1 00:00:00,200 --> 00:00:16,520 Speaker 1: Hi, and welcome to What Goes Up, a weekly markets 2 00:00:16,560 --> 00:00:19,840 Speaker 1: podcast umbled on a higher across hasset reporter at Bloomberg, 3 00:00:20,239 --> 00:00:23,360 Speaker 1: and I'm Katie Greifeld filling in for Mike Reagan. I 4 00:00:23,400 --> 00:00:26,520 Speaker 1: am also across asset reporter at Bloomberg. I'm also the 5 00:00:26,680 --> 00:00:29,800 Speaker 1: co anchor of Quick Take Stock. It is a daily 6 00:00:29,800 --> 00:00:33,280 Speaker 1: market show for Bloomberg Quick Take, and this week on 7 00:00:33,320 --> 00:00:35,800 Speaker 1: the show, Thanksgiving is around the corner in Wall Street 8 00:00:35,840 --> 00:00:38,160 Speaker 1: is looking back on the stellar year while also trying 9 00:00:38,200 --> 00:00:41,640 Speaker 1: to predict what two might bring. Everyone's still contending with 10 00:00:41,720 --> 00:00:45,240 Speaker 1: lots of things, including hotter than expected inflation, bubble talk, 11 00:00:45,560 --> 00:00:49,040 Speaker 1: and projections that the portfolio is dead. We're going to 12 00:00:49,080 --> 00:00:51,360 Speaker 1: get into all of that with our guest, the head 13 00:00:51,440 --> 00:00:56,000 Speaker 1: of global multi assets at a major investment firm. But first, Katie, 14 00:00:56,000 --> 00:00:58,080 Speaker 1: I wanted to welcome you to the show. Mike's out 15 00:00:58,160 --> 00:01:01,440 Speaker 1: this week and that it's actually really perfect because you 16 00:01:01,440 --> 00:01:03,520 Speaker 1: and I have a lot to talk about. We've been 17 00:01:03,560 --> 00:01:07,840 Speaker 1: hanging out recently, most notably at some football games. And 18 00:01:07,880 --> 00:01:10,800 Speaker 1: then just a reminder from me and you, Mike said 19 00:01:10,840 --> 00:01:16,600 Speaker 1: that we must make a joke on this week's podcast. Listen. 20 00:01:17,120 --> 00:01:19,480 Speaker 1: I don't have jokes I have nothing but facts. I've 21 00:01:19,560 --> 00:01:23,080 Speaker 1: learned a lot about football, in particular in the last week. 22 00:01:23,800 --> 00:01:27,280 Speaker 1: I've heard a lot about Josh Allen. Apparently he's really good. 23 00:01:27,280 --> 00:01:30,200 Speaker 1: I've learned that in trouble you throw to Digs, He'll 24 00:01:30,240 --> 00:01:34,000 Speaker 1: get it done. On the Jets, though, Mike White, I mean, 25 00:01:34,360 --> 00:01:37,280 Speaker 1: next Tom Brady, I don't know. I don't think so 26 00:01:37,800 --> 00:01:39,760 Speaker 1: for all of our listeners. Katie and I went to 27 00:01:39,800 --> 00:01:42,560 Speaker 1: the Bills and Jets game this past weekend and we 28 00:01:42,640 --> 00:01:45,240 Speaker 1: had the best time. And Katie heard a lot of 29 00:01:45,440 --> 00:01:48,960 Speaker 1: really amazing catchphrases that she was using throughout the game, 30 00:01:49,040 --> 00:01:51,760 Speaker 1: and I think it worked out. I think so. I 31 00:01:51,800 --> 00:01:57,600 Speaker 1: mean I was soliciting cool catchphrases I could sprinkle into conversation. Um, 32 00:01:57,640 --> 00:02:00,400 Speaker 1: the Bills, they had a pretty rough game the weekend before, 33 00:02:00,480 --> 00:02:02,240 Speaker 1: so they really needed to come out with their hair 34 00:02:02,240 --> 00:02:05,400 Speaker 1: on fire. With their hair on fire, that's right. They delivered. 35 00:02:05,480 --> 00:02:10,280 Speaker 1: They delivered two touchdowns. And this is now a sports podcast, 36 00:02:10,320 --> 00:02:12,880 Speaker 1: by the way, this is everybody who's tuning in for 37 00:02:12,880 --> 00:02:15,800 Speaker 1: for a commentary on the stock market. You can you 38 00:02:15,800 --> 00:02:20,880 Speaker 1: can delete now, well we can. We can ask our 39 00:02:21,080 --> 00:02:24,840 Speaker 1: guests this week about football as well. Possibly, but let's 40 00:02:24,840 --> 00:02:27,480 Speaker 1: bring in Sebastian Page, who's the head of Global Multi 41 00:02:27,520 --> 00:02:30,760 Speaker 1: Asset at TRO Price and he's also the author of 42 00:02:30,800 --> 00:02:34,720 Speaker 1: a new book called Beyond Diversification, which will also discuss 43 00:02:34,800 --> 00:02:38,680 Speaker 1: on the podcast today. Sebastian, welcome to the show. Thank you, 44 00:02:38,840 --> 00:02:41,400 Speaker 1: Vildana and Katie. Thank you for having me. Really happy 45 00:02:41,480 --> 00:02:45,720 Speaker 1: to participate today. Are you a football fan? Yeah, I'm 46 00:02:45,760 --> 00:02:48,919 Speaker 1: in Baltimore, Maryland, so it's the Ravens for me. Oh 47 00:02:49,000 --> 00:02:52,519 Speaker 1: go Bills all the way. And I don't have any 48 00:02:52,560 --> 00:02:56,200 Speaker 1: fun facts about the Ravens. Unfortunately, you'll have to let 49 00:02:56,200 --> 00:02:59,359 Speaker 1: her know ahead of time next time. But Sebastian, I 50 00:02:59,520 --> 00:03:02,600 Speaker 1: always hope you could help set things up for us 51 00:03:02,600 --> 00:03:04,400 Speaker 1: and just give us a little bit more about your 52 00:03:04,480 --> 00:03:09,919 Speaker 1: role at tro and what your strategy looks like right now. Yeah, 53 00:03:10,000 --> 00:03:12,320 Speaker 1: thank you. You know my role at THRO I like 54 00:03:12,400 --> 00:03:15,639 Speaker 1: to say it's the perfect job for me. I absolutely 55 00:03:15,720 --> 00:03:20,640 Speaker 1: love it. I'm running a large global investment organization, in 56 00:03:20,680 --> 00:03:24,560 Speaker 1: this case over four hundred and fifty billion in a 57 00:03:24,760 --> 00:03:29,360 Speaker 1: u M and we oversee over two D and twenty portfolios. 58 00:03:29,440 --> 00:03:32,200 Speaker 1: And by the way, we have the number one actively 59 00:03:32,280 --> 00:03:37,400 Speaker 1: managed retirement product in terms of assets under management and performance. 60 00:03:38,240 --> 00:03:43,160 Speaker 1: The job will Danna involves not only investment oversight, so 61 00:03:43,520 --> 00:03:46,560 Speaker 1: you know, staying on top of capital markets, consuming vast 62 00:03:46,640 --> 00:03:50,720 Speaker 1: amounts of research from Bloomberg of course, and so on. 63 00:03:51,160 --> 00:03:54,280 Speaker 1: But I also run the business, which means setting a 64 00:03:54,320 --> 00:04:01,120 Speaker 1: strategic vision, making sure it's executed well, importantly, recruiting, developing talent, 65 00:04:01,880 --> 00:04:06,400 Speaker 1: managing large product development projects. I'm also a member of 66 00:04:06,440 --> 00:04:10,760 Speaker 1: the firm's management committee, which means I'm representing the division 67 00:04:11,280 --> 00:04:15,200 Speaker 1: at the firm wide level, and I helped manage the firm. 68 00:04:15,240 --> 00:04:17,680 Speaker 1: And by the way, at tour Price, we have one 69 00:04:17,720 --> 00:04:22,760 Speaker 1: point six trillion in assets under management over seven thousand, 70 00:04:22,839 --> 00:04:27,359 Speaker 1: eight hundred employees in sixteen countries. You know, we have 71 00:04:27,440 --> 00:04:30,760 Speaker 1: a good brand, but we also have this ethos of 72 00:04:31,080 --> 00:04:35,080 Speaker 1: keeping our heads down and focusing on investment performance. So 