Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Leye.
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Speaker 1: us Now. Just had the briefing with pr about what
Speaker 1: you can account talk about, John joins us now Alian's
Speaker 1: Global Investors US investment strategist. I'll just ask you, what
Speaker 1: can you possibly say about what happened last week so
Speaker 1: I keep you out of trouble. Yeah, it's a great
Speaker 1: question on a Monday morning. Look, it was fascinating to
Speaker 1: watch about thirty billion dollars of market cap in a
Speaker 1: fifty trillion dollar US stock market has created really a
Speaker 1: lot of media and attention, and I think in fact
Speaker 1: for some good reason. You know, we are living through
Speaker 1: history here and if you uestions that come to mind
Speaker 1: as we process all of all of these news around
Speaker 1: stocks like game Stop, AMC, etcetera. UM one, you know
Speaker 1: what really drives, uh, the value of an asset is
Speaker 1: it it's fundamental value based on some sort of discount
Speaker 1: of cash flow model or p multiple or is it
Speaker 1: really what an asset owner is willing to pay for it?
Speaker 1: And we see that in places like artwork or collectibles, etcetera.
Speaker 1: Is this really any different? And and really over time
Speaker 1: how does this end? Does game stop or NAMEC come
Speaker 1: back down to its fundamental value, which if you look
Speaker 1: at average price targets by analysts game stop at thirteen fifty,
Speaker 1: a m C at two fifty, or you know, do
Speaker 1: we get some sort of regulation in the introm our market?
Speaker 1: Force is going to dominate? And then finally, you know,
Speaker 1: there's something we've been thinking about as an industry and
Speaker 1: as a financial services firm. M Are we going to
Speaker 1: need a new set of analysts that just kind of
Speaker 1: go through and combe through message boards? Social media? Uh?
Speaker 1: Do we need AI and bots to help us with
Speaker 1: this to kind of figure out where to invest next?
Speaker 1: And so all fascinating questions. I mean, it's really important
Speaker 1: we go through Pharaoh's Twitter feed just to see where
Speaker 1: he is. You know, that's the only way, Yeah, because
Speaker 1: I know you do as well. Uh No, what have
Speaker 1: you changed anything at Alian's I mean, you know it's
Speaker 1: sort of a February first readjust off what was written
Speaker 1: December fifteen for two thousand twenty one. Is it renuance
Speaker 1: in the tone? You know, it's interesting, I mean generally
Speaker 1: speaking beyond what's happening in the retail space, and certainly
Speaker 1: retail investors have become a bigger part of our equation
Speaker 1: of both those clients, but really as drivers of the market,
Speaker 1: and we saw that not only this year, but really
Speaker 1: in Forest last year. I think in you could argue
Speaker 1: the smart money was the retail money who really got
Speaker 1: in post that March low and wrote the market up
Speaker 1: the sp plus on the nastack, and so that was
Speaker 1: fascinating to watch the retail versus the institutional clients that
Speaker 1: we had um But broadly speaking, our outlook for is
Speaker 1: driven by three factors, and that's re accelerating growth and
Speaker 1: we're watching, you know, whether or not that does come
Speaker 1: to question in the second half of this year, a
Speaker 1: FED that continues to remain on the sideline, and we
Speaker 1: would argue that that will remain the case through one
Speaker 1: at least, and then of course what happens with the
Speaker 1: bind administration, stimulus and and physical spending. And I think
Speaker 1: interesting to see this week at one point nine trillion
Speaker 1: met with a six billion package by the Republicans. Perhaps
Speaker 1: the magic numbers in the middle there at one point
Speaker 1: two to one point three trillion at some point, I
Speaker 1: think they both are starting point. So, uh, as long
Speaker 1: as those factors are in place and we don't get
Speaker 1: any exogenous shocks, we do think that this is an
Speaker 1: economy and really in a market that is pretty well supported.
