1 00:00:01,320 --> 00:00:13,200 Speaker 1: Scrap on your parachute. It's time for What Goes Up? Hello, 2 00:00:13,240 --> 00:00:17,000 Speaker 1: and welcome to What Goes Up, a Bloomberg Weekly Markets podcast. 3 00:00:17,280 --> 00:00:20,360 Speaker 1: I'm Mike Reagan, a senior editor at Bloomberg, and this 4 00:00:20,400 --> 00:00:23,759 Speaker 1: week on the show, the alarming rise in treasury yields 5 00:00:23,800 --> 00:00:27,120 Speaker 1: finally cooled off this week. But does this really the 6 00:00:27,320 --> 00:00:30,640 Speaker 1: end or do rates have further room to move higher? 7 00:00:31,120 --> 00:00:33,560 Speaker 1: And what does it all mean for this rotation into 8 00:00:33,640 --> 00:00:37,120 Speaker 1: value in cyclical stocks. Our guest will share some thoughts 9 00:00:37,159 --> 00:00:39,720 Speaker 1: on this issue, as well as explain why he's looking 10 00:00:39,840 --> 00:00:43,800 Speaker 1: at stocks in the United Kingdom among other international markets. 11 00:00:44,440 --> 00:00:47,440 Speaker 1: But before we get to that, since Sarah abandoned us 12 00:00:47,440 --> 00:00:50,600 Speaker 1: all here sadly, I've decided we will bring in sort 13 00:00:50,640 --> 00:00:55,120 Speaker 1: of a rotating cast of reporters, editors, and strategists from 14 00:00:55,160 --> 00:00:57,840 Speaker 1: throughout the Bloomberg universe to fill in for her on 15 00:00:57,920 --> 00:01:01,480 Speaker 1: a sort of rotating basis. And as listeners know, I 16 00:01:01,520 --> 00:01:03,640 Speaker 1: can't resist a good gimmick, so I'm going to call 17 00:01:03,680 --> 00:01:06,959 Speaker 1: it the mystery co host of the week. So Charlie 18 00:01:07,040 --> 00:01:09,160 Speaker 1: Pellett take it away and tell us who this week's 19 00:01:09,240 --> 00:01:13,360 Speaker 1: mystery co host is. This week's mystery co host is 20 00:01:13,520 --> 00:01:17,119 Speaker 1: pretty gup dog Pretty as a reporter for Bloomberg's Market 21 00:01:17,160 --> 00:01:20,880 Speaker 1: Live blog and a regular on Bloomberg TV and radio. 22 00:01:21,400 --> 00:01:24,679 Speaker 1: She's a texting at heart and owns a dog that 23 00:01:24,840 --> 00:01:28,319 Speaker 1: resembles an old man. It is true, and I'm very 24 00:01:28,400 --> 00:01:30,199 Speaker 1: proud of it. Even when I got him as a puppy, 25 00:01:30,280 --> 00:01:31,959 Speaker 1: he was only a month old, and he still looked 26 00:01:32,000 --> 00:01:34,679 Speaker 1: like he had, you know, twenty years of experience, which, 27 00:01:34,720 --> 00:01:37,160 Speaker 1: to be honest, is actually pretty interesting because when I 28 00:01:37,200 --> 00:01:38,560 Speaker 1: was a little that's what my mom used to say 29 00:01:38,560 --> 00:01:40,679 Speaker 1: about me. So I think it's only fitting that I 30 00:01:40,720 --> 00:01:43,600 Speaker 1: got this dog. It's fitting for me because I'm an 31 00:01:43,640 --> 00:01:46,680 Speaker 1: old man who looks like a dog. So I feel 32 00:01:47,080 --> 00:01:51,520 Speaker 1: comradeship here. I think we all have our weak points. Mike, 33 00:01:51,560 --> 00:01:55,560 Speaker 1: I'm just not going to comment on yours. So but anyways, 34 00:01:55,560 --> 00:01:58,080 Speaker 1: though that's enough about my dog. I do want to 35 00:01:58,120 --> 00:02:01,400 Speaker 1: introduce our guests though. This week's guests the head of 36 00:02:01,520 --> 00:02:05,040 Speaker 1: investment strategy for City Personal Wealth Management. His name is 37 00:02:05,080 --> 00:02:07,440 Speaker 1: Shawn Snyder. Sean, Welcome to the show. Thank you so 38 00:02:07,560 --> 00:02:09,720 Speaker 1: much for joining us. I do want to dive right 39 00:02:09,760 --> 00:02:12,760 Speaker 1: in here to the tech slash yields component, and we've 40 00:02:12,760 --> 00:02:15,720 Speaker 1: been talking about it for weeks, this inverse correlation that 41 00:02:15,760 --> 00:02:18,840 Speaker 1: you're seeing, and the narrative seems to be that if 42 00:02:18,919 --> 00:02:22,280 Speaker 1: text kind of future earnings are based on longer term growth, 43 00:02:22,320 --> 00:02:24,200 Speaker 1: based on this idea that all of their growth is 44 00:02:24,240 --> 00:02:27,120 Speaker 1: coming in the future, therefore they're more going to be 45 00:02:27,160 --> 00:02:29,360 Speaker 1: more sensitive to yield. But how can you make that 46 00:02:29,480 --> 00:02:32,840 Speaker 1: argument when perhaps the last ten years of growth you've 47 00:02:32,840 --> 00:02:35,560 Speaker 1: seen a tech isn't necessarily indicative of the same margin 48 00:02:35,639 --> 00:02:37,519 Speaker 1: of growth you're going to see in the same sector 49 00:02:37,600 --> 00:02:39,240 Speaker 1: for the next ten years. So how how do you 50 00:02:39,280 --> 00:02:42,239 Speaker 1: how do you justify that? Sure? I think the most 51 00:02:43,080 --> 00:02:47,080 Speaker 1: simplistic way to think about what's happening is essentially, if 52 00:02:47,080 --> 00:02:50,560 Speaker 1: you have inflation rising, a dollar today is worth more 53 00:02:50,639 --> 00:02:54,560 Speaker 1: than a dollar in the future. And technology stocks are 54 00:02:54,600 --> 00:02:58,480 Speaker 1: generally considered long duration assets, so they're particularly sensitive to 55 00:02:58,480 --> 00:03:01,000 Speaker 1: the rising yields. But not just us the rise in 56 00:03:01,160 --> 00:03:04,720 Speaker 1: tenure nominal yields, but really the tenure real yield. That's 57 00:03:04,720 --> 00:03:08,079 Speaker 1: what it matters the most. They've actually tracked fairly well 58 00:03:08,120 --> 00:03:11,480 Speaker 1: together in an inverse correlation over the last say six 59 00:03:11,520 --> 00:03:14,080 Speaker 1: months or so, so it's really what's happening to the 60 00:03:14,120 --> 00:03:17,600 Speaker 1: real yell that matters most. For technology, I will argue 61 00:03:17,639 --> 00:03:21,359 Speaker 1: that you are right. Technology today looks very different than 62 00:03:21,360 --> 00:03:23,440 Speaker 1: it did in the past. Right when we had the 63 00:03:23,480 --> 00:03:26,240 Speaker 1: technology bubble, you have really extreme valuations and not a 64 00:03:26,240 --> 00:03:28,800 Speaker 1: lot of earnings. A lot of these companies now actually 65 00:03:28,840 --> 00:03:30,960 Speaker 1: have significant earnings, so it is different. I would say 66 00:03:30,960 --> 00:03:33,720 Speaker 1: that maybe a little bit less vulnerable than they were 67 00:03:33,760 --> 00:03:37,720 Speaker 1: back then. Seans it's this all sort of the lynchpins 68 00:03:37,720 --> 00:03:41,960 Speaker 1: who to all this rotation is in the bond market. Um. 69 00:03:42,000 --> 00:03:44,600 Speaker 1: This week we did see that that ten year yield 70 00:03:44,680 --> 00:03:48,760 Speaker 1: sort of come down a little bit. Walk us through 71 00:03:48,800 --> 00:03:51,360 Speaker 1: what you're thinking about the long end of the curve 72 00:03:51,440 --> 00:03:53,440 Speaker 1: and the yield curve. I know you've done some some 73 00:03:53,480 --> 00:03:56,040 Speaker 1: work looking about looking at that and thinking about it. 74 00:03:56,360 --> 00:03:59,280 Speaker 1: I don't think anyone is very confident that this surgeon 75 00:03:59,360 --> 00:04:02,200 Speaker 1: yields is over yet. I mean, is this kind of 76 00:04:02,200 --> 00:04:04,000 Speaker 1: a head fake that we're saying this week? What's your 77 00:04:04,000 --> 00:04:07,440 Speaker 1: take on on this sort of uh many correction back 78 00:04:07,480 --> 00:04:10,600 Speaker 1: lower yields that we're seeing. I think the last week 79 00:04:10,680 --> 00:04:12,880 Speaker 1: or so it could probably be chalked up to COVID jitters. 