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Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast.

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Speaker 1: My name is Mike Regan. I'm a senior editor at Bloomberg.

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Speaker 2: I'm Katie Greifeld. I'm a cross asset reporter filling in

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Speaker 2: for Bill Dona Hirich.

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Speaker 1: And this week on the show, if you're anything like me,

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Speaker 1: you probably talk about the last decade or so as

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Speaker 1: three distinct periods. First, there was the pre COVID times,

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Speaker 1: that period of low inflation, low growth, and low interest

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Speaker 1: rates after the global financial crisis that's often referred to

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Speaker 1: as the new normal. Then there was the stay at

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Speaker 1: home COVID era when absolutely nothing was normal. And then

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Speaker 1: there's now and in the here and now, COVID isn't

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Speaker 1: the threat it once was, but things are still quite

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Speaker 1: a bit different than they were before COVID. And that's

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Speaker 1: especially true when it comes to the economy and financial markets.

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Speaker 1: So what changes can we expect to be permanent? And

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Speaker 1: importantly for the show, what will it mean for your investments.

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Speaker 1: We'll get into it with a strategist in the asset

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Speaker 1: management unit of a major bank who recently helped offer

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Speaker 1: a seventy page research report on the post COVID world.

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Speaker 1: But First, Katie, thanks for phoning for Veldana this week.

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Speaker 3: I am thrilled for the opportunity.

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Speaker 1: Yeahl Dona's feeling a little under the weather this week.

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Speaker 1: And as you know, she's very excellent podcast co hosts. Yes,

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Speaker 1: sometimes she goes a little overboard. I'll say, like when

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Speaker 1: I make a dad joke, she laughs a little too hot.

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Speaker 1: Sometimes she's always talking about how cool and young seeming.

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Speaker 1: I am, oh, yeah, yeah, a little overboard. So okay,

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Speaker 1: so try to keep that toned down. I'll dial that,

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Speaker 1: keep it in check.

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Speaker 3: Got it.

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Speaker 1: But speaking of another cool hip young guy we have

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Speaker 1: here returning to the show. He is the head of

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Speaker 1: Institutional Portfolio Strategy at JP Morgan Asset Management. Jared Gross,

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Speaker 1: welcome back to the show.

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Speaker 4: Thank you so much, Mike, And as a father of three,

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Speaker 4: if you need any backup on the dad jokes, someone

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Speaker 4: home your guy, someone will get me. The joke there,

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Speaker 4: of course is I don't think bol Donna's once left

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Speaker 4: at any.

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Speaker 1: Any joke that's good, that was authentically I have but

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Speaker 1: char talk to us about. This is a fascinating report.

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Speaker 1: You guys have seventy pages. I'll confess I haven't read

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Speaker 1: every page. I've read most of it, though, But you know,

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Speaker 1: if you had a quick elevator conversation with a client,

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Speaker 1: how would you sum up what you find to be

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Speaker 1: the biggest takeaways from this report?

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Speaker 4: So I think I'll start, if you'll indulge me, with

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Speaker 4: just a little bit of a snapshot of what happened before,

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Speaker 4: because I think it sets up the conversation, and I

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Speaker 4: think you touched on this a little bit. What you

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Speaker 4: had before COVID was a very globalized economy with long

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Speaker 4: supply chains. You had a lot of migration that took

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Speaker 4: the pressure off of develop market economies when it came

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Speaker 4: to a declining labor force. You had low inflation, which

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Speaker 4: led to a very deeply ingrained accommodative monetary policy QII,

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Speaker 4: low interest rates across the board. And then because we

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Speaker 4: had low injury, we had rising asset prices, and we

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Speaker 4: had a lot of leverage. And so COVID comes along

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Speaker 4: and shocks that system. And I think that equilibrium that

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Speaker 4: existed pre COVID was somewhat fragile. That doesn't mean it

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Speaker 4: was necessarily doomed to unwind, but COVID came along and

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Speaker 4: sort of did that for us. And so in that

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Speaker 4: shock you had. The phase one was the health crisis

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Speaker 4: and a lot of government spending and the shutdowns, and

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Speaker 4: we all kind of lived through that. And then maybe

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Speaker 4: less well understood was the kind of the fiscal impulse

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Speaker 4: that came on. And that's important because prior to COVID,

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Speaker 4: the monetary policy authorities were the only game in town.

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Speaker 4: If anything, they were pushing back against austerity or very

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Speaker 4: low levels of fiscal spending, and that did a complete

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Speaker 4: one point eighty When COVID hit, the fiscal authorities woke up,

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Speaker 4: they started spending money, and the monetary authorities actually financed it.

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Speaker 4: If you look at the amount of debt that was

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Speaker 4: issued during COVID, almost to the dollar, it was paid

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Speaker 4: for by central bank balance sheets, and so that shifted

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Speaker 4: the entire sort of economic dynamics. So now you know

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Speaker 4: what we did in this report is we're looking for

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Speaker 4: things that are more permanent. As you said, we don't

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Speaker 4: want to tell the story of peloton that went up

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Speaker 4: and came right back down, or cruise line that went

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Speaker 4: down and came right back up, or crypto or crypto

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Speaker 4: if we want to go there. But you know, there

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Speaker 4: are some interesting things. I mean, we look at supply chains,

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Speaker 4: and there's a lot of narrative in the market now

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Speaker 4: about deglobalization. I think it's actually much more subtle. It's

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Speaker 4: a rewiring of trade. It's the big pipe between China

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Speaker 4: and the developed markets is being split apart. There's a

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Speaker 4: lot of reshoring, on shoring, friend shoring, near shoring. All

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Speaker 4: of that stuff is going on, and it's a real thing,

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Speaker 4: and it's going to change the way trade happens. We've

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Speaker 4: got a lot of demographic challenges in the developed world that,

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Speaker 4: while they remain profound, we have seen some daylight now

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Speaker 4: in the form of technology. The fact that we were

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Speaker 4: all able to go home and work for two years.

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Speaker 4: We're back from that. But when we look at a

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Speaker 4: declining labor force and we say, how do we get

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Speaker 4: talent back into that labor force, we can do that

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Speaker 4: remotely now, and that's a huge advantage that developed economies

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Speaker 4: are going to have. The fiscal and monetary sort of

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Speaker 4: flip flop I described a little bit. The way we

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Speaker 4: put it in the paper is that the central bank put,

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Speaker 4: which everyone used to talk about, has probably been replaced

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Speaker 4: with a fiscal put. If you're looking for a backstop

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Speaker 4: for market volatility. You probably can't depend on the monetary

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Speaker 4: authorities as much as you used to because they now

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Speaker 4: have to be very careful given the amount of fiscal

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Speaker 4: stimulus in the economy. They can't just cut rates because

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Speaker 4: stocks go down, or they can't just cut rates because

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Speaker 4: a bank is wabbling, and we've seen that. You think

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Speaker 4: about what happened with Silicon Valley Bank. That was basically

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Speaker 4: a FED operation that the FED sort of went along with,

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Speaker 4: but that was not the FED cutting rates to ease

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Speaker 4: the market's mind. It was a profound change.

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Speaker 1: You consider that more on the fiscal side, I guess,

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Speaker 1: since it wasn't a result of lowering rates.

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Speaker 4: Yeah, I'd say the traditional tools of monetary policy, which

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Speaker 4: were if there's something's going wrong, you cut rates first

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Speaker 4: to take the pressure off. That seems to be off

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Speaker 4: the table right now, and that is I think a

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Speaker 4: little bit by design. The FED wants to restore its credibility,

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Speaker 4: and one of the aspects of restoring credibility is you

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Speaker 4: have to demonstrate some indifference to market volatility. If you're

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Speaker 4: cutting rates at the first sign of someone losing money,

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Speaker 4: you know you're not going to have a lot of

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Speaker 4: credibility and I think the FED sort of they've been

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Speaker 4: looking for a way out of that trap for a while,

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Speaker 4: and this seems to have given it to them.

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Speaker 2: I definitely want to talk about the credibility topic, because

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Speaker 2: that has definitely become a conversation in markets. But I

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Speaker 2: want to make sure I'm understanding the metaphor that sort

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Speaker 2: of the central bank put has been replaced by the

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Speaker 2: fiscal policy put. It sounds like what you're saying is

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Speaker 2: not that fiscal authorities will come out and throw a

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Speaker 2: lot of money at the economy of market volatility increases.

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Speaker 3: It sounds like what you're saying.

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Speaker 2: Is rather that because of all of that stimulus from

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Speaker 2: the fiscal side, that sort of limits the central bank's

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Speaker 2: ability to step in every time there's a hiccup.

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Speaker 4: I mean, there are some problems that the fiscal authorities

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Speaker 4: may be better suited to solve. Financial market volatility probably

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Speaker 4: isn't one of them. But if you think about certain

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Speaker 4: areas of growth, you look at what happened in COVID.

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Speaker 4: The ability to pump money into employers and employees' pockets

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Speaker 4: to support aggregate demand during COVID, short term interest rates

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Speaker 4: would have helped at the margin and we did see

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Speaker 4: short term interest rates fall, so you can't necessarily sort

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Speaker 4: of prove the counterfactual. But I think a lot of

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Speaker 4: the lesson learned was that fiscal policy can play a

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Speaker 4: very real role in responding to crises. And so, you know,

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Speaker 4: I think, as you said, like the fiscal authorities feel

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Speaker 4: a little bit unbound by what's happened, and they then

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Speaker 4: they feel more active, and as a result, the monetary

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Speaker 4: authorities have to hang back and take a more sort

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Speaker 4: of defensive posture. Yeah, I wanted to rewind a little

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Speaker 4: bit and talk about that reaction to Silicon Valley Bank

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Speaker 4: and some of the other regional banks that were sort

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Speaker 4: of wobbling there. It was a pretty impressive reaction from

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Speaker 4: the FED and the Treasury Department, how quickly they were

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Speaker 4: able to seemingly put that fire out. But I wonder

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Speaker 4: if the fire is really out. Interest rates aren't going

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Speaker 4: any lower any time soon. That pressure on deposits, the

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Speaker 4: funding cost at smaller banks hasn't really gone away. Have

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Speaker 4: we heard the end of this story when it comes

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Speaker 4: to the banking sector, where you is it possible we'll

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Speaker 4: be dealing with another one down the road sometime. I

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Speaker 4: think they've taken what could have been a very short,

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Speaker 4: sharp and sort of painful reckoning for a lot of

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Speaker 4: these banks and extended it. And the issue I think

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Speaker 4: was we're probably all familiar with was you had the

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Speaker 4: assets on the bank's balance sheets had gone down in

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Speaker 4: value a lot as interest rates had risen, and when

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Speaker 4: depositors were pulling money, that forced a sort of mark

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Speaker 4: to market of those assets and wiped out the capital.

