: it really really high valuations relative to relative to fundamentals,
Speaker 1: the greater the likelihood that that could happen. We're gonna
Speaker 1: put the road Runner on Bildonna's list to it too
Speaker 1: as well. But it's a shame to me, Steve to
Speaker 1: hear you say that these stocks are on the heavy
Speaker 1: volume list. For you guys, it's because I picture I
Speaker 1: d k our clients to be. I don't know more
Speaker 1: of the professional sophisticated set than say it's say a
Speaker 1: Robin hood, which leads me to believe, I mean people
Speaker 1: are trying to figure out even the pros I guess
Speaker 1: they're trying to figure out what to do with these things. Um.
Speaker 1: And you know, forgot like you who has a background
Speaker 1: and now goo trading. Um, how does an awgo sort
Speaker 1: of trained brain approach these things? And I know there's
Speaker 1: been a lot of work done to try to sort
Speaker 1: of quantify the sentiment on social media and that sort
Speaker 1: of thing is that is that the main focus of
Speaker 1: sort of anyone trying to trade these from a quant
Speaker 1: or an algo type of perspective is is trying to
Speaker 1: you know, not have to read every post on Reddit,
Speaker 1: but try to somehow quantify what's going on. I think
Speaker 1: that's that's one way to do it, is try to
Speaker 1: quantify it and see if you can see if you
Speaker 1: can you know, read in sentiment. It requires a bit
Speaker 1: of natural language processing, which some people are better at
Speaker 1: than others. And the simplest algory, of course, is just momentum,
Speaker 1: you know, trend following and seeing that um, you know,
Speaker 1: which which um you know is there volume? I might
Speaker 1: seem volume accumulating at higher and higher prices, which leads
Speaker 1: me to believe that that that the freight train might
Speaker 1: be might be gaining steam. Um. And at what point,
Speaker 1: you know, or at what point does it seem like
Speaker 1: the volume is petered out? I will say the half
Speaker 1: life of the meme rallies seems to be shrinking. Um,
Speaker 1: you know, we're the one that we saw earlier this
Speaker 1: week kind of petered out relatively quickly, did They didn't
Speaker 1: give back everything, but they just sort of it was
Speaker 1: a one day wonder rather than rather than a lasting
Speaker 1: for any period of time. Um, you know. The but
Speaker 1: but also also in your question, it's sort of implied
Speaker 1: that you know, you're surprised that a lot of the
Speaker 1: customers are doing this, but we have, we do. I
Speaker 1: would say that we have a more sophisticated customer base
Speaker 1: than than average. You know, I think a lot of times,
Speaker 1: even though we have a high retail component, most of
Speaker 1: our accounts are in fact UM some sort of institutional
Speaker 1: in terms of money, certainly some sort of institutional or
Speaker 1: professional UM. And you know what their traders and traders
Speaker 1: trade where where the action is UM. You know, back
Speaker 1: in the old days of the option floors, you know,
Speaker 1: the people would come and go UM to you know,
Speaker 1: to the pits that had the active that had the
Speaker 1: active names. You know, in this case you don't have
Speaker 1: to physically move from one place to the next UM.
Speaker 1: But you know, people people follow the action. And I
Speaker 1: think that's whether that's professional or retail. I mean, if
Speaker 1: you're buying, if you're buy and hold investor, yeah, obviously
Speaker 1: you're not, you're not chasing these things. But if you're,
Speaker 1: if you've got any sort of trading mentality, there's there's
Speaker 1: that's where the volatility is, that's where the money is,
Speaker 1: and that's where the that's where the that's where the
Speaker 1: action tends to follow, and that's where the volume tends
Speaker 1: to follow. Steven. Another one of your notes recently, you
Speaker 1: wrote about something called Tina fomo and I think this
Speaker 1: this all sort of ties together. I'm hoping you can
Speaker 1: sort of break down what what exactly that means, because
Speaker 1: it's a mingling of two very popular acronyms. Right. I
Speaker 1: think I dated Tina Fomo when I was living in
Speaker 1: Philly for a while. I didn't have a lot of
Speaker 1: other options, though I was gonna say it sounds like
Speaker 1: a person last name. Yeah. That and there was the
Speaker 1: construct I actually got to admit I debuted that one
Speaker 1: when I guess author column Barons about five years ago,
Speaker 1: but I've I've loved it ever since. And but yeah,
Speaker 1: I mean it's unpacking. You know, the two most common
Speaker 1: acronyms to describe the market, you know, Tina being there
Speaker 1: is no alternative and fomo being the fear of missing out, Um,
Speaker 1: there is no alternative. Part now, I'm always a believer
Speaker 1: of that there's some alternative somewhere, but on the whole,
Speaker 1: I get it. I think there's if you're not unlet
Speaker 1: if it's very tough to make a case to be
Speaker 1: in cash that that earns nothing, or to be in
Speaker 1: fixed income that you know that pays nearly nothing, and
Speaker 1: neither is has incredibly, if you're gonna go out to credit,
Speaker 1: if you're gonna credit curve, you're not getting paid a ton.