80 00:04:13,360 --> 00:04:17,320 Speaker 1: You've seen some renewed lockdowns in Germany, although very short lived. 81 00:04:17,360 --> 00:04:19,800 Speaker 1: I think they end. Uh. You know, you know, in 82 00:04:19,800 --> 00:04:22,240 Speaker 1: a week or two. I think it's April eighteenth or something. 83 00:04:22,320 --> 00:04:23,960 Speaker 1: I don't remember the exact date. But it's not a 84 00:04:24,000 --> 00:04:26,719 Speaker 1: long lived lockdown. Uh. You saw it's a very similar 85 00:04:26,800 --> 00:04:29,599 Speaker 1: thing in France. UH. And I think there's some concerns 86 00:04:29,640 --> 00:04:34,159 Speaker 1: that these you know, new strains, UH, maybe spreading a 87 00:04:34,160 --> 00:04:37,839 Speaker 1: bit more rapidly than we initially anticipated. So I don't 88 00:04:37,839 --> 00:04:41,640 Speaker 1: think that delays the recovery significantly. You know, you heard 89 00:04:41,680 --> 00:04:44,159 Speaker 1: President Biden talk about raising his goal from a hundred 90 00:04:44,160 --> 00:04:47,560 Speaker 1: million shots to two million today. Um, they are on 91 00:04:47,640 --> 00:04:49,800 Speaker 1: pace to get there at the current pace, about two 92 00:04:49,800 --> 00:04:52,840 Speaker 1: and a half million doses per day. Uh. To get 93 00:04:52,839 --> 00:04:55,000 Speaker 1: that extra seventy million needed to hit his target, it 94 00:04:55,000 --> 00:04:57,640 Speaker 1: only takes about twenty eight days. But I do think 95 00:04:57,680 --> 00:04:59,599 Speaker 1: that's sort of y Yields have kind of backed up 96 00:04:59,640 --> 00:05:02,279 Speaker 1: a little bit, UM when you mentioned what's going to happen, 97 00:05:02,320 --> 00:05:04,760 Speaker 1: and over the long run, this is not a new 98 00:05:04,800 --> 00:05:08,400 Speaker 1: phenomenon to see the yield curve steepen. It's happened when 99 00:05:08,400 --> 00:05:12,880 Speaker 1: the U. S economy exited recession during the last four recessions. UH, 100 00:05:12,920 --> 00:05:15,800 Speaker 1: And eventually the spread between the ten year yield and 101 00:05:15,800 --> 00:05:17,440 Speaker 1: the two year yield, which is what we call the 102 00:05:17,520 --> 00:05:21,719 Speaker 1: yield curve, actually peaked at about two point four percenter. 103 00:05:21,800 --> 00:05:24,880 Speaker 1: So during those last four recessions. Right now the spread 104 00:05:24,920 --> 00:05:27,040 Speaker 1: is about one and a half percent, so that would 105 00:05:27,040 --> 00:05:30,560 Speaker 1: imply there's probably further upside here to go. And if 106 00:05:30,600 --> 00:05:33,080 Speaker 1: we look at the past four recessions again, it took 107 00:05:33,120 --> 00:05:36,240 Speaker 1: about twenty two months on average from the end of 108 00:05:36,240 --> 00:05:39,680 Speaker 1: the recession to the yield curve peaking. Now, the recession 109 00:05:39,680 --> 00:05:41,720 Speaker 1: has probably ended a while ago, right it may have 110 00:05:41,839 --> 00:05:45,360 Speaker 1: ended in September. I'm not the one who's the arbitr 111 00:05:45,360 --> 00:05:49,039 Speaker 1: of when recession visually ended, but we're probably at least 112 00:05:49,480 --> 00:05:53,160 Speaker 1: several months into the recovery, so some of this has 113 00:05:53,160 --> 00:05:55,599 Speaker 1: already been priced in. The yield curve has already steep end, 114 00:05:56,279 --> 00:05:58,360 Speaker 1: but we probably have further to run based on what's 115 00:05:58,360 --> 00:06:02,400 Speaker 1: happened in historical example. That's fascinating that you say that, 116 00:06:02,440 --> 00:06:05,520 Speaker 1: because you've talked about post recessionary periods. But something else 117 00:06:05,520 --> 00:06:08,240 Speaker 1: that's pretty common in post recessionary periods is this idea 118 00:06:08,279 --> 00:06:10,560 Speaker 1: that value stocks continue to rise. And I think the 119 00:06:10,560 --> 00:06:13,120 Speaker 1: connection to that, for example, with the yield picture, is 120 00:06:13,160 --> 00:06:15,400 Speaker 1: going to be that financials will rise as well in 121 00:06:15,480 --> 00:06:18,599 Speaker 1: line with those yield curves. But how do you decide 122 00:06:18,640 --> 00:06:20,839 Speaker 1: how long that that rally runs up? I mean it 123 00:06:20,839 --> 00:06:24,320 Speaker 1: makes sense to buy things like financials like I mentioned, 124 00:06:24,400 --> 00:06:26,480 Speaker 1: or commodities or e M for example. But when do 125 00:06:26,560 --> 00:06:29,839 Speaker 1: you decide that that period about performance is over? When 126 00:06:29,839 --> 00:06:31,400 Speaker 1: do you decide that we're now going to be in 127 00:06:31,440 --> 00:06:34,920 Speaker 1: a growth environment? Again, that is an absolutely great question 128 00:06:35,000 --> 00:06:38,280 Speaker 1: to determine when exactly something ends. I think there's further 129 00:06:38,520 --> 00:06:40,240 Speaker 1: room to run if you just look on a very 130 00:06:40,320 --> 00:06:44,320 Speaker 1: very basic level, the Russell one thousand growth index versus 131 00:06:44,320 --> 00:06:46,480 Speaker 1: the Russell one thousand value index and you look at 132 00:06:46,520 --> 00:06:50,640 Speaker 1: how they perform. Since the end of the growth index 133 00:06:50,680 --> 00:06:54,600 Speaker 1: is up about the value index is only up about ten. 134 00:06:55,160 --> 00:06:57,080 Speaker 1: So to me, that suggests that there's further room to 135 00:06:57,160 --> 00:07:00,320 Speaker 1: run in the value space. And it really is picular 136 00:07:00,360 --> 00:07:04,040 Speaker 1: for financials because you think that steepening yield curve benefits 137 00:07:04,080 --> 00:07:06,719 Speaker 1: them through net interest income. And they also took a 138 00:07:06,760 --> 00:07:10,360 Speaker 1: lot of loan loss reserves in anticipation of this pandemic 139 00:07:10,520 --> 00:07:14,760 Speaker 1: causing credit issues, and because we've got so much significant stimulus, 140 00:07:15,240 --> 00:07:17,880 Speaker 1: they really haven't quite seen that. So eventually that's going 141 00:07:17,960 --> 00:07:20,360 Speaker 1: to be released, and that will turn into profits. Now, 142 00:07:20,480 --> 00:07:23,240 Speaker 1: some of that's priced in, probably, but I still think 143 00:07:23,240 --> 00:07:25,920 Speaker 1: there's some room to run there for financials, particularly for 144 00:07:26,040 --> 00:07:30,200 Speaker 1: talking about another one percent higher or steepening in the 145 00:07:30,280 --> 00:07:34,520 Speaker 1: yield curve. You're shut. I keep thinking of a word 146 00:07:34,760 --> 00:07:37,440 Speaker 1: that I haven't used or heard in a in a 147 00:07:37,480 --> 00:07:41,000 Speaker 1: long time, and that's goldilocks. I feel like the market 148 00:07:41,040 --> 00:07:44,000 Speaker 1: is really hoping for sort of this goldilocks recovery. If 149 00:07:44,040 --> 00:07:46,160 Speaker 1: it gets a little too hot, if inflation is a 150 00:07:46,160 --> 00:07:49,640 Speaker 1: little too hot, that's obviously going to raise rates and 151 00:07:49,680 --> 00:07:52,040 Speaker 1: be an issue. But as you point out now, with 152 00:07:52,160 --> 00:07:54,840 Speaker 1: Germany locking down even here in my home state of 153 00:07:54,880 --> 00:07:58,160 Speaker 1: New Jersey, they've kind of halted the reopening to some degree. 