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Speaker 4: And so that forced the FDIC to essentially step in

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Speaker 4: and put these banks into receivership. And that's a simplified

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Speaker 4: version of the story, but that's basically what happened. Now.

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Speaker 4: Because they're able to essentially fund their liabilities at the

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Speaker 4: original purchase price, they've taken that marked to market change

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Speaker 4: off the table. But they in order to retain their deposits,

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Speaker 4: they have to pay them market rate. You know, the

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Speaker 4: demand from depositors to get the highest possible rate is

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Speaker 4: very real. They can go to a money market fund,

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Speaker 4: they can go to the next bank down the road.

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Speaker 4: And I think they've realized that the deposit insurance limit

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Speaker 4: is a real thing. We get reminded of that every

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Speaker 4: ten years or so, that you know there is a limit,

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Speaker 4: on what deposit insurance is worth. And so yeah, I

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Speaker 4: think to answer your question, this is going to be

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Speaker 4: a lingering problem for the banks because if they are

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Speaker 4: essentially unprofitable because they can't earn a net interest margin

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Speaker 4: over their deposits by virtue of having to offer such

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Speaker 4: high rates, then their capital will sort of gradually diminish

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Speaker 4: over time, or at least it prevents them from building

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Speaker 4: up capital and becoming more resilient. The story's not fully written,

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Speaker 4: to be sure.

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Speaker 3: So what does that mean for monetary policy?

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Speaker 2: Because if we think back, the FED had a meeting

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Speaker 2: in March which was amazing, and I remember the thought

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Speaker 2: exercise on Wall Street at the time was how much

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Speaker 2: of a tightening impulse is all of this stress that

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Speaker 2: you're seeing among the banks worth? And it feels like

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Speaker 2: we kind of settle on fifty basis points.

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Speaker 3: I don't know.

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Speaker 2: I think Powell himself acknowledged that maybe it was worth

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Speaker 2: twenty five basis points.

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Speaker 3: And then you think about what we heard from the FED.

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Speaker 2: At June's meeting, and it feels like definitely some of

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Speaker 2: those worst case scenarios when it comes to the banking

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Speaker 2: system have been taken off the boil when you think

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Speaker 2: about that long term story that you're talking about, that

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Speaker 2: this is going to continue to be a problem for

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Speaker 2: some of these lenders. The fact that you have a

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Speaker 2: lot of competition coming from money market funds, how does

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Speaker 2: that translate into credit tightening.

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Speaker 4: The banks who are under pressure from having to pay

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Speaker 4: higher deposit rates, they will presumably be less willing to

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Speaker 4: extend credit. They will be more focused on preserving the

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Speaker 4: equity capital that they have and earning their way out

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Speaker 4: of the hole to the point where they have enough

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Speaker 4: excess capital that they can resume lending. You know that

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Speaker 4: may or may not be a huge part of the economy. Obviously,

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Speaker 4: borrowers have many places they can go to get credit.

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Speaker 4: Banks are one. The private credit industry, which is blossomed

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Speaker 4: in the last ten years, is certainly there to offer credit,

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Speaker 4: and larger banks, who may not suffer from the same problem,

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Speaker 4: have the ability to offer credit as well. So I

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Speaker 4: don't know at the economic level, sort of the macro level,

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Speaker 4: how severe this is going to be, And it doesn't

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Speaker 4: appear yet. There's a lot of evidence that it's leading

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Speaker 4: to a downturn. We do see signs of it in

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Speaker 4: the loan officer's survey, and some of the data points

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Speaker 4: that bank credit is becoming less available, and you know,

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Speaker 4: it may be that this is another sort of long

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Speaker 4: and variable lag. We talk about monetary policy operating with

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Speaker 4: a lag, bank credit may offer the same feature. So

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Speaker 4: I think it's a little too early to tell how

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Speaker 4: big a problem it's going to be. I think from

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Speaker 4: the market standpoint, and as it relates to the FED,

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Speaker 4: the question is will the Fed essentially cave or pause

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Speaker 4: earlier than they would or cut rates sooner than they

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Speaker 4: would because of this? And I think it's not really

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Speaker 4: clear that that's the case. I mean, the market has

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Speaker 4: been trying to call the fed's bluff now for a

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Speaker 4: couple of years. I think the FED has generally spoken

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Speaker 4: pretty clearly about what their intent is, which is to

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Speaker 4: raise rates until you get to a positive real rate,

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Speaker 4: hold it there for some period of time until inflation

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Speaker 4: is coming down, and then gradually return rates back towards

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Speaker 4: the long term sort of nominal target two percent or thereabouts.

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Speaker 3: And I guess that.

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Speaker 2: Comes back to the sort of credibility issue that we

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Speaker 2: were talking about a few minutes ago, the fact that

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Speaker 2: the market keeps fighting the Fed. I was looking at

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Speaker 2: it a little bit earlier. I mean, PAL has been

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Speaker 2: pretty clear that maybe two more rate hikes are kind

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Speaker 2: of likely. From here, it just feels like there's this

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Speaker 2: persistent golf between what's priced in and what PAL is

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Speaker 2: actually saying.

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Speaker 3: How do you narrow that goal?

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Speaker 4: Well, I think the market has learned it's less than

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Speaker 4: multiple times now. I think at some point they will

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Speaker 4: be right in the sense that they will be pricing

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Speaker 4: in the actual pivot from the Fed as the economy

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Speaker 4: turns down, as inflation comes down. Thus far, they have

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Speaker 4: not predicted that very accurately, and it's not you know,

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Speaker 4: I mean you can sort of point the finger at

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Speaker 4: the market broadly. Professional forecasters have not done a particularly

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Speaker 4: good job of forecasting inflation. The five year, five year

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Speaker 4: forward rate has not done a particularly good job of

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Speaker 4: forecasting inflation. Consumer expectations have not done a particularly good job.

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Speaker 4: So inflation is where it is, and I think the

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Speaker 4: Fed is responding to real data about inflation. The core

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Speaker 4: rate is still north of five. So does the Fed

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Speaker 4: feel an imperative to cut at this point? Clearly not.

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Speaker 4: If anything, They're going to go the other way. I mean,

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Speaker 4: obviously they're going to be somewhat data dependent, but you

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Speaker 4: see a lot of volatility in the two year, which

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Speaker 4: is where I think that risk is concentrated. You don't

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Speaker 4: see as much volatility at the long end of the curve,

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Speaker 4: which is interesting because I think that tells you that

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Speaker 4: despite all of this uncertainty and the volatility we've been through,

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Speaker 4: long term inflation expectations are reasonably well anchored, and that

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Speaker 4: the ten year and certainly the thirty year have not

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Speaker 4: moved around as much on a relative basis as we've

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Speaker 4: seen the front end of the curve.

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Speaker 1: Jared, you touched on this a little bit, but I

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Speaker 1: just want to read one of the bullet points from

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Speaker 1: that report we discussed and unpack it a little bit.

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Speaker 1: Says developed economies have been facing a seemingly intractable problem

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Speaker 1: of aging populations, declining labor force participation, and insufficient immigration.

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Speaker 1: COVID may have led to a potential solution the power

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Speaker 1: of workplace technology to match labor and capital at a distance,

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Speaker 1: and presumably that's describing zoom and teleconferencing and that sort

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Speaker 1: of thing. But then this year we had a new

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Speaker 1: sort of wildcard thrown into the mix in the form

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Speaker 1: of artificial intelligence, and presumably I think all of the

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Speaker 1: hype and all of the stock market euphoria over it

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Speaker 1: is somewhat related to what you're talking about here, in

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Speaker 1: that we don't have this quickly growing labor force, but

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Speaker 1: we do have this technology that's going to allow for

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Speaker 1: more efficiency, more productivity, that sort of thing. But I'm

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Speaker 1: curious how you're thinking about how the stock market has

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Speaker 1: reacted to this hype round AI, because, for one thing,

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Speaker 1: there are fundamentals attached to it pretty quickly. In Vidia's forecast,

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Speaker 1: how much they raise their forecast. All the cloud companies

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Speaker 1: are raising their forecasts, if not all many of them.

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Speaker 1: Does the hype around AI justify what we've seen in

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Speaker 1: this stock market this year thirty percent up on the

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Speaker 1: Nasdaq one hundred and how do you sort of separate

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Speaker 1: that hype from the true sort of fundamental potential from AI.

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Speaker 4: It's obviously early in the game, so we have to

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Speaker 4: be a little careful about how strong a prediction we

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Speaker 4: make here. I think in some cases you have specific

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Speaker 4: firms that were remarkably well positioned for the growth in

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Speaker 4: the sort of large language model, data driven AI that

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Speaker 4: the market just didn't appreciate, and their chip technology and

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Speaker 4: I think this specifically refers to Nvidia, although I will

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Speaker 4: say I'm not an expert in this space. Particularly, they

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Speaker 4: had the technology that was necessary for this, but no

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Speaker 4: one sort of realized it until chat GPT came along

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Speaker 4: and showed the world what their particular chipsets were capable

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Speaker 4: of relative to their peers. And I think that seems

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Speaker 4: to be a well earned advantage. Now, I mean, whether

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Speaker 4: the market is correctly valuing it, I think is hard

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Speaker 4: to know.

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Speaker 1: Is it a potential macro force, you know, as far

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Speaker 1: as unemployment rates inflation? Do you think this is something

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Speaker 1: we're gonna be seeing moving the numbers on sort of

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Speaker 1: the macro numbers that we all look at.

