1 00:00:13,600 --> 00:00:17,240 Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast. 2 00:00:17,280 --> 00:00:20,720 Speaker 1: I'm Mike Reagan, a senior editor at Bloomberg, and I'm 3 00:00:20,760 --> 00:00:24,200 Speaker 1: Waldonna Hirich, across asset reporter at Bloomberg. This week on 4 00:00:24,239 --> 00:00:27,479 Speaker 1: the show, well, everyone is freaking out about interest rates again. 5 00:00:27,760 --> 00:00:30,560 Speaker 1: The tenure treasure yield is up twenty some basis points 6 00:00:30,560 --> 00:00:34,680 Speaker 1: since the Federal Reserve September meeting. That's when the Central 7 00:00:34,680 --> 00:00:38,280 Speaker 1: Bank signaled that tapering of its asset purchases will likely 8 00:00:38,560 --> 00:00:42,559 Speaker 1: commence sometime this year. At the same time, well, remember 9 00:00:42,600 --> 00:00:45,680 Speaker 1: that soap opera surrounding the debt ceiling. It's been renewed 10 00:00:45,680 --> 00:00:49,000 Speaker 1: for another season, so as the drama about a potential 11 00:00:49,080 --> 00:00:52,440 Speaker 1: hard landing in China's economy. So what's it all mean 12 00:00:52,520 --> 00:00:54,840 Speaker 1: for your investments? We'll get into it with the chief 13 00:00:54,880 --> 00:00:59,280 Speaker 1: investment strategist at a major investment firm. But first we 14 00:00:59,400 --> 00:01:03,120 Speaker 1: have a very special announcement from Charlie Pellett himself. Well, 15 00:01:03,200 --> 00:01:05,920 Speaker 1: every good mystery must come to an end, so we'll 16 00:01:06,000 --> 00:01:09,480 Speaker 1: keep you in suspense no longer. What Goes Up is 17 00:01:09,480 --> 00:01:12,400 Speaker 1: pleased to announce that Bill Donna hi Rick will be 18 00:01:12,480 --> 00:01:15,800 Speaker 1: the new co host of the show. Permanently, or at 19 00:01:15,880 --> 00:01:21,520 Speaker 1: least until Reagan drives her nuts. I like how Charlie 20 00:01:21,520 --> 00:01:23,640 Speaker 1: could not resist getting a dig in on me on 21 00:01:23,680 --> 00:01:27,800 Speaker 1: that that introduction. They're built but which I really appreciate. 22 00:01:28,080 --> 00:01:33,279 Speaker 1: By the way, this is news to me. Oh well, surprise, surprise. Thanks. 23 00:01:34,480 --> 00:01:36,360 Speaker 1: We know how much you love the the attention and 24 00:01:36,400 --> 00:01:38,759 Speaker 1: the spotlight to be on you, so I I don't 25 00:01:38,840 --> 00:01:42,240 Speaker 1: at all. Yeah, you'll get used to it, you'll get 26 00:01:42,319 --> 00:01:44,840 Speaker 1: used to but but I love but I love everything 27 00:01:45,440 --> 00:01:48,440 Speaker 1: Charlie does. So I appreciate that that's that's one of 28 00:01:48,480 --> 00:01:51,000 Speaker 1: the members here that that you love, Like, okay, yeah, 29 00:01:51,000 --> 00:01:53,600 Speaker 1: that's fair enough. Yeah, but I'm very proud to have you, 30 00:01:53,640 --> 00:01:56,040 Speaker 1: Bill Donna. I mean we I obviously enjoyed the mystery 31 00:01:56,320 --> 00:01:59,200 Speaker 1: co host gimmick for as long as it lasted. But uh, 32 00:01:59,720 --> 00:02:02,800 Speaker 1: long time listeners will know vil Donna has been a 33 00:02:02,920 --> 00:02:06,240 Speaker 1: major behind the scenes contributor to the show since it's beginning. 34 00:02:06,880 --> 00:02:12,160 Speaker 1: Uh that vildonna energy is unrivaled and she's uh uh importantly, 35 00:02:12,160 --> 00:02:16,119 Speaker 1: she's on the phone every day with smart people who 36 00:02:16,160 --> 00:02:18,960 Speaker 1: may or may not realize that they're they're actually auditioning 37 00:02:19,040 --> 00:02:22,600 Speaker 1: for for a guest spot on the for the podcast, right, 38 00:02:22,840 --> 00:02:25,520 Speaker 1: I don't know if you tell them that. I never do, 39 00:02:25,800 --> 00:02:28,560 Speaker 1: and I think that might have been the case with 40 00:02:28,680 --> 00:02:30,760 Speaker 1: this week's guests. We can we can ask him. I 41 00:02:30,800 --> 00:02:34,040 Speaker 1: want to introduce this week's guest. It's Brian Nick. He's 42 00:02:34,120 --> 00:02:37,359 Speaker 1: the chief investment strategist at Moving and he also used 43 00:02:37,400 --> 00:02:39,239 Speaker 1: to work at the New York Fed. So I think 44 00:02:39,280 --> 00:02:41,919 Speaker 1: he's the perfect guest for for the podcast this week. 45 00:02:41,960 --> 00:02:44,760 Speaker 1: Thank thank you for joining us, Brian, Thank you very 46 00:02:44,840 --> 00:02:46,520 Speaker 1: much for having me. And I would say every time 47 00:02:46,520 --> 00:02:48,440 Speaker 1: I talked to a reporter, I secretly hope that I'm 48 00:02:48,440 --> 00:02:51,000 Speaker 1: auditioning for a podcast. So this is this is fantastic. 49 00:02:51,560 --> 00:02:57,359 Speaker 1: It's every strategist stream right. It is finally paid off. Well, 50 00:02:57,680 --> 00:02:59,720 Speaker 1: you know as well, Dona said you started earlier in 51 00:02:59,720 --> 00:03:02,040 Speaker 1: your we're working at the at the market's desk at 52 00:03:02,080 --> 00:03:05,679 Speaker 1: the FED itself. Um so, I want to hope and 53 00:03:05,720 --> 00:03:07,920 Speaker 1: you can kind of put that FED hat on again 54 00:03:07,960 --> 00:03:10,200 Speaker 1: before we actually get into your views on the market, 55 00:03:10,600 --> 00:03:13,480 Speaker 1: I just talked to us a little bit about what 56 00:03:13,520 --> 00:03:17,640 Speaker 1: you're expecting for the tapering process. Um uh, you know, 57 00:03:18,040 --> 00:03:20,760 Speaker 1: how aggressive will the FED be? How soon are you 58 00:03:20,800 --> 00:03:23,880 Speaker 1: expecting sort of the the normalization of interest rates to 59 00:03:24,320 --> 00:03:28,040 Speaker 1: follow after tapering, and you know, how do you think 60 00:03:28,040 --> 00:03:31,280 Speaker 1: the market. Is the market prepared for what's coming um 61 00:03:31,400 --> 00:03:33,840 Speaker 1: or is it over pricing under pricing at any of 62 00:03:33,840 --> 00:03:37,040 Speaker 1: the risks here? Yeah, So I think from the Fed's perspective, 63 00:03:37,720 --> 00:03:40,640 Speaker 1: they have this sort of institutional memory of the last 64 00:03:40,680 --> 00:03:43,200 Speaker 1: crisis when they did wait a very long time after 65 00:03:43,240 --> 00:03:45,760 Speaker 1: the financial crisis three or four years before that. You 66 00:03:45,800 --> 00:03:48,920 Speaker 1: when we're talking about tapering their bond purchases, and they 67 00:03:48,960 --> 00:03:50,520 Speaker 1: were off and on with QI one, q E two, 68 00:03:50,560 --> 00:03:54,000 Speaker 1: q E three, but it took until for them to 69 00:03:54,080 --> 00:03:57,000 Speaker 1: actually get you know, busy with the with the task 70 00:03:57,040 --> 00:04:01,000 Speaker 1: of rolling down those bond purchases, and in retrospect, they 71 00:04:01,040 --> 00:04:04,360 Speaker 1: probably think they did that too quickly. J Pal himself 72 00:04:04,400 --> 00:04:06,400 Speaker 1: has said the economy is actually in better shape today 73 00:04:06,600 --> 00:04:09,320 Speaker 1: that it was when they first announced that taper in 74 00:04:09,360 --> 00:04:11,200 Speaker 1: the market had a big tantrum about it. An interest 75 00:04:11,280 --> 00:04:13,880 Speaker 1: rates doubled in a pretty short period of time. So 76 00:04:13,920 --> 00:04:18,080 Speaker 1: the Fed is taking lessons of the last recovery and 77 00:04:18,120 --> 00:04:21,360 Speaker 1: their part in, you know, getting to the period of 78 00:04:21,440 --> 00:04:24,960 Speaker 1: higher interest rates and fewer bond purchases, and it probably 79 00:04:25,560 --> 00:04:29,080 Speaker 1: thinks it went too quickly, tightened too much tightened too quickly, 80 00:04:29,520 --> 00:04:31,560 Speaker 1: even by what at the time seemed like very very 81 00:04:31,560 --> 00:04:34,400 Speaker 1: slow standards. And and so this feed has become much 82 00:04:34,440 --> 00:04:38,480 Speaker 1: more dubbish in its reaction function to hotter economic data, 83 00:04:38,480 --> 00:04:41,480 Speaker 1: whether it's growth or higher inflation, much more tolerant of inflation. 84 00:04:41,520 --> 00:04:44,599 Speaker 1: I'd say, almost dismissive. When you hear a FED chair 85 00:04:44,680 --> 00:04:46,880 Speaker 1: get up in front of everybody and say, well, the 86 00:04:46,880 --> 00:04:49,240 Speaker 1: difference between two point four percent and two percent. You know, 87 00:04:49,279 --> 00:04:51,159 Speaker 1: the average households not going to feel that. You know, 88 00:04:51,200 --> 00:04:53,560 Speaker 1: we're not in Paul Volker territory anymore, right when we 89 00:04:53,560 --> 00:04:56,040 Speaker 1: have the FED chair saying that. And obviously inflation has 90 00:04:56,040 --> 00:04:58,160 Speaker 1: been much higher than two point four percent this year, 91 00:04:58,400 --> 00:05:00,719 Speaker 1: and the FED has been extremely tall and continuing to 92 00:05:00,760 --> 00:05:04,240 Speaker 1: do the asset purchases, continuing to really like shoot off 93 00:05:04,320 --> 00:05:06,240 Speaker 1: any notion that they're going to be raising interest rates 94 00:05:06,440 --> 00:05:09,400 Speaker 1: anytime soon. I think they got to a point where 95 00:05:09,400 --> 00:05:11,799 Speaker 1: even the doves on the committee were comfortable that liquidity 96 00:05:11,839 --> 00:05:16,479 Speaker 1: was ample. This emergency stimulus, you know, bond buying program 97 00:05:16,560 --> 00:05:19,560 Speaker 1: was probably um no longer doing a whole lot of good, 98 00:05:19,600 --> 00:05:21,880 Speaker 1: probably wasn't doing harm, but wasn't gonna be helping anymore. 