73 00:04:35,160 --> 00:04:39,159 Speaker 1: for some people and maybe some people in our audience today, 74 00:04:39,279 --> 00:04:42,880 Speaker 1: sometimes we're like the biggest asset manager they've never heard of. 75 00:04:43,720 --> 00:04:46,640 Speaker 1: Bottom line is the job is broad. I learned something 76 00:04:46,760 --> 00:04:52,440 Speaker 1: every day. There are investment challenges and leadership challenges. So 77 00:04:52,600 --> 00:04:55,159 Speaker 1: if you follow me on LinkedIn, by the way, I 78 00:04:55,200 --> 00:04:58,320 Speaker 1: realized I'm starting to sound like an influencer. I only 79 00:04:58,360 --> 00:05:01,400 Speaker 1: have LinkedIn. I don't have Twitter, or anything else. But 80 00:05:01,520 --> 00:05:05,200 Speaker 1: you'll see that I started was posting on capital markets, 81 00:05:05,240 --> 00:05:09,360 Speaker 1: of course, but I started posting short articles on psychology 82 00:05:09,400 --> 00:05:12,360 Speaker 1: and leadership as well because that's a part of my job. 83 00:05:12,640 --> 00:05:16,359 Speaker 1: So sorry for the LinkedIn plug. I'm just starting to 84 00:05:16,800 --> 00:05:19,040 Speaker 1: get a few followers and trying. We're trying to ramp 85 00:05:19,120 --> 00:05:23,040 Speaker 1: up our digital brand as a firm. But yeah, the 86 00:05:23,080 --> 00:05:25,760 Speaker 1: bottom line is it's a broad job. It's a leadership 87 00:05:25,800 --> 00:05:28,880 Speaker 1: and an investment job. Sebastian, We've got to get you 88 00:05:28,920 --> 00:05:31,640 Speaker 1: on Twitter. It's where all the action is. You would 89 00:05:31,680 --> 00:05:34,320 Speaker 1: fit right in at fin Twitter. But we are in 90 00:05:34,360 --> 00:05:36,600 Speaker 1: the special time of year where we have about six 91 00:05:36,640 --> 00:05:40,919 Speaker 1: weeks to go until two and as such, we're starting 92 00:05:40,920 --> 00:05:45,560 Speaker 1: to see a lot of your head outlooks trickle out, 93 00:05:45,839 --> 00:05:48,719 Speaker 1: and I'm curious to hear your view on what we're 94 00:05:48,720 --> 00:05:52,320 Speaker 1: heading into next year, because I mean, just we're still 95 00:05:52,400 --> 00:05:55,960 Speaker 1: waiting on tenter hooks to see who Biden's FED nominee 96 00:05:56,040 --> 00:05:59,560 Speaker 1: will be. For example, we know that inflation is at 97 00:05:59,640 --> 00:06:03,160 Speaker 1: level we haven't seen in decades. Curious how you're taking 98 00:06:03,200 --> 00:06:06,800 Speaker 1: all these different inputs and seeing how the year head 99 00:06:06,880 --> 00:06:11,479 Speaker 1: might look Katie. A simple question right now that's on 100 00:06:11,560 --> 00:06:16,960 Speaker 1: everyone's mind is our stocks in the bubble? And it's 101 00:06:17,000 --> 00:06:21,960 Speaker 1: really a complicated question. They're both and this is gonna 102 00:06:22,360 --> 00:06:25,480 Speaker 1: sound unusual, but I can make the statement that at 103 00:06:25,520 --> 00:06:29,360 Speaker 1: the same time that stocks are both as expensive as 104 00:06:29,400 --> 00:06:32,880 Speaker 1: they've ever been and as cheap as they've ever been. 105 00:06:33,640 --> 00:06:36,039 Speaker 1: So how do I get to that statement? If I 106 00:06:36,040 --> 00:06:38,880 Speaker 1: look at the price earnings ratio on the stock market 107 00:06:38,920 --> 00:06:42,840 Speaker 1: on the S and P five, it's in the person 108 00:06:43,000 --> 00:06:46,440 Speaker 1: tile compared to the last thirty years. Maybe it got 109 00:06:46,600 --> 00:06:50,640 Speaker 1: more expensive around the tech bubble, but pretty much close 110 00:06:50,680 --> 00:06:54,359 Speaker 1: to as expensive as they've ever been. But if you 111 00:06:54,400 --> 00:06:57,599 Speaker 1: think stocks are expensive, have you looked at bonds recently? 112 00:06:58,720 --> 00:07:03,400 Speaker 1: And if you compare the evaluation of stocks that PE ratio, 113 00:07:03,720 --> 00:07:05,760 Speaker 1: and you can invert it and look at the yield, 114 00:07:05,920 --> 00:07:10,400 Speaker 1: which makes an easier comparison with bond yields and in 115 00:07:10,440 --> 00:07:14,880 Speaker 1: particular real rates, the yield you get on bonds after inflation. 116 00:07:15,560 --> 00:07:18,280 Speaker 1: Then you get to the conclusion that it's it's in 117 00:07:18,320 --> 00:07:21,560 Speaker 1: the bottom one. So stocks are as cheap as they've 118 00:07:21,560 --> 00:07:25,320 Speaker 1: ever been. So it's a confusing time for asset allocators. 119 00:07:25,440 --> 00:07:27,680 Speaker 1: We just had a debate between the bulls and the 120 00:07:27,760 --> 00:07:31,160 Speaker 1: bears in our asset Allocation Committee. So as we look 121 00:07:31,200 --> 00:07:38,320 Speaker 1: into the bears are arguing that we've borrowed from the recovery. 122 00:07:38,480 --> 00:07:41,800 Speaker 1: In other words, valuations are a sign of that. And 123 00:07:42,000 --> 00:07:46,800 Speaker 1: monetary and fiscal policy have been so extreme that one 124 00:07:46,840 --> 00:07:50,720 Speaker 1: of our committee members said, look, every inch of recovery 125 00:07:50,840 --> 00:07:53,880 Speaker 1: will get taken away by the Feds. Need to taper. 126 00:07:55,080 --> 00:07:58,960 Speaker 1: And on the fiscal side, we're kind of at the 127 00:07:59,120 --> 00:08:01,720 Speaker 1: end of the day is of sending checks to people. 128 00:08:02,400 --> 00:08:06,440 Speaker 1: One reason to worry about asset valuations is that it's 129 00:08:06,480 --> 00:08:11,520 Speaker 1: been liquidity driven. I listened to your podcast. I'm a fan, 130 00:08:11,600 --> 00:08:15,800 Speaker 1: by the way, I listened to it every weekend. Um. 131 00:08:16,160 --> 00:08:20,200 Speaker 1: I listened to your Weirdest Things in Market in markets, 132 00:08:20,280 --> 00:08:23,840 Speaker 1: so you see the speculation there when you hear your 133 00:08:23,880 --> 00:08:26,800 Speaker 1: comments about the weirdest things in market. Right, you mentioned 134 00:08:26,840 --> 00:08:29,680 Speaker 1: at one time that someone bought the jpeg and n 135 00:08:29,720 --> 00:08:32,320 Speaker 1: f T the jpeg of a rock, a dancing rock 136 00:08:32,440 --> 00:08:36,240 Speaker 1: or rock with red eyes for one point one million. Right. 137 00:08:36,880 --> 00:08:39,520 Speaker 1: The other one I think you mentioned was the Shiba, 138 00:08:39,840 --> 00:08:43,440 Speaker 1: a new coin which is a spoof coin on a 139 00:08:43,520 --> 00:08:46,920 Speaker 1: spoof coin on doche coin. Right, someone had eight thousand 140 00:08:47,000 --> 00:08:49,199 Speaker 1: dollars in an account and then a year and a 141 00:08:49,240 --> 00:08:52,560 Speaker 1: half later, that account was worth five point seven billion. 142 00:08:52,920 --> 00:08:57,600 Speaker 1: So when I talk about liquidity and speculation in markets, 143 00:08:57,600 --> 00:09:00,320 Speaker 1: you have these micro bubbles, and this is another ration 144 00:09:00,400 --> 00:09:03,400 Speaker 1: of what makes the bears nervous. So thank you for 145 00:09:03,480 --> 00:09:06,720 Speaker 1: these examples. I'm using them in some of my presentations. Now. 146 00:09:07,080 --> 00:09:10,240 Speaker 1: So what are the bulls saying in our committee? Now? 147 00:09:10,640 --> 00:09:16,600 Speaker 1: They're saying that, look, peak growth doesn't mean low growth. 