Speaker 1: And if you're on the treasury cycle, you're probably you know,
Speaker 1: it's still almost a negative real interest it's still a
Speaker 1: negative real interest rate. So I get that. So you're
Speaker 1: gonna see you're gonna see money moving to risk assets,
Speaker 1: and you know, in its most extreme form, that's where
Speaker 1: you get back to the flight to crack. But let's
Speaker 1: let's keep it more or less into equity. So if
Speaker 1: you're you know, relatively binary cash bonds versus stocks, you're
Speaker 1: gonna be you're gonna be leaning towards stocks, and and
Speaker 1: that there is no alternative part. There is, there's a root,
Speaker 1: there's a routing there if you're missing out those purely
Speaker 1: emotional and ultimately, you know, although it has fear in it,
Speaker 1: it's really I think an expression of greed. You know,
Speaker 1: it's it's it's envy. Um, it's I don't you know
Speaker 1: everybody else is making money why shouldn't I be making
Speaker 1: money now? To a professional investor, that's kind of the
Speaker 1: way their career runs. Because if you don't sort of
Speaker 1: matt meet or you know, meet your benchmark or or
Speaker 1: or be in the top, you know, being that meeting
Speaker 1: part of the curve with your peers, if you're not
Speaker 1: gonna if you're not gonna outpace them, um, you know,
Speaker 1: there is career risk. So it's so it's like this
Speaker 1: weird fear and fear meets greed um and and that's
Speaker 1: the scarier part because the tina I can kind of quantify,
Speaker 1: you know, we can we can sit here and say
Speaker 1: like what's you know, what's the right level of risk premium?
Speaker 1: What you know, what level of yield should we be
Speaker 1: looking for in the sp F versus the ten year
Speaker 1: and have a very you know, high level discussion about
Speaker 1: that sort of stuff and probably have you know, cause
Speaker 1: a lot of people hit the PA you know, the
Speaker 1: pause button because it's dry. Um. The fomo stuff though,
Speaker 1: is very it's it's it's this weird it gets into
Speaker 1: human nature and that's where you get into the crazy stuff.
Speaker 1: And that's why I think it's a very dangerous combination.
Speaker 1: Um you know, she's a dangerous She's a dangerous woman.
Speaker 1: That ten fomo. Well, you know what, we like to
Speaker 1: get into the crazy stuff, Steve. But but one more,
Speaker 1: at least one more before we before we get there.
Speaker 1: But I think that, you know, and this may be
Speaker 1: oversimplifying everyone's strategy this year, but at the risk of
Speaker 1: oversimplifying it, it seems like, you know, the discussions we've
Speaker 1: had all year been, well, do you play the reopening
Speaker 1: stocks you travel, hotel leisure or do you stick with
Speaker 1: the sort of perennial growth names uh in the fang
Speaker 1: universe uh and tech that sort of thing. UM. I'm curious,
Speaker 1: a is that oversimplifying how we should approach the market? Um?
Speaker 1: Or is there still sort of some juice to squeeze
Speaker 1: from that lemon? And at which side would you squeeze? Now?
Speaker 1: Do you squeeze the reopening or would you you know,
Speaker 1: you you and the stick with growth in tech for
Speaker 1: as long as you can. Um. My, my gut is
Speaker 1: typically my gut is more towards the value side than
Speaker 1: the growth side. I think I think that there are
Speaker 1: names out there that are um, you know, that are
Speaker 1: high quality. I think right now it's you know, the retailers,
Speaker 1: you know, had this big bounce of the last few
Speaker 1: sessions because well, low and behold. If you you know,
Speaker 1: if you give people four checks and then open the stores,
Speaker 1: they're gonna go spend the money. Um. And so you know,
Speaker 1: I'm actually kicking myself, like, you know, why didn't I
Speaker 1: just put all my money into art acts or something
Speaker 1: like that when I when I was walking down broad
Speaker 1: lower Broadway and seeing lines outside all these solo sports, um,
Speaker 1: you know, but that that was that was my big miss.