154 00:07:58,800 --> 00:08:02,760 Speaker 1: I wonder, you know which is sort of a more 155 00:08:02,840 --> 00:08:05,960 Speaker 1: painful event for the market. Is it too hot of 156 00:08:05,960 --> 00:08:09,480 Speaker 1: a recovery that that causes yields to rise and people 157 00:08:09,520 --> 00:08:14,560 Speaker 1: bring forward their timeline for the fed UH normalizing policy, 158 00:08:14,800 --> 00:08:18,320 Speaker 1: or is it that this recovery is not as robust 159 00:08:18,400 --> 00:08:21,480 Speaker 1: as sort of this rotation and and the excitement over 160 00:08:21,520 --> 00:08:25,040 Speaker 1: the rotation into cyclicals and value sort of implies, which 161 00:08:25,160 --> 00:08:28,920 Speaker 1: which one kind of scares you more. I think what 162 00:08:29,000 --> 00:08:31,720 Speaker 1: scares me the most is if we're wrong about the 163 00:08:31,760 --> 00:08:35,280 Speaker 1: path of the virus, that changes everything, Right, If these 164 00:08:35,559 --> 00:08:40,000 Speaker 1: strains come out spread more rapidly than we expect or 165 00:08:40,080 --> 00:08:42,320 Speaker 1: aren't covered by the vaccines, then that's kind of a 166 00:08:42,320 --> 00:08:44,559 Speaker 1: game change. Or now that's not the base case. It 167 00:08:44,600 --> 00:08:47,320 Speaker 1: doesn't seem like that's happening, you know, And I do 168 00:08:47,440 --> 00:08:52,160 Speaker 1: think that our treatment levels have improved greatly, number of hospitializations, 169 00:08:52,200 --> 00:08:54,640 Speaker 1: deaths likely come down. And I think really importantly, you 170 00:08:54,640 --> 00:08:58,160 Speaker 1: have a very significant portion of the sixty five plus 171 00:08:58,200 --> 00:09:01,520 Speaker 1: population already vaccinated. So you know, I think they're right 172 00:09:01,600 --> 00:09:05,000 Speaker 1: to be optimistic about the future. And you know, if 173 00:09:05,040 --> 00:09:07,200 Speaker 1: we do get six and a half percent growth, like 174 00:09:07,200 --> 00:09:10,480 Speaker 1: the fattest projecting, then you're looking at the strongest growth 175 00:09:10,559 --> 00:09:13,400 Speaker 1: since the early nine and I think we will hit that. 176 00:09:13,960 --> 00:09:16,240 Speaker 1: Um So, to me, I think that's the most important 177 00:09:16,240 --> 00:09:18,720 Speaker 1: point of all of this. It's not rising bond yields. 178 00:09:18,800 --> 00:09:21,560 Speaker 1: It's that we are exiting a recession and this is 179 00:09:21,600 --> 00:09:24,160 Speaker 1: probably just the beginning of a new economic cycle, and 180 00:09:24,160 --> 00:09:27,880 Speaker 1: those tend to last five, six years, maybe longer. That's 181 00:09:27,920 --> 00:09:30,400 Speaker 1: really the important point because that's what's going to create earnings, 182 00:09:30,640 --> 00:09:32,600 Speaker 1: and that's what's going to sustain the stock market over 183 00:09:32,600 --> 00:09:35,360 Speaker 1: a longer period of time. Do you see corrections because 184 00:09:35,360 --> 00:09:37,920 Speaker 1: of bond yields? Maybe, But at the end of the day, 185 00:09:38,400 --> 00:09:40,760 Speaker 1: it's really about the economy recovering in the beginning of 186 00:09:40,800 --> 00:09:56,280 Speaker 1: a new economic cycle. De Sean, what's the trade here? 187 00:09:56,320 --> 00:09:58,960 Speaker 1: And here's why I ask. I'm on a team that's 188 00:09:59,000 --> 00:10:01,840 Speaker 1: filled with X trader and they always ask me what's 189 00:10:01,880 --> 00:10:04,200 Speaker 1: the trade? Uh? So I'm very curious when you have 190 00:10:04,320 --> 00:10:07,920 Speaker 1: this risk, or this continuing risk of this virus of 191 00:10:08,240 --> 00:10:11,920 Speaker 1: perhaps more variants, can you really dive into the deep 192 00:10:12,040 --> 00:10:13,920 Speaker 1: end with the value play or do you still have 193 00:10:13,960 --> 00:10:16,880 Speaker 1: to have some sort of exposure to things like tech, 194 00:10:16,960 --> 00:10:19,560 Speaker 1: to things like utilities, those kind of names that you 195 00:10:19,559 --> 00:10:23,400 Speaker 1: can really continue to rely on. Sure, I don't think 196 00:10:23,400 --> 00:10:26,520 Speaker 1: you just abandoned technology or growth stocks. I mean, over time, 197 00:10:26,920 --> 00:10:30,480 Speaker 1: they will continue to provide growth as they're called, uh 198 00:10:30,480 --> 00:10:32,880 Speaker 1: and you will see positive earnings in those spaces. So 199 00:10:32,920 --> 00:10:35,000 Speaker 1: I don't think it makes sense to completely get rid 200 00:10:35,040 --> 00:10:38,319 Speaker 1: of technology. But you know, you have a lot of 201 00:10:38,480 --> 00:10:41,160 Speaker 1: people that have been heavily invested in technology since the 202 00:10:41,200 --> 00:10:46,000 Speaker 1: beginning of the pandemic, and that scenario where we're all 203 00:10:46,040 --> 00:10:49,840 Speaker 1: staying at home is potentially unwinding. So it's not all 204 00:10:49,920 --> 00:10:54,199 Speaker 1: technology companies, right. There's some that i've really strong cash 205 00:10:54,520 --> 00:10:57,440 Speaker 1: cash on their balance sheet, they have strong curpet earnings. 206 00:10:57,480 --> 00:11:00,360 Speaker 1: There's some that don't have a lot of earnings. There's 207 00:11:00,400 --> 00:11:04,800 Speaker 1: also some that are uniquely benefiting from the pandemic exercise equipment. 208 00:11:05,120 --> 00:11:07,960 Speaker 1: So it really it's not just tech, it's which type 209 00:11:08,000 --> 00:11:11,520 Speaker 1: of tech. Yeah, I feel like the really the most 210 00:11:11,520 --> 00:11:14,920 Speaker 1: speculative sort of earnings way off in the in the 211 00:11:14,960 --> 00:11:19,160 Speaker 1: distant future type of tech. Uh, really the the arc 212 00:11:19,320 --> 00:11:22,440 Speaker 1: you know, Cathy Woods type of of hopes and dreams 213 00:11:22,480 --> 00:11:25,280 Speaker 1: type of stocks that are really getting hit the hardest. 214 00:11:25,360 --> 00:11:29,600 Speaker 1: Is there something I mean? Is that all simply a 215 00:11:29,640 --> 00:11:33,000 Speaker 1: reverse of the side of the coin to the yields picture? 216 00:11:33,080 --> 00:11:35,200 Speaker 1: I mean, what would it take to get that kind 217 00:11:35,200 --> 00:11:41,000 Speaker 1: of really gung ho, uh gusty spirit towards those those 218 00:11:41,040 --> 00:11:43,000 Speaker 1: types of stocks brewing? Again? Is it? Is it just 219 00:11:43,080 --> 00:11:46,439 Speaker 1: as a simple matter of which way rates are going now? 220 00:11:46,679 --> 00:11:49,480 Speaker 1: I think it's valuations. I think if you see those 221 00:11:49,600 --> 00:11:52,480 Speaker 1: stocks correct enough, you'll get people back into the space. 222 00:11:52,880 --> 00:11:55,480 Speaker 1: I just don't think they feel completely confident yet that 223 00:11:55,520 --> 00:11:58,600 Speaker 1: it's over, that it's corrected enough where the valuations are 224 00:11:58,600 --> 00:12:01,080 Speaker 1: really appealing at this point. Uh, And it's not so 225 00:12:01,200 --> 00:12:03,680 Speaker 1: that people are kind of nervous about how things look 226 00:12:03,720 --> 00:12:06,800 Speaker 1: as we exit this recession. There's a lot of uncertainty. 