99 00:05:22,120 --> 00:05:24,120 Speaker 1: And so I think they were very explicit, in fact, 100 00:05:24,120 --> 00:05:25,720 Speaker 1: more explicit than I expected them to be at the 101 00:05:25,760 --> 00:05:28,760 Speaker 1: September meeting that they would be heading into November with 102 00:05:28,839 --> 00:05:31,359 Speaker 1: the expectation to be announcing a taper, probably start that 103 00:05:31,400 --> 00:05:35,080 Speaker 1: in December, wind it down maybe fifteen billion a month 104 00:05:35,520 --> 00:05:37,599 Speaker 1: until they're done it at the end of July, and 105 00:05:37,600 --> 00:05:39,840 Speaker 1: I think that's probably the timeline that we're looking for, 106 00:05:39,920 --> 00:05:42,680 Speaker 1: probably a bit more aggressive than maybe a few months 107 00:05:42,720 --> 00:05:45,000 Speaker 1: ago what we would have expected. But I think with 108 00:05:45,000 --> 00:05:47,240 Speaker 1: with the COVID cases sort of peeking and coming down, 109 00:05:47,320 --> 00:05:49,040 Speaker 1: some of the economic data has actually turned a bit 110 00:05:49,080 --> 00:05:51,840 Speaker 1: better and inflation hasn't gone away as an issue for 111 00:05:51,880 --> 00:05:54,440 Speaker 1: the FAT to have to consider. Um, this is probably 112 00:05:54,480 --> 00:05:57,000 Speaker 1: kind of the media outcome from markets in terms of 113 00:05:57,000 --> 00:05:59,160 Speaker 1: interest rate hikes. I do think this is where maybe 114 00:05:59,160 --> 00:06:01,800 Speaker 1: the market is being a little bit too aggressive pricing 115 00:06:01,800 --> 00:06:04,599 Speaker 1: in FED hikes. Yes, the FED dots are telling us 116 00:06:04,680 --> 00:06:06,480 Speaker 1: that about half the members think that they should be 117 00:06:06,520 --> 00:06:08,760 Speaker 1: raising rates next year at least once. I mean is 118 00:06:08,800 --> 00:06:10,680 Speaker 1: also half the members don't think they should be raising 119 00:06:10,760 --> 00:06:12,680 Speaker 1: rates next year or won't have to raise rates next year, 120 00:06:12,680 --> 00:06:14,400 Speaker 1: And I think there will be more doves on the 121 00:06:14,440 --> 00:06:16,840 Speaker 1: committee a year from now than there are now. Because 122 00:06:16,880 --> 00:06:20,120 Speaker 1: Biden's going to pick three two or three new FED governors, 123 00:06:20,120 --> 00:06:22,760 Speaker 1: it'll probably be more inclined not to raise rates, and 124 00:06:22,760 --> 00:06:24,919 Speaker 1: so I wouldn't look for them to lift off until 125 00:06:25,320 --> 00:06:28,560 Speaker 1: the first part of three, with a caveat being that 126 00:06:28,600 --> 00:06:31,480 Speaker 1: if inflation continues to come in a lot hotter than expected, 127 00:06:31,720 --> 00:06:33,480 Speaker 1: that may be pulled forward into the second half of 128 00:06:33,520 --> 00:06:38,200 Speaker 1: next year. So, Brian, obviously we saw a spike in 129 00:06:38,640 --> 00:06:42,320 Speaker 1: treasury yields right after the FED meeting, or maybe not 130 00:06:42,480 --> 00:06:44,680 Speaker 1: right after. I think in a story I wrote, uh, 131 00:06:45,400 --> 00:06:49,320 Speaker 1: we said something like eighteen hours afterwards. So it is 132 00:06:49,320 --> 00:06:53,200 Speaker 1: is that what's behind the sell off in the bond market? 133 00:06:53,400 --> 00:06:55,560 Speaker 1: Is it what we you know it was, it's parked 134 00:06:55,560 --> 00:06:57,760 Speaker 1: by what we heard from the Fed? Or is it 135 00:06:57,839 --> 00:07:00,800 Speaker 1: more so the outlook for growth? It both? Can you 136 00:07:00,920 --> 00:07:03,479 Speaker 1: walk us through your thinking? They're sure. I think it 137 00:07:03,560 --> 00:07:07,479 Speaker 1: follows the pattern of a taper tantrum, except in a 138 00:07:07,560 --> 00:07:10,720 Speaker 1: much more mild case than we saw in real interest 139 00:07:10,800 --> 00:07:13,800 Speaker 1: rates rising. You don't really have inflation expectations doing much, 140 00:07:13,800 --> 00:07:15,720 Speaker 1: so the markets not screaming that the Fed's making a 141 00:07:15,800 --> 00:07:18,160 Speaker 1: huge mistake by tapering. Do you think all the way 142 00:07:18,200 --> 00:07:21,680 Speaker 1: back to June. That meeting, when the dots were interpreted 143 00:07:21,680 --> 00:07:24,040 Speaker 1: as being more hawkish and the FED maybe kind of 144 00:07:24,080 --> 00:07:27,200 Speaker 1: mishandle its communication spook the markets a little bit into 145 00:07:27,240 --> 00:07:28,840 Speaker 1: thinking it was going to be a bit too hawkish. 146 00:07:28,920 --> 00:07:31,320 Speaker 1: You actually saw long term interest rates fall, which is 147 00:07:31,360 --> 00:07:33,160 Speaker 1: a sign at the market, at least the bondo market 148 00:07:33,160 --> 00:07:35,880 Speaker 1: thinks that fed's making a mistake and going too quickly. 149 00:07:36,000 --> 00:07:37,840 Speaker 1: With the September meeting, I think it was handled a 150 00:07:37,880 --> 00:07:41,320 Speaker 1: bit better. The communication, the separation of the bond buying 151 00:07:41,360 --> 00:07:45,040 Speaker 1: from the interest rate lift off um again, the dismissive 152 00:07:45,840 --> 00:07:49,000 Speaker 1: attack towards inflation, I think I'll probably also got got 153 00:07:49,480 --> 00:07:51,960 Speaker 1: markets attention. So when you have interest rates rising at 154 00:07:51,960 --> 00:07:54,240 Speaker 1: the Yolkurf steepening, I think it's a sign that the 155 00:07:54,280 --> 00:07:57,000 Speaker 1: markets are optimistic about growth, and I think you have 156 00:07:57,040 --> 00:07:59,880 Speaker 1: to consider the context. Yes, the FED was probably sort 157 00:07:59,920 --> 00:08:02,320 Speaker 1: of proximate cause for the increase in rates, but we 158 00:08:02,360 --> 00:08:06,000 Speaker 1: also have now a clear decline in US and global 159 00:08:06,360 --> 00:08:08,880 Speaker 1: COVID cases, So it seems like the delta variant is 160 00:08:08,880 --> 00:08:11,080 Speaker 1: is in decline in many more places than it's than 161 00:08:11,080 --> 00:08:13,280 Speaker 1: it's on the rise at this point, and the economic 162 00:08:13,360 --> 00:08:16,720 Speaker 1: data sort of sneakily has gotten a little bit better, 163 00:08:16,800 --> 00:08:18,960 Speaker 1: or at least it's less prone to disappointment than it was. 164 00:08:19,360 --> 00:08:21,600 Speaker 1: Over the summer, we got a really good retail sales number, 165 00:08:21,640 --> 00:08:25,480 Speaker 1: some of the housing numbers, home construction was was better 166 00:08:25,480 --> 00:08:29,320 Speaker 1: than expected, and so I think that the overall tone 167 00:08:29,360 --> 00:08:31,840 Speaker 1: has become a bit more optimistic, maybe reversing some of 168 00:08:31,840 --> 00:08:34,679 Speaker 1: the pessimism we saw in July and August, which is 169 00:08:34,679 --> 00:08:37,960 Speaker 1: when rates were declining for reasons that that to us 170 00:08:37,960 --> 00:08:39,600 Speaker 1: at the time we're pretty mysterious. So a bit of 171 00:08:39,600 --> 00:08:42,600 Speaker 1: a reversal of what we saw then. UM, not quite 172 00:08:42,679 --> 00:08:44,520 Speaker 1: risk one, because we've seen the equity markets and how 173 00:08:44,559 --> 00:08:47,520 Speaker 1: they behave. But I think an overall more optimistic tone 174 00:08:47,520 --> 00:08:49,720 Speaker 1: in the bottom market UM that sees the FED is 175 00:08:49,760 --> 00:08:52,280 Speaker 1: as pretty much getting things right and not too many 176 00:08:52,280 --> 00:08:55,360 Speaker 1: other things interfering with the general story, which is slower 177 00:08:55,360 --> 00:08:58,559 Speaker 1: economic growth from a very very high rate and peak 178 00:08:58,600 --> 00:09:00,880 Speaker 1: in the second quarter and at least a number of 179 00:09:01,200 --> 00:09:03,760 Speaker 1: quarters of of above trend growth ahead. So you know, 180 00:09:03,920 --> 00:09:06,559 Speaker 1: I think, so still still relatively smooth sailing for the 181 00:09:06,640 --> 00:09:19,920 Speaker 1: US economy. Ran so obviously, uh, equity valuations are are 182 00:09:19,960 --> 00:09:24,040 Speaker 1: super high, at least compared with history. Credit spreads are 183 00:09:24,480 --> 00:09:28,040 Speaker 1: razor thin um, and you make you set up some 184 00:09:28,080 --> 00:09:31,480 Speaker 1: thoughts heres too toldon and I, uh, sort of your 185 00:09:31,480 --> 00:09:33,920 Speaker 1: general thoughts about the market. And one point you made 186 00:09:33,960 --> 00:09:36,600 Speaker 1: I think is really interesting. Uh you said that the 187 00:09:36,600 --> 00:09:40,960 Speaker 1: economy is early to mid cycle, but markets are are 188 00:09:41,040 --> 00:09:44,400 Speaker 1: late cycle, you know, presumably looking at evaluation metrics like that. 189 00:09:45,160 --> 00:09:47,000 Speaker 1: And I think that's an interesting way of looking at it. 190 00:09:47,040 --> 00:09:49,760 Speaker 1: I agree, I I completely agree. But I'm wondering how 191 00:09:49,840 --> 00:09:53,080 Speaker 1: you think that resolves itself. I