Speaker 1: Have we already passed mona the time where we can
Speaker 1: say that Reddit traders will not necessarily be the exogenous
Speaker 1: shock that causes a deeper sell off. You know, thus far,
Speaker 1: we haven't seen signals that that, uh, these trades will
Speaker 1: will spark any systemic risk UM, as we noted earlier
Speaker 1: as a percent of total market cap very diminimous, probably
Speaker 1: less than maybe even point one percent of overall market
Speaker 1: cap UM. And so we think while they could cause
Speaker 1: ripples in how the financial services industry operates broadly, we
Speaker 1: don't think that it will cause um any major shocks
Speaker 1: that would would really put a dent in the overall
Speaker 1: financial services system. And so that to us is important.
Speaker 1: I do think we're watching for shocks that are beyond
Speaker 1: just you know, the reddit type traders, which include things,
Speaker 1: as you mentioned earlier, variants of the virus, whether or
Speaker 1: not we can win this race between vaccines versus variants.
Speaker 1: How the rollouts going, and we're encouraged on that front
Speaker 1: in particular, not only here in the US, but quite globally.
Speaker 1: If the pandemic copy got a looking last week, did
Speaker 1: it great a catch up? It's fantastic to catch up.
Speaker 1: Sty Well, this is not that David Axelrod of Obama
Speaker 1: administration claim. It's a David axel Rod of Ballard Spark law.
Speaker 1: What you need to know is we know on surveillance
Speaker 1: the length of the resume, the length of the bio
Speaker 1: is in for inversely proportional to the skill. Except axel
Speaker 1: Rod is a wild, wild exception to that. His cases
Speaker 1: are extraordinary, both in private practice and his work with
Speaker 1: the Securities and Exchange Commission. And we're thrilled to bring
Speaker 1: you this voice on surveillance this morning. David, thank you
Speaker 1: so much, really honored that you could be with us,
Speaker 1: uh this morning. You did an insider trader thing at
Speaker 1: the at the Williams Court there in Washington years and
Speaker 1: years ago. If you were speaking to a body of
Speaker 1: attorneys today about what is to come in this uproar,
Speaker 1: what would you say to them. You know, listen, I'd
Speaker 1: say that you know, in the in the in the
Speaker 1: wake of this, everyone's looking for a boogeyman. But I
Speaker 1: think we're gonna find out that nothing really has changed. Um,
Speaker 1: not really much was done wrong here. The rules are
Speaker 1: gonna work. Fine, may see other examples of this going forward.
Speaker 1: But I think the market's going to shake out. I mean,
Speaker 1: the small retail traders saw and saw an inefficiency here,
Speaker 1: saw a window to do something, um, and and they
Speaker 1: and they did, and they made some money. But you know,
Speaker 1: all that the stock is gonna go back down probably
Speaker 1: and I think it's probably all gonna shake out. How
Speaker 1: do you is a lawyer? You've you've been You've been
Speaker 1: with sec against Cooperman, You've had men, you've been on
Speaker 1: both sides of the fence practicing the law. How do
Speaker 1: you treat the silicon val tone that we get from
Speaker 1: Robin Hood and others? How do you candle the behavioral
Speaker 1: and cultural millennial tone that we observe. Well, listen, there
Speaker 1: are very smart people at the hedge funds, at an
Speaker 1: institutional investors. They've been scraping social media for years already,
Speaker 1: that this is nothing new to them. It may be
Speaker 1: new to us in the general public scene this, but
Speaker 1: you know, it's it's they're gonna have to build into it.
Speaker 1: They're gonna build it into their models. They're gonna end
Speaker 1: up probably taking advantage of it, and of ways that
Speaker 1: I wish I could contemplate because I'd be not working
Speaker 1: in the law. Um, but you know, they're gonna deal
Speaker 1: with it, and it's gonna all be built into how
Speaker 1: they operate. What illegal issues here, David, You know, I'm
Speaker 1: not sure there are you know, as I said, a
Speaker 1: lot of people are looking for something wrong here, but
Speaker 1: this isn't the case where you see deception on Reddit.