227 00:12:06,840 --> 00:12:10,000 Speaker 1: We don't know what's going to happen with inflation. We 228 00:12:10,040 --> 00:12:13,120 Speaker 1: think we know you can look at gasoline prices alone 229 00:12:13,240 --> 00:12:15,840 Speaker 1: and that will point towards the CPI that's about three 230 00:12:16,320 --> 00:12:19,280 Speaker 1: for the remainder of the year. So there's really high 231 00:12:19,480 --> 00:12:22,640 Speaker 1: probability that we get higher inflation, but we don't know 232 00:12:22,720 --> 00:12:25,920 Speaker 1: if it's simply going to be for a couple of 233 00:12:26,000 --> 00:12:28,080 Speaker 1: quarters and then moderate, or if it's going to be 234 00:12:28,160 --> 00:12:31,920 Speaker 1: something more significant. And that's really the uncertainty that keeps 235 00:12:31,960 --> 00:12:35,000 Speaker 1: you from maybe going all back in on these high 236 00:12:35,120 --> 00:12:40,400 Speaker 1: valuation areas. So tell me you talked about valuations. How 237 00:12:40,480 --> 00:12:43,280 Speaker 1: much does liquidity play into this, because I think in 238 00:12:43,840 --> 00:12:46,080 Speaker 1: the middle parts of last year have to say there 239 00:12:46,080 --> 00:12:49,160 Speaker 1: were companies who were just in free access of the 240 00:12:49,200 --> 00:12:52,560 Speaker 1: debt market here. I mean you had airlines really basing 241 00:12:52,559 --> 00:12:55,320 Speaker 1: a cash bunch and then getting these kind of massive 242 00:12:55,320 --> 00:12:59,000 Speaker 1: amounts of cash and issuing these bonds for ten premiums. 243 00:12:59,040 --> 00:13:02,760 Speaker 1: Tech coming in issuing bonds for literally no premium So 244 00:13:02,840 --> 00:13:06,600 Speaker 1: what here's the role here of those extra cash cushions 245 00:13:06,600 --> 00:13:09,280 Speaker 1: that tech may have, but now other kind of battered 246 00:13:09,320 --> 00:13:12,400 Speaker 1: sectors have to from airlines to cruise, lene etcetera. Where 247 00:13:12,400 --> 00:13:16,120 Speaker 1: does the liquidity piece of the equation come in? Sure? 248 00:13:16,200 --> 00:13:18,319 Speaker 1: So I'm not sure I'm going to answer this exactly 249 00:13:18,360 --> 00:13:20,040 Speaker 1: the way you'd want me to. But if you think 250 00:13:20,080 --> 00:13:23,360 Speaker 1: of how much stimulus has been done, you've seen personal 251 00:13:23,400 --> 00:13:26,959 Speaker 1: income rise one point one trillion dollars last year for 252 00:13:27,200 --> 00:13:29,440 Speaker 1: the nation as a whole, and a lot of that 253 00:13:29,480 --> 00:13:32,960 Speaker 1: money went into some of these technology things, exercise equipment, 254 00:13:33,000 --> 00:13:35,319 Speaker 1: all those stay at home type stock. So that is 255 00:13:35,360 --> 00:13:39,040 Speaker 1: liquidity in the sense that it actually reached consumers. Consumers 256 00:13:39,080 --> 00:13:41,440 Speaker 1: actually spent it. But are they going to continue that 257 00:13:41,480 --> 00:13:44,160 Speaker 1: same behavioral pattern or they going to move towards the 258 00:13:44,200 --> 00:13:47,760 Speaker 1: services sector the economy. Are they going to start booking trips? 259 00:13:47,800 --> 00:13:50,120 Speaker 1: Are they going to start going back to hotels? Are 260 00:13:50,120 --> 00:13:52,439 Speaker 1: they're going to do those types of things? Um So, 261 00:13:52,480 --> 00:13:54,719 Speaker 1: to me, that's kind of where the liquidity plays. And 262 00:13:54,800 --> 00:13:58,720 Speaker 1: you're absolutely right when you talk about technology and airlines 263 00:13:58,760 --> 00:14:01,400 Speaker 1: and some of these with debt. But if you look 264 00:14:01,400 --> 00:14:06,080 Speaker 1: at the SP five, nowhere near the same performance for 265 00:14:06,280 --> 00:14:09,520 Speaker 1: the other four hundred and ninety stocks. Right, So you 266 00:14:09,559 --> 00:14:11,800 Speaker 1: had significant run up, maybe a hundred and thirty percent 267 00:14:11,880 --> 00:14:15,000 Speaker 1: return in those top five stocks, and then maybe not 268 00:14:15,080 --> 00:14:17,400 Speaker 1: even half of that, maybe six and the other four. 269 00:14:18,720 --> 00:14:21,400 Speaker 1: So when I hear about liquidity just insanely driving up 270 00:14:21,440 --> 00:14:24,160 Speaker 1: the market, it's not all of the market. There's plenty 271 00:14:24,200 --> 00:14:27,320 Speaker 1: of areas that are still beaten down. Yeah, So I 272 00:14:27,360 --> 00:14:31,080 Speaker 1: wanted to get to that notion about the value in 273 00:14:31,080 --> 00:14:34,920 Speaker 1: in overseas markets, and you would pointed out the UK market, 274 00:14:34,960 --> 00:14:38,360 Speaker 1: you know, looking at the foot see here. Uh never 275 00:14:38,480 --> 00:14:41,600 Speaker 1: did quite reclaim that that record back I think it 276 00:14:41,680 --> 00:14:44,440 Speaker 1: was two thousand and eighteen. I mean, I guess there's 277 00:14:44,800 --> 00:14:48,600 Speaker 1: always handwringing over Brexit and the trade situation and that 278 00:14:48,680 --> 00:14:51,760 Speaker 1: sort of thing. But yeah, we're still down a good 279 00:14:51,800 --> 00:14:55,720 Speaker 1: fifteen percent for the foot see from from that peak, Um, 280 00:14:55,960 --> 00:15:00,200 Speaker 1: walk us through what is attractive there? Obviously, valuations, I'm 281 00:15:00,200 --> 00:15:02,080 Speaker 1: sure part of it is it is a kind of 282 00:15:02,120 --> 00:15:05,720 Speaker 1: hand in hand with the the rotation into the more 283 00:15:05,760 --> 00:15:09,240 Speaker 1: cyclical parts of the of the market. Is that kind 284 00:15:09,240 --> 00:15:11,520 Speaker 1: of the story for the UK and and a lot 285 00:15:11,560 --> 00:15:14,080 Speaker 1: of the bullishness towards uh, you know the rest of 286 00:15:14,120 --> 00:15:17,320 Speaker 1: the world compared to the US at this point. Yeah, 287 00:15:17,320 --> 00:15:19,720 Speaker 1: that's right. So what I think of UK equities, I'm 288 00:15:19,800 --> 00:15:22,240 Speaker 1: not thinking that it's going to be some hot stock 289 00:15:22,320 --> 00:15:24,080 Speaker 1: so to speak, that you get rich on, right. This 290 00:15:24,200 --> 00:15:27,240 Speaker 1: is not one of those types of investments. But what 291 00:15:27,280 --> 00:15:30,040 Speaker 1: it is is something that trades about fourteen times earnings, 292 00:15:30,080 --> 00:15:34,400 Speaker 1: which is about discount the U S stocks UH significant 293 00:15:34,400 --> 00:15:36,600 Speaker 1: weighting of the foot Seed one hundred is an energy 294 00:15:36,600 --> 00:15:40,040 Speaker 1: and financials which are both positively correlated with yields. That 295 00:15:40,040 --> 00:15:42,480 Speaker 1: means the fields go up, those sectors tend to benefit, 296 00:15:42,760 --> 00:15:45,040 Speaker 1: and it doesn't have a lot of exposure to technology. 297 00:15:45,080 --> 00:15:47,760 Speaker 1: It's under a two percent waiting in the index of 298 00:15:47,760 --> 00:15:51,400 Speaker 1: the foot So it's not that it's necessarily going to 299 00:15:51,480 --> 00:15:54,320 Speaker 1: make you rich instantly, but if you're looking for an 300 00:15:54,400 --> 00:15:58,720 Speaker 1: area that is still offers value probably as upside to hear, 301 00:15:59,440 --> 00:16:01,880 Speaker 1: we think it's attractive. And I also want to point 302 00:16:01,880 --> 00:16:04,560 Speaker 1: out that this has been a rolling healthcare crisis the 303 00:16:04,720 --> 00:16:07,920 Speaker 1: entire time. Right it started in China, then it spread 304 00:16:07,960 --> 00:16:10,240 Speaker 1: to Italy, then it spread to the U S. We're 305 00:16:10,320 --> 00:16:13,600 Speaker 1: essentially seeing the reversive that now where you're going to 306 00:16:13,680 --> 00:16:16,920 Speaker 1: have lots of vaccinations in the US, then you're going 307 00:16:16,960 --> 00:16:19,400 Speaker 1: to have vaccinations in Europe that maybe it moves to 308 00:16:19,480 --> 00:16:23,960 Speaker 1: Latin America, so those areas