Speaker 1: Left the money on the table boiler. But and my
Speaker 1: dad was a retail analyst, and so I used to
Speaker 1: have to go to malls with him and like count
Speaker 1: shopping bags and stuff like this. And so I'm really
Speaker 1: kicking myself on that one anyway. Um, you know, in
Speaker 1: terms of I look at it now and say, okay,
Speaker 1: if I think that, if I think that the FED
Speaker 1: is going to be less aggressive at monetary stimulus, and
Speaker 1: if whatever fiscal stimulus is going to come is going
Speaker 1: to be more in the form of long term infrastructure
Speaker 1: type of place, I'm starting to think about, you know,
Speaker 1: that dirty word of dividends. Um. And I think I
Speaker 1: want I think I want to own some some stocks
Speaker 1: that have a little bit of ballast to them um
Speaker 1: as opposed to stocks that are more precariously valued. You know,
Speaker 1: you had this thing going back and forth where where
Speaker 1: there was this idea, you know what people would would
Speaker 1: sell the d X stocks, you know, sell indie X
Speaker 1: if it fields, if Fields go up, and buy it
Speaker 1: on the inverse, which you know was was all predicated
Speaker 1: on value, you know, on on discounting, on the value
Speaker 1: of future cash flows. Just kind of listen. I'm like, really,
Speaker 1: valuation matters to you people, when when you know that's
Speaker 1: not that's not really you know, you're you're you're trying
Speaker 1: to trade Amazon on evaluation. Are you know an evaluation argument? Um?
Speaker 1: You know on Facebook? You know that there's plenty of
Speaker 1: reasons too, there's plenty of reasons to invest in these companies.
Speaker 1: But it's not because of there. It's not because you know,
Speaker 1: it's not because of you know, a fifteen basis point
Speaker 1: move in a tenure um affecting the affecting the long
Speaker 1: term cash flows. Um. You know. And so that's why
Speaker 1: I would tend to I've tended to to start to
Speaker 1: look for more, um more of your defensive place you know,
Speaker 1: if if you can earn a couple of if you
Speaker 1: can earn a couple of percent or two or three
Speaker 1: UM and yields, assuming of course that the company UM
Speaker 1: is you know, where it's cash flows can support that
Speaker 1: kind of dividend. UM. I can't give specific recommendations otherwise
Speaker 1: my compliance people will have my head. But that's the
Speaker 1: sort of but that's the sort of theme that I
Speaker 1: think will UM will you know, will benefit investors if
Speaker 1: we start to see some sort of UM, some sort
Speaker 1: of nerves among investors because the FETE is taking their
Speaker 1: foot off the gas, you know, and if I'm sure
Speaker 1: if you do that vetan diagram too, there's a lot
Speaker 1: of overlap between the beneficiaries of infrastructure spending and stocks
Speaker 1: with some good yields at this point. Indeed, there there
Speaker 1: would be you know, or consumer staples that you know,
Speaker 1: that kind of that kind of thing. Again, I can't
Speaker 1: I'm getting a lot of trouble if I throw out
Speaker 1: all the names. But you know, are there's an intelligent
Speaker 1: listenership and I know they'll they'll read between the lines there.
Speaker 1: We don't want to get you in trouble, Well do
Speaker 1: I might want to get you in trouble. I don't know.
Speaker 1: She's a troublemaker for you, maybe less so for me. Yeah,
Speaker 1: strategists gets fired for podcast interview. I mean it would
Speaker 1: be great for our metrics, not not so much for you,
Speaker 1: but so well, we're sympathetic to that. If anyone's gonna
Speaker 1: get fired from this podcast, it's gonna be me. Believe me.
Speaker 1: I think we can all agree on that. But the
Speaker 1: dow is Steve gave us the great Timing is everything,
Speaker 1: and Steve gave us a great set up there is literally,
Speaker 1: But I think I think it's not too early to
Speaker 1: to segue into those crazy things we saw this week.
Speaker 1: Soup stand clear of the craziest things we saw in
Speaker 1: markets this week. I'm gonna how about I start. I
Speaker 1: never start usually I saved the best for last um,
Speaker 1: But I'll just go ahead and I'll start this time.
Speaker 1: You save, you save yourself as as last, because you
Speaker 1: like to give yourself the award of crazy thing every week.