148 00:09:17,800 --> 00:09:21,920 Speaker 1: The delta situation ultimately, we hope will be better in six, nine, 149 00:09:22,000 --> 00:09:25,480 Speaker 1: twelve months. Think about a back to normal world where 150 00:09:25,520 --> 00:09:33,680 Speaker 1: there's less COVID supply chains maybe slowly, but still normalize services, 151 00:09:33,840 --> 00:09:38,600 Speaker 1: spending increases, and so on. So the bulls are saying 152 00:09:39,760 --> 00:09:44,079 Speaker 1: growth is slowed and delayed, but it's not derailed. We're 153 00:09:44,120 --> 00:09:47,800 Speaker 1: still in their recovery. The number that sticks in my mind, 154 00:09:47,880 --> 00:09:50,040 Speaker 1: and you hear it a lot in the financial media, 155 00:09:50,600 --> 00:09:55,679 Speaker 1: is this two trillion dollars sitting in people's checking accounts, right, 156 00:09:55,760 --> 00:09:59,640 Speaker 1: this concept of pent up demand and companies are flush 157 00:09:59,720 --> 00:10:03,679 Speaker 1: with hash too. And there's a massive wealth effect at 158 00:10:03,720 --> 00:10:08,800 Speaker 1: some point from asset price appreciation. And here's something that's 159 00:10:08,840 --> 00:10:14,120 Speaker 1: not talked about much. Pent up housing single family housing 160 00:10:14,240 --> 00:10:17,960 Speaker 1: units under construction at its highest level in fifteen years, 161 00:10:18,040 --> 00:10:21,319 Speaker 1: and this is due to supply shortages. We know also 162 00:10:21,360 --> 00:10:25,160 Speaker 1: the percentage of houses for sale but not started is 163 00:10:25,200 --> 00:10:28,160 Speaker 1: at its highest level in history, almost doubled the long 164 00:10:28,240 --> 00:10:32,520 Speaker 1: term average. So just that pent up housing, our economists 165 00:10:32,559 --> 00:10:35,760 Speaker 1: here things that it can add seventy five basis points 166 00:10:35,760 --> 00:10:38,400 Speaker 1: to GDP growth next year as some of these things 167 00:10:38,440 --> 00:10:41,120 Speaker 1: start to normalize. So the bottom line is that over 168 00:10:41,200 --> 00:10:45,040 Speaker 1: the next year we will face decline in growth, but 169 00:10:45,200 --> 00:10:50,840 Speaker 1: still very high growth, declining liquidity, but still very high liquidity, 170 00:10:50,960 --> 00:10:54,160 Speaker 1: and settle into the mid cycle game. For that game, 171 00:10:54,559 --> 00:10:59,280 Speaker 1: you need earnings to sustain stocks more than rising valuations, 172 00:10:59,520 --> 00:11:04,240 Speaker 1: which is what happened this year. Price earnings ratios actually 173 00:11:04,640 --> 00:11:08,080 Speaker 1: went down on the margin, but earnings has been so 174 00:11:08,160 --> 00:11:12,360 Speaker 1: strong that stocks have continued to make new highs. You know, 175 00:11:12,400 --> 00:11:16,800 Speaker 1: it's a massively distorted economy. Ultimately, we're more bearish on 176 00:11:16,880 --> 00:11:19,800 Speaker 1: bonds than stocks. So where do we settle all of 177 00:11:19,800 --> 00:11:23,280 Speaker 1: this between the bears and the bulls. Is that we 178 00:11:23,360 --> 00:11:28,439 Speaker 1: have taken some profits in our portfolios by selling some stocks, 179 00:11:28,520 --> 00:11:30,800 Speaker 1: but on the margin, we've sold about one percent of 180 00:11:30,840 --> 00:11:34,440 Speaker 1: our stock stocks exposure. But we're also long growth. We're 181 00:11:34,440 --> 00:11:36,840 Speaker 1: also a long the economy, so we've added risk back 182 00:11:36,880 --> 00:11:41,559 Speaker 1: into the portfolio through relative valuation, so to go along 183 00:11:41,600 --> 00:11:46,800 Speaker 1: the economy long cyclicality. We have shorted treasuries, we have 184 00:11:47,000 --> 00:11:50,360 Speaker 1: added on the margin to credit, and we're long small 185 00:11:50,440 --> 00:11:54,440 Speaker 1: cap and value stocks. So we're adding baxiclicality into the 186 00:11:54,480 --> 00:11:57,959 Speaker 1: portfolio as we're selling some stocks on the margin. That's 187 00:11:58,000 --> 00:12:11,560 Speaker 1: how we settled the debate, that's how we're thinking about two. So, Sebastian, 188 00:12:11,640 --> 00:12:14,600 Speaker 1: you actually stole my next question because I wanted to 189 00:12:14,640 --> 00:12:16,960 Speaker 1: ask you about I saw in one of your recent 190 00:12:17,000 --> 00:12:19,800 Speaker 1: notes that you guys did recently sell one percent of 191 00:12:19,800 --> 00:12:23,000 Speaker 1: your equity exposure, so I wanted to ask you about that. 192 00:12:23,040 --> 00:12:25,319 Speaker 1: And I wanted to ask you to look ahead to 193 00:12:25,400 --> 00:12:28,360 Speaker 1: next year because my colleagues and I were thinking about 194 00:12:28,360 --> 00:12:30,520 Speaker 1: what some of the strategists have been coming out with, 195 00:12:30,840 --> 00:12:33,839 Speaker 1: as Katie mentioned, for their year ahead outlooks, and I 196 00:12:33,920 --> 00:12:35,360 Speaker 1: wanted to ask you how true it is that a 197 00:12:35,440 --> 00:12:39,400 Speaker 1: lot will depend on where rates and yields are. And 198 00:12:39,440 --> 00:12:43,079 Speaker 1: then another one of your comments recently had said that 199 00:12:43,120 --> 00:12:47,400 Speaker 1: you guys moved some assets into liquid alternatives, and I 200 00:12:47,400 --> 00:12:50,680 Speaker 1: wanted to ask you what specifically that is. Yeah, let 201 00:12:50,760 --> 00:12:55,559 Speaker 1: me start with UM the liquid alternatives questions. So as 202 00:12:56,080 --> 00:12:59,079 Speaker 1: you sell some stocks, maybe you start taking a bit 203 00:12:59,080 --> 00:13:03,040 Speaker 1: of profit, you pull back a little bit, You stay diversified, 204 00:13:03,160 --> 00:13:07,079 Speaker 1: you stay invested, but the question becomes where do you 205 00:13:07,200 --> 00:13:11,520 Speaker 1: put the money? And this relates to the six question 206 00:13:11,600 --> 00:13:17,840 Speaker 1: as well. About twelve of our core bonds exposure UM 207 00:13:17,960 --> 00:13:23,199 Speaker 1: has been transferred in our flagship global Allocations strategy to 208 00:13:23,679 --> 00:13:29,119 Speaker 1: liquid alternatives. Those are strategies that are active management focused, 209 00:13:29,559 --> 00:13:34,400 Speaker 1: so you need skilled active management to succeed here, and 210 00:13:34,600 --> 00:13:38,800 Speaker 1: they allow for short positions. They're not linked to the 211 00:13:38,880 --> 00:13:44,720 Speaker 1: big market trends in either equity returns or interest rates. 212 00:13:45,120 --> 00:13:50,240 Speaker 1: So that's how we add some diversification into the portfolio. 213 00:13:50,720 --> 00:13:55,640 Speaker 1: We've also added on the margin two loans as an 214 00:13:55,640 --> 00:13:58,959 Speaker 1: asset class. Bank loans tend to do okay when rates 215 00:13:59,080 --> 00:14:04,320 Speaker 1: rise really too long treasuries for example. And we've also 216 00:14:04,440 --> 00:14:07,679 Speaker 1: added but not too much, but on the margin to 217 00:14:07,920 --> 00:14:11,960 Speaker 1: credit more broadly, high high yield in particular. So that's 218 00:14:11,960 --> 00:14:15,840 Speaker 1: how we're positioned from a tactical perspective at the moment, 219 00:14:17,000 --> 00:14:21,000 Speaker 1: So sepassion. It's been about fourteen minutes that I've been recording. 220 00:14:21,200 --> 00:14:23,160 Speaker 1: Haven't brought up crypto yet. But I'm going to do 221 00:14:23,160 --> 00:14:27,000 Speaker 1: that right now, because when you think about a diversified portfolio, 222 00:14:27,200 --> 00:14:32,680 Speaker 1: obviously the bitcoin is an infleation hedge narrative has reared 223 00:14:32,760 --> 00:14:36,760 Speaker 1: up again, especially after that really really hot cp I 224 00:14:36,800 --> 00:14:39,800 Speaker 1: figure that we got for October. How do you think 225 00:14:39,840 --> 00:14:44,200 Speaker 1: about crypto as an asset class? First of all, just 226 00:14:44,240 --> 00:14:47,120 Speaker 1: look at the size of crypto, and it's hard to 227 00:14:48,640 --> 00:14:52,680 Speaker 1: disagree with the idea that it is an asset class. Overall, 228 00:14:52,720 --> 00:14:55,720 Speaker 1: it's bigger than say, the high yield bond market in 229 00:14:55,760 --> 00:14:59,080 Speaker 1: the US, So it is a force to be reckoned 230 00:14:59,120 --> 00:15:02,520 Speaker 1: with in most of our portfolios in our business or 231 00:15:02,560 --> 00:15:08,560 Speaker 1: clients aren't giving us the mandate to invest in crypto, 232 00:15:08,680 --> 00:15:12,640 Speaker 1: but we do research in that space because it's going 233 00:15:12,680 --> 00:15:17,400 Speaker 1: to influence how a lot of companies do business in 234 00:15:17,520 --> 00:15:22,840 Speaker 1: multiple sectors. We have an army of stock analysts at 235 00:15:22,840 --> 00:15:27,160 Speaker 1: Tyro Price, and so some of them are following the space. 236 00:15:27,800 --> 00:15:31,240 Speaker 1: We're looking at it at this point personally, I can 237 00:15:31,280 --> 00:15:36,160 Speaker 1: say not from an inflation hedge perspective, simply because it's 238 00:15:36,280 --> 00:15:40,240 Speaker 1: just still such a speculative asset class and it's really 239 00:15:40,320 --> 00:15:46,760 Speaker 1: driven by technicals sentiment. Sometimes crypto moves and that's why 240 00:15:47,280 --> 00:15:50,800 Speaker 1: I don't envy being in your business, Katie and Bill Donna, 241 00:15:50,920 --> 00:15:54,360 Speaker 1: because it's just hard to actually explain. Right, Oh, it's 242 00:15:54,400 --> 00:15:57,320 Speaker 1: down ten percent, or maybe it's the sweet and it's 243 00:15:57,320 --> 00:16:00,760 Speaker 1: a little bit mysterious, nebulous. This is a sign that 244 00:16:00,880 --> 00:16:05,680 Speaker 1: it's still an asset class that moves on sentiment and speculation. 245 00:16:06,400 --> 00:16:08,880 Speaker 1: I'm just gonna throw a number. I haven't done the map, 246 00:16:09,040 --> 00:16:14,480 Speaker 1: but let's suppose the volatility of crypto really is speculation 247 00:16:14,680 --> 00:16:19,880 Speaker 1: trend chasing sentiment. Well, that doesn't make for a really 248 00:16:19,880 --> 00:16:23,160 Speaker 1: good inflation hedge, unless maybe you think about it from 249 00:16:23,160 --> 00:16:27,240 Speaker 1: a very, very long term perspective. It's an evolving space. 250 00:16:27,280 --> 00:16:31,000 Speaker 1: It's an important space for asset allocators to think about. 251 00:16:31,680 --> 00:16:36,800 Speaker 1: The fact that it's highly volatile is not necessarily an issue. 252 00:16:38,000 --> 00:16:41,880 Speaker 1: It means that it's more capital efficient, all else being equal. 253 00:16:42,920 --> 00:16:48,880 Speaker 1: But it's still, for us, not an inflation hedge um 254 00:16:48,920 --> 00:16:51,760 Speaker 1: as we would think of a traditional inflation hedge. Sorry 255 00:16:51,760 --> 00:16:55,840 Speaker 1: I'm sounding a bit old school here. Now, this is 256 00:16:55,920 --> 00:16:59,240 Speaker 1: this is great and I'm really glad. I'm really glad 257 00:16:59,280 --> 00:17:02,960 Speaker 1: that we brought inflation because Katie wrote the cover of 258 00:17:03,120 --> 00:17:06,400 Speaker 1: Business Week this week, and it's all about the idea 259 00:17:06,600 --> 00:17:10,920 Speaker 1: that technically digital. Dohna wasn't on it too, so I 260 00:17:10,960 --> 00:17:13,240 Speaker 1: was part of it. But her story it was so good. 261 00:17:13,280 --> 00:17:15,879 Speaker 1: If you haven't seen it, you have to go see it. 262 00:17:15,880 --> 00:17:18,560 Speaker 1: It's all about how important it is to get the 263 00:17:18,600 --> 00:17:23,399 Speaker 1: inflation call right for portfolio manager heading into two and 264 00:17:23,480 --> 00:17:25,240 Speaker 1: so I wanted to ask you where you fall on 265 00:17:25,320 --> 00:17:30,000 Speaker 1: the transitory or not debate, and then what some potential 266 00:17:30,040 --> 00:17:32,919 Speaker 1: inflation hedges are, because that was what was part of 267 00:17:32,960 --> 00:17:37,080 Speaker 1: my article for for Business Speak. It was about, you know, 268 00:17:37,280 --> 00:17:41,240 Speaker 1: do you buy bitcoin or gold or reads or whatever else? 269 00:17:41,359 --> 00:17:45,080 Speaker 1: So what might you recommend as an inflation hedge? Yeah, 270 00:17:45,320 --> 00:17:47,959 Speaker 1: really good question Bill that. In fact, it's kind of 271 00:17:48,000 --> 00:17:53,639 Speaker 1: become the question right now. Uh. COVID is an absolute disaster, 272 00:17:53,840 --> 00:17:57,360 Speaker 1: but it's almost taken a back seat to the inflation question. 273 00:17:58,400 --> 00:18:01,159 Speaker 1: First of all, I'll say, well, you've solved the riddle 274 00:18:01,440 --> 00:18:05,000 Speaker 1: of how to create inflation in the developed world. It's 275 00:18:05,080 --> 00:18:09,639 Speaker 1: fiscal policy, not monetary. Right. We've dropped i don't know, 276 00:18:09,760 --> 00:18:13,440 Speaker 1: four hundred million checks of over a thousand dollars right 277 00:18:13,480 --> 00:18:18,560 Speaker 1: from the helicopters. So there's too much money demand chasing, 278 00:18:18,600 --> 00:18:24,440 Speaker 1: too little stuff to buy, especially goods, which creates supply issues. 