Speaker 1: It's not people aren't mining about what they're gonna do.
Speaker 1: They're saying, I'm going to buy this stock because I
Speaker 1: wanted to go up. People have been doing this for years,
Speaker 1: So I don't see anything wrong there. You know, for
Speaker 1: robin Hood, you know, you need to look at the
Speaker 1: terms of contracts they have with their with their actual customers.
Speaker 1: But I haven't seen anything that indicates there's a problem
Speaker 1: for robin Hood either. There's a larger question here, David,
Speaker 1: especially as social media takes on an increasing presence in markets.
Speaker 1: What's the line which it crosses into market manipulation. Yeah,
Speaker 1: I mean, that's that's gonna be the difficult thing, right.
Speaker 1: I mean, usually in situations like this, you see people
Speaker 1: crossing the line, and the line is line, the line
Speaker 1: is deception, the line is the pump is part of
Speaker 1: the pump and dump. Um. So once you see people
Speaker 1: kind of exaggerating, fabricating what's going to happen, you'll see
Speaker 1: the SEC get very active, very quickly. But if that
Speaker 1: line hasn't been crossed, if you just have Dave x
Speaker 1: Rod sitting in front of his computer trading stock, it's
Speaker 1: the line is not there. I don't think hedge funds
Speaker 1: need me to protect them David, But I will ask this,
Speaker 1: does intent matter? Does the objective matter? If I go
Speaker 1: on a forum and say this is what I like,
Speaker 1: this is why I like it, and the objective is
Speaker 1: just to make money. What if the objective is to
Speaker 1: hurt or cause someone else paines, does that matter? I
Speaker 1: mean no, uh, in our system and our you know,
Speaker 1: hedge funds has been doing this year for years. I mean,
Speaker 1: the intent is to make money. They don't care whether
Speaker 1: a business gets put out of business. I mean, which
Speaker 1: is the very possibility of the of the put options
Speaker 1: in this case. So no, you know, if retail investors
Speaker 1: want to hurt hedge funds, that's the way. Our system
Speaker 1: doesn't doesn't capture intent. Our system is as long as
Speaker 1: you're honest, as long as you're not deceiving someone, you
Speaker 1: can your intent really is irrelevant. What did you think?
Speaker 1: What was your response when you saw trading shut down
Speaker 1: on Thursday or Friday? Do you just assume that somebody
Speaker 1: got out front of those announcements? Yeah, I I always
Speaker 1: assume that if there's going to be a big shift
Speaker 1: in the way that the markets operating, that someone with
Speaker 1: information and balance is taking advantage. How do you how
Speaker 1: do you discover that? How how does the prosecution discover
Speaker 1: that malfeasance? Really simply, I mean, if it happened, I
Speaker 1: suspect that the SEC and perhaps the Department of Justice
Speaker 1: will send subpoenas for testimony for emails for Bloomberg. I
Speaker 1: am chats uh exactly had to throw that pitching for you,
Speaker 1: But I mean it's it's always in the records. So
Speaker 1: I mean, if some hedge fund knew that bloom that
Speaker 1: Robin Hood was going to take action and knew that
Speaker 1: would harm the stock. Um that information is probably going
Speaker 1: to be there, and the SEC or the d O
Speaker 1: J as I said, because this could be a criminal event,
Speaker 1: we'll find that David as a formal former SEC official.
Speaker 1: Given the politicization of this issue, the fact that ao
Speaker 1: See and Senator Ted Cruz came out and sided on
Speaker 1: the on the side of the robin Hood traders, this
Speaker 1: became a populist versus the system kind of debate. What
Speaker 1: are the long term consequences for the supposedly a political
Speaker 1: regulatory agencies like the SEC. You know, from a policy perspective,
Speaker 1: I don't know. I could go millions of different ways.
Speaker 1: I mean from from AOC's perspective, UM, I mean, they
Speaker 1: could attack what hedge funds were doing in the first place.