mean, to me, there's 192 00:09:53,160 --> 00:09:56,760 Speaker 1: there's kind of two maybe main possibilities. You know, obviously 193 00:09:56,800 --> 00:10:01,160 Speaker 1: that the markets can can sort of you know, come 194 00:10:01,200 --> 00:10:05,199 Speaker 1: down and drag the economy, uh down with them into 195 00:10:05,240 --> 00:10:07,640 Speaker 1: the late cycle or uh, you know, end of the 196 00:10:07,640 --> 00:10:10,640 Speaker 1: cycle for the economy, or you know, I always think 197 00:10:10,679 --> 00:10:14,000 Speaker 1: maybe you get that correction on the X axis of 198 00:10:14,160 --> 00:10:16,000 Speaker 1: the chart rather than the y access you know, in 199 00:10:16,080 --> 00:10:19,600 Speaker 1: other words, just a market that goes nowhere for a while, uh, 200 00:10:19,679 --> 00:10:23,240 Speaker 1: until learnings catch up that sort of thing, um, rather 201 00:10:23,320 --> 00:10:27,040 Speaker 1: than a sharpe drop in price that brings things back 202 00:10:27,080 --> 00:10:30,520 Speaker 1: to a sort of a mean reversion evaluations. But how 203 00:10:30,559 --> 00:10:33,520 Speaker 1: are you thinking about how that will resolve itself? This 204 00:10:34,280 --> 00:10:37,440 Speaker 1: discrepancy between where the economy is, what part of the cycle, 205 00:10:37,480 --> 00:10:40,679 Speaker 1: and where the market seem to be in the cycle. Yes, 206 00:10:40,760 --> 00:10:42,800 Speaker 1: so just just quickly, I think to put some some 207 00:10:42,920 --> 00:10:44,360 Speaker 1: meat on the bones of the argument that if you 208 00:10:44,360 --> 00:10:46,480 Speaker 1: look at the economy, the unemployment or it's not high, 209 00:10:46,679 --> 00:10:48,880 Speaker 1: but it's higher than it was pre pandemic. We have 210 00:10:48,920 --> 00:10:50,880 Speaker 1: a lot of people who haven't even entered the or 211 00:10:50,880 --> 00:10:52,680 Speaker 1: re entered the labor force yet. So I think there's 212 00:10:52,679 --> 00:10:55,520 Speaker 1: still many millions of more people who will be getting 213 00:10:55,600 --> 00:10:58,240 Speaker 1: jobs in the next call at six to eighteen months, 214 00:10:58,559 --> 00:11:00,640 Speaker 1: and so that it's a sign that you're you're creating 215 00:11:00,679 --> 00:11:03,120 Speaker 1: jobs at that clip. It's still early cycle. Savings rates 216 00:11:03,120 --> 00:11:06,199 Speaker 1: are very high, which is not abnormal after research when 217 00:11:06,200 --> 00:11:08,120 Speaker 1: people have built up savings, although the reason that they're 218 00:11:08,160 --> 00:11:10,480 Speaker 1: high is much different than this massive physical stimulus and 219 00:11:10,559 --> 00:11:13,320 Speaker 1: people you know, essentially confined to their to their homes 220 00:11:13,360 --> 00:11:16,280 Speaker 1: for many many months um and then things like inventories, 221 00:11:16,320 --> 00:11:18,800 Speaker 1: their companies are scrambling to restock inventories, they let them 222 00:11:18,800 --> 00:11:20,640 Speaker 1: wind all the way down. That's something that happens earlier 223 00:11:20,640 --> 00:11:23,199 Speaker 1: in economic cycle as well. Whereas the markets are behaving 224 00:11:23,200 --> 00:11:25,960 Speaker 1: almost as if the pandemic they never happened. Equity valuations, 225 00:11:25,960 --> 00:11:28,080 Speaker 1: to your point, are higher than they were pre pandemic. 226 00:11:28,120 --> 00:11:30,559 Speaker 1: They were a little bit off their peaks from earlier 227 00:11:30,559 --> 00:11:32,559 Speaker 1: in the year. They have been coming down because the 228 00:11:32,559 --> 00:11:34,880 Speaker 1: market has been doing less well than earnings growth has 229 00:11:34,920 --> 00:11:38,920 Speaker 1: been doing. But credit spreads certainly extremely resilient and much 230 00:11:38,960 --> 00:11:42,040 Speaker 1: better UM you know, have exhibited you know, late cycle 231 00:11:42,080 --> 00:11:44,320 Speaker 1: signs in a way that that they weren't even doing 232 00:11:44,480 --> 00:11:47,040 Speaker 1: before the pandemic. So how did this resolves itself? I 233 00:11:47,080 --> 00:11:49,520 Speaker 1: think your your point about maybe the market's not giving 234 00:11:49,520 --> 00:11:52,440 Speaker 1: you a whole lot as a diversified investor for some 235 00:11:52,480 --> 00:11:54,320 Speaker 1: period of time. I think it's probably the way we 236 00:11:54,360 --> 00:11:58,680 Speaker 1: see this resolving. As the economy continues to decelerate gently, 237 00:11:59,240 --> 00:12:02,800 Speaker 1: I think we get you know, slightly less good market returns, 238 00:12:02,800 --> 00:12:05,560 Speaker 1: and we're seeing the third quarter has resolved in a 239 00:12:05,600 --> 00:12:08,440 Speaker 1: way that the net net sp five really hasn't gone 240 00:12:08,480 --> 00:12:11,920 Speaker 1: much of anywhere. UM. Interest rates are incrementally higher than 241 00:12:11,920 --> 00:12:14,880 Speaker 1: they were to start the quarter UM, but really it's 242 00:12:14,880 --> 00:12:17,000 Speaker 1: a three D sixty degree turned throughout the quarters, a 243 00:12:17,000 --> 00:12:20,080 Speaker 1: little bit of treading water already this early in the cycle, 244 00:12:20,120 --> 00:12:22,440 Speaker 1: and I think investors can expect some more of that 245 00:12:22,440 --> 00:12:26,120 Speaker 1: doesn't mean there's not opportunities in places credit outperformed in 246 00:12:26,120 --> 00:12:29,080 Speaker 1: in the in the third quarter, but it's gonna be 247 00:12:29,080 --> 00:12:31,480 Speaker 1: I think more frustrating, certainly for anybody who's gotten used 248 00:12:31,480 --> 00:12:34,839 Speaker 1: to the last eighteen months or go back ten years 249 00:12:34,840 --> 00:12:39,280 Speaker 1: of returns for somebody in a portfolio to generate those 250 00:12:39,280 --> 00:12:43,960 Speaker 1: types of returns when markets have already moved so so fast, 251 00:12:44,000 --> 00:12:47,000 Speaker 1: so forward, um in terms of you know, pricing in 252 00:12:47,080 --> 00:12:50,520 Speaker 1: a very good and mature economic cycle when we haven't 253 00:12:50,520 --> 00:12:52,960 Speaker 1: really arrived at that point yet. I think from a 254 00:12:53,000 --> 00:12:56,200 Speaker 1: from a fundamental standpoint, um. The other way it could 255 00:12:56,200 --> 00:12:59,200 Speaker 1: resolve is that we're just wrong about the economic cycle 256 00:12:59,240 --> 00:13:01,320 Speaker 1: being early, and the market is actually much tighter than 257 00:13:01,360 --> 00:13:03,360 Speaker 1: we think, and those workers aren't coming back, and that 258 00:13:03,400 --> 00:13:07,240 Speaker 1: means we do get your classic kind of overheating. The 259 00:13:07,280 --> 00:13:09,960 Speaker 1: FED has has become too debbish and he's gotten behind 260 00:13:10,000 --> 00:13:11,719 Speaker 1: the eight ball, and that's where you get the kind 261 00:13:11,720 --> 00:13:14,200 Speaker 1: of the rapid end of the cycle. We talked about 262 00:13:14,240 --> 00:13:16,120 Speaker 1: that as an investment committee. We talked about that at 263 00:13:16,120 --> 00:13:18,280 Speaker 1: new being quite frequently as a big risk. But we 264 00:13:18,320 --> 00:13:21,679 Speaker 1: don't think that's that's something we should be acutely worried 265 00:13:21,679 --> 00:13:24,440 Speaker 1: about unless there's more evidence in some of these Jaws 266 00:13:24,480 --> 00:13:26,880 Speaker 1: reports coming out soon that that there really aren't that 267 00:13:26,880 --> 00:13:28,480 Speaker 1: many more people on the sidelines are going to get 268 00:13:28,520 --> 00:13:31,800 Speaker 1: back to work. So just to tie a few of 269 00:13:31,840 --> 00:13:35,199 Speaker 1: these things together, everything that's going on with the bond market, 270 00:13:35,240 --> 00:13:37,040 Speaker 1: and then you know what we've seen from the stock 271 00:13:37,080 --> 00:13:39,040 Speaker 1: market so far this year. I know one of the 272 00:13:39,120 --> 00:13:41,440 Speaker 1: things that we were thinking about is just what the 273 00:13:41,480 --> 00:13:45,480 Speaker 1: background looks like, the economic background looks like right now 274 00:13:45,640 --> 00:13:49,800 Speaker 1: with yield spiking, versus what the setup looks like back 275 00:13:49,840 --> 00:13:51,960 Speaker 1: in the spring when we were seeing, you know, a 276 00:13:52,040 --> 00:13:55,120 Speaker 1: similar things happening in the in the bond market. And 277 00:13:55,160 --> 00:13:58,920 Speaker 1: I think some people would argue that the economic background 278 00:13:59,679 --> 00:14:02,720 Speaker 1: just looking forward, it doesn't look as strong as when 279 00:14:02,840 --> 00:14:05,800 Speaker 1: everybody was looking forward to the reopening. Then at the 280 00:14:05,800 --> 00:14:08,160 Speaker 1: same time you did, as you just said, we have 281 00:14:08,320 --> 00:14:12,600 Speaker 1: seen stocks run up quite a lot since then. So 282 00:14:13,000 --> 00:14:14,959 Speaker 1: does that mean like through the end of the year, 283 00:14:15,120 --> 00:14:18,200 Speaker 1: just the bullish set up for the market is a 284 00:14:18,200 --> 00:14:21,800 Speaker 1: little bit less constructive or how are you thinking about it? Yes, So, 285 00:14:21,840 --> 00:14:25,840 Speaker 1: this this economic period that we've been in start obviously 286 00:14:25,880 --> 00:14:29,040 Speaker 1: starting with with the first quarter UM. Most people who 287 00:14:29,040 --> 00:14:32,720 Speaker 1: are investors today have never experienced something like this before 288 00:14:32,760 --> 00:14:37,040 Speaker 1: where we have six or seven GDP growth for a 289 00:14:37,040 --> 00:14:39,560 Speaker 1: period of six months and they were decelerating from that. 290 00:14:40,080 --> 00:14:43,000 Speaker 1: But the absolute level of growth in the third quarter 291 00:14:43,040 --> 00:14:44,160 Speaker 1: is still going to make it one of the best 292 00:14:44,200 --> 00:14:46,720 Speaker 1: quarters that we've seen in several decades. Right, even if 293 00:14:46,760 --> 00:14:48,360 Speaker 1: it's three and a half or four and a half 294 00:14:48,360 --> 00:14:51,920 Speaker 1: of me that that's well above normal, certainly post financial 295 00:14:51,960 --> 00:14:55,200 Speaker 1: crisis and even before that. So we're still running the 296 00:14:55,240 --> 00:14:58,160 Speaker 1: economy hot here and we should still be seeing you know, 297 00:14:58,320 --> 00:15:01,080 Speaker 1: solid contributions from consumer, albeit not as good as the 298 00:15:01,080 --> 00:15:02,960 Speaker 1: first half of the year when we were getting stimulus 299 00:15:03,000 --> 00:15:05,960 Speaker 1: checks and other kinds of of of transfer payments that 300 00:15:06,000 --> 00:15:09,280 Speaker 1: was enabling consumption to be artificially high. Um. We got 301 00:15:09,320 --> 00:15:13,240 Speaker 1: that second quarter, UH revision for GDP. We're now consumer 302 00:15:13,280 --> 00:15:16,440 Speaker 1: spending annualized at in the second quarter. That's just not 303 00:15:16,480 --> 00:15:18,600 Speaker 1: gonna happen in the third. What didn't happen in the 304 00:15:18,600 --> 00:15:21,280 Speaker 1: third quarter is not gonna happen in the fourth quarter. Um. 305 00:15:21,320 --> 00:15:23,880 Speaker 1: But it's still gonna be solid. People are still drawing 306 00:15:23,920 --> 00:15:27,280 Speaker 1: down on considerable savings. UH. We know that businesses need 307 00:15:27,320 --> 00:15:29,960 Speaker 1: to restock inventories. We know they're making investments to try 308 00:15:29,960 --> 00:15:32,360 Speaker 1: to make those workers more productive. That, by the way, 309 00:15:32,440 --> 00:15:34,960 Speaker 1: is one of the things that can help forestall more inflation. 310 00:15:35,000 --> 00:15:37,240 Speaker 1: Is if we just get more productivity out of the 311 00:15:37,240 --> 00:15:39,600 Speaker 1: existing workforce, we can pay those people more without having 312 00:15:39,680 --> 00:15:43,239 Speaker 1: to charge higher prices to to the end end customers. 313 00:15:44,120 --> 00:15:46,320 Speaker 1: So there's a lot of good things happening economy. Global 314 00:15:46,320 --> 00:15:48,960 Speaker 1: manufacturing output is an all time high. Trade flows are 315 00:15:49,040 --> 00:15:51,680 Speaker 1: called close to their all time highs UM. But we 316 00:15:51,720 --> 00:15:55,280 Speaker 1: don't have this huge demand shock every single quarter the 317 00:15:55,320 --> 00:15:57,040 Speaker 1: way we did in Q one and Q two, because 318 00:15:57,080 --> 00:15:59,760 Speaker 1: the fiscal stimulus is gonna very quickly go from being 319 00:15:59,800 --> 00:16:02,560 Speaker 1: an a plus two once it sort of expires and 320 00:16:02,800 --> 00:16:06,160 Speaker 1: becomes a drag and that minus and that's gonna mean that, yeah, 321 00:16:06,200 --> 00:16:07,760 Speaker 1: the growth rate is gonna come down. It's gonna come 322 00:16:07,760 --> 00:16:10,000 Speaker 1: down to four ish three ish two wish, and probably 323 00:16:10,000 --> 00:16:11,640 Speaker 1: by the end of next year we'll kind of get 324 00:16:11,680 --> 00:16:14,720 Speaker 1: a sense of where the new normal is. Maybe it's 325 00:16:14,960 --> 00:16:16,680 Speaker 1: you know, one and a half percent to two and 326 00:16:16,680 --> 00:16:18,640 Speaker 1: a half percent growth, something like what we're used to 327 00:16:18,920 --> 00:16:21,960 Speaker 1: pre pandemic. But we know from experience that equities can 328 00:16:22,000 --> 00:16:24,680 Speaker 1: do fine and that scenario credit can certainly do. Find 329 00:16:24,680 --> 00:16:28,120 Speaker 1: in that scenario UM and some of the I think 330 00:16:28,320 --> 00:16:30,800 Speaker 1: rotations that we've seen into more those more familiar out 331 00:16:30,800 --> 00:16:34,240 Speaker 1: performers like technology and brawdly defined a lot of you know, 332 00:16:34,320 --> 00:16:38,000 Speaker 1: higher growth companies. You know that I think has been 333 00:16:38,520 --> 00:16:41,680 Speaker 1: of a piece with a recognition that that growth is decelerating. 334 00:16:41,720 --> 00:16:45,440 Speaker 1: What we might get pockets of cyclical outperformance here and there, 335 00:16:45,440 --> 00:16:47,560 Speaker 1: like the ones we've been in for the last few weeks. 336 00:16:47,720 --> 00:16:49,400 Speaker 1: I think for the most part, we're settling back down 337 00:16:49,400 --> 00:16:52,240 Speaker 1: into a more familiar pattern for growth, albeit after several 338 00:16:52,760 --> 00:16:55,240 Speaker 1: quite good quarters for the US economy, which would still 339 00:16:55,360 --> 00:16:57,840 Speaker 1: you know, I mean, we're creating jobs, we're seeing wages 340 00:16:57,880 --> 00:17:01,560 Speaker 1: move up, and yes, inflation still probably running above where 341 00:17:01,560 --> 00:17:04,600 Speaker 1: the FED would ideally like it to be. So, Brian, 342 00:17:04,680 --> 00:17:08,399 Speaker 1: I think regular listeners of this show, UH listen up 343 00:17:08,400 --> 00:17:10,439 Speaker 1: for for two main things when when they listen to 344 00:17:10,480 --> 00:17:12,680 Speaker 1: the show. One is the craziest things we saw in 345 00:17:12,720 --> 00:17:14,840 Speaker 1: the market. That's your real test. We'll get to that later. 346 00:17:15,320 --> 00:17:18,400 Speaker 1: That that's your that's your real doctorate thesis there that 347 00:17:18,400 --> 00:17:20,800 Speaker 1: that we'll get to. But the other question they look 348 00:17:20,800 --> 00:17:23,040 Speaker 1: out for is, well, just tell me what to buy 349 00:17:23,160 --> 00:17:25,000 Speaker 1: right now for a guy like you, you know, I know, 350 00:17:25,400 --> 00:17:28,720 Speaker 1: moving you've got a big um what is it one 351 00:17:28,720 --> 00:17:31,520 Speaker 1: point two trillion or something like that at one point 352 00:17:31,560 --> 00:17:35,480 Speaker 1: to bigger than bitcoin. Well we'll say, uh, that's on 353 00:17:35,520 --> 00:17:38,200 Speaker 1: the day. It depends on it depends on the day. 354 00:17:38,240 --> 00:17:40,280 Speaker 1: But you know, so obviously you got your eye on 355 00:17:40,560 --> 00:17:44,920 Speaker 1: across all asset classes, across all uh, you know, markets 356 00:17:44,920 --> 00:17:48,040 Speaker 1: around the world. What is sticking out you know to 357 00:17:48,200 --> 00:17:51,360 Speaker 1: you now as sort of worth investing in right now? 358 00:17:51,640 --> 00:17:53,679 Speaker 1: To to simplify it, to it to sort of the 359 00:17:53,720 --> 00:17:56,960 Speaker 1: most basic question. Yeah, so we we do have this 360 00:17:57,000 --> 00:17:59,679 Speaker 1: sort of late market cycle thesis, which means that a 361 00:17:59,720 --> 00:18:01,760 Speaker 1: lot of things that would normally at this stage look 362 00:18:01,760 --> 00:18:04,560 Speaker 1: at look inexpensive, look to us fully valued or maybe 363 00:18:04,560 --> 00:18:07,000 Speaker 1: even a bit expensive. The question is looking outside of 364 00:18:07,000 --> 00:18:09,280 Speaker 1: those areas which I think make up the bread and butter, 365 00:18:09,400 --> 00:18:12,960 Speaker 1: traditional uh diverse fire portfolios that people invest in. That's 366 00:18:12,960 --> 00:18:14,959 Speaker 1: going to be the key, and it's it's really up 367 00:18:14,960 --> 00:18:18,199 Speaker 1: to the individual. Are you diversifying fully into things like 368 00:18:18,240 --> 00:18:22,400 Speaker 1: a liquid alternatives, private credit, farmland, timber. Those are all 369 00:18:22,440 --> 00:18:26,320 Speaker 1: things that that we're keen on getting investors into if 370 00:18:26,359 --> 00:18:28,520 Speaker 1: we can. But I think even for investors who who 371 00:18:28,520 --> 00:18:31,800 Speaker 1: don't have that liquidity tolerance, of that ability to allocate alternatives. 372 00:18:31,800 --> 00:18:34,240 Speaker 1: It's things like emerging market credit, which is an asset 373 00:18:34,320 --> 00:18:37,720 Speaker 1: class that still looks early cycle compared to the US markets. 374 00:18:37,760 --> 00:18:39,640 Speaker 1: It's always a bit of a penalty just for being 375 00:18:39,800 --> 00:18:43,080 Speaker 1: emerging markets, but EM credit is one of the nice 376 00:18:43,080 --> 00:18:44,879 Speaker 1: things about it. A little bit less China exposure than 377 00:18:44,880 --> 00:18:47,520 Speaker 1: if you go with the e M equity side UM, so, 378 00:18:47,640 --> 00:18:51,200 Speaker 1: less less sort of idiosyncratic ad hoc China regulatory risk, 379 00:18:51,200 --> 00:18:53,720 Speaker 1: which is a big theme in the third quarter. UH. 380 00:18:53,800 --> 00:18:56,239 Speaker 1: And then just just a an environment that we know 381 00:18:56,400 --> 00:18:59,440 Speaker 1: is going to be a reach for yield, increasing risk 382 00:18:59,480 --> 00:19:02,560 Speaker 1: tolerance of fixed income investors. As the global economy continues 383 00:19:02,600 --> 00:19:05,639 Speaker 1: to to do fine, people are gonna be looking for 384 00:19:05,720 --> 00:19:07,560 Speaker 1: areas where they can earn extra income and that's gonna 385 00:19:07,560 --> 00:19:10,280 Speaker 1: be one of them. And then things like bank loans 386 00:19:10,280 --> 00:19:12,960 Speaker 1: of floating rate loans UM also for the US, also 387 00:19:13,000 --> 00:19:16,879 Speaker 1: a big asset class, sort of tactical preference for US 388 00:19:16,880 --> 00:19:19,840 Speaker 1: as well in an environment of raising rising interest rates, 389 00:19:19,840 --> 00:19:22,439 Speaker 1: and it's underperformed high yield just a little bit, so 390 00:19:22,440 --> 00:19:24,720 Speaker 1: if you're looking at that loan versus credit trade, the 391 00:19:24,760 --> 00:19:26,679 Speaker 1: loans look a little bit more attractive to US too, 392 00:19:26,840 --> 00:19:30,119 Speaker 1: And you know, we're very focused on income. Almost every 393 00:19:30,240 --> 00:19:32,960 Speaker 1: asset class we do has some sort of income uh 394 00:19:33,200 --> 00:19:35,240 Speaker 1: bent to it, and so that that's one area that 395 00:19:35,240 --> 00:19:37,800 Speaker 1: we're we're certainly looking for. And then something else that 396 00:19:37,840 --> 00:19:39,960 Speaker 1: we talked about it every investment committee meeting and sort 397 00:19:39,960 --> 00:19:41,080 Speaker 1: of in our d n A as E s G 398 00:19:41,240 --> 00:19:44,159 Speaker 1: investing uh specifically, one thing we talked about it this 399 00:19:44,400 --> 00:19:46,480 Speaker 1: uh this this last meeting, and we're gonna be writing 400 00:19:46,480 --> 00:19:48,919 Speaker 1: about a fourth courter outlook is paying it more attention 401 00:19:48,960 --> 00:19:51,520 Speaker 1: to the s the social in E s G and 402 00:19:51,680 --> 00:19:54,320 Speaker 1: just do as an example, looking and trying to find 403 00:19:54,400 --> 00:19:57,800 Speaker 1: ways to measure employee satisfaction with their companies. So you 404 00:19:57,800 --> 00:19:59,840 Speaker 1: can look at how much companies pay their employees as 405 00:19:59,840 --> 00:20:02,000 Speaker 1: our sort of a should I invest in this company 406 00:20:02,040 --> 00:20:03,720 Speaker 1: or not? It has to be a pretty bad predictor 407 00:20:03,800 --> 00:20:05,399 Speaker 1: for how the stock is going to do. But if 408 00:20:05,440 --> 00:20:11,040 Speaker 1: you wrap up employee compensation into things like training, benefits, opportunities, lifestyle, 409 00:20:11,480 --> 00:20:13,920 Speaker 1: work life balance and can find ways to measure those things, 410 00:20:14,160 --> 00:20:16,560 Speaker 1: that's where the positive alpha comes in. So if you 411 00:20:16,640 --> 00:20:20,040 Speaker 1: have that s G component to your security selection, that's 412 00:20:20,040 --> 00:20:21,800 Speaker 1: something that can help with the margins too. In an 413 00:20:21,920 --> 00:20:23,919 Speaker 1: environment where we know it's very hard to be a 414 00:20:23,960 --> 00:20:27,320 Speaker 1: reliable stock picker. Free snacks. I think if you can 415 00:20:27,359 --> 00:20:31,080 Speaker 1: correlate free snacks from a company to other returns, I 416 00:20:31,520 --> 00:20:33,480 Speaker 1: think we'll find something. You know, we had just gotten 417 00:20:33,480 --> 00:20:35,560 Speaker 1: the free snacks just before the pandemic, so they may 418 00:20:35,600 --> 00:20:39,119 Speaker 1: be still be sitting in the opposite you have to 419 00:20:39,119 --> 00:20:57,439 Speaker 1: re replenish them. I want to just rewind a little bit. 420 00:20:57,440 --> 00:21:01,720 Speaker 1: And he did mention China's he sounded a little uh 421 00:21:01,880 --> 00:21:05,320 Speaker 1: China verse uh there for a minute. And you know, 422 00:21:05,359 --> 00:21:07,720 Speaker 1: I wonder if you look at some of the dislocations 423 00:21:07,720 --> 00:21:10,520 Speaker 1: that have happened in the Chinese market in recent months, 424 00:21:10,520 --> 00:21:13,320 Speaker 1: and it's I mean, it's got to be tempting to 425 00:21:13,480 --> 00:21:18,600 Speaker 1: go bargain hunting across whether it be equities or credits. 426 00:21:18,760 --> 00:21:22,040 Speaker 1: You know, even uh sovereign yields always in China looking 427 00:21:22,040 --> 00:21:23,760 Speaker 1: a little bit better than than most of the rest 428 00:21:23,760 --> 00:21:26,639 Speaker 1: of the world. But you know what what you're thinking 429 00:21:26,640 --> 00:21:29,440 Speaker 1: on China right now, a lot of people saying it's 430 00:21:29,480 --> 00:21:33,199 Speaker 1: it's simply uninvestable right now with this regulatory crackdown going on. 431 00:21:33,240 --> 00:21:35,240 Speaker 1: I mean, do you take it that far? Whereas you know, 432 00:21:35,359 --> 00:21:37,679 Speaker 1: is there a middle ground where you try to you know, 433 00:21:37,720 --> 00:21:40,960 Speaker 1: take advantage of some of this dislocation, but maybe not 434 00:21:41,000 --> 00:21:43,679 Speaker 1: expose yourself too much to it. Yeah, I think you 435 00:21:43,680 --> 00:21:46,040 Speaker 1: said it with the middle ground. We actually had three 436 00:21:46,080 --> 00:21:49,360 Speaker 1: different emerging market speakers in our at our investment community 437 00:21:49,359 --> 00:21:53,000 Speaker 1: meeting and from around New vine Um. You guess what 438 00:21:53,080 --> 00:21:54,800 Speaker 1: happened when we get three people. One of them is 439 00:21:54,800 --> 00:21:56,480 Speaker 1: a bit more bullish, one of them embarrass and one 440 00:21:56,480 --> 00:21:58,439 Speaker 1: of them sort of in between. And I think, you know, 441 00:21:58,480 --> 00:22:00,320 Speaker 1: we're not We're not going to say that China is 442 00:22:00,359 --> 00:22:04,280 Speaker 1: uninvestable because it's an economy that big, that's growing that fast, 443 00:22:04,680 --> 00:22:07,560 Speaker 1: that has you know, a lot of kind of positive stories, 444 00:22:07,560 --> 00:22:10,920 Speaker 1: whether it's technology, whether it's manufacturing. You know, just taking 445 00:22:10,920 --> 00:22:12,800 Speaker 1: it off the table is very hard to do, even 446 00:22:12,840 --> 00:22:14,680 Speaker 1: if you wanted to, because it's such a huge part 447 00:22:14,720 --> 00:22:18,320 Speaker 1: of these benchmark indexes that any kind of China specific 448 00:22:18,600 --> 00:22:21,720 Speaker 1: risk is going to destroy your ability to make, you know, 449 00:22:21,720 --> 00:22:24,200 Speaker 1: to add value else one in portfolio. And you don't 450 00:22:24,240 --> 00:22:26,480 Speaker 1: want your entire performance to be hostage to what's going 451 00:22:26,480 --> 00:22:28,119 Speaker 1: on with China. So I think the idea is we 452 00:22:28,160 --> 00:22:30,560 Speaker 1: want to be about market weight China, and we're not, 453 00:22:31,000 --> 00:22:33,680 Speaker 1: you know, bottom fishing in areas that are at high 454 00:22:33,800 --> 00:22:36,600 Speaker 1: risk for governmental capture. But we want to be much 455 00:22:36,640 --> 00:22:38,920 Speaker 1: more selective. And I know that's you know, that's never 456 00:22:38,960 --> 00:22:40,800 Speaker 1: like the most satisfying answer, that we want to be 457 00:22:40,880 --> 00:22:43,280 Speaker 1: more selective and sharpen our pencils and find the right opportunity, 458 00:22:43,280 --> 00:22:46,439 Speaker 1: But it really is trying to identify areas where the 459 00:22:46,560 --> 00:22:49,639 Speaker 1: government may have an interest in becoming more active a 460 00:22:49,760 --> 00:22:53,200 Speaker 1: k a. Reducing shareholder value, reducing profit margins because they're 461 00:22:53,200 --> 00:22:57,120 Speaker 1: serving some kind of larger economic or political purpose, and 462 00:22:57,320 --> 00:22:59,440 Speaker 1: looking more to areas that China is probably going to 463 00:22:59,520 --> 00:23:01,240 Speaker 1: allow a bit of more of a lazy fair attitude 464 00:23:01,240 --> 00:23:03,440 Speaker 1: because they're talking about companies that are trying to compete 465 00:23:03,680 --> 00:23:05,960 Speaker 1: with the US and other areas of the world on 466 00:23:06,000 --> 00:23:07,639 Speaker 1: a global stage. And I think a lot of that 467 00:23:07,800 --> 00:23:09,600 Speaker 1: is is going to be in tech, some of that 468 00:23:09,600 --> 00:23:12,200 Speaker 1: will be in manufacturing as well. Um, but it has 469 00:23:12,280 --> 00:23:15,240 Speaker 1: become undoubtedly much much much harder because you could have 470 00:23:15,240 --> 00:23:17,879 Speaker 1: been underweight China in the third quarter, and if you 471 00:23:17,960 --> 00:23:20,000 Speaker 1: just had the wrong names in the portfolio, you could 472 00:23:20,040 --> 00:23:23,840 Speaker 1: still could have underperformed because of the acute underperformance of 473 00:23:24,240 --> 00:23:26,679 Speaker 1: whether it was gaming, whether it was that you know 474 00:23:26,720 --> 00:23:29,119 Speaker 1: that that for profit education sector, or whether it was 475 00:23:29,359 --> 00:23:32,640 Speaker 1: areas of tech that we're you know, again surprised with 476 00:23:32,800 --> 00:23:34,920 Speaker 1: um with with sort of that you know that that 477 00:23:35,000 --> 00:23:38,080 Speaker 1: ad hoc regulatory capture. Yeah, it does kind of overlap 478 00:23:38,119 --> 00:23:39,800 Speaker 1: with the E s G notion to some degree. I 479 00:23:39,800 --> 00:23:42,119 Speaker 1: mean trying to figure out you know, E s G 480 00:23:42,359 --> 00:23:45,280 Speaker 1: through the lens of Xi jing Ping. You know a 481 00:23:45,320 --> 00:23:47,720 Speaker 1: lot of this stuff that there's overlap there. I guess 482 00:23:48,760 --> 00:23:50,679 Speaker 1: there is. And when you've been talking about E s 483 00:23:50,720 --> 00:23:53,119 Speaker 1: G in the United States, it's usually a data issue. 484 00:23:53,520 --> 00:23:56,360 Speaker 1: You think you have a thesis on what I can 485 00:23:56,400 --> 00:23:59,400 Speaker 1: do to allocate towards certain type of companies or maybe 486 00:23:59,440 --> 00:24:01,520 Speaker 1: away from certain types of companies depending on the issue. 487 00:24:01,800 --> 00:24:03,920 Speaker 1: But it's all about getting the right data. With China, 488 00:24:04,240 --> 00:24:06,280 Speaker 1: there's not much of a hope of getting a lot 489 00:24:06,359 --> 00:24:09,600 Speaker 1: of transparent data at the very very micro micro levels. 490 00:24:09,600 --> 00:24:13,840 Speaker 1: We're talking like sub operating statements and and earnings reports. 491 00:24:13,840 --> 00:24:16,560 Speaker 1: We're talking more things like like I said, employees satisfaction, 492 00:24:16,960 --> 00:24:19,879 Speaker 1: you know, net carbon emissions, that kind of thing much 493 00:24:19,960 --> 00:24:21,720 Speaker 1: much harder to get when it comes to China, but 494 00:24:21,760 --> 00:24:23,720 Speaker 1: it's still the same. I think overall tone is that 495 00:24:23,760 --> 00:24:26,840 Speaker 1: you want to avoid investing in places where there could 496 00:24:26,840 --> 00:24:31,359 Speaker 1: be reputational risk, country risk. Um uh, you know, single 497 00:24:31,440 --> 00:24:35,160 Speaker 1: single company issues that that end up again if you're 498 00:24:35,160 --> 00:24:39,240 Speaker 1: overallocated to these certain areas, end up torpedo and your performance. Ryan. 499 00:24:39,320 --> 00:24:43,119 Speaker 1: Just to to close out are are grilling of you, 500 00:24:43,560 --> 00:24:45,840 Speaker 1: I want to ask you to look ahead to the 501 00:24:45,840 --> 00:24:48,440 Speaker 1: next earning season, which is supposed to kick off in 502 00:24:49,080 --> 00:24:51,080 Speaker 1: just a couple of days. I think I think it's 503 00:24:51,080 --> 00:24:53,080 Speaker 1: October thirteenth that we start to see some of the 504 00:24:53,119 --> 00:24:56,800 Speaker 1: banks releasing earnings. So can you just tell us, like, 505 00:24:56,880 --> 00:24:58,639 Speaker 1: what will you be looking for? Because I know my 506 00:24:58,720 --> 00:25:01,119 Speaker 1: inbox is always flooded when ever we hear these warnings 507 00:25:01,119 --> 00:25:04,080 Speaker 1: from companies like Surewyn Williams that we've heard over the 508 00:25:04,119 --> 00:25:05,800 Speaker 1: last couple of days. So what will you be looking 509 00:25:05,800 --> 00:25:08,600 Speaker 1: for and is there anything that would be really concerning 510 00:25:08,720 --> 00:25:12,679 Speaker 1: to hear from company management. Yes, So it's a continuation 511 00:25:12,720 --> 00:25:14,800 Speaker 1: to the second quarter where we were really looking for 512 00:25:15,720 --> 00:25:19,280 Speaker 1: statements or evidence that there was a declining profit margin 513 00:25:19,359 --> 00:25:21,639 Speaker 1: because of a combination of higher input costs for all 514 00:25:21,720 --> 00:25:25,320 Speaker 1: materials for some firms, and higher labor costs because there 515 00:25:25,359 --> 00:25:28,600 Speaker 1: was a shortage of available workers or workers able to 516 00:25:28,600 --> 00:25:30,399 Speaker 1: work at the wage that was being offered, and we 517 00:25:30,440 --> 00:25:32,080 Speaker 1: didn't actually see that much of that. Even at the 518 00:25:32,119 --> 00:25:35,120 Speaker 1: places that we know the sort of the price pressures 519 00:25:35,200 --> 00:25:37,320 Speaker 1: or the the the labor costs are a bit of 520 00:25:37,320 --> 00:25:40,320 Speaker 1: a stress. For example, UM, you know restaurants, fast food 521 00:25:40,359 --> 00:25:42,160 Speaker 1: industry would be in an area what you would expect 522 00:25:42,160 --> 00:25:43,840 Speaker 1: to see some stress. We didn't see that as much 523 00:25:43,840 --> 00:25:45,240 Speaker 1: in the second quarter. I think part of that's just 524 00:25:45,280 --> 00:25:47,800 Speaker 1: the man was so strong that revenue growth was able 525 00:25:47,840 --> 00:25:50,720 Speaker 1: to kind of overwhelm UH rising costs. But we know 526 00:25:50,760 --> 00:25:53,680 Speaker 1: that revenue growth is gonna be slowing down like the economy, 527 00:25:53,720 --> 00:25:56,400 Speaker 1: which peaked in the second quarter. Earnings growth almost certainly 528 00:25:56,440 --> 00:25:58,639 Speaker 1: peaked in the second quarter as well, just because of 529 00:25:58,640 --> 00:26:01,119 Speaker 1: base effects. So we're gonna be seeing fully expect to 530 00:26:01,160 --> 00:26:03,520 Speaker 1: see a decline in the year on year rate of 531 00:26:03,520 --> 00:26:08,760 Speaker 1: earnings growth, and probably more anecdotal evidence that inflation, especially 532 00:26:08,840 --> 00:26:12,080 Speaker 1: raw materials, maybe supply chain disruptions, and maybe a combination 533 00:26:12,119 --> 00:26:14,800 Speaker 1: of all those things in labor costs is eating into 534 00:26:14,840 --> 00:26:17,640 Speaker 1: profit margins. I don't think that's necessarily a flashing red 535 00:26:17,720 --> 00:26:20,760 Speaker 1: light for investors. I think it's perfectly natural that you'd 536 00:26:20,760 --> 00:26:24,200 Speaker 1: see profit margins peak in a very very hot UH 537 00:26:24,400 --> 00:26:26,680 Speaker 1: quarter for growth and then kind of decline from there. 538 00:26:26,960 --> 00:26:30,480 Speaker 1: But we don't want to see, you know, abrupt declines 539 00:26:30,520 --> 00:26:33,960 Speaker 1: and profit margins accompanied by very kind of pessimistic outlooks 540 00:26:33,960 --> 00:26:37,439 Speaker 1: for profitability because all of these issues are kind of 541 00:26:37,480 --> 00:26:39,600 Speaker 1: coming to a head. That would be my my concern 542 00:26:39,680 --> 00:26:40,919 Speaker 1: and one of the things that you know, even if 543 00:26:40,960 --> 00:26:43,840 Speaker 1: the bond market doesn't step in and and tell the 544 00:26:43,840 --> 00:26:46,640 Speaker 1: Fed that it's time to raise interest rates, profitability of 545 00:26:46,880 --> 00:26:49,199 Speaker 1: US corporations might might be doing that. I don't think 546 00:26:49,240 --> 00:26:51,040 Speaker 1: that's gonna be a huge issue in the third quarter, 547 00:26:51,080 --> 00:26:53,960 Speaker 1: but I think it's the thing I'm most um intently 548 00:26:53,960 --> 00:26:57,200 Speaker 1: looking at for for sort of a common theme across 549 00:26:57,200 --> 00:27:01,560 Speaker 1: different industries. Well, you know what most intently looking at, 550 00:27:01,600 --> 00:27:05,439 Speaker 1: bil Donna. Yeah, I know, skared a hazard. I guess 551 00:27:06,040 --> 00:27:09,359 Speaker 1: you know, as co host, you're contractually obligated to laugh 552 00:27:09,400 --> 00:27:11,679 Speaker 1: at my jokes. Now you realize that, right, Oh sorry, 553 00:27:11,720 --> 00:27:15,360 Speaker 1: it's just so hard because I can't. Sometimes they don't 554 00:27:15,359 --> 00:27:18,120 Speaker 1: even sound like jokes, That's that's what makes them funny. Yeah, 555 00:27:18,119 --> 00:27:20,520 Speaker 1: you've really got to be paying attention there anyway. Oh 556 00:27:20,520 --> 00:27:23,000 Speaker 1: my gosh, enough with that, Enough with that, It's time 557 00:27:23,040 --> 00:27:25,640 Speaker 1: for the craziest things we saw in markets this week 558 00:27:26,240 --> 00:27:29,840 Speaker 1: stand clear of the craziest things we saw in markets 559 00:27:29,880 --> 00:27:32,760 Speaker 1: this week, I'm gonna say I got a really good one. 560 00:27:32,800 --> 00:27:35,640 Speaker 1: I hate to declare myself the winner already, but um 561 00:27:35,720 --> 00:27:38,080 Speaker 1: so we'll go through the motions with you too, but 562 00:27:38,720 --> 00:27:42,080 Speaker 1: mine's pretty good. So I'm gonna I'm gonna wait till last. Uh, 563 00:27:42,640 --> 00:27:44,320 Speaker 1: let's start with you. What's the craziest thing you saw 564 00:27:44,359 --> 00:27:46,800 Speaker 1: in markets this week? So, Mike, I want to give 565 00:27:46,840 --> 00:27:48,880 Speaker 1: a shout out to our producer too, for four heads 566 00:27:48,920 --> 00:27:52,080 Speaker 1: who who flagged this story to me and you actually, 567 00:27:52,160 --> 00:27:54,760 Speaker 1: so you might already be familiar with it, but it's 568 00:27:54,800 --> 00:27:58,119 Speaker 1: a CNN story and the headline is this hamster's crypto 569 00:27:58,440 --> 00:28:03,880 Speaker 1: currency portfolio is beating the market and it's amazing. It's like, honestly, 570 00:28:03,920 --> 00:28:05,840 Speaker 1: the craziest thing I've seen in a really long time. 571 00:28:05,840 --> 00:28:08,960 Speaker 1: It's this German hamster and he's beating investors at their 572 00:28:09,000 --> 00:28:12,199 Speaker 1: own game, apparently. So he has this little spinning wheel 573 00:28:12,240 --> 00:28:14,840 Speaker 1: and he sort of runs around and then like wherever 574 00:28:14,880 --> 00:28:19,040 Speaker 1: he ends up, if it's like a buy or a cell, 575 00:28:19,640 --> 00:28:23,600 Speaker 1: it triggers these purchases, I think. And so he's been 576 00:28:23,600 --> 00:28:28,879 Speaker 1: doing really really well in his portfolio, has ether and bitcoin, 577 00:28:29,000 --> 00:28:35,080 Speaker 1: and I mean you can't. I think I win. You 578 00:28:35,119 --> 00:28:38,120 Speaker 1: can't get better than that when it comes to cryptocurrencies. 579 00:28:38,160 --> 00:28:40,600 Speaker 1: That that strategy makes as much sense as just about 580 00:28:40,640 --> 00:28:43,640 Speaker 1: every other one I've heard. So I'll take the Hampsten. 581 00:28:43,880 --> 00:28:48,040 Speaker 1: You know, Bert mack Hill had the monkey throwing darts 582 00:28:48,040 --> 00:28:50,800 Speaker 1: at the dartboard, So why not a hamster. That should 583 00:28:50,800 --> 00:28:53,800 Speaker 1: be the benchmark. The hamster the crypto benchmark. That's that's 584 00:28:53,800 --> 00:28:55,720 Speaker 1: a pretty good one. That's a pretty good one we 585 00:28:55,720 --> 00:28:58,080 Speaker 1: should make. We should make an index of like what 586 00:28:58,160 --> 00:29:00,959 Speaker 1: the hamsters tracking and then just yeah, you get all 587 00:29:01,040 --> 00:29:04,120 Speaker 1: you should get on that. You should get, you should get. 588 00:29:05,000 --> 00:29:11,040 Speaker 1: We need a ticker ham h A M. That one's 589 00:29:11,040 --> 00:29:13,760 Speaker 1: pretty good. I'll give you. I'll give you uh props 590 00:29:13,800 --> 00:29:15,480 Speaker 1: for that one. How about you, Brian? Have you seen 591 00:29:15,480 --> 00:29:18,960 Speaker 1: anything crazy? Uh? This weekend markets? Well, it's going to 592 00:29:19,000 --> 00:29:20,960 Speaker 1: suggest that we look at the octopus that predicted the 593 00:29:20,960 --> 00:29:23,560 Speaker 1: World Cup and see if that that he or she 594 00:29:23,600 --> 00:29:26,120 Speaker 1: can come up with a better crypto strategy. So I'm 595 00:29:26,120 --> 00:29:28,200 Speaker 1: gonna cheat a little bit and stretch the definition of 596 00:29:28,240 --> 00:29:32,280 Speaker 1: markets to include prediction markets for what's going on in Washington, 597 00:29:32,360 --> 00:29:34,480 Speaker 1: d C. Now, these are not the US treadury market, 598 00:29:34,520 --> 00:29:36,520 Speaker 1: not the deepest most liquid markets in the world. But 599 00:29:37,000 --> 00:29:40,800 Speaker 1: when you are kind of on Twitter religiously, like I 600 00:29:40,840 --> 00:29:42,800 Speaker 1: am kind of following the minutes a minute, what's going 601 00:29:42,840 --> 00:29:46,800 Speaker 1: on with the Reconciliation bill, there's this really cool um 602 00:29:46,840 --> 00:29:50,600 Speaker 1: predicted market on on unpredicted that is basically saying, how 603 00:29:50,600 --> 00:29:53,800 Speaker 1: big is the reconciliation bill going to be? And as 604 00:29:53,920 --> 00:29:57,520 Speaker 1: this crazy week kind of wore on the one point 605 00:29:57,600 --> 00:30:01,480 Speaker 1: five trillion and under category a much much stronger bid 606 00:30:01,560 --> 00:30:03,000 Speaker 1: as we as we kind of wore on. I had 607 00:30:03,040 --> 00:30:04,920 Speaker 1: been kind of thinking it was the two trillion number 608 00:30:04,960 --> 00:30:07,080 Speaker 1: was sort of the over under um We're gonna get 609 00:30:07,080 --> 00:30:10,200 Speaker 1: close to there. But you know now that it seems 610 00:30:10,240 --> 00:30:13,200 Speaker 1: like there's even less agreement or consensus on on on 611 00:30:13,280 --> 00:30:16,160 Speaker 1: these these spending bills that the potential is it falls 612 00:30:16,160 --> 00:30:19,080 Speaker 1: apart completely or just becomes a much much smaller number. 613 00:30:19,120 --> 00:30:22,480 Speaker 1: Now that that's the most fun weird thing I saw 614 00:30:22,600 --> 00:30:25,520 Speaker 1: in markets this week. The extra bit of weirdness that 615 00:30:25,560 --> 00:30:28,280 Speaker 1: I'd add to it is the financial markets seem completely 616 00:30:28,320 --> 00:30:30,840 Speaker 1: uninterested in this UM. I to the best of my ability, 617 00:30:30,880 --> 00:30:33,840 Speaker 1: I can't discern any movement in the tenure Treasury, the 618 00:30:33,920 --> 00:30:37,680 Speaker 1: spire market leadership based on what's going on with this bill, 619 00:30:37,760 --> 00:30:40,680 Speaker 1: because um, hey, we I don't think it's a great 620 00:30:40,760 --> 00:30:43,200 Speaker 1: understanding of what's in it other than a sort of 621 00:30:43,200 --> 00:30:46,760 Speaker 1: a lot of kind of kind of transfer payments. Um 622 00:30:47,160 --> 00:30:49,320 Speaker 1: that could help the economy or could hurt the economy, 623 00:30:49,320 --> 00:30:51,440 Speaker 1: depending on if you're paying more taxes or receiving more 624 00:30:51,480 --> 00:30:54,840 Speaker 1: in benefits. But it's being doled out over you know, 625 00:30:54,960 --> 00:30:56,840 Speaker 1: five or eight or ten years, depending on how they 626 00:30:56,880 --> 00:30:59,040 Speaker 1: get it done. It just is dwarfed by all the 627 00:30:59,080 --> 00:31:02,320 Speaker 1: stimulus we've done. Let's hit bottom lines immediately in the 628 00:31:02,360 --> 00:31:04,560 Speaker 1: last eighteen months, and it almost seems like we have 629 00:31:04,800 --> 00:31:07,480 Speaker 1: we kind of have this um uh, you know that 630 00:31:07,520 --> 00:31:12,280 Speaker 1: we've gotten used to these huge fiscal influxes into the 631 00:31:12,320 --> 00:31:14,240 Speaker 1: economy that when you you know, you said it's gonna 632 00:31:14,240 --> 00:31:15,920 Speaker 1: be oh, it's true, tillion dollars over ten years, we 633 00:31:15,960 --> 00:31:17,560 Speaker 1: kind of shrug it dot number even though it's still 634 00:31:17,560 --> 00:31:19,800 Speaker 1: a massive amount of money. But it doesn't seem like 635 00:31:19,880 --> 00:31:21,560 Speaker 1: it's having much of a much of an impact on 636 00:31:21,640 --> 00:31:24,680 Speaker 1: markets for the time being. That's a good one. I'll hey, 637 00:31:24,720 --> 00:31:27,600 Speaker 1: I love the predictions market. We'll allow that any time. 638 00:31:27,760 --> 00:31:30,200 Speaker 1: How about the debt sailing is the debt shilling keeping 639 00:31:30,200 --> 00:31:31,920 Speaker 1: you up at night, or is this the typical game 640 00:31:31,960 --> 00:31:34,479 Speaker 1: of chicken that's gonna end at the eleventh hour like 641 00:31:34,480 --> 00:31:36,600 Speaker 1: we've seen in the past. So this is my second 642 00:31:36,640 --> 00:31:39,960 Speaker 1: favorite um predicted contract, which is will the debt ceiling 643 00:31:39,960 --> 00:31:43,760 Speaker 1: be raised by October fifteen? And then Johnny Ellen comes 644 00:31:43,760 --> 00:31:45,880 Speaker 1: out this week and says the drop dead date is 645 00:31:46,160 --> 00:31:48,680 Speaker 1: the eighteen. So I'm a big no on the fifteen 646 00:31:48,680 --> 00:31:51,680 Speaker 1: because why would they do it three days earlier? Thing? Right, 647 00:31:51,920 --> 00:31:53,600 Speaker 1: if you got an extra three days, you know Congress 648 00:31:53,640 --> 00:31:56,000 Speaker 1: is gonna use it. There's gonna be a lot of brinksmanship. 649 00:31:56,200 --> 00:31:59,640 Speaker 1: My senses that Democrats are going to use a reconciliation process, 650 00:31:59,640 --> 00:32:01,560 Speaker 1: which is a big pain in the neck for them, 651 00:32:01,680 --> 00:32:03,560 Speaker 1: and get it in there and get it through and 652 00:32:03,600 --> 00:32:05,800 Speaker 1: passed by the eighteenth. And the reason they're saying they're 653 00:32:05,800 --> 00:32:07,320 Speaker 1: not going to do that, they want to wait until 654 00:32:07,320 --> 00:32:09,640 Speaker 1: the last minute because they want Republicans to basically have 655 00:32:09,760 --> 00:32:12,040 Speaker 1: the cave on letting them do it quickly, because the 656 00:32:12,080 --> 00:32:13,800 Speaker 1: Republicans are not going to vote to raise the dead ceiling, 657 00:32:13,840 --> 00:32:16,040 Speaker 1: but they're not going to throw obstacles in the way 658 00:32:16,120 --> 00:32:18,680 Speaker 1: of the Democrats for spite as they're trying to kind 659 00:32:18,680 --> 00:32:20,240 Speaker 1: of scramble to get this done at the eleventh hour. 660 00:32:20,360 --> 00:32:23,560 Speaker 1: So I would say, if you're up on October seventeenth 661 00:32:23,640 --> 00:32:27,600 Speaker 1: at eleven fifty nine eastern seconds, that's probably about when 662 00:32:27,600 --> 00:32:29,720 Speaker 1: i'd expect the death ceiling to be right. That sounds 663 00:32:29,720 --> 00:32:32,000 Speaker 1: about right. I'll to look up and see if there's 664 00:32:32,040 --> 00:32:35,720 Speaker 1: a trillion dollar coin market on predicted. That's that's uh, 665 00:32:35,760 --> 00:32:38,800 Speaker 1: that's the other option. Not yet, but it's still early days. 666 00:32:39,960 --> 00:32:42,800 Speaker 1: All right, those are good you guys stuff competition this week. 667 00:32:42,840 --> 00:32:45,440 Speaker 1: But now now I can give you the winning entry 668 00:32:45,480 --> 00:32:47,720 Speaker 1: in the craziest thing. I'm just kidding. We'll call it 669 00:32:47,720 --> 00:32:50,080 Speaker 1: a three away time. But mine's pretty good. And this 670 00:32:50,160 --> 00:32:53,600 Speaker 1: is courtesy of our colleague Nick Baker, who turned me 671 00:32:53,640 --> 00:32:55,680 Speaker 1: onto this market. I can't believe I've never heard it 672 00:32:55,720 --> 00:32:59,480 Speaker 1: about it before. It's called the royalties Exchange. Have you 673 00:32:59,520 --> 00:33:02,120 Speaker 1: have you ever heard of this, fill Donna. It's not 674 00:33:02,200 --> 00:33:05,400 Speaker 1: like royal family members. You know, you can't trade, uh 675 00:33:05,520 --> 00:33:08,480 Speaker 1: you know, Prince Henry for I don't know, but it's 676 00:33:08,560 --> 00:33:13,240 Speaker 1: royalties from music and movies I guess too. So up 677 00:33:13,280 --> 00:33:16,920 Speaker 1: for auction this week where the royalties from the jingle 678 00:33:17,240 --> 00:33:21,560 Speaker 1: the best part of waking up. Remember the Folders jingle? Yeah, 679 00:33:21,800 --> 00:33:26,040 Speaker 1: classic jingle. Uh, So you know Folders still uses it 680 00:33:26,080 --> 00:33:27,720 Speaker 1: from time to time, so you kind of you're kind 681 00:33:27,720 --> 00:33:29,719 Speaker 1: of at the mercy of when they decided to use 682 00:33:29,760 --> 00:33:31,600 Speaker 1: it or not. And I guess maybe, I don't know, 683 00:33:31,760 --> 00:33:33,600 Speaker 1: Kanye West could cover it to who knows, and you 684 00:33:33,640 --> 00:33:35,680 Speaker 1: get you get royalties that way, but I think that 685 00:33:35,800 --> 00:33:40,840 Speaker 1: the mainstream of royalties is from the commercials when Folders 686 00:33:40,960 --> 00:33:44,520 Speaker 1: uses it. So we're gonna play prices right here. Let's 687 00:33:44,560 --> 00:33:48,920 Speaker 1: put your break, your out, your your dividendic's discount model 688 00:33:48,960 --> 00:33:51,680 Speaker 1: Brian or whatever you call it in the in this case. 689 00:33:52,440 --> 00:33:55,840 Speaker 1: So the royalties last twelve month royalties for this jingle 690 00:33:56,080 --> 00:34:00,680 Speaker 1: were eleven thousand, seven hundred forty seven dollars. Right. Now, 691 00:34:00,720 --> 00:34:02,680 Speaker 1: here's the deal with this. You if you buy this, 692 00:34:02,960 --> 00:34:06,520 Speaker 1: you get um the royalties for the lifetime of the 693 00:34:06,560 --> 00:34:08,480 Speaker 1: author who actually had to go and look up. Her 694 00:34:08,520 --> 00:34:12,319 Speaker 1: name is Leslie Pearl. She's sixty nine, still alive, so 695 00:34:12,360 --> 00:34:14,680 Speaker 1: you get it for the duration of her lifetime plus 696 00:34:14,680 --> 00:34:18,280 Speaker 1: seventy years, so you know, you got at least seventy 697 00:34:18,320 --> 00:34:20,480 Speaker 1: years there. She could live to a hundred and you 698 00:34:20,520 --> 00:34:24,720 Speaker 1: know then you got a hundred years out of it. Um, 699 00:34:24,800 --> 00:34:29,440 Speaker 1: so eleven thousand, seven hundred dollars in royalties in the 700 00:34:29,600 --> 00:34:33,920 Speaker 1: trailing twelve months? What would you bid for that based 701 00:34:33,920 --> 00:34:37,440 Speaker 1: on that information? Uh? And I've got the I've got 702 00:34:37,440 --> 00:34:39,879 Speaker 1: the latest bid. The auctions like got two hours left 703 00:34:39,880 --> 00:34:41,600 Speaker 1: in it, so we're pretty close to the final bid. 704 00:34:42,360 --> 00:34:44,359 Speaker 1: What's let's start with you, old Ona, what's your bid 705 00:34:44,400 --> 00:34:48,720 Speaker 1: for the royalties for the Falters jingle? I saw this story, 706 00:34:48,800 --> 00:34:51,000 Speaker 1: so I might be cheating if if I give you 707 00:34:51,000 --> 00:34:54,600 Speaker 1: an answer, you're allowed to cheat. It's fine. Oh okay, 708 00:34:54,640 --> 00:34:57,879 Speaker 1: I think, well, Brian, you go first, so he doesn't 709 00:34:57,880 --> 00:35:00,000 Speaker 1: get gonna run down and ask my wife, who's an act. 710 00:35:00,040 --> 00:35:03,839 Speaker 1: Surely how long this lady's gonna live? That would give 711 00:35:03,880 --> 00:35:08,440 Speaker 1: me an inside track on the answer. I know we 712 00:35:08,480 --> 00:35:11,040 Speaker 1: need to we need more information on her lifestyle habits, 713 00:35:11,080 --> 00:35:15,240 Speaker 1: I think to uh, okay, So it's a hundred years 714 00:35:15,600 --> 00:35:18,759 Speaker 1: eleven thousand dollars a year with some kind of very 715 00:35:18,800 --> 00:35:21,080 Speaker 1: low interest rate because I'm assuming interest rates are going 716 00:35:21,080 --> 00:35:28,000 Speaker 1: down forever. Yeah, yeah, applied to it. So, um, let's 717 00:35:28,040 --> 00:35:35,560 Speaker 1: see five thousand. It's a pretty good guess. I would 718 00:35:35,560 --> 00:35:37,279 Speaker 1: guess I'm not gonna tell you what I guess we'll do. 719 00:35:37,480 --> 00:35:41,399 Speaker 1: What's your guess? I was gonna say, twenty seven thousand. Wow, 720 00:35:42,080 --> 00:35:44,879 Speaker 1: that's a big bitess spread right there. Yeah, maybe I'm 721 00:35:44,880 --> 00:35:49,799 Speaker 1: misremembering the story UM eighty three thousand, three hundred and fifty, which, 722 00:35:49,960 --> 00:35:51,719 Speaker 1: to your point, Pride, I think is a bargain. I 723 00:35:51,760 --> 00:35:54,680 Speaker 1: mean you you yeah, right about You're talking about like 724 00:35:54,719 --> 00:35:56,920 Speaker 1: a fourteen percent yield off of this thing. I mean, 725 00:35:57,440 --> 00:35:59,920 Speaker 1: you know, granted you don't get your return of capital 726 00:36:00,000 --> 00:36:02,160 Speaker 1: at the end of a hundred years, but it comes 727 00:36:02,200 --> 00:36:04,759 Speaker 1: stream I would think would be a lot worth a 728 00:36:04,760 --> 00:36:08,320 Speaker 1: lot more than uh uh eight three grand I don't know. 729 00:36:08,360 --> 00:36:10,319 Speaker 1: I think I'm discounting a much too low an interest rate, 730 00:36:10,320 --> 00:36:14,240 Speaker 1: but I think I'm probably right to do so. I agree, 731 00:36:14,320 --> 00:36:17,880 Speaker 1: I agree, But yeah, pretty pretty good bargain on the 732 00:36:17,880 --> 00:36:20,600 Speaker 1: folders jingle. If you know two hours left, if either 733 00:36:20,680 --> 00:36:23,120 Speaker 1: he wants to get in on that, Dana, you could, uh, 734 00:36:23,160 --> 00:36:25,320 Speaker 1: I wonder if they'll just let me transfer half my 735 00:36:25,360 --> 00:36:28,160 Speaker 1: four one k into that and just fit it up. 736 00:36:29,080 --> 00:36:31,080 Speaker 1: I don't know, you could try. I don't know if 737 00:36:31,160 --> 00:36:33,239 Speaker 1: real ties are a valid for one k only if 738 00:36:33,280 --> 00:36:36,280 Speaker 1: you do do it, only if you really like Folgers coffee. 739 00:36:36,280 --> 00:36:38,960 Speaker 1: If you don't just I don't know why Folgers just 740 00:36:39,000 --> 00:36:42,080 Speaker 1: doesn't buy it for four grand if they're spending twelve 741 00:36:42,120 --> 00:36:44,399 Speaker 1: grand a year on the royalties, I don't know why 742 00:36:44,400 --> 00:36:46,239 Speaker 1: they don't buy it. But we'll pay off in a 743 00:36:46,239 --> 00:36:48,160 Speaker 1: couple I'm gonna give I'm gonna go talk to the 744 00:36:48,160 --> 00:36:51,719 Speaker 1: people at Folgers and uh, we'll figure that out. But 745 00:36:52,040 --> 00:36:54,279 Speaker 1: with that said, I think that's all the time we have, 746 00:36:55,040 --> 00:36:57,880 Speaker 1: right Nick, really uh injoyed the conversation. Hopefully we can 747 00:36:57,920 --> 00:37:01,520 Speaker 1: get you back again sometime. You passed Voldonna's audition, you 748 00:37:01,560 --> 00:37:03,560 Speaker 1: can give me back anytime. Thanks very much for having me. 749 00:37:04,280 --> 00:37:15,959 Speaker 1: Thank you, Brian, what goes up? We'll be back next week. 750 00:37:16,200 --> 00:37:17,840 Speaker 1: And so that you can find us on the Bloomberg 751 00:37:17,920 --> 00:37:22,560 Speaker 1: Terminal website and app wherever you get your podcasts, we'd 752 00:37:22,560 --> 00:37:24,120 Speaker 1: love it if you took the time to rate and 753 00:37:24,200 --> 00:37:27,040 Speaker 1: review the show while on Apple Podcasts so more listeners 754 00:37:27,080 --> 00:37:29,520 Speaker 1: can find us. And you can find us on Twitter, 755 00:37:29,840 --> 00:37:33,640 Speaker 1: follow me at reing Anonymous Well. Donna Hirich is at 756 00:37:33,800 --> 00:37:37,560 Speaker 1: Bildonna hi Rich. This week's guest, Brian Nick is at 757 00:37:37,600 --> 00:37:41,800 Speaker 1: Brian Nick now Vene, and you can also follow Bloomberg 758 00:37:41,800 --> 00:37:46,040 Speaker 1: Podcasts at podcasts that get to Charlie Pellett of Bloomberg 759 00:37:46,080 --> 00:37:48,920 Speaker 1: Radio and the voice of the New York City subway system. 760 00:37:48,960 --> 00:37:51,680 Speaker 1: What Goes Up is produced by Tofur Foreheads. Ahead of 761 00:37:51,680 --> 00:37:55,799 Speaker 1: Bloomberg Podcasts is Francesco Levy. Thanks for listening, See you 762 00:37:55,840 --> 00:38:00,280 Speaker 1: next time, Ol