will recover, but slower and 309 00:16:24,080 --> 00:16:27,800 Speaker 1: later than we do in the US. I love that 310 00:16:27,840 --> 00:16:30,760 Speaker 1: you brought up vaccinations because that's been something that people saying, 311 00:16:30,760 --> 00:16:33,360 Speaker 1: how do you trade on this? Uh? Something back in 312 00:16:34,080 --> 00:16:36,480 Speaker 1: that was happening is people were trading to the opposite 313 00:16:36,480 --> 00:16:38,880 Speaker 1: direction about in terms of case counts. They were buying 314 00:16:39,040 --> 00:16:42,280 Speaker 1: US markets because Europe and China was more supposed to 315 00:16:42,280 --> 00:16:44,640 Speaker 1: the virus in the US was at the time, and 316 00:16:44,680 --> 00:16:46,400 Speaker 1: then it kind of got flipped on its head. So 317 00:16:46,520 --> 00:16:49,880 Speaker 1: how do you trade the opposite We're to talk about vaccinations, 318 00:16:49,920 --> 00:16:52,880 Speaker 1: for example, where you have perhaps the US or even 319 00:16:52,880 --> 00:16:55,760 Speaker 1: the UK leading in those vaccinations. But like you said, 320 00:16:56,000 --> 00:16:59,280 Speaker 1: e M is not well. I guess one way to 321 00:16:59,320 --> 00:17:01,080 Speaker 1: think about it in the gain not sure and perfectly 322 00:17:01,080 --> 00:17:04,800 Speaker 1: answering the question. But the more vaccinations you have, then 323 00:17:04,840 --> 00:17:06,760 Speaker 1: it's more likely that you're going to pull back on 324 00:17:06,800 --> 00:17:10,080 Speaker 1: some of the stimulus over time. Right, So eventually these 325 00:17:10,080 --> 00:17:12,920 Speaker 1: central banks are going to start to exit from the 326 00:17:12,960 --> 00:17:16,159 Speaker 1: massive amounts of stimulus they've provided, and I think that 327 00:17:16,280 --> 00:17:18,959 Speaker 1: that will be a considered not necessarily immediately we hear 328 00:17:19,000 --> 00:17:20,760 Speaker 1: in Fuss just talking about it in the US right now. 329 00:17:20,800 --> 00:17:23,240 Speaker 1: What the Federal Reserve is gonna do. Are they really 330 00:17:23,240 --> 00:17:25,880 Speaker 1: going to wait until the end of three to raise 331 00:17:25,920 --> 00:17:27,639 Speaker 1: interest rates or they're going to do it towards the 332 00:17:27,720 --> 00:17:31,919 Speaker 1: end of Will they start to taper asset purchases at 333 00:17:31,960 --> 00:17:35,240 Speaker 1: the end of this year or is it early? And 334 00:17:35,480 --> 00:17:38,080 Speaker 1: I think those things will be issues for markets down 335 00:17:38,119 --> 00:17:41,560 Speaker 1: the road. UM. So as far as vaccinations increasing, it's 336 00:17:41,560 --> 00:17:43,240 Speaker 1: a great thing. We all want to get back to life. 337 00:17:43,280 --> 00:17:46,040 Speaker 1: I think that's important, um. And I also would point 338 00:17:46,040 --> 00:17:48,520 Speaker 1: out economy is not the stock market. Stock market is 339 00:17:48,560 --> 00:17:50,960 Speaker 1: not the economy that old adage. Um. I think there 340 00:17:51,000 --> 00:17:53,119 Speaker 1: may be more truth to that as we get further 341 00:17:53,200 --> 00:17:57,920 Speaker 1: along in this where the vaccinations increase the economic outlook 342 00:17:57,920 --> 00:18:01,119 Speaker 1: and the growth outlook, but kind of decreases the amount 343 00:18:01,119 --> 00:18:04,320 Speaker 1: of stimulus that we're seeing in the market. You know, Sean, 344 00:18:04,359 --> 00:18:07,200 Speaker 1: I think it's a it's a fascinating time to try 345 00:18:07,240 --> 00:18:10,840 Speaker 1: to figure out what the Federal reserves next move will be. 346 00:18:11,040 --> 00:18:13,960 Speaker 1: As you point out, you know, everyone trying to determine 347 00:18:14,000 --> 00:18:17,320 Speaker 1: when that tapering begins. I mean, it seems to me 348 00:18:17,880 --> 00:18:20,840 Speaker 1: that they're gonna have a hard time tapering, uh, without 349 00:18:20,880 --> 00:18:24,159 Speaker 1: causing some adjecta, as they say, in the market one 350 00:18:24,160 --> 00:18:26,399 Speaker 1: way or the other. But I also wonder, you know, 351 00:18:26,800 --> 00:18:30,040 Speaker 1: is there an equal chance that we get a surprise 352 00:18:30,080 --> 00:18:32,720 Speaker 1: from them in the other directions, some kind of yield 353 00:18:32,760 --> 00:18:36,200 Speaker 1: curve control or some kind of operation twist to keep 354 00:18:36,240 --> 00:18:39,240 Speaker 1: those that long end tam is that I wonder if 355 00:18:39,240 --> 00:18:43,199 Speaker 1: the market is in some way almost begging for that 356 00:18:43,560 --> 00:18:46,600 Speaker 1: or wishful thinking for that type of scenario. What do 357 00:18:46,680 --> 00:18:49,480 Speaker 1: you think? Yeah, I think it's fascinating that you bring 358 00:18:49,480 --> 00:18:51,240 Speaker 1: that up. I was thinking about this the other day, 359 00:18:51,320 --> 00:18:53,920 Speaker 1: and you know, it almost feels like investors are kind 360 00:18:53,920 --> 00:18:55,720 Speaker 1: of this mindset that the Federal Reserve is on the 361 00:18:55,760 --> 00:18:57,320 Speaker 1: sidelines and they're not going to help us out and 362 00:18:57,359 --> 00:18:59,800 Speaker 1: can't count on them anymore. But if you think about 363 00:18:59,840 --> 00:19:02,440 Speaker 1: what they're saying, they're saying, we need to see either 364 00:19:02,640 --> 00:19:06,520 Speaker 1: substantial for the progress and the recovery or a market 365 00:19:06,520 --> 00:19:10,119 Speaker 1: deterioration in financial conditions. What would get you a market 366 00:19:10,160 --> 00:19:12,920 Speaker 1: deterioration and financial conditions is if the stock market sells 367 00:19:12,920 --> 00:19:16,480 Speaker 1: off sharply. So if the stock market sells sells off 368 00:19:16,520 --> 00:19:20,200 Speaker 1: sharply and corrects because of these rising bond yields, then 369 00:19:20,400 --> 00:19:22,359 Speaker 1: you actually have more impetus for the FETE to step 370 00:19:22,359 --> 00:19:26,200 Speaker 1: in and do a program like QI twist where it 371 00:19:26,240 --> 00:19:29,480 Speaker 1: would actually once again help markets. So I think there's 372 00:19:29,480 --> 00:19:32,800 Speaker 1: support there that people are maybe ignoring. It's almost like 373 00:19:32,840 --> 00:19:35,199 Speaker 1: the the proverbial poal put. You know, we're we're all 374 00:19:35,240 --> 00:19:37,920 Speaker 1: trying to figure out what that type of altility would 375 00:19:37,920 --> 00:19:39,520 Speaker 1: look like to to get us there. I don't. I 376 00:19:39,520 --> 00:19:41,960 Speaker 1: guess no one knows once we see, right. I mean 377 00:19:41,960 --> 00:19:45,120 Speaker 1: maybe if you get you know, real tenure treasury yields 378 00:19:45,119 --> 00:19:47,320 Speaker 1: in your zero, that would maybe be concerning. I don't 379 00:19:47,320 --> 00:19:50,760 Speaker 1: think there's much appetite for a positive real yield or 380 00:19:50,800 --> 00:19:54,760 Speaker 1: if you saw stock market sell off, you know, I 381 00:19:54,800 --> 00:19:57,320 Speaker 1: do think you'd see action. So it's not like they're 382 00:19:57,359 --> 00:20:00,880 Speaker 1: completely gone. The Federal Reserve has not disappeared. They're comfortable 383 00:20:00,960 --> 00:20:03,840 Speaker 1: with their stance for now, but things could change. So 384 00:20:03,880 --> 00:20:07,399 Speaker 1: speaking of a fifteen stock correction, what might be the 385 00:20:07,440 --> 00:20:10,600 Speaker 1: catalyst of that if not the FED and a deterioration 386 00:20:11,080 --> 00:20:13,879 Speaker 1: from there, and what else could possibly create that kind 387 00:20:13,920 --> 00:20:17,400 Speaker 1: of move. That's a really good question. I do think 388 00:20:17,440 --> 00:20:20,000 Speaker 1: the tapering is something that you know, I don't think 389 00:20:20,040 --> 00:20:22,720 Speaker 1: it would create a bear market. I just don't see that. 390 00:20:22,800 --> 00:20:26,320 Speaker 1: I think there's such strong tail winds right now, but 391 00:20:26,520 --> 00:20:29,080 Speaker 1: a goat, any change in the path of the virus 392 00:20:29,400 --> 00:20:32,640 Speaker 1: would be something to consider. Maybe if earning is really 393 00:20:32,640 --> 00:20:37,080 Speaker 1: disappoint maybe if you saw these rising yields become a 394 00:20:37,119 --> 00:20:40,320 Speaker 1: credit market issue, which I don't think there's really signs 395 00:20:40,320 --> 00:20:44,359 Speaker 1: of that yet, um, but it could be something. It's 396 00:20:44,480 --> 00:20:46,720 Speaker 1: it's always tough to say what exactly the catalyst is 397 00:20:46,760 --> 00:20:49,359 Speaker 1: going to be when you have stretched valuations. It doesn't 398 00:20:49,359 --> 00:20:51,959 Speaker 1: always take a whole lot, and it usually comes out 399 00:20:52,000 --> 00:20:55,720 Speaker 1: of nowhere, you know. Sure, I am picturing the clients, 400 00:20:56,200 --> 00:21:01,000 Speaker 1: the city wealth clients as being you know what, sophisticated 401 00:21:01,040 --> 00:21:05,720 Speaker 1: as far as individual investors somewhat let's imagine deeper account 402 00:21:05,800 --> 00:21:08,720 Speaker 1: balances than the robin Hood set out there. Um. But 403 00:21:08,760 --> 00:21:11,240 Speaker 1: there's a lot of speculation these days about what the 404 00:21:11,280 --> 00:21:15,119 Speaker 1: individual investor is gonna do next, especially all these you know, 405 00:21:15,320 --> 00:21:18,919 Speaker 1: new gung ho younger retail traders on Reddit and on 406 00:21:19,040 --> 00:21:22,720 Speaker 1: robin Hood. Is there any insight you have from sort 407 00:21:22,760 --> 00:21:24,919 Speaker 1: of the clients how you deal with like again, I 408 00:21:24,960 --> 00:21:28,520 Speaker 1: think it's not exactly a complete overlap with that that 409 00:21:28,640 --> 00:21:30,920 Speaker 1: type of trader, but you know, just from the sense 410 00:21:30,960 --> 00:21:35,000 Speaker 1: of individuals kind of what their their sentiment is like 411 00:21:35,080 --> 00:21:37,600 Speaker 1: that these days are they are they still willing to 412 00:21:37,680 --> 00:21:41,760 Speaker 1: chase this rally to embrace risk, or you know, is 413 00:21:41,800 --> 00:21:44,880 Speaker 1: that sort of wearing off to some degree. I think 414 00:21:44,880 --> 00:21:48,680 Speaker 1: it's wearing off to some degree. You've actually seen retail 415 00:21:48,720 --> 00:21:52,200 Speaker 1: investors seemingly step back a little bit over the past 416 00:21:52,240 --> 00:21:55,320 Speaker 1: few weeks or so. Uh. And I have to tell you, 417 00:21:55,400 --> 00:21:57,200 Speaker 1: someone just asked me to speak to their high school 418 00:21:57,240 --> 00:22:00,280 Speaker 1: because there the student the students in the fine dance 419 00:22:00,359 --> 00:22:03,639 Speaker 1: club are all, you know, just talking to each other 420 00:22:03,640 --> 00:22:05,720 Speaker 1: about hot stock tips and trying to figure out what 421 00:22:05,760 --> 00:22:08,360 Speaker 1: to do. And they're trying to convince them that that's 422 00:22:08,359 --> 00:22:10,119 Speaker 1: not how you invest, that you should look over the 423 00:22:10,119 --> 00:22:14,040 Speaker 1: long term and not just risk money at any any 424 00:22:14,280 --> 00:22:17,359 Speaker 1: throw it at anything. So it's still going on. I 425 00:22:17,400 --> 00:22:20,439 Speaker 1: think it's encouraging to actually have retail investors in the market. 426 00:22:20,960 --> 00:22:25,080 Speaker 1: It's just when you get into these speculative areas, Uh, 427 00:22:25,160 --> 00:22:27,600 Speaker 1: you really need to know your risk tolerance. And I 428 00:22:27,600 --> 00:22:30,879 Speaker 1: don't think people actually understand their risk tolerance until it 429 00:22:30,920 --> 00:22:33,040 Speaker 1: really collapses on them. And I'm not sure that that's 430 00:22:33,040 --> 00:22:36,359 Speaker 1: going to happen anytime soon. Um, but you know, it 431 00:22:36,400 --> 00:22:40,359 Speaker 1: almost feels too like that check that landed in people's 432 00:22:40,359 --> 00:22:43,160 Speaker 1: and it feels like house money to some degree, I 433 00:22:43,160 --> 00:22:46,679 Speaker 1: imagined to some traders, you know, what better use of 434 00:22:46,720 --> 00:22:49,160 Speaker 1: it than to to let it ride on something risky 435 00:22:49,200 --> 00:22:53,280 Speaker 1: I suppose, right, Yeah, stimulus chocks, And I know there's 436 00:22:53,320 --> 00:22:55,760 Speaker 1: other banks that put out research saying that you know, 437 00:22:55,880 --> 00:22:57,280 Speaker 1: at least a portion of that is going to go 438 00:22:57,320 --> 00:23:17,200 Speaker 1: into retail trading. So let me ask you how insulated 439 00:23:17,440 --> 00:23:20,000 Speaker 1: or not insulated is the market from that, because I 440 00:23:20,000 --> 00:23:21,720 Speaker 1: mean we saw just a few weeks ago during this 441 00:23:21,720 --> 00:23:25,439 Speaker 1: whole game stop saga, the market literally sold off because 442 00:23:25,480 --> 00:23:27,680 Speaker 1: of that. They were freaking out, is what is what 443 00:23:27,800 --> 00:23:30,960 Speaker 1: my understanding was, to what extent is some of these 444 00:23:31,000 --> 00:23:33,760 Speaker 1: bigger tech stocks, for example, that have these bigger waitings 445 00:23:34,000 --> 00:23:38,040 Speaker 1: insulated from the retail bid who maybe can't afford a 446 00:23:38,119 --> 00:23:41,920 Speaker 1: share of Amazon with their checks. You know, I don't 447 00:23:41,960 --> 00:23:45,440 Speaker 1: think it anything that would lead to broad market contagion. 448 00:23:45,520 --> 00:23:47,200 Speaker 1: And the reason I say that is when you think 449 00:23:47,200 --> 00:23:51,399 Speaker 1: of the company that you just mentioned, Uh, there's just 450 00:23:51,480 --> 00:23:54,800 Speaker 1: about zero point seven percent of the market cap is 451 00:23:55,320 --> 00:23:58,760 Speaker 1: shorted names, so it's not a huge section. So there's 452 00:23:59,200 --> 00:24:03,480 Speaker 1: opportunity to kind of, you know, create this scenario where 453 00:24:03,480 --> 00:24:05,520 Speaker 1: you can drive it up. But it's not in a 454 00:24:05,560 --> 00:24:07,240 Speaker 1: lot of names. It's only a few names that you 455 00:24:07,240 --> 00:24:10,080 Speaker 1: can actually do that in. Luckily, thank you, miss I 456 00:24:10,119 --> 00:24:13,159 Speaker 1: guess it would be a crazy world if if it 457 00:24:13,440 --> 00:24:18,800 Speaker 1: uh for other eyes, which is our perfect segue, pretty 458 00:24:19,000 --> 00:24:21,440 Speaker 1: to the craziest things we saw in markets this week, 459 00:24:21,920 --> 00:24:24,679 Speaker 1: as Charlie Pelt will tell us, stand clear of the 460 00:24:24,760 --> 00:24:29,359 Speaker 1: craziest things we saw in markets this week. Pretty, no 461 00:24:29,480 --> 00:24:31,760 Speaker 1: pressure on you. This is your first one co hosting 462 00:24:32,960 --> 00:24:35,400 Speaker 1: bin'd lie. There's a lot of pressure on you. I'm 463 00:24:35,440 --> 00:24:37,840 Speaker 1: expecting you to bring it with the crazy thing. But 464 00:24:37,880 --> 00:24:39,159 Speaker 1: before we get to that, I know we have a 465 00:24:39,200 --> 00:24:41,520 Speaker 1: voicemail into the hotline, So let's let's listen to that 466 00:24:41,560 --> 00:24:44,280 Speaker 1: and see what that's all about. Hey guys, it's Katie 467 00:24:44,280 --> 00:24:47,359 Speaker 1: gray Slid. I couldn't resist popping by because the craziest 468 00:24:47,359 --> 00:24:49,800 Speaker 1: thing I've seen in markets this week and just in 469 00:24:49,880 --> 00:24:52,639 Speaker 1: general is the Suez Canal situation, and I'm dying to 470 00:24:52,720 --> 00:24:55,639 Speaker 1: talk about it. Basically, there's a boat as long as 471 00:24:55,640 --> 00:24:58,160 Speaker 1: the Eiffel Tower is stuck in the Suez and it's 472 00:24:58,200 --> 00:25:02,159 Speaker 1: causing this whole thing. There's oil tankers and container ships 473 00:25:02,200 --> 00:25:05,280 Speaker 1: piled up behind it, calling a mess in the crude market. 