279 00:18:25,480 --> 00:18:28,879 Speaker 1: This is not new. Everybody's talking about the mother of 280 00:18:28,920 --> 00:18:33,040 Speaker 1: all traffic jams at this point. You know, at TiO, 281 00:18:33,240 --> 00:18:36,520 Speaker 1: we don't have a house view. Sup Portfolio managers across 282 00:18:36,520 --> 00:18:40,919 Speaker 1: our investment platform actually divided on the question as to 283 00:18:41,119 --> 00:18:47,840 Speaker 1: whether will face runaway inflation, which Bill Donna. The trick 284 00:18:47,920 --> 00:18:51,679 Speaker 1: with the transitory question is that everyone has a different 285 00:18:51,720 --> 00:18:54,800 Speaker 1: definition of transitory, so you sort of need to define 286 00:18:54,840 --> 00:18:58,840 Speaker 1: transitory first and then express your view. So here I'm 287 00:18:58,840 --> 00:19:02,679 Speaker 1: gonna say, maybe rephrase the question, are we going to 288 00:19:02,840 --> 00:19:07,160 Speaker 1: face runaway, out of control inflation that will force the Feds? 289 00:19:07,320 --> 00:19:11,760 Speaker 1: And you know, from a long term perspective, technology globalization 290 00:19:11,960 --> 00:19:15,760 Speaker 1: have put downward pressures on prices. And if you go 291 00:19:15,840 --> 00:19:17,760 Speaker 1: back to say two thousand and you look at the 292 00:19:17,800 --> 00:19:22,960 Speaker 1: trends in different components of inflation. Uh, look at say, 293 00:19:23,040 --> 00:19:26,919 Speaker 1: flat screen TVs, computers, all that stuff has gotten really 294 00:19:27,359 --> 00:19:33,280 Speaker 1: cheaper and cheaper since UM two and before. And so 295 00:19:33,359 --> 00:19:36,480 Speaker 1: you have you have China made stuff you can buy 296 00:19:36,520 --> 00:19:42,000 Speaker 1: on Amazon, really cheap stuff, apparel, furnitures, toys. You know, 297 00:19:42,040 --> 00:19:44,879 Speaker 1: maybe we'll buy less stuff from China. But globalization is 298 00:19:44,880 --> 00:19:48,040 Speaker 1: sort of unstoppable, right, So maybe in Vietnam and Malaysia 299 00:19:48,200 --> 00:19:53,199 Speaker 1: and Yea. So those long term trends technology, globalization persists 300 00:19:53,240 --> 00:19:55,480 Speaker 1: in the background. We don't really think about them right 301 00:19:55,480 --> 00:19:58,840 Speaker 1: now because we have supply issues and other more pressing 302 00:19:59,320 --> 00:20:03,800 Speaker 1: concern to address. So from a shorter term perspective, there 303 00:20:03,840 --> 00:20:07,520 Speaker 1: are reopening effects. We just had a print at six 304 00:20:07,560 --> 00:20:11,640 Speaker 1: point two headline. You see a big component of it 305 00:20:11,720 --> 00:20:15,680 Speaker 1: was used cars up about thirty but also inflation is 306 00:20:15,720 --> 00:20:20,399 Speaker 1: becoming more broad based. You see rents, rents lag real estate. 307 00:20:20,640 --> 00:20:25,879 Speaker 1: Real estate is up by about expect rents to go 308 00:20:26,240 --> 00:20:30,600 Speaker 1: up based on the historical relationship when people get to 309 00:20:30,680 --> 00:20:35,560 Speaker 1: renew their lease um, they will most likely see a 310 00:20:35,640 --> 00:20:39,199 Speaker 1: price increase. And then there's energy, which is also a puzzle. 311 00:20:39,320 --> 00:20:42,520 Speaker 1: So gasoline is up fifty percent over the last twelve months, 312 00:20:42,560 --> 00:20:45,960 Speaker 1: So if you're looking at projecting inflation into next year, 313 00:20:46,000 --> 00:20:48,280 Speaker 1: it could say, look, it's unlikely that gasoline will be 314 00:20:48,359 --> 00:20:52,159 Speaker 1: up another fifty percent and news cars probably won't be 315 00:20:52,280 --> 00:20:56,200 Speaker 1: up another But if you look at shelter, a third 316 00:20:56,200 --> 00:20:59,320 Speaker 1: of the CPI, you know it was up only three 317 00:20:59,320 --> 00:21:03,399 Speaker 1: point five cent over the period for that last print 318 00:21:03,480 --> 00:21:07,439 Speaker 1: of six so it kind of doesn't add up with 319 00:21:07,600 --> 00:21:11,199 Speaker 1: real estate being up. That is more structural, and of 320 00:21:11,240 --> 00:21:15,200 Speaker 1: course wage inflation is more structural. So I think overall, 321 00:21:15,280 --> 00:21:19,560 Speaker 1: I think we're close to pick and peak inflation, but 322 00:21:19,640 --> 00:21:23,159 Speaker 1: we won't settle back down to pre COVID sub two 323 00:21:23,160 --> 00:21:29,119 Speaker 1: percent numbers in the foreseeable future. Right now, as we speak, 324 00:21:29,440 --> 00:21:33,000 Speaker 1: five year break even inflation is trending up. It's at 325 00:21:33,080 --> 00:21:36,679 Speaker 1: three point two, and that seems reasonable to me. But 326 00:21:36,760 --> 00:21:39,679 Speaker 1: it's a problem because the FED is you know, you 327 00:21:39,720 --> 00:21:42,680 Speaker 1: can be flexible. The FED can be flexible targeting two. 328 00:21:43,840 --> 00:21:47,840 Speaker 1: But there's flexible, and then there's as break events are implying, 329 00:21:48,040 --> 00:21:53,320 Speaker 1: letting inflation average above three over the next five years, 330 00:21:53,359 --> 00:21:56,760 Speaker 1: something has to give just to quickly hit Bill down 331 00:21:56,840 --> 00:22:00,359 Speaker 1: on how do you hedge those risks? We hold short 332 00:22:00,480 --> 00:22:04,200 Speaker 1: term tips in the portfolio. Interestingly, those are up about 333 00:22:04,520 --> 00:22:08,439 Speaker 1: seven percent this year compared to minus one for the 334 00:22:08,480 --> 00:22:12,879 Speaker 1: Barkley Zagg but overall expected returns on short short short 335 00:22:12,960 --> 00:22:16,640 Speaker 1: term tips are are fairly low where we sit now. 336 00:22:17,400 --> 00:22:21,919 Speaker 1: We also hold people talk about gold crypto we've just 337 00:22:22,000 --> 00:22:27,200 Speaker 1: talked about. We also hold a fund of real asset equities. 338 00:22:27,520 --> 00:22:31,679 Speaker 1: So these are stocks, Katie and Bill Dana, these are stocks, 339 00:22:31,720 --> 00:22:36,680 Speaker 1: but these are stocks that are inflation sensitive. So think 340 00:22:36,760 --> 00:22:42,400 Speaker 1: about real estate reads, metals and mining companies, precious metals, 341 00:22:42,960 --> 00:22:46,800 Speaker 1: energy companies. So what you get with this real asset 342 00:22:46,920 --> 00:22:52,960 Speaker 1: equity strategies is a levered response to inflation. Right, so 343 00:22:53,000 --> 00:22:55,119 Speaker 1: if you get an inflation shock, it will go up 344 00:22:55,160 --> 00:22:59,720 Speaker 1: by five six x and you also get stock exposure 345 00:23:00,000 --> 00:23:02,919 Speaker 1: in the long run that tends to pay off. And 346 00:23:02,960 --> 00:23:07,639 Speaker 1: so that's strategies up significantly over the last year as 347 00:23:07,960 --> 00:23:13,400 Speaker 1: it's done its job of hedging the surprises. Uh in inflation. 348 00:23:14,160 --> 00:23:17,080 Speaker 1: Now everyone's worried about what the Fed will do. We're 349 00:23:17,080 --> 00:23:21,040 Speaker 1: all scared of rising rates. I'm gonna end my answer 350 00:23:21,119 --> 00:23:24,440 Speaker 1: to this really important question on inflation with a riddle 351 00:23:24,720 --> 00:23:30,280 Speaker 1: for for you, Um, Katie Vildanna, what do egg, yolks, 352 00:23:30,960 --> 00:23:38,199 Speaker 1: red wine, coffee, and rising rates have in common? You 353 00:23:38,200 --> 00:23:42,520 Speaker 1: can have them all for breakfast. Well, yeah, we could 354 00:23:42,560 --> 00:23:49,760 Speaker 1: quibble on wine, but not on this podcast. So so, 355 00:23:49,760 --> 00:23:52,000 Speaker 1: so the idea is that you don't really if you 356 00:23:52,040 --> 00:23:54,280 Speaker 1: look at research and you're into health and fitness, you 357 00:23:54,280 --> 00:23:55,920 Speaker 1: don't really know if these things are good or bad 358 00:23:55,960 --> 00:23:58,680 Speaker 1: for you. Right, It kind of can go both ways. 359 00:23:59,160 --> 00:24:01,200 Speaker 1: That's the same thing for a rising rates. We actually 360 00:24:01,240 --> 00:24:04,359 Speaker 1: did a study and we looked at nine times that 361 00:24:04,520 --> 00:24:09,760 Speaker 1: the FED pivoted towards higher rates since nineteen seventy nine, 362 00:24:10,760 --> 00:24:14,480 Speaker 1: and that included the two thirteen paper. And we looked 363 00:24:14,480 --> 00:24:17,800 Speaker 1: at stock returns twelve months before the pivot and twelve 364 00:24:17,840 --> 00:24:22,480 Speaker 1: months after the pivot, which gave us eighteen observations. Seventeen 365 00:24:22,520 --> 00:24:25,959 Speaker 1: of those saw positive stock returns, and the stock returns 366 00:24:26,000 --> 00:24:30,520 Speaker 1: to were fifteen percent on average. So everyone's you know there, 367 00:24:30,600 --> 00:24:34,199 Speaker 1: everyone's freaking out about rising rates. But the FED is 368 00:24:34,240 --> 00:24:40,160 Speaker 1: only comfortable hiking and pivoting in a strong economic environment. 