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Speaker 4: So that's a topic we get at in the paper,

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Speaker 4: and we don't spend as much time on AI specifically,

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Speaker 4: although we do speak a little bit about the cloud

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Speaker 4: and sort of how that's rolling through the economy. But

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Speaker 4: when you think about it, right, the challenge that a

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Speaker 4: lot of developed economies have had is a declining working

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Speaker 4: age population and declining labor force participation. That's naturally an

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Speaker 4: inflationary sort of impulse in the economy. Trying to get

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Speaker 4: workers into that space is why we think that a

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Speaker 4: lot of the technology gains from Zoom and other sort

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Speaker 4: of remote work will be helpful. And it's not just

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Speaker 4: allowing people to work where they want to work and

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Speaker 4: not have to commute. It's worker populations that historically dropped out,

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Speaker 4: whether it's older workers, women, people with children, those people

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Speaker 4: who may have a handicap, might be unable to work

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Speaker 4: in an office situation. You bring them back in and

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Speaker 4: that supports the labor force to some extent. And you

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Speaker 4: actually see a little bit of the data, and this

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Speaker 4: is one of the more interesting charts in the paper.

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Speaker 4: If you look at the long term demographic trend of

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Speaker 4: the labor force participation post COVID, we actually were seeing

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Speaker 4: higher levels of participation than that trend would have indicated.

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Speaker 4: And I think that's clearly the result of technology bringing

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Speaker 4: people back into the labor force. The other thing that's

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Speaker 4: a little more speculative but could be very interesting over

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Speaker 4: the longer horizon is cross border so allowing workers in

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Speaker 4: the develop world where there is a surplus of labor

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Speaker 4: to get around the immigration barrier, which is a challenge

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Speaker 4: and work remotely. And so you know, we're sort of

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Speaker 4: optimistic that technology broadly speaking, will bring workers in and

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Speaker 4: ultimately be sort of a disinflationary force. Now, the point

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Speaker 4: you're making about AI is it reduces the denominator, I

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Speaker 4: guess is to in the mathematical way, you just need

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Speaker 4: less workers because the computers will do the jobs that

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Speaker 4: were being done by human beings. I think that's inevitable

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Speaker 4: to some extent. I mean, we were already seeing that

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Speaker 4: pre COVID. You walk into a burger king, you tap

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Speaker 4: on a kiosk, you don't talk to a person, don't

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Speaker 4: you walk into you know, but you know, like that's

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Speaker 4: that stuff's already changing. And then you think about sort

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Speaker 4: of automation and industrial automation and the like care giving

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Speaker 4: to elderly in Japan where they have robots doing. I mean,

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Speaker 4: there's a whole host of ways in which technology is

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Speaker 4: stepping into the shoes of humans and that. But that's

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Speaker 4: a very long term trend.

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Speaker 1: More of a Wendy's guy.

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Speaker 2: Oh yeah, no, I love Wendy's. Actually, I'm so glad

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Speaker 2: you said that. I do like burger king fries. I

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Speaker 2: will just add, could an AI do a podcast?

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Speaker 3: I don't think so.

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Speaker 1: Oh, they certainly have written some scripts that I've early

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Speaker 1: on point I don't know.

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Speaker 3: I don't know I would fact check those.

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Speaker 2: But okay, So aside from this sort of long term

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Speaker 2: disinflationary impulse that we're getting from tech that we could

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Speaker 2: be getting from AI, if we bring that conversation to

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Speaker 2: a slightly shorter but still longer term timeframe, I want

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Speaker 2: to talk about the inflation that we're experiencing right now.

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Speaker 2: I think we finally put the term transitory to bed.

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Speaker 2: We've disabused that notion. But is the inflation that we're

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Speaker 2: looking at now? And of course inflation has been coming

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Speaker 2: down if you measure by a CPI, if you look

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Speaker 2: at PCE, But is this structural inflation it's two percent

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Speaker 2: still a realistic target or do you think inflation has

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Speaker 2: structurally moved higher.

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Speaker 4: I think the Fed has the tools to get inflation

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Speaker 4: back to two percent if they choose to, and at

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Speaker 4: this moment, they're not going to back off of that

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Speaker 4: as their stated target, because again it gets back to

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Speaker 4: the credibility question. Is there a scenario where the economy

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Speaker 4: starts to go south and inflation has not yet come

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Speaker 4: down enough that they have to make a really difficult

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Speaker 4: choice between their sort of dual mandate. Potentially but we're

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Speaker 4: a long.

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Speaker 1: Way from there.

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Speaker 4: With employment at the current high levels and inflation at

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Speaker 4: the current high levels. Clearly the thumb is on the

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Speaker 4: scale with respect to the Fed's sort of objective function,

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Speaker 4: that fighting inflation is number one. So I think that's

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Speaker 4: sort of where their heads are at right now. I

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Speaker 4: think you know, the question as to how structural it is.

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Speaker 4: I think initially you know inflation was supply driven when

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Speaker 4: you get into sort of the early stages of COVID,

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Speaker 4: it was reasonable for them to look at that situation

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Speaker 4: and say that supply driven inflation tends to be self correcting,

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Speaker 4: and so the phrase transitory, which I think has come

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Speaker 4: to be regarded as an unfortunate turn of phrase by Powell,

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Speaker 4: there was some basis for that, but over time, I

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Speaker 4: think what they missed was that the labor market sort

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Speaker 4: of downturn was really short lived and was really almost

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Speaker 4: like an accounting blip at the end of the day,

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Speaker 4: because so many people got money from the government and

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Speaker 4: stayed spending. The job market came back pretty strongly, pretty quickly,

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Speaker 4: and the FED was behind the curve very quickly, and

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Speaker 4: it took them, particularly in the spring into the fall

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Speaker 4: of twenty twenty one, when inflation was surging and they

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Speaker 4: were still working out of their prior forward average targeting

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Speaker 4: and forward guidance, and they were living in this very

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Speaker 4: slow paced world of monetary policy reaction, and so they

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Speaker 4: wound up behind the curve, and that allowed some of

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Speaker 4: this inflation to become more structural. We did have a

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Speaker 4: bit of a wage price spiral, so you know, I

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Speaker 4: mean classic, you know, when I learned economics, the basic

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Speaker 4: message was you ignore headline because it's very volatile in

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Speaker 4: both directions. A lot of the factors that go into

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Speaker 4: headline inflation are their sort of elastic demand. They're substitutable,

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Speaker 4: So if it's high this month, it could be low

438
00:21:32,440 --> 00:21:34,199
Speaker 4: next month, so you don't really worry about that. And

439
00:21:34,240 --> 00:21:37,000
Speaker 4: core had been low for so long, and I think

440
00:21:37,000 --> 00:21:40,280
Speaker 4: people stopped worrying about it, and now it's high, and

441
00:21:40,359 --> 00:21:41,840
Speaker 4: you know, and I think we don't yet have a

442
00:21:41,840 --> 00:21:43,520
Speaker 4: good handle on how long it takes to come down.

443
00:21:43,560 --> 00:21:45,680
Speaker 4: You know. I think it's an interesting moment to consider

444
00:21:46,800 --> 00:21:50,359
Speaker 4: the difference in the choices made by say Paul Vulker

445
00:21:50,400 --> 00:21:54,520
Speaker 4: back in the eighties versus Powell today. Vulkar's policy path

446
00:21:54,720 --> 00:21:58,200
Speaker 4: was to hike very rapidly to extremely high levels, generate

447
00:21:58,240 --> 00:22:01,840
Speaker 4: a very strong positive real rate, effectively crush the economy

448
00:22:02,520 --> 00:22:06,160
Speaker 4: huge unemployment, but then rapidly cut so that there's a hit.

449
00:22:06,280 --> 00:22:08,200
Speaker 4: Was very painful, but it was very quick and very clear.

450
00:22:08,880 --> 00:22:11,320
Speaker 4: Powell's chosen a more sort of finest approach, which is

451
00:22:11,359 --> 00:22:14,520
Speaker 4: to hike to a positive but fairly low real rate

452
00:22:14,600 --> 00:22:17,040
Speaker 4: and then stay there. And so we're right in that

453
00:22:17,080 --> 00:22:20,280
Speaker 4: bumpy phase where inflation is the core is right around five,

454
00:22:21,040 --> 00:22:23,159
Speaker 4: the rates are right around five. You can arm wrestle

455
00:22:23,160 --> 00:22:25,440
Speaker 4: over whether there's a positive real rate at various points

456
00:22:25,480 --> 00:22:28,280
Speaker 4: on the curve, but it's not clear that he's done

457
00:22:28,880 --> 00:22:32,000
Speaker 4: enough to really tip inflation over yet. And so I think,

458
00:22:32,040 --> 00:22:34,399
Speaker 4: you know, they're they're taking some comfort in the idea

459
00:22:34,440 --> 00:22:38,679
Speaker 4: that there is a long lag. And you have, also,

460
00:22:38,720 --> 00:22:40,280
Speaker 4: I think, you know, an economy that built up a

461
00:22:40,320 --> 00:22:43,359
Speaker 4: lot of leverage prior to COVID, and that cost is

462
00:22:43,440 --> 00:22:46,120
Speaker 4: now coming due in the form of higher interest expense,

463
00:22:46,760 --> 00:22:49,480
Speaker 4: not just for banks but for anyone who borrows money.

464
00:22:49,880 --> 00:22:52,119
Speaker 4: You know, I think they're probably right to pause and

465
00:22:52,359 --> 00:22:54,720
Speaker 4: watch the data a bit, but it's you know, they

466
00:22:54,800 --> 00:22:57,600
Speaker 4: have definitely not moved as aggressively as past FEDS have,

467
00:22:58,400 --> 00:22:59,720
Speaker 4: so we have to be thoughtful about that.

468
00:23:00,160 --> 00:23:03,439
Speaker 1: Shared one thing that came up over and over again,

469
00:23:03,720 --> 00:23:06,120
Speaker 1: especially in the news. Maybe I'm to blame. I think

470
00:23:06,160 --> 00:23:10,679
Speaker 1: I edited probably half of these stories questioning whether sixty

471
00:23:10,760 --> 00:23:14,040
Speaker 1: forty was dead in the even in the pre pandemic era.

472
00:23:14,119 --> 00:23:17,840
Speaker 1: But then when rates got really ridiculously low during COVID,

473
00:23:17,960 --> 00:23:20,560
Speaker 1: you know, every day there was a new obituary for

474
00:23:20,800 --> 00:23:25,200
Speaker 1: the sixty forty strategy. Sixty percent of your portfolio in stocks,

475
00:23:25,200 --> 00:23:29,200
Speaker 1: forty percent in bonds. I feel like everything's changed now.

476
00:23:29,240 --> 00:23:33,160
Speaker 1: So I'm wondering what the conversations are with institutional clients

477
00:23:33,240 --> 00:23:36,800
Speaker 1: of yours these days. You've got this fomo that seems

478
00:23:36,840 --> 00:23:38,960
Speaker 1: to be erupting in the stock market. Yet at the

479
00:23:38,960 --> 00:23:42,880
Speaker 1: same time, it's very easy to get a risk free

480
00:23:43,240 --> 00:23:48,400
Speaker 1: real return even in cash money markets, almost at five

481
00:23:48,440 --> 00:23:51,920
Speaker 1: percent in some cases. What are the conversations, like, what

482
00:23:52,320 --> 00:23:54,720
Speaker 1: should an institution, in your opinion, be doing with their

483
00:23:54,720 --> 00:23:56,560
Speaker 1: money right now? Yeah, there were a lot of obituaries

484
00:23:56,560 --> 00:23:58,959
Speaker 1: written for sixty forty. I probably wrote a few myself,

485
00:24:00,040 --> 00:24:00,200
Speaker 1: you know.

486
00:24:00,320 --> 00:24:04,480
Speaker 4: And look, I think twenty twenty two was the worst

487
00:24:04,480 --> 00:24:07,440
Speaker 4: possible outcome if you are a classic kind of correlation

488
00:24:07,520 --> 00:24:10,199
Speaker 4: based investor, where you get your risk management from the

489
00:24:10,200 --> 00:24:12,720
Speaker 4: assumption that stocks and bonds will move into opposite directions

490
00:24:12,760 --> 00:24:15,720
Speaker 4: at the same time. Obviously, twenty twenty two was the

491
00:24:15,760 --> 00:24:18,399
Speaker 4: one year and twenty year thirty where that goes the

492
00:24:18,440 --> 00:24:21,080
Speaker 4: wrong way on you, and it led to severe losses.

493
00:24:21,119 --> 00:24:24,320
Speaker 4: So you know, at the same time, even going into

494
00:24:24,400 --> 00:24:26,879
Speaker 4: twenty twenty two, you could look at market valuations at

495
00:24:26,880 --> 00:24:29,120
Speaker 4: the end of twenty one and say equity valuations were high,

496
00:24:29,240 --> 00:24:31,680
Speaker 4: bond yields were low. It was very hard to see

497
00:24:31,680 --> 00:24:33,720
Speaker 4: how a sixty forty portfolio was going to do much

498
00:24:33,760 --> 00:24:35,840
Speaker 4: for you, even if you didn't anticipate the sort of

499
00:24:35,920 --> 00:24:39,159
Speaker 4: catastrophe that twenty twenty two turned into. And I think

500
00:24:39,320 --> 00:24:41,840
Speaker 4: the recipe then, which still makes a lot of sense,

501
00:24:42,000 --> 00:24:45,720
Speaker 4: is diversify not just in terms of sort of correlation

502
00:24:45,800 --> 00:24:49,680
Speaker 4: of betas, but across genuinely diverse asset classes, particularly using

503
00:24:49,760 --> 00:24:55,720
Speaker 4: alternatives that have unique return streams. Focus on managing liquidity

504
00:24:55,760 --> 00:24:59,439
Speaker 4: and illiquidity. So for whatever asset portion of your assets

505
00:24:59,440 --> 00:25:02,320
Speaker 4: you put into to long lock private equity and private

506
00:25:02,320 --> 00:25:04,840
Speaker 4: credit strategies, you're going to generate a higher level of

507
00:25:04,880 --> 00:25:08,360
Speaker 4: return almost certainly with those types of approaches, but they

508
00:25:08,400 --> 00:25:11,119
Speaker 4: lock up your liquidity, and that's a problem for two reasons.

509
00:25:11,119 --> 00:25:12,600
Speaker 4: One is if you need your liquidity, if you're a

510
00:25:12,640 --> 00:25:14,720
Speaker 4: pension fund or an endowment who has to pay out,

511
00:25:15,160 --> 00:25:17,840
Speaker 4: you have to have cash ready to go. It's also

512
00:25:17,920 --> 00:25:21,040
Speaker 4: there's an opportunity cost when you get a volatile market

513
00:25:21,160 --> 00:25:23,800
Speaker 4: and the stock market goes down twenty percent and you'd

514
00:25:23,880 --> 00:25:25,639
Speaker 4: like to be a buyer, where do you get to

515
00:25:25,720 --> 00:25:28,560
Speaker 4: dry powder from? And so you know. I think the

516
00:25:28,600 --> 00:25:30,560
Speaker 4: twenty twenty two episode has sort of forced people to

517
00:25:30,560 --> 00:25:33,320
Speaker 4: rethink a lot of these issues. I think the more

518
00:25:33,359 --> 00:25:35,879
Speaker 4: diverse strategies going forward make a lot of sense. I

519
00:25:35,880 --> 00:25:39,240
Speaker 4: think the alternatives world has evolved and diversified to the

520
00:25:39,280 --> 00:25:43,640
Speaker 4: point where in the old days investors tended to think

521
00:25:43,680 --> 00:25:46,280
Speaker 4: of it as very liquid. You're talking about draw down

522
00:25:46,400 --> 00:25:49,600
Speaker 4: structures in private equity and private credit that lock up

523
00:25:49,600 --> 00:25:52,520
Speaker 4: your money for five, seven, ten years or more. And

524
00:25:52,560 --> 00:25:54,879
Speaker 4: because that money was locked away, you would only bother

525
00:25:55,000 --> 00:25:58,240
Speaker 4: to choose those private vehicles that had the highest possible returns.

526
00:25:59,040 --> 00:26:01,600
Speaker 4: I think what we've seen today is much greater willingness

527
00:26:01,640 --> 00:26:04,800
Speaker 4: to look across the spectrum of alternatives, which has some

528
00:26:05,119 --> 00:26:09,000
Speaker 4: much more liquid, some moderate liquid, some very illiquid, and

529
00:26:09,000 --> 00:26:11,320
Speaker 4: that if you use that entire spectrum, you can allocate

530
00:26:11,359 --> 00:26:13,119
Speaker 4: a lot more of your capital in that space. I

531
00:26:13,119 --> 00:26:15,080
Speaker 4: think we're going to still see a lot of stocks

532
00:26:15,080 --> 00:26:17,280
Speaker 4: in a lot of bonds right now. Cash is really

533
00:26:17,280 --> 00:26:21,720
Speaker 4: interesting because you're getting paid to be defensive, which feels good,

534
00:26:22,520 --> 00:26:24,680
Speaker 4: but you know there is a trap there too. I mean,

535
00:26:24,680 --> 00:26:26,880
Speaker 4: if interest rates do start to fall, if the FED

536
00:26:26,920 --> 00:26:29,560
Speaker 4: is successful, the returns on your cash will come down

537
00:26:29,560 --> 00:26:31,840
Speaker 4: pretty quickly. I think we're at a point now where

538
00:26:32,000 --> 00:26:35,479
Speaker 4: fixed income investors should start to move back to their

539
00:26:35,560 --> 00:26:39,000
Speaker 4: natural habitats. You know, if you're a core bond investor

540
00:26:39,000 --> 00:26:42,520
Speaker 4: who's just looking for diversity versus stocks, that's a good

541
00:26:42,520 --> 00:26:45,160
Speaker 4: place to be. If you're a long duration investor who's

542
00:26:45,160 --> 00:26:47,560
Speaker 4: hedging liabilities, you can start to move back out there.

543
00:26:47,560 --> 00:26:49,119
Speaker 4: The curve seems to be in a pretty good.

544
00:26:48,960 --> 00:26:51,520
Speaker 2: Place, and I get that the argument that can be

545
00:26:51,560 --> 00:26:54,879
Speaker 2: made about cash maybe turning into a little bit of

546
00:26:54,920 --> 00:26:58,560
Speaker 2: a trap. But until that point where the FED starts

547
00:26:58,560 --> 00:27:01,560
Speaker 2: cutting and I forget exactly what language Pal used at

548
00:27:01,560 --> 00:27:03,680
Speaker 2: the June presser, but I think you said something.

549
00:27:03,440 --> 00:27:05,320
Speaker 3: Like raycuts are a couple of years away.

550
00:27:05,200 --> 00:27:08,320
Speaker 2: Like it feels like it doesn't really become a very

551
00:27:08,359 --> 00:27:11,600
Speaker 2: scary trap until that point one hundred percent.

552
00:27:11,640 --> 00:27:15,480
Speaker 4: I mean, you are you're trying to anticipate when the

553
00:27:15,520 --> 00:27:17,520
Speaker 4: FED will pivot and when the rates will start to

554
00:27:17,520 --> 00:27:21,400
Speaker 4: come down. Obviously, the FED is going to be reacting

555
00:27:21,440 --> 00:27:23,120
Speaker 4: to real data. There are a lot of people who

556
00:27:23,119 --> 00:27:26,240
Speaker 4: have very well founded views that a recession will be hitting,

557
00:27:27,119 --> 00:27:29,440
Speaker 4: probably less likely in the very end of twenty twenty three,

558
00:27:29,480 --> 00:27:31,560
Speaker 4: but certainly in twenty twenty four. And there's a lot

559
00:27:31,600 --> 00:27:34,520
Speaker 4: of reasons to think that may be happening. That's probably

560
00:27:34,560 --> 00:27:37,360
Speaker 4: beyond the scope of our call today. But you know,

561
00:27:37,520 --> 00:27:39,679
Speaker 4: when and if that happens, the FED will react. Now,

562
00:27:39,760 --> 00:27:43,320
Speaker 4: I think the question is how quickly they react. Where

563
00:27:43,359 --> 00:27:45,760
Speaker 4: in that sort of progression do you put the first cut?