474 00:25:05,400 --> 00:25:07,440 Speaker 1: And I'm at home with my family this week and 475 00:25:07,480 --> 00:25:09,520 Speaker 1: they're tired of hearing me talk about it, so I 476 00:25:09,600 --> 00:25:11,639 Speaker 1: thought i'd tell you, guys. I hope the show is 477 00:25:11,680 --> 00:25:15,399 Speaker 1: going well. I love Katie's enthusiasm for this story. She 478 00:25:15,600 --> 00:25:19,600 Speaker 1: she's bored the parents and her boyfriend at home talking 479 00:25:19,600 --> 00:25:21,399 Speaker 1: about it. I can't. I'll talk about it all day. 480 00:25:21,440 --> 00:25:25,520 Speaker 1: I think it's fascinating. This is the commodity traffic jam 481 00:25:25,600 --> 00:25:29,200 Speaker 1: that I did not see coming, and I love it. 482 00:25:29,280 --> 00:25:31,520 Speaker 1: And I love that Katie obsesses about it, because after 483 00:25:31,520 --> 00:25:33,520 Speaker 1: the show, I'm going to message her about it. And 484 00:25:33,560 --> 00:25:36,840 Speaker 1: it's fascinating that it's the size of, or bigger than 485 00:25:36,880 --> 00:25:39,800 Speaker 1: the size of the Eiffel Tower, which is honestly beyond 486 00:25:40,560 --> 00:25:43,720 Speaker 1: uh beyond imagination. I mean, the memes alone just make 487 00:25:43,800 --> 00:25:47,320 Speaker 1: the story so interesting. Um. I think what's interesting about 488 00:25:47,359 --> 00:25:49,199 Speaker 1: it for me, the craziest thing in market is the 489 00:25:49,240 --> 00:25:52,000 Speaker 1: fact that people are actually playing this. Now. You ousually 490 00:25:52,000 --> 00:25:53,760 Speaker 1: saw a little bit of an oil pop on it, 491 00:25:53,800 --> 00:25:57,320 Speaker 1: because you know oils backed up. It makes that just 492 00:25:57,359 --> 00:25:59,240 Speaker 1: a little bit more create a little bit more demand. 493 00:25:59,400 --> 00:26:02,359 Speaker 1: But there's this e t F that I really thought 494 00:26:02,400 --> 00:26:04,720 Speaker 1: was interesting. Shout out to Rachel Evans who pointed this 495 00:26:04,760 --> 00:26:07,320 Speaker 1: out to me, called b Dry b d r Y. 496 00:26:07,400 --> 00:26:10,480 Speaker 1: That's the ticker is the Baltic Dry Shipping Index, and 497 00:26:10,600 --> 00:26:14,920 Speaker 1: on this news it's a it's biggest inflow in years now. 498 00:26:14,960 --> 00:26:17,200 Speaker 1: This isn't the A t F that necessarily moves market. 499 00:26:17,280 --> 00:26:19,240 Speaker 1: This isn't the q q Q or anything. But I 500 00:26:19,240 --> 00:26:22,399 Speaker 1: thought it was interesting that people are actively trading on 501 00:26:22,480 --> 00:26:25,040 Speaker 1: this idea that there's a ship stuck in a canal. 502 00:26:26,440 --> 00:26:30,679 Speaker 1: It is. It's fantastic that the JP Morgan's famous strategist 503 00:26:30,680 --> 00:26:33,240 Speaker 1: Marco Klonovitch even had a note out on it saying 504 00:26:33,640 --> 00:26:35,840 Speaker 1: there's a chance the ship could just break that in 505 00:26:35,880 --> 00:26:38,840 Speaker 1: the process of delodging it, they'll just break the thing 506 00:26:38,920 --> 00:26:41,399 Speaker 1: and then the canal will be closed for weeks or months, 507 00:26:41,400 --> 00:26:43,800 Speaker 1: and it could cause shipping rates to go up, oil 508 00:26:43,840 --> 00:26:45,840 Speaker 1: to go up. And he's got trades, like you said, 509 00:26:45,840 --> 00:26:49,320 Speaker 1: recommended uh based on on the potential for that hedge 510 00:26:49,359 --> 00:26:53,080 Speaker 1: hedge with oil and oil stop. It's so funny because 511 00:26:53,359 --> 00:26:55,600 Speaker 1: our colleague Joe Wisenthal wrote about this that this is 512 00:26:55,640 --> 00:26:58,800 Speaker 1: actually a function of ships just getting bigger and bigger 513 00:26:58,840 --> 00:27:01,480 Speaker 1: and bigger. Into was like economies of scale. No one 514 00:27:01,480 --> 00:27:03,600 Speaker 1: actually thought that maybe they should account for the size 515 00:27:03,600 --> 00:27:07,159 Speaker 1: of the actual canal. I think the canal a little wider, 516 00:27:07,200 --> 00:27:10,040 Speaker 1: and yeah it is. It's certainly one of the craziest things. 517 00:27:10,440 --> 00:27:12,040 Speaker 1: And we've seen a lot of crazy things here what 518 00:27:12,200 --> 00:27:14,640 Speaker 1: goes up in the rest here. But that's pretty good, Seurean. 519 00:27:14,640 --> 00:27:17,320 Speaker 1: How about you got anything crazy first? Well, Katie came 520 00:27:17,359 --> 00:27:22,000 Speaker 1: in and stole mine, and I have a couple other ones, 521 00:27:22,040 --> 00:27:25,040 Speaker 1: but it is absolutely Fascinating's like the butterfly effect where 522 00:27:26,160 --> 00:27:29,800 Speaker 1: wind blows the ship and gets it stuck right. It's nuts, 523 00:27:29,840 --> 00:27:33,199 Speaker 1: isn't It completely screws up to the market. So I 524 00:27:33,240 --> 00:27:35,639 Speaker 1: have two things, and one is ready to n f 525 00:27:35,680 --> 00:27:37,040 Speaker 1: t S, and I'll be really quick on that one 526 00:27:37,080 --> 00:27:39,879 Speaker 1: because it's probably been beaten to death. I was watching 527 00:27:39,920 --> 00:27:42,280 Speaker 1: sixty Minutes the other day where people actually said he 528 00:27:42,320 --> 00:27:44,399 Speaker 1: thought the n f t S were in an asset bubble, 529 00:27:45,440 --> 00:27:48,159 Speaker 1: which which I find fascinating because I think no one 530 00:27:48,160 --> 00:27:49,640 Speaker 1: would know about n f t S and it wasn't 531 00:27:49,640 --> 00:27:53,040 Speaker 1: for people beyond that. And this is ripped from the 532 00:27:53,040 --> 00:27:56,560 Speaker 1: headlines and Bloomberg news the world is potentially facing a 533 00:27:56,600 --> 00:28:00,800 Speaker 1: coffee deficit because of again and supplied and so coffee 534 00:28:00,800 --> 00:28:03,520 Speaker 1: supplies in the US are actually shrinking due to a 535 00:28:03,520 --> 00:28:06,920 Speaker 1: shortage of shipping containers and supply bottlenecks, and the coffee 536 00:28:06,920 --> 00:28:10,640 Speaker 1: stockpiles have sunk to a six year low. So, now 537 00:28:10,960 --> 00:28:12,840 Speaker 1: who knows what that happens to. You know what happens 538 00:28:12,880 --> 00:28:16,040 Speaker 1: to coffee inflation. But if you're going to get gas 539 00:28:16,040 --> 00:28:18,440 Speaker 1: at the gas station, that prices there have went up, 540 00:28:18,800 --> 00:28:21,440 Speaker 1: and then you cup of coffee price goes up. Wait, 541 00:28:22,960 --> 00:28:25,480 Speaker 1: so does that mean my cup