369 00:24:40,440 --> 00:24:44,560 Speaker 1: The FED doesn't raise rates in a recession, so the 370 00:24:44,600 --> 00:24:48,080 Speaker 1: initial pivot is usually not as damaging as you might 371 00:24:48,160 --> 00:24:53,920 Speaker 1: think to risk assets. This is historical evidence. Things could 372 00:24:53,960 --> 00:24:56,639 Speaker 1: play out differently based on what we just talked about 373 00:24:56,680 --> 00:25:00,760 Speaker 1: around inflation, but it just gives you some perspective about 374 00:25:01,280 --> 00:25:05,359 Speaker 1: rising rates. I like that all three of us agree 375 00:25:05,440 --> 00:25:10,800 Speaker 1: we can have rates for breakfast. Absolutely delicious. Uh, you know, 376 00:25:10,840 --> 00:25:12,800 Speaker 1: a little bit of cinnamon, But I didn't want to ask. 377 00:25:12,880 --> 00:25:15,480 Speaker 1: You know, you mentioned that everyone is worried about rising grates. 378 00:25:15,720 --> 00:25:17,720 Speaker 1: It feels like, you know, on and all of everyone 379 00:25:17,800 --> 00:25:22,120 Speaker 1: is also worried about um rising long term bond yields. 380 00:25:22,160 --> 00:25:23,800 Speaker 1: But if you look at the bond market, I feel 381 00:25:23,800 --> 00:25:26,600 Speaker 1: like that has almost become a pain trade because I'm 382 00:25:26,600 --> 00:25:29,840 Speaker 1: looking at thirty year treasury yields right now, especially for 383 00:25:29,880 --> 00:25:32,640 Speaker 1: the past six months or so, it feels like they 384 00:25:32,720 --> 00:25:36,520 Speaker 1: just can't hold above two per cent. Uh. Same with 385 00:25:36,560 --> 00:25:40,359 Speaker 1: ten year yields, I mean one point seven five got 386 00:25:40,440 --> 00:25:42,480 Speaker 1: there for a second, and we went right back down. 387 00:25:43,000 --> 00:25:46,320 Speaker 1: What's going on in that market? Because I mean, inflation 388 00:25:46,440 --> 00:25:49,560 Speaker 1: is here and it's hot, but yet long term treasury 389 00:25:49,640 --> 00:25:54,640 Speaker 1: yields still quite low. It's remarkable, isn't it? What an 390 00:25:54,640 --> 00:25:59,439 Speaker 1: important question? Ten year yield at one point six in 391 00:25:59,640 --> 00:26:04,399 Speaker 1: flay and running at six percent, growth running at five 392 00:26:04,520 --> 00:26:07,440 Speaker 1: six percent, so you talking about nominal growth above ten 393 00:26:08,880 --> 00:26:12,480 Speaker 1: with the ten year yield at one point six it's 394 00:26:12,520 --> 00:26:17,639 Speaker 1: a really big unusual spread. And then when you subtract 395 00:26:17,680 --> 00:26:21,560 Speaker 1: the inflation from the ten year yield, you get an 396 00:26:21,600 --> 00:26:27,720 Speaker 1: all time low number less than minus one. So what's 397 00:26:27,760 --> 00:26:33,359 Speaker 1: going on? Many things influence the direction of rates. Probably 398 00:26:33,400 --> 00:26:38,960 Speaker 1: the most important isn't extremely debbish fed even in the 399 00:26:39,080 --> 00:26:43,840 Speaker 1: face of everything that's happening with inflation in the recovery. 400 00:26:44,320 --> 00:26:46,240 Speaker 1: The other thing is that there is a lot of 401 00:26:46,280 --> 00:26:52,400 Speaker 1: demand from outside the United States for treasuries, And if 402 00:26:52,440 --> 00:26:56,320 Speaker 1: you're an investor based in Japan, for most of the 403 00:26:56,480 --> 00:27:02,800 Speaker 1: last twelve months, treasuries were hovering towards on a hedged 404 00:27:03,000 --> 00:27:06,320 Speaker 1: basis back to your home country, kind of like close 405 00:27:06,400 --> 00:27:10,040 Speaker 1: to a ten year high. So you actually rates are 406 00:27:10,119 --> 00:27:14,399 Speaker 1: so low in some countries that this creates demand even 407 00:27:14,440 --> 00:27:19,439 Speaker 1: for the long end um for treasuries. It keeps rates 408 00:27:19,960 --> 00:27:23,960 Speaker 1: low when all is said and done, right now, our 409 00:27:24,240 --> 00:27:29,840 Speaker 1: largest tactical position in our portfolios is to underweight treasuries, 410 00:27:30,119 --> 00:27:34,120 Speaker 1: and Katie, to your question, underweight the long end. It's 411 00:27:34,160 --> 00:27:39,399 Speaker 1: starting to look like a coiled spring this valuation. And 412 00:27:39,440 --> 00:27:42,080 Speaker 1: if you look forward over the next twelve months, it's 413 00:27:42,160 --> 00:27:47,359 Speaker 1: possible that the direction of rates is higher. If break 414 00:27:47,400 --> 00:27:50,440 Speaker 1: even inflation, as I mentioned earlier, over five years is 415 00:27:50,560 --> 00:27:54,240 Speaker 1: three point two, the Fed has to do something even 416 00:27:54,440 --> 00:28:01,000 Speaker 1: under flexible average inflation targeting to stay around two. So's 417 00:28:01,359 --> 00:28:03,800 Speaker 1: there's a little bit of an asymmetry, right how much 418 00:28:03,840 --> 00:28:06,480 Speaker 1: lore can they go from here? And how much higher 419 00:28:06,520 --> 00:28:08,240 Speaker 1: can they go from here? I'd rather be on the 420 00:28:08,280 --> 00:28:28,160 Speaker 1: side of pie. So Sebastian, I wanted to ask you 421 00:28:28,480 --> 00:28:31,040 Speaker 1: one more question before we get into the weirdest thing, 422 00:28:31,160 --> 00:28:34,399 Speaker 1: and it's about your book called Beyond Diversification. I'm hoping 423 00:28:34,440 --> 00:28:36,359 Speaker 1: you can set up for us how you're thinking about 424 00:28:36,800 --> 00:28:39,920 Speaker 1: never certification considering all of the things that we were 425 00:28:40,000 --> 00:28:43,360 Speaker 1: just talking about, and granted those are, you know, some 426 00:28:43,440 --> 00:28:45,920 Speaker 1: more short term things, but how should people be thinking 427 00:28:45,920 --> 00:28:48,480 Speaker 1: about diversification? Why did you feel it's important to write 428 00:28:48,520 --> 00:28:51,760 Speaker 1: this book? Yeah, thank you for the question. Think about 429 00:28:51,840 --> 00:28:56,840 Speaker 1: the is the sixty forty portfolio dead? Question? In a sense, 430 00:28:56,960 --> 00:29:01,000 Speaker 1: that's a question the book addresses. I cover asset allocation 431 00:29:01,160 --> 00:29:04,800 Speaker 1: for the long run, how you do tactical asset allocation, 432 00:29:04,920 --> 00:29:09,840 Speaker 1: and how you think about risk, and I revisit how 433 00:29:09,880 --> 00:29:14,280 Speaker 1: we think about the concept of diversification. So around COVID 434 00:29:14,360 --> 00:29:18,600 Speaker 1: the book was still in production and the media all 435 00:29:18,640 --> 00:29:22,160 Speaker 1: of a sudden latched on this question. Is the sixty 436 00:29:22,240 --> 00:29:28,640 Speaker 1: forty dead? I called McGraw hill and tried to change 437 00:29:28,680 --> 00:29:32,160 Speaker 1: the title too, is the sixty forty Dead? But unfortunately 438 00:29:32,200 --> 00:29:34,920 Speaker 1: it was too late, so it would have been a 439 00:29:34,960 --> 00:29:38,840 Speaker 1: better title than Beyond Diversification. But Bill Donard gives you 440 00:29:38,880 --> 00:29:41,640 Speaker 1: an idea what the book is about. How do you 441 00:29:41,680 --> 00:29:48,320 Speaker 1: construct a portfolio given current conditions? I review about two 442 00:29:48,440 --> 00:29:53,200 Speaker 1: hundred academic articles, but I make it really really user friendly. 443 00:29:53,280 --> 00:29:57,080 Speaker 1: There's no math, no equations. I also refer to our 444 00:29:57,120 --> 00:30:01,600 Speaker 1: own experience managing portfolios, and in the third section you 445 00:30:01,680 --> 00:30:04,400 Speaker 1: get model portfolios too, to give you an idea of, 446 00:30:04,440 --> 00:30:06,800 Speaker 1: depending on what you're trying to do, what the asset 447 00:30:06,800 --> 00:30:12,040 Speaker 1: allocation would look like. Stand clear of the craziest things 448 00:30:12,160 --> 00:30:16,040 Speaker 1: we saw in markets this week. We talked about a 449 00:30:16,040 --> 00:30:18,560 Speaker 1: lot of weird things on the podcast so far, but 450 00:30:18,640 --> 00:30:20,440 Speaker 1: we have to get to our weirdest things that we 451 00:30:20,480 --> 00:30:24,120 Speaker 1: all saw this week. I know Mike usually does this 452 00:30:24,200 --> 00:30:27,480 Speaker 1: section and sets us up and plays little games, and 453 00:30:27,880 --> 00:30:30,120 Speaker 1: I'm not as fancy as my kiss, so I think 454 00:30:30,120 --> 00:30:32,800 Speaker 1: we'll just have to go around and go over the 455 00:30:32,800 --> 00:30:35,560 Speaker 1: weirdest things that we saw each of us. Sebastian, if 456 00:30:35,560 --> 00:30:40,600 Speaker 1: you'd like to start, Oh, thank you, I'm glad to start. 457 00:30:40,640 --> 00:30:45,640 Speaker 1: I've asked my entire strategy team for ideas for this segment, 458 00:30:45,800 --> 00:30:52,600 Speaker 1: and here's the problem, Uh, Katie, I got too many, 459 00:30:52,920 --> 00:30:55,520 Speaker 1: and I didn't know which one to choose. So people 460 00:30:55,520 --> 00:30:58,080 Speaker 1: talked about the size of Avis and the index, the 461 00:30:58,200 --> 00:31:02,400 Speaker 1: squid coin, which went up millions of percent then crashed zero, 462 00:31:02,720 --> 00:31:05,960 Speaker 1: how big the fangma's have gotten I heard Rob Arna 463 00:31:06,040 --> 00:31:10,520 Speaker 1: on your podcast talk about that Amazon collecting thirty five 464 00:31:10,560 --> 00:31:14,080 Speaker 1: cents of every dollar spent online and so on, So 465 00:31:14,240 --> 00:31:16,520 Speaker 1: I it is just like which one am I going 466 00:31:16,600 --> 00:31:19,160 Speaker 1: to choose? I know you always talk about crypt not always, 467 00:31:19,200 --> 00:31:22,680 Speaker 1: but often talk about crypto some items that are selling 468 00:31:22,720 --> 00:31:26,000 Speaker 1: at auction, right. I hear Mike sometimes trying to make 469 00:31:26,120 --> 00:31:29,760 Speaker 1: people guess how much the items are selling for. So 470 00:31:29,800 --> 00:31:33,360 Speaker 1: those ideas were off the table. I settle on one 471 00:31:33,400 --> 00:31:37,720 Speaker 1: that I read this week. But I cheated, and I 472 00:31:37,760 --> 00:31:39,760 Speaker 1: know Mike he's not on the show right now, so 473 00:31:39,840 --> 00:31:43,600 Speaker 1: maybe we can we can say he cheats sometimes. Um 474 00:31:43,600 --> 00:31:46,640 Speaker 1: so I he cheats all the time, so you can 475 00:31:46,680 --> 00:31:49,320 Speaker 1: you can cheat this week too, thank you. So it's 476 00:31:49,320 --> 00:31:51,960 Speaker 1: something I read this week, but it actually occurred in 477 00:31:52,000 --> 00:31:56,160 Speaker 1: the eighties, and it's more broadly related to marketing than 478 00:31:56,280 --> 00:32:00,560 Speaker 1: markets per se. And um, I guess I can make 479 00:32:00,600 --> 00:32:04,320 Speaker 1: it a game a quiz. So McDonald's, this is going 480 00:32:04,360 --> 00:32:07,320 Speaker 1: to be a quiz. Back in the eighties, McDonald's had 481 00:32:07,440 --> 00:32:12,400 Speaker 1: so much success with their quarter pounder that apparently A 482 00:32:12,600 --> 00:32:19,760 Speaker 1: and W decided to offer a bigger, juicier third pound 483 00:32:20,160 --> 00:32:26,040 Speaker 1: burger at the same price. The product was a huge flop. 484 00:32:27,640 --> 00:32:32,720 Speaker 1: It was a bigger what third pounder juicier? It was 485 00:32:32,800 --> 00:32:35,440 Speaker 1: to compete with the quarter pounder. It was the same price, 486 00:32:36,280 --> 00:32:39,840 Speaker 1: but it was a huge flop. So my quiz for 487 00:32:39,920 --> 00:32:44,000 Speaker 1: you is, guess why I know this one? I have 488 00:32:44,080 --> 00:32:46,400 Speaker 1: the answer, pill Donna, do you have the answer. I 489 00:32:46,440 --> 00:32:49,920 Speaker 1: don't have the answer. Okay, here's the answer. It's because 490 00:32:50,200 --> 00:32:54,800 Speaker 1: four is bigger than three. So people heard quarter pounder 491 00:32:55,720 --> 00:32:58,520 Speaker 1: and said, oh, that has a foreign it that's bigger 492 00:32:58,560 --> 00:33:03,360 Speaker 1: than three. That that's right. That is that. That is 493 00:33:03,400 --> 00:33:06,480 Speaker 1: the reason it went down in history as a huge 494 00:33:06,600 --> 00:33:11,760 Speaker 1: marketing fail because after the fact A w realized that people, 495 00:33:11,920 --> 00:33:15,800 Speaker 1: a lot of people, too many. I thought that a 496 00:33:15,920 --> 00:33:20,000 Speaker 1: quarter pounder was bigger than a third pounder. Wow. I'm 497 00:33:20,240 --> 00:33:24,560 Speaker 1: pitiful at math, but I at least know that this 498 00:33:24,680 --> 00:33:27,000 Speaker 1: is amazing. I think you win. I mean, Katie and 499 00:33:27,040 --> 00:33:32,000 Speaker 1: I don't even have to go. You win, Katie. Katie 500 00:33:32,000 --> 00:33:33,440 Speaker 1: will get to go. But it's the best. You have 501 00:33:33,520 --> 00:33:35,000 Speaker 1: so many good ones. This is why you need a 502 00:33:35,000 --> 00:33:37,640 Speaker 1: Twitter so you can tweet about these weird things. I 503 00:33:38,400 --> 00:33:40,959 Speaker 1: don't have a thick enough skin to get on Twitter. 