Speaker 1: That's true. That's true. You know, it's it's I'm the
Speaker 1: judge and jury here and I just have to I
Speaker 1: have to do the right thing. I mean, you know,
Speaker 1: it's it's a I've lost a few I've lost a few,
Speaker 1: but I like I like my chances this week. So
Speaker 1: in the world of alternative assets, one of my favorite
Speaker 1: things is trading cards. You know, baseball cards, the old
Speaker 1: Onus Wagner card, Babe Ruth, that sort of thing. Michael
Speaker 1: Jordan's Rookie card is a popular one. I bet you
Speaker 1: did not know, Stephen vill Donna, that there are guerrillas,
Speaker 1: actual zoo gorillas who have their own trading cards. At
Speaker 1: least the most famous one Harambe, who was the the
Speaker 1: guerrilla who died in two thousand and sixteen and became
Speaker 1: an Internet sensation. Some outfit made a trading card of Harambe. Uh.
Speaker 1: And it's going up for auction on this outfit Golden Auctions,
Speaker 1: which is now my new favorite source for for crazy
Speaker 1: things because this auction house is just filled with them. Um.
Speaker 1: And this story is courtesy I just to give credit
Speaker 1: where it's due. Sam Row of Axios tweeted about it. Uh.
Speaker 1: And it's actually based on an Instagram post from Golden
Speaker 1: Auctions and has actually going up for auction yet, so
Speaker 1: we don't really know what the bidding is gonna look like.
Speaker 1: But I found this same card for sale on eBay
Speaker 1: now granted people who set to buy it now. Uh,
Speaker 1: the ask on eBay might be a little more optimistic,
Speaker 1: uh than is warranted. But I will ask you to
Speaker 1: to tell me, what do you think if you were
Speaker 1: an eBay seller and you were putting the Harambe trading
Speaker 1: card from two thousand and sixteen up for sale on
Speaker 1: eBay and at a buy it now price, very optimistic price,
Speaker 1: I'll throw this factory it out to you too on
Speaker 1: the back of the card. And I did not know this.
Speaker 1: In one poll for the presidential election, Harambee actually got
Speaker 1: five support for president, and this is after he died.
Speaker 1: So I think that tells you more about the two
Speaker 1: thousand and sixteen election than than anything else. But well, Donna,
Speaker 1: what's your buy it now price? If you're selling the
Speaker 1: Harambe trading card on you? Is there only one? That's
Speaker 1: a good question. I do not know how many of
Speaker 1: there are. I will say there's other listings for the
Speaker 1: same card, but UM, I don't know about the condition.
Speaker 1: I think this perhaps this is the most prestine version
Speaker 1: of the card, or perhaps the most delusional seller on
Speaker 1: eBay at the moment. I'll leave it at that, But
Speaker 1: what's your what's your buy it now price for Harrambe
Speaker 1: trading card. I'm going to go with fifteen thousand, yes, okay,
Speaker 1: how about you, Steve, I'm gonna go with nine thousand,
Speaker 1: spot nine nine. That's a pretty good good guesses, Steve,
Speaker 1: I would tell you there actually was. There's another Harambe
Speaker 1: card up for that price, but the highest one is
Speaker 1: up for twenty tho. I will call it a push
Speaker 1: between you two. The highest by now, prist, I definitely win.
Speaker 1: She's she's five thousand dollars closer, all right. I was
Speaker 1: just being played. But there and there's one up for
Speaker 1: like even less than that. But I don't know. We'll
Speaker 1: have to check back and see what it actually sells for.
Speaker 1: I'm skeptical it'll actually go for twenty grand. But in
Speaker 1: this world, maybe someone will buy it, take a photo
Speaker 1: of it, and make an n f T out of it,
Speaker 1: and sell it for ten million. I think is that's
Speaker 1: the player and exactly what I was about to say.
Speaker 1: And that's actually my craziest thing. It's it's part of
Speaker 1: you know, some some of the things I've been reporting
Speaker 1: in regards to some of the prices that we've seen
Speaker 1: for some of these n f t s and then
Speaker 1: I saw so if I can give one example, I
Speaker 1: spoke with somebody who owns a pudgy penguin, which is
Speaker 1: like super super popular. They're really cute. They have these
Speaker 1: cute little outfits. It's just a cartoon of a penguin. Basically,
Speaker 1: it's an n f T um. This guy I spoke
Speaker 1: with bought it for and like four days later it
Speaker 1: was worth over seven thousand dollars. So that's why I
Speaker 1: don't think is too crazy for this baseball card. Umbe. Yes, yeah,
Speaker 1: it is a it's a very attractive portrait of Harrumbe
Speaker 1: on the card. I gotta say it looks like he
Speaker 1: posed for it. There's he's got this very uh it
Speaker 1: looks like something Steve and it is biography photo for
Speaker 1: his job. Would would have a nice thoughtful pose. And
Speaker 1: but there is there is one other crazy thing which
Speaker 1: is along the same lines. I'm grouping them all together
Speaker 1: for me here in my bid to win this week's
Speaker 1: Best Best Craziest Thing award. So there was a CNBC
Speaker 1: headline that said somebody just paid one point three million
Speaker 1: dollars for a picture of a rock. So if you
Speaker 1: have that going on one point three million dollars. Let
Speaker 1: me have the punchy penguins. Do they only exist in
Speaker 1: the n f T universe? Was that they were not
Speaker 1: something that's been turned into n f T s. They're
Speaker 1: not a cartoon or something. I mistered know. They exist
Speaker 1: as n f T s. There's eight thousand, eight hundred
Speaker 1: eight of them. They were all sold out, and I
Speaker 1: really I do have to say they're supremely cute. Okay,
Speaker 1: well that that's fair. Then if they're supremely cute, my
Speaker 1: question regarding the Harambe card is will it be one
Speaker 1: of the A M c apes who ends up buying?
Speaker 1: That's my guess. Yeah, it must have been that. I
Speaker 1: think that's who the bidders are. And that thing for sure.
Speaker 1: They referenced Harambe a lot. They're big, they're needles to
Speaker 1: say they're big Harambe fans on four gonna lead you
Speaker 1: know you. I was gonna go either with the pudgy
Speaker 1: penguin or the pet rock. And I even consulted, you know,
Speaker 1: so great minds think alike. I did consult my son,
Speaker 1: who's literally he does marketing for cryptocurrency companies. He's got
Speaker 1: a he's a comedian. He's actually a stand up comedian,
Speaker 1: but he hasn't made it big enough yet to not
Speaker 1: get rid of his day job. But his day job
Speaker 1: went from s a T tutoring to doing freelance marketing
Speaker 1: for crypto companies. And so I asked him, because he's
Speaker 1: very plugged into this world, and he basically said, you know,
Speaker 1: the pudgy penguin thing has gotta be gotta be your
Speaker 1: go to because you know, he's been seeing sort of
Speaker 1: the on Twitter, like I can't believe I spent five
Speaker 1: thousand dollars on a on a penguin avatar, and you know,
Speaker 1: he he, you know, he kind of went and went
Speaker 1: into this with me when I asked him over the
Speaker 1: you know, the last couple of days, and that one
Speaker 1: that to me. So I'm gonna I have to I
Speaker 1: have to vote with the donna because you know, she
Speaker 1: and I were do you and I we're treading the
Speaker 1: same ground on that one. Does your son own one
Speaker 1: of the puddect penguins? He does not. He um. He
Speaker 1: gets paid in crypto um, but he um. He tries
Speaker 1: to convert it because he has to pay. He has
Speaker 1: to do things like pay rent and you know, and
Speaker 1: and and little things like that. Um, he actually did
Speaker 1: do a video where he went around New York trying
Speaker 1: to spend a hundred dollars in crypto harder than you
Speaker 1: think off to check that out. That sounds good. Well,
Speaker 1: that's all I keep thinking about with all this, Steve
Speaker 1: is you know the old joke that in the gold
Speaker 1: Rush it was the people selling the picks and shovels
Speaker 1: that we're the only ones to get rich. So I
Speaker 1: imagine in the crypto thing, the marketing people are are
Speaker 1: could be the equivalent of that in this So I
Speaker 1: think that's a good uh. I think he's in the
Speaker 1: right place. I think in video is more the pick
Speaker 1: and shovel but true, true, true, good point. All right,
Speaker 1: well I'll take the all on that, and you can
Speaker 1: both see if you both came up with the podgy penguin.
Speaker 1: I I can't, I can't beat that, although Hormbey card,
Speaker 1: we have to see, we'll have to see which ends
Speaker 1: up being more valuable, harrumby training card or the pudgy penguin.
Speaker 1: N f T. Who would have ever thought words like
Speaker 1: that would be coming out of my mouth on a
Speaker 1: financial news podcast. But here we are Wildanna hire Steve.
Speaker 1: Thanks so much for your time. Hopefully we can do
Speaker 1: it again my pleasure. I look forward to the opportunity
Speaker 1: and I had a great time with you guys. Thank
Speaker 1: you so much for having me What Goes Up. We'll
Speaker 1: be back next week and so that you can find
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Speaker 1: find us on Twitter, follow me at Reaganonymous. Bildana Hirich
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