564
00:27:45,800 --> 00:27:48,200
Speaker 4: And as you said, it's sitting cash is pretty safe,

565
00:27:48,680 --> 00:27:49,400
Speaker 4: you're getting paid.

566
00:27:49,680 --> 00:27:53,199
Speaker 2: That is interesting, just piecing together what you said that

567
00:27:53,480 --> 00:27:56,320
Speaker 2: when the recession comes, the FED will cut and people

568
00:27:56,400 --> 00:27:59,119
Speaker 2: will exit cash. I feel like that's one of the

569
00:28:00,200 --> 00:28:02,160
Speaker 2: one of the many ways that sort of the perception

570
00:28:02,640 --> 00:28:04,879
Speaker 2: of cash has changed. Like in the past few months,

571
00:28:05,200 --> 00:28:08,400
Speaker 2: cash has become not necessarily a defensive strategy. It's going

572
00:28:08,480 --> 00:28:11,360
Speaker 2: on the offense collecting the yield in cash. And when

573
00:28:11,400 --> 00:28:13,760
Speaker 2: you think about what the trigger for getting people out

574
00:28:13,800 --> 00:28:15,959
Speaker 2: of cash would be, it might actually be the recession.

575
00:28:16,000 --> 00:28:19,040
Speaker 2: I'm thinking all out here, because usually you think of

576
00:28:19,119 --> 00:28:19,679
Speaker 2: cash as like.

577
00:28:22,000 --> 00:28:25,600
Speaker 4: Yeah, preservation, that's right. I mean, the key difference today

578
00:28:25,640 --> 00:28:29,399
Speaker 4: is with the inverted curve. Everything else in bondland is

579
00:28:29,400 --> 00:28:31,560
Speaker 4: a negative carry trade. For the most part. You're getting

580
00:28:31,560 --> 00:28:33,240
Speaker 4: paid more money at the front of the curve in

581
00:28:33,280 --> 00:28:36,600
Speaker 4: the most defensive asset relative to just about everything else.

582
00:28:36,640 --> 00:28:38,480
Speaker 4: And you can take on credit risk, and I think

583
00:28:38,520 --> 00:28:41,880
Speaker 4: credit risk is reasonably priced. It certainly isn't cheap by

584
00:28:41,960 --> 00:28:46,520
Speaker 4: historical standards. But yeah, to your point, you normally think

585
00:28:46,560 --> 00:28:48,680
Speaker 4: of cash as having almost a penalty rate for the

586
00:28:48,720 --> 00:28:51,480
Speaker 4: protection it provides, and that's just not the case right now,

587
00:28:51,520 --> 00:28:53,040
Speaker 4: and I think a lot of investors are sort of

588
00:28:53,280 --> 00:28:55,840
Speaker 4: appreciating that. And it's not pure cash. I mean, you

589
00:28:55,880 --> 00:28:58,240
Speaker 4: have a variety of sort of money market strategies, short

590
00:28:58,280 --> 00:29:00,720
Speaker 4: duration bond strategies. There's lots of things you can do

591
00:29:01,480 --> 00:29:16,360
Speaker 4: to capture those fields.

592
00:29:18,720 --> 00:29:21,800
Speaker 1: You know, you mentioned how it seems like the recession

593
00:29:21,840 --> 00:29:24,880
Speaker 1: calls keep getting pushed further out into the future now

594
00:29:24,920 --> 00:29:27,800
Speaker 1: into twenty twenty four, but they're still there. The equity

595
00:29:27,840 --> 00:29:31,880
Speaker 1: market really seems to be behaving like a soft landing.

596
00:29:32,240 --> 00:29:35,360
Speaker 1: Is a done deal, a given? But I wonder, you know,

597
00:29:35,440 --> 00:29:38,320
Speaker 1: if there is a recession in the cards for twenty

598
00:29:38,360 --> 00:29:40,840
Speaker 1: twenty four, does it make sense that the stock market

599
00:29:40,880 --> 00:29:44,280
Speaker 1: really saw the bottom in October of last year? Where

600
00:29:44,680 --> 00:29:48,360
Speaker 1: do we have to have that sort of cathartic drop

601
00:29:48,480 --> 00:29:51,840
Speaker 1: in the market that we typically see during or right

602
00:29:51,840 --> 00:29:54,120
Speaker 1: before recession. At least, I.

603
00:29:54,080 --> 00:29:57,320
Speaker 4: Think what would be concerning is that with inflation where

604
00:29:57,360 --> 00:30:00,840
Speaker 4: it is, the traditional sort of safety valve of that

605
00:30:00,920 --> 00:30:03,840
Speaker 4: central bank put is no longer there, and so you

606
00:30:03,920 --> 00:30:06,520
Speaker 4: have to be concerned that if there is an earning's recession,

607
00:30:06,560 --> 00:30:09,720
Speaker 4: if stocks are selling off, that sort of habit that

608
00:30:09,720 --> 00:30:11,920
Speaker 4: we've gotten used to of the central bank coming to

609
00:30:11,960 --> 00:30:16,080
Speaker 4: the rescue just won't happen. I do think the fundamentals,

610
00:30:16,120 --> 00:30:18,640
Speaker 4: I mean, this is why are the recession expectations getting

611
00:30:18,680 --> 00:30:21,120
Speaker 4: pushed out Because the economy is doing okay. The employment

612
00:30:21,200 --> 00:30:25,000
Speaker 4: numbers are still pretty strong, wages are still doing reasonably well,

613
00:30:25,200 --> 00:30:27,840
Speaker 4: consumer spending is pretty healthy, the real estate market is

614
00:30:27,880 --> 00:30:30,920
Speaker 4: pretty sound. Obviously, there's some exceptions and sort of office

615
00:30:30,920 --> 00:30:33,200
Speaker 4: space and things like that, but a lot of the

616
00:30:33,200 --> 00:30:37,240
Speaker 4: things that would normally underpin a severe sell off aren't

617
00:30:37,240 --> 00:30:39,920
Speaker 4: really there. And I think to the point you made earlier,

618
00:30:39,960 --> 00:30:41,720
Speaker 4: like a big part of the equity run up is

619
00:30:41,760 --> 00:30:45,640
Speaker 4: a very concentrated exposure to the top seven to ten

620
00:30:45,760 --> 00:30:49,920
Speaker 4: names that are largely tech focused. So could those names

621
00:30:50,080 --> 00:30:52,000
Speaker 4: snap back and have a real sell off, Sure, but

622
00:30:52,080 --> 00:30:54,080
Speaker 4: I think the rest of the market has not followed

623
00:30:54,760 --> 00:30:57,280
Speaker 4: anywhere close to the same degree in terms of the

624
00:30:57,360 --> 00:31:00,640
Speaker 4: valuation increases, and so I don't know that there's much

625
00:31:00,680 --> 00:31:02,760
Speaker 4: of an air pocket underneath the entire market. There may

626
00:31:02,800 --> 00:31:04,360
Speaker 4: be under some of the tech names, though.

627
00:31:04,800 --> 00:31:06,800
Speaker 1: Which you know, if you're talking about a quarter of

628
00:31:06,880 --> 00:31:09,000
Speaker 1: the weighting of the S and P with a handful

629
00:31:09,000 --> 00:31:11,800
Speaker 1: of names on an equal weighted basis, might not be

630
00:31:11,840 --> 00:31:13,520
Speaker 1: too bad, but it could get ugly.

631
00:31:14,520 --> 00:31:17,440
Speaker 4: Yeah. I mean again, I don't have a particularly clear

632
00:31:17,480 --> 00:31:19,960
Speaker 4: sense of sort of the valuation for those firms, But yeah,

633
00:31:20,080 --> 00:31:23,640
Speaker 4: just given what they've done, even a partial retlacement from

634
00:31:23,680 --> 00:31:25,480
Speaker 4: a percentage standpoint could be pretty severe.

635
00:31:25,760 --> 00:31:28,920
Speaker 2: And just on the topic of recessions and the yield curve,

636
00:31:29,400 --> 00:31:31,720
Speaker 2: at what point can we say the yield curve was wrong?

637
00:31:31,760 --> 00:31:34,800
Speaker 2: At what point do the recession calls, does the actual

638
00:31:34,880 --> 00:31:38,400
Speaker 2: recession get pushed out enough that it's not any longer

639
00:31:38,400 --> 00:31:41,560
Speaker 2: in that magical twelve to eighteen month timeframe from the

640
00:31:41,600 --> 00:31:43,880
Speaker 2: time that the curve inverted. How are you thinking about

641
00:31:43,960 --> 00:31:47,400
Speaker 2: the yield curve and its potency as a recession indicator.

642
00:31:48,040 --> 00:31:49,720
Speaker 4: Well, you know, there's the old joke that the yield

643
00:31:49,720 --> 00:31:52,560
Speaker 4: curve has predicted ten of the last five recessions. So

644
00:31:53,160 --> 00:31:54,840
Speaker 4: you have to take it with a grain of salt.

645
00:31:54,880 --> 00:31:58,120
Speaker 4: And I think one of the ways, and this sort

646
00:31:58,160 --> 00:31:59,960
Speaker 4: of paraphrases a little bit of what's in our paper,

647
00:32:00,840 --> 00:32:03,000
Speaker 4: you have to understand that COVID really was a very

648
00:32:03,080 --> 00:32:06,800
Speaker 4: profound reset of the financial and economic system in a

649
00:32:06,840 --> 00:32:10,040
Speaker 4: way that past business cycles were not. It's almost like

650
00:32:10,040 --> 00:32:12,400
Speaker 4: when your computer's not working and the last resort is

651
00:32:12,440 --> 00:32:14,080
Speaker 4: you just turn it off and you turn it back

652
00:32:14,120 --> 00:32:17,600
Speaker 4: on and yeah, you know, and you wait for the

653
00:32:17,680 --> 00:32:20,200
Speaker 4: screen to come back on, and you're like, please, please God,

654
00:32:20,280 --> 00:32:23,080
Speaker 4: let my document be up there when it turns on.

655
00:32:23,760 --> 00:32:25,280
Speaker 4: And COVID was a little bit like that, And so

656
00:32:25,400 --> 00:32:27,440
Speaker 4: a lot of the sort of habits and patterns that

657
00:32:27,440 --> 00:32:31,239
Speaker 4: we got used to looking at don't necessarily apply here.