504 00:33:41,560 --> 00:33:44,920 Speaker 1: It's a rough it's it's brutal out there. It can 505 00:33:44,960 --> 00:33:49,240 Speaker 1: be toxic, but you find your nice little niches and 506 00:33:49,480 --> 00:33:52,360 Speaker 1: people will People are generally nice, Katie, and I will 507 00:33:52,360 --> 00:33:57,640 Speaker 1: follow you. Yeah, okay, thank you, Katie. What's your weirdest thing? Okay, 508 00:33:57,720 --> 00:34:00,600 Speaker 1: it's not so much like a crazy thing that I saw, 509 00:34:00,760 --> 00:34:04,680 Speaker 1: but it is a fun fact. So Sweet Green Salad 510 00:34:04,880 --> 00:34:09,520 Speaker 1: chain it went public this past week valuation but almost 511 00:34:09,840 --> 00:34:13,719 Speaker 1: three billion dollars, and Bloomberg had a great story. Drew 512 00:34:13,800 --> 00:34:16,960 Speaker 1: Singer wrote it. So there's been eleven food and beverage 513 00:34:17,000 --> 00:34:19,720 Speaker 1: I p o s this year. That is the most 514 00:34:19,719 --> 00:34:24,239 Speaker 1: since n did not know that there's only one. I 515 00:34:24,239 --> 00:34:28,400 Speaker 1: mean pretending that Sweet Green hasn't happened. There's only one 516 00:34:28,560 --> 00:34:31,680 Speaker 1: food or beverage I p O that's treating higher this year. 517 00:34:32,160 --> 00:34:36,440 Speaker 1: It's a winemaker called duck Corn Portfolio, and the ticker 518 00:34:36,719 --> 00:34:41,200 Speaker 1: is NAPA, which is adorable. Wow, what a great ticker. 519 00:34:41,560 --> 00:34:44,959 Speaker 1: I think it's up thirty percent this year, so outperforming 520 00:34:44,960 --> 00:34:47,480 Speaker 1: the S and P five hundred at this point. Well, 521 00:34:47,480 --> 00:34:49,440 Speaker 1: I will say, I think the last time I went 522 00:34:49,480 --> 00:34:52,960 Speaker 1: to Sweet Green, I spent like seventeen dollars for one salad. 523 00:34:53,080 --> 00:34:56,840 Speaker 1: So inflation, they everywhere they better and they better be 524 00:34:56,960 --> 00:35:00,200 Speaker 1: making money with with those types of prices. You have 525 00:35:00,280 --> 00:35:05,000 Speaker 1: to imagine so or they're doing something wrong. It's your turn, though, 526 00:35:05,600 --> 00:35:08,399 Speaker 1: Oh yes, it's my turn, that's right. So this one 527 00:35:08,719 --> 00:35:12,080 Speaker 1: is courtesy of Stacy Marie Ishmael, who's the head of 528 00:35:12,200 --> 00:35:15,160 Speaker 1: crypto for us over here at Bloomberg, and she shared 529 00:35:15,880 --> 00:35:19,440 Speaker 1: this story from earlier in the week. It's titled Barbados 530 00:35:19,560 --> 00:35:22,800 Speaker 1: is to become the first sovereign nation with an embassy 531 00:35:22,920 --> 00:35:28,400 Speaker 1: in the Metaverse. Oh my god, Wow, I mean just wow. 532 00:35:28,680 --> 00:35:32,200 Speaker 1: The article says Barbados is preparing to legally declare digital 533 00:35:32,239 --> 00:35:37,240 Speaker 1: real estate sovereign land with the establishment of a metaverse embassy. 534 00:35:37,280 --> 00:35:39,640 Speaker 1: And I just had this great, you know picture in 535 00:35:39,680 --> 00:35:42,239 Speaker 1: my head of people going in, you know, in this 536 00:35:42,880 --> 00:35:48,719 Speaker 1: digital metaverse, lining up at the embassy for their passport 537 00:35:48,840 --> 00:35:53,080 Speaker 1: whatever needs. I don't even know so that that's gassport 538 00:35:53,239 --> 00:35:56,440 Speaker 1: in the metaverse, or their countries and borders in the metaverse? 539 00:35:56,480 --> 00:35:59,319 Speaker 1: Do I have to pay rent in the metaverse? Thinking 540 00:35:59,320 --> 00:36:02,200 Speaker 1: about the metaverse makes me spiral. I think you and 541 00:36:02,239 --> 00:36:04,960 Speaker 1: I should just start a business now about, you know, 542 00:36:06,080 --> 00:36:10,760 Speaker 1: getting everybody settled in the meta worth yea move in service. Yeah, 543 00:36:10,920 --> 00:36:13,080 Speaker 1: I don't know, Sebastian, what you think about the metaverse. 544 00:36:13,640 --> 00:36:19,719 Speaker 1: Katy and I have many thoughts. Yeah, it's um, it's puzzling. 545 00:36:20,560 --> 00:36:24,200 Speaker 1: I think about I think about my kids who just 546 00:36:24,360 --> 00:36:28,440 Speaker 1: through covid, if just spent so much time on mine 547 00:36:28,560 --> 00:36:32,920 Speaker 1: Craft and you know, those types of games, And I 548 00:36:32,960 --> 00:36:36,600 Speaker 1: think about ten years from now, what really all of 549 00:36:36,640 --> 00:36:41,279 Speaker 1: this will look like. And I don't know. It's it's 550 00:36:41,320 --> 00:36:44,799 Speaker 1: a it's puzzling exactly where this is going. And the 551 00:36:44,880 --> 00:36:49,440 Speaker 1: fact that Facebook is leading the charge is is also puzzling. 552 00:36:49,600 --> 00:36:52,400 Speaker 1: So we'll see, we'll see how it plays out. I 553 00:36:52,440 --> 00:36:54,640 Speaker 1: don't know. I'm not ready to If I'm going to 554 00:36:54,760 --> 00:36:57,120 Speaker 1: visit Barbados, I think I'm going to go in person. 555 00:36:58,200 --> 00:36:59,920 Speaker 1: And I mean, you're not even on Twitter, how are 556 00:37:00,000 --> 00:37:03,879 Speaker 1: you gonna get into the metal exactly? I'm way behind here, 557 00:37:04,880 --> 00:37:07,759 Speaker 1: way behind. UM. I think we'll have to leave it 558 00:37:07,880 --> 00:37:10,759 Speaker 1: at that. Thank you both so much for joining us. Sebastian, 559 00:37:10,840 --> 00:37:12,880 Speaker 1: thank you for joining the podcast. We're looking forward to 560 00:37:12,920 --> 00:37:15,680 Speaker 1: having you back on. And Katie, I think I think 561 00:37:15,680 --> 00:37:18,560 Speaker 1: we just don't call my creaking back ever again for 562 00:37:18,600 --> 00:37:20,640 Speaker 1: the podcast. I think who's were welcome to be the 563 00:37:21,120 --> 00:37:23,759 Speaker 1: who is he? I don't know that man. Me neither. 564 00:37:23,920 --> 00:37:27,000 Speaker 1: I've already forgotten about him. So thank you both so 565 00:37:27,080 --> 00:37:38,719 Speaker 1: much for joining the show. Thank you, thank you. What 566 00:37:38,840 --> 00:37:41,360 Speaker 1: Goes Up. We'll be back next week. Until then, you 567 00:37:41,400 --> 00:37:44,240 Speaker 1: can find us on the bloomboog terminal website and app, 568 00:37:44,480 --> 00:37:46,960 Speaker 1: or wherever you get your podcasts. We'd love it if 569 00:37:46,960 --> 00:37:48,920 Speaker 1: you took the time to rate and review the show 570 00:37:49,040 --> 00:37:51,960 Speaker 1: Apple Podcasts so more listeners can find us. And you 571 00:37:51,960 --> 00:37:54,840 Speaker 1: can find us on Twitter, follow me at Vildanna Hirich, 572 00:37:55,280 --> 00:37:59,320 Speaker 1: Katie Greifeld is at k Greifeld, and our guest, Sebastian 573 00:37:59,360 --> 00:38:03,840 Speaker 1: pagees on Linington. You can find him at Sebastian dash page. 574 00:38:04,520 --> 00:38:09,239 Speaker 1: You can also follow Bloomer Podcasts at at podcast and 575 00:38:09,320 --> 00:38:12,160 Speaker 1: thank you to Charlie Pellett of Bloomer Radio. What Goes 576 00:38:12,280 --> 00:38:16,000 Speaker 1: Up is produced by tofar forheas the head of Bloomer Podcasts. 577 00:38:16,320 --> 00:38:19,439 Speaker 1: It's Francesca Levi. Thanks for listening and see you next time.