of coffee could actually 542 00:28:25,480 --> 00:28:28,320 Speaker 1: be more expensive than the five dollars I already spend 543 00:28:28,359 --> 00:28:31,960 Speaker 1: on a great cup of coffee? Maybe you millennials will 544 00:28:31,960 --> 00:28:34,520 Speaker 1: never be able to afford the house now if they 545 00:28:34,560 --> 00:28:36,879 Speaker 1: haven't hedged their costs. And just when I was going 546 00:28:36,920 --> 00:28:41,680 Speaker 1: to give up avocado toast, come on, that's unrelated to 547 00:28:41,720 --> 00:28:46,240 Speaker 1: the Suez Canal. That's just a separate that's pretty good, 548 00:28:47,000 --> 00:28:49,240 Speaker 1: all right, Well, you guys are good. I don't think 549 00:28:49,280 --> 00:28:50,760 Speaker 1: I can beat it, but I've got a good one 550 00:28:50,800 --> 00:28:52,520 Speaker 1: that's kind of out of left field here, And this 551 00:28:52,560 --> 00:28:58,320 Speaker 1: is courtesy of the always brilliant Matt Levine's Money Stuff newsletter, 552 00:28:59,160 --> 00:29:03,240 Speaker 1: and he wrote a about the SEC and the Justice 553 00:29:03,280 --> 00:29:07,280 Speaker 1: Department started investigating the quote unquote dark web, which I 554 00:29:07,320 --> 00:29:09,000 Speaker 1: always hear about. I don't really know much about that. 555 00:29:09,040 --> 00:29:11,040 Speaker 1: I don't think I've ever actually been on the dark Web. 556 00:29:11,400 --> 00:29:12,719 Speaker 1: I don't know how to get there if I need 557 00:29:12,760 --> 00:29:15,200 Speaker 1: a different computer or something. I don't know much about it, 558 00:29:15,200 --> 00:29:19,600 Speaker 1: but it's fascinating. And they found some message board where 559 00:29:19,640 --> 00:29:25,160 Speaker 1: people were trading insider tips insider stock tips and paying 560 00:29:25,200 --> 00:29:27,440 Speaker 1: each other in bitcoin as one does you know what 561 00:29:27,720 --> 00:29:30,920 Speaker 1: else are you gonna pay uh for for something shady 562 00:29:30,960 --> 00:29:34,760 Speaker 1: like that? Um. So they caught this guy who's actually 563 00:29:34,800 --> 00:29:38,959 Speaker 1: a employee of SpaceX, of of Elon Musk's SpaceX. He's 564 00:29:39,000 --> 00:29:43,600 Speaker 1: an engineer for them, and they arrested him for collecting 565 00:29:44,120 --> 00:29:48,160 Speaker 1: payment and bitcoin for insider tips. But here's the crazy 566 00:29:48,240 --> 00:29:52,720 Speaker 1: part is they were fake insider tips, and the SEC 567 00:29:52,880 --> 00:29:57,080 Speaker 1: said he's being fraudulent by selling insider tips that were 568 00:29:57,080 --> 00:29:59,440 Speaker 1: actually fake. It was just stuff that you know, the 569 00:29:59,480 --> 00:30:02,640 Speaker 1: guy I think found in public documents and whatnot and 570 00:30:03,440 --> 00:30:07,160 Speaker 1: purported it to be insider tips. Uh. And the fraud, 571 00:30:07,160 --> 00:30:09,200 Speaker 1: according to the SEC and the Justice Pariment is like 572 00:30:10,160 --> 00:30:12,200 Speaker 1: these are fake inside your tips. You can't do this. 573 00:30:12,440 --> 00:30:14,080 Speaker 1: So I thought that was pretty good. You know what 574 00:30:14,160 --> 00:30:15,720 Speaker 1: that reminds me of, if I can just throw in 575 00:30:15,760 --> 00:30:18,640 Speaker 1: my little two cents here is so I'm a big 576 00:30:18,680 --> 00:30:21,280 Speaker 1: fan of anything related to the Royals, which I know 577 00:30:21,320 --> 00:30:23,320 Speaker 1: when this gets published, I'm going to get a ton 578 00:30:23,360 --> 00:30:26,560 Speaker 1: of backlash on I just know it. But there's this 579 00:30:26,680 --> 00:30:28,960 Speaker 1: thing that I saw on like a Hallmark movie of 580 00:30:28,960 --> 00:30:32,600 Speaker 1: the Royals, where a prince who shall be unnamed, put 581 00:30:32,600 --> 00:30:35,560 Speaker 1: out you know, a secret, a fake secret, to see 582 00:30:35,560 --> 00:30:37,240 Speaker 1: who his real friends were and who's worked. And this 583 00:30:37,280 --> 00:30:40,200 Speaker 1: kind of sounds a little similar to similar to that, 584 00:30:40,320 --> 00:30:42,960 Speaker 1: to see if there is actually good behavior out there 585 00:30:43,080 --> 00:30:47,960 Speaker 1: or or people are just tricked. I guess that's pretty good. Well, 586 00:30:48,000 --> 00:30:49,720 Speaker 1: I'm glad you like the Royals. Well, we'll have to 587 00:30:49,760 --> 00:30:53,240 Speaker 1: talk about my kids. Apparently on TikTok the young kids 588 00:30:53,280 --> 00:30:56,680 Speaker 1: are all fascinated with Prince Philip for some reason, I 589 00:30:56,720 --> 00:30:59,640 Speaker 1: don't know. I don't know why, but I read his 590 00:30:59,680 --> 00:31:02,600 Speaker 1: wook PD page. What a fascinating the guy. The guy's 591 00:31:02,640 --> 00:31:04,720 Speaker 1: got more titles than anyone I know. He's the print. 592 00:31:04,760 --> 00:31:07,880 Speaker 1: He was the Prince of Denmark and Greece, and then 593 00:31:07,920 --> 00:31:10,440 Speaker 1: he married Elizabeth and they made him Prince of the 594 00:31:10,560 --> 00:31:13,520 Speaker 1: UK too. He's got more never never get the king 595 00:31:13,560 --> 00:31:17,440 Speaker 1: title apparently, but enough more titles than anyone else I've 596 00:31:17,480 --> 00:31:19,960 Speaker 1: ever heard. Well, as long as it's not like Overlord 597 00:31:19,960 --> 00:31:25,480 Speaker 1: of the World, we'll save that title for you. Critty, 598 00:31:25,800 --> 00:31:27,800 Speaker 1: you work your way up. I'm gonna hold you up 599 00:31:27,800 --> 00:31:30,240 Speaker 1: and I'm gonna hold you to it. But with that, 600 00:31:30,320 --> 00:31:32,000 Speaker 1: I think that's all the time we had. Seawan as 601 00:31:32,040 --> 00:31:33,920 Speaker 1: always a great pleasure to have you on the show. 602 00:31:33,960 --> 00:31:36,160 Speaker 1: We hope you can come back again. Uh really enjoy 603 00:31:36,160 --> 00:31:39,400 Speaker 1: your insights and you're good humor. Thank you. I'd love 604 00:31:39,440 --> 00:31:42,640 Speaker 1: to thank you and Critty, thank you for filling in 605 00:31:42,760 --> 00:31:45,560 Speaker 1: for Sara there admirably. We'll have you back as well. 606 00:31:45,760 --> 00:31:54,960 Speaker 1: Thank you for having me this one programming note, What 607 00:31:55,080 --> 00:31:57,880 Speaker 1: Goes Up is taking next week off for spring break. 608 00:31:58,400 --> 00:32:02,200 Speaker 1: We'll see you again on Friday, April ninth. Until then, 609 00:32:02,320 --> 00:32:04,800 Speaker 1: you can find us on the Bloomberg Terminal website and 610 00:32:04,880 --> 00:32:08,280 Speaker 1: app or wherever you get your podcasts. We'd love it 611 00:32:08,280 --> 00:32:10,120 Speaker 1: if you took the time to rate and review the 612 00:32:10,160 --> 00:32:13,240 Speaker 1: show on Apple Podcasts so more listeners can find us. 613 00:32:13,960 --> 00:32:17,560 Speaker 1: And you can find us on Twitter, follow me, at Reaganonymous. 614 00:32:18,120 --> 00:32:21,640 Speaker 1: Pretty is at at Pretty Groupta News. You can also 615 00:32:21,680 --> 00:32:26,080 Speaker 1: follow Bloomberg Podcasts at at podcasts and thank you to 616 00:32:26,160 --> 00:32:28,240 Speaker 1: Charlie Pellett of Bloomberg Radio and the voice of the 617 00:32:28,280 --> 00:32:31,480 Speaker 1: New York City Subway system. What Goes Up is produced 618 00:32:31,520 --> 00:32:36,000 Speaker 1: by Tofur Foreheads. The head of Bloomberg Podcasts is Francesco Levy. 619 00:32:36,800 --> 00:32:38,520 Speaker 1: Thanks for listening, See you next time.