658
00:32:31,280 --> 00:32:33,080
Speaker 4: I mean, the last time. I mean, you really have

659
00:32:33,120 --> 00:32:35,960
Speaker 4: to go back to the eighties to see a spike

660
00:32:36,000 --> 00:32:38,600
Speaker 4: in inflation like what we saw and a FED reaction

661
00:32:38,720 --> 00:32:42,800
Speaker 4: function like what we saw. And even there, the degree

662
00:32:42,880 --> 00:32:45,200
Speaker 4: of leverage that had built up because of a very

663
00:32:45,280 --> 00:32:49,560
Speaker 4: long period of low interest rates is unique. The asset

664
00:32:49,600 --> 00:32:52,520
Speaker 4: class relationships that were used to because you know, were

665
00:32:53,200 --> 00:32:55,120
Speaker 4: heavily biased by the fact that we lived through a

666
00:32:55,120 --> 00:32:58,440
Speaker 4: forty year disinflationary bull market. There's so many ways in

667
00:32:58,520 --> 00:33:02,520
Speaker 4: which you'd really can't rely on the rules of thumb

668
00:33:03,040 --> 00:33:05,840
Speaker 4: that have been passed down from the last thirty forty years.

669
00:33:05,840 --> 00:33:07,560
Speaker 4: You really have to look at the fundamentals. And so

670
00:33:07,680 --> 00:33:11,040
Speaker 4: to your question about the yield curve. Right now, the

671
00:33:11,040 --> 00:33:14,000
Speaker 4: FED is anchoring the front of the curve at or

672
00:33:14,040 --> 00:33:17,560
Speaker 4: slightly above the prevailing rate of inflation, and they intended

673
00:33:17,600 --> 00:33:20,200
Speaker 4: to keep it there for some period of time. History

674
00:33:20,200 --> 00:33:23,760
Speaker 4: suggests that positive real rates of a reasonable magnitude will

675
00:33:23,800 --> 00:33:27,960
Speaker 4: slow the economy and will bring inflation down. And aside

676
00:33:27,960 --> 00:33:30,480
Speaker 4: from that, you also have quantitative tightening and other things

677
00:33:30,480 --> 00:33:33,280
Speaker 4: that are reducing the money supply, and all of those

678
00:33:33,320 --> 00:33:37,000
Speaker 4: things together are pretty powerful, and so we do think

679
00:33:37,880 --> 00:33:40,360
Speaker 4: growth will slow. Whether you get a soft landing or

680
00:33:40,400 --> 00:33:42,760
Speaker 4: a recession, and people can sort of arm wrestle over

681
00:33:42,800 --> 00:33:45,960
Speaker 4: how you define those things. That's probably a little bit TBD,

682
00:33:46,120 --> 00:33:48,920
Speaker 4: but we think it's going to work. Eventually, the direction

683
00:33:48,960 --> 00:33:51,160
Speaker 4: will be down for inflation, will be down for rates.

684
00:33:51,560 --> 00:33:53,760
Speaker 4: That's essentially what the curve is pricing. I think a

685
00:33:53,760 --> 00:33:55,520
Speaker 4: lot of the volatility in the curve over the last

686
00:33:55,600 --> 00:33:59,480
Speaker 4: year and a half has been again the market implicitly

687
00:33:59,480 --> 00:34:02,320
Speaker 4: thinking the thing did not have the sort of gumption

688
00:34:02,520 --> 00:34:06,520
Speaker 4: to hold fast to interest rate hikes, and that the

689
00:34:06,520 --> 00:34:08,960
Speaker 4: market was essentially predicting that at the first bad data

690
00:34:08,960 --> 00:34:11,160
Speaker 4: point or the first sign of market volatility, they would

691
00:34:11,200 --> 00:34:13,239
Speaker 4: just cave. And they have. And I think you have

692
00:34:13,280 --> 00:34:15,240
Speaker 4: to give Powell some credit for that, which is they've

693
00:34:15,600 --> 00:34:18,000
Speaker 4: i think spoken very clearly about what their intentions are

694
00:34:18,040 --> 00:34:18,879
Speaker 4: and they followed through.

695
00:34:19,760 --> 00:34:22,000
Speaker 1: Jared, I'm going to give you some credit too, because

696
00:34:22,280 --> 00:34:25,520
Speaker 1: we were joking before we started taping that the last

697
00:34:25,600 --> 00:34:28,319
Speaker 1: time you were on it was like this. We must

698
00:34:28,320 --> 00:34:30,960
Speaker 1: have talked for a good hour about all the important

699
00:34:31,120 --> 00:34:34,239
Speaker 1: cross asset and macro things in the world, and then

700
00:34:34,239 --> 00:34:36,960
Speaker 1: we spent about a minute on bitcoin and crypto, and

701
00:34:37,320 --> 00:34:39,399
Speaker 1: of course I made that the headline of the piece

702
00:34:39,480 --> 00:34:41,759
Speaker 1: on the podcast as as you're right, so I'm gonna

703
00:34:41,800 --> 00:34:44,000
Speaker 1: do that again, I think now I'm just kidding. But Katie,

704
00:34:44,040 --> 00:34:46,160
Speaker 1: I want you to chime in on this too, because

705
00:34:46,160 --> 00:34:49,759
Speaker 1: it is a fascinating development in the last week or

706
00:34:49,800 --> 00:34:54,960
Speaker 1: two with black Rock applying for a bitcoin etf, Wisdom

707
00:34:55,000 --> 00:34:57,880
Speaker 1: Tree coming out applying for one, and we've seen bitcoin

708
00:34:57,960 --> 00:35:02,040
Speaker 1: ETFs before going nowhere. But I feel like when Blackrock

709
00:35:02,120 --> 00:35:06,319
Speaker 1: does it, it's something's changed, something different. Yeah, Jared, let's

710
00:35:06,320 --> 00:35:08,160
Speaker 1: start with you. Does this move you know? I think

711
00:35:08,239 --> 00:35:11,880
Speaker 1: the headline last time was J P. Burgen's Jared Gross

712
00:35:11,880 --> 00:35:15,440
Speaker 1: says institutional investors have no interest in crypto or something

713
00:35:15,480 --> 00:35:18,000
Speaker 1: like that. Does this change the game at all? Do

714
00:35:18,000 --> 00:35:21,760
Speaker 1: you think now that, if it should, Blackrock successfully launch

715
00:35:21,880 --> 00:35:23,440
Speaker 1: a spot bitcoin etf.

716
00:35:24,719 --> 00:35:27,760
Speaker 4: So there's a lot of layers to that sort of process.

717
00:35:28,120 --> 00:35:31,480
Speaker 4: One thing I think has become increasingly well established understood

718
00:35:31,480 --> 00:35:35,360
Speaker 4: is that bitcoin itself as an asset is not a security.

719
00:35:35,400 --> 00:35:39,520
Speaker 4: It is essentially a commodity, and there are past instances

720
00:35:39,560 --> 00:35:42,839
Speaker 4: of ETFs based on commodities. So if you accept that

721
00:35:42,960 --> 00:35:46,960
Speaker 4: sort of logic, I don't know that there's a regulatory

722
00:35:47,120 --> 00:35:49,800
Speaker 4: barrier to this sort of preceding my assumption as Blackrock

723
00:35:49,880 --> 00:35:51,719
Speaker 4: thought all this through and is not going to be

724
00:35:52,040 --> 00:35:53,919
Speaker 4: right investing all the time and effort to do something

725
00:35:53,920 --> 00:35:56,000
Speaker 4: that's just going to get knocked off the ledge by

726
00:35:56,120 --> 00:35:59,200
Speaker 4: Gary Gensler. So they got some clarity from the actions

727
00:35:59,239 --> 00:36:02,400
Speaker 4: against coinbab and that's when I say there's distinctions. I

728
00:36:02,440 --> 00:36:04,320
Speaker 4: think you really have to draw a very bright line

729
00:36:04,360 --> 00:36:07,680
Speaker 4: between Bitcoin. Again, my understanding is this sort of ether

730
00:36:07,880 --> 00:36:11,280
Speaker 4: falls under that same kind of rubric and the broader

731
00:36:11,360 --> 00:36:14,680
Speaker 4: kind of tokenization of the crypto world, which I think

732
00:36:14,760 --> 00:36:20,200
Speaker 4: is full of poorly regulated and sort of assets masquerading

733
00:36:20,239 --> 00:36:22,719
Speaker 4: as securities that aren't regulated like security. And this is

734
00:36:22,719 --> 00:36:25,280
Speaker 4: the place where the SEC and the CFTC are battling.

735
00:36:25,320 --> 00:36:27,719
Speaker 4: And so you know, I don't have a particular view

736
00:36:27,800 --> 00:36:30,240
Speaker 4: on where those lines get drawn, but it certainly seems

737
00:36:30,280 --> 00:36:34,280
Speaker 4: like the SEC has now thrown a marker down saying

738
00:36:34,440 --> 00:36:38,359
Speaker 4: if you are trading these things often exchange that they

739
00:36:38,360 --> 00:36:41,600
Speaker 4: are securities at least according to the SEC's definition, and

740
00:36:41,640 --> 00:36:44,680
Speaker 4: that'll get litigated. I think Coinbase is suing them and

741
00:36:44,719 --> 00:36:46,520
Speaker 4: they're going to go to court and figure out where

742
00:36:46,520 --> 00:36:47,120
Speaker 4: the lines are drawn.

743
00:36:47,120 --> 00:36:50,600
Speaker 2: But gray Scale is also suing the SEC because they

744
00:36:50,640 --> 00:36:54,120
Speaker 2: had their spot bitcoin eto. It was an application, but

745
00:36:54,200 --> 00:36:57,480
Speaker 2: it was trying to convert their trust into an ETF

746
00:36:57,520 --> 00:37:01,160
Speaker 2: that was rejected last June, almost exactly year ago, and

747
00:37:01,200 --> 00:37:03,880
Speaker 2: they're now suing the SEC. But kind of make a

748
00:37:03,920 --> 00:37:06,279
Speaker 2: comment to what Jared was saying, to the idea that

749
00:37:06,400 --> 00:37:10,840
Speaker 2: theoretically Blackrock has thought all of this through. You mentioned

750
00:37:10,840 --> 00:37:13,600
Speaker 2: that we saw something from Wisdom Try. You've also seen

751
00:37:13,719 --> 00:37:18,200
Speaker 2: in Vasco revive their spot bitcoin ETF application and bit

752
00:37:18,280 --> 00:37:19,200
Speaker 2: Wise as well.

753
00:37:19,440 --> 00:37:21,960
Speaker 1: Why now, Katie, Is it because they finally got that

754
00:37:22,040 --> 00:37:24,680
Speaker 1: clarity or feel like they've gotten the clarity in terms

755
00:37:24,719 --> 00:37:25,360
Speaker 1: of Blackrock.

756
00:37:25,640 --> 00:37:30,279
Speaker 2: Yeah, I'm not sure what spurred the Blackrock filing. I've

757
00:37:30,360 --> 00:37:34,080
Speaker 2: spoken to a lot of analysts and investors about what

758
00:37:34,120 --> 00:37:36,520
Speaker 2: they could possibly be thinking, and the answer I get

759
00:37:36,600 --> 00:37:38,440
Speaker 2: is in hush tones, Oh it's Blackrock.

760
00:37:38,560 --> 00:37:40,120
Speaker 3: They must know something.

761
00:37:40,360 --> 00:37:43,800
Speaker 2: And theoretically, you look at this long line of issuers

762
00:37:43,800 --> 00:37:45,760
Speaker 2: who are lining up right behind them, and that seems

763
00:37:45,760 --> 00:37:48,680
Speaker 2: to be the thinking among the industry right now. It's

764
00:37:48,719 --> 00:37:51,719
Speaker 2: going to be really fascinating to see how this plays out.

765
00:37:52,040 --> 00:37:55,759
Speaker 1: It would be shocking to see Blackrock get an ETF

766
00:37:55,840 --> 00:37:57,160
Speaker 1: application rejected.

767
00:37:57,719 --> 00:37:59,319
Speaker 2: That's what I was thinking, I want to go back

768
00:37:59,360 --> 00:38:02,920
Speaker 2: and check. So Blackrock the world's largest asset manager, they're

769
00:38:02,920 --> 00:38:05,560
Speaker 2: also the world's largest etf issuer, which kind of goes.

770
00:38:05,440 --> 00:38:06,000
Speaker 3: Hand in hand.

771
00:38:06,440 --> 00:38:08,920
Speaker 2: I would love to go back through history and see

772
00:38:09,200 --> 00:38:12,160
Speaker 2: how many times they've filed for an ETF and had

773
00:38:12,160 --> 00:38:13,320
Speaker 2: it not launch.

774
00:38:14,400 --> 00:38:17,160
Speaker 4: And I think with bitcoin specifically, you also have to

775
00:38:17,160 --> 00:38:18,759
Speaker 4: go back. And this, I think was the subject we

776
00:38:18,800 --> 00:38:21,080
Speaker 4: discussed last time I was here, is what's the purpose

777
00:38:21,120 --> 00:38:23,040
Speaker 4: of it? If you're an investor, why do you want

778
00:38:23,080 --> 00:38:27,440
Speaker 4: to own bitcoin? And I think there's really two perspectives.

779
00:38:27,440 --> 00:38:29,520
Speaker 4: There's a more of a retail perspective, which this is

780
00:38:29,560 --> 00:38:31,480
Speaker 4: sort of a fun, interesting asset class. There's a lot

781
00:38:31,480 --> 00:38:33,960
Speaker 4: of volatility. People love to day trade things with a

782
00:38:33,960 --> 00:38:35,520
Speaker 4: lot of volatility, and you can make them a lot

783
00:38:35,520 --> 00:38:37,759
Speaker 4: of money, you can lose a lot of money. Most

784
00:38:37,840 --> 00:38:40,319
Speaker 4: the institutional investors that I deal with, they don't think

785
00:38:40,320 --> 00:38:42,960
Speaker 4: in those terms. They want to understand is there a

786
00:38:43,080 --> 00:38:45,680
Speaker 4: long term positive rate of return attached to this asset

787
00:38:46,160 --> 00:38:49,320
Speaker 4: and does it have correlation advantages that diversify your portfolio?

788
00:38:49,360 --> 00:38:51,799
Speaker 4: And I think with bitcoin, the first one is hard

789
00:38:51,840 --> 00:38:54,960
Speaker 4: to see. The second one you can probably wrap your

790
00:38:55,000 --> 00:38:57,400
Speaker 4: mind around. That it is starting to become a little

791
00:38:57,440 --> 00:39:00,399
Speaker 4: more like gold in the sense that it's this sort

792
00:39:00,400 --> 00:39:04,239
Speaker 4: of uncorrelated thing. But still it's very hard to postulate

793
00:39:04,239 --> 00:39:06,360
Speaker 4: that there's an intrinsic rate of return attached to just

794
00:39:06,400 --> 00:39:10,080
Speaker 4: being long bitcoin, and it obviously has a lot of volatility,

795
00:39:10,120 --> 00:39:12,560
Speaker 4: which from an investor standpoint is a risk that most

796
00:39:12,719 --> 00:39:16,239
Speaker 4: institutions simply don't want to take. If it becomes increasingly

797
00:39:17,200 --> 00:39:20,200
Speaker 4: normalized and liquid and easy to trade, then I think,

798
00:39:20,320 --> 00:39:23,680
Speaker 4: like a lot of commodities, it'll become at least potentially

799
00:39:23,760 --> 00:39:26,600
Speaker 4: part of people's portfolios. So that's a you know, as

800
00:39:26,640 --> 00:39:28,080
Speaker 4: I said, I try to draw a very clear line

801
00:39:28,080 --> 00:39:30,600
Speaker 4: around bitcoin versus the rest of crypto, which I think

802
00:39:30,719 --> 00:39:34,359
Speaker 4: is replete with dangerous places that you do not want

803
00:39:34,360 --> 00:39:36,840
Speaker 4: to get. I'm interpreting that as there's no lottery ticket

804
00:39:36,880 --> 00:39:43,120
Speaker 4: allocation in institutional portfolio. Jared Gross, head of institutional portfolio

805
00:39:43,200 --> 00:39:45,920
Speaker 4: Strategy at JP Morgan Asset Management, Thanks so much for

806
00:39:45,960 --> 00:39:48,759
Speaker 4: coming back. Can't let you go just yet, though we

807
00:39:48,760 --> 00:39:52,040
Speaker 4: do have attrition on the show, where hopefully you came

808
00:39:52,360 --> 00:39:54,960
Speaker 4: prepared with the craziest thing you've seen in markets. I

809
00:39:54,960 --> 00:39:58,160
Speaker 4: don't know anything the one that struck me when I

810
00:39:58,200 --> 00:40:00,200
Speaker 4: was asked this is There was a story I think

811
00:40:00,239 --> 00:40:01,560
Speaker 4: it was in the New York Times the other day

812
00:40:01,560 --> 00:40:05,720
Speaker 4: about Argentina and how the dining scene in Buenos Aires

813
00:40:05,960 --> 00:40:10,480
Speaker 4: is ultra hot, not because of all star chefs or

814
00:40:10,880 --> 00:40:13,680
Speaker 4: low beef prices, but because inflation has gotten so out

815
00:40:13,719 --> 00:40:17,400
Speaker 4: of hand that the Argentines would rather spend their money

816
00:40:17,400 --> 00:40:19,319
Speaker 4: instantly once they take it from the bank in a

817
00:40:19,360 --> 00:40:22,360
Speaker 4: restaurant than watch it lose value sitting in their pocket.

818
00:40:22,480 --> 00:40:26,239
Speaker 4: And so this has become the favored pastime of the

819
00:40:26,280 --> 00:40:29,120
Speaker 4: residents of Buenos Aires, which is to dine out as

820
00:40:29,120 --> 00:40:30,160
Speaker 4: a hedge against inflation.

821
00:40:31,320 --> 00:40:32,799
Speaker 1: I'd be some pretty good food there too.

822
00:40:33,120 --> 00:40:33,319
Speaker 2: Yeah.

823
00:40:34,160 --> 00:40:36,160
Speaker 4: I've certainly spent a lot of money in restaurants without

824
00:40:36,160 --> 00:40:37,680
Speaker 4: having it serve as a hedge against inflation.

825
00:40:37,760 --> 00:40:39,359
Speaker 3: So I don't I'm going to I'm going to use

826
00:40:39,360 --> 00:40:39,680
Speaker 3: that one.

827
00:40:39,880 --> 00:40:42,319
Speaker 4: Yeah, my husband, maybe I'll sleep a little better at

828
00:40:42,400 --> 00:40:44,040
Speaker 4: night when you get my credit card building. And I

829
00:40:44,080 --> 00:40:45,280
Speaker 4: was hedging Argentine inflation.

830
00:40:45,600 --> 00:40:47,600
Speaker 1: I had no idea my teenaged daughters were.

831
00:40:47,440 --> 00:40:50,560
Speaker 3: Hedging in They're deeply worried about inflation.

832
00:40:53,080 --> 00:40:56,440
Speaker 2: Already talked about I was going to talk about the

833
00:40:57,360 --> 00:41:00,360
Speaker 2: filing rush to see a lot of is where is

834
00:41:00,440 --> 00:41:03,400
Speaker 2: follow in black rocks lead? I don't know, that's all

835
00:41:03,400 --> 00:41:04,919
Speaker 2: I got. I mean you could talk about the price

836
00:41:04,960 --> 00:41:08,520
Speaker 2: a bitcoin. It got close to or above thirty thousand.

837
00:41:08,680 --> 00:41:09,839
Speaker 2: I think it rallied.

838
00:41:09,520 --> 00:41:14,160
Speaker 3: Something like seventeen percent in the days since we're back. Baby,

839
00:41:14,239 --> 00:41:17,280
Speaker 3: it's crazy you're back. Yeah, the smallest scrap of news

840
00:41:17,360 --> 00:41:18,040
Speaker 3: and here we are.

841
00:41:18,880 --> 00:41:21,319
Speaker 1: It is crazy. I'll grant you that. Why now, I

842
00:41:21,360 --> 00:41:23,480
Speaker 1: think it is the crazy part, but it'll I mean,

843
00:41:23,520 --> 00:41:25,960
Speaker 1: it all makes sense when you unpack it. All right,

844
00:41:26,000 --> 00:41:28,200
Speaker 1: I'll give you my crazy thing. And this relates to

845
00:41:28,680 --> 00:41:32,440
Speaker 1: how hot the labor market is. There is a billionaire

846
00:41:32,800 --> 00:41:37,000
Speaker 1: family in the UK, a US family, billionaire family. This

847
00:41:37,040 --> 00:41:38,839
Speaker 1: is the New York Post, so they don't tell you

848
00:41:38,880 --> 00:41:40,839
Speaker 1: the family. It's a blind item. I think they refer

849
00:41:40,920 --> 00:41:45,840
Speaker 1: to it. And this billionaire family is seeking a dog nanny,

850
00:41:46,600 --> 00:41:49,480
Speaker 1: so someone to come in full time and watch.

851
00:41:49,320 --> 00:41:50,760
Speaker 3: The salary on that.

852
00:41:50,760 --> 00:41:55,200
Speaker 1: That is where we play. Oh god, the Prices Precise

853
00:41:55,360 --> 00:41:58,319
Speaker 1: game show. Jared, I got to inform you you're now

854
00:41:58,440 --> 00:42:03,080
Speaker 1: contestant on the Prices Precise to make Katie go first, Katie,

855
00:42:03,120 --> 00:42:07,920
Speaker 1: if you're a billionaire US family in London. I assume no,

856
00:42:08,000 --> 00:42:11,960
Speaker 1: not actually London. Wah, Knightsbridge district, that's London.

857
00:42:12,640 --> 00:42:16,399
Speaker 4: Okay, are we going annual salary? Is this an hourly way?

858
00:42:16,560 --> 00:42:19,600
Speaker 4: Annual salaries per dog? And you're we doing? Yeah?

859
00:42:19,600 --> 00:42:21,560
Speaker 1: How might one whole in the story is they don't

860
00:42:21,600 --> 00:42:24,840
Speaker 1: tell you what kind of dogs that would influence, but

861
00:42:25,160 --> 00:42:26,680
Speaker 1: multiple two dogs?

862
00:42:26,719 --> 00:42:29,600
Speaker 3: Two dogs? And is this in dollars.

863
00:42:29,239 --> 00:42:31,440
Speaker 1: You can I'll accept British pounds.

864
00:42:31,760 --> 00:42:33,240
Speaker 3: I'm going to go in dollars dollars.

865
00:42:33,360 --> 00:42:34,920
Speaker 1: Don't make me do the bitcoin conversion.

866
00:42:35,200 --> 00:42:36,880
Speaker 3: I'm just thinking about the New York City rats.

867
00:42:36,880 --> 00:42:39,880
Speaker 2: Are I think the annual salary there is like one

868
00:42:39,920 --> 00:42:40,880
Speaker 2: hundred and fifty thousand.

869
00:42:40,960 --> 00:42:42,879
Speaker 3: I'm going to say one hundred and fifty thousand US dollars.

870
00:42:42,920 --> 00:42:45,200
Speaker 1: One hundred and fifty thousand US dollars. I'll give you

871
00:42:45,200 --> 00:42:47,600
Speaker 1: a little more information, Jared. Since you're the guest, you

872
00:42:47,640 --> 00:42:48,920
Speaker 1: do get six weeks off.

873
00:42:49,520 --> 00:42:50,440
Speaker 3: Oh wow.

874
00:42:50,760 --> 00:42:53,839
Speaker 1: But the recruiter says, but when you're dealing with this

875
00:42:53,880 --> 00:42:57,239
Speaker 1: sort of clients, if they want to go to Monaco tomorrow,

876
00:42:57,719 --> 00:43:00,360
Speaker 1: you'd be on a private jet flying with those dogs.

877
00:43:01,080 --> 00:43:02,560
Speaker 4: So remote work is not an option.

878
00:43:02,560 --> 00:43:06,839
Speaker 1: For remote work, you really need to drop everything and

879
00:43:06,880 --> 00:43:09,520
Speaker 1: be there when they call and leave your private life

880
00:43:09,719 --> 00:43:12,880
Speaker 1: on the back burner for these two billionaire dogs.

881
00:43:13,520 --> 00:43:16,440
Speaker 3: So Katie, I'm still gonna stick with one hundred.

882
00:43:16,160 --> 00:43:18,280
Speaker 1: And fifty thousand. That's about one hundred and twenty.

883
00:43:19,480 --> 00:43:22,399
Speaker 3: You have functions for this on terminal, So.

884
00:43:22,400 --> 00:43:25,359
Speaker 4: You went dollars, Yeah, dollars, I'll accept that. I'll stay

885
00:43:25,360 --> 00:43:26,120
Speaker 4: in dollars.

886
00:43:25,840 --> 00:43:28,359
Speaker 1: For I remember the prices right, rules are in effect, so.

887
00:43:28,320 --> 00:43:29,880
Speaker 4: You got to be under, you can't be over. Is

888
00:43:29,880 --> 00:43:30,479
Speaker 4: that how this works?

889
00:43:30,920 --> 00:43:32,279
Speaker 1: We'll call it closest to the pin?

890
00:43:33,120 --> 00:43:35,720
Speaker 4: Okay, yeah, I'm going to say two dogs in London

891
00:43:35,760 --> 00:43:38,920
Speaker 4: working for billionaires on call twenty four to seven is

892
00:43:39,080 --> 00:43:42,440
Speaker 4: a ninety nine thousand dollars a year job.

893
00:43:42,600 --> 00:43:47,600
Speaker 1: Holy cow, what a gosh dollar? Wait, dollars, dollars, but

894
00:43:47,960 --> 00:43:51,000
Speaker 1: if pounds is closer, I'll take that. Man, all right,

895
00:43:51,120 --> 00:43:53,080
Speaker 1: I'm gonna have to get the calculator out. One hundred

896
00:43:53,120 --> 00:43:57,080
Speaker 1: thousand British pounds to take care of two dogs. What

897
00:43:57,160 --> 00:44:01,040
Speaker 1: is in London? One hundred and twenty eight thousand US

898
00:44:01,120 --> 00:44:05,040
Speaker 1: dollars the difference in the middle. Yeah, yeah, I think

899
00:44:05,040 --> 00:44:05,719
Speaker 1: we got a draw.

900
00:44:05,880 --> 00:44:07,000
Speaker 4: I think so I'll take it.

901
00:44:07,120 --> 00:44:10,160
Speaker 1: You have a draw, that's pretty good, and uh, it's

902
00:44:10,200 --> 00:44:13,200
Speaker 1: time for me to announce I'll be leaving Bloomberg for uh,

903
00:44:13,560 --> 00:44:17,120
Speaker 1: for my retirement career as a dog nanny in London.

904
00:44:17,280 --> 00:44:19,759
Speaker 2: Why did I immediately take you seriously?

905
00:44:22,000 --> 00:44:22,560
Speaker 3: I need to go.

906
00:44:22,760 --> 00:44:24,719
Speaker 1: Oh believe me. When I leave, they'll be dragging me

907
00:44:24,760 --> 00:44:27,359
Speaker 1: out of here in a handcuffs, not in handcuffs, but

908
00:44:28,280 --> 00:44:29,240
Speaker 1: kicking and screaming.

909
00:44:29,760 --> 00:44:32,000
Speaker 3: Why doesn't Full dawna laugh? You are pretty funny.

910
00:44:34,840 --> 00:44:36,880
Speaker 4: That is what we call a backhanded compliment here in

911
00:44:36,920 --> 00:44:37,799
Speaker 4: the podcasting world.

912
00:44:39,040 --> 00:44:43,360
Speaker 1: I'll take any compliment backhand, forehand, side hand, whatever it takes.

913
00:44:43,760 --> 00:44:47,200
Speaker 1: Jared Gross, head of Institutional Portfolio Strategy at JP Morgan

914
00:44:47,280 --> 00:44:50,280
Speaker 1: Asset Management. Really always a pleasure to hear your thoughts

915
00:44:50,400 --> 00:44:54,319
Speaker 1: and express so simply and eloquently, really appreciate it, and

916
00:44:54,440 --> 00:44:56,400
Speaker 1: hope I'll get you back in for a third time

917
00:44:56,760 --> 00:44:58,640
Speaker 1: and get another bitcoin headline.

918
00:44:59,200 --> 00:45:01,600
Speaker 4: No bitcoin headline, Yeah, you already got one. It's all

919
00:45:01,760 --> 00:45:09,920
Speaker 4: got Yeah, nothing, that's time. Thanks Jared, take care, Bye, bye,

920
00:45:13,120 --> 00:45:13,799
Speaker 4: what goes up?

921
00:45:13,920 --> 00:45:16,719
Speaker 5: We'll be back next week. Until then, you can find

922
00:45:16,760 --> 00:45:20,280
Speaker 5: us on the Bloomberg Terminal, website and app or wherever

923
00:45:20,320 --> 00:45:21,440
Speaker 5: you get your podcasts.

924
00:45:22,120 --> 00:45:22,600
Speaker 3: We'd love it.

925
00:45:22,640 --> 00:45:24,520
Speaker 5: If you took the time to rate and review the

926
00:45:24,560 --> 00:45:27,479
Speaker 5: show so more listeners can find us. You can find

927
00:45:27,560 --> 00:45:32,200
Speaker 5: us on Twitter, follow me at Goldana Hirich. Mike Reagan

928
00:45:32,360 --> 00:45:37,359
Speaker 5: is at Reaganonymous. You can also follow Bloomber Podcasts at podcasts.

929
00:45:38,160 --> 00:45:40,920
Speaker 5: What Goes Up is produced by Stacy Wong and our

930
00:45:40,920 --> 00:45:44,160
Speaker 5: head of podcasts is Sage Pauman. Thanks for listening and

931
00:45:44,160 --> 00:45:48,160
Speaker 5: we'll see you next week.