Speaker 1: They could attack large put options that you know, some
Speaker 1: people argue have no economic benefit in the beginning, Um,
Speaker 1: others they could attack robin Hood and make sure that
Speaker 1: market access is in place for everyone. But really it's
Speaker 1: hard to talk and the politics of this are really weird.
Speaker 1: As anytime you have AOC and Ted Cruz lining up
Speaker 1: on the same side of an issue, you know one
Speaker 1: should expect UM. So I don't know it. It can
Speaker 1: go a million different different ways. That's certainly a good
Speaker 1: way of putting it. David, great to catch. Yeah, thank you.
Speaker 1: David actually wrote the film sec Supervise Street Trial Council
Speaker 1: Now without a SPA law help Corta droutsa bank for
Speaker 1: years writing most read twelve page papers that always had
Speaker 1: not one, not two, but three charts where you would
Speaker 1: stop and actually have to read the report and read
Speaker 1: the captions under the charts. That's how good he is.
Speaker 1: He was snagged by Apollo Management as their chief economists
Speaker 1: or thrilled it. Mr Slock could join us uh this morning, Torston.
Speaker 1: I want to cut to the chase, which is the
Speaker 1: idea of long term inflation expectations. No one cares commodities
Speaker 1: lift and it's real simple on the Central Bank watch.
Speaker 1: Should Mr Powell pay attention to Dr Copper? I mean,
Speaker 1: this is a very important issue in races, markets and
Speaker 1: therefore and everything fixed income I mean placed expectations in
Speaker 1: the long ends or tenia break evens have gone up
Speaker 1: almost on a linear trend since much I've been a
Speaker 1: few mos here and there, but this is certainly something
Speaker 1: that's very important for the fit. Then, of course the
Speaker 1: question becomes, well, why is it that the market suddenly
Speaker 1: expects inflation in ten years high to be higher? And
Speaker 1: there's a number of different explanations. The first one, as
Speaker 1: you mentioned TOWM, is that commodity prices are almost mechanically
Speaker 1: correlated with long term inflationing incputations, so commodity prices going
Speaker 1: up it is a very important driver. But another very
Speaker 1: important driver is to fit changed the framework from just
Speaker 1: normal inflation targeting to and reflectible inflation targeting, and therefore
Speaker 1: the fit saying will allow OLMOS shooting has been pushing
Speaker 1: long term inflation infectations. Stuff that's good here and now,
Speaker 1: but it's certainly a very critical thing to monitor if
Speaker 1: we do get that strong growth in the second half
Speaker 1: this year that you guys have covered so well. Do
Speaker 1: you think that markets right now towards in our underpricing
Speaker 1: or overpricing inflation so they I mean, if I look
Speaker 1: at Bloomberg screen today, there is really no inflation in
Speaker 1: TRIM means, in code PC, in co CPI. No matter
Speaker 1: what fit measure or be a measure that you look
Speaker 1: at for inflation, there's just no actual inflation. So all
Speaker 1: of this has to do with what expectations, of course,
Speaker 1: both in the next few quarters, but also what expectations
Speaker 1: if you look several years out. So for now, I
Speaker 1: think the market is a little bit get ahead of
Speaker 1: itself in the sense that we will not get that
Speaker 1: much inflation. We will get some base effects of course
Speaker 1: in the next few months, as we all know, but
Speaker 1: going into two thousand twenty two, still we have a
Speaker 1: lot of slag in the economy. We therefore, as as
Speaker 1: you also just spoke about the lago, market is not
Speaker 1: great on Friday with the numbers that we get for January.
Speaker 1: So at this point it is a little bit it's
Speaker 1: still too premature to worry about inflation, not to get
Speaker 1: philosophical about this torson. But as we see higher commodity prices,
Speaker 1: and as the prices of goods goes up as a
Speaker 1: result of supply chain disruptions and other COVID related issues,
Speaker 1: how much could we see some sort of not disinflation
Speaker 1: but stagnation. This idea that people's wages are saying the
Speaker 1: same or going down, the employment picture is weak, and
Speaker 1: they are forced to pay more for the goods that
Speaker 1: they need. That's right, and that's that's that's that's the
Speaker 1: environment we have today, I mean commodity prices going up,
Speaker 1: and at the same time we have also had very
Speaker 1: little employment growth, and unfortunately we still have as you
Speaker 1: know that the employment situation that we have ten million
Speaker 1: people less working today relative to a Fipruary two thousands winning.
Speaker 1: So the label argut is indeed still very weak while
Speaker 1: commodity prices are going up. If you look further out,
Speaker 1: then of course it becomes more almost a philosophical issue,
Speaker 1: whether you think that it is the level of capacity
Speaker 1: utilization that matters. In other words, in the Philip scripture
Speaker 1: were about the level of the outpro gap or the
Speaker 1: change in the outpro gap. That's a sophisticated way of
Speaker 1: saying that should we worry about at growth spurit potentially
Speaker 1: giving some inflation in the second half of this year,
Speaker 1: or should we say, oh, that's not a problem because
Speaker 1: the unemployer is still so high. So there's a lot
Speaker 1: of thinking around this issue, and I'm sure that FED
Speaker 1: is looking very carefully this potential risk that we could
Speaker 1: have that the growth bursts we get in the second
Speaker 1: half this year does lift in particular services pricing, and
Speaker 1: tossed and talked to me about financial stability risks, and
Speaker 1: we've gone through the labor market. There are very clear
Speaker 1: reasons why this fat wants to keep right slow for
Speaker 1: a long long time. Do you see them doing that
Speaker 1: at the sacrifice of really making sure that financial stability
Speaker 1: risk don't build. That's really important, Jonathan. There is a
Speaker 1: very critical paper, reasonably by there on sim Sect that
Speaker 1: try to look at exactly why is it that stock
Speaker 1: prices are so seemingly disconnected from fundamentals, And what they
Speaker 1: are arguing, which makes a lot of sense, is that
Speaker 1: it is actually the optimal strategy for the fit to say,
Speaker 1: if we know that this shock is of limited nature,
Speaker 1: in other words, it will be all at some point,
Speaker 1: then we should be easing financial conditions as much as possible.
Speaker 1: We should be creating a disconnect between stock prices and
Speaker 1: credit spreads and the real economy because that does accelerate
Speaker 1: the expansion later on. So in that sense, I think
Speaker 1: the Fate looks at this it says, yeah, we do
Speaker 1: know that stock prices might seem reads if you're high.
Speaker 1: We know that credit spreads are very tight depressive to fundamentals.
Speaker 1: But this is the best strategy for us in terms
Speaker 1: of getting the economy as quickly back as possible, and
Speaker 1: that's the objective. They've been successful, Toulson. I can pick
Speaker 1: example after example where they've managed to divorce financial conditions
Speaker 1: from economic fundamentals. Do you think we can have a
Speaker 1: reconcund that. Yes, So now the question of course becomes, well,
Speaker 1: what once we then get to the pandemic being over,
Speaker 1: what is the well then going to look like? And
Speaker 1: in particularly if this is associated with rates going up,
Speaker 1: and this is where you get a little bit worried
Speaker 1: about what sexes and this most vulnerable to higher rates.
Speaker 1: And that's of course those sexts that I'm all along
Speaker 1: duration and that's of course in particular tech. So if
Speaker 1: we do have a move higher in rates in the
Speaker 1: second half this year, both in the front end with
Speaker 1: FED expectations and also in the long end, then those
Speaker 1: parts of the fun that a most sensitive to high
Speaker 1: at discount rate and in this case in particularly the
Speaker 1: tech sector would also become more vulnerable. So you're right, Jonathan,
Speaker 1: that if we do have much high level of valuations
Speaker 1: once the pandemic it is over, then we do begin
Speaker 1: to in particular, as I says, become more vulnerable to
Speaker 1: rates moving up within the system. Torsten Slark of Apollo Management,
Speaker 1: do you see effervescence? Is it an effervescence? I don't
Speaker 1: mean bubble in an amateur sense like that, but do
Speaker 1: you just see a ferment there from all this gross accommodation.
Speaker 1: So I think that the FIT and d C be
Speaker 1: NDS would be to say we have done what we
Speaker 1: can do with the tools we have. And that's why
Speaker 1: the debate, as you also have talking about earlier today,
Speaker 1: is that now we're switching from monetary policy having done
Speaker 1: whatever they can, and that results in high as surprises.
Speaker 1: But that's why the fiscal discussion is now so aftertely
Speaker 1: critical that it's small the issue that we haven't really
Speaker 1: spoken about yet. And stuff course that the number of
Speaker 1: cases is coming down quite quickly from the US, also
Speaker 1: in Europe, also in the UK. And I mean think
Speaker 1: about a few weeks ago in the US to have
Speaker 1: about three hundred thousand new cases every day. Now we
Speaker 1: have about a hundred fifty thousand. If you put admittedly
Speaker 1: very simple you rule it down and ask the question,
Speaker 1: if I type c V I D on my Bloomberg screen,
Speaker 1: when will we actually get that the number of new
Speaker 1: cases will be close to zero. You get and I
Speaker 1: know this is a been extreme thinking both about the
Speaker 1: strings from Latin America and South Africa and set up.
Speaker 1: But you can that we get to sero new cases
Speaker 1: sometimes yet potentially already in much so that's why the
Speaker 1: speedless which the number of cases is coming down. That's
Speaker 1: something that we should not under is the mate that
Speaker 1: we could potentially have the growth, but not only the
Speaker 1: second half this year. You could potentially already come in
Speaker 1: the second quarter of this year, and that of course
Speaker 1: will be an upside surprise to market, the upside surprise.
Speaker 1: So would you suggest that this bull market valuing out
Speaker 1: six months, valuing out a year is fairly priced, so
Speaker 1: that that's why that comes to whene we will begin
Speaker 1: to see inflation and therefore the fit dovishness. Will that
Speaker 1: be sticking or will the fit the having to turn
Speaker 1: around quite quickly as you know, the fate is at
Speaker 1: the moment saying we will not high rates on to
Speaker 1: two twenty three. This is almost the premise for the
Speaker 1: hunt for yield. People buying first the duration and treasuries,
Speaker 1: then i G then high yield and in equities. If
Speaker 1: we do begin to see that growth comes faster and quicker,
Speaker 1: and the catch up effect, if you will, is much
Speaker 1: more speedy than what we all expect at the moment.
Speaker 1: Then the f it would certainly have to pedal back
Speaker 1: and and to talk about rate packs coming to know.
Speaker 1: But the question therefore is is the FED going to
Speaker 1: state dovish Clarita has said that we will do que
Speaker 1: meaning by a d building and treasuries forty building in
Speaker 1: mortgages throughout the end of this year. If we have
Speaker 1: three very strong quarters of growth here in the next nine,
Speaker 1: then we could have that defect could be potential being
Speaker 1: to the table already sometime in the second half of
Speaker 1: this year, Towarsten, one thing that you did so well
Speaker 1: when you were at Deutsche Bank was put out these
Speaker 1: charts showing the divide in the labor markets, showing the
Speaker 1: divide in the economy between halves and have nots. From
Speaker 1: your seat now at Apollo, there is a question when
Speaker 1: does this divide and have and have not affect markets
Speaker 1: which have been relatively divorced from it and moving on
Speaker 1: very different factors, in part because they're dominated largely by
Speaker 1: the bigger, more resilient companies. When does it become a
Speaker 1: real problem that you have a two track economy with
Speaker 1: a two track labor market. I know the's and as
Speaker 1: it is a case shaped recovery, and as you have
Speaker 1: covered so well, this is creating all kinds of issues.
Speaker 1: In particular will leverage in companies that have very little learnings,
Speaker 1: not only because of COVID, but have not had earnings
Speaker 1: for three years in a row, the so called sumpie companies.
Speaker 1: And what this is also opening up is of course
Speaker 1: that there's a number of, if you will, unintended consequence
Speaker 1: of the very very quick reaction that the FED had
Speaker 1: during this rise. It's normally a recession cleans out balance sheets.
Speaker 1: In two thousand six, it was cleaning out energies in
Speaker 1: the housing sector. It was cleaning out benergies the banking sector,
Speaker 1: cleaning up penergies in the household sector, meaning consumers. This
Speaker 1: time around, the FED and the fiscal policy makers came
Speaker 1: to the rescue so quickly. So therefore normally we then say, okay,
Speaker 1: we had a recession, we can now have another cycle.
Speaker 1: In the last ten years. The issue is that this
Speaker 1: recession really didn't clean up much, and therefore many of
Speaker 1: the problems that we had pre COVID, most importantly leverage
Speaker 1: in the lower rated companies and a lot of companies
Speaker 1: that are much more at risk. That problem is still here.
Speaker 1: So that says many of the vulnerabilities that you normally
Speaker 1: clean out with the recession, those vulnerabilities are still here.
Speaker 1: That's why going into this new cycle that we're literally
Speaker 1: entering here as we speak, it does raise some questions
Speaker 1: about well, but this cycle starts out on a very
Speaker 1: vulnerable footing, and that is a problem when you think
Speaker 1: about how long this cycle actually can end up being
Speaker 1: serious issues. I have to say that, Tusten, I just
Speaker 1: love the Apollo. Just allow just a little bit of stubble,
Speaker 1: just a little bit. It's COVID. I mean now, it's
Speaker 1: that you talked about the Deutsche Bank Apollo transition. I'm
Speaker 1: just taking it seriously to the next level. You've got
Speaker 1: a little stubble, Yeah, I'm not. It's allowed here too.
Speaker 1: That's why, thanks Slock of Apollo Management. I'm looking at
Speaker 1: this shark Tom and the peak of sober back on
Speaker 1: the Bloomberg was back like two thousand elevens. Let's let's
Speaker 1: get some perspective here. We can do that with Mike mcgloane.
Speaker 1: He covers all that commodity stuff for Bloomberg Intelligence. Mike,
Speaker 1: what do you make of what's going on with silver
Speaker 1: here this morning? Up ten percent, pushing up the thirty dollars. Hello, Tom,
Speaker 1: imply I was thinking of you this weekend and two
Speaker 1: time when I was trying to ice skate in my
Speaker 1: neighbor's pond, but the ice wasn't think enough yet. But
Speaker 1: we're getting to that pon hockey let weather just too
Speaker 1: much snow now, but that's very cool. Yeah, the keeping
Speaker 1: about silver, it's a fundamentally bullish mark. In fact, before
Speaker 1: this issues with Robin Hood and stuff is it's the
Speaker 1: most likely commodity I view that was really going to
Speaker 1: get to the old time highs or even double in
Speaker 1: value this year, which is around fifty. It's in a
Speaker 1: perfect spot as far as electrification macro economic it's being
Speaker 1: half industrial, half pressures. But what's happening now with you
Speaker 1: know the Reddit stuff is this is a really deep
Speaker 1: market institutions in terms of future is already very much long.
Speaker 1: I think it's you manage money net positions, I e. Hedghunes,
Speaker 1: there of open interest net long ready. So this is
Speaker 1: just adding a little fuel to the bullish narrative and
Speaker 1: silver the way I see it, so it's kind of
Speaker 1: a do you view this is kind of a short
Speaker 1: term trading I guess, you know, just a short term
Speaker 1: blip here, Mike, Or is this something that the bulls
Speaker 1: can build upon going forward more than the latter? It's
Speaker 1: short term and this is a good way for traders
Speaker 1: to lose money. I I look at the best way
Speaker 1: to look at silver and precious medals and bitcoin, it's
Speaker 1: just buy and forget about it. And the best way
Speaker 1: to lose money is to try to trade it. So
Speaker 1: silver is known as the Devil's medal for a reason
Speaker 1: because it's rip your it will make will make the
Speaker 1: valil is amazing, I'll make you lose your hair, as
Speaker 1: you've seen. I used to have here. But and it's
Speaker 1: but it's at these levels, I think it just adds
Speaker 1: to there. But that's the big difference with things like
Speaker 1: game stock. It's a fundamentally bare stock when I had
Speaker 1: too many shorts. This is fundamentally bullish, a really deep
Speaker 1: market that silberty long and it has a lot of
Speaker 1: reasons to just do what gold did. Gold made a
Speaker 1: new high last year. Silver the gold ratio right now
Speaker 1: is below the twenty year average, which is quite rare.
Speaker 1: So to me, the whole space is just moving higher.
Speaker 1: Just silver has the has the attention at the moment,
Speaker 1: Mike A Man. The statistic from us GS, a government agency.
Speaker 1: If you walk a hundred and eighty feet, folks, which
Speaker 1: is like what Tom Brady will pass on the first
Speaker 1: down on the Super Bowl. If you walk a hundred
Speaker 1: and eighty feet and you make a cube of that size,
Speaker 1: that's all the silver in the world. Mike. I think
Speaker 1: all of us have an intuitive understanding of gold. Is
Speaker 1: silver constrained? Is it rare? Is it is it something
Speaker 1: where they're not mining it anymore? It's been constrained for
Speaker 1: a while. COVID reduced production, and you know prices have
Speaker 1: been down since that peak in two thousand and eleven,
Speaker 1: so obviously you expect to pull back in all the
Speaker 1: all but the most productive minds. But the big difference
Speaker 1: is twenty years ago, maybe eighty or six, it was
Speaker 1: really used for precious purposes and for jewelry and thing.
Speaker 1: Now it's fift is industrial solar panels and things and electrification,
Speaker 1: and the other fifty percent is for coinage. And jewelry
Speaker 1: and things. So to me, that's why it's so unique
Speaker 1: in this space, and it's just not as rare as gold.
Speaker 1: The thing is, if prices get high enough, you can
Speaker 1: bring on silver supply quite rapidly. Gold it's much Where
Speaker 1: where do you get silver? Where do you mind silver?
Speaker 1: Like South America, Mexico, Peru, Chili, it's almost all South America.
Speaker 1: Would just think of the conquistadors and that's just say
Speaker 1: the fourth flor Tiffany. But there, Michael, Bitcoin, let's get
Speaker 1: your thirty seconds on bitcoin. Tom. Tom just lives for this. Well.
Speaker 1: It's the thing about bitcoin is just the fact is
Speaker 1: the old school precious metal holders of centuries now no,
Speaker 1: they have to have some bitcoin in their portfolos, and
Speaker 1: they might be missing out. Now that's not only anecdotal,
Speaker 1: it's a fact in terms of funds. And it makes
Speaker 1: sense from what you're seeing from the narrative is you
Speaker 1: probably need to add maybe a portion of what I
Speaker 1: was going to put in gold, or what I did
Speaker 1: put in gold into bitcoin. So now I analyzed the
Speaker 1: two together, and if you lead a bitcoin of gold
Speaker 1: together combine, the act has been lower than the stock
Speaker 1: market on as you know we could get the forty
Speaker 1: five people Paul we've had on against mcgloan. It could
Speaker 1: be mcglowan against the first one. He was the first
Speaker 1: one to tell me about bitcoin being a store of value,
Speaker 1: so that that hey, hey moon shot, Um Mike, I learned.
Speaker 1: I hate what he's on because I have to take notes.
Speaker 1: I learned so much. Michael mcgloan, Thank you so much,
Speaker 1: Bloomberg Intelligence. Thanks for listening to the Bloomberg Surveillance podcast.